<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SFX ENTERTAINMENT, INC.
(Exact Name of Registrant and its Guarantor Subsidiaries* as Specified in its
Charter)
(* A complete list is set forth on the following pages)
<TABLE>
<S> <C> <C>
DELAWARE 7922 13-3977880
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization*) Classification Code Number*) Identification Number*)
----------------
</TABLE>
650 MADISON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10022
(212) 838-3100
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------
ROBERT F.X. SILLERMAN, EXECUTIVE CHAIRMAN
SFX ENTERTAINMENT, INC.
650 MADISON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10022
(212) 838-3100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
----------------
COPY OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
AMAR BUDARAPU, ESQ. DANIEL A. NINIVAGGI, ESQ.
BAKER & MCKENZIE WINSTON & STRAWN
1200 SMITH STREET, SUITE 1200 200 PARK AVENUE
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10166
(713) 427-5000 (212) 294-6700
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT TO MAXIMUM MAXIMUM AMOUNT OF
BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE
<S> <C> <C> <C> <C>
9 1/8% Senior Subordinated Notes due 2008............ $200,000,000 100% $200,000,000 $55,600
Guarantees of 9 1/8% Senior Subordinated
Notes due 2008 .................................... (2) -- -- (3)
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(f)(2) under the Securities Act solely for
purposes of calculating the registration fee.
(2) The 9 1/8% Senior Subordinated Notes due 2008 being registered will be
guaranteed on a senior subordinated basis by each of the Guarantor
Subsidiaries. No separate consideration was received for the guarantees.
(3) Pursuant to Rule 457(n) under the Securities Act, no separate fee is
payable for the guarantees.
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
Unless specified otherwise, the mailing address and phone number of the
additional registrants, each of which is a guarantor subsidiary, is c/o SFX
Entertainment, Inc., 650 Madison Avenue, 16th Floor, New York, New York 10022;
(212) 838-3100. The agent for service for the additional registrants is Howard
J. Tytel, c/o SFX Entertainment, Inc., 650 Madison Avenue, 16th Floor, New
York, New York 10022. The primary standard industry classification number for
all registrants is 7922.
<TABLE>
<CAPTION>
STATE OR OTHER I.R.S.
JURISDICTION OF EMPLOYER
INCORPORATION OR IDENTIFICATION
NAME, ADDRESS, TELEPHONE NUMBER ORGANIZATION NUMBER
- ---------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
AKG, Inc. (1) ............................................ California 94-2628377
American Artists, Inc. ................................... Massachusetts 04-2830220
American Artists Limited, Inc. ........................... Massachusetts 04-3178589
American Broadway, Inc. (2) .............................. Texas 76-0475585
Amphitheater Entertainment Partnership ................... Delaware pending
Ant Theatrical Productions, Inc. ......................... New York pending
Ardee Festivals N.J., Inc. ............................... Delaware 13-3933969
Atlanta Concerts, Inc. ................................... Delaware 13-3969854
Audrey & Jane, Inc. ...................................... California 95-4308177
Avalon Acquisition Corp. ................................. Delaware 13-4008946
Beach Concerts, Inc. ..................................... New York 13-3155946
BG Presents, Inc. (1) .................................... California 68-0320084
BGP Acquisition, L.L.C. .................................. Delaware pending
BGP Denver, Inc. ......................................... Delaware 13-4027214
Bill Graham Enterprises, Inc. (1) ........................ California 94-1734238
Bill Graham Management, Inc. (1) ......................... California 94-3129254
Bill Graham Presents, Inc. (1) ........................... California 94-1650714
Boston Playhouse Realty, Inc. ............................ Massachusetts 04-3279825
Boylston Street Theatre Corp. ............................ Massachusetts 04-3094563
Broadway Concerts, Inc. .................................. New York 13-3748971
Broadway Series Associates, Inc. ......................... Indiana 61-1297704
Broadway Series Management Group, Inc. ................... Ohio 31-1246380
Camarillo Amphitheater Managing Partners, Inc. ........... California 95-4540816
Cheva Touring Company .................................... Florida 65-0849218
Concert Productions International B.V. ................... The Netherlands N/A
Concerts, Inc. (3) ....................................... Nevada 86-0871933
Concert Productions (UK) Limited ......................... UK N/A
Conn Ticketing Company ................................... Connecticut 06-1450528
Connecticut Amphitheater Development Corporation ......... Connecticut 06-1416442
Connecticut Concerts Incorporated ........................ Connecticut 13-3748975
Connecticut Performing Arts Partners ..................... Connecticut 06-1420929
Connecticut Performing Arts, Inc. ........................ Connecticut 06-1411118
Contemporary Group Acquisition Corp. ..................... Delaware 13-3991262
Contemporary Group, Inc. (4) ............................. Missouri 43-1701968
Contemporary Marketing, Inc. (4) ......................... Missouri 43-1248261
Contemporary Productions Incorporated (4) ................ Missouri 43-1243654
Contemporary Sports Incorporated (4) ..................... Missouri 43-1245258
Cooley and Conlon Management Co. ......................... Georgia 58-1762653
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
STATE OR OTHER I.R.S.
JURISDICTION OF EMPLOYER
INCORPORATION OR IDENTIFICATION
NAME, ADDRESS, TELEPHONE NUMBER ORGANIZATION NUMBER
- --------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
Deer Creek Amphitheater Concerts, L.P. .................. Delaware 13-3951407
Deer Creek Amphitheater Concerts, Inc. .................. Delaware 13-3951407
Delsener/Slater Enterprises, Ltd. ....................... New York 13-2560412
DiCesare-Engler, Inc. ................................... Pennsylvania 25-1474385
DiCesare-Engler Promotions, Inc. ........................ Pennsylvania 25-1523877
DLC Corp. (f/k/a DLC Acquisition Corp.) ................. Delaware 13-4006444
DLC Funding Corp. ....................................... Delaware 13-4027213
Dumb Deal, Inc. ......................................... New York 13-2892073
Eagle Eye Entertainment Inc. ............................ Ontario, Canada 894241835
Eagle Eye Entertainment USA Inc. ........................ Delaware pending
EMI Acquisition Sub, Inc. ............................... Delaware 13-4006445
Entertainment Performing Arts, Inc. (2) ................. Texas 76-0297763
Event Merchandising, Inc. ............................... California 52-2062536
Exit 116 Revisited, Inc. ................................ New Jersey 13-3886101
Falk Associates Management Enterprises, Inc. ............ Delaware 36-3810092
Festival Productions, Inc. (2) .......................... Texas 74-1975839
Fillmore Corporation (1) ................................ Delaware 94-1687122
Fillmore Fingers, Inc. (1) .............................. California 94-2998317
Financial Advisory Management Enterprises, Inc. ......... Delaware 54-1621608
Gershwins' Fascinating Rhythm ........................... Florida 65-0865107
Grand Slam Sports Marketing, Inc. ....................... Florida 65-0265329
GSAC Partners ........................................... Delaware 76-051636
High Cotton, Inc. ....................................... Georgia 58-1802140
In House Tickets, Inc. .................................. New York 13-3077977
International Music (Canada) Inc. ....................... Ontario, Canada N/A
International Music Ltd. ................................ Bermuda N/A
International Music Tour II Ltd. ........................ Bermuda N/A
International Music Tour I Ltd. ......................... Bermuda N/A
International Music Tour II (USA) Inc. .................. Delaware 13-3921456
International Music Tour I (USA) Inc. ................... Delaware 13-3921455
International Music (USA) Inc. .......................... Delaware 13-3921454
Irvine Meadows Amphitheater ............................. California 95-3589576
Irving Plaza Concerts, Inc. ............................. Delaware 13-3938355
Jefko Touring Company ................................... New York 22-3495975
Magicsports--Grand Slam Management, Inc. ................ Florida 13-4042626
Magicworks Concerts, Inc. ............................... Florida 31-1528922
Magicworks Entertainment Asia Limited ................... Hong Kong N/A
Magicworks Entertainment Incorporated ................... Delaware 87-0425513
Magicworks Entertainment International, Inc. ............ Florida 65-0394100
Magicworks Exhibitions Joint Venture .................... Florida 65-0868670
Magicworks Exhibitions, Inc. ............................ Florida 65-0855062
Magicworks Fashion Management, Inc. ..................... Florida 13-4036641
Magicworks Merchandising, Inc. .......................... Florida 65-0054981
Magicworks Sports Management, Inc. ...................... Florida 65-0761899
Magicworks Theatricals, Inc. ............................ Ohio 34-1461096
Magicworks Transportation, Inc. ......................... Florida 65-0802722
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
STATE OR OTHER I.R.S.
JURISDICTION OF EMPLOYER
INCORPORATION OR IDENTIFICATION
NAME, ADDRESS, TELEPHONE NUMBER ORGANIZATION NUMBER
- --------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
Magicworks West, Inc. ................................... Florida 83-0244891
Marco Entertainment, Inc. ............................... D.C. 52-1092929
Melody Tent and Amphitheater, Inc. ...................... Pennsylvania 25-1567915
Murat Center Concerts, Inc. ............................. Delaware 13-3948205
Murat Center Concerts, L.P. ............................. Delaware 13-3951403
New Avalon, Inc. ........................................ California 95-3779054
NOC, Inc. ............................................... Connecticut 13-3738288
Northeast Ticketing Company ............................. Connecticut 06-1450528
Oakdale Theater Concerts, Inc. .......................... Delaware 13-3997242
Old PCI, Inc. (2) ....................................... Texas 76-0392584
PACE AEP Acquisition, Inc. (2) .......................... Texas 01-477749
PACE (UK) (2) ........................................... United Kingdom N/A
PACE Amphitheater Management, Inc. (2) .................. Texas 76-0474961
PACE Amphitheatres, Inc. (2) ............................ Texas 76-0250531
PACE Bayou Place, Inc. (2) .............................. Texas 76-0543571
PACE Communications, Inc. (2) ........................... Texas 76-0545041
PACE Concerts, Ltd. (2) ................................. Texas 76-0522083
PACE Concerts GP, Inc. (2) .............................. Texas 76-0522081
PACE Entertainment Corporation (2) ...................... Texas 74-1545442
PACE Entertainment Group, Ltd. (2) ...................... Texas 76-0522084
PACE Entertainment GP Corp. (2) ......................... Texas 76-0522082
PACE Milton Keynes, Inc. (2) ............................ Texas 76-0412384
PACE Motor Sports, Inc. (2) ............................. Texas 74-1990536
PACE Music Group, Inc. (2) .............................. Texas 76-0108294
PACE Productions, Inc. (2) .............................. Texas 76-0287817
PACE Theatrical Group, Inc. (2) ......................... Texas 76-0235495
PACE Touring, Inc. (2) .................................. Texas 76-0406630
PACE U.K. Holding Corporation (2) ....................... Texas 76-0412383
PACE Variety Entertainment, Inc. (2) .................... Texas 76-0546383
Pavilion Partners ....................................... Delaware 76-0306688
PEC, Inc. (3) ........................................... Nevada 86-0871934
Performing Arts Management of North Miami, Inc. ......... Florida 65-0245800
Polaris Amphitheater Concerts, Inc. ..................... Delaware 13-3948206
PTG-Florida, Inc. (5) ................................... Texas 58-1812340
QN Corp. ................................................ Connecticut pending
Rugrats American Tour, Ltd. ............................. Texas 76-0547132
SFX Acquisition Corp. ................................... Delaware pending
SFX Concerts of the Midwest, Inc. ....................... Delaware 13-3950590
SFX Concerts, Inc. ...................................... Delaware 13-3909179
SFX Delaware, Inc. ...................................... Delaware 13-3931550
SFX Network Group, L.L.C. ............................... Delaware N/A
SFX Sports Group, Inc. .................................. Delaware 13-4006446
SFX Touring, Inc. ....................................... Delaware 13-3993989
Shelli Meadows, Inc. .................................... California 95-4291320
Shoreline Amphitheatre, Ltd. (1) ........................ California 94-2997795
Shoreline Amphitheatre Partners (1) ..................... California 94-2997214
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
STATE OR OTHER I.R.S.
JURISDICTION OF EMPLOYER
INCORPORATION OR IDENTIFICATION
NAME, ADDRESS, TELEPHONE NUMBER ORGANIZATION NUMBER
- ----------------------------------------------------- ------------------ ---------------
<S> <C> <C>
SFX Radio Network, Inc. ............................. Pennsylvania 23-2828323
SM/PACE, Inc. (2) ................................... Texas 74-1855786
Southeast Ticketing Company ......................... Connecticut 06-1450527
Southern Promotions, Inc. ........................... Georgia 58-1421506
STEP Entertainment Services, Inc. ................... Canada N/A
Sunshine Concerts, L.L.C. ........................... Delaware 13-3951409
Sunshine Designs, L.P. .............................. Delaware 13-3951402
Sunshine Designs, Inc. .............................. Delaware 13-3948203
Suntex Acquisition, Inc. ............................ Delaware 13-3948208
Suntex Acquisition, L.P. ............................ Delaware 13-3951401
TAP Productions, Inc. ............................... Massachusetts 04-3178590
TBA Media, Inc. ..................................... California 95-3934091
Tennis Events, Inc. ................................. Florida 65-0646993
The Album Network, Inc. (6) ......................... California 93-3297803
The Gin Touring Company ............................. Florida 65-0825687
The Wedding Tour Company ............................ Texas 76-0548668
Ticket Service, Inc. ................................ Pennsylvania 25-1557403
Touring Artists Group, Inc. ......................... Florida 65-0394104
Touring Artists Group, Inc. ......................... Ohio 34-1708075
Touring Productions, Inc. (2) ....................... Texas 76-0161212
Tremont Street Theatre Corporation II, Inc. ......... Massachusetts 04-3279828
Tuneful Company, Inc. (2) ........................... Texas 34-1708075
Warrenton Street Theatre Corp. ...................... Massachusetts 13-3749267
West Coast Amphitheater Corp. ....................... California 95-4645319
Westbury Music Fair, L.L.C. ......................... Delaware 13-3984613
Western Amphitheater Partners ....................... California 76-0541785
Wolfgang Records (1) ................................ California 94-3223917
</TABLE>
- ----------
The mailing addresses and phone numbers for the additional registrants are as
follows:
(1) 260 Fifth Avenue, San Francisco, California 94142; (415) 541-0800.
(2) 515 Post Oak Boulevard, Suite 300, Houston, Texas 77027; (713) 693-8600.
(3) 1325 Airmotive Way, Suite 130, Reno, Nevada 89502; (702) 322-2221.
(4) 1401 South Brentwood Boulevard, St. Louis, Missouri 63144; (314)
962-4000.
(5) 100 South Biscayne Boulevard, Suite 1200, Miami, Florida 33131; (305)
379-2700.
(6) 120 North Victory Boulevard, 3rd Floor, Burbank, California 91502; (818)
955-4000.
iv
<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THE NEW NOTES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THE NEW NOTES, AND IT IS NOT SOLICITING AN OFFER TO BUY
THE NEW NOTES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1999
PROSPECTUS
[GRAPHIC OMITTED]
OFFER TO EXCHANGE ALL
OUTSTANDING 9 1/8% SENIOR SUBORDINATED NOTES DUE 2008
$200,000,000 PRINCIPAL AMOUNT
FOR
REGISTERED 9 1/8% SENIOR SUBORDINATED NOTES DUE 2008
$200,000,000 PRINCIPAL AMOUNT
We are offering you the opportunity to exchange your 9 1/8% Senior Subordinated
Notes due 2008 for our new 9 1/8% Senior Subordinated Notes due 2008 that are
registered under the Securities Act of 1933 in the exchange offer. Your Old
Notes are not registered under the Securities Act of 1933. Exchanging your Old
Notes for New Notes will provide you with notes that may be easier to sell and
transfer.
Material terms of the exchange offer:
o EXPIRATION. The exchange offer will expire at 5:00 p.m., New York
City time, on , 1999, unless we extend it.
o EXCHANGE. We will exchange all outstanding Old Notes that are validly
tendered and not validly withdrawn before the exchange offer expires.
o TERMS OF THE NOTES. The terms of the New Notes are substantially
identical to the Old Notes, except that the New Notes are registered
under the Securities Act of 1933. Certain transfer restrictions and
registration rights relating to the Old Notes do not apply to the New
Notes.
o WITHDRAWAL RIGHTS. You may withdraw tenders of Old Notes at any time
before the exchange offer expires.
o TAX CONSEQUENCES. We believe that the exchange of notes will not be a
taxable event for U.S. federal income tax purposes, but you should
see "United States Federal Tax Considerations" on page 185 for more
information.
o USE OF PROCEEDS. We will not receive any proceeds from the exchange
offer.
o TRADING. There is no existing market for the New Notes and we will
not apply to list them on any securities exchange.
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN RISKS
THAT YOU SHOULD CONSIDER BEFORE YOU TENDER YOUR OLD NOTES AND PARTICIPATE IN
THIS EXCHANGE OFFER.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the New Notes or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
This prospectus is dated February , 1999.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus and does
not contain all of the information that is important to you. We encourage you
to read all of the information in this prospectus carefully, including the
"Risk Factors" section, before you exchange your Old Notes. Unless otherwise
indicated, all references in this prospectus to "SFX," "Company," "we," "us,"
or "our" mean SFX Entertainment, Inc., including the entities acquired by SFX
and its subsidiaries. The pro forma information contained in this prospectus
gives effect to our acquisitions listed on page 39, our pending Marquee and
Cellar Door acquisitions as if they had occurred on January 1, 1997, an
offering of the Old Notes and a proposed equity offering of 4.8 million shares
of Class A common stock as if they had occurred on January 1, 1997. However,
the pending acquisitions or the proposed equity offering might not be
consummated on the terms described in this prospectus or at all.
SFX
SFX is the largest diversified promoter, producer and venue operator for
live entertainment events in the United States. Our major areas of focus within
the live entertainment industry include music, theater, sports and family
entertainment. We believe that our leadership position in the industry enhances
our ability to maximize ancillary revenue opportunities, including corporate
sponsorship sales, advertising, concession sales and product merchandising. For
the twelve months ended September 30, 1998, we had pro forma net revenue of
approximately $1.26 billion.
We own, partially or entirely, and/or operate 75 venues, constituting the
largest network of venues in the United States used principally for music
concerts and other live entertainment events. As a venue owner/operator, we
book and promote events in the venues that we control. We have 14 amphitheaters
in 9 of the top 10 markets, and own and/or operate venues in 30 of the top 50
markets overall. We also develop and manage touring Broadway shows, selling
subscription series in 38 markets.
During 1998, giving effect to our recent and pending Marquee and Cellar
Door acquisitions, approximately 35 million people attended 12,150 events
promoted and/or produced by SFX, including approximately 5,200 music concerts,
5,800 theatrical shows, over 800 family entertainment shows and over 350
specialized motor sports shows.
Our principal objectives are to maximize revenue and cash flow growth
opportunities by owning and/or operating leading live entertainment venues,
being a leading promoter and producer of live entertainment events and a
leading provider of talent representation services.
Since its formation in December 1997, SFX has pursued an aggressive
acquisition strategy, completing in excess of 20 acquisitions. In addition, we
have recently agreed to acquire Marquee Group, the Cellar Door group of
companies, interests in seven venues and other assets from entities controlled
by members of the Nederlander family, and Integrated Sports International. The
pending acquisitions are subject to a number of conditions, certain of which
are beyond our control. We are currently negotiating additional acquisitions of
live entertainment and related businesses.
SFX has filed a registration statement covering the proposed issuance of
approximately 4.8 million shares of Class A common stock. SFX expects to
consummate the proposed equity offering in mid February 1999. SFX intends to
use a portion of the net proceeds to pay the cash portion of the pending
acquisitions.
The address and telephone number of our principal executive offices are:
650 Madison Avenue, 16th Floor, New York, New York 10022; (212) 838-3100.
1
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer.......... We are offering to exchange up to $200,000,000
aggregate principal amount of our new 9 1/8%
Senior Subordinated Notes due 2008, or New Notes,
which have been registered under the Securities
Act of 1933, for a like amount of our outstanding
9 1/8% Senior Subordinated Notes due 2008, or Old
Notes, which we issued on November 25, 1998 in a
private offering. To exchange your Old Notes, you
must properly tender them and we must accept
them.
Expiration Date............. The exchange offer expires at 5:00 p.m., New
York City time, on , 1999, unless we extend
it.
Withdrawal Rights........... You may withdraw the tender of your Old Notes
at any time before 5:00 p.m., New York City time,
on the expiration date. If we decide for any
reason not to accept any Old Notes for exchange,
we will return your Old Notes without expense to
you promptly after the expiration or termination
of the exchange offer.
Conditions to the Exchange
Offer...................... The exchange offer is subject to customary
conditions, some of which we may waive. We
reserve the right to terminate and amend the
exchange offer at any time if any such condition
occurs before the expiration date.
Interest Payments........... The New Notes will bear interest from December
1, 1998. If we accept your Old Notes for
exchange, then you will waive all interest
accrued but not paid on such Old Notes.
Procedures for Tendering Old
Notes...................... If you are a holder of Old Notes who wishes to
accept the exchange offer for New Notes:
o you must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof;
o arrange for The Depository Trust Company to
transmit certain required information to the
exchange agent in connection with a
book-entry transfer; or
o mail or otherwise deliver such
documentation, together with your Old Notes,
to the exchange agent at the address set
forth under "The Exchange Offer--Exchange
Agent."
2
<PAGE>
Do not send Letters of Transmittal and
certificates representing Old Notes to us.
By tendering your Old Notes in this manner, you
will be representing, among other things, that:
o the New Notes you acquire pursuant to the
exchange offer are being acquired in the
ordinary course of your business;
o you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the New Notes issued
to you in the exchange offer; and
o you are not an "affiliate" of ours.
Special Procedures for Beneficial
Owners..................... If you are a beneficial owner whose Old Notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and wish to tender your Old Notes in the exchange
offer, please contact the registered owner as
soon as possible and instruct it to tender on
your behalf. If you wish to tender on your own
behalf, you must, prior to completing and
executing the Letter of Transmittal and
delivering your Old Notes, either arrange to have
your Old Notes registered in your name or obtain
a properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time.
Guaranteed Delivery
Procedures.................. If you wish to tender your Old Notes and time
will not permit your required documents to reach
the exchange agent by the expiration date, or the
procedure for book-entry transfer cannot be
completed on time, you may tender your Old Notes
according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for
Tendering Notes."
Appraisal or
Dissenters' Rights......... Owners of Old Notes do not have any appraisal or
dissenters' rights in the exchange offer.
Consequences of Not Exchanging
Old Notes.................. If you do not tender your Old Notes or we
reject your tender, you will not be entitled to
any further registration rights or exchange
rights, except under limited circumstances, and
your Old Notes will continue to be subject to
certain restrictions on transfer.
3
<PAGE>
However, your Old Notes will remain outstanding
and entitled to the benefits of the indenture
governing the notes.
Resales..................... We believe that you can offer for resale,
resell or otherwise transfer the New Notes
without complying with further registration and
prospectus delivery requirements of the
Securities Act if you make the representations
described above under "Procedures for Tendering
Old Notes."
If you are unable to make any of such
representations and you transfer any New Notes
without delivering a proper prospectus or
without qualifying for a registration exemption,
you may incur liability under the Securities Act
and applicable state securities laws. We will
not assume or indemnify you against such
liability.
Federal Tax Consequences.... Your exchange of Old Notes for New Notes
pursuant to the exchange offer generally will not
result in any gain or loss to you for United
States federal income tax purposes. For more
information, see "United States Federal Tax
Considerations."
Use of Proceeds............. We will receive no proceeds from the exchange
offer. We will pay all of our expenses related to
the exchange offer.
Exchange Agent.............. ChaseMellon Shareholder Services, L.L.C. is the
exchange agent for the exchange offer.
4
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The form and terms of the New Notes are substantially identical as the
form and terms of the Old Notes, except that the New Notes are registered under
the Securities Act. As a result, the New Notes do not bear legends restricting
their transfer and are not subject to the registration rights and liquidated
damage provisions contained in the Old Notes, except in limited circumstances.
The New Notes represent the same debt as the Old Notes. Both the Old Notes and
the New Notes are governed by the same indenture.
Securities Offered.......... $200,000,000 principal amount of our new 9 1/8%
Senior Subordinated Notes due 2008.
Maturity.................... December 1, 2008.
Interest Payment Dates...... June 1 and December 1, beginning June 1, 1999.
Subsidiary Guarantors....... Each guarantor is our subsidiary. However, not
all of our subsidiaries are guarantors of these
notes. If we cannot make payments on the notes
when they are due, the subsidiary guarantors must
make them instead.
Ranking..................... The New Notes and the subsidiary guarantees:
o are senior subordinated debts;
o are general unsecured obligations of ours;
o rank behind all of our existing and future
senior debt, and ahead or even with all of
our other debt; and
o rank even with our 9 1/8% Senior Subordinated
Notes due February 1, 2008.
Assuming we had completed the offering of the
Old Notes and the exchange of the New Notes on
September 30, 1998 and applied the proceeds as
intended, the New Notes and the subsidiary
guarantees:
o would have been subordinated to $207.0
million of senior debt; and
o would have ranked equally with $350.0
million of other senior subordinated debt.
Optional Redemption......... On or after December 1, 2003, we may redeem at
our option some or all of the New Notes at any
time at the redemption prices listed in the
section "Description of the New Notes--Optional
Redemption."
5
<PAGE>
Before December 1, 2001, we may redeem up to
$70.0 million of the New Notes with the proceeds
of certain public offerings of our equity at the
redemption price listed in the section
"Description of the New Notes--Optional
Redemption."
Mandatory Redemption........ If we sell certain assets or experience
specific kinds of changes of control, we must
offer to repurchase your New Notes at 101% of the
principal amount plus accrued interest through
the repurchase date. For more information, see
"Description of the New Notes-- Repurchase at the
Option of Holders--Change of Control."
Certain Covenants........... The indenture covering the notes contains
covenants that, among other things, restrict our
ability and the ability of our subsidiaries to:
o borrow money;
o sell assets;
o pay dividends on stock or purchase stock;
o make certain payments or investments;
o use assets as security in other
transactions; and
o sell or transfer certain assets or merge
with or into other companies.
For more information on covenants, see
"Description of the New Notes--Certain
Covenants."
RISK FACTORS
You should consider carefully all of the information set forth in this
prospectus and, in particular, the specific factors set forth under "Risk
Factors" before deciding to tender your Old Notes and participate in the
exchange offer.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
We are providing the following information to aid you in your analysis of
the financial aspects of this exchange offer. We derived this financial
information presented below from the audited and unaudited consolidated
financial statements of SFX and its predecessor. The information is only a
summary and you should read it in conjunction with our historical financial
statements and related notes appearing elsewhere in this document. See "Index
to Financial Statements." We derived the summary unaudited pro forma financial
information presented below from the SFX Unaudited Pro Forma Condensed Combined
Financial Statements included elsewhere in this prospectus.
The summary unaudited pro forma financial information gives effect to the
acquisitions completed by us in 1997 and 1998, the offering of the Old Notes,
the proposed equity offering and the pending acquisitions of Marquee and Cellar
Door as if they had occurred at the beginning of the periods presented. See
"SFX Unaudited Pro Forma Condensed Combined Financial Statements" and the table
"SFX Entertainment, Inc. Summary of Completed and Certain Pending Acquisitions"
on page 39 for selected financial information relating to each acquisition.
We expect to account for the pending Marquee and Cellar Door acquisitions
under the "purchase method." For accounting and financial reporting purposes,
we will allocate the purchase prices of the Marquee and Cellar Door
acquisitions to the assets acquired and liabilities assumed based on their
estimated fair values. SFX will allocate any excess purchase consideration to
goodwill and amortize such amount using the straight-line method over a period
of 15 years.
We believe that the operating performance of entertainment companies, such
as SFX, is measured, in part, by their ability to generate EBITDA. Further, we
use EBITDA as our primary indicator of our operating performance, and
secondarily as a measure of liquidity. "EBITDA" is defined as earnings before
interest, taxes, other income, net equity income (loss) from investments and
depreciation and amortization. Although EBITDA is not a measure of performance
calculated in accordance with GAAP, we believe that the industry accepts EBITDA
as a generally recognized measure of performance and that analysts who report
publicly on the performance of entertainment companies use EBITDA.
Nevertheless, you should not consider this measure in isolation or as a
substitute for operating income, net income, net cash provided by operating
activities or any other measure for determining the operating performance or
liquidity that is calculated in accordance with GAAP. EBITDA, as we calculate
it, may not be comparable to calculations of similarly titled measures
presented by other companies.
We believe there are adjustments that could affect EBITDA, but we have not
reflected them in the pro forma financial information. If we had made such
adjustments, Adjusted EBITDA on a pro forma basis would have been approximately
$116,875,000 for the year ended December 31, 1997 and $131,154,000 for the nine
months ended September 30, 1998. The adjustments include the elimination of
non-cash charges, the expected cost savings associated with the elimination of
duplicative staffing and general and administrative expenses in connection with
our 1998 acquisitions and the pending Marquee and Cellar Door acquisitions, and
include equity income from investments. While management believes that such
cost savings are achievable, our ability to fully achieve such cost savings is
subject to numerous factors, certain of which may be beyond our control.
7
<PAGE>
Depreciation and amortization includes $1,264,000 of integration costs
incurred during the nine months ended September 30, 1998.
We have reduced corporate expenses for consulting fees earned from
Triathlon Broadcasting Company of $1,794,000 for the year ended December 31,
1997 and $398,000 for the nine months ended September 30, 1998. SFX
Broadcasting Inc. assigned the right to receive consulting fees payable under
the agreement with Triathlon to us in connection with our spin-off from SFX
Broadcasting. Triathlon has agreed to be acquired by a third party, and when
acquired, it will cease paying consulting fees. If the acquisition does not
occur, future fees may vary, above the minimum annual fee of $500,000,
depending upon the level of acquisition and financing activities of Triathlon.
8
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
PRO FORMA
FOR THE 1997
ACQUISITIONS, THE
1998 ACQUISITIONS,
THE PENDING
MARQUEE
AND CELLAR DOOR
ACQUISITIONS,
THE OLD
NOTE OFFERING
PREDECESSOR AND THE PROPOSED
------------------------------------------------- EQUITY OFFERING
1993 1994 1995 1996 1997 1997
------------- ------------- ---------- ---------- -------------- --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenue .................... $46,526 $92,785 $47,566 $ 50,362 $ 96,144 $ 1,001,191
Operating expenses ......... 45,635 90,598 47,178 50,686 83,417 892,159
Depreciation &
amortization .............. 762 755 750 747 5,431 89,156
Corporate expenses ......... -- -- -- -- 2,206 8,000
Non-cash compensation
and other non-cash
charges ................... -- -- -- -- -- 1,367
------- ------- ------- -------- ------------ -----------
Operating income (loss) 129 1,432 (362) (1,071) 5,090 10,509
Interest expense ........... (148) (144) (144) (60) (1,590) (70,115)
Other income
(expense) ................. 85 138 178 198 295 4,280
Equity income (loss)
from investments .......... -- (9) 488 524 509 5,489
------- --------- ------- -------- ------------ -----------
Income (loss) before
income taxes .............. 66 1,417 160 (409) 4,304 (49,837)
Income tax provision ....... (57) (5) (13) (106) (490) (4,915)
------- --------- ------- -------- ------------ -----------
Net income (loss) .......... 9 1,412 147 (515) 3,814 (54,752)
Accretion on temporary
equity--stock subject
to redemption (1) ......... -- -- -- -- -- (3,601)
------- -------- ------- -------- ------------ -----------
Net income (loss)
applicable to common
shares .................... $ 9 $1,412 $ 147 $ (515) $ 3,814 $ (58,353)
======= ======== ======= ======== ============ ===========
Net income (loss) per
common share (2) .......... $ 0.26 $ (1.60)
------------ -----------
Weighted average
common shares
outstanding (2) ........... 14,445,061 37,085,751
OTHER OPERATING
DATA (3)
Cash flow from:
Operating activities ...... $2,959 $ (453) $ 4,214 $ 1,005
Investment activities ..... -- -- (435) (73,296)
Financing activities ...... (477) (216) (1,431) 78,270
Ratio of earnings to
fixed charges (4) ........ 1.2x 4.6x 1.4x -- 2.5 x --
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------
PRO FORMA
FOR THE 1997
ACQUISITIONS, THE
1998 ACQUISITIONS,
THE PENDING
MARQUEE
AND CELLAR DOOR
ACQUISITIONS,
THE OLD
NOTE OFFERING
AND THE PROPOSED
ACTUAL ACTUAL EQUITY OFFERING
1997 1998 1998
-------------- -------------- -------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenue .................... $ 74,396 $ 680,376 $ 1,037,148
Operating expenses ......... 63,045 602,538 910,731
Depreciation &
amortization .............. 4,041 40,381 71,808
Corporate expenses ......... 1,307 5,839 6,000
Non-cash compensation
and other non-cash
charges ................... -- 32,895 33,262
------------ ------------ -----------
Operating income (loss) 6,003 (1,277) 15,347
Interest expense ........... (956) (31,709) (52,587)
Other income
(expense) ................. 213 2,152 (670)
Equity income (loss)
from investments .......... 1,344 3,964 5,968
------------ ------------ -----------
Income (loss) before
income taxes .............. 6,604 (26,870) (31,942)
Income tax provision ....... (2,952) (3,333) (4,617)
------------ ------------ -----------
Net income (loss) .......... 3,652 (30,203) (36,559)
Accretion on temporary
equity--stock subject
to redemption (1) ......... -- (1,925) (2,711)
------------ ------------ -----------
Net income (loss)
applicable to common
shares .................... $ 3,652 $ (32,128) $ (39,270)
============ ============ ===========
Net income (loss) per
common share (2) .......... $ 0.25 $ (1.38) $ (1.07)
------------ ------------ -----------
Weighted average
common shares
outstanding (2) ........... 14,382,778 23,262,122 37,085,751
OTHER OPERATING
DATA (3)
Cash flow from:
Operating activities ...... $ 789 $ 22,307
Investment activities ..... (71,997) (852,240)
Financing activities ...... 78,302 889,543
Ratio of earnings to
fixed charges (4) ........ 3.1 x -- --
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1998
---------------------------------------------------------- ------------------------------
PRO FORMA
FOR THE PENDING
MARQUEE
AND CELLAR DOOR
ACQUISITIONS,
THE OLD NOTE
PREDECESSOR OFFERING AND
----------------------------------------------- THE PROPOSED
1993 1994 1995 1996 1997 ACTUAL EQUITY OFFERING
------------- ------------- --------- --------- ---------- ------------- ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets ................. $1,823 $4,453 $3,022 $6,191 $ 11,220 $ 165,727 $ 321,583
Property and equipment, net..... 4,484 3,728 2,978 2,231 59,685 275,000 312,881
Intangible assets, net ......... -- -- -- -- 60,306 904,929 1,088,621
Total assets ................... 6,420 8,222 6,037 8,879 146,942 1,391,548 1,776,513
Current liabilities ............ 4,356 3,423 3,138 7,973 21,514 166,540 175,512
Long-term debt, including
current portion ............... -- 1,830 -- -- 16,178 742,474 757,039
Temporary equity--stock
subject to redemption(1) ...... -- -- -- -- -- 16,500 19,920
Shareholders' equity ........... 6,420 2,969 2,900 907 102,144 396,211 751,183
</TABLE>
- ----------
(1) The PACE acquisition agreement provides that each PACE seller shall have an
option, exercisable during a period beginning on the fifth anniversary of
the closing of the PACE acquisition and ending 90 days thereafter, to
require SFX to purchase up to one-third of Class A common stock received
by that PACE seller, representing 500,000 shares in the aggregate, for a
cash purchase price of $33.00 per share. With certain limited exceptions,
the sellers may not assign the fifth year put option rights. We have
recorded the maximum amount payable under all fifth year put options,
$16,500,000, as temporary equity. For more information regarding the fifth
year put options, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
The ProServ acquisition agreement provides that Marquee may be required to
repurchase up to all of the 545,000 shares of Marquee common stock, which
equals 46,652 shares of Class A common stock after giving effect to the
Marquee acquisition. The maximum amount payable under the put option,
$3,420,000, has been recorded as temporary equity.
(2) Includes 500,000 shares of Class A common stock issued to the PACE sellers
in connection with the fifth year put options and 46,652 shares of Class A
common stock related to the ProServ put options issued by Marquee; these
shares are not included in calculating the net loss per common share.
(3) For a calculation of EBITDA and Adjusted EBITDA, see page 11.
(4) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consists of earnings before income taxes and fixed charges.
"Fixed charges" consists of interest on all indebtedness. Earnings were
insufficient to cover fixed charges by $393,000 for the year ended
December 31, 1996, $44,348,000 for the year ended December 31, 1997 pro
forma, $26,413,000 for the nine months ended September 30, 1998 and
$25,974,000 for the nine months ended September 30, 1998 pro forma.
10
<PAGE>
SFX ENTERTAINMENT, INC.
COMPUTATION OF EBITDA AND ADJUSTED EBITDA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
PRO FORMA
FOR THE 1997
ACQUISITIONS, THE
1998 ACQUISITIONS,
THE PENDING
MARQUEE
AND CELLAR DOOR
ACQUISITIONS,
THE OLD
NOTE OFFERING
PREDECESSOR AND THE PROPOSED
----------------------------------------------- EQUITY OFFERING
1993 1994 1995 1996 1997 1997
------------- ------------ --------- ---------- ----------- --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) .......... $ 9 $1,412 $ 147 $ (515) $ 3,814 $ (54,752)
Add back:
Depreciation and
amortization ............. 762 755 750 747 5,431 89,156
Interest expense .......... 148 144 144 60 1,590 70,115
Income tax provision ...... 57 5 13 106 490 4,915
Less:
Other income (expense)..... (85) (138) (178) (198) (295) (4,280)
Equity income from
investments .............. -- 9 (488) (524) (509) (5,489)
----- ------ ------- ------ ------- ---------
EBITDA ..................... 891 2,187 388 (324) 10,521 99,665
Add:
Non-cash compensation
and other non-cash
charges .................. -- -- -- -- -- 1,367
Equity income from
investments .............. -- (9) 488 524 509 5,489
Expected acquisition
related cost savings
related to the
elimination of
duplicative staffing
and general and
administrative
expenses ................. -- -- -- -- -- 10,354
----- ------- ------- ------ ------- ---------
Adjusted EBITDA ............ $ 891 $2,178 $ 876 $ 200 $11,030 $ 116,875
===== ======= ======= ====== ======= =========
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------
PRO FORMA
FOR THE 1997
ACQUISITIONS, THE
1998 ACQUISITIONS,
THE PENDING
MARQUEE
AND CELLAR DOOR
ACQUISITIONS,
THE OLD
NOTE OFFERING
AND THE PROPOSED
ACTUAL ACTUAL EQUITY OFFERING
1997 1998 1998
------------- ------------- -------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Net income (loss) .......... $ 3,652 $ (30,203) $ (36,559)
Add back:
Depreciation and
amortization ............. 4,041 40,381 71,808
Interest expense .......... 956 31,709 52,587
Income tax provision ...... 2,952 3,333 4,617
Less:
Other income (expense)..... (213) (2,152) 670
Equity income from
investments .............. (1,344) (3,964) (5,968)
-------- --------- ---------
EBITDA ..................... 10,044 39,104 87,155
Add:
Non-cash compensation
and other non-cash
charges .................. -- 32,895 33,262
Equity income from
investments .............. 1,344 3,964 5,968
Expected acquisition
related cost savings
related to the
elimination of
duplicative staffing
and general and
administrative
expenses ................. -- -- 4,769
-------- --------- ---------
Adjusted EBITDA ............ $ 11,388 $ 75,963 $ 131,154
======== ========= =========
</TABLE>
11
<PAGE>
RISK FACTORS
You should consider carefully the following risk factors and all of the
information set forth in this prospectus before tendering your Old Notes and
participating in the exchange offer. This prospectus contains forward-looking
statements which involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth in the following risk
factors and elsewhere in this prospectus. See "Safe Harbor for Forward-Looking
Statements."
RISKS RELATING TO THE NOTES
YOU MAY SUFFER NEGATIVE CONSEQUENCES IF YOU DO NOT EXCHANGE YOUR NOTES.
If you do not exchange your Old Notes for the New Notes pursuant to the
exchange offer, you will continue to be subject to the restrictions on transfer
of your Old Notes described in the legend on your Old Notes. In general, you
may only offer or sell the Old Notes if they are registered under the
Securities Act and applicable state securities laws, or offered and sold
pursuant to an exemption from such requirements. We do not intend to register
the Old Notes under any law. In addition, if you exchange your Old Notes in the
exchange offer for the purpose of participating in a distribution of the
exchange notes, you may be deemed to have received restricted securities and,
if so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
To the extent Old Notes are tendered and accepted in the exchange offer, the
trading market, if any, for the Old Notes would be damaged. For more
information on the consequences of not exchanging your Old Notes, see "The
Exchange Offer--Consequences of Failure to Exchange."
SFX HAS A SUBSTANTIAL AMOUNT OF DEBT, WHICH MAY HARM OUR FINANCIAL HEALTH
AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES.
We have a substantial amount of debt, and the amount of our debt is likely
to substantially increase in the future. Our consolidated debt as of September
30, 1998 would have been approximately $757.0 million, on a pro forma basis
after giving effect to the pending Marquee and Cellar Door acquisitions, the
proposed equity offering and the offering of the Old Notes.
The amount of our debt could have significant negative consequences for us
and for your investment in us. These consequences include:
o making it more difficult for us to make payments required by the notes;
o making us more vulnerable to general adverse economic and industry
conditions;
o limiting our ability to obtain money to pay for future acquisitions,
working capital, capital expenditures and other general corporate
requirements;
o dedicating more of our cash flow to paying off our debt, which will
reduce the amount of cash available to pay for working capital, capital
expenditures or other general corporate needs;
o limiting our flexibility in planning for, or reacting to, changes in
our business and the industry; and
o placing us at a competitive disadvantage to competitors that have less
debt.
12
<PAGE>
Our ability to pay principal and interest on our debt on time, to
refinance our debt, or to pay for planned expenditures will depend on various
factors, some of which we will not be able to control. These factors include
restrictions contained in our credit facility and the indentures relating to
the Old Notes and the Notes due February 2008, which may limit our ability to,
among other things, borrow additional funds. We may be unable to generate
enough money to pay our debts because of insufficient cash flow from operations
or because we are not able to raise additional capital funds by selling
securities. We may also be required to refinance a part of our debt before the
debt matures. For more details about our financial resources, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
SFX, AS A HOLDING COMPANY, DEPENDS ON ITS SUBSIDIARIES TO MEET ITS
FINANCIAL OBLIGATIONS.
We are a holding company with no significant assets other than the stock
of our subsidiaries. In order to meet our financial needs, we will rely
exclusively on repayments of interest and principal on intercompany loans made
by us to our operating subsidiaries and income from dividends and other cash
flow from such subsidiaries. We cannot assure you that our operating
subsidiaries will generate sufficient net income to pay upstream dividends or
cash flow to make payments of interest and principal to us in respect of our
intercompany loans.
YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES IS JUNIOR TO OUR EXISTING
INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS.
The notes and the subsidiary guarantees rank behind all the indebtedness
of us and our subsidiaries which guarantee the notes, other than trade
payables, and all of our and their future borrowings, other than trade
payables, except any future indebtedness that expressly provides that it ranks
equal with, or subordinated in right of payment to, the notes and the
guarantees. The notes rank the same as our Notes due February 2008 in the
principal amount of $350.0 million. As a result, upon any distribution to our
creditors or the creditors of the Subsidiary Guarantors in a bankruptcy,
liquidation or reorganization or similar proceeding relating to us or the
Subsidiary Guarantors or our or their property, the holders of our senior debt
and of the Subsidiary Guarantors will be entitled to be paid in full in cash
before any payment may be made with respect to the notes or the subsidiary
guarantees.
In addition, all payments on the notes and the guarantees will be blocked
in the event of a payment default on senior debt and may be blocked for up to
179 days each year in the event of certain non-payment defaults on senior debt.
If a bankruptcy, liquidation or reorganization or similar proceeding
relating to us or the Subsidiary Guarantors occurs, holders of the notes will
participate with trade creditors and all other holders of our subordinated
indebtedness and of the Subsidiary Guarantors in the assets remaining after we
and the Subsidiary Guarantors have paid all of the senior debt. In any of these
cases, we and the Subsidiary Guarantors may not have sufficient funds to pay
all of our creditors and holders of notes may receive less, pro rata, than the
holders of senior debt.
Our obligations under the notes are subordinate and junior in right of
payment to all of our existing and future senior debt. As of September 30,
1998, on a pro forma basis giving effect to the pending Marquee and Cellar Door
acquisitions, the proposed equity offering, and the offering of the Old Notes,
approximately $700.0 million of our total consolidated indebtedness would have
been senior debt, including approximately $150.0 million of
13
<PAGE>
borrowings under the senior credit facility. The indenture allows us to borrow
substantial additional indebtedness, including senior debt, in the future. See
"Description of Indebtedness."
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES COULD BE ADVERSELY AFFECTED IF
ANY OF SFX'S NON-GUARANTOR SUBSIDIARIES DECLARES BANKRUPTCY, LIQUIDATES OR
REORGANIZES.
Some but not all of our subsidiaries guarantee the notes. In a bankruptcy,
liquidation or reorganization of any of the non-guarantor subsidiaries, holders
of their indebtedness and their trade creditors will generally be entitled to
payment of their claims from the assets of those subsidiaries before any assets
are made available for distribution to us. Assuming we had completed the
offering of the Old Notes on September 30, 1998, the notes would have been
effectively junior to $207.0 million of indebtedness and other liabilities,
including trade payables, of these non-guarantor subsidiaries and approximately
$197.0 million would have been available to those subsidiaries for future
borrowing under our credit facility after giving effect to our pending
acquisitions. The non-guarantor subsidiaries generated 2% of our consolidated
revenues and 3% of our consolidated EBITDA in the nine-month period ended
September 30, 1998 and held 3% of our consolidated assets as of September 30,
1998, in each case after giving effect to our pending Marquee and Cellar Door
acquisitions.
SFX'S CREDIT FACILITY AND INDENTURES RESTRICT ITS OPERATIONS.
Our indentures and our credit facility restrict our ability and our
subsidiaries' ability to, among other things:
o sell or transfer assets;
o incur additional debt;
o repay other debt;
o pay dividends;
o make certain investments or acquisitions;
o repurchase or redeem capital stock;
o engage in mergers or consolidations; and
o engage in certain transactions with subsidiaries and affiliates.
The indentures and the credit facility also require us to comply with
certain financial ratios, as discussed in "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
These restrictions may interfere with our ability to obtain financing or
to engage in other necessary or desirable business activities.
If we cannot comply with the requirements in our credit facility, then the
lenders may require us to repay immediately all of the outstanding debt under
our credit facility. If our debt payments were accelerated, our assets might
not be sufficient to fully repay our debt. These lenders may also require us to
use all of its available cash to repay our debt or may prevent us from making
payments to other creditors on certain portions of our outstanding debt.
We may not be able to obtain a waiver of these provisions or refinance our
debt, if needed. In such a case, our business, results of operations and
financial condition would suffer.
14
<PAGE>
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO
VOID GUARANTEES AND REQUIRE NOTE HOLDERS TO RETURN PAYMENTS FROM GUARANTORS.
Any of our creditors may file a lawsuit objecting to our obligations under
the New Notes or the use of the proceeds from the Old Notes. A court could void
our obligations under the New Notes, subordinate the New Notes to our other
debt or order the holders to return any amounts paid for the Old Notes to us or
to a fund benefitting the creditors if the court finds we intended to defraud a
creditor, or did not receive fair value for the Old Notes, and we either:
o were insolvent or became insolvent by offering the Old Notes;
o did not have enough capital to engage in our business; or
o intended to or believed that we overextended our debt obligations.
Creditors of the Subsidiary Guarantors may also object to the Subsidiary
Guarantors' guarantees of the New Notes. In such circumstances, a court could
order the relief outlined above for the same reasons outlined above. In
addition, the creditors of the Subsidiary Guarantors could claim that since the
guarantees were made for our benefit, the Subsidiary Guarantors did not receive
fair value for the guarantees.
The measure of insolvency for fraudulent transfer laws will vary in
different jurisdictions. We believe that at the time we incurred the debt
constituting the Old Notes and the subsidiary guarantees, we and the Subsidiary
Guarantors were neither insolvent nor to be rendered insolvent as a result. We
cannot assure you, however, that a court passing on the same questions would
reach the same conclusions.
SFX MAY NOT HAVE THE FUNDS NECESSARY TO FINANCE A CHANGE OF CONTROL OFFER
FOR THE NOTES.
Upon the occurrence of certain change of control events, we will be
required to repay significant debt and offer to repurchase all outstanding
notes. If Mr. Sillerman directly or indirectly owns less than 30% of the
combined voting power of the Class A and Class B common stock of SFX, then a
"Change in Control" will occur under the senior credit facility. This would
require us to repay all outstanding debt under the senior credit facility. Mr.
Sillerman's voting power will decrease to 34.3% after giving effect to the
pending Marquee and Cellar Door acquisitions and the proposed equity offering.
This amount will decrease if we sell additional voting stock to third parties
or issue it in acquisitions.
In addition, if anyone other than Mr. Sillerman owns over 35% of the
voting power of SFX common stock, we are required to offer to repurchase the
notes and the Notes due February 2008 at 101% of their principal amount plus
accrued interest and liquidated damages. If a change of control were to occur,
we cannot assure you that we would have sufficient money or be able to arrange
financing to perform the obligations or that the restrictions in other
indebtedness permit us from performing our obligations. The indenture does not
protect holders of notes from certain corporate transactions such as a highly
leveraged transaction, reorganization, restructuring, merger or similar event
that does not result in a change of control. You should read "Description of
the New Notes--Repurchase at the Option of Holders--Change of Control" and
"Description of Indebtedness" for more information.
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IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP FOR THESE NOTES, IT WILL BE
DIFFICULT TO SELL THESE NOTES OR TO RECEIVE AN ATTRACTIVE PRICE.
The New Notes have no existing trading market. We do not intend to apply
for listing or quotation of the New Notes on any exchange. Therefore, we do not
know the extent to which investor interest will lead to the development of a
trading market or how liquid that market might be. We also cannot assure you
regarding your ability to sell New Notes or the price at which the New Notes
might be sold. Although the initial purchasers of the Old Notes have informed
us that they currently intend to make a market in the New Notes, they are not
obligated to do so, and any such market-making may be discontinued at any time
without notice. As a result, the market price of the New Notes could be harmed.
Historically, the market for non-investment grade debt, such as the New Notes,
has been subject to disruptions that have caused substantial volatility in the
prices of such securities. Any such disruptions may reduce the value of the New
Notes.
COMPANY SPECIFIC RISKS
IF SFX IS UNABLE TO INTEGRATE THE OPERATIONS OF ITS VARIOUS BUSINESSES,
ITS OVERALL BUSINESS MAY SUFFER.
We have grown rapidly since our formation in December 1997, mainly by
acquiring established live entertainment businesses. If we are unable to
integrate our various businesses effectively, then our business, financial
condition and operating results may suffer. As of September 30, 1998, on a pro
forma basis, our 1998 acquisitions represented 74% of our revenues and 67% of
our assets, while the pending Marquee and Cellar Door acquisitions collectively
represented 11% of our revenues and 16% of our assets.
As you evaluate our prospects, you should consider the many risks we will
encounter during our process of integrating these acquired businesses,
including:
o the distraction of management's attention from other business concerns;
o our entry into markets where we have previously limited or no
experience; and
o potential loss of key employees or customers of the acquired
businesses.
Although our management has significant experience, it may be unable to
effectively integrate the acquired businesses and/or integrate Marquee, Cellar
Door and/or other companies we expect to acquire in our pending acquisitions,
if such acquisitions are consummated, without encountering the difficulties
described above, and the combined companies may not benefit as expected from
the integration.
IF SFX IS UNABLE TO COMPLETE ITS PENDING ACQUISITIONS, SFX'S BUSINESS MAY
SUFFER.
Our pending acquisitions are important components in the implementation of
our overall business strategy. However, we may be unable to complete our
pending acquisitions on the terms described in this prospectus or at all. If
the trading price of Class A common stock reflects the market's expectation
that we will complete our pending acquisitions, then the price of Class A
common stock may drop if we are unable to complete these acquisitions.
IF SFX IS UNABLE TO COMPLETE OTHER ACQUISITIONS IN THE FUTURE, SFX'S
BUSINESS MAY SUFFER.
We are currently negotiating additional acquisitions and expect to seek
additional acquisitions of live entertainment and related businesses in the
future. However, we may be unable to:
o identify and acquire additional suitable businesses;
o obtain the financing necessary to acquire the businesses; or
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o obtain lenders' consents under our credit facility to acquire the
businesses.
Our inability to obtain financing for future acquisitions or to complete
acquisitions due to regulatory concerns could damage our business, financial
condition and results of operations.
Even if we are able to complete future acquisitions, they could result in
our issuance of more of our stock, which may dilute the value of existing
common stock; incurring a substantial amount of additional debt; and/or
amortizing expenses related to goodwill and other intangible assets. Any or all
of these actions could damage our business, financial condition and results of
operations.
SFX MAY BE FORCED TO SELL SOME OF ITS SUBSIDIARIES, WHICH MAY PREVENT SFX
FROM REALIZING THE FULL VALUE OF THESE SUBSIDIARIES.
We have granted rights to re-purchase some of our subsidiaries. These
rights may discourage potential bidders for the affected assets from
negotiating with us, and may keep us from realizing the full productive value
of these subsidiaries over time.
PACE. In connection with our acquisition of PACE Entertainment
Corporation, Brian Becker received an option to acquire PACE's then existing
motor sports business--or, if that business is sold, PACE's then existing
theatrical business--at its fair market value. Mr. Becker may only exercise
this option within 15 days after February 25, 2000. Mr. Becker's exercise of
this option would result in termination of his employment agreement. Mr.
Becker's exercise of this option could damage our business, financial condition
and results of operations.
In addition, from February 25, 1999 to February 25, 2000, Mr. Becker will
also have a right of first refusal under certain circumstances to acquire
PACE's then existing theatrical or motor sports line of business at a price
equal to 95% of any proposed purchase price by a third party. On a pro forma
basis for our 1998 acquisitions and the pending Marquee and Cellar Door
acquisitions, specialized motor sports would have accounted for approximately
5%, and theatrical would have accounted for approximately 21%, of our total net
revenues for the nine months ended September 30, 1998.
DON LAW. In connection with our acquisition of Blackstone Entertainment,
LLC, also known as "Don Law," we granted the seller a right of first offer and
refusal. The right allows the seller to purchase, with certain exceptions, the
assets we acquired in the acquisition if we elect to sell those assets before
July 2, 2000.
BGP. We have agreed that we will not sell the assets of BG Presents, Inc.
before February 24, 2001, without giving the sellers the opportunity to
purchase the assets on the same terms.
In addition, we have granted similar rights of first refusal to sellers in
certain other acquisitions.
SFX MAY HAVE LOWER REVENUES BECAUSE IT IS UNABLE TO SECURE APPROPRIATE
ARTISTS, EVENTS AND VENUES.
As a participant in the live entertainment industry, our ability to
generate revenues is highly sensitive to public tastes, which are
unpredictable. A change in public tastes, an increase in competition or a lack
of performer or event availability could damage our business, financial
condition and results of operations. Similarly, our ability to generate
revenues from live entertainment events may be limited if other competitive
forms of entertainment are available. Since we rely on unrelated parties to
create and perform live entertainment content, any lack of availability of
popular musical artists, touring Broadway shows, specialized motor sports
talent and other performers could limit our ability to generate revenues.
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We require access to venues to generate revenues from live entertainment
events. We operate a number of our live entertainment venues under leasing or
booking agreements. Our long-term success will depend in part on our ability to
renew these agreements when they expire or end. We may be unable to renew these
agreements on acceptable terms or at all, and we may be unable to obtain
favorable agreements with new venues.
SFX MAY HAVE ENVIRONMENTAL LIABILITIES THAT COULD AFFECT ITS RESULTS OR
OPERATIONS OR FINANCIAL CONDITION.
We may be subject to significant environmental liabilities. We own or
lease, or have other contractual interests in, numerous pieces of real
property, many of which we recently acquired. Our properties are subject to
environmental laws and regulations relating to the use, storage, disposal,
emission and release of hazardous and non-hazardous substances or materials.
Our properties may also be subject to noise level restrictions, which may
affect, among other things, the hours of operation of our venues. Additionally,
certain laws and regulations could hold us strictly, jointly and severally
responsible for the correction of hazardous substance contamination at our
facilities or at third-party waste disposal sites, and could hold us
responsible for any personal or property damage related to the contamination.
THE DEPARTMENT OF JUSTICE INVESTIGATION MAY HARM SFX'S OPERATIONS.
We have received a preliminary inquiry from the Department of Justice
seeking information on our acquisitions of live entertainment venues and
businesses throughout the United States. The Department of Justice is
investigating whether these acquisitions might give us undue market power in
producing, promoting or exhibiting live entertainment events. We have
cooperated with the Department of Justice, and believe that our operations and
plan of acquisitions comply with applicable antitrust laws. However, if the
Department of Justice disagrees, it might file a lawsuit to force us to divest
ourselves of some of our operations. Such a lawsuit could have a material
adverse impact on our business, results of operations and financial condition.
For more information concerning the Department of Justice's preliminary
inquiry, see "Business--Regulatory Matters."
POTENTIAL CONFLICTS OF INTEREST MAY AFFECT SFX'S OPERATIONS.
We are subject to potential conflicts of interest arising out of our
relationship with our affiliates. We have issued, and may issue in the future,
shares of Class B common stock, which has 10 votes per share in most matters.
Robert F.X. Sillerman and Michael G. Ferrel will control approximately 37.9% of
our total voting power after the consummation of the pending Marquee and Cellar
Door acquisitions and the proposed equity offering. Messrs. Sillerman and
Ferrel are also officers and directors of ours. The holders of these shares
will probably have the ability to control certain decisions concerning the
management of SFX which may present conflicts of interest between the holders
of the notes and the holders of the Class B common stock. The holders of Class
B common stock generally will have the ability to control our business affairs
and to determine the outcome of most corporate transactions or other matters
requiring stockholder approval. Such matters requiring stockholder approval
include, among others:
o an amendment to our articles of incorporation;
o the authorization of additional shares of capital stock; and
o a merger, consolidation or sale of all or substantially all of our assets
or stock.
The holders of Class B common stock thus can prevent or cause a change of
control of SFX, either of which may adversely affect us or our results of
operations.
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SFX'S OPERATIONS MAY SUFFER FROM YEAR 2000 COMPUTER PROBLEMS.
Year 2000 issues exist when computers record dates using two digits rather
than four, and then use the dates for arithmetic operations, comparisons or
sorting. A two-digit recording may recognize a date using "00" as 1900 rather
than 2000, which could cause computer systems to perform inaccurate
computations or fail to operate. Although we do not anticipate being subject to
a material impact in this area, if we and the companies with which we do
business do not take adequate preventative action, then the Year 2000 problem
could damage our business, financial condition and results of operations. For
more information concerning our Year 2000 compliance issues, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Year 2000 Compliance."
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the Old Notes on November 25, 1998 to Morgan Stanley & Co.
Incorporated, Lehman Brothers Inc., BancBoston Roberston Stephens Inc. and BNY
Capital Markets, Inc. (collectively, the "Initial Purchasers") pursuant to a
purchase agreement. The Initial Purchasers subsequently placed the Old Notes
with qualified institutional buyers in reliance on Rule 144A under the
Securities Act of 1933 and in non-U.S. transactions pursuant to Regulation S
under the Securities Act. As a condition to the sale of the Old Notes, SFX, the
Subsidiary Guarantors and the Initial Purchasers entered into the Registration
Rights Agreement on November 25, 1998.
Pursuant to the Registration Rights Agreement, we agreed that, unless the
exchange offer is not permitted by applicable law or Securities and Exchange
Commission policy, we would:
o file with the Commission a registration statement under the Securities Act
with respect to the New Notes within 100 days of such agreement's
execution;
o use its best efforts to cause such registration statement to become
effective under the Securities Act within 145 days of such agreement's
execution; and
o upon effectiveness of the registration statement, commence the exchange
offer and use its best efforts to maintain the effectiveness of the
registration statement and keep the exchange offer open for at least 20
business days.
A copy of the Registration Rights Agreement is filed as a copy to the
registration statement of which this prospectus is a part. We are making this
exchange offer to satisfy our obligations under the Registration Rights
Agreement. The term "holder," with respect to the exchange offer, means any
person in whose name Old Notes are registered on our books or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose Old Notes are held of record by The Depository Trust Company
("DTC"). Other than pursuant to the Registration Rights Agreement, we are not
required to file any registration statement to register any outstanding Old
Notes. Holders of Old Notes who do not tender their Old Notes or whose Old
Notes are tendered but not accepted would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act, if they wish to sell their Old Notes.
RESALE OF THE NEW NOTES
We are making the exchange offer in reliance on the position of the staff
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, we have not sought our own
interpretive letter and there can be no assurance that the staff would make a
similar determination with respect to the exchange offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Commission, we believe that a holder who exchanges the Old Notes
for the New Notes in the ordinary course of business and who is not
participating, does not intend to participate, and has no arrangement with any
person to participate, in the distribution of the New Notes, will be allowed to
resell the New Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the New Notes a
prospectus that satisfies the requirements of the Securities Act.
Any holder of Old Notes who is an "affiliate" of ours or who intends to
distribute the New Notes, or any broker-dealer who purchased Old Notes from us
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act:
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o cannot rely on the staff's interpretations in the above-mentioned
interpretive letters;
o cannot tender Old Notes in the exchange offer; and
o must comply with the registration and prospectus delivery requirements of
the Securities Act to transfer the Old Notes, unless the sale is exempt.
In addition, if any broker-dealer acquired Old Notes for its own account
as a result of market-making or other trading activities and exchanges the Old
Notes for the New Notes, the broker-dealer must deliver a prospectus with any
resales of the New Notes.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. A broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act if it makes this
acknowledgment and delivers a prospectus in connection with any resale. A
broker-dealer may use this prospectus, as it may be amended or supplemented
from time to time, in connection with resales of New Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as a
result of market-making or other trading activities. Pursuant to the
Registration Rights Agreement, we agreed to make this prospectus, as it may be
amended or supplemented from time to time, available to broker-dealers for use
in connection with any resale for a period of 180 days after the Commission
declares the registration statement effective. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING NOTES
Subject to the terms and conditions set forth in this prospectus and in
the accompanying Letter of Transmittal, we will accept for exchange Old Notes
which are properly tendered on or prior to the Expiration Date and not
withdrawn as permitted below. We will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
surrendered pursuant to the exchange offer. As used in this prospectus, the
term "Expiration Date" means 5:00 p.m., New York City time, on , 1999;
provided, however, that if we, in our sole discretion, have extended the period
of time for which the exchange offer is open, the term "Expiration Date" means
the latest time and date to which we extend the exchange offer.
The form and terms of the New Notes are substantially identical as the
form and terms of the Old Notes, except that:
o the New Notes are registered under the Securities Act and, therefore, the
New Notes do not bear legends restricting their transfer; and
o holders of the New Notes will not be entitled to the rights of holders of
Old Notes under the Registration Rights Agreement, which rights will
terminate upon the consummation of the exchange offer.
The New Notes will evidence the same debt as the Old Notes, which they replace.
The New Notes will be issued under, and be entitled to the benefits of, the
indenture, which authorized the issuance of the Old Notes. The indenture will
treat the Old Notes and the New Notes as a single class of debt securities.
As of the date of this prospectus, $200.0 million aggregate principal
amount of the Old Notes are outstanding. This prospectus and the Letter of
Transmittal are first being sent on
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or about , 1999, to all holders of Old Notes known to us. Our obligation
to accept Old Notes for exchange pursuant to the exchange offer is subject to
certain conditions as set forth below under "--Certain Conditions to the
Exchange Offer."
Holders of the Old Notes do not have any appraisal or dissenters' rights
under the indenture in connection with the exchange offer. We intend to conduct
the exchange offer in accordance with the provisions of the registration rights
agreement and the applicable requirements of the Securities Act, the Securities
and Exchange Act of 1934, as amended, and the related rules and regulations of
the Commission.
If holders do not tender Old Notes or tender Old Notes that we do not
accept, their Old Notes will remain outstanding. Any Old Notes will be entitled
to the benefits of the indenture, but will not be entitled to any further
registration, except under limited circumstances. See "Risk Factors--Risks
Relating to the Notes--You may suffer negative consequences if you do not
exchange your notes."
We expressly reserve the right, at any time or from time to time, to
extend the period of time during which the exchange offer is open, and thereby
delay acceptance for exchange of any Old Notes, by giving written notice of
such extension to the Old Note holders as described below. During any such
extension, all Old Notes previously tendered will remain subject to the
exchange offer, and we may accept such notes for exchange. We will return at no
expense to the holder, any Old Notes not accepted for exchange as promptly as
practicable after the expiration or termination of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any Old Notes not already accepted for exchange,
if any of the events specified below under "--Certain Conditions to the
Exchange Offer" should occur. We will give written notice of any extension,
amendment, nonacceptance or termination to the holders of the Old Notes as
promptly as practicable. We will issue notices, in the case of any extension of
the exchange offer, by means of a press release or other public announcement no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
PROCEDURES FOR TENDERING NOTES
Tender
When an Old Note holder validly tenders, and we accept, the Old Notes,
this will constitute a binding agreement between us and such holder subject to
the terms and conditions set forth in this prospectus and the Letter of
Transmittal.
To validly tender in the exchange offer, a holder must transmit a properly
completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to Chase Mellon Shareholder
Services, L.L.C., the exchange agent, at one of the addresses set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition, either:
o the exchange agent must receive the certificates for the Old Notes and the
Letter of Transmittal; or
o the exchange agent must receive, prior to , 1999, a timely
confirmation of a book-entry transfer of such Old Notes into the exchange
agent's account at DTC according to the procedure for book-entry transfer
described below; or
o the holder must comply with the guaranteed delivery procedures described
below.
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If you tender fewer than all of your Old Notes, you should fill in the
amount of notes tendered in the appropriate box on the Letter of Transmittal.
If you do not indicate the amount tendered in the appropriate box, we will
assume you are tendering all Old Notes that you hold.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT YOUR OWN ELECTION AND RISK. DELIVERY OF DOCUMENTS TO
DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. DO NOT SEND LETTERS OF TRANSMITTAL
OR OLD NOTES TO US.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Old Notes promptly and
instruct such registered holder of Old Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing the Letter of
Transmittal and delivering its Old Notes, either:
o make appropriate arrangements to register ownership of the Old Notes in such
beneficial owner's name; or
o obtain a properly completed bond power from the registered holder of the Old
Notes.
The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
are tendered:
o by a registered Old Note holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal; or
o for the account of an Eligible Institution.
An "Eligible Institution" is a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or by a commercial bank or trust company having an office or
correspondent in the United States. If signatures on a Letter of Transmittal or
a notice of withdrawal are required to be guaranteed, the guarantor must be an
Eligible Institution. If Old Notes are registered in the name of a person other
than a signer of the Letter of Transmittal, the Old Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by us
in our sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
Determination of Validity
We, in our sole discretion, will determine all questions as to the
validity, form, eligibility, including time of receipt, and acceptance of Old
Notes tendered for exchange. Our determination will be final and binding. We
reserve the absolute right to reject any and all tenders of Old Notes
improperly tendered or to not accept any Old Notes which acceptance might, in
our judgment or that of our counsel, be unlawful. We also reserve the absolute
right to waive any defects or irregularities or conditions of the exchange
offer as to any Old Notes either before or after the Expiration Date, including
the right to waive the ineligibility of any holder who seeks to tender Old
Notes in the exchange offer. We need not waive similar conditions or
irregularities in the case of other Old Notes. Our interpretation of the
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terms and conditions of the exchange offer as to any particular Old Notes
either before or after the Expiration Date, including the Letter of Transmittal
and the instructions thereto, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as we shall
determine. Neither we, the exchange agent nor any other person shall be under
any duty to give notification of any defect or irregularity with respect to any
tender of Old Notes for exchange, nor shall any of us incur any liability for
failure to give such notification.
If a person or persons other than the registered holder or holders of Old
Notes signs the Letter of Transmittal, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered holder or holders that appear on the Old
Notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the Letter of Transmittal or any Old Notes or powers of attorney,
such persons should so indicate when signing, and you must submit proper
evidence satisfactory to us of such persons' authority to so act unless we
waive this requirement.
By tendering, each holder will represent to us that, among other things:
(1) the New Notes to be acquired by the holder of the Old Notes in connection
with the exchange offer are being acquired by the holder in the ordinary
course of business of the holder;
(2) the holder has no arrangement or understanding with any person to
participate in the distribution of New Notes;
(3) the holder acknowledges and agrees that any person who is a broker-dealer
registered under the Exchange Act or is participating in the exchange
offer for the purposes of distributing the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the New Notes
acquired by such person and cannot rely on the position of the staff of
the Commission set forth in certain no-action letters;
(4) the holder understands that a secondary resale transaction described in
clause (3) above and any resales of New Notes obtained by such holder in
exchange for Old Notes acquired by such holder directly from us should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or Item 508, as
applicable, of Regulation S-K of the Commission; and
(5) the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of ours.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
We will issue to the exchange agent New Notes for Old Notes validly
tendered and accepted and not validly withdrawn promptly after the Expiration
Date. See "--Certain Conditions to the Exchange Offer" below. For purposes of
the exchange offer, we will be deemed to have accepted properly tendered Old
Notes for exchange when, as and if we have given oral or written notice to the
exchange agent, with written confirmation of any oral notice to be given
promptly thereafter. The exchange agent might not deliver the New Notes to all
tendering holders at the same time. The timing of delivery depends upon when
the exchange agent receives and processes the required documents.
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For each Old Note accepted for exchange, the Old Note holder will receive
a New Note having a principal amount at maturity equal to that of the
surrendered Old Note. The New Notes bear interest at a rate equal to 9 1/8% per
annum. Interest on the New Notes is payable semi-annually on each December 1
and June 1, commencing on June 1, 1999. Registered holders of the New Notes on
the relevant record date for the first interest payment date following the
consummation of the exchange offer will receive interest accruing from the most
recent date to which interest has been paid on the Old Notes. Holders of Old
Notes that are accepted for exchange will be deemed to have waived the right to
receive any interest accrued on the Old Notes.
In all cases, the issuance of New Notes for Old Notes that are accepted
for exchange pursuant to the exchange offer will be made only after the
exchange agent timely receives either certificates for such Old Notes or
book-entry confirmation of such Old Notes into the exchange agent's account at
DTC, a properly completed and duly executed Letter of Transmittal and all other
required documents. If for any reason set forth in the terms and conditions of
the exchange offer we do not accept any tendered Old Notes, or if Old Notes are
submitted for a greater amount than the holder desires to exchange, we will
return such unaccepted or non-exchanged Old Notes without expense to the
tendering holder--or, in the case of Old Notes tendered by book-entry
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with DTC--as promptly as practicable after the expiration or
termination of the exchange offer.
The exchange agent is an agent for SFX for receiving tenders of the Old
Notes, Letters of Transmittal and related documents. The exchange agent is also
an agent for tendering holders for receiving the Old Notes, Letters of
Transmittal and related documents and transmitting the New Notes to validly
tendering holders. If for any reason, we:
o delay the acceptance or exchange of any Old Notes;
o extend the exchange offer; or
o are unable to accept or exchange Old Notes,
then the exchange agent may, on behalf of SFX and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered notes. Notes retained by the exchange
agent may not be withdrawn, except according to the withdrawal procedures
outlined in the section entitled "--Withdrawal Rights" below.
In tendering Old Notes, you must warrant in the Letter of Transmittal
that:
o you have full power and authority to tender, exchange, sell, assign and
transfer Old Notes;
o SFX will acquire good, marketable and unencumbered title to the tendered Old
Notes, free and clear of all liens, restrictions, charges and other
encumbrances; and
o the Old Notes tendered for exchange are not subject to any adverse claims or
proxies.
You also must warrant and agree that you will, upon request, execute and
deliver any additional documents requested by us or the exchange agent to
complete the exchange, sale, assignment and transfer of the Old Notes.
BOOK-ENTRY TRANSFER
In order to facilitate the exchange offer, the exchange agent will request
DTC to establish an account with respect to the Old Notes for the exchange
offer within two business days after the date of this prospectus. Additionally,
any financial institution that is a
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participant in DTC's book-entry systems may make book-entry delivery of Old
Notes by causing DTC to transfer such Old Notes into the exchange agent's
account at DTC in accordance with DTC's procedures for transfer. Although
delivery of Old Notes may be effected through book-entry transfer at DTC, the
Letter of Transmittal or facsimile thereof, with any required signature
guarantees and other required documents, must in any case be transmitted to and
received by the exchange agent at one of the addresses set forth below under
"--Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the exchange agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, then a tender may be effected if:
o the tender is made through an Eligible Institution;
o before the Expiration Date, the exchange agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal,
or a facsimile thereof, and notice of guaranteed delivery, substantially in
the form provided by us, by telegram, telex, facsimile transmission, mail
or hand delivery, setting forth the name and address of the holder of the
Old Notes and the amount of Old Notes tendered, stating that the tender is
being made thereby and guaranteeing that within three New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a book-entry confirmation, as the
case may be, and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the exchange agent; and
o the exchange agent receives the certificates for all physically tendered Old
Notes, in proper form for transfer, or a book-entry confirmation, as the
case may be, and all other documents required by the Letter of Transmittal,
within five New York Stock Exchange trading days after the date of
execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
You may withdraw tenders of Old Notes at any time on or before the
Expiration Date.
To validly withdraw, you must send a written notice of withdrawal to the
exchange agent at one of the addresses set forth below under "--Exchange
Agent." Any such notice of withdrawal must:
o specify the name of the person who tendered the Old Notes to be withdrawn;
o identify the Old Notes you want to withdraw, including the total amount of
such Old Notes; and
o where certificates for Old Notes have been transmitted, specify the name in
which such Old Notes are registered, if different from that of the
withdrawing holder.
If certificates for Old Notes have been delivered or otherwise identified
to the exchange agent, then, before the release of such certificates the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such holder is an
26
<PAGE>
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawn Old
Notes and otherwise comply with the procedures of such facility. We will
determine all questions as to the validity, form and eligibility, including
time of receipt, of such notices. Our determination will be final and binding
on all parties. Any Old Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the exchange offer. Any Old Notes
which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder, or,
in the case of Old Notes tendered by book-entry transfer into the exchange
agent's account at DTC pursuant to the book-entry transfer procedures described
above, such Old Notes will be credited to an account with DTC specified by the
holder, as soon as practicable after withdrawal, rejection of tender or
terminations of the exchange offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "--Procedures for
Tendering" above at any time on or before the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we will not be
required to accept for exchange, or to issue New Notes in exchange for, any Old
Notes. We may terminate or amend the exchange offer, if at any time before the
acceptance of such Old Notes for exchange or the exchange of the New Notes for
such Old Notes, any of the following events will occur, which in our sole
judgment in any case, and regardless of the circumstances, including any action
by us, giving rise to any event described below, makes it inadvisable to
proceed with the exchange offer and/or acceptance for exchange or with such
exchange:
o if any court, governmental agency or other governmental regulatory or
administrative agency or commission threatens, institutes or issues any
action, injunction or order of decree seeking to restrain or prohibit the
making or consummation of the exchange offer or any other transaction
contemplated by the exchange offer, or assessing or seeking any damage as a
result of the exchange offer or resulting in a material delay in our
ability to accept or exchange some or all of the Old Notes pursuant to the
exchange offer;
o if any government or governmental authority, agency or court, domestic or
foreign, takes, proposes to take or threatens to take any action, or seeks,
proposes, introduces, enacts, promulgates or deems applicable to the
exchange offer or any of the transactions contemplated by the exchange
offer any statute, rule, regulation, order or injunction that in our sole
judgment might directly or indirectly result in any of the consequences
referred to above, holders having obligations with respect to resales and
transfers of New Notes greater than those described in the Commission's
interpretation referred to in this section under the heading
"--Consequences of Exchanging Notes," or other consequences, which would
otherwise make it inadvisable to proceed with the exchange offer;
o the staff no longer allows the New Notes to be offered for resale, resold
and otherwise transferred by certain holders without compliance with the
registration and prospectus delivery provisions of the Securities Act;
o if any general suspension of or general limitation on prices for, or trading
in, securities on any national securities exchange or in the
over-the-counter market occurs;
o if any limitation by any governmental agency or authority which may
adversely affect our ability to complete the transactions contemplated by
the exchange offer occurs;
27
<PAGE>
o if a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation by any governmental
agency or authority which adversely affects the extension of credit occurs;
o if a commencement of a war, armed hostilities or other similar international
calamity directly or indirectly involving the United States, or, in the
case of any of the foregoing existing at the time of the commencement of
the exchange offer, a material acceleration or worsening thereof occurs; or
o if any change, or any development involving a prospective change, occurs or
is threatened in our and our subsidiaries' business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects taken as a whole that, in our sole judgment, is or may be adverse
to us, or we become aware of facts that, in our sole judgment have or may
have adverse significance with respect to the value of the Old Notes or the
New Notes.
The foregoing conditions are for our sole benefit and we may assert them
regardless of the circumstances giving rise to any such condition or we may
waive them in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right and each such right will be
deemed an ongoing right which we may assert at any time and from time to time.
In addition, we will not accept for exchange any Old Notes tendered, and
no New Notes will be issued in exchange for any such Old Notes, if at such time
any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part, or the
qualification of the indenture under the Trust Indenture Act
of 1939.
28
<PAGE>
EXCHANGE AGENT
ChaseMellon Shareholder Services, L.L.C. will be the exchange agent for
the exchange offer. All executed Letters of Transmittal should be directed to
the exchange agent at the addresses set forth below.
<TABLE>
<S> <C>
By U.S. Mail: By Hand:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
Attn: Reorganization Department Attn: Reorganization Department
By Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C.
85 ChallengerRoad--Mail Drop--Reorg
Ridgefield Park, NJ 07660
Attn: Reorganization Department
By Facsimile: (201) 296-4293
Confirm Facsimile Only: (201) 296-4860
</TABLE>
DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF
TRANSMITTAL.
INFORMATION AGENT
Georgeson & Company Inc. will be the information agent for the exchange
offer. Questions and requests for assistance, requests for additional copies of
this prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the information agent at the address
set forth below:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: 1-800-223-2065
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer other than to the information agent.
We will pay the estimated cash expenses to be incurred in connection with
the exchange offer, which are estimated in the aggregate to be $500,000.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. We will amortize the expenses of the exchange offer over
the term of the New Notes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct us to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
29
<PAGE>
REGULATORY MATTERS
We are not aware of any governmental or regulatory approvals that are
required in order to consummate the exchange offer.
CONSEQUENCES OF EXCHANGING NOTES
Based on interpretations by the staff of the Commission as set forth in
no-action letters issued to third parties in other transactions, we believe
that New Notes issued pursuant to the exchange offer in exchange for Old Notes
may be offered for resale, resold or otherwise transferred by a holder thereof,
other than any holder which is an "affiliate" of ours within the meaning of
Rule 405 under the Securities Act or a holder that is a broker-dealer who
acquires New Notes to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holder's business and
such holder has no arrangement or understanding with any person to participate
in the distribution of such New Notes. However, we do not intend to request the
Commission to consider, and the Commission has not considered, the exchange
offer in the context of a no-action letter and we cannot guarantee that the
staff of the Commission would make a similar determination with respect to the
exchange offer as in such other circumstances. If any holder is an affiliate of
ours, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the exchange offer, such holder must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes must acknowledge that such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities and that it will deliver a prospectus in connection with any
resale of such New Notes.
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. You are urged to consult
with your financial and tax advisors in making your decision on what action to
take.
The Old Notes which are not exchanged for the New Notes pursuant to the
exchange offer will remain restricted securities. Accordingly, such Old Notes
may be resold only:
o to a person whom the seller reasonably believes is a qualified institutional
buyer, as defined in Rule 144A under the Securities Act, in a transaction
meeting the requirements of Rule 144A;
o in a transaction meeting the requirements of Rule 144 under the Securities
Act;
o outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act;
o in accordance with another exemption from the registration requirements of
the Securities Act, and based upon an opinion of counsel, if we so request,
to us; or
o pursuant to an effective registration statement.
30
<PAGE>
and, in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction. We do not
currently anticipate that we will register the Old Notes under the Securities
Act.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of, this exchange offer, the
Company will have fulfilled a covenant contained in the Registration Rights
Agreement. Holders of Old Notes who do not tender their Old Notes in the
exchange offer will continue to hold such Old Notes and will be entitled to all
the rights and limitations applicable thereto under the Indenture, except for
any such rights under the Registration Rights Agreement that by their terms
terminate or cease to have further effectiveness as a result of the making of
this exchange offer. All untendered Old Notes will continue to be subject to
the restrictions on transfer set forth in the Indenture. To the extent that Old
Notes are tendered and accepted in the exchange offer, the trading market for
untendered Old Notes could be adversely affected.
31
<PAGE>
USE OF PROCEEDS
SFX will not receive any proceeds from the exchange offer.
SFX used $178.0 million of the net proceeds of the offering of the Old
Notes to repay substantially all outstanding borrowings under the revolving
portion of its senior credit facility.
32
<PAGE>
CAPITALIZATION
The following table includes, as of September 30, 1998, the historical
capitalization of SFX and the pro forma capitalization of SFX to reflect the
offering of the Old Notes, the consummation of the pending Marquee and Cellar
Door acquisitions and the consummation of the proposed equity offering. This
information should be read in conjunction with the financial statements and the
related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------------
(IN THOUSANDS)
ACTUAL PRO FORMA
------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash and cash equivalents .......................................... $ 65,589 $ 197,565
========== ==========
Debt:
Senior credit facility ............................................. $ 346,000 $ 150,000
9 1/8% senior subordinated notes due February 1, 2008 .............. 350,000 350,000
9 1/8% senior subordianted notes due December 1, 2008 .............. -- 200,000
Other long-term debt ............................................... 23,122 23,122
Capital lease obligations .......................................... 12,922 12,922
Deferred purchase consideration .................................... 10,430 20,995
---------- ----------
Total debt ......................................................... $ 742,474 $ 757,039
---------- ----------
Temporary equity--stock subject to redemption(1) ................... $ 16,500 $ 19,920
---------- ----------
Stockholders' equity:
Preferred stock, $.01 par value, 25,000,000 shares authorized, none
outstanding as of September 30, 1998 actual and pro forma ......... -- --
Class A common stock, $.01 par value, 100,000,000 shares
authorized, 28,753,194 shares issued and outstanding as of
September 30, 1998 actual, and 35,388,714 shares issued and
outstanding pro forma(2) .......................................... 288 354
Class B common stock, $.01 par value, 10,000,000 shares
authorized, 1,697,037 shares issued and outstanding as of
September 30, 1998 actual and pro forma ........................... 17 17
Additional paid-in capital ......................................... 431,617 786,523
Deferred compensation .............................................. (7,397) (7,397)
Accumulated deficit ................................................ (28,314) (28,314)
---------- ----------
Total stockholders' equity ......................................... $ 396,211 $ 751,183
---------- ----------
Total capitalization ............................................... $1,155,185 $1,528,142
========== ==========
</TABLE>
- ----------
(1) The PACE agreement provides each PACE seller with an option, exercisable
between February 25, 2003 and May 26, 2003, to require SFX to purchase up
to one-third of the shares of Class A common stock received by that
seller, representing 500,000 shares in the aggregate, for a cash purchase
price of $33.00 per share. With certain limited exceptions, the PACE
sellers cannot assign the option rights. The maximum amount payable under
the options of $16.5 million is presented as temporary equity in SFX's
historical balance sheet, and the increase on a pro forma basis
represents Marquee's potential obligation to repurchase 545,135 shares of
Marquee common stock issued in connection with certain of its
acquisitions, of which 59,027 shares are in escrow.
33
<PAGE>
Marquee has determined that it is probable that the financial thresholds
required to be met for the release of these escrowed shares will be
achieved in 1998. These shares are not included in stockholders' equity.
(2) Gives effect on a pro forma basis to the issuance of an aggregate of
1,472,570 shares of Class A common stock estimated to be issued in the
Marquee acquisition, an aggregate of 360,360 shares of Class A common
stock anticipated to be issued in the Cellar Door acquisition, an
aggregate of 4.8 million shares of Class A common stock to be issued in
the proposed equity offering and issuances of additional shares of Class A
common stock since September 30, 1998. Does not include shares issuable,
subject to certain conditions, upon conversion of the Class B common stock
or shares issuable upon exercise of outstanding options.
34
<PAGE>
SFX UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following information is based on the audited and unaudited financial
statements of our company and certain of the other companies which we have
acquired as well as the audited and unaudited financial statements of Marquee
and Cellar Door. The pro forma information set forth below does not give effect
to the pending Nederlander and ISI acquisitions as well as certain other recent
acquisitions.
The SFX Unaudited Pro Forma Condensed Combined Balance Sheet at September
30, 1998, is presented as if SFX had completed the Old Note offering, the
pending Marquee and Cellar Door acquisitions and the proposed equity offering
as of September 30, 1998.
The SFX Unaudited Pro Forma Condensed Combined Statements of Operations
for the year ended December 31, 1997, and the nine months ended September 30,
1998, are presented as if SFX had completed SFX's 1997 acquisitions, SFX's 1998
acquisitions, the Old Note offering, the pending Marquee and Cellar Door
acquisitions and the proposed equity offering as of January 1, 1997.
To help facilitate your evaluation and review of the following pro forma
information, beginning on page 59, we have included the unaudited pro forma
condensed combined statements of operations of Marquee for the year ending
December 31, 1997, and nine months ended September 30, 1998.
In addition, the SFX Unaudited Pro Forma Condensed Combined Financial
Statements do not reflect certain purchase price adjustments and future
contingent payments, which may be payable pursuant to the various acquisition
agreements.
In our opinion, all adjustments necessary to fairly present this pro forma
information have been made. The SFX Unaudited Pro Forma Condensed Combined
Financial Statements are based upon, and should be read in conjunction with,
the historical financial statements of SFX and certain of the businesses
previously acquired by SFX and the related notes to such financial statements
contained elsewhere in this document. The pro forma information is based upon
tentative allocations of purchase price and does not purport to be indicative
of the results that would have been reported had such events actually occurred
on the date specified, nor is it indicative of SFX's future results. Purchase
accounting is based upon preliminary asset valuations, which are subject to
change. Final asset valuations are not expected to differ materially from the
preliminary valuations. In addition, the operations data include adjustments to
operating expenses to reflect anticipated savings that SFX management believes
it will be able to achieve through the implementation of its operating
strategy. However, there can be no assurance that SFX will be able to achieve
such savings.
The SFX Unaudited Pro Forma Condensed Combined Financial Statements and
notes thereto contain forward-looking statements that involve risks and
uncertainties, including those described in "Risk Factors" or elsewhere herein.
Therefore, the actual results of SFX may differ materially from those discussed
herein. See "Risk Factors." SFX undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements that may be
made to reflect any future events or circumstances.
35
<PAGE>
SFX ENTERTAINMENT, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PENDING MARQUEE AND CELLAR DOOR ACQUISITIONS
AND OLD NOTE OFFERING
I
-----------------------------------------------
SFX CELLAR PRO FORMA
ENTERTAINMENT DOOR MARQUEE ADJUSTMENTS
(ACTUAL) A B C
--------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C>
Assets:
Current assets .............................. $ 165,727 $ (62,405) $ (17,275) $ 110,640(a)
Property and equipment, net of
accumulated depreciation of $12,144 ........ 275,000 34,986 2,895 --
Intangible assets, net of accumulated
amortization of $28,551..................... 904,929 65,635 110,557 7,500 (b)
Other assets ................................ 45,892 2,088 5,814 (366)(d)
---------- --------- --------- ----------
Total Assets ................................ $1,391,548 $ 40,304 $ 101,991 $ 117,774
========== ========= ========= ==========
Liabilities and Stockholders' Equity:
Current liabilities ......................... $ 166,540 $ 11,729 $ 11,451 $ (14,208)(c)
Deferred taxes .............................. 60,601 -- -- --
Senior credit facility ...................... 346,000 -- -- (67,652)(c)
Senior subordinated notes ................... 350,000 -- -- 200,000 (a)
Other long-term debt ........................ 23,122 -- -- --
Capital lease obligations ................... 12,922 -- -- --
Deferred purchase consideration ............. 10,430 6,788 3,777 --
Other liabilities ........................... 5,354 1,787 1,615 --
Minority interest ........................... 3,868 -- -- (366)(d)
Temporary equity--stock subject to
redemption ................................. 16,500 -- 3,420 --
Stockholders, equity:
Class A common stock ........................ 288 4 14 --
Class B common stock ........................ 17 -- -- --
Additional paid-in capital .................. 431,617 19,996 81,714 --
Deferred compensation ....................... (7,397) -- -- --
Accumulated deficit ......................... (28,314) -- -- --
---------- --------- --------- ----------
Total stockholders' equity .................. 396,211 20,000 81,728 --
Total Liabilities & Stockholders' Equity $1,391,548 $ 40,304 $ 101,991 $ 117,774
========== ========= ========= ==========
<CAPTION>
PRO FORMA
FOR THE PENDING
PRO FORMA MARQUEE AND
FOR THE CELLAR DOOR
PENDING MARQUEE THE ACQUISITIONS,
AND CELLAR DOOR PROPOSED THE OLD NOTE
ACQUISITIONS AND EQUITY OFFERING AND
THE OLD NOTE OFFERING THE PROPOSED
OFFERING II EQUITY OFFERING
----------------- ------------- ----------------
<S> <C> <C> <C>
Assets:
Current assets .............................. $ 196,687 $ 124,896 $ 321,583
Property and equipment, net of
accumulated depreciation of $12,144 ........ 312,881 -- 312,881
Intangible assets, net of accumulated
amortization of $28,551..................... 1,088,621 -- 1,088,621
Other assets ................................ 53,428 -- 53,428
---------- ----------- ----------
Total Assets ................................ $1,651,617 $ 124,896 $1,776,513
========== =========== ==========
Liabilities and Stockholders' Equity:
Current liabilities ......................... $ 175,512 $ -- $ 175,512
Deferred taxes .............................. 60,601 -- 60,601
Senior credit facility ...................... 278,348 (128,348) 150,000
Senior subordinated notes ................... 550,000 -- 550,000
Other long-term debt ........................ 23,122 -- 23,122
Capital lease obligations ................... 12,922 -- 12,922
Deferred purchase consideration ............. 20,995 -- 20,995
Other liabilities ........................... 8,756 -- 8,756
Minority interest ........................... 3,502 -- 3,502
Temporary equity--stock subject to
redemption ................................. 19,920 -- 19,920
Stockholders, equity:
Class A common stock ........................ 306 48 354
Class B common stock ........................ 17 -- 17
Additional paid-in capital .................. 533,327 253,196 786,523
Deferred compensation ....................... (7,397) -- (7,397)
Accumulated deficit ......................... (28,314) -- (28,314)
---------- ----------- ----------
<PAGE>
Total stockholders' equity .................. 497,939 253,244 751,183
Total Liabilities & Stockholders' Equity $1,651,617 $ 124,896 $1,776,513
========== =========== ==========
</TABLE>
36
<PAGE>
I. PENDING MARQUEE AND CELLAR DOOR ACQUISITIONS AND THE OLD NOTE OFFERING
A. CELLAR DOOR
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998 (IN THOUSANDS)
--------------------------------------------------
PRO FORMA CELLAR DOOR
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ------------------- ------------
<S> <C> <C> <C>
Assets:
Current assets ................................... $ 9,095 $ (71,500)(a) $ (62,405)
Property and equipment, net ...................... 34,986 -- 34,986
Intangible assets, net ........................... 256 58,591 (b) 65,635
6,788 (c)
Other assets ..................................... 4,420 (2,332)(d) 2,088
------- ---------- ---------
Total Assets ..................................... $48,757 $ (8,453) $ 40,304
======= ========== =========
Liabilities & Stockholders' Equity:
Current liabilities .............................. $16,130 $ (4,401)(d) $ 11,729
Long-term debt ................................... 23,500 (23,500)(a) --
Deferred Purchase Consideration .................. -- 6,788 (c) 6,788
Other Liabilities ................................ 1,787 -- 1,787
Stockholders' equity ............................. 7,340 (7,340)(e) 20,000
20,000 (a)
------- ---------- ---------
Total Liabilities & Stockholders' Equity ......... $48,757 $ (8,453) $ 40,304
======= ========== =========
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) To reflect the Cellar Door acquisition for $71,500,000 in cash
including the repayment of $23,500,000 of Cellar Door's debt and
$1,500,000 of fees and expenses, and the issuance of $20,000,000 of
SFX Class A common stock or 360,360 shares, assuming that the shares
are issued at $55.50 per share.
(b) To reflect the excess of the purchase price paid over the fair value
of net tangible assets acquired of $58,591,000.
(c) To reflect the issuance of an $8,500,000 promissory note to certain
sellers with a present value of $6,788,000.
(d) To reflect the elimination of related parties' notes.
(e) To reflect the elimination of Cellar Door's historical stockholders'
equity.
37
<PAGE>
B. MARQUEE
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998 (IN THOUSANDS)
-----------------------------------------------------
PRO FORMA MARQUEE
AS REPORTED ADJUSTMENTS ACQUISITION(A)
------------- ------------------- ---------------
<S> <C> <C> <C>
Assets:
Current assets ................................... $21,825 $ (39,100)(a) $ (17,275)
Property and equipment, net ...................... 2,895 -- 2,895
Intangible assets, net ........................... 59,648 50,909 (b) 110,557
Other assets ..................................... 5,814 -- 5,814
------- ---------- ---------
Total Assets ..................................... $90,182 $ 11,809 $ 101,991
======= ========== =========
Liabilities & Stockholders Equity:
Current liabilities .............................. $11,451 $ -- $ 11,451
Long-term debt ................................... 33,140 (33,140)(a) --
Deferred purchase consideration .................. 3,777 -- 3,777
Other liabilities ................................ 1,615 -- 1,615
Temporary equity -- stock subject to
redemption ...................................... 3,420 -- 3,420
Stockholders' equity ............................. 36,779 (36,779)(c) 81,728
81,728 (a)
------- ---------- ---------
Total Liabilities & Stockholders' Equity ......... $90,182 $ 11,809 $ 101,991
======= ========== =========
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) To reflect the issuance of 1,472,570 shares of SFX Class A common
stock valued at approximately $81,727,635, and the repayment of
$33,140,000 of Marquee's debt and $6,000,000 in cash for related
fees and expenses. The number of shares and the value of the stock
to be issued is based on a $55.50 price per share and an exchange
ratio of .0856.
(b) To reflect the excess of the purchase price paid over the fair value
of net tangible assets acquired of $50,909,000. If the price of
SFX's common stock is $42.75 or less, the goodwill arising from the
merger may decrease by approximately $28,207,000.
(c) To reflect the elimination of Marquee's historical stockholders'
equity.
C. PRO FORMA ADJUSTMENTS:
(a) Represents the application of the net proceeds of the Old Note
offering to repay substantially all of the revolving portion of
SFX's credit facility, and borrowings under such facility to finance
the purchase price of the Marquee and Cellar Door acquisitions of
$110,640,000, including the repayment of Marquee's debt and related
fees and expenses.
(b) To record debt issuance costs related to the Old Note offering.
(c) Reflects the payment of the $14,208,000 tax indemnification
liability on December 31, 1998 and a $67,652,000 net paydown of
existing borrowings under the credit agreement.
(d) Reflects the elimination of PACE's minority interest due to the
Cellar Door acquisition.
II. THE PROPOSED EQUITY OFFERING
The adjustments represent the estimated proceeds from the proposed equity
offering of $253,224,000, based on an offering price of $55.50 per share net of
anticipated underwriting discount and fees and expenses related to the proposed
equity offering, the repayment of amounts outstanding under SFX's credit
facility of $128,348,000 and additional cash for general corporate purposes,
including potential future acquisitions of $124,896,000.
38
<PAGE>
SFX ENTERTAINMENT, INC.
SUMMARY OF COMPLETED AND CERTAIN PENDING ACQUISITIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
CASH
CONSIDERATION
DATE AND VALUE OF NUMBER OF
COMPANY/ACTIVITY ACQUIRED ASSUMED DEBT STOCK ISSUED SHARES ISSUED(1)
- -------------------- -------------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C>
Delsener/Slater January 2, 1997 $ 26,815 $ -- --
Meadows March 1, 1997 16,354 7,500 247
Sunshine June 1, 1997 57,489 4,000 152
Westbury January 8, 1998 8,835 1,000 75
BGP February 24, 1998 72,827 7,500 563
PACE and Pavilion February 25, 1998 220,683 20,000 1,500
Contemporary February 27, 1998 82,702 18,700 1,403
Network February 27, 1998 56,784 10,000 750
Concert/Southern March 4, 1998 16,908 -- --
USA Motor Sports March 25, 1998 4,000 -- --
Avalon May 14, 1998 26,840 -- --
Oakdale June 3, 1998 11,900 -- --
FAME June 4, 1998 82,241 35,960 1,000
Don Law July 2, 1998 92,195 -- --
Magicworks September 11, 1998 115,740 -- --
Other Acquisitions Third quarter 1998 115,386 10,000 300
Deferred financing
costs -- -- --
Cellar Door First Quarter 1999 76,788 20,000 360
Marquee First Quarter 1999 33,140 81,728 1,472
Working capital -- -- --
---------- -------- -----
Subtotal 1,117,627 216,388 7,822
Proposed Equity
Offering First Quarter 1999 -- -- --
---------- -------- -----
Total $1,117,627 $216,388 7,822
========== ======== =====
Deferred financing
costs (3) -- -- --
<CAPTION>
RELATED DEBT,
CAPITAL LEASES
AND DEFERRED PRO FORMA INTEREST EXPENSE
PURCHASE ----------------------------------
CONSIDERATION YEAR ENDED
SOURCE OF AT SEPTEMBER 30, INTEREST DECEMBER 31, NINE MONTHS ENDED,
COMPANY/ACTIVITY FUNDS(2) 1998 RATE 1997 SEPTEMBER 30, 1998
- -------------------- ----------------------------------------- ----------------- ------------ -------------- -------------------
<S> <C> <C> <C> <C> <C>
Delsener/Slater Capital contribution $ 2,204 10.000% $ 220 $ 165
Meadows Capital contribution 14,366 8.31% 1,194 895
Sunshine Capital contribution 1,306 8.58% 112 84
Westbury February 2008 Notes 8,835 9.125% 806 605
BGP February 2008 Notes 72,827 9.125% 6,645 4,984
PACE and Pavilion February 2008 Notes 220,683 9.125% 20,137 15,103
Contemporary February 2008 Notes and credit facility 82,702 8.71% 7,203 5,403
Network Credit facility 56,784 8.15% 4,628 3,471
Concert/Southern Credit facility 16,908 8.15% 1,378 1,034
USA Motor Sports Credit facility 4,000 8.15% 326 245
Avalon Credit facility 26,840 8.15% 2,188 1,641
Oakdale Equity offering -- -- -- --
FAME Equity offering -- -- -- --
Don Law Equity offering -- -- -- --
Magicworks Credit facility 115,740 8.84% 10,237 7,678
Other Acquisitions Equity offering and credit facility 100,376 8.15% 8,182 6,136
Deferred financing
costs 18,903 8.15% 1,541 1,156
Cellar Door Credit facility 78,288 9.125% 7,144 5,358
Marquee Credit facility 42,917 9.125% 3,916 2,934
Working capital Credit facility 21,708 9.125% 1,981 1,486
----------------------------------------- ---------- ---------- --------
Subtotal 885,387 77,838 58,378
Proposed Equity
Offering (128,348) (10,113) (7,584)
---------- ---------- --------
Total $ 757,039 $ 67,725 $ 50,794
========== ========== ========
Deferred financing
costs (3) 26,403(4) 2,390 1,793
---------- --------
$ 70,115 $ 52,587
========== ========
</TABLE>
- -------
(1) The number of shares issued was based upon the market price either agreed
upon by SFX and the sellers before SFX's stock was publicly traded or at
the price over a reasonable period of time before and after the
announcement of the transaction.
(2) Assumes that the tax indemnification payments of $93.7 million paid as of
September 30, 1998, were funded with the proceeds from SFX's public
offering of 8,050,000 shares of Class A common stock on May 27, 1998.
(3) Represents interest associated with amounts assumed to be borrowed to pay
deferred financing costs.
(4) Deferred financing costs are being amortized over the term of the
agreement.
39
<PAGE>
SFX ENTERTAINMENT, INC.
SUMMARY OF DEPRECIATION AND AMORTIZATION EXPENSE
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA AMORTIZATION EXPENSE
----------------------------------
GOODWILL AND OTHER PROPERTY AND YEAR ENDED NINE MONTHS ENDED
INTANGIBLE ASSETS, AMORTIZATION EQUIPMENT, DEPRECIATION DECEMBER 31, SEPTEMBER 30,
COMPANY/ACTIVITY GROSS PERIOD GROSS PERIOD 1997 1998
- -------------------- -------------------- -------------- -------------- -------------- -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Delsener/Slater $ 23,627 15 years $ 21,682 5-20 years $ 1,575 $ 1,181
Meadows 3,243 15 years 26,370 5-39 years 216 162
Sunshine 37,619 15 years 28,991 5-40 years 2,508 1,881
Westbury 11,512 15 years 500 7 years 767 576
BGP 51,441 15 years 37,431 7-30 years 3,429 2,572
PACE and Pavilion 182,423 2-15 years 94,515 7-30 years 13,028 9,771
Contemporary 68,692 15 years 25,651 7-30 years 4,579 3,435
Network 62,055 15 years 3,798 7-20 years 4,137 3,103
Concert/Southern 16,227 15 years 709 7 years 1,082 811
USA Motor Sports 2,759 15 years -- -- 184 138
Avalon 27,418 15 years 4,268 7-30 years 1,828 1,371
Oakdale 12,536 15 years 268 7 years 836 627
FAME 120,138 15 years 297 7 years 8,021 6,016
Don Law 64,049 15 years 27,571 7-30 years 4,270 3,202
Magicworks 110,350 15 years 2,068 7 years 7,357 5,518
Other Acquisitions 128,168 10-15 years 2,958 7-30 years 9,614 7,210
Corporate -- -- 10,067 3-10 years -- 3,989(1)
Deferred financing
costs 18,903 10 years -- -- -- --
Cellar Door 65,635 15 years 34,986 7-30 years 4,376 3,282
Marquee 110,557 15 years 2,895 7 years 7,370 5,527
---------- -------------- -------- -------------- ------- -----------
Deferred financing
costs 7,500 15 years -- -- --
Total $1,124,852 $325,025 $75,177 $ 60,372
========== ======== ======= ===========
<CAPTION>
PRO FORMA
DEPRECIATION AND AMORTIZATION
PRO FORMA DEPRECIATION EXPENSE EXPENSE
---------------------------------- ---------------------------------
YEAR ENDED NINE MONTHS ENDED YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
COMPANY/ACTIVITY 1997 1998 1997 1998
- -------------------- -------------- ------------------- -------------- ------------------
<S> <C> <C> <C> <C>
Delsener/Slater $ 1,417 $ 1,063 $ 2,992 $ 2,244
Meadows 624 468 840 630
Sunshine 1,008 756 3,516 2,637
Westbury 72 53 839 629
BGP 1,357 1,018 4,786 3,590
PACE and Pavilion 2,685 1,957 15,713 11,728
Contemporary 1,402 1,051 5,981 4,486
Network 332 249 4,469 3,352
Concert/Southern 101 76 1,183 887
USA Motor Sports -- -- 184 138
Avalon 610 457 2,438 1,828
Oakdale 38 29 874 656
FAME 43 32 8,064 6,048
Don Law 1,137 853 5,407 4,055
Magicworks 295 221 7,652 5,739
Other Acquisitions 284 212 9,898 7,422
Corporate 941 1,716 941 5,705
Deferred financing
costs -- -- -- --
Cellar Door 1,219 914 5,595 4,196
Marquee 414 311 7,784 5,838
------- ------- ------- -------
Deferred financing
costs -- -- -- --
Total $13,979 $11,436 $89,156 $71,808
======= ======= ======= =======
</TABLE>
- -------
(1) Represents the $2,725,000 write-off of the Triathlon asset and $1,264,000
of integration costs.
40
<PAGE>
SFX ENTERTAINMENT, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
SFX FOR THE SFX 1997
ENTERTAINMENT SFX 1997 SFX 1998 ACQUISITIONS
(ACTUAL) ACQUISITIONS ACQUISITIONS AND THE SFX 1998
I II III ACQUISITIONS
--------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C>
Revenue ....................................... $96,144 $14,243 $ 773,514 $ 883,901
Cost of revenue ............................... 73,881 8,696 569,500 652,077
Selling, general and administrative
expenses ..................................... 9,536 4,597 121,306 135,439
Depreciation & amortization ................... 5,431 3,802 66,544 75,777
--
Corporate expenses, net of Triathlon fees ..... 2,206 -- 5,794 8,000
Non-cash compensation and other
non-cash charges ............................. -- -- -- --
------- ------- --------- ---------
Operating income (loss) ....................... 5,090 (2,852) 10,370 12,608
Interest expense .............................. 1,590 742 63,632 65,964
Equity (income) loss from investments ......... (509) -- (5,354) (5,863)
Other income .................................. (295) (1) (2,640) (2,936)
------- ---------- --------- ---------
Income (loss) before
income tax expense ........................... 4,304 (3,593) (45,268) (44,557)
Income tax expense (benefit) .................. 490 -- 4,367 4,857
------- --------- --------- ---------
Net income (loss) ............................. $ 3,814 $(3,593) $ (49,635) (49,414)
========= =========
Accretion on put option ....................... -- (3,300)
------- ---------
Net income (loss) applicable to common
shares ....................................... $ 3,814 $ (52,714)
======= =========
Net income (loss) per common share ............ $ 0.26 $ (1.76)
======= =========
Weighted average common shares
outstanding (1) (2) .......................... 14,445 30,454
======= =========
<CAPTION>
PRO FORMA
FOR THE SFX
1997 ACQUISITIONS,
THE SFX 1998
PENDING MARQUEE AND CELLAR DOOR ACQUISITIONS,
ACQUISITIONS THE OLD NOTE
AND THE OLD NOTE OFFERING OFFERING AND THE
IV ------------- THE PENDING PROPOSED
-------------------------- PRO FORMA MARQUEE AND EQUITY
CELLAR DOOR MARQUEE ADJUSTMENTS CELLAR DOOR OFFERING
A B C ACQUISITIONS V
------------- ----------- ------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue ....................................... $63,966 $ 53,324 $ -- $1,001,191 $ --
Cost of revenue ............................... 49,073 34,383 -- 735,533 --
Selling, general and administrative
expenses ..................................... 9,092 12,095 -- 156,626 --
Depreciation & amortization ................... 5,595 7,784 -- 89,156 --
Corporate expenses, net of Triathlon fees ..... -- -- -- 8,000 --
Non-cash compensation and other
non-cash charges ............................. -- (1,367) -- 1,367 --
------- -------- --------- ---------- ----------
Operating income (loss) ....................... 206 (2,305) -- 10,509 --
Interest expense .............................. -- -- 14,264 80,228 (10,113)
Equity (income) loss from investments ......... (601) -- 975 (5,489) --
Other income .................................. (369) -- (975) (4,280) --
------- -------- --------- ---------- ----------
Income (loss) before
income tax expense ........................... 1,176 (2,305) (14,264) (59,950) 10,113
Income tax expense (benefit) .................. 5 53 -- 4,915 --
------- -------- --------- ---------- ----------
Net income (loss) ............................. $ 1,171 (2,358) $ (14,264) (64,865) $ 10,113
======= ========= ==========
Accretion on put option ....................... (301) (3,601)
-------- ----------
Net income (loss) applicable to common
shares ....................................... $ (2,659) $ (68,466)
======== ==========
Net income (loss) per common share ............ $ (2.16)
==========
Weighted average common shares
outstanding (1) (2) .......................... 32,286
==========
<CAPTION>
PRO FORMA
FOR THE SFX
1997 ACQUISITIONS,
THE SFX 1998
ACQUISITIONS,
THE OLD NOTE
OFFERING,
THE PENDING
MARQUEE
AND CELLAR DOOR
ACQUISITIONS
AND THE
PROPOSED
EQUITY
OFFERING
-------------------
<S> <C>
Revenue ....................................... $1,001,191
Cost of revenue ............................... 735,533
Selling, general and administrative
expenses ..................................... 156,626
Depreciation & amortization ................... 89,156
Corporate expenses, net of Triathlon fees ..... 8,000
Non-cash compensation and other
non-cash charges ............................. 1,367
----------
Operating income (loss) ....................... 10,509
Interest expense .............................. 70,115
Equity (income) loss from investments ......... (5,489)
Other income .................................. (4,280)
----------
Income (loss) before
income tax expense ........................... (49,837)
Income tax expense (benefit) .................. 4,915
----------
Net income (loss) ............................. (54,752)
Accretion on put option ....................... (3,601)
Net income (loss) applicable to common
shares ....................................... $ (58,353)
==========
Net income (loss) per common share ............ $ (1.60)
==========
Weighted average common shares
outstanding (1) (2) .......................... 37,086
==========
</TABLE>
- -------
See footnotes on following page.
41
<PAGE>
- ----------
(1) Includes 500,000 shares of SFX Class A common stock issued to the PACE
sellers in connection with the fifth year put options and 46,652 shares
of SFX Class A common stock related to the ProServ put options issued by
Marquee--such shares are not included in calculating the net loss per
common share.
(2) Reconciliation of historical weighted average shares outstanding to pro
forma weighted average shares.
<TABLE>
<CAPTION>
CLASS A & B WEIGHTED
ISSUANCE OF COMMON SHARES DATE ISSUED SHARES OUTSTANDING AVERAGE SHARES
- ------------------------------------------------------------------ ------------- -------------------- ---------------
<S> <C> <C> <C>
Class A common shares issued to SFX Broadcasting, Inc.
shareholders' in the spin-off (a) ............................... 1/1/97 12,864 12,864
Class B common shares issued to SFX Broadcasting, Inc.
shareholders' in the spin-off (a) ............................... 1/1/97 1,047 1,047
Class A common shares issued in the Meadows acquisition .......... 2/28/97 247 208
Class A common shares issued to employees ........................ 4/15/97 400 286
Class A common shares issued in the Sunshine acquisition ......... 6/1/97 68 40
------ ------
Subtotal ......................................................... 1/1/98 14,626 14,445
======
Class A common shares issued for the Westbury, PACE, BGP,
Contemporary and Network acquisitions ........................... 4/27/98 4,291
Class A common shares issued to employees in connection
with the spin-off ............................................... 4/27/98 1,533
Class B common shares issued to employees in connection
with the spin-off ............................................... 4/27/98 650
Class A common shares issued in the 1998 Equity Offering ......... 5/5/98 8,050
Class A common shares issued in the FAME acquisition ............. 6/4/98 1,000
Class A common shares issued for the other acquisitions .......... 7/10/98 300
Class A common shares issued after September 30, 1998 ............ 4
------
Pro forma weighted average common shares outstanding
before pending acquisitions and the proposed equity
offering ........................................................ 30,454
Class A common shares expected to be issued in the Cellar
Door acquisition ................................................ 360
Class A common shares expected to be issued for the
Marquee merger .................................................. 1,472
------
Pro forma weighted average common shares outstanding
before the proposed equity offering ............................. 32,286
Class A common shares expected to be issued in the
proposed equity offering ........................................ 4,800
------
Pro forma weighted average common shares outstanding ............. 37,086
======
</TABLE>
- ----------
(a) Shares are assumed to be outstanding at the beginning of the period
since SFX was a wholly owned subsidiary of SFX Broadcasting, Inc. at
the time.
42
<PAGE>
I. SFX'S ACTUAL OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997
EBITDA for the year ended December 31, 1997 was $10,521,000 and
$99,665,000 for SFX on an actual basis and a pro forma basis, respectively.
EBITDA is defined as earnings before interest, taxes, other income, net, equity
income (loss) from investments and depreciation and amortization. Although
EBITDA is not a measure of performance calculated in accordance with GAAP, SFX
believes that the entertainment industry accepts EBITDA as a generally
recognized measure of performance and that analysts who report publicly on the
performance of entertainment companies use EBITDA. Nevertheless, you should not
consider this measure in isolation or as a substitute for operating income, net
income, net cash provided by operating activities or any other measure for
determining SFX's operating performance or liquidity which is calculated in
accordance with GAAP. EBITDA, as we calculate it, may not be comparable to
calculations of similarly titled measures presented by other companies. Cash
flows from operating, investing and financing activities for SFX for the year
ended December 31, 1997 were $1,005,000, ($73,296,000) and $78,270,000,
respectively.
We believe there are other adjustments that could affect EBITDA, but we
have not reflected them herein. If we had made such adjustments, Adjusted
EBITDA on a pro forma basis would have been approximately $116,875,000 for the
year ended December 31, 1997. The adjustments include the elimination of
non-cash compensation and other non-cash charges of $1,367,000, the expected
cost savings in connection with SFX's 1998 acquisitions, the pending Marquee
and Cellar Door acquisitions associated with the elimination of duplicative
staffing and general and administrative expenses of $10,354,000, and equity
income from investments of $5,489,000. While management believes that such cost
savings are achievable, SFX's ability to fully achieve such cost savings is
subject to numerous factors, certain of which may be beyond SFX's control. See
"Risk Factors."
II. SFX 1997 ACQUISITIONS
SFX acquired Delsener/Slater, Meadows and Sunshine Promotions on January
2, 1997, March 20, 1997, and June 24, 1997, respectively. These adjustments
represent the historical operating results of Meadows and Sunshine Promotions
prior to their respective acquisitions by SFX. The following represents the
historical operating results of these companies prior to their acquisition by
SFX.
<TABLE>
<CAPTION>
PRO FORMA
DELSENER/ FOR THE SFX
SUNSHINE MEADOWS SLATER PRO FORMA 1997
ACQUISITION ACQUISITION ACQUISITION(A) ADJUSTMENTS ACQUISITIONS
------------- ------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue .............................................. $11,692 $ 601 $1,950 $ -- $14,243
Cost of revenue ...................................... 7,779 325 592 -- 8,696
Selling, general and administrative expenses ......... 3,826 306 465 -- 4,597
Depreciation & amortization .......................... 836 321 245 2,400 (b) 3,802
------- ----- ------ --------- -------
Operating income (loss) .............................. (749) (351) 648 (2,400) (2,852)
Interest expense ..................................... -- 171 -- 571 (c) 742
Other (income) expenses .............................. -- (1) -- -- (1)
------- -------- ------ --------- -------
Income (loss) before income tax expense .............. (749) (521) 648 (2,971) (3,593)
Income tax expense (benefit) ......................... -- -- -- -- --
------- ------- ------ --------- -------
Net income (loss) .................................... $ (749) $(521) $ 648 $ (2,971) $(3,593)
======= ======= ====== ========= =======
</TABLE>
- ----------
(a) Delsener/Slater acquired Westbury Music Fair and Irving Plaza on
January 8, 1998, and November 19, 1997, respectively.
Delsener/Slater results includes the historical operating results of
Westbury and Irving Plaza prior to their acquisitions.
(b) Reflects the increase in depreciation and amortization resulting
from the preliminary purchase accounting treatment of the
acquisitions. SFX amortizes goodwill and other intangibles over
periods ranging from 2-15 years.
(c) Reflects the incremental interest expense associated with additional
borrowing related to SFX's 1997 acquisitions.
43
<PAGE>
III. SFX 1998 ACQUISITIONS SFX acquired PACE, including USA Motor Sports, and
Pavilion on February 25, 1998; Contemporary on February 27, 1998; BG
Presents, Inc. ("BGP") on February 24, 1998; Album Network, Inc., SJS
Entertainment Corporation and the Network 40 (collectively "Network") on
February 27, 1998; and Concert/Southern on March 4, 1998. In May 1998, SFX
acquired Irvine Meadows Amphitheater, New Avalon, Inc, TBA Media, Inc. and
West Coast Amphitheater (collectively "Avalon"). In June 1998, SFX acquired
FAME and Oakdale. In July 1998, SFX acquired Don Law, and in September
1998, SFX acquired Magicworks. In addition, in the third quarter of 1998,
SFX acquired seven other companies herein defined as the Other
Acquisitions. The following represents the historical operating results of
these companies prior to their acquisition by SFX.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
-------------------------------------------------------------------------------------
PACE
AND CONCERTS
PAVILION CONTEMPORARY BGP NETWORK SOUTHERN FAME
ACQUISITIONS ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION
A B C D E F
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ..................... $284,360 $103,300 $105,553 $28,322 $14,797 $10,881
Cost of revenue ............. 218,119 75,820 82,356 6,399 9,878 --
Selling, general and
administrative expenses 43,044 15,400 14,274 13,178 2,642 3,457
Depreciation &
amortization ............... 7,053 1,320 1,027 351 79 115
Corporate expenses .......... -- -- -- -- -- --
Other expenses .............. -- -- -- -- -- --
-------- -------- -------- ------- ------- -------
Operating income (loss) ..... 16,144 10,760 7,896 8,394 2,198 7,309
Interest expense ............ 6,772 266 917 195 -- 79
Equity (income) loss from
investments ................ (7,399) -- -- -- 48 --
Other (income) expenses...... 1,290 (357) (270) (78) (60) (143)
-------- -------- -------- ------- ------- -------
Income (loss) before
income tax expense ......... 15,481 10,851 7,249 8,277 2,210 7,373
Income tax expense
(benefit) .................. 3,569 -- 1,687 127 -- 700
-------- -------- -------- ------- ------- -------
Net income (loss) ........... $ 11,912 $ 10,851 $ 5,562 $ 8,150 $ 2,210 $ 6,673
======== ======== ======== ======= ======= =======
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
-------------------------------------------------------------------------------------------
AVALON OAKDALE DON LAW MAGICWORKS OTHER PRO FORMA
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS
G H I J K L
------------- ------------- ------------- ------------- -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ..................... $27,265 $16,435 $50,588 $38,963 $ 93,050 --
Cost of revenue ............. 20,077 10,866 38,644 28,165 79,176 --
Selling, general and
administrative expenses 3,629 3,854 5,097 8,290 8,441 --
Depreciation &
amortization ............... 410 51 2,033 634 430 53,041 (a)
Corporate expenses .......... -- -- -- -- -- 5,794 (b)
Other expenses .............. -- -- -- -- -- --
------- ------- ------- ------- -------- ---------
Operating income (loss) ..... 3,149 1,664 4,814 1,874 5,003 (58,835)
Interest expense ............ 94 1,508 1,072 686 254 51,789 (c)
Equity (income) loss from
investments ................ -- -- -- (541) (1,561) 862 (d)
1,581 (e)
1,656 (f)
Other (income) expenses...... -- (79) (329) (135) 39 (862)(d)
(1,656)(f)
------- ------- ------- ------- -------- ---------
Income (loss) before
income tax expense ......... 3,055 235 4,071 1,864 6,271 (112,205)
Income tax expense
(benefit) .................. 949 -- -- 747 22 (2,834))(g)
(600)(h)
------- ------- ------- ------- -------- ---------
Net income (loss) ........... $ 2,106 $ 235 $ 4,071 $ 1,117 $ 6,249 $(108,771)
======= ======= ======= ======= ======== =========
<PAGE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
(IN THOUSANDS)
--------------
PRO FORMA
FOR THE
SFX 1998
ACQUISITIONS
-------------
<S> <C>
Revenue ..................... $ 773,514
Cost of revenue ............. 569,500
Selling, general and
administrative expenses 121,306
Depreciation &
amortization ............... 66,544
Corporate expenses .......... 5,794
Other expenses .............. --
---------
Operating income (loss) ..... 10,370
Interest expense ............ 63,632
Equity (income) loss from
investments ................ (5,354)
Other (income) expenses...... (2,640)
---------
Income (loss) before
income tax expense ......... (45,268)
Income tax expense
(benefit) .................. 4,367
---------
Net income (loss) ........... $ (49,635)
=========
</TABLE>
44
<PAGE>
A. PACE AND PAVILION ACQUISITIONS
Reflects the PACE acquisition, the separate acquisition of two partners'
interest in the Pavilion partnership that owns certain amphitheaters operated
by PACE and the acquisition of USA Motor Sports by PACE in March 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
-----------------------------------------------------------------------------
PACE AND
PACE PAVILION USA MOTOR PRO FORMA PAVILION
AS REPORTED AS REPORTED SPORTS ADJUSTMENTS ACQUISITIONS
------------- ------------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue ................................... $176,168 $ 98,632 $8,560 $ 1,000(a) $284,360
Cost of revenue ........................... 147,969 64,419 5,731 -- 218,119
Selling, general and administrative
expenses ................................. 22,200 18,839 2,575 (570)(b) 43,044
Depreciation & amortization ............... 1,985 4,045 23 1,000 (a) 7,053
Other expenses ............................ 1,139 -- -- (1,139)(c) --
-------- -------- ------ --------- --------
Operating income .......................... 2,875 11,329 231 1,709 16,144
Interest expense .......................... 2,384 4,388 -- -- 6,772
Equity (income) loss from investments ..... (8,134) (1,831) -- 2,566 (d) (7,399)
Other (income) expenses ................... 53 1,304 (67) -- 1,290
-------- -------- ------ --------- --------
Income before income tax expense .......... 8,572 7,468 298 (857) 15,481
Income tax expense ........................ 3,569 -- -- -- 3,569
-------- -------- ------ --------- --------
Net income ................................ $ 5,003 $ 7,468 $ 298 $ (857) $ 11,912
======== ======== ====== ========= ========
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) To reflect non-cash revenue and related amortization expense
resulting from SFX granting Blockbuster naming rights to three
venues for two years for no future consideration as part of its
agreement to acquire Blockbuster's indirect 33 1/3% interest in
Pavilion. SFX recorded deferred revenue and an offsetting intangible
asset at the time of the PACE acquisition relating to the naming
rights.
(b) Reflects the elimination of $570,000 of certain officers' salaries
and bonuses which will not be paid under SFX's new employment
contracts. The amount of the pro forma adjustment to eliminate
salaries and bonuses is based on SFX's agreements with the affected
employees that a bonus will not be paid unless there is a
significant improvement in the results of the PACE acquisition.
Accordingly, no such bonus is reflected in the pro forma statement
of operations because, if PACE's results were similar to those in
these pro forma statements of operations, SFX would not be
contractually obligated to pay a bonus.
(c) Reflects the elimination of non-recurring restricted stock
compensation to PACE executives, as SFX does not maintain a
restricted stock compensation plan and the new employment agreements
with the PACE executives do not provide for such compensation.
(d) To eliminate PACE's income from its 33 1/3% equity investment in
Pavilion.
45
<PAGE>
B. CONTEMPORARY ACQUISITION
Reflects the Contemporary acquisition and the separate acquisition of the
remaining 50% interest in Riverport Amphitheater Partners, a partnership that
owns an amphitheater in St. Louis, Missouri that is operated by Contemporary.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
-------------------------------------------------------------------
CONTEMPORARY RIVERPORT PRO FORMA CONTEMPORARY
AS REPORTED AS REPORTED ADJUSTMENTS ACQUISITION
-------------- ------------- ------------------ -------------
<S> <C> <C> <C> <C>
Revenue .............................................. $ 89,053 $14,247 $ -- $103,300
Cost of revenue ...................................... 66,940 8,880 -- 75,820
Selling, general and administrative expenses ......... 23,880 2,750 (11,230)(a) 15,400
Depreciation & amortization .......................... 541 779 -- 1,320
--------- ------- ---------- --------
Operating income (loss) .............................. (2,308) 1,838 11,230 10,760
Interest expense ..................................... 192 74 -- 266
Equity (income) from investments ..................... (1,002) -- 1,002 (b) --
Other (income) expenses .............................. (117) (240) -- (357)
--------- ------- ---------- --------
Income (loss) before income tax expense .............. (1,381) 2,004 10,228 10,851
Income tax expense (benefit) ......................... -- -- -- --
--------- ------- ---------- --------
Net income (loss) .................................... $ (1,381) $ 2,004 $ 10,228 $ 10,851
========= ======= ========== ========
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects the elimination of certain officers' salaries and bonuses
and other consulting expenses which will not be paid under SFX's new
employment and other contracts. The amount of the pro forma
adjustment to eliminate salaries and bonuses is based on SFX's
agreements with the affected employees that a bonus will not be paid
unless there is a significant improvement in the results of
Contemporary. Accordingly, no such bonus is reflected in the pro
forma statement of operations because, if Contemporary's results
were similar to those in these pro forma statements of operations,
SFX would not be contractually obligated to pay a bonus.
(b) Reflects the elimination of Contemporary's equity income in
Riverport Amphitheater Partners. Contemporary has acquired its
partners' 50% interest in this venture.
C. BGP ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
------------------------------------------------
AS REPORTED PRO FORMA BGP
(A) ADJUSTMENTS ACQUISITION
------------- ----------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $105,553 $ -- $105,553
Cost of revenue ...................................... 82,356 -- 82,356
Selling, general and administrative expenses ......... 17,602 (3,328)(b) 14,274
Depreciation & amortization .......................... 1,027 -- 1,027
-------- --------- --------
Operating income ..................................... 4,568 3,328 7,896
Interest expense ..................................... 917 -- 917
Other (income) expenses .............................. (270) -- (270)
-------- --------- --------
Income (loss) before income tax expense .............. 3,921 3,328 7,249
Income tax expense ................................... 1,687 -- 1,687
-------- --------- --------
Net income ........................................... $ 2,234 $ 3,328 $ 5,562
======== ========= ========
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects BGP's operating results for the twelve months ended January
31, 1998.
(b) Reflects the elimination of certain officers' salaries and bonuses
and other consulting expenses which will not be paid under SFX's new
employment and other contracts. The amount of the pro forma
adjustment to eliminate salaries and bonuses is based on SFX's
46
<PAGE>
agreements with the affected employees that a bonus will not be paid unless
there is a significant improvement in the results of BGP. Accordingly, no
such bonus is reflected in the pro forma statement of operations because,
if BGP's results were similar to those in these pro forma statements of
operations, SFX would not be contractually obligated to pay a bonus.
D. NETWORK ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
------------------------------------------------
PRO FORMA NETWORK
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ----------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $28,322 $ -- $28,322
Cost of revenue ...................................... 6,399 -- 6,399
Selling, general and administrative expenses ......... 20,504 (7,326)(a) 13,178
Depreciation & amortization .......................... 351 351
------- --------- -------
Operating income (loss) .............................. 1,068 7,326 8,394
Interest expense, net ................................ 195 -- 195
Other (income) expenses .............................. (78) -- (78)
------- --------- -------
Income (loss) before income tax expense .............. 951 7,326 8,277
Income tax expense ................................... 127 -- 127
------- --------- -------
Net income ........................................... $ 824 $ 7,326 $ 8,150
======= ========= =======
</TABLE>
- ----------
PRO FORMA ADJUSTMENT:
(a) Reflects the elimination of certain officers' salaries and bonuses
which will not be paid under SFX's new employment contracts. The
amount of the pro forma adjustment to eliminate salaries and bonuses
is based on SFX's agreements with the affected employees that a
bonus will not be paid unless there is a significant improvement in
the results of the Network acquisition. Accordingly, no such bonus
is reflected in the pro forma statement of operations because, if
Network's results were similar to those in these pro forma
statements of operations, SFX would not be contractually obligated
to pay a bonus.
E. CONCERT/SOUTHERN ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
----------------------------------------------
CONCERT/
PRO FORMA SOUTHERN
AS REPORTED ADJUSTMENTS ACQUISITION
------------- --------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $14,797 $ -- $14,797
Cost of revenue ...................................... 9,878 -- 9,878
Selling, general and administrative expenses ......... 3,071 (429)(a) 2,642
Depreciation & amortization .......................... 79 -- 79
------- ------- -------
Operating income ..................................... 1,769 429 2,198
Other (income) expenses .............................. (60) -- (60)
Equity (income) loss from investments ................ 80 (32)(b) 48
------- ------- -------
Income before income tax expense ..................... 1,749 461 2,210
Income tax expense ................................... -- -- --
------- ------- -------
Net income ........................................... $ 1,749 $ 461 $ 2,210
======= ======= =======
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects the elimination of certain officers' salaries and bonuses
which will not be paid under SFX's new employment contracts. The
amount of the pro forma adjustment to eliminate salaries and bonuses
is based on SFX's agreements with the affected employees that a
bonus will not be paid unless there is a significant improvement in
the results of Concert/Southern. Accordingly, no such bonus is
reflected in the pro forma statement of operations because, if
Concert/Southern's results were similar to those in these pro forma
statements of operations, SFX would not be contractually obligated
to pay a bonus.
47
<PAGE>
(b) Reflects the elimination of equity loss of a non-entertainment
affiliated entity which was not acquired by SFX.
F. FAME ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
-------------------------------------------------
PRO FORMA FAME
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ------------------ ------------
<S> <C> <C> <C>
Revenue .............................................. $ 10,881 $ -- $10,881
Cost of revenue ...................................... -- -- --
Selling, general and administrative expenses ......... 13,002 (10,595)(a) 3,457
1,050 (b)
Depreciation & amortization .......................... 115 -- 115
-------- ---------- -------
Operating income (loss) .............................. (2,236) 9,545 7,309
Interest expense ..................................... 79 -- 79
Other (income) expenses .............................. (143) -- (143)
-------- ---------- -------
Income (loss) before income tax expense .............. (2,172) 9,545 7,373
Income tax expense (benefit) ......................... -- 700 (c) 700
-------- ---------- -------
Net income (loss) .................................... $ (2,172) $ 8,845 $ 6,673
======== ========== =======
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects the elimination of certain officers' distributions of
earnings which will not be paid under SFX's new employment
contracts. The FAME acquisition agreement provides for payments by
SFX to the FAME sellers of additional amounts up to an aggregate of
$15.0 million in equal annual installments over 5 years contingent
on the achievement of certain financial targets and for additional
payments by SFX if FAME's financial performance exceeds the target
by certain amounts. The financial targets were not met during the
pro forma period, therefore such additional payments are not
included in these pro forma financial statements. Had such targets
been met, or exceeded, the additional payments would have been
rewarded as additional consideration in the acquisition of FAME. If
FAME should meet the targets in the future, SFX will record the
payments as additional purchase price.
(b) Reflects salaries and officers' life insurance premiums to be paid
by SFX.
(c) Reflects an adjustment to the provision for state and local income
taxes.
G. AVALON ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
------------------------------------------------
PRO FORMA AVALON
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ----------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $27,265 $ -- $27,265
Cost of revenue ...................................... 20,077 -- 20,077
Selling, general and administrative expenses ......... 4,327 (698)(a) 3,629
Depreciation & amortization .......................... 410 -- 410
Corporate expenses ................................... -- -- --
------- --------- -------
Operating income (loss) .............................. 2,451 698 3,149
Interest expense ..................................... 94 -- 94
Other expenses ....................................... 1,581 (1,581)(b) --
------- --------- -------
Income (loss) before income tax expense .............. 776 2,279 3,055
Income tax expense ................................... 249 700 (c) 949
------- --------- -------
Net income ........................................... $ 527 $ 1,579 $ 2,106
======= ========= =======
</TABLE>
48
<PAGE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects the elimination of certain officers' bonuses and wages not
expected to be paid under SFX's new employment contracts for Avalon.
The amount of the pro forma adjustment to eliminate salaries and
bonuses is based on SFX's agreements with the affected employees
that a bonus will not be paid unless there is a significant
improvement in the results of Avalon. Accordingly, no such bonus is
reflected in the pro forma statement of operations because, if
Avalon's results were similar to those in these pro forma statements
of operations, SFX would not be contractually obligated to pay a
bonus.
(b) To reclassify PACE's equity income in Avalon following the Avalon
acquisition.
(c) Reflects an adjustment to the provision for state and local income
taxes.
H. OAKDALE ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
--------------------------------------------
PRO FORMA OAKDALE
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $16,435 $ -- $16,435
Cost of revenue ...................................... 10,866 -- 10,866
Selling, general and administrative expenses ......... 3,854 -- 3,854
Depreciation & amortization .......................... 51 -- 51
------- ---- -------
Operating income (loss) .............................. 1,664 -- 1,664
Interest expense ..................................... 1,508 -- 1,508
Other (income) expenses .............................. (79) -- (79)
------- ---- -------
Income before income tax expense ..................... 235 -- 235
Income tax expense ................................... -- -- --
------- ---- -------
Net income ........................................... $ 235 $ -- $ 235
======= ==== =======
</TABLE>
I. DON LAW ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
------------------------------------------------
PRO FORMA DON LAW
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ----------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $50,588 $ -- $50,588
Cost of revenue ...................................... 38,644 -- 38,644
Selling, general and administrative expenses ......... 5,757 (610) (a) 5,097
(50)(b)
Depreciation & amortization .......................... 2,033 -- 2,033
------- -------- -------
Operating income ..................................... 4,154 660 4,814
Interest expense ..................................... 1,072 -- 1,072
Other (income) expenses .............................. (329) -- (329)
------- -------- -------
Income before income tax expense ..................... 3,411 660 4,071
Income tax expense ................................... -- -- --
------- -------- -------
Net income ........................................... $ 3,411 $ 660 $ 4,071
======= ======== =======
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects adjustment to eliminate payments made to employees
associated with membership interest.
49
<PAGE>
(b) Reflects the elimination of certain officer's bonuses and wages not
expected to be paid under SFX's new employment contracts. The amount
of the pro forma adjustment to eliminate salaries and bonuses is
based on SFX's agreements with the affected employees that a bonus
will not be paid unless there is a significant improvement in the
results of Don Law. Accordingly, no such bonus is reflected in the
pro forma statement of operations as should Don Law's results be at
a similar level to that in these pro forma statements of operations
no bonus would be paid, and SFX would not be contractually obligated
to pay a bonus.
J. MAGICWORKS ACQUISITION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
--------------------------------------------
PRO FORMA MAGICWORKS
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $38,963 $ -- $38,963
Cost of revenue ...................................... 28,165 -- 28,165
Selling, general and administrative expenses ......... 8,290 -- 8,290
Depreciation & amortization .......................... 634 -- 634
------- ---- -------
Operating income (loss) .............................. 1,874 -- 1,874
Interest expenses .................................... 686 -- 686
Equity (income) loss from investments ................ (541) -- (541)
Other (income) expenses .............................. (135) -- (135)
------- ---- -------
Income before income tax expense ..................... 1,864 -- 1,864
Income tax expense ................................... 747 -- 747
------- ---- -------
Net income ........................................... $ 1,117 $ -- $ 1,117
======= ==== =======
</TABLE>
K. OTHER ACQUISITIONS
Reflects the historical combined operating results of the seven businesses
acquired by SFX in the third quarter of 1998. In the aggregate, such
acquisitions are not material to SFX's financial position or results of
operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
------------------------------------------------
PRO FORMA OTHER
HISTORICAL ADJUSTMENTS ACQUISITIONS
------------ ----------------- -------------
<S> <C> <C> <C>
Revenue ............................................. $ 93,050 $ -- $ 93,050
Cost of revenue ..................................... 79,176 -- 79,176
Selling, general and administrative expense ......... 10,064 (1,623)(a) 8,441
Depreciation & amortization ......................... 430 -- 430
-------- --------- --------
Operating income .................................... 3,380 1,623 5,003
Interest expense .................................... 254 -- 254
Equity (income) loss from investments ............... (1,561) -- (1,561)
Other (income) expenses ............................. 39 -- 39
-------- --------- --------
Income (loss) before income tax expense ............. 4,648 1,623 6,271
Income tax expense .................................. 22 -- 22
-------- --------- --------
Net income .......................................... $ 4,626 $ 1,623 $ 6,249
======== ========= ========
</TABLE>
- ----------
PRO FORMA ADJUSTMENT:
(a) Reflects the elimination of consulting fees.
L. PRO FORMA ADJUSTMENTS
(a) Reflects the increase in depreciation and amortization resulting
from the preliminary purchase accounting treatment of the
acquisitions. SFX amortizes goodwill and other intangibles over
periods ranging from 2-15 years.
50
<PAGE>
(b) To record incremental corporate overhead charges associated with
headquarters personnel and general and administrative expenses that
management estimates will be necessary as a result of the SFX's
acquisitions.
(c) Reflects the incremental interest expense associated with additional
borrowing related to SFX's 1998 acquisitions.
(d) To reclassify Delsener/Slater's equity income in the PNC Bank Arts
Center venue following the acquisition of Pavilion, which owns the
other 50% equity interest in the venue.
(e) To reclassify PACE's equity income in Avalon following the Avalon
acquisition.
(f) To reflect the elimination of PACE's equity income in Magicworks.
(g) Represents an adjustment to the provision for state and local income
taxes. The calculation treats all companies acquired as "C"
Corporations and reflects the impact of non-deductible goodwill and
tax savings related to the pro forma adjustments.
(h) To reflect the federal tax benefit for interest expense.
IV. PENDING MARQUEE AND CELLAR DOOR ACQUISITIONS AND THE OLD NOTE OFFERING
A. CELLAR DOOR
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
------------------------------------------------
PRO FORMA CELLAR DOOR
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ----------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $63,966 $ -- $63,966
Cost of revenue ...................................... 49,073 -- 49,073
Selling, general and administrative expenses ......... 12,152 (3,060)(a) 9,092
Depreciation & amortization .......................... 1,613 3,982 (b) 5,595
------- --------- -------
Operating income (loss) .............................. 1,128 (922) 206
Interest expense ..................................... 2,398 (2,398)(c) --
Equity income from investments ....................... (601) -- (601)
Other income ......................................... (369) -- (369)
------- --------- -------
Income (loss) before income tax expense .............. (300) 1,476 1,176
Income tax expense ................................... 5 -- 5
------- --------- -------
Net income (loss) .................................... $ (305) $ 1,476 $ 1,171
======= ========= =======
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects the elimination of certain management fees and certain
officers' salaries, bonuses and other compensation which will not be
paid under SFX's new employment agreements and other contracts.
(b) Reflects the increase of $3,982,000 in depreciation and amortization
resulting from the preliminary purchase accounting treatment of
Cellar Door. SFX amortizes goodwill over 15 years.
(c) Reflects the elimination of $2,398,000 of historical interest
expense.
51
<PAGE>
B. MARQUEE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
-------------------------------------------------
MARQUEE PRO FORMA MARQUEE
PRO FORMA (A) ADJUSTMENTS ACQUISITION
--------------- ---------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $ 53,324 $ -- $ 53,324
Cost of revenue ...................................... 34,383 -- 34,383
Selling, general and administrative expenses ......... 12,095 -- 12,095
Depreciation and amortization ........................ 4,561 3,223 (b) 7,784
Non-cash charges and financing expense ............... 1,367 -- 1,367
-------- --------- --------
Operating income (loss) .............................. 918 (3,223) (2,305)
Interest expense ..................................... 3,323 (3,323)(c) --
-------- --------- --------
Income (loss) before income tax expense .............. (2,405) 100 (2,305)
Income tax expense ................................... 53 -- 53
-------- --------- --------
Net income (loss) .................................... (2,458) 100 (2,358)
Accretion on put option .............................. (301) -- (301)
-------- --------- --------
Net loss applicable to common share .................. $ (2,759) $ 100 $ (2,659)
======== ========= ========
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Represents the pro forma results for Marquee. See Marquee's
unaudited pro forma condensed combined statement of operations
beginning on page 59.
(b) Reflects the increase of $3,223,000 in depreciation and amortization
resulting from the preliminary purchase accounting treatment of
Marquee. SFX amortizes goodwill over 15 years.
(c) Reflects the elimination of $3,323,000 of historical interest
expense.
C. PRO FORMA ADJUSTMENT
Reflects the incremental depreciation and amortization expense, SFX's
incremental interest expense related to the pending Marquee and Cellar
Door acquisitions and the elimination of Cellar Door's equity income in
certain PACE companies. See pages 39 and 40 for details of the
adjustments. Also, reflects no tax benefit on pro forma adjustments given
SFX's loss position.
V. THE PROPOSED EQUITY OFFERING
Reflects a reduction in interest expense of $10,113,000 due to repayment
of outstanding borrowings under the revolving portion of SFX's credit facility
in connection with the proposed equity offering.
52
<PAGE>
SFX ENTERTAINMENT, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SFX
ENTERTAINMENT
(ACTUAL) SFX 1998 ACQUISTIONS PRO FORMA FOR
I II THE SFX 1998 ACQUISITIONS
--------------- ---------------------- ---------------------------
<S> <C> <C> <C>
Revenue ............................. $ 680,376 $244,718 $ 925,094
Cost of revenue ..................... 519,552 178,745 698,297
Selling, general and
administrative expenses ............ 82,986 30,631 113,617
Depreciation & amortization,
including integration costs ........ 40,381 21,393 61,774
Corporate expenses, net of
Triathlon fees ..................... 5,839 161 6,000
Noncash compensation and other
non cash charges ................... 32,895 -- 32,895
--------- -------- ---------
Operating income (loss) ............. (1,277) 13,788 12,511
Interest expense .................... 31,709 17,764 49,473
Equity (income) loss from
investments ........................ (3,964) (1,270) (5,234)
Other (income) expenses ............. (2,152) 2,822 670
--------- -------- ---------
Income (loss) before income tax
expense ............................ (26,870) (5,528) (32,398)
Income tax expense (benefit) ........ 3,333 280 3,613
--------- -------- ---------
Net income (loss) ................... (30,203) $ (5,808) (36,011)
========
Accretion on put option ............. (1,925) (2,475)
--------- ---------
Net loss applicable to common
shares ............................. $ (32,128) $ (38,486)
========= =========
Net loss per common share ........... $ (1.38) $ (1.28)
========= =========
Weighted average common
shares outstanding (1) (2) ......... 23,262 30,454
========= =========
<CAPTION>
PRO FORMA
PENDING MARQUEE AND CELLAR DOOR
ACQUISITIONS FOR THE SFX 1998
AND THE OLD NOTE OFFERING ACQUISITIONS,
III THE OLD NOTE OFFERING THE
--------------------------------------- AND THE PENDING PROPOSED
PRO FORMA MARQUEE AND EQUITY
CELLAR DOOR MARQUEE ADJUSTMENTS CELLAR DOOR OFFERING
A B C ACQUISITIONS IV
------------- ----------- ------------- ----------------------- -----------
<S> <C> <C> <C> <C> <C>
Revenue ............................. $63,206 $48,848 -- $1,037,148 $ --
Cost of revenue ..................... 51,323 30,777 -- 780,397 --
Selling, general and
administrative expenses ............ 6,067 10,650 -- 130,334 --
Depreciation & amortization,
including integration costs ........ 4,196 5,838 $ -- 71,808 --
Corporate expenses, net of
Triathlon fees ..................... -- -- -- 6,000 --
Noncash compensation and other
non cash charges ................... -- 367 -- 33,262 --
------- ------- --------- ---------- ---------
Operating income (loss) ............. 1,620 1,216 -- 15,347 --
Interest expense .................... -- -- 10,698 60,171 (7,584)
Equity (income) loss from
investments ........................ (645) -- (89) (5,968) --
Other (income) expenses ............. (89) -- 89 670 --
------- ------- --------- ---------- ---------
Income (loss) before income tax
expense ............................ 2,354 1,216 (10,698) (39,526) 7,584
Income tax expense (benefit) ........ 4 1,000 -- 4,617 --
------- ------- --------- ---------- ---------
Net income (loss) ................... $ 2,350 216 $ (10,698) (44,143) $ 7,584
======= ========= =========
Accretion on put option ............. (236) (2,711)
------- ----------
Net loss applicable to common
shares ............................. $ (20) $ (46,854)
======= ==========
Net loss per common share ........... $ (1.48)
==========
Weighted average common
shares outstanding (1) (2) ......... 32,286
==========
<CAPTION>
PRO FORMA FOR
THE SFX 1998
ACQUISITIONS,
THE OLD NOTE
OFFERING,
THE PENDING
MARQUEE AND
CELLAR DOOR
ACQUISITIONS
AND THE PROPOSED
EQUITY OFFERING
-----------------
<S> <C>
Revenue ............................. $1,037,148
Cost of revenue ..................... 780,397
Selling, general and
administrative expenses ............ 130,334
Depreciation & amortization,
including integration costs ........ 71,808
Corporate expenses, net of
Triathlon fees ..................... 6,000
Noncash compensation and other
non cash charges ................... 33,262
----------
Operating income (loss) ............. 15,347
Interest expense .................... 52,587
Equity (income) loss from
investments ........................ (5,968)
Other (income) expenses ............. 670
----------
Income (loss) before income tax
expense ............................ (31,942)
Income tax expense (benefit) ........ 4,617
----------
Net income (loss) ................... (36,559)
Accretion on put option ............. (2,711)
----------
Net loss applicable to common
shares ............................. $ (39,270)
==========
Net loss per common share ........... $ (1.07)
==========
Weighted average common
shares outstanding (1) (2) ......... 37,086
==========
</TABLE>
See footnotes on following page.
53
<PAGE>
- ----------
(1) Includes 500,000 shares of SFX Class A common stock issued to the PACE
sellers in connection with the fifth year put option and 46,652 shares of
SFX Class A common stock related to the ProServ put options issued by
Marquee. Such shares are not included in calculating the net loss per
common share.
(2) Reconciliation of historical weighted average shares outstanding to
proforma weighted average shares.
<TABLE>
<CAPTION>
CLASS A & B
DATE SHARES WEIGHTED AVERAGE
ISSUANCE OF COMMON SHARES ISSUED OUTSTANDING SHARES
- ------------------------------------------------------ ---------- ------------- -----------------
<S> <C> <C> <C>
Class A common shares outstanding .................... 1/1/98 13,579 13,579
Class B common shares outstanding .................... 1/1/98 1,047 1,047
Class A common shares issued for Westbury, PACE,
BGP, Contemporary, and Network acquisitions ......... 4/27/98 4,291 2,460
Class A common shares issued to employees in
connection with the spin-off ........................ 4/27/98 1,533 882
Class B common shares issued to employees in
connection with the spin-off ........................ 4/27/98 650 374
Class A common shares issued in the 1998 Equity
Offering ............................................ 5/5/98 8,050 4,394
Class A common shares issued in the FAME
acquisition ......................................... 6/4/98 1,000 436
Class A common shares issued for the other
acquisitions ........................................ 7/10/98 300 90
Class A common shares issued after
September 30, 1998 .................................. 4 --
------ ------
Subtotal ............................................. 30,454 23,262
======
Class A common shares expected to be issued in the
Cellar Door acquisition ............................. 360
Class A common shares expected to be issued for the
Marquee acquisition ................................. 1,472
------
Weighted average common shares outstanding before
the proposed equity offering ........................ 32,286
Class A common shares expected to be issued in the
proposed equity offering ............................ 4,800
------
Pro forma weighted average common shares
outstanding ......................................... 37,086
======
</TABLE>
NOTES TO PRO FORMA STATEMENTS:
I. Represents SFX's actual operating results for the nine months ended
September 30, 1998.
EDITDA for the nine months ended September 30, 1998, was $39,104,000 and
$87,155,000 for SFX on an actual basis and a pro forma basis, respectively.
EBITDA is defined as earnings before interest, taxes, other income, net,
equity income (loss) from investments and depreciation and amortization.
Although EBITDA is not a measure of performance calculated in accordance
with GAAP, we believe that the entertainment industry accepts EBITDA as a
generally recognized measure of performance and that analysts who report
publicly on the performance of entertainment companies use EBITDA.
Nevertheless, you should not consider this measure in isolation or as a
54
<PAGE>
substitute for operating income, net income, net cash provided by operating
activities or any other measure for determining SFX's operating performance
or liquidity that is calculated in accordance with GAAP. EBITDA, as we
calculate it, may not be comparable to calculations of similarly titled
measures presented by other companies. Cash flows from operating, investing
and financing activities for SFX for the nine months ended September 30,
1998, were $22,307,000, ($852,240,000) and $889,543,000, respectively.
We believe there are other adjustments that could affect EBITDA, but we
have not reflected them herein. If we had made such adjustments, Adjusted
EBITDA on a pro forma basis would have been approximately $131,154,000 for
the nine months ended September 30, 1998. The adjustments include the
elimination of non-cash compensation and other non-cash charges of
$33,262,000, the expected cost savings in connection with SFX's 1997
acquisitions, SFX's 1998 acquisitions and the pending Marquee and Cellar
Door acquisitions associated with the elimination of duplicative staffing
and general and administrative expenses of $4,769,000, and equity income
from investments of $5,968,000. While management believes that such cost
saving are achievable, SFX's ability to fully achieve such cost savings is
subject to numerous factors, certain of which may be beyond SFX's control.
55
<PAGE>
II. SFX 1998 ACQUISITIONS SFX acquired PACE, including USA Motor Sports, and
Pavilion, Contemporary, BGP, Network and Concert/Southern on February 25,
1998, February 27, 1998, February 24, 1998, February 27, 1998, and March 4,
1998, respectively. In May 1998, SFX acquired Avalon. In June 1998, SFX
acquired FAME and Oakdale. In July 1998, SFX acquired Don Law, and in
September 1998 SFX acquired Magicworks. In addition, in the third quarter
of 1998 SFX acquired seven other companies herein defined as the Other
Acquisitions. The following represents the historical operating results of
these companies prior to their acquisition by SFX.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
-------------------------------------------------------------------------------------
PACE & CONCERT/
PAVILION COMTEMPORARY BGP NETWORK SOUTHERN FAME
ACQUISITIONS ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ......................... $ 86,206 $7,882 $ 16,075 $4,154 $ 524 $2,144
Cost of revenue ................. 67,744 6,711 14,149 1,047 276 1,742
Selling, general &
administrative expenses ........ 17,906 1,544 2,652 2,902 362 295
Depreciation & amortization...... 1,049 254 213 51 9 27
Corporate expenses .............. -- -- -- -- -- --
-------- ------ -------- ------ ------ ------
Operating income (loss) ......... (493) (627) (939) 154 (123) 80
Interest expense ................ 1,148 -- 165 37 -- 42
Equity (income) loss from
investments .................... 549 -- -- -- 20 --
Other (income) expenses ......... (176) (122) 67 (14) -- (26)
-------- ------ -------- ------ ------ ------
Income (loss) before income
tax expense .................... (2,014) (505) (1,171) 131 (143) 64
Income tax expense (benefit)..... (475) -- -- 3 -- --
-------- ------ -------- ------ ------ ------
Net income (loss) ............... $ (1,539) $ (505) $ (1,171) $ 128 $ (143) $ 64
======== ====== ======== ====== ====== ======
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
------------------------------------------------------------------------------------------
PRO FORMA
AVALON OAKDALE DON LAW MAGICWORKS OTHER ADJUSTMENTS
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITIONS A
------------- ------------- ------------- ------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ......................... $ 2,269 $5,982 $20,566 $54,547 $44,369 $ --
Cost of revenue ................. 2,467 3,787 14,598 46,292 19,932 --
Selling, general &
administrative expenses ........ 1,338 1,535 2,437 6,070 6,512 (13,185)(a)
263 (b)
Depreciation & amortization...... 220 28 2,661 -- 191 16,690 (c)
Corporate expenses .............. -- -- -- -- -- 161 (d)
-------- ------ ------- ------- ------- -----------
Operating income (loss) ......... (1,756) 632 870 2,185 17,734 (3,929)
Interest expense ................ -- -- -- -- 404 15,968 (e)
Equity (income) loss from
investments .................... (370) -- -- (235) (958) (276)(f)
Other (income) expenses ......... -- -- (166) -- 240 370 (g)
2,373 (h)
276 (f)
-------- ------ ------- ------- ------- -----------
Income (loss) before income
tax expense .................... (1,386) 632 1,036 2,420 18,048 (22,640)
Income tax expense (benefit)..... -- -- -- 950 -- (198)(i)
-------- ------ ------- ------- ------- -----------
Net income (loss) ............... $ (1,386) $ 632 $ 1,036 $ 1,470 $18,048 $ (22,442)
======== ====== ======= ======= ======= ===========
<PAGE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
1998
(IN THOUSANDS)
--------------
PRO FORMA
FOR THE SFX
1998
ACQUISITIONS
-------------
<S> <C>
Revenue ......................... $244,718
Cost of revenue ................. 178,745
Selling, general &
administrative expenses ........ 30,631
Depreciation & amortization...... 21,393
Corporate expenses .............. 161
--------
Operating income (loss) ......... 13,788
Interest expense ................ 17,764
Equity (income) loss from
investments .................... (1,270)
Other (income) expenses ......... 2,822
Income (loss) before income
tax expense .................... (5,528)
Income tax expense (benefit)..... 280
--------
Net income (loss) ............... $ (5,808)
========
</TABLE>
56
<PAGE>
- ----------
A. PRO FORMA ADJUSTMENTS:
(a) To reflect the elimination of $10,723,000 of PACE's non-cash stock
and other non-recurring compensation, $1,173,000 and $1,289,000 of
Network's and FAME's excess compensation, respectively.
(b) Reflects salaries and officers' life insurance premiums to be paid
by SFX.
(c) Reflects the increase of $18,108,000 in depreciation and
amortization resulting from the preliminary purchase accounting
treatment of SFX's 1998 acquisitions. SFX amortizes goodwill and
other intangibles over periods ranging for 2-15 years.
(d) To record incremental corporate overhead, personnel and
administrative expenses that management estimates will be necessary
as a result of SFX's acquisitions.
(e) Reflects the incremental interest expense associated with additional
borrowing related to SFX's 1998 acquisitions.
(f) Reflects the elimination of PACE's equity income in certain
Magicworks tours.
(g) To reclassify $370,000 of PACE's equity income in Avalon following
the Avalon acquisition.
(h) Reflects the elimination of interest income earned from investing
borrowings used to fund acquisitions.
(i) Represents an adjustment to the provision for state and local income
taxes and a Federal tax benefit for interest expense at Magicworks.
The calculation treats all companies to be acquired as "C"
Corporations and reflects the impact of non-deductible goodwill.
III. PENDING MARQUEE AND CELLAR DOOR ACQUISITIONS AND THE OLD NOTE OFFERING
A. CELLAR DOOR
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1998 (IN
THOUSANDS)
--------------------------------------------
PRO FORMA CELLAR DOOR
AS REPORTED ADJUSTMENTS ACQUISITION
------------- ----------------- ------------
<S> <C> <C> <C>
Revenue .............................................. $63,206 $ -- $63,206
Cost of revenue ...................................... 51,323 -- 51,323
Selling, general and administrative expenses ......... 6,697 (630)(a) 6,067
Depreciation & amortization .......................... 1,272 2,924 (b) 4,196
------- --------- -------
Operating income (loss) .............................. 3,914 (2,294) 1,620
Interest (income) expense ............................ 1,610 (1,610)(c) --
Equity (income) loss from investments ................ (645) -- (645)
Other income ......................................... (89) -- (89)
------- --------- -------
Income (loss) before income tax expense .............. 3,038 (684) 2,354
Income tax expense ................................... 4 -- 4
------- --------- -------
Net income (loss) .................................... $ 3,034 $ (684) $ 2,350
======= ========= =======
</TABLE>
- ----------
PRO FORMA ADJUSTMENTS:
(a) Reflects the elimination of certain management fees which will not
be paid under SFX's new agreements.
(b) Reflects the increase of $2,924,000 in depreciation and amortization
resulting from the preliminary purchase accounting treatment of
Cellar Door. SFX amortizes goodwill over 15 years.
(c) Reflects the elimination of $1,610,000 of historical interest
expense.
57
<PAGE>
B. MARQUEE
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1998 (IN
THOUSANDS)
-----------------------------------------------
MARQUEE PRO FORMA MARQUEE
PRO FORMA(A) ADJUSTMENTS ACQUISITION
-------------- ------------------- ------------
<S> <C> <C> <C>
Revenue ................................... $48,848 $ -- $48,848
Cost of revenue ........................... 30,777 -- 30,777
Selling, general and administrative
expenses ................................. 10,650 -- 10,650
Depreciation & amortization ............... 3,569 2,269 (b) 5,838
Corporate expenses ........................ -- -- --
Non cash compensation and other non cash
charges .................................. 367 -- 367
------- ---------- -------
Operating income (loss) ................... 3,485 (2,269) 1,216
Interest expense .......................... 2,359 (2,359))(c) --
Equity (income) loss from investment ...... -- -- --
Other (income) expenses ................... -- -- --
------- ---------- -------
Income/(loss) before income tax expense ... 1,126 90 1,216
Income tax expense (benefit) .............. 1,000 -- 1,000
------- ---------- -------
Net income ................................ 126 90 216
Accretion on put option ................... (236) -- (236)
------- ---------- -------
Net loss applicable to common shares ...... $ (110) $ 90 $ (20)
======= ========== =======
</TABLE>
PRO FORMA ADJUSTMENTS:
(a) Reflects the pro forma results of Marquee. See Marquee's unaudited
pro forma condensed combined statement of operations beginning on
page 59.
(b) Reflects the increase of $2,269,000 in depreciation and amortization
resulting from the preliminary purchase accounting treatment of
Marquee. SFX amortizes goodwill over 15 years.
(c) Reflects the elimination of $2,359,000 of historical interest
expense.
C. PRO FORMA ADJUSTMENTS
To reflect the elimination of Cellar Door's equity income in certain PACE
businesses. Reflects the incremental amortization expense associated with
the fees and expenses incurred in connection with the merger and the Cellar
Door acquisition and SFX's incremental interest expense. Reflects no tax
benefit on pro forma adjustments given SFX's loss position.
IV. THE PROPOSED EQUITY OFFERING
Reflects a reduction in interest expense of $7,584,000 due to repayment of
outstanding borrowings under the revolving portion of SFX's credit facility in
connection with the proposed equity offering.
58
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARQUEE
MARQUEE 1997 PRO FORMA
AS REPORTED ACQUISITIONS(1) ADJUSTMENTS
------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues ..................... $ 21,268 $13,685 $ --
Operating expenses ........... 14,459 9,375 (680)(2)
General and
administrative expenses 6,316 3,678 (1,003)(2)
Loss on abandonment of
lease ....................... 466 -- --
Deferred compensation
and other non-cash
expenses .................... 145 110 (110)(2)
Depreciation &
amortization ................ 371 105 953 (3)
-------- ------- ----------
Income (loss) from
operations .................. (489) 417 840
Interest expense (income),
net ......................... 22 120 (120)(4)
Financing expense ............ 756 -- --
Income (loss) before
income taxes ................ (1,267) 297 960
Income taxes ................. 45 45 --
-------- ------- ----------
Net income (loss) ............ (1,312) 252 960
Accretion of obligation
related to the put option
issued in connection
with the ProServ
acquisition ................. 59 -- 242 (5)
-------- ------- ----------
Net income (loss)
applicable to common
stockholders ................ $ (1,371) $ 252 $ 718
======== ======= ==========
Net loss per share
applicable to common
stockholders -- basic ....... $ (0.15)
========
Weighted average common
stock outstanding ........... 9,377
========
<CAPTION>
PRO FORMA
FOR THE
MARQUEE
1997
ACQUISITIONS,
MARQUEE
PRO FORMA 1998
FOR THE ACQUISITIONS
MARQUEE MARQUEE AND THE
1997 1998 PRO FORMA MARQUEE
ACQUISITIONS ACQUISITIONS(6) ADJUSTMENTS CREDIT AGREEMENT
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenues ..................... $34,953 $18,371 $ -- $ 53,324
Operating expenses ........... 23,154 13,795 (2,566)(7) 34,383
General and
administrative expenses 8,991 3,179 (75) (7) 12,095
Loss on abandonment of
lease ....................... 466 -- -- 466
Deferred compensation
and other non-cash
expenses .................... 145 -- -- 145
Depreciation &
amortization ................ 1,429 132 3,000 (8) 4,561
------- ------- ---------- --------
Income (loss) from
operations .................. 768 1,265 (359) 1,674
Interest expense (income),
net ......................... 22 (32) 233 (9) 3,323
3,100 (10)
Financing expense ............ 756 -- -- 756
Income (loss) before
income taxes ................ (10) 1,297 (3,692) (2,405)
Income taxes ................. 90 287 (324)(11) 53
------- ------- ---------- --------
Net income (loss) ............ (100) 1,010 (3,368) (2,458)
Accretion of obligation
related to the put option
issued in connection
with the ProServ
acquisition ................. 301 -- -- 301
------- ------- ---------- --------
Net income (loss)
applicable to common
stockholders ................ $ (401) $ 1,010 $ (3,368) $ (2,759)
======= ======= ========== ========
Net loss per share
applicable to common
stockholders -- basic ....... $ (0.03) $ (0.16)
======= ========
Weighted average common
stock outstanding ........... 16,559 17,108
======= ========
</TABLE>
59
<PAGE>
1997 PRO FORMA ADJUSTMENTS FOR STATEMENT OF OPERATIONS
(1) Marquee acquired ProServ, Inc. and ProServ Television, Inc., and QBQ
Entertainment Inc. in October 1997 and included the results of their
operations only from the acquisition date in its consolidated results of
operations for the year ended December 31, 1997. Therefore, for pro forma
purposes, the results of operations of Marquee's 1997 acquisitions for the
period prior to the acquisition date are presented separately and are as
follows:
<TABLE>
<CAPTION>
PROSERV QBQ COMBINED
----------- --------- ---------
<S> <C> <C> <C>
Revenues ........................................ $11,987 $1,698 $13,685
Operating expenses .............................. 8,926 449 9,375
General and administrative expenses ............. 3,240 438 3,678
------- ------ -------
(179) 811 632
Deferred compensation and other non-cash expenses 110 -- 110
Depreciation and amortization ................... 105 -- 105
------- ------ -------
Income (loss) from operations ................... (394) 811 417
Interest expense (income), net .................. 152 (32) 120
------- ------ -------
Income (loss) before income taxes ............... (546) 843 297
Income taxes .................................... 45 -- 45
------- ------ -------
Net income (loss) ............................... $ (591) $ 843 $ 252
======= ====== =======
</TABLE>
(2) To reduce expenses to reflect contractually agreed to reductions in
personnel, officers' salaries, employee benefits and other costs in
connection with Marquee's 1997 acquisitions for the period prior to the
acquisitions.
(3) To reflect full year amortization of intangibles arising from Marquee's
1997 acquisitions.
(4) To reduce ProServ interest expense to reflect the reduction in debt as a
result of the acquisition.
(5) To reflect full year expense related to the accretion of the put option.
(6) The Marquee 1998 acquisitions consisting of Alphabet City Industries, Inc.
and Alphabet City Sport Records, Inc., Cambridge Holding Corporation, Park
Associations Limited ("PAL"), Tony Stephen Associates Limited, and Halcyon
Days Production, Inc., Robbins Entertainment Group, Inc. and Tollin
Robbins Management, LLC (collectively, "Tollin/Robbins") includes the
historical results of operations for 1997 as follows:
60
<PAGE>
<TABLE>
<CAPTION>
ALPHABET CITY CAMBRIDGE PAL TOLLIN/ROBBINS TONY STEPHENS COMBINED
--------------- ----------- ------------ ---------------- --------------- -----------
NOTE (A) NOTE (A)
<S> <C> <C> <C> <C> <C> <C>
Revenues ................... $2,976 $1,319 $4,889 $5,073 $4,114 $18,371
Operating expenses ......... 2,216 768 3,775 3,648 3,388 13,795
General and
administrative
expenses ................. 653 571 813 846 296 3,179
------ ------ ------ ------ ------ -------
107 (20) 301 579 430 1,397
Depreciation and
amortization ............. 4 9 23 75 21 132
------ ------ ------ ------ ------ -------
Income (loss) from
operations ............... 103 (29) 278 504 409 1,265
Interest expense
(income), net ............ -- (12) (8) -- (12) (32)
------ ------ ------ ------ ------ -------
Income (loss) before
income taxes ............. 103 (17) 286 504 421 1,297
Income taxes ............... 23 -- 74 80 110 287
------ ------ ------- ------ ------ -------
Net income (loss) .......... $ 80 $ (17) $ 212 $ 424 $ 311 $ 1,010
====== ====== ======= ====== ====== =======
</TABLE>
- ----------
Note (a)--Translated from British Pounds at the average exchange rate for the
year.
(7) To adjust expenses to reflect compensation agreements entered into in
connection with Marquee's 1998 acquisitions.
(8) To record the amortization of the intangibles arising from Marquee's 1998
acquisitions--over 10-15 years.
(9) To record imputed interest expense, at interest rates ranging from 8.4% to
10.5%, on the obligations to certain sellers in connection with
Marquee's 1998 acquisitions--$800,000 of imputed interest to be
amortized over 4 to 5 years.
(10) To reflect interest expense, at interest rates ranging from 8.4% to 10.5%,
total borrowings of $33.1 million, including the amortization of deferred
financing costs of approximately $750,000 amortized over 3 years,
associated with the Marquee credit agreement used to finance Marquee's
1998 acquisitions.
(11) To record the impact of Marquee's 1998 acquisitions pro forma adjustments,
net of the benefit of consolidated net operating loss carryforwards.
61
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
FOR THE
MARQUEE
1997
ACQUISITIONS,
MARQUEE
1998
ACQUISITIONS
MARQUEE AND THE
MARQUEE 1998 PRO FORMA MARQUEE
AS REPORTED ACQUISITIONS(1) ADJUSTMENTS CREDIT AGREEMENT
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenues ....................... $ 35,470 $13,378 $ -- $48,848
Operating expenses ............. 23,726 8,544 (1,493)(2) 30,777
General and administrative
expenses ...................... 8,239 2,826 (251)(2) 10,650
(164)(3)
Deferred compensation and
other non-cash expenses ....... 367 -- -- 367
Depreciation & amortization..... 1,463 66 2,040 (4) 3,569
-------- ------- --------- -------
Income (loss) from
operations .................... 1,675 1,942 (132) 3,485
Interest expense (income),
net ........................... 120 (17) 176 (5) 2,359
2,080 (6)
---------
Income (loss) before income
taxes ......................... 1,555 1,959 (2,388) 1,126
Income taxes ................... 541 161 298 (7) 1,000
-------- ------- --------- -------
Net Income (loss) .............. 1,014 1,798 (2,686) 126
Accretion of obligation
related to the put option
issued in connection with
the ProServ acquisition ....... 236 -- -- 236
-------- ------- --------- -------
Net income (loss) applicable
to common stockholders ........ $ 778 $ 1,798 $ (2,686) $ (110)
======== ======= ========= =======
Net income (loss) per share
applicable to common
stockholders--basic and
dilutive ...................... $ 0.05 $ (0.01)
======== =======
Weighted average common
stock outstanding ............. 16,801 17,124
======== =======
</TABLE>
62
<PAGE>
1998 PRO FORMA ADJUSTMENTS FOR STATEMENT OF OPERATIONS
(1) Marquee acquired Alphabet City, Cambridge, PAL, Tollin/Robbins, and Tony
Stephens during 1998 and included the results of their operations only
from the acquisition date in its consolidated results of operations for
the nine months ended September 30, 1998. Therefore, for pro forma
purposes, the results of operations of Marquee's 1998 acquisitions for
the period prior to the acquisition date are presented separately and are
as follows:
<TABLE>
<CAPTION>
ALPHABET TOLLIN/ TONY
CITY CAMBRIDGE PAL ROBBINS STEPHENS COMBINED
---------- ----------- ------------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues ................... $1,476 $691 $2,576 $5,509 $3,126 $13,378
Operating expenses ......... 1,186 303 1,966 2,424 2,665 8,544
General and administrative
expenses .................. 346 156 906 1,259 159 2,826
------ ---- ------ ------ ------ -------
(56) 232 (296) 1,826 302 2,008
Depreciation and
amortization .............. 4 2 -- 50 10 66
------ ---- ------ ------ ------ -------
Income (loss) from
operations ................ (60) 230 (296) 1,776 292 1,942
Interest expense (income),
net ....................... -- (1) (8) -- (8) (17)
------ ------ -------- ------ -------- -------
Income (loss) before income
taxes ..................... (60) 231 (288) 1,776 300 1,959
Income taxes ............... 20 85 (30) 86 161
------ ----- ------- ------- -------
Net income (loss) .......... $ (80) $146 $(258) $1,776 $ 214 $ 1,798
====== ===== ======= ====== ======= =======
</TABLE>
(2) To adjust expenses to reflect compensation agreements entered into in
connection with Marquee's 1998 acquisitions.
(3) To reduce expenses for loss on transfer of property to former owners of
PAL and other nonrecurring costs.
(4) To record the amortization of the excess of the purchase price over the
net assets acquired associated with Marquee's 1998 acquisitions--over
10-15 years.
(5) To record imputed interest expense, at interest rates ranging from 8.4%
to 10.5%, on the obligations to certain sellers in connection with
Marquee's 1998 acquisitions--$800,000 of imputed interest to be amortized
over 4 to 5 years.
(6) To reflect interest expense, at interest rate ranging from 8.4% to 10.5%,
total borrowings of $33.1 million, including the amortization of deferred
financing costs of approximately $750,000 amortized over 3 years,
associated with the Marquee credit agreement used to finance Marquee's
1998 acquisitions.
(7) To record the impact of Marquee's 1998 acquisitions Pro Forma
Adjustments, net of the benefit of consolidated net operating loss
carryforwards.
63
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of SFX should be read in conjunction with the consolidated financial
statements and related notes thereto included in this prospectus. The following
discussion contains certain forward-looking statements that involve risks and
uncertainties. SFX's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to the differences are
discussed in "Risk Factors" and elsewhere in this prospectus. SFX undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
SFX's core business is the promotion and production of live entertainment
events, most significantly for concert and other music performances in venues
owned and/or operated by SFX and in third-party venues. In connection with all
of its live entertainment events, SFX seeks to maximize related revenue
streams, including the sale of corporate sponsorships, the sale of concessions
and the merchandising of a broad range of products. On a pro forma basis for
SFX's 1998 acquisitions and the pending Marquee and Cellar Door acquisitions,
SFX's music businesses, including venue operations, comprised approximately 61%
of net revenues, theater comprised approximately 21% of net revenues, sports,
including representation of professional athletes and specialized motor sports,
comprised approximately 10% of net revenues and other operations comprised
approximately 8% of SFX's net revenues for the nine months ended September 30,
1998.
Promotion of events involves booking talent, renting or providing the
event venue, marketing the event to attract ticket buyers and providing for
local services required in the production of the event, such as security and
stage hands. Promoters generally receive revenues from the sale of tickets and
sponsorships. When an event is promoted at a venue owned or managed by the
promoter, the promoter also generally receives a percentage of revenues from
concessions, merchandising, parking, premium box seats and ticket rebates. SFX
earns promotion revenues principally by promoting music concerts, touring
Broadway shows and specialized motor sports events.
Production of events involves developing the event content, hiring
artistic talent and managing the actual production of the event with the
assistance of the local promoter. Producers generally receive revenues from
guarantees and from profit sharing agreements with promoters, a percentage of
the promoters' ticket sales, merchandising, sponsorships, licensing and the
exploitation of intellectual property and other rights related to the
production. SFX earns revenues by producing:
o touring Broadway shows;
o specialized motor sports events; and
o other proprietary and non-proprietary entertainment events.
THE SPIN-OFF
On April 27, 1998, SFX Broadcasting, Inc., a company primarily engaged in
the radio broadcasting business, spun off SFX, one of its subsidiaries. In
connection with the spin-off, SFX and Broadcasting entered into a distribution
agreement, a tax sharing agreement and an employee benefits agreement, each of
which provides for certain indemnification obligations by SFX. See "--Liquidity
and Capital Resources--Spin-Off."
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FINANCINGS
OLD NOTE OFFERING
On November 25, 1998, SFX completed an offering of $200.0 million in
principal amount of 9 1/8% Senior Subordinated Notes due December 1, 2008.
Interest is payable on the Old Notes on June 1 and December 1 of each year. SFX
used the proceeds from the Old Note offering to repay substantially all
outstanding borrowings under the revolving portion of its credit facility. SFX
is obligated to offer to exchange substantially identical publicly registered
notes for all outstanding Old Notes pursuant to this exchange offer.
FEBRUARY 2008 NOTE OFFERING
On February 11, 1998, SFX completed an offering of $350.0 million in
principal amount of 9 1/8% Senior Subordinated Notes due February 1, 2008 (the
"February 2008 Notes"). Interest is payable on these February 2008 Notes on
February 1 and August 1 of each year. SFX used the proceeds from the February
2008 Note offering and the initial borrowings under SFX's credit facility to
consummate certain of SFX's 1998 acquisitions. On July 15, 1998, SFX
consummated the exchange of substantially identical publicly registered notes
for all outstanding February 2008 Notes. All original February 2008 Notes were
tendered for exchange and were canceled upon the issuance of the same principal
amount of exchange notes.
SENIOR CREDIT FACILITY
On February 26, 1998, SFX executed a Credit and Guarantee Agreement which
established a $300.0 million senior secured credit facility comprised of a
$150.0 million eight-year term loan and a $150.0 million seven-year reducing
revolving credit facility. On September 10, 1998, SFX entered into an agreement
with The Bank of New York to increase the revolving portion of SFX's credit
facility for a total borrowing availability of $350.0 million under its credit
facility. SFX was required to obtain the consent of the lenders under its
credit facility to consummate the Old Note offering. In connection with such
consent, the applicable margins under its credit facility were amended. In
connection with the proposed equity offering, SFX is seeking a consent from the
lenders under its credit facility. See "--Liquidity and Capital
Rources--Sources of Liquidity."
SFX has had discussions with its lenders regarding an amendment to its
credit facility that would increase total borrowing availability thereunder to
$550.0 million and modify certain covenants. Although no assurances can be
given, SFX expects to enter into this amendment by the end of the first quarter
of 1999.
1998 EQUITY OFFERING
On May 27, 1998, SFX consummated an offering of 8,050,000 shares of Class
A common stock at an offering price of $43.25 per share (the "1998 Equity
Offering") and received net proceeds of approximately $329.0 million. SFX used
the proceeds to consummate certain of its 1998 acquisitions, to fund $97.3
million of tax indemnity payments and to pay fees and other expenses. See
"--Liquidity and Capital Resources."
PROPOSED EQUITY OFFERING
SFX anticipates issuing approximately 4,800,000 shares of Class A common
stock in the proposed equity offering. See "--Liquidity and Capital
Resources--Sources of Liquidity."
1997 ACQUISITIONS
SFX entered the live entertainment business in January 1997 with
Broadcasting's acquisition of Delsener/Slater, a New York-based concert
promotion company for an
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aggregate consideration of $26.8 million. Delsener/Slater has long-term leases
or is the exclusive promoter for many of the major concert venues in the New
York City metropolitan area, including the Jones Beach Amphitheater, a
14,000-seat complex located in Wantagh, New York, and the PNC Bank Arts Center,
a 17,500-seat complex located in Holmdel, New Jersey, which was formerly known
as the Garden State Arts Center. In March 1997, Delsener/Slater acquired, for
aggregate consideration of $23.8 million, companies which hold a 37-year lease
to operate the Meadows, a 25,000-seat indoor/outdoor complex located in
Hartford, Connecticut. In June 1997, Broadcasting acquired Sunshine Promotions,
Inc., a concert promoter in the Midwest, and certain other related companies
for an aggregate cash consideration of $57.5 million and $4.0 million shares of
Broadcasting stock. As a result of the acquisition of Sunshine Promotions, the
Company owns the Deer Creek Music Theater, a 21,000-seat complex located in
Indianapolis, Indiana, and the Polaris Amphitheater, a 20,000-seat complex
located in Columbus, Ohio, and has a long-term lease to operate the Murat
Centre, a 2,700-seat theater and 2,200-seat ballroom located in Indianapolis,
Indiana. See "Business--1997 Acquisitions."
The cash portion of the purchase price for the 1997 Acquisitions was
financed through capital contributions from Broadcasting.
1998 ACQUISITIONS
ACQUISITION OF WESTBURY
On January 8, 1998, SFX acquired a long-term lease for Westbury Music
Fair, located in Westbury, New York, for an aggregate consideration of
approximately $3.0 million and 75,019 shares of Class A common stock having a
negotiated value of approximately $1.0 million, which are subject to certain
put and call rights. During the period between the closing and January 8, 2000,
SFX has the right to repurchase all of such shares for an aggregate
consideration of $2.0 million, and the seller has the right to require SFX to
purchase all of such shares for an aggregate consideration of $750,000. SFX
financed the purchase price with its cash on hand.
ACQUISITION OF PACE AND PAVILION PARTNERS
On February 25, 1998, SFX acquired all of the outstanding capital stock of
PACE. In connection with the PACE acquisition, SFX acquired 100% of Pavilion, a
partnership that owns interests in ten venues, by acquiring one-third of
Pavilion through the acquisition of PACE and acquiring two-thirds of Pavilion
through separate agreements between SFX and Pavilion, PACE and Blockbuster and
PACE and Sony. The total consideration for the PACE acquisition was
approximately $109.5 million in cash, the repayment of approximately $20.6
million of debt and the issuance of 1.5 million shares of Class A common stock
having a negotiated value of approximately $20.0 million. The total
consideration for the Pavilion acquisition was approximately $90.6 million,
comprised of $41.4 million in cash, the repayment of $43.1 million of debt and
the assumption of approximately $6.1 million of debt related to a capital
lease. See "--Liquidity and Capital Resources--Future Contingent Payments." SFX
financed the purchase price with borrowings under its credit facility and with
a portion of the proceeds of the February 2008 Note offering.
ACQUISITION OF CONTEMPORARY
On February 27, 1998, SFX acquired Contemporary. The Contemporary
acquisition involved the merger of Contemporary International Productions
Corporation with and into SFX, the acquisition by a wholly-owned subsidiary of
SFX of substantially all of the assets, excluding certain cash and receivables,
of the remaining members of Contemporary and the acquisition of the 50%
interest in the Riverport Amphitheatre Joint Venture not owned by
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Contemporary. The total consideration for the Contemporary acquisition was
approximately $101.4 million, including $72.8 million in cash, a payment for
working capital of $9.9 million, and the issuance of 1,402,850 shares of Class
A common stock having a negotiated value of approximately $18.7 million. See
"--Liquidity and Capital Resources--Future Contingent Payments." In May 1998,
SFX and the Contemporary sellers agreed to place 140,000 of the shares issued
in connection with the Contemporary acquisition into an escrow account. SFX
may, at any time before May 18, 1999, cancel the escrowed shares in full
settlement of certain claims which SFX has made against the Contemporary
sellers. SFX financed the purchase price with borrowings under its credit
facility and with a portion of the proceeds of the February 2008 Note offering.
ACQUISITION OF BGP
On February 24, 1998, SFX acquired all of the outstanding capital stock of
BGP for a total consideration of $60.8 million in cash, $12.0 million in
repayment of debt, which amount was at least equal to BGP's working capital,
and 562,640 shares of Class A common stock having a negotiated value of
approximately $7.5 million. SFX financed the purchase price with borrowings
under its credit facility and with a portion of the proceeds of the February
2008 Note offering.
ACQUISITION OF NETWORK
On February 27, 1998, SFX acquired Network. In the Network acquisition,
SFX acquired all of the outstanding capital stock of each of The Album Network,
Inc. and SJS Entertainment Corporation and purchased substantially all of the
assets and properties and assumed substantially all of the liabilities and
obligations of The Network 40, Inc. The total purchase price paid was
approximately $66.8 million, including approximately $52.0 million in cash, a
payment for working capital of $1.8 million, reimbursed seller's costs of
$500,000, the purchase of an office building and related property for
approximately $2.5 million and the issuance of approximately 750,000 shares of
Class A common stock having a negotiated value of approximately $10.0 million.
The purchase price is subject to an increase based on Network's actual 1998
EBITDA, as defined in the acquisition agreement. The increase will be $4.0
million if such EBITDA equals or exceeds $9.0 million, and may be as much as
$14.0 million if such EBITDA is greater than $11.0 million. Any increase will
be payable in Class A common stock, or in certain circumstances in cash, by no
later than March 20, 1999. See "--Liquidity and Capital Resources--Future
Contingent Payments." The $2.5 million purchase of the office building and
related property used in connection with Network's business was comprised of
cash of $700,000 and the assumption of debt of $1.8 million. SFX financed the
purchase price with borrowings under its credit facility and with a portion of
the proceeds of the February 2008 Note offering. In connection with the Network
acquisition, the selling stockholders were reimbursed for working capital in
excess of $500,000.
ACQUISITION OF CONCERT/SOUTHERN
On March 4, 1998, SFX acquired Concert/Southern for a total cash
consideration of $16.9 million. This amount includes payments of $1.6 million,
representing the present value of a deferred purchase obligation, and $300,000
for the working capital adjustment. SFX financed the purchase price with
borrowings under its credit facility and with a portion of the proceeds of the
February 2008 Note offering.
ACQUISITION OF USA MOTOR SPORTS
On March 25, 1998, PACE acquired a 67% interest in certain assets and
liabilities of USA Motor Sports for an aggregate cash consideration of
approximately $4.0 million. Contemporary held the remaining 33% interest.
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ACQUISITION OF AVALON
On May 14, 1998, SFX acquired all the outstanding equity interests in
Avalon for a total cash purchase price of $26.8 million. SFX financed the
purchase price with borrowings under the Senior Credit Facility, which it
subsequently repaid with a portion of the proceeds from the 1998 Equity
Offering.
ACQUISITION OF OAKDALE
On June 3, 1998, SFX acquired certain assets of Oakdale for a purchase
price of $9.4 million in cash and the assumption of $2.5 million of
liabilities. At the closing, SFX also made a non-recourse loan to the Oakdale
sellers in the amount of $11.4 million, a portion of which was used to repay
outstanding indebtedness. In addition, SFX may be required to make an
additional payment to the sellers based on the Oakdale and Meadows combined
EBITDA, as defined in the acquisition agreement. If this EBITDA exceeds $5.5
million in 1999, SFX will be obligated to pay the amount of such excess
multiplied by a factor of between 5.0 and 5.8. SFX financed the purchase price
with a portion of the proceeds from the 1998 Equity Offering.
ACQUISITION OF FAME
On June 4, 1998, SFX acquired all of the outstanding capital stock of
FAME. The aggregate purchase price for FAME was approximately $82.2 million in
cash and 1.0 million shares of Class A common stock having a negotiated value
of approximately $35.9 million. The cash portion of the purchase price includes
$7.9 million which SFX paid in connection with certain taxes to which FAME will
be subject and excluding approximately $4.7 million of taxes paid which will be
refunded to SFX in 1999. Under the FAME acquisition agreement, SFX is obligated
to pay to the FAME sellers additional amounts up to an aggregate of $15.0
million in equal annual installments over 5 years contingent on the achievement
of certain EBITDA targets, as described in the acquisition agreement. See
"--Liquidity and Capital Resources--Future Contingent Payments." The agreement
also provides for additional payments by SFX if FAME's EBITDA performance
exceeds the targets by certain amounts. The additional payments are to be made
within 120 days after the end of the year to which they relate. SFX financed
the purchase price with a portion of the proceeds from the 1998 Equity
Offering.
ACQUISITION OF DON LAW
On July 2, 1998, SFX acquired certain assets of Don Law, for an aggregate
cash consideration of approximately $92.2 million, including the repayment of
approximately $7.0 million in debt. SFX financed the purchase price with a
portion of the proceeds of the 1998 Equity Offering.
ACQUISITION OF MAGICWORKS
On September 11, 1998, SFX purchased all of the outstanding shares of
common stock of Magicworks, a publicly traded company, for a total
consideration of approximately $115.7 million in cash. SFX consummated the
acquisition by means of a tender offer, in which it purchased approximately
98.7% of the Magicworks shares, followed by a merger in which the remaining
shares were converted into cash consideration. SFX financed the acquisition
with available cash and borrowings under its credit facility.
OTHER ACQUISITIONS
In the third quarter of 1998, SFX completed the acquisition of seven
companies in the theatrical and music segments. The seven acquisitions included
two concert promotion
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companies, two theatrical presenters, a theatrical presenter and venue
owner/operator, a concert merchandising company and an equity owner of an SFX
amphitheater. The aggregate purchase price for these acquisitions was $107.2
million in cash, $8.2 million in deferred purchase consideration and 300,000
shares of Class A common stock having a negotiated value of approximately $10.0
million, which are subject to piggyback and demand registration rights. SFX may
also be required to make additional payments to the sellers of certain of the
acquired companies based on the companies' EBITDA as defined in the acquisition
agreements for the years 1998 through 2000. SFX financed the purchase prices
with available cash and a portion of the proceeds of the 1998 Equity Offering.
The foregoing descriptions do not purport to be complete descriptions of
the terms of the acquisition agreements and are qualified by reference to the
acquisition agreements. Copies of certain of these acquisition agreements are
exhibits to the registration statement of which this prospectus is a part and
are incorporated herein by reference. Pursuant to the acquisition agreements
and the related agreements, SFX:
o under certain circumstances, may be required to repurchase shares of
its Class A common stock or make additional payments in connection
therewith (See "--Liquidity and Capital Resources--Future Contingent
Payments");
o has granted certain rights of first refusal, certain of which are
exercisable at 95% of the proposed purchase price; and
o in connection with the PACE acquisition, has granted Brian Becker, an
Executive Vice President, a Member of the Office of the Chairman and a
director of SFX, the option to acquire, after February 25, 2000, SFX's
then existing motor sports line of business -- or, if that business has
previously been sold, SFX's then existing theatrical line of business --
at its then fair market value.
See "Risk Factors--Company Specific Risks--SFX may be forced to sell some of
its subsidiaries, which may prevent SFX from realizing the full value of these
subsidiaries" and "Management-- Employment Agreements and Arrangements with
Certain Officers and Directors--Becker Employment Agreement."
SFX's 1998 acquisitions were accounted for using the purchase method of
accounting, and the intangible assets created in the purchase transactions will
generally be amortized against future earnings, if any, over a 15-year period.
The amount of amortization will be substantial and will continue to affect
SFX's operating results in the future. These expenses, however, do not result
in an outflow of cash by SFX and do not impact EBITDA.
The consummation of the acquisitions by SFX and other future acquisitions
will result in substantial charges to earnings relating to interest expense and
the recognition and amortization of goodwill and other intangible assets. As of
September 30, 1998, SFX's goodwill was approximately $905.0 million. This
balance will substantially increase due to the pending Marquee and Cellar Door
acquisitions. Goodwill and other intangible assets are being amortized using
the straight-line method over periods up to 15 years.
RECENT ACQUISITION
On January 11, 1999, SFX completed the acquisition of a company in the
concert promotion and production industry, for a total consideration of $39.0
million. This amount includes $6.5 million in deferred purchase consideration
based on foreign tax credits SFX may become entitled to before January 2004 and
$4.0 million in deferred purchase consideration based on the seller's EBITDA,
as defined in the acquisition agreement. SFX financed the acquisition with
borrowings under its credit facility.
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PENDING ACQUISITIONS
MARQUEE ACQUISITION
On July 23, 1998, SFX and Marquee entered into the merger agreement
whereby a wholly-owned subsidiary of SFX will be merged with and into Marquee
and Marquee will become a wholly-owned subsidiary of SFX. The merger agreement,
as amended, provides that each share of Marquee common stock will be converted
into a number of shares of Class A common stock based on the Exchange Ratio, as
defined on page 115.
CELLAR DOOR ACQUISITION
In January 1999, SFX entered into a stock purchase agreement with John J.
Boyle and members of his family, the stockholders of the Cellar Door group of
companies. Under the terms of this agreement, SFX will acquire all of the
issued and outstanding capital stock of Cellar Door for a purchase price of:
o $70.0 million in cash payable at closing, less an amount equal to
Cellar Door's "secured fund" indebtedness and capitalized leases;
o shares of Class A common stock with a value of $20.0 million, up to
$15.0 million of which SFX may elect to pay in cash; and
o $8.5 million payable in five equal annual installments beginning on the
first anniversary of the closing date. In addition, SFX will issue to
the seller options to purchase 100,000 shares of Class A common stock.
See "Agreements Related to the Pending Acquisitions--Cellar Door."
NEDERLANDER ACQUISITION
On February 1, 1999, SFX and the owners of Nederlander entered into
definitive agreements for the acquisition of certain interests in seven venues
and other assets of Nederlander for an aggregate purchase price of
approximately $93.6 million in cash. SFX made payments to the sellers upon
signing of the agreements in the aggregate amount of $7.5 million as a down
payment toward the aggregate purchase price. SFX is required to make an
additional down payment to the sellers of $5.0 million toward the aggregate
purchase price if and when a second request for additional information is made
under the HSR Act. The agreement relating to the venues in Cincinnati requires
SFX to make an earn-out payment to the sellers in 2000 of up to $3.2 million
depending on the level of earnings generated by operation of the Crown Arena.
If SFX sells or transfers any of the interests in Crown Arena within ten years
of the closing, SFX will be obligated to pay a portion of the consideration it
receives to the sellers of Nederlander. The agreement relating to Mesa del Sol
Centre for the Performing Arts provides for earn-out payments based on the
financial performance of this venue. See "Agreements Related to the Pending
Acquisitions--Nederlander." The closing will be subject to customary closing
conditions, including obtaining the required approval under the HSR Act.
ISI ACQUISITION
On January 26, 1999, SFX entered into a definitive agreement to acquire
Integrated Sports International for an aggregate purchase price of $14.1
million in cash and 60,000 shares of Class A common stock. In addition, during
the five year period following the closing of the acquisition, SFX may be
required to make additional payments of up to $7.5 million in cash and 50,000
shares of Class A common stock, based on the achievement by ISI of certain
target levels of EBITDA, as defined in the acquisition agreement, during such
period. SFX expects to complete the ISI acquisition during the first quarter of
1999.
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SFX expects to complete the pending Marquee, Cellar Door and ISI
acquisitions during the first quarter of 1999 and the Nederlander acquisition
during the second quarter of 1999. However, the timing and completion of SFX's
pending acquisitions are subject to a number of customary closing conditions,
certain of which are beyond the control of SFX including, in the case of the
Nederlander acquisition, approvals under the HSR Act. No assurance can be given
that SFX will be able to complete its pending acquisitions on the terms
described herein or at all. See "Risk Factors--Company Specific Risks--If SFX
is unable to complete its pending acquisitions, SFX's business may suffer."
The pending acquisitions will be accounted for using the purchase method
of accounting and intangible assets created in the purchase transaction will
generally be amortized against future earnings over a fifteen-year period. The
amount of such amortization will be substantial and will continue to affect
SFX's operating results in the future. These expenses, however, do not result
in an outflow of cash by SFX and do not impact EBITDA.
The consummation of the pending acquisitions by SFX and other future
acquisitions will result in substantial charges to earnings relating to
interest expense and the recognition and amortization of goodwill and other
intangible assets. As of September 30, 1998, SFX's goodwill and other
intangibles was approximately $905.0 million. This balance will increase due to
the pending Marquee, Cellar Door, Nederlander and ISI acquisitions. Goodwill
and other intangibles are being amortized using the straight-line method over
2-15 years.
SFX is also currently pursuing certain additional acquisitions; however,
it has not entered into any definitive agreements with respect to such
acquisitions, and there can be no assurance that it will do so. See "Risk
Factors--Company Specific Risks--If SFX is unable to complete other
acquisitions in the future, SFX's business may suffer."
AGREEMENT WITH TICKETMASTER
On November 16, 1998, SFX and Ticketmaster entered into a binding letter
of intent pursuant to which SFX granted Ticketmaster the exclusive right to
sell and distribute tickets for SFX's events worldwide.
PROPOSED STOCK OPTION PLAN
Following a recommendation of SFX's compensation committee, SFX has,
subject to stockholder approval, adopted a new incentive stock option plan
covering options to acquire up to three million shares of Class A common stock
and approved the grant of the options thereunder to acquire shares of Class A
common stock. SFX anticipates that the proposed stock option plan will be
submitted to a vote of the stockholders at SFX's first annual meeting scheduled
to be held in the spring of 1999.
RESULTS OF OPERATIONS
The operating performance of entertainment companies, such as SFX, is
measured, in part, by their ability to generate EBITDA. Further, SFX uses
EBITDA as its primary indicator of its operating performance, and secondarily
as a measure of liquidity. "EBITDA" is defined as earnings before interest,
taxes, other income, net equity income (loss) from investments and depreciation
and amortization. Although EBITDA is not a measure of performance calculated in
accordance with GAAP, SFX believes that the entertainment industry accepts
EBITDA as a generally recognized measure of performance and analysts who report
publicly on the performance of entertainment companies use EBITDA.
Nevertheless, you should not consider this measure in isolation or as a
substitute for
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operating income, net income, net cash provided by operating activities or any
other measure for determining our operating performance or liquidity that is
calculated in accordance with GAAP. EBITDA, as SFX calculates it, may not be
comparable to calculations of similarly titled measures presented by other
companies.
SFX's operations consist primarily of:
o concert promotion and venue operation;
o the promotion and production of theatrical events, particularly touring
Broadway shows;
o the promotion and production of motor sports events; and
o representation of professional athletes.
SFX also engages in various other activities ancillary to its live
entertainment businesses.
CONCERT PROMOTION/VENUE OPERATION
SFX's concert promotion and venue operation business consists primarily of
the promotion of concerts and operation of venues primarily for use in the
presentation of musical events. SFX's primary source of revenues from its
concert promotion activities is from ticket sales at events promoted by SFX. As
a venue operator, SFX's primary sources of revenue are sponsorships,
concessions, parking and other ancillary services, derived principally from
events promoted by SFX.
Revenue from ticket sales is affected primarily by the number of events
SFX promotes, the average ticket price and the number of tickets sold. The
average ticket price depends on the popularity of the artist whom SFX is
promoting, the size and type of venue and the general economic conditions and
consumer tastes in the market where the event is being held. Revenue and
margins are also affected significantly by the type of contract entered into
with the artist or the artist's representative. Generally, the promoter or
venue operator will agree to pay the artist the greater of a minimum guarantee
or a profit sharing payment based on ticket revenue, less certain show
expenses. The promoter or venue operator assumes the financial risk of ticket
sales and is responsible for local production and advertising of the event.
However, in certain instances, the promoter agrees to accept a fixed fee from
the artist for its services, and the artist assumes all financial risk. When
the promoter or venue operator assumes the financial risk, all revenue and
expenses associated with the event are recorded. When the artist assumes the
risk, only the fee is recorded. As a result, operating margins would be
significantly greater for fee-based events as opposed to events for which SFX
assumes the risk of ticket sales, although profits per event would tend to be
lower. Operating margins can vary from period to period.
SFX's most significant operating expenses are talent fees, production
costs, venue operating expenses, including rent, advertising costs and
insurance expense. The booking of talent in the concert promotion business
generally involves contracts for limited engagements, often involving a small
number of performances. Talent fees depend primarily on the popularity of the
artist, the ticket price that the artist can command at a particular venue and
the expected level of ticket sales. Production costs and venue operating
expenses have substantial fixed cost components and lesser variable costs
primarily related to expected attendance.
THEATRICAL
SFX's theatrical operations are directed mainly towards the promotion and
production of touring Broadway shows, which generate revenues primarily from
ticket sales and
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sponsorships. SFX may also participate in ancillary revenues, such as
concessions and merchandise sales, depending on its agreement with a particular
local promoter/venue operator. Revenue from ticket sales is primarily affected
by the popularity of the production and the general economic conditions and
consumer tastes in the particular market and venue where the production is
presented. To reduce its dependency on the success of any single touring
production, SFX sells advance annual subscriptions that provide the purchaser
with tickets for all of the shows that SFX intends to tour in the particular
market during the touring season. Historically, approximately 28% of ticket
sales for touring Broadway shows presented by SFX were sold through advance
annual subscriptions. Subscription related revenues received before the event
date are initially recorded on the balance sheet as deferred revenue; after the
event occurs, they are recorded on the statement of operations as gross
revenue. Expenses are capitalized on the balance sheet as prepaid expenses
until the event occurs. Subscriptions for touring Broadway shows typically
cover approximately two-thirds of SFX's break-even cost point for those shows.
Principal operating expenses related to touring shows include talent,
rent, advertising and royalties. Talent costs are generally fixed once a
production is cast. Rent and advertising expense may be either fixed or
variable based on the arrangement with the particular local promoter/venue
operator. Royalties are generally paid as a percentage of gross ticket sales.
SFX also makes minority equity investments in original Broadway
productions, principally as a means to obtain rights for touring shows, and in
certain touring Broadway shows. These investments are accounted for using
either the equity method or the cost method of accounting, based on the
relative size of the investment. SFX monitors the recoverability of these
investments on a regular basis, and SFX may be required to take write-offs if
the original production closes or if SFX determines that the production will
not recoup the investment. The timing of any write-off could adversely affect
operating results in a particular quarter.
MOTOR SPORTS
SFX's motor sports activities consist principally of the promotion and
production of specialized motor sports, which generate revenues primarily from
ticket sales and sponsorships, as well as merchandising and video rights
associated with producing motor sports events. Ticket prices for these events
are generally lower than for theatrical or music concert events, generally
ranging from $5 to $30. Revenue from these sources is primarily affected by the
type of event and the general economic conditions and consumer tastes in the
particular markets and venues where the events are presented. Event-related
revenues received before the event date are initially recorded on the balance
sheet as deferred revenue. After the event occurs, they are recorded on the
statement of operations as gross revenue. Expenses are deferred on the balance
sheet as prepaid expenses until the event occurs.
Operating expenses associated with motor sports activities include talent,
rent, track preparation costs, security and advertising. These operating
expenses are generally fixed costs that vary based on the type of event and
venue where the event is held.
Under certain circumstances, SFX may be required to sell either its motor
sports or theatrical lines of business. See "Risk Factors--Company Specific
Risks--SFX may be forced to sell some of its subsidiaries, which may prevent
SFX from realizing the full value of these subsidiaries."
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REPRESENTATION OF PROFESSIONAL ATHLETES
Through FAME, SFX's talent representation activities consist principally
of the representation of team sports athletes, primarily in the NBA, in player
contract and endorsement negotiations. FAME also provides certain investment
advisory services to its clients through an affiliate. FAME typically receives
a percentage of monies earned by a player, generally approximately 4% of a
player's sports contract and typically from 15% to 25% of endorsement deals.
Revenue from these sources is recognized as the player receives his salary or
endorsement payments based on the terms of the negotiated agreement. Revenue
from these sources is dependent upon a number of variables, many of which are
outside SFX's control, including a player's skill, health, public appeal and
the appeal of the sport in which the player participates. Principal operating
expenses include salaries, wages and travel and entertainment expenses.
On a pro forma basis for SFX's 1998 acquisitions, FAME's revenues would
have comprised approximately 1.0% of SFX's revenues for the nine months ended
September 30, 1998. The owners of the teams in the NBA had locked out their
players from participation in league activities and suspended the 1998-99
basketball season indefinitely, causing cancellation of some of the games for
the 1998-99 basketball season. The suspension of the NBA season ended on
January 6, 1999, and the NBA season began February 5, 1999 with a reduced game
schedule. The cancellation of over 30 games for the current NBA season will
have a negative impact on FAME's revenues and EBITDA.
OTHER BUSINESSES
SFX's other principal businesses include the production and distribution
of radio industry trade magazines, the production of radio programming content
and show-prep material and the provision of radio air play and music retail
research services. The primary sources of revenues from these activities
include the sale of advertising space in its publications and the sale of
advertising time on radio stations that carry its syndicated shows,
subscription fees for its trade publications and subscription fees for access
to its database of radio play lists and audience data. Revenues generally vary
based on the overall advertising environment and competition.
SFX also provides marketing and consulting services pursuant to contracts
with individual clients for specific projects. Revenues from and costs related
to these services vary based on the type of service being provided and the
incremental associated costs.
SEASONALITY
SFX's operations and revenues have been largely seasonal in nature, with
generally higher revenue generated in the second and third quarters of the
year. For example, on a pro forma basis for SFX's 1997 and 1998 acquisitions,
SFX generated approximately 63% of its revenues in the second and third
quarters for the twelve months ended September 30, 1998. SFX's outdoor venues
are primarily used in the summer months and do not generate substantial revenue
in the late fall, winter and early spring. Similarly, the musical concerts that
SFX promotes largely occur in the second and third quarters. SFX's
entertainment marketing and consulting in connection with musical concerts also
predominantly generate revenues in the second and third quarters. Therefore,
the seasonality of SFX's business causes -- and will probably continue to cause
- -- a significant variation in SFX's quarterly operating results. These
variations in demand could have a material adverse effect on the timing of
SFX's cash flows and, therefore, on its ability to service its obligations with
respect to its indebtedness. However, SFX believes that this variation may be
somewhat offset with
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the acquisition of typically non-summer seasonal businesses in SFX's 1998
acquisitions, such as motor sports, which is winter-seasonal, and touring
Broadway shows, which typically tour between September and May.
RECENT DEVELOPMENTS
SFX expects to release its results of operations for the fourth quarter
and fiscal year ended December 31, 1998 on or about March 1, 1999. Although its
year-end audit has not been completed, SFX expects to report that revenues,
operating income and EBITDA during the fourth quarter of 1998 did not grow at
the same rate as during the nine months ended September 30, 1998. The fourth
quarter results were impacted by the loss of revenue during the NBA lock-out
and results in SFX's theatrical business, which was adversely affected in part
by the Livent Inc. bankruptcy. In addition, as a result of the bankruptcy
filing of Livent Inc. in November 1998, SFX is considering a one-time, non-cash
charge of approximately $5.6 million in the fourth quarter of 1998 in order to
fully reserve against advances relating to the touring productions of Ragtime
and Showboat. Management's expectations are based on a preliminary review of
the results of operations of SFX, its recently acquired companies and Cellar
Door and Marquee for the fourth quarter of 1998. Actual results may deviate
from our current expectations.
HISTORICAL RESULTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
SFX's revenue increased by $606.0 million to $680.4 million for the nine
months ended September 30, 1998, compared to $74.4 million for the nine months
ended September 30, 1997, primarily as a result of $578.5 million attributable
to SFX's 1998 acquisitions and $12.4 million attributable to the acquisitions
of the Meadows in March 1997 and Sunshine Promotions in June 1997. SFX's 1998
acquisitions significantly increased the concert promotion and venues operation
business and expanded SFX's business to include theatrical promotion and
production, motor sports promotion and production, representation of
professional athletes and radio magazine publishing, programming and research.
Cost of revenue increased by $539.5 million to $602.5 million for the nine
month period ended September 30, 1998, compared to $63.0 million for the nine
months ended September 30, 1997, primarily as a result of $513.5 million
attributable to SFX's 1998 acquisitions and $12.6 million attributable to the
acquisition of Sunshine Promotions in June 1997.
Depreciation and amortization expense increased to $40.3 million for the
nine month period ended September 30, 1998, compared to $4.0 million for the
nine month period ended September 30, 1997, due to the inclusion of $31.1
million of depreciation and amortization expense related to SFX's 1998
acquisitions and the acquisition of Sunshine Promotions in June 1997 and $1.2
million related to the completion of capacity expansion projects at two
amphitheaters. In addition, SFX recorded a $2.7 million write down of deferred
expense relating to the Triathlon Broadcasting Company agreement and recorded
$1.3 million of integration costs for the nine month period ended September 30,
1998. SFX recorded the fixed assets of the SFX's 1998 acquisitions and the
Sunshine Promotions acquisition at fair value and recorded intangible assets
equal to the excess of purchase price over the fair value of the net tangible
assets, which are being amortized over a 2-15 year period.
Corporate expenses were $5.8 million for the nine month period ended
September 30, 1998, net of $398,000 in fees earned from Triathlon, compared to
$1.3 million for the nine
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months ended September 30, 1997, net of Triathlon fees of $1.7 million. The
increase in corporate expense reflects the growth of SFX's operations and the
formation of SFX Live, the national marketing division of the Company. The fees
earned from Triathlon are based on consulting services provided by or on behalf
of SCMC, a private investment company in which Messrs. Sillerman and Tytel have
economic interests, that makes investments in and provides financial consulting
services to companies engaged in the media business. These fees fluctuate above
the minimum annual fee of $500,000 based on the level of acquisition and
financing activities of Triathlon. SCMC previously assigned its rights to
receive fees payable from Triathlon to Broadcasting, and Broadcasting assigned
its rights to receive the fees to SFX, pursuant to the distribution agreement.
Triathlon has announced that it has agreed to be acquired by a third party.
When Triathlon is acquired, it will cease paying consulting fees. See "Certain
Relationships and Related Transactions--Triathlon Fees."
Non-cash compensation and other non-cash charges recorded in the second
and third quarter of 1998 of $32.9 million consisted of:
o $23.9 million of compensation related to sale of 650,000 shares of Class B
common stock and 190,000 shares of Class A common stock at a purchase price
of $2.00 per share to certain executive officers pursuant to employment
agreements;
o $7.5 million associated with the issuance of 247,177 shares of Class A
common stock to Mr. Sillerman in connection with the repurchase (the
"Meadows Repurchase") of shares of Broadcasting issued to the sellers of
Meadows; and
o $1.5 million related to the issuance of stock options to certain executive
officers pursuant to employment agreements exercisable for an aggregate of
352,500 shares of SFX Class A common stock.
Of these options, 345,000 vest over three years and have an exercise price
of $5.50 per share. SFX is recording non-cash compensation charges of
approximately $3.3 million annually over the three-year exercise period. See
"Management--Executive Compensation" and "Certain Relationships and Related
Transactions--Meadows Repurchase."
The operating loss was $1.3 million for the nine month period ended
September 30, 1998, compared to income of $6.0 million for the nine months
ended September 30, 1997, due to the results discussed above.
Interest expense, net of investment income, was $28.2 million in the nine
months ended September 30, 1998, compared to $743,000 for the nine months ended
September 30, 1997, primarily as a result of $724.5 million attributable to the
incurrence of additional debt related to SFX's 1998 acquisitions and $15.7
million attributable to the debt assumed in connection with the Meadows and
Sunshine Promotions acquisitions.
Minority interest was $1.3 million for the nine months ended September 30,
1998, compared to no minority interest for the nine months ended September 30,
1997, as a result of SFX's 1998 acquisitions.
Income from equity investments was $4.0 million for the nine months ended
September 30, 1998, compared to income of $1.3 million for the nine months
ended September 30, 1997, as a result of SFX's 1998 acquisitions.
Income tax expense was $3.3 million for the nine month period ended
September 30, 1998. The provision is primarily for state and local taxes and
reflects the impact of non-deductible goodwill amortization and other non-cash
compensation and other non-cash charges. No federal tax benefit has been
recognized due to the uncertainty of realizing a tax benefit for SFX's losses.
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SFX's net loss increased to $30.2 million for the nine month period ended
September 30, 1998, as compared to net income of $3.7 million for the nine
months ended September 30, 1997, due to the factors discussed above.
EBITDA would have been $39.1 million for the nine months ended September
30, 1998. EBITDA, excluding non-cash compensation and other non-cash charges of
$32.9 million, increased to $72.0 million for the nine month period ended
September 30, 1998, compared to $10.0 million for the nine months ended
September 30, 1997, primarily as a result of $65.1 million attributable to
SFX's 1998 acquisitions and a deficit of $202,000 attributable to the
acquisition of Sunshine Promotions in June 1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
SFX's concert promotion revenue increased by 91% to $96.1 million for the
year ended December 31, 1997, compared to $50.4 million for the year ended
December 31, 1996, as a result of the acquisitions of Sunshine Promotions and
Meadows, which increased concert promotion revenue by $45.5 million.
Cost of revenue increased by 65% to $83.4 million for the year ended
December 31, 1997, compared to $50.7 million for the year ended December 31,
1996, primarily as a result of the acquisitions of Sunshine Promotions and
Meadows, which increased concert operating expenses revenue by $37.1 million,
which was offset in part by $4.4 million in decreased officer salary expense
paid to the former owners of Delsener/Slater.
Depreciation and amortization expense increased to $5.4 million for the
year ended December 31, 1997, compared to $747,000 for the year ended December
31, 1996, due to the inclusion of $2.6 million of depreciation and amortization
expense related to the acquisitions of Sunshine Promotions and Meadows and $1.4
million in depreciation and amortization recorded in 1997 related to the
purchase of Delsener/Slater on January 2, 1997 and $657,000 of depreciation and
amortization relating to the corporate office. In 1997, SFX recorded the fixed
assets of Delsener/Slater at fair value and recorded an intangible asset equal
to the excess of purchase price over the fair value of net tangible assets of
Delsener/Slater, which was amortized over a 15-year period.
Corporate expenses were $2.2 million for the year ended December 31, 1997,
net of $1.8 million in fees received from Triathlon, compared to no corporate
expenses for the year ended December 31, 1996. These expenses represent the
incremental costs of operating SFX's corporate offices, and therefore did not
exist in 1996.
Operating income was $5.1 million for the year ended December 31, 1997,
compared to a loss of $1.1 million for the year ended December 31, 1996, due to
the results discussed above.
Interest expense, net of investment income, was $1.3 million in the year
ended December 31, 1997, compared to net interest income of $138,000 for the
year ended December 31, 1996, primarily as a result of assumption of additional
debt related to the acquisitions of the Meadows and Sunshine Promotions.
Equity income in unconsolidated subsidiaries decreased 3% to $509,000 for
the year ended December 31, 1997, compared to $524,000 for the year ended
December 31, 1996.
Income tax expense increased to $490,000 for the year ended December 31,
1997, compared to $106,000 for the year ended December 31, 1996, primarily as a
result of higher operating income.
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SFX's net income increased to $3.8 million for the year ended December 31,
1997, as compared to a net loss of $515,000 for the year ended December 31,
1996, due to the factors discussed above.
EBITDA increased to $10.5 million for the year ended December 31, 1997,
compared to a negative $324,000 for the year ended December 31, 1996, as a
result of $8.3 million attributable to SFX's 1997 acquisitions, $4.4 million
attributable to the reduction in officers' salary expense and $340,000
attributable to improved operating results.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
SFX's concert promotion revenue increased by 5.9% to $50.4 million for the
year ended December 31, 1996, compared to $47.6 million for the year ended
December 31, 1995, primarily as a result of an increase in concerts promoted.
Cost of revenue increased by 7.2% to $50.6 million for the year ended
December 31, 1996, compared to $47.2 million for the year ended December 31,
1995, primarily as a result of an increase in concert activity.
Depreciation and amortization expense decreased slightly to $747,000 for
the year ended December 31, 1996, compared to $750,000 for the year ended
December 31, 1995.
SFX's operating loss was $1.1 million for the year ended December 31,
1996, compared to an operating loss of $362,000 for the year ended December 31,
1995, due to the results discussed above.
Interest income, net of interest expense, increased by 306% to $138,000
for the year ended December 31, 1996, compared to $34,000 for the year ended
December 31, 1995.
Equity income in unconsolidated subsidiaries increased 8% to $524,000 for
the year ended December 31, 1996, compared to $488,000 for the year ended
December 31, 1995, primarily as a result of $210,000 of income from the
investment in the PNC Bank Arts Center, offset by lower income from SFX's other
equity investments that was $174,000 lower.
SFX's state and local income tax expense increased to $106,000 for the
year ended December 31, 1996, compared to $13,000 for the year ended December
31, 1995. This increase was primarily the result of the higher operating
income.
SFX's net loss was $515,000 for the year ended December 31, 1996, compared
to net income of $147,000 for the year ended December 31, 1995, due to the
factors discussed above.
EBITDA was a negative $324,000 for the year ended December 31, 1996,
compared to $388,000 for the year ended December 31, 1995, primarily as a
result of operating income of $902,000 and officers' salary expense that was
$2,424,000 higher, partially offset by general and administrative expenses that
were $809,000 lower.
PRO FORMA RESULTS
NINE MONTHS ENDED SEPTEMBER 30, 1998
On a pro forma basis, assuming all acquisitions and relating financings
were completed as of January 1, 1997, revenue for the nine months ended
September 30, 1998 would have been $1.0 billion, as compared to the actual
results of $680.4 million. Cost of revenue would have been $780.4 million, as
compared to the actual results of $519.6 million. Selling, general and
administrative expenses would have been $130.3 million, as compared to the
actual results of $83.0 million. Depreciation and amortization would have been
$71.8 million, as compared to the actual results of $40.4 million. These
increases in revenue, cost of revenue,
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selling, general and administrative expenses and depreciation and amortization
resulted primarily from the inclusion of the operating results from each of the
acquired businesses and pending acquisitions for the entire period.
Corporate expenses would have been $6.0 million net of Triathlon fees, as
compared to the actual results of $5.8 million, reflecting the incremental cost
to the corporate office of operating a larger enterprise. Non-cash compensation
and other non-cash charges would have been $33.3 million, as compared to the
actual results of $32.9 million as a result of including Marquee's operations
in the pro forma results. Operating income for the nine months ended September
30, 1998 would have been $15.3 million, as compared to the actual loss of $1.3
million, due to the results discussed above.
Interest expense would have been $52.6 million for the nine months ended
September 30, 1998, as compared to the actual results of $31.7 million.
Interest increased primarily as a result of assumption in the pro forma
financial statements that the debt used to fund the acquisitions are
outstanding at the beginning of the period.
Income from equity investments would have been $6.0 million, as compared
to the actual results of $4.0 million. Income tax expense would have been $4.6
million, as compared to the actual provision of $3.3 million. These increases
reflect the inclusion of the operating results of the completed and pending
acquisitions for the entire period.
SFX's net loss for the nine months ended September 30, 1998 would have
been $36.6 million, as compared to the actual results of $30.2 million, due to
the results discussed above.
EBITDA would have been $87.2 million as compared to EBITDA of $39.1
million on a historical basis, due to the results discussed above. EBITDA,
excluding non-cash charges of $33.3 million, would have been $120.4 million, as
compared to EBITDA, excluding non-cash charges of $32.9 million, of $72.0
million on a historical basis.
YEAR ENDED DECEMBER 31, 1997
On a pro forma basis, assuming all acquisitions and related financings had
been completed as of January 1, 1997, revenue for the year ended December 31,
1997 would have been $1.0 billion, as compared to the actual results of $96.1
million. Cost of revenue would have been $735.5 million, as compared to the
actual results of $73.9 million. Selling, general and administrative expenses
would have been $156.6 million, as compared to the actual results of $9.5
million. Depreciation and amortization would have been $89.2 million, as
compared to the actual results of $5.4 million. The increase in revenue, cost
of revenue, selling, general and administrative expenses and depreciation and
amortization was a result of the inclusion of the operating results from each
of the acquired businesses and pending acquisitions for the entire period.
Corporate expenses, net of Triathlon fees would have been $8.0 million, as
compared to the actual results of $2.2 million, reflecting the incremental cost
to the corporate office of operating the larger enterprise. Non-cash
compensation and other non-cash charges would have been $1.4 million, resulting
from historical costs incurred by Marquee. Operating income for the year ended
December 31, 1997 would have been $10.5 million, as compared to the actual
results of $5.1 million, due to the results discussed above.
Interest expense would have been $70.0 million, as compared to the actual
results of $1.6 million. Interest increased primarily as a result of the
assumption in the pro forma financial statements that the debt used to fund the
acquisitions are outstanding at the beginning of the period.
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Income from equity investments would have been $5.5 million, as compared
to the actual results of $509,000. Income tax expense would have been $4.9
million, as compared to the actual provision of $490,000. These increases
reflect the inclusion of the operating results of the completed and pending
acquisitions for the entire period.
SFX's net loss for the year ended December 31, 1997 would have been $54.8
million, as compared to the actual results of net income of $3.8 million, due
to the results discussed above.
EBITDA would have been $99.7 million as compared to EBITDA of $10.5
million on a historical basis, due to the results discussed above. EBITDA,
excluding non-cash charges of $1.4 million, would have been $101.0 million, as
compared to actual results of $10.5 million.
LIQUIDITY AND CAPITAL RESOURCES
SFX's principal need for funds has been for acquisitions, interest
expense, working capital needs, certain payments in connection with the SFX
spin-off and, to a lesser extent, capital expenditures. SFX's principal sources
of funds has been proceeds from the February 2008 Note offering, the 1998
Equity Offering, the Old Note offering, borrowings under its credit facility
and cash flows from operations. SFX intends to use the net proceeds from the
proposed equity offering to repay all of the revolving portion of its credit
facility, to repay the outstanding debt of Marquee in connection with the
Marquee acquisition, to pay the cash consideration in connection with the
Nederlander and ISI acquisitions for general corporate purposes, including
future acquisitions and to pay fees and expenses related to the pending Marquee
acquisition and the proposed equity offering. SFX intends to use the additional
borrowing availability under its credit facility to complete the Cellar Door
acquisition, to pay fees and expenses in connection therewith and for other
general corporate purposes, including future acquisitions. The foregoing
represents SFX's best current estimate of the allocation of the net proceeds of
the proposed equity offering and anticipated uses of borrowings under its
credit facility based on the current status of its business. As noted elsewhere
herein, such estimates and anticipated uses could be subject to significant
change.
HISTORICAL CASH FLOWS
Net cash provided by operations was $22.3 million for the nine months
ended September 30, 1998, as compared to $789,000 for the nine months ended
September 30, 1997. The increase was primarily attributable to an increase in
operating income, before depreciation, amortization and non-cash compensation
and other non-cash charges of $40.4 million related to SFX's 1998 acquisitions,
partially offset by other changes in working capital.
Net cash used in investing activities for the nine months ended September
30, 1998 was $852.2 million as compared to $72.0 million for the nine months
ended September 30, 1997. The increase was primarily the result of SFX's 1998
acquisitions. During the nine months ended September 30, 1997, SFX completed
the acquisitions of Delsener/Slater, the Meadows and Sunshine Promotions.
Net cash provided by financing activities for the nine months ended
September 30, 1998, was $889.5 million as compared to $78.3 million for the
nine months ended September 30, 1997. During 1998, SFX completed the February
2008 Note offering for $350.0 million, borrowed $346.0 million under its credit
facility and completed the 1998 Equity Offering for $329.0 million, net, offset
by tax indemnification payments and SFX spin-off related payments to
Broadcasting of $113.9 million and the payment of debt issuance costs of $17.5
million.
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PENDING ACQUISITIONS
SFX will be required to refinance approximately $33.1 million of Marquee's
debt in connection with the Marquee acquisition. The aggregate cash
consideration in the Cellar Door acquisition is expected to consist of
approximately $78.5 million, including $8.5 million to be paid over five years.
The aggregate cash consideration in the ISI acquisition is expected to be $14.1
million. Additionally, the aggregate cash consideration in the Nederlander
acquisition is expected to be $93.6 million. SFX expects to incur approximately
$9.8 million in fees and expenses related to the pending Marquee, Cellar Door
and Nederlander acquisitions.
FUTURE CONTINGENT PAYMENTS
Certain of the agreements relating to SFX's 1998 acquisitions provide for
purchase price adjustments and other future contingent payments under certain
circumstances. The PACE acquisition agreement provides that each PACE seller
will have an option, exercisable for 90 days after the fifth anniversary of the
closing of the PACE acquisition, to require SFX to repurchase up to 500,000
shares of the Class A common stock received by that seller for $33.00 in cash
per share, for an aggregate purchase price of up to $16.5 million. Pursuant to
the terms of Brian Becker's employment agreement with SFX, during the period
between December 12, 1999, and December 27, 1999, Mr. Becker, an Executive Vice
President, a director and a Member of the Office of the Chairman of SFX, will
have the option to, among other things, require SFX to purchase any stock or
options granted to him by SFX and/or pay him an amount equal to the present
value of the compensation payable during the remaining term of his employment
agreement. Exercise of such option would result in termination of Mr. Becker's
employment agreement. See "Management--Employment Agreements and Arrangements
with Certain Officers and Directors--Becker Employment Agreement."
Moreover, if the average trading price of the Class A common stock is less
than $13.33 during the twenty days before the second anniversary of the
Contemporary acquisition, SFX will be required to pay one-half of such
difference for each of the 1,402,850 shares issued in the acquisition and still
held by the sellers of Contemporary on such date.
Pursuant to the Network acquisition agreement, SFX agreed to increase the
purchase price for Network based on Network's actual 1998 EBITDA, as defined in
the acquisition agreement. The increase will be payable as follows:
o by $4.0 million if the 1998 EBITDA equals or exceeds $9.0 million;
o by an additional $4 for each $1 of additional 1998 EBITDA between $9.0
million and $10.0 million; and
o by an additional $6 for each $1 of additional 1998 EBITDA between $10.0
million and $11.0 million.
This contingent consideration of up to $14.0 million is payable in shares of
Class A common stock or, in certain circumstances, in cash by no later than
March 20, 1999.
Pursuant to the agreement relating to the acquisition of FAME, SFX is
obligated to pay to the FAME sellers additional amounts up to $15.0 million in
equal annual installments over five years contingent on the achievement by FAME
of certain EBITDA targets, as defined in the acquisition agreement. The FAME
agreement also provides for additional payments by SFX to the FAME sellers if
FAME's EBITDA performance exceeds the targets by certain amounts. Furthermore,
if SFX disposes of all or substantially all of the assets or voting
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interests of FAME during the five years following the closing of the FAME
acquisition, certain payments may become due to the FAME sellers out of the
proceeds of such sale.
Pursuant to the agreement relating to the acquisition of certain assets of
Oakdale, SFX may be required to make an additional payment to the sellers based
on the Oakdale and Meadows combined EBITDA, as defined in the Oakdale
acquisition agreement. If this EBITDA exceeds $5.5 million in 1999, SFX will be
obligated to pay the Oakdale sellers between 5.0 to 5.8 times the amount of
such excess.
In addition, pursuant to the agreement relating to the acquisition of one
of the seven companies in the theatrical and music segments in July, August and
September 1998, if the EBITDA, as defined in the acquisition agreement, exceeds
$14.3 million in 1998 and $30.0 million in 1999, SFX will be obligated to pay
the sellers such excess.
Pursuant to the agreement relating to the acquisition of a concert
promotion and production company in January 1999, SFX may be obligated to pay
to the seller additional amounts up to $4.0 million over five years contingent
on the achievement by certain business segments of the seller of certain EBITDA
targets. Additionally, SFX deposited $6.5 million into an escrow account. The
release of such funds from escrow to the seller is dependent upon SFX achieving
certain foreign tax savings.
Certain of SFX's 1998 acquisitions and the pending Nederlander and ISI
acquisitions also provide for additional future payments based on the acquired
companies' performance. No assurance can be given that SFX will have sufficient
cash or other available sources of capital to make any or all of the future or
contingent payments described above.
SPIN-OFF
In connection with the SFX spin-off, SFX entered into the tax sharing
agreement with Broadcasting. Pursuant to such agreement, SFX is responsible for
certain taxes incurred by Broadcasting, including income taxes imposed with
respect to income generated by SFX for periods before the spin-off and taxes
resulting from gain recognized by Broadcasting in the spin-off. SFX has made an
estimated payment of $108.0 million in taxes in connection with the spin-off.
Management's estimates of the amount of the indemnity payment are based on
assumptions which management believes are reasonable. However, upon the
completion of all final tax returns, including any potential tax audits, such
assumptions could be modified in a manner that would result in a significant
variance in the actual amount of the tax indemnity.
INTEREST ON NOTES AND BORROWINGS UNDER THE SENIOR CREDIT FACILITY
On February 11, 1998, SFX completed the private placement of the February
2008 Notes, which were subsequently exchanged for the publicly registered notes
on July 15, 1998. Interest is payable on the exchange notes on February 1 and
August 1 of each year. In addition, as of October 30, 1998, SFX had borrowed
$346.0 million under the SFX credit facility, at an interest rate of
approximately 7.89%, to fund a portion of SFX's 1998 acquisitions. On November
25, 1998, SFX completed the offering of the Old Notes, which are required to be
exchanged for publicly registered New Notes. In the event the Old Notes are not
so exchanged, liquidated damages to the holders of the Old Notes will become
payable. Interest is payable on the Old Notes on June 1 and December 1 of each
year. In addition, as of January 26, 1999, SFX had term loan indebtedness of
$149.0 million under its credit facility.
The degree to which SFX will be leveraged could have important
consequences including, but not limited to:
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o making it more difficult for SFX to satisfy its obligations with respect to
the February 2008 Notes and Old Notes;
o increasing SFX's vulnerability to general adverse economic and industry
conditions;
o limiting SFX's ability to obtain additional financing to fund future
acquisitions, working capital, capital expenditures and other general
corporate requirements;
o requiring the dedication of a substantial portion of SFX's cash flow from
operations to the payment of principal of, and interest on, its
indebtedness, thereby reducing the availability of such cash flow to fund
working capital, capital expenditures, or other general corporate purposes;
o limiting SFX's flexibility in planning for, or reacting to, changes in its
business and the industry; and
o placing SFX at a competitive disadvantage vis-a-vis less leveraged
competitors.
In addition, its credit facility, the indenture governing the February
2008 Notes and the indenture governing the Old Notes contain financial and
other restrictive covenants that will limit the ability of SFX to, among other
things, borrow additional funds for future acquisitions or otherwise. Failure
by SFX to comply with such covenants could result in an event of default which,
if not cured or waived, could have a material adverse effect on SFX's business,
financial condition and results of operations. SFX's indebtedness under its
credit facility is secured by a pledge of the stock of its subsidiaries and by
liens on substantially all of its and its subsidiaries' tangible assets. Most
of SFX's subsidiaries have also guaranteed the February 2008 Notes, Old Notes
and borrowings under the credit facility. If SFX were unable to repay any
borrowings when due, the lenders could attempt to seize SFX's and its
subsidiaries' assets and the capital stock of SFX's subsidiaries. In addition,
the degree to which SFX is leveraged could prevent it from repurchasing all of
the February 2008 Notes and Old Notes tendered to it upon the occurrence of a
change of control. See "Risk Factors--Risks Relating to Notes--SFX's credit
facility and indentures restrict its operations" and "--SFX may not have the
funds necessary to finance a change of control offer for the notes."
SFX's ability to make scheduled payments of principal of, to pay interest
on or to refinance its debt depends on its future financial performance, which,
to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors beyond its control, as well as the
success of the businesses to be acquired and the integration of these
businesses into SFX's operations. There can be no assurance that SFX will be
able to make planned borrowings, that SFX's business will generate sufficient
cash flow from operations, or that future borrowings will be available in an
amount to enable SFX to service its debt and to make necessary capital or other
expenditures. SFX may be required to refinance a portion of the principal
amount of its indebtedness before its maturities. There can be no assurance
that SFX will be able to raise additional capital through the sale of
securities, the disposition of assets or otherwise for any refinancing.
CAPITAL EXPENDITURES
Capital expenditures totaled $44.6 million for the nine months ended
September 30, 1998. SFX estimates that its remaining capital expenditures for
1998 were approximately $3.4 million, including $2.4 million of major projects
and $1.0 million of other capital expenditures. SFX expects capital
expenditures to be approximately $37.0 million, including $25.0 million of
major projects, in 1999, and are anticipated to be funded with cash flow from
operations.
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YEAR 2000 COMPLIANCE
SFX is currently working to resolve the potential impact of the Year 2000
on the processing of date-sensitive information by SFX's computer systems. The
Year 2000 problem is the result of computer programs being written using two
digits, rather than four, to define the applicable year. Any of SFX's programs
that have time-sensitive software may recognize a date using "00" as the Year
1900 rather than the Year 2000, which could result in miscalculations or system
failures. The problem is not limited to computer systems. Year 2000 issues will
also potentially affect every non-information technology system that has an
embedded microchip, such as elevators.
ASSESSMENT. SFX management has been conducting a review of its exposure to
the Year 2000 problem. Based on SFX's internal review and discussions with
third parties regarding the Year 2000 problem, SFX believes that its exposure
to potential Year 2000 problems exists in two general areas: technological
operations, including non-information technology systems, which are in the sole
control of SFX; and technological operations which are dependent in some way on
one or more third parties. Failure to achieve high levels of Year 2000
compliance in either area could have a material adverse impact on SFX.
REMEDIATION AND IMPLEMENTATION. In the area of technological operations
which are under SFX's exclusive control, SFX is currently involved in the
identification and remediation of affected technological functions, including
non-information technology systems. SFX is addressing the risks associated with
Year 2000 compliance with respect to its accounting and financial reporting
systems and is in the process of installing new accounting and reporting
systems. These systems will provide improved reporting, allow for more detailed
analysis, handle SFX's 1998 acquisitions, the Marquee and the Cellar Door
acquisitions and be Year 2000 compliant. SFX expects that business segments
representing 88% of SFX's pro forma revenue for the year ended September 30,
1998 will have the new year 2000 compliant accounting and financial systems
installed as of January 1, 1999. SFX expects its remaining business segments to
have the new year 2000 compliant accounting and financial systems installed
before the summer of 1999. SFX is in the identification and assessment phase
with respect to its non-information technology systems, which is projected to
continue until the summer of 1999.
TESTING. SFX will begin updating and testing its systems after their
installation, and expects that all testing will be complete by the summer of
1999. Upon completion, SFX will be able to identify any internal computer
systems that remain non-compliant. At present, it is anticipated that SFX's
action plan for addressing Year 2000 problems will be successfully completed in
all material respects in advance of January 1, 2000.
ESTIMATED COSTS. The total financial effect that Year 2000 issues will
have on SFX cannot be predicted with any certainty at this time. In fact, in
spite of all efforts being made to rectify these problems, the success of SFX's
efforts will not be known with certainty until the year 2000 actually arrives.
SFX anticipates that the cost of implementing the new accounting and reporting
systems will be approximately $4.5 million, of which approximately $2.4 million
has been spent to date. Based on its assessment to date, SFX does not believe
that expenses related to addressing the Year 2000 problem will have a material
effect on the operations and financial condition of SFX.
THIRD PARTIES. In the area of technological operations dependent in some
way on one or more third parties, including vendors, suppliers, joint venture
partners or major customers, the situation is much less in SFX's ability to
predict or control. SFX has begun to assess the level of Year 2000 problems
associated with their various vendors, suppliers, joint venture
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partners and major customers. SFX's significant vendors are ticketing
companies, payroll processors, utility companies and banks. SFX is
communicating with some of these third parties to assess their compliance
efforts and SFX's exposure resulting from Year 2000 issues. SFX is in the
process of requesting written assurances of Year 2000 compliance from each of
its significant suppliers as a part of SFX's contingency planning process.
Although SFX is making these efforts to ensure that the third parties on which
it is heavily reliant are Year 2000 compliant, it cannot predict the likelihood
of such compliance occurring nor the direct or indirect costs to SFX of
non-compliance by those third parties or of securing such services from
compliant third parties. SFX has no control over these third parties'
compliance and cannot give assurances that these third parties' representations
to SFX are accurate. Therefore, there can be no guarantee that Year 2000
problems originating with a third party will not occur and no absolute
assurance that third parties will convert their systems in a timely manner.
Assuming that such third parties are not or do not become Year 2000 compliant
in a timely manner, to the extent SFX is unable to replace the goods, services
or customers with alternate sources of supply and demand on a timely and
economically equivalent basis, such failure would likely have a material
adverse effect on SFX's business and results of operations. However, SFX does
not anticipate that it will be subject to a material impact in this area.
CONTINGENCY PLAN. SFX has not completed its implementation and testing of
Year 2000 compliant systems. However, a reasonably likely worst case scenario
is that certain of SFX's material suppliers or customers will be unable to
fully become Year 2000 compliant in a timely manner, which will disrupt SFX's
ability to provide services and generate revenues in certain areas in which it
does business. For example, disruptions in ticketing operations would
significantly reduce attendance. Disruptions in transportation could affect the
provision of concessions for sale at SFX's venues. These disruptions would
continue until alternate sources of supply and demand could be located. Based
on the results of the implementation and testing of SFX's Year 2000 affected
systems and the ongoing assessment of the readiness of its vendors, suppliers,
joint venture partners and major customers, SFX will develop appropriate
contingency plans that address the most reasonably likely worst case scenarios.
SFX expects to have such contingency plans in place by the summer of 1999. A
failure to address Year 2000 issues successfully could have a material adverse
effect on SFX's business, financial condition or results of operations.
SOURCES OF LIQUIDITY
As of September 30, 1998, SFX's cash and cash equivalents totaled $65.6
million, and its working capital was a negative $8.0 million. In February 1998,
SFX received the proceeds from the $350.0 million offering of its February 2008
Notes and borrowed $150.0 million under its credit facility. On May 27, 1998,
SFX received approximately $329.0 million in net proceeds from the 1998 Equity
Offering. SFX used the proceeds from the 1998 Equity Offering to repay certain
indebtedness, fund the tax indemnification payments and consummate the FAME,
Oakdale and certain other acquisitions. In the third quarter of 1998, SFX used
the remaining proceeds of the 1998 Equity Offering and borrowed an additional
$196.0 million under its credit facility to complete the Don Law acquisition,
the Magicworks acquisition and the acquisition of the seven companies in the
theatrical and music segments. On November 25, 1998, SFX received approximately
$192.5 million in net proceeds from the Old Note offering, which it used to
repay indebtedness under the revolving portion of its credit facility.
SFX contemplates issuing approximately 4,800,000 shares of Class A common
stock in the proposed equity offering. Assuming an offering price of $55.50,
the net proceeds of the
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offering are expected to be approximately $253.2 million. SFX currently expects
to use the estimated net proceeds from the proposed equity offering to repay
borrowings under its credit facility and to repay Marquee's indebtedness in the
pending Marquee acquisition. SFX intends to finance the cash portion of the
purchase price of the pending acquisitions with a portion of the net proceeds
of the proposed equity offering and borrowings under its credit facility. There
can be no assurance that the proposed equity offering will be consummated.
SFX has incurred and will continue to incur substantial amounts of
indebtedness. As of September 30, 1998, on a pro forma basis giving effect to
the Old Note offering and the application of the net proceeds therefrom, the
consummation of the Cellar Door acquisition and the Marquee acquisition,
anticipated borrowings under the SFX credit facility and the proposed equity
offering and the application of the estimated proceeds therefrom, SFX's
consolidated debt would have been approximately $757.0 million. On the same
basis, SFX's consolidated debt would consist of:
o $350.0 million of February 2008 Notes;
o $200.0 million of Old Notes;
o $150.0 million in borrowings under the SFX credit facility; and
o $57.0 million in other debt.
SFX's temporary equity would have been $19.9 million, and its stockholders'
equity would have been approximately $751.2 million.
SFX's ratio of total debt to total capitalization as of September 30, 1998
would have been approximately 0.50 to 1. See "SFX Unaudited Pro Forma Condensed
Combined Financial Statements." SFX may incur indebtedness from time to time to
finance future acquisitions, for capital expenditures or for other purposes.
See "Risk Factors--Risks Relating to the Notes--SFX has a substantial amount of
debt, which may harm our financial health and prevent us from fulfilling our
obligations under the notes" and "--Company Specific Risks--If SFX is unable to
complete other acquisitions in the future, SFX's business may suffer."
SFX's credit facility originally consisted of a $150.0 million seven-year
reducing revolving facility and a $150.0 million eight-year term loan. On
September 10, 1998, SFX entered into an agreement with The Bank of New York to
increase its borrowing availability under the revolver portion of SFX's credit
facility by an additional $50.0 million, which increased the aggregate amount
of borrowing availability under the SFX credit facility to approximately $350.0
million. As of February 5, 1999, SFX had outstanding approximately $285.0
million of borrowings under its credit facility. Giving pro forma effect to the
proposed equity offering and the application of the proceeds therefrom,
anticipated borrowings under its credit facility and consummation of the
Marquee, Cellar Door, ISI and Nederlander acquisitions, SFX expects to have
$150.0 million outstanding under its credit facility. Loans outstanding under
its credit facility will bear interest, at SFX's option, at 1.625 to 3.625
percentage points over LIBOR or the greater of the Federal Funds rate plus
0.50% or The Bank of New York's prime rate. The interest rate spreads on the
term loan and the revolver portion of the credit facility will be adjusted
based on SFX's Total Leverage Ratio, as defined in the SFX credit facility. SFX
will pay a per annum commitment fee on unused availability under the revolver
of 0.375% to 0.5% and a per annum letter of credit fee equal to the Applicable
LIBOR Margin, as defined in the SFX credit facility, for the revolver then in
effect.
The revolver and term loan portion of the SFX's credit facility contain
usual and customary covenants, including limitations on:
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o line of business;
o additional indebtedness;
o liens;
o acquisitions;
o asset sales;
o dividends, repurchases of stock and other cash distributions;
o total leverage;
o senior leverage; and
o ratios of Operating Cash Flow, as defined in the SFX credit facility, to pro
forma interest expense, debt service and fixed charges.
SFX's obligations under the revolver and term loan are secured by substantially
all of its assets, including property, stock of subsidiaries and accounts
receivable and are guaranteed by SFX's subsidiaries.
The consummation of the Old Note offering was conditioned upon the receipt
of the consent of the lenders under the SFX credit facility. In connection with
such consent, SFX agreed to increase the applicable margins as described above.
SFX paid a consent fee to each consenting lender of 0.25% of such lender's
commitment amount. In addition, SFX obtained a consent of the lenders in
connection with the proposed equity offering.
SFX has had discussions with its lenders to amend its credit facility to
increase borrowing availability to $550.0 million and amend certain covenants.
The new facility is subject to the execution of a definitive agreement, which
SFX expects to enter into by the end of first quarter of 1999, although no
assurances can be given in this regard.
The net proceeds to SFX from the proposed equity offering are expected to
be approximately $253.2 million. The aggregate consideration to be paid in the
Marquee, Cellar Door, ISI and Nederlander acquisitions is expected to be
approximately $220.8 million, including the repayment of approximately $33.1
million in debt. SFX intends to use a portion of the net proceeds from the
proposed equity offering to temporarily repay borrowings under the revolving
portion of its credit facility, which had an outstanding balance of $135.0
million as of February 5, 1999. Total borrowing availability under the revolver
is $200.0 million. SFX intends to finance the cash portion of the purchase
price of the pending acquisitions with the remaining net proceeds of the
proposed equity offering and borrowings under its credit facility. The
availability of funds under the credit facility is subject to compliance with
certain financial covenants, and there can be no assurance that the funds
required to complete the pending acquisitions will be available to SFX when
needed. If SFX is unable to complete the Cellar Door acquisition, it may be
required to pay the seller $10.0 million as liquidated damages. If SFX is
unable to complete the Nederlander acquisition, it may be required to pay the
seller up to $12.5 million as liquidated damages. In addition, SFX would be
required to pay liquidated damages of $2.0 million to ISI in the event it is
not able to close the acquisition on or prior to April 15, 1999. See
"Agreements Related to Pending Acquisitions."
Furthermore, certain agreements of SFX, including the distribution
agreement, the tax sharing agreement, employee benefits agreement, certain
employment agreements and the agreements relating to the completed acquisitions
and the pending Marquee, Cellar Door, Nederlander and ISI acquisitions, provide
for tax and other indemnities, purchase price adjustments, repurchase of SFX
stock and future contingent payments in certain circumstances. There can be no
assurance that SFX will have sufficient sources of funds to make such payments
should they come due.
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In addition, consistent with its operating strategy, SFX is currently
negotiating additional acquisitions and expects to pursue additional
acquisitions in the live entertainment business in the future. However, SFX has
not entered into any definitive agreements with respect to such acquisitions
and there can be no assurance that it will do so. Any such acquisitions could
result in SFX:
o issuing more of its stock, which may dilute the value of existing stock of
SFX;
o incurring a substantial amount of additional debt; and/or
o amortizing expenses related to goodwill and other intangible assets.
However, there can be no assurance that SFX will be able to obtain financing
for such acquisitions on terms acceptable to SFX or at all. Any or all of these
actions could have a material adverse impact on SFX's business, financial
condition and results of operations. See "Risk Factors--Company Specific
Risks--If SFX is unable to complete other acquisitions in the future, SFX's
business may suffer."
SFX may also be obligated to make payments relating to ongoing and future
litigation. See "Business--Litigation."
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("FAS 131"), which is effective for years
beginning after December 15, 1997. FAS 131 establishes standards for the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. FAS 131 is effective for financial
statements for fiscal years beginning after December 15, 1997, and therefore
the Company will adopt the new requirements for fiscal year 1998. Management
has completed its review of FAS 131 and has preliminarily determined that its
reportable segments will be music, theater, sports and other.
In June 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"), which is effective for fiscal years beginning after
December 15, 1998. Under SOP 98-5, the costs of start-up activities, including
organizational costs, would be expensed as incurred. SOP 98-5 broadly defines
start-up activities as those one-time activities related to opening a new
facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new class of customer or beneficiary,
initiating a new process in an existing facility or beginning a new operation.
SOP 98-5 is effective for financial statements for fiscal years beginning after
December 15, 1998. Earlier application is encouraged. The initial application
of SOP 98-5 is to be reported as a cumulative effect of a change in accounting
principle. Management has preliminarily determined that SOP 98-5 will not have
a material effect on its financial position.
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OVERVIEW OF THE LIVE ENTERTAINMENT INDUSTRY
CONCERT PROMOTION INDUSTRY
The concert promotion industry consists primarily of regional promoters
focused generally in one or two major metropolitan markets. According to
Amusement Business, industry gross box office receipts for North American
concert tours totaled $1.1 billion in 1997, compared to $321.7 million in 1985,
representing a compounded annual growth rate of approximately 10.9%. SFX
believes that overall increases in ticket sales during the last several years
are in part due to the increasing popularity of amphitheaters as live
entertainment venues, as well as an increasing number of tours that attract
older audiences who did not previously attend musical concerts.
Typically, to initiate a music concert or other live entertainment event
or tour, a booking agent contracts with a performer to arrange a venue and
date, or series of venues and dates, for the performer's event. The booking
agent in turn contacts a promoter or promoters in the locality or region of the
relevant venue or venues. The promoter markets the event, sells tickets, rents
or otherwise provides the event venue or venues and arranges for local
production services, such as stage, set, sound and lighting. In certain
instances, particularly in connection with music festivals, a promoter may also
provide limited production services. Individual industry participants, such as
SFX, often perform more than one of the booking, promotion and venue operation
functions.
The booking agent generally receives from the artist a fixed fee for its
services or, in some cases, a fee based on the success of the event or events.
The promoter typically agrees to pay the performer the greater of a guaranteed
amount and a profit-sharing payment based on gross ticket revenues, therefore
assuming the risk of an unsuccessful event. The promoter sets ticket prices and
advertises the event to cover expenses and generate profits. If the event is
unprofitable, a promoter will sometimes renegotiate a lower guarantee to lessen
the promoter's losses, in a process known as "settlement". In some instances,
the promoter agrees to accept a fee from the booking agent for the promoter's
services, and the booking agent bears the financial risk of the event.
A venue operator typically contracts with a promoter to rent its venue for
a specific event on a specific date or dates. The venue operator provides
services such as concessions, parking, security, ushers and ticket-takers, and
receives revenues from concessions, merchandise, sponsorships, parking and
premium box seats. A venue operator will typically receive for each event it
hosts a fixed fee or percentage of ticket sales for use of the venue, as well
as a fee representing between 40-50% of total concession sales from the vendors
and 10-25% of total merchandise sales from the performer.
Concert venues generally consist of:
o stadiums, which typically have 32,000 or more seats;
o amphitheaters or arenas, which typically have 5,000 to 32,000 seats;
o clubs, which typically have less than 2,000 seats; and
o theaters, which typically have 100 to 5,000 seats.
Amphitheaters are generally outdoor venues that are used primarily in the
summer season. They have become increasingly popular venues for concerts
because the seating configuration is designed specifically for concert events,
often resulting in more available seats, fewer
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obstructed seats, better lines of sight to the stage and superior acoustics. In
addition, because they typically cost less to construct, maintain and operate
than traditional multi-purpose stadiums and arenas, amphitheaters often are
able to host concerts and other events that would not be profitable in a
stadium or arena.
THEATRICAL INDUSTRY
The audience for live professional theater has increased significantly in
the last two decades. According to Variety Magazine, gross ticket sales for the
entire industry of touring Broadway shows and Broadway shows have increased
from $476.5 million during the 1987-8 season to $1.4 billion during the 1997-8
season, a compounded annual growth rate of 11.0%. During this time, the number
of touring weeks and markets where touring Broadway shows could profitably be
presented have expanded. Sales for touring Broadway shows have grown as a
percentage of total industry gross ticket sales, from approximately 47% in the
1987-8 season to approximately 59% in the 1997-8 season. The growth of the
national theatrical industry has resulted, in part, from:
o the development of local subscription series for touring Broadway shows;
o the construction of new performing arts centers with seating capacities of
2,500 or more in many municipalities;
o an increase in the quality of touring Broadway shows; and
o an increase in the number of multiple-week engagements produced for
presentation outside of New York City.
Touring Broadway shows are typically revivals of previous commercial successes
or reproductions of theatrical shows currently playing on Broadway in New York
City.
Live professional theater consists mainly of the production of existing
musical and dramatic works and the development of new works. In general,
musicals require more investment of time and capital than dramatic productions.
For an existing musical work, which is more likely to be presented as a touring
Broadway show, a period of 12 to 24 months typically elapses between the time a
producer acquires the theatrical stage rights and the date when the musical is
first performed before the public. During this time, the producer assembles a
touring company and readies the show for the road. By comparison, dramatic
productions typically have smaller production budgets, shorter pre-production
periods and lower operating costs, and tend to occupy smaller theaters for
shorter runs.
A producer of a Broadway show or a touring Broadway show first acquires
the rights to the work from its owners, who typically receive royalty payments
in return. The producer then assembles the cast of the play, hires a director
and arranges for the design and construction of sets and costumes. The producer
of a touring Broadway show also must arrange transportation and schedule the
show with local promoters. The local promoter of a touring Broadway show, who
generally operates or has relationships with venues in individual markets,
provides all local services such as selling tickets, hiring local personnel,
buying advertising and paying a fixed guarantee, typically between $100,000 and
$400,000, to the producer of the show for each week that the show is presented.
The promoter then has the right to recover the amount of the guarantee plus its
local costs from ticket revenues. The promoter and the producer share any
remaining ticket revenues, with the producer typically receiving approximately
60% of the profits. Although touring Broadway shows are generally substantially
less expensive to produce than Broadway shows, their financing may take place
through a limited partnership with third-party investors who receive a profit
interest in the production. Often, investors in touring Broadway shows will
also invest in the
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underlying Broadway show, in part to help secure touring rights. After
investors have received the complete return of their investment, net profits
are split between the limited partners and the show's producer. The amount of
net profits allocated to the show's producer, including fees and royalties,
varies somewhat, but is normally in the range of 50% after certain profit
participations are deducted. After certain net profits, a producer may also
receive a production fee and royalties. A typical touring Broadway show
requires 45 playing weeks with a weekly guarantee from the local promoter of
approximately $250,000 to recoup production and touring costs; more elaborate
touring productions with larger casts or sets, such as The Phantom of the Opera
or Miss Saigon, generally require significantly higher weekly revenues and
additional playing weeks to recoup production and touring costs.
Venues often sell tickets for touring Broadway shows through "subscription
series," which are pre-sold season tickets for a defined package of shows to be
presented in a given venue.
MOTOR SPORTS INDUSTRY
Specialized motor sports events make up a growing segment of the live
entertainment industry. This growth has resulted from additional demand in
existing markets and new demand in markets where new arenas and stadiums have
been built. The increasing popularity of specialized motor sports over the last
several years has coincided with, and, in part, been due to, the increased
popularity of other professional motor sports events, such as professional auto
racing, including NASCAR, CART and Indy Car Racing. A number of specialized
motor sports events are televised on several of the major television networks
and are also shown on television in markets outside of the United States.
In general, most markets host one to four motor sports events each year,
with larger markets hosting more performances. Stadiums and arenas typically
work with producers and promoters to manage the scheduling of events to
maximize each event's results and each season's revenues. The cost of producing
and promoting a typical single stadium event ranges from $300,000 to $600,000,
and the cost of producing and presenting a typical single arena event ranges
from $50,000 to $150,000. Typically, third parties create and finance monster
trucks, demolition derbies, thrill acts, air shows and other motor sports
concepts and events. They may perform in an individual event or in an entire
season of events. As in other motor sports, corporate sponsorships and
television exposure are important financial components that contribute to the
success of a single event or season of events.
TALENT REPRESENTATION INDUSTRY
The talent representation industry generally encompasses the negotiation
of employment agreements and the creation and evaluation of endorsement,
promotional and other business opportunities for the client. A provider in this
industry may also provide ancillary services, such as financial advisory or
management services to its clients in the course of the representation.
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BUSINESS
SUMMARY
SFX is the largest diversified promoter, producer and venue operator for
live entertainment events in the United States. In addition, with its
acquisition of FAME in June 1998, SFX became a leading full-service marketing
and management company specializing in the representation of team sports
athletes, primarily in professional basketball. SFX owns, partially or
entirely, and/or operates under lease or exclusive booking arrangements, the
largest network of venues used principally for music concerts and other live
entertainment events in the United States, with 75 venues in 30 of the top 50
markets, including 14 amphitheaters in 9 of the top 10 markets. SFX's major
areas of focus within the live entertainment industry include music, theater,
sports and family entertainment.
SFX has benefited from significant growth in the live entertainment
industry over the last several years. SFX believes that its ability to provide
integrated services as a promoter, producer, venue operator and manager of live
entertainment events will encourage wider use of its venues by performers. SFX
further believes that this ability will allow SFX to capture a greater
percentage of revenues generated by those events and may contribute to the
overall growth of the live entertainment industry.
Through its large number of venues, its strong, branded presence in each
market served and its long operating history, SFX is able to provide integrated
promotion and production services for a broad variety of live entertainment
events locally, regionally and nationally. During 1998, giving effect to SFX's
recent and pending Marquee and Cellar Door acquisitions, approximately 35
million people attended 12,150 events promoted and/or produced by SFX,
including approximately 5,200 music concerts, 5,800 theatrical shows, over 800
family entertainment shows and over 350 specialized motor sports shows. These
events included:
o music concerts featuring artists such as The Rolling Stones, Phish,
Fleetwood Mac, Ozzy Osbourne and Alanis Morissette;
o music festivals such as the George Strait Country Music Festival;
o touring theatrical productions such as Jekyll & Hyde, Rent and The Magic
of David Copperfield; and
o specialized motor sports events, such as Truck Fest and American
Motorcycle Association Supercross racing events.
SFX also represents many prominent and prestigious athletes and
broadcasters for contract and marketing services. In addition, SFX's event
marketing programs reached over 15 million people in 1997. SFX believes that
its ability to provide integrated live entertainment services will, among other
things, encourage wider use of its venues by performers and allow SFX to
capture a greater percentage of revenues from national tours and ancillary
revenue sources.
SFX's core business is the promotion and production of live entertainment
events, most significantly for concert and other music performances in venues
owned and/or operated by SFX and in third-party venues. As promoter, SFX
typically markets events and tours, sells tickets, rents or otherwise provides
event venues and arranges for local production services, such as stage, set,
sound and lighting. As producer, SFX:
o creates tours for music concerts, theatrical events, specialized motor
sports and other events;
o develops and manages touring Broadway touring theatrical shows; and
o develops specialized motor sports and other live entertainment events.
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As venue owner/operator, SFX books and promotes events in the venues which
it controls. SFX believes that its leadership position in the industry enhances
its ability to maximize ancillary revenue opportunities, including corporate
sponsorship sales, advertising, concession sales and product merchandising. For
the twelve months ended September 30, 1998, SFX had pro forma net revenue of
approximately $1.26 billion. In addition, SFX represents over 100 professional
athletes, many of whom are professional basketball players. The following chart
sets forth, on a pro forma basis, the appropriate percentages of SFX's net
revenues for the nine months ended September 30, 1998, represented by its major
areas of focus:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1998
(% OF PRO FORMA
LIVE ENTERTAINMENT NET REVENUES)
- ---------------------------------------------------------------------- -------------------
<S> <C>
Music, including venue operations ........................... 61%
Theater ..................................................... 21%
Sports, including representation of professional athletes and
specialized motor sports operations ........................ 10%
</TABLE>
In addition, SFX recently created a family entertainment division to
encompass certain of its family-oriented music and theater operations.
BROADCASTING MERGER AND THE SPIN-OFF
Broadcasting was formed in 1992 principally to acquire and operate radio
broadcasting stations. Broadcasting formed SFX as its wholly-owned subsidiary
in December 1997. On May 29, 1998, Broadcasting merged with and into an
affiliate of Hicks, Muse Tate & Furst Incorporated. As a condition to the
Broadcasting merger, Broadcasting contributed to SFX all of its assets relating
to its entertainment business, and, on April 27, 1998, distributed the SFX
common stock to certain stockholders of Broadcasting on a pro rata basis. The
spin-off separated Broadcasting's entertainment business from its
radio-broadcasting business and enabled Broadcasting buyer to acquire only
Broadcasting's radio broadcasting business in the Broadcasting merger.
In conjunction with the Broadcasting merger and the spin-off, SFX,
Broadcasting and Broadcasting buyer entered into the distribution agreement,
the tax sharing agreement and the employee benefits agreement. Each of these
agreements provides for indemnification obligations by SFX and Broadcasting.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--
Spin-Off."
1997 ACQUISITIONS
Broadcasting formed SFX Concerts, Inc. ("Concerts") in January 1997 to
acquire and hold Broadcasting's live entertainment operations. Broadcasting
formed SFX as a wholly-owned subsidiary in December 1997 to be the parent
company of Concerts. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
DELSENER/ SLATER
In January 1997, Concerts acquired Delsener/Slater, a leading concert
promotion company. Delsener/Slater has long-term leases or is the exclusive
promoter for several of the major concert venues in the New York City
metropolitan area, including the Jones Beach Amphitheater, which is a
14,000-seat complex located in Wantagh, New York, and the PNC Bank Arts Center,
which is a 17,500-seat complex located in Holmdel, New Jersey, and was formerly
known as the Garden State Arts Center.
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<PAGE>
MEADOWS
In March 1997, Concerts acquired the stock of certain companies which own
and operate the Meadows, a 25,000-seat indoor/outdoor complex located in
Hartford, Connecticut. See "Certain Relationships and Related
Transactions--Meadows Repurchase."
SUNSHINE PROMOTIONS
In June 1997, Concerts acquired the stock of Sunshine Promotions, one of
the largest concert promoters in the Midwest. Sunshine Promotions owns the Deer
Creek Music Theater, a 21,000-seat complex located in Indianapolis, Indiana,
and the Polaris Amphitheater, a 20,000-seat complex located in Columbus, Ohio,
and has a long-term lease to operate the Murat Centre, a 2,700-seat theater and
2,200-seat ballroom located in Indianapolis, Indiana.
1998 ACQUISITIONS
The following is a brief description of the businesses SFX acquired in
1998. The following descriptions are not intended to be complete descriptions
of the terms of the acquisition agreements and are qualified by reference to
the acquisition agreements. Copies of certain of these acquisition agreements
are filed as exhibits to the registration statement of which this prospectus is
a part and are incorporated herein by reference. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
WESTBURY
On January 8, 1998, SFX acquired a long-term lease for Westbury Music
Fair, located in Westbury, New York.
BGP
On February 24, 1998, SFX acquired BGP, one of the oldest promoters and
producers of live entertainment in the United States and the principal promoter
of live entertainment in the San Francisco Bay area.
PACE AND PAVILION PARTNERS
On February 25, 1998, SFX acquired all of the outstanding capital stock of
PACE, one of the largest diversified promoters and producers of live
entertainment in the United States. PACE has what SFX believes to be the
largest distribution network in each of its music concerts, theatrical shows
and motor sports events business segments. In connection with the acquisition
of PACE, SFX has obtained 100% of Pavilion, a partnership that owns interests
in venues owned by SFX, by acquiring one-third of Pavilion through the
acquisition of PACE and the remaining two-thirds of Pavilion from Sony and
Blockbuster. Under certain circumstances, SFX may be required to sell either
its motor sports or theatrical lines of business. See "Risk Factors--Company
Specific Risks--SFX may be forced to sell some of its subsidiaries, which may
prevent SFX from realizing the full value of these subsidiaries."
In connection with its acquisition of partnership interests in Lakewood
Amphitheater in Atlanta, Georgia and Starplex Amphitheater in Dallas, Texas,
PACE entered into a co-promotion agreement with its partner. The co-promotion
agreement contains a provision that purports, under certain circumstances, to
require PACE to co-promote, and share one-half of the profits and losses, with
such partnership certain concerts which are presented by PACE or any of its
affiliates in another venue located in either Atlanta, Georgia or Dallas,
Texas. However, SFX acquired an interest in Chastain Park Amphitheater, also in
Atlanta, in the Concert/Southern acquisition described below. SFX is currently
involved in litigation with its partner. See "--Litigation."
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<PAGE>
CONTEMPORARY
On February 27, 1998, SFX acquired by merger and asset acquisition the
music concert, live entertainment, event marketing, computerized ticketing and
related businesses of Contemporary and the 50% interest in the Riverport
Amphitheater Joint Venture not owned by Contemporary. Contemporary is a
vertically-integrated live entertainment and special event promoter and
producer, venue operator and consumer marketer. Contemporary is also one of the
top special event sales promotion and marketing companies in the country.
Contemporary develops programs for national consumer product companies and for
demonstrating, sampling and selling products to consumers. Contemporary's
clients have included AT&T, CBS TV, Radio Shack, Coca Cola USA, Reebok, Nabisco
and the NBA.
NETWORK
On February 27, 1998, SFX acquired Album Network, Inc., SJS Entertainment
Corporation and the assets of The Network 40 as well as an office building and
related property. Network is engaged in music marketing, research and artist
development activities and is a publisher of trade magazines for radio
broadcasters, music retailers, performers and record industry executives.
CONCERT/SOUTHERN
On March 4, 1998, SFX acquired Concert/Southern, a promoter of live
entertainment in the Atlanta metropolitan area.
USA MOTOR SPORTS
On March 25, 1998, PACE acquired a 67% interest in certain assets and
liabilities of USA Motor Sports. The remaining 33% interest is held by
Contemporary.
AVALON
On May 14, 1998, SFX acquired Avalon, a leading music concert producer and
promoter in the Los Angeles area.
OAKDALE
On June 3, 1998, SFX acquired certain assets of Oakdale. Oakdale is a
promoter and producer of concerts in Connecticut and the owner of the Oakdale
Theater, a new 4,800 seat facility located in Wallingford, Connecticut.
FAME
On June 4, 1998, SFX acquired all of the outstanding capital stock of
FAME, a leading full-service marketing and management company which specializes
in the representation of team sports athletes, primarily in professional
basketball. FAME was founded in 1992 by David Falk and Curtis Polk and
currently represents some of the premier athletes in professional team sports,
including, among others, Michael Jordan, Patrick Ewing, Alonzo Mourning, Juwan
Howard and Allen Iverson. In addition, FAME provides specialized financial
advisory services to its clients. Mr. Falk continues to serve as the Chairman
of FAME and was appointed as a Member of the Office of the Chairman and a
director of SFX. SFX believes that, through its acquisition of FAME, it will be
able to capitalize on the cross-marketing opportunities that may arise by
virtue of representing prominent team athletes while selling corporate
sponsorships and other marketing rights at its existing venues.
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<PAGE>
DON LAW
On July 2, 1998, SFX acquired certain assets of Don Law, a concert and
theater promoter in New England. Don Law currently owns and/or operates three
venues in New England with an aggregate seating capacity of 27,400.
MAGICWORKS
On September 11, 1998, SFX purchased all of the outstanding shares of
common stock of Magicworks, a publicly-traded company. Magicworks specializes
in the production and promotion of live entertainment events such as theatrical
shows, musical concerts, ice skating shows and other forms of live
entertainment. Magicworks also provides personal representation and sports
marketing services to professional athletes in such sports as figure skating,
baseball and tennis.
OTHER ACQUISITIONS
In the third quarter of 1998, SFX completed the acquisition of seven
additional companies in the theatrical and music segments. The seven
acquisitions included two concert promotion companies, two theatrical
presenters, a theatrical presenter and venue owner/operator, a concert
merchandising company and an equity owner of an SFX amphitheater.
RECENT ACQUISITION
On January 11, 1999, SFX acquired all of the outstanding equity interests
of a company involved in business management and tour production in music and
the performing arts.
PENDING ACQUISITIONS
MARQUEE ACQUISITION
On July 23, 1998, SFX and Marquee entered into a merger agreement whereby
a wholly owned subsidiary of SFX will be merged with and into Marquee and
Marquee will become a wholly owned subsidiary of SFX. See "Agreements Related
to the Pending Acquisitions--Marquee." Marquee provides integrated event
management, television programming and production, marketing, talent
representation and consulting services in the sports, news and other
entertainment industries. Marquee's event management, television programming
and production and marketing services involve:
o managing sporting events, such as professional tennis, golf and bowling
tournaments;
o producing television programs, principally sports entertainment and
children's programs; and
o marketing professional and collegiate athletic leagues and
organizations.
CELLAR DOOR ACQUISITION
In January 1999, SFX entered into an agreement to acquire all of the
issued and outstanding capital stock of Cellar Door. Cellar Door is a leading
promoter and producer of live entertainment events. See "Agreements Related to
the Pending Acquisitions--Cellar Door."
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<PAGE>
NEDERLANDER ACQUISITION
On February 1, 1999, SFX entered into definitive agreements for the
acquisition of certain interests in seven venues and other assets from entities
controlled by members of the Nederlander family and other persons. The
interests in the venues to be acquired consist of:
o 50% interests in long-term leases and booking and management agreements for
The World Music Theatre in Chicago and the Alpine/Valley Music Amphitheatre
in East Troy, Wisconsin, serving the Milwaukee/North Chicago market;
o a long-term lease for the Merriweather Post Pavilion in Columbia, Maryland,
serving the Washington D.C. and Baltimore markets; and
o booking and management agreements for the Riverbend Music Center and the
Crown Arena, a one-third interest in the ownership of the Crown Arena, a
lease for the Taft Theater and a short term lease for Bogart's Club, all in
Cincinnati.
In addition, the agreements cover 100% interests in entities that provide
concert performances and hold rights to construct the Mesa del Sol Centre for
the Performing Arts in Albuquerque, New Mexico. See "Agreements Related to the
Pending Acquisitions--
Nederlander."
ISI ACQUISITION
On January 26, 1999, SFX entered into a definitive agreement to acquire
ISI. ISI is a full-service marketing company utilizing a completely integrated
approach in the development of client programs. ISI is involved in:
o corporate consulting and property marketing;
o athletic/celebrity marketing and representation;
o team and venue services;
o event planning and management; and
o licensing and merchandising.
The consummation of each pending acquisition is subject to the
satisfaction of a number of conditions, which, in some cases, are out of SFX's
control. No assurance can be given that the pending acquisitions will be
consummated on the terms described in this prospectus, or at all.
SFX is also currently pursuing certain additional acquisitions; however,
it has not entered into any definitive agreements with respect to such
acquisitions and there can be no assurance that it will do so.
AGREEMENT WITH TICKETMASTER
On November 13, 1998, SFX and Ticketmaster entered into a binding letter
of intent in which SFX granted Ticketmaster the exclusive right to sell and
distribute tickets for SFX's events worldwide. SFX anticipates that the
revenues associated with its ticket sales will increase in 1999 as a result of
this agreement. SFX is currently evaluating its existing internal ticket
operations, which were acquired in SFX's 1998 acquisitions; however, SFX does
not believe that its ticketing operations are material to its financial
condition or results of operation.
SERVICES PROVIDED BY SFX
SFX is engaged in:
o booking and promoting live entertainment events and tours;
97
<PAGE>
o producing live entertainment events and tours;
o owning and/or operating concert and other entertainment venues;
o representing professional athletes; and
o selling corporate sponsorships and advertising, and providing marketing
and consulting services to third-parties.
BOOKING AND PROMOTION
SFX books and promotes music concerts, theatrical events, specialized
motor sports and other live entertainment events and tours such as music
festivals, comedy tours, figure skating shows, gymnastics tours, motivational
speaking tours and other special events. SFX books and promotes events in a
number of types of venues that are owned and/or operated by SFX or by third
parties. See "--Venue Operations." SFX primarily promotes concerts performed by
newer performers having widespread popularity--such as Phish, Dave Matthews
Band and Hootie & the Blowfish--and by more established performers having
relatively long-standing and more stable bases of popularity--such as James
Taylor and Jimmy Buffett. SFX believes that its large distribution network will
enable it to set an aggregate guarantee for a series of shows, mitigating the
risk of loss associated with a single show. SFX also believes that the market
research and audience demographics database that it acquired in SFX's 1998
acquisitions, when combined with its existing audience data collection efforts,
will permit highly-effective, targeted marketing, such as direct-mail and
subscription series campaigns, which SFX believes will increase ticket
pre-sales and overall sales in a cost-efficient manner.
The following table identifies artists whose events SFX recently promoted,
on a pro forma basis:
<TABLE>
<S> <C> <C>
Aerosmith Elton John Phil Collins
Alabama Fleetwood Mac* Pink Floyd
Alanis Morissette James Taylor Phish
Bette Midler Janet Jackson R.E.M.
Billy Joel Jerry Seinfeld* Rod Stewart*
Brooks & Dunn Jimmy Buffett The Rolling Stones
Chris Rock* Live Seal
Clint Black Melissa Etheridge Sheryl Crow
Crosby, Stills & Nash Metallica Smashing Pumpkins
Dave Matthews Michael Bolton* Stone Temple Pilots
Depeche Mode Ozzy Osbourne* Tim Allen*
The Eagles Pearl Jam Tina Turner
Earth, Wind & Fire Peter Gabriel U2
</TABLE>
- ----------
* SFX produced a national tour.
PRODUCTION
SFX is currently involved in creating tours for music concert and other
live entertainment events. SFX's production activities include:
o creating tours for music concert, theatrical, specialized motor sports
and other live entertainment events;
o developing and managing touring Broadway shows; and
o developing specialized motor sports shows, proprietary characters and
television programming.
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<PAGE>
The acquired businesses produce tours on a national or regional basis and,
in 1997, structured national tours for Fleetwood Mac and Ozzy Osbourne, among
others. SFX plans to increase its production of national music tours.
PACE also produces touring Broadway shows, acquiring the stage and touring
rights from a show's owner, assembling the touring cast, hiring a director and
arranging for the construction and design of sets and costumes. Touring
Broadway shows are typically revivals of previous commercial successes or
reproductions of theatrical shows currently playing on Broadway in New York
City. PACE also produces and makes small investments--typically approximately
$150,000 to $600,000--as a limited partner in the creation of a small number of
original Broadway shows, in exchange for obtaining touring rights and favorable
scheduling for those shows.
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<PAGE>
The touring Broadway show production and promotion industry is highly
fragmented. SFX believes it is the largest multiple-market presenter of touring
Broadway shows in the United States. SFX competes with other producers and
presenters to obtain presentation arrangements with venues and performing arts
organizations in various markets, including in markets that have more than one
venue suitable for presenting a touring Broadway show. SFX's competitors, some
of whom have also been partners of PACE and Magicworks in certain theater
investments from time to time, include a number of New York-based production
companies that also promote touring Broadway shows and a number of regional
presenters. On a pro forma basis, SFX would have had a producing interest or
investment in the following shows for 1997 and/or 1998, among others:
<TABLE>
<CAPTION>
SHOW TITLE TYPE SFX'S INVOLVEMENT
- ----------------------------- -------------------- --------------------------
<S> <C> <C>
Big Touring Production
Cabaret Touring Production
Damn Yankees Touring Production
Death Trap Touring Production
Evita Touring Production
Funny Girl Touring Production
The Gin Game Touring Production
Harmony Development Production
Jekyll & Hyde Broadway Production
Kiss of the Spiderwoman Touring Production
Lord of the Dance Touring (Europe) Production
The Magic of Touring Production
David Copperfield
Man of La Mancha Touring Production
Smokey Joe's Cafe Touring Production
The Sound of Music Touring Production
Victor, Victoria Touring Production and Investment
West Side Story Touring Production
A Chorus Line Touring (US & UK) Investment
Annie Broadway Investment
Carousel Touring Investment
Cirque Broadway & Touring Investment
Chicago Broadway & Touring Investment
How to Succeed in Business Broadway & Touring Investment
Martin Guerre West End (UK) Investment
Rent Broadway & Touring Investment
Steel Pier Broadway Investment
Triumph of Love Broadway Investment
West Side Story Touring (UK) Investment
</TABLE>
SFX believes that there are approximately 50 domestic markets that can
provide the potential audience and gross ticket revenues for a full scale
touring Broadway show to be profitable, and an additional 50 markets where
smaller scale productions with shorter runs can be presented profitably. Most
of these cities have only a limited number of venues that can accommodate a
touring Broadway show.
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<PAGE>
SFX currently sells subscription series for its touring Broadway shows in
the following 38 markets that maintain active touring schedules:
<TABLE>
<S> <C> <C>
Albuquerque, NM Indianapolis, IN Pittsburgh, PA
Atlanta, GA Jacksonville, FL Portland, OR
Austin, TX Long Beach, CA Salt Lake City, UT
Baltimore, MD Louisville, KY San Antonio, TX
Boise, ID Miami, FL Seattle, WA
Boston, MA Milwaukee, WI Tampa, FL
Cincinnati, OH Minneapolis, MN Tempe, AZ
Colorado Springs, CO Nashville, TN Tucson, AZ
Columbus, OH New Orleans, LA Wallingford, CT
Dallas, TX Omaha, NE Wichita, KS
Eugene, OR Orange County, CA Ottawa, Canada
Ft. Lauderdale, FL Orlando, FL Edmonton, Canada
Houston, TX Palm Beach, FL
</TABLE>
SFX also produces motor sports events, such as monster truck events,
tractor pulls, mud races, demolition derbies and motor cross races, and designs
tracks and other elements for those events. Competition among producers in the
specialized motor sports industry is between three large companies and a number
of smaller regional companies. SFX also competes with several regional
specialized motor sports companies, which each present only a small number of
events, as well as a number of local promoters that present only one or two
events per year. See "Risk Factors--Company Specific Risks--SFX may be forced
to sell some of its subsidiaries, which may prevent SFX from realizing the full
value of these subsidiaries."
In addition, SFX produces a variety of other forms of live entertainment,
including music festivals, radio programs, air shows, figure skating shows,
gymnastics tours, comedy tours, motivational speaking tours and television
programming based on certain of its events and other events.
VENUE OPERATIONS
SFX derives revenues from its venue operations primarily from corporate
sponsorships and advertising, concessions, merchandise, parking and other
related items. A venue operator typically receives for each event it hosts a
fixed fee or percentage of ticket sales for use of the venue, as well as a fee
representing 40-50% of total concession sales from the vendors and 10-25% of
total merchandise sales from the performer. As a venue owner, SFX typically
receives 100% of sponsorship and advertising revenues. Since few artists will
play in every available market during a tour, SFX competes with venues in other
markets for dates of popular national tours. The favorable cost structure of
amphitheaters and their ability to draw fans is often an important factor in a
performer's decision to choose to perform in an amphitheater market. SFX also
competes with other venues to promote an artist in that city.
SFX believes that it controls the largest network of venues used
principally for music concerts and other live entertainment events in the
United States. Upon closing of the pending Cellar Door acquisition, SFX will
wholly or partially own and/or operate 75 venues in 30 of the top 50 markets,
including 14 amphitheaters in 9 of the top 10 markets. The following chart sets
forth certain information with respect to the venues that SFX wholly or
partially owns and/or operates:
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<PAGE>
<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- ------------------------------- ---------- -------------- ------------- --------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NEW YORK--NORTHERN NEW 1
JERSEY--LONG ISLAND:
PNC Bank Arts Center amphitheater 22-year 17,500 6,456 57 368,004
(formerly Garden State lease that
Arts Center) ................. expires
October 31,
2017
Jones Beach Theatre ........... amphitheater 10-year 14,400 7,992 45 359,653
license
agreement
that expires
December 31,
1999
Roseland Ballroom ............. theater exclusive 3,600 2,614 41 107,174
booking
agent
Westbury Music Fair ........... theater 43-year 2,870 2,198 148 325,348
lease that
expires
December 31,
2034
Irving Plaza .................. theater 10-year 1,121 963 208 200,250
lease that
expires
July 30,
2007
Beacon Theatre ................ theater 49% 2,849 2,000(2) 40(2) 80,000(2)
partnership
interest in
15-year
lease that
expires
December 31,
2006
LOS ANGELES--RIVERSIDE-- 2
ORANGE COUNTY:
Glen Helen Blockbuster amphitheater 25-year 25,000(3) 10,162 15 152,432
Pavilion ..................... lease that
expires
July 1, 2018
Irvine Meadows amphitheater facility 15,500 11,537 19 219,211
Amphitheater ................. owned;
20-year land
lease that
expires
February
28, 2017
Thousand Oaks Civic Arts theater 5-year 1,800 1,164 24 27,929
Plaza ........................ exclusive
booking
agent for
contemporary
music
events that
expires
May 2003
CHICAGO--GARY--KENOSHA: 3
The Palace Theater(4) ......... theater 50% 2,350 N/A N/A N/A
partnership
interest in
49-year
lease that
expires
May, 2048
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- ---------------------------------- ---------- -------------- ----------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Rosemont Horizon ................. arena 10-year 17,500 N/A N/A N/A
consulting
agreement
that expires
January 1,
2009(5)
Rosemont Theater ................. theater 10-year 4,000 N/A N/A N/A
consulting
agreement
that expires
January 1,
2009(5)
WASHINGTON--BALTIMORE: 4
Nissan Pavilion at Stone amphitheater 20-year 25,000 11,116 31 344,600
Ridge(6) ........................ lease that
expires
June 9,
2014
SAN FRANCISCO--OAKLAND--SAN 5
JOSE:
Shoreline Amphitheater ........... amphitheater facility 22,000 12,600 40 504,013
owned; land
leased for
35 years,
expiring
November 30,
2021
Concord Pavilion ................. amphitheater 10-year 12,500 6,226 42 261,479
exclusive
outside
booking
agent until
December 31,
2005
Greek Theater .................... theater 4-year 8,500 6,191 9 55,718
promotion
agreement
that expires
October 31,
2002
Warfield Theatre ................. theater 10-year 2,250 1,677 77 129,129
lease that
expires
May 31,
2008
Fillmore Auditorium .............. theater 10-year 1,249 1,051 180 189,103
lease that
expires
August 31,
2007
Punch Line Comedy Club ........... club 5-year lease 175 97 422 41,138
that expires
September 15,
2001
PHILADELPHIA--WILMINGTON-- 6
ATLANTIC CITY:
Blockbuster/SONY Music amphitheater 31-year 25,000 8,973 54 484,528
Entertainment Centre at lease that
the Waterfront .................. expires
September 29,
2025
BOSTON--WORCESTER--LAWRENCE: 7
Great Woods Center for the amphitheater owned 19,500 11,943 54 644,875
Performing Arts .................
Harborlights Pavilion(7) ......... amphitheater license 4,800 3,180 45 143,100
agreement
</TABLE>
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<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- -------------------------------- ---------- -------------- ---------------- --------------- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Orpheum Theatre ................ theater 4-year 2,700 2,475 184 622,586
operating
agreement
that expires
December 31,
2000
Avalon ......................... club 5-year 1,350 1,116 54 60,213
exclusive
booking
agent until
June 30,
2003 and
beneficial
owner of a
minority
interest
Charles Playhouse (main theater owned 525 439 416 182,448
stage) ........................
Charles Playhouse (basement) theater owned 200 104 416 43,480
Wilbur Theatre ................. theater 5-year lease 1,223 959 129 123,732
that expires
August 25,
2001
Colonial Theatre ............... theater 8-year lease 1,704 1,330 208 276,754
that expires
August 31,
2001
DETROIT--ANN ARBOR--FLINT: 8
Pine Knob Music Theatre(6) ..... amphitheater preferred 16,646 11,277 45 507,469
booking
The Palace at Auburn arena preferred 15,000(8) 15,893 23 365,549
Hills(6) ...................... booking
Detroit State Theatre(6) ....... theater exclusive 3,000 2,388 36 85,979
booking
Meadowbrook amphitheater exclusive 7,619 4,235 5 21,174
Amphitheater(6) ............... booking
DALLAS--FORT WORTH: 9
Starplex Amphitheater .......... amphitheater 32.5% 20,500 8,799 35 307,981
partnership
interest in
31 year
lease that
expires
December 31,
2028
HOUSTON--GALVESTON--BRAZORIA: 10
Cynthia Woods Mitchell amphitheater 15-year 13,000 8,381 35 293,350
Pavilion ...................... management
contract
that expires
December 31,
2009
Aerial Theater at Bayou theater 50% 2,800 3,223 18 58,019(9)
Place ......................... partnership
interest in
10-year
lease that
expires
December 31,
2007
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- -------------------------------- ---------- -------------- -------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ATLANTA: 11
Lakewood Amphitheater .......... amphitheater 32.5% 19,000 9,257 32 296,225
partnership
interest in
35-year
lease that
expires
January 1,
2019
Chastain Park Amphitheater ..... amphitheater 10-year 7,000 5,777 28 161,755
lease that
expires
December 31,
2000
Roxy Theater ................... club 7-year lease 1,500 848 102 86,498
that expires
March 31,
2004
Cotton Club .................... club 5-year lease 650 403 151 60,829
that expires
August 30,
2000
MIAMI--FORT LAUDERDALE: 12
Sunrise Musical Theatre (6) .... theater owned 3,968 3,366 34 114,444
Parker Playhouse ............... theater 4-year 1,185 749 112 83,904
exclusive
booking
that expires
October 17,
2000
SEATTLE--TACOMA--BREMERTON: 13
White River Amphitheatre amphitheater long-term 20,000 N/A N/A N/A
(10) .......................... management
agreement
PHOENIX--MESA: 16
Desert Sky Blockbuster amphitheater 60-year 19,900 9,179 23 211,114
Pavilion ...................... lease that
expires
June 30,
2049
ST. LOUIS: 18
Riverport Amphitheater ......... amphitheater owned 21,000 10,531 42 442,302
American Theater ............... theater 10-year 2,000 1,510 24 36,236
lease that
expires
July 31,
2004
Westport Playhouse ............. theater year-to-year 1,100 880 15 13,196
lease, with
renewal
under
negotiation
PITTSBURGH: 19
Star Lake Amphitheater ......... amphitheater 45-year 22,500 12,361 42 519,182
lease that
expires
December 31,
2034
</TABLE>
105
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<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- --------------------------------- ---------- -------------- ----------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
I.C. Light Amphitheater ......... amphitheater year to year 4,235 2,257 82 185,029
license
agreement
expired
December 31,
1998 (extension
to December 31,
2004 negotiated-
awaiting
execution of
agreement)
DENVER-BOULDER-GREELEY: 21
Mammoth Events Center ........... theater owned 3,000 N/A N/A N/A
KANSAS CITY: 24
Sandstone Amphitheater. ......... amphitheater 10-year 18,000 8,109 32 259,488
lease that
expires
December 31,
2002
Starlight Theater ............... theater concert 9,000 3,772 9 33,948
presentation
agreement
that expires
September 30,
2000
Memorial Hall ................... theater 5-year 3,000 1,910 11 21,014
management
contract
that expires
January 1,
2004
MILWAUKEE--RACINE: 25
Marcus Amphitheater (6) ......... amphitheater 50% 22,828 8,334 11 91,670
partnership
in lease that
expires in
2000
Modjeska Theater(6) ............. theater exclusive 1,800 965 21 20,262
booking
SACRAMENTO--YOLO: 26
Punch Line Comedy Club .......... club 9-year lease 245 90 355 31,834
that expires
December 31,
2000
Yuba County amphitheater owned 18,500 N/A N/A N/A
Amphitheatre (10) ..............
NORFOLK--VIRGINIA BEACH-- 27
NEWPORT NEWS:
GTE Virginia Beach amphitheater 30-year 20,000 10,428 32 333,688
Amphitheater(6). ............... lease that
expires in
2026
The Boathouse(6) ................ concert hall lease that 2,460 1,494 42 62,762
expires 2013
The Abyss(6) .................... club exclusive 900 329 16 5,269
booking
INDIANAPOLIS: 28
Deer Creek Music Center ......... amphitheater owned 21,000 11,348 42 476,617
Murat Theatre ................... theater and 50-year 2,700 1,412 144 211,920
ballroom lease that
expires
August 31,
2045
COLUMBUS: 30
Polaris Amphitheater ............ amphitheater owned 20,000 7,732 39 301,555
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- ------------------------------- ---------- -------------- -------------- ---------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
CHARLOTTE--GASTONIA--ROCK 32
HILL:
Charlotte Blockbuster amphitheater owned 18,000 8,592 34 292,135
Pavilion .....................
HARTFORD: 37
Meadows Music Theater ......... amphitheater facility 25,000 9,807 26 254,982
owned; land
leased for
40 years
until
September 13,
2034
Oakdale Theater ............... theater facility 4,800 2,944 142 418,000
owned;
15-year land
lease that
expires
June 3,
2013 and
SFX will
purchase
land upon
expiration
NASHVILLE: 40
Starwood Amphitheater ......... amphitheater owned 17,000 8,208 25 205,204
ROCHESTER: 41
Finger Lakes Amphitheater ..... amphitheater year to year 12,700 6,123 15 91,845
co-promotion
agreement
that expires
December 31,
1999
RALEIGH--DURHAM--CHAPEL 45
HILL:
Walnut Creek Amphitheater ..... amphitheater 40-year 20,000 10,498 40 419,919
lease that
expires
October 31,
2030 (11)
Harro East Theater ............ theater/ 7-year 1,050 1,000(12) 13(12) 13,000(12)
ballroom exclusive
booking
that expires
November 4,
2005
WEST PALM BEACH--BOCA 48
RATON:
SONY Music/Blockbuster
Coral Sky Amphitheater ....... amphitheater lease that 20,000 11,244 26 292,340
expires
December 31,
2005 (11)
Royal Poinciana Playhouse ..... theater 6-year lease 878 601 84 50,509
that expires
October 31,
2004
<PAGE>
LOUISVILLE: 49
Palace Theatre ................ theatre 50% 2,700 N/A N/A N/A
ownership
RICHMOND--PETERSBURG: 51
Classic Amphitheatre(6) ....... amphitheater year to year 11,000 6,208 14 86,917
management
contract
</TABLE>
107
<PAGE>
<TABLE>
<CAPTION>
TOTAL AVG. NO. OF TOTAL
MARKET TYPE OF SFX'S SEATING ATTENDANCE EVENTS SEATS SOLD
MARKET AND VENUE RANK (1) VENUE INTEREST CAPACITY IN 1997 IN 1997 IN 1997
- ---------------------------------- ---------- -------------- --------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SPRINGFIELD: 70
Tanglewood ....................... amphitheater exclusive 13,802 5,786 8 46,289
booking
agent--expires
July 27,
1999
RENO: 125
Reno Hilton Amphitheater ......... amphitheater 4-year 8,500 3,420 19 64,983
exclusive
promotion
agreement
that expires
December 31,
2001
</TABLE>
- ----------
(1) Based on the July 1996 population of metropolitan statistical areas as set
forth in the Internet Press Release, dated December 1997, by the
Population Estimates Program, Population Division, U.S. Bureau of the
Census. Excludes venues where SFX sells subscriptions for touring Broadway
shows.
(2) Approximate numbers.
(3) Additional seating of approximately 40,000 is available for certain
events.
(4) Venue is closed for renovation and is scheduled to re-open in May 1999.
(5) Consulting agreement provides for booking, group sales and marketing
consultation services. Venue is available for rental by all promoters.
(6) Venues to be acquired in the Cellar Door acquisition.
(7) SFX has negotiated a new license agreement for this facility and is
awaiting approval of this agreement by the appropriate governmental
authority.
(8) Additional seating of approximately 5,000 is available for certain events.
(9) Includes New Year's Eve Festival with attendance of approximately 15,000.
(10) Venue is currently under development.
(11) Upon closing of the Cellar Door acquisition, SFX will own a 100% interest
in each of these leases. SFX currently holds a 66% partnership interest in
the Walnut Creek Amphitheater lease and a 75% partnership interest in the
SONY Music/Blockbuster Coral Sky Amphitheater lease.
(12) Approximate numbers based on reported sellouts of all but one show.
Because SFX operates a number of its venues under leasing or booking
agreements, its long-term success will depend on its ability to renew these
agreements when they expire or end. There can be no assurance that it will be
able to renew these agreements on acceptable terms or at all, or that it will
be able to obtain attractive agreements with substitute venues.
REPRESENTATION OF PROFESSIONAL ATHLETES AND OTHER PERSONALITIES
Upon consummation of the FAME acquisition in June 1998, SFX became a
leading full-service provider of marketing and management services,
specializing in the representation of team sports athletes, primarily in
professional basketball. It generates revenues through the negotiation of
professional sports contracts and endorsement contracts for its clients. FAME's
clients have endorsed products for companies such as Nike, McDonald's,
Coca-Cola and Chevrolet. In addition, FAME generates a small portion of its
revenues by providing certain financial management and planning services to its
clients, through its investment affiliate that was also acquired in the FAME
acquisition, which is a registered investment advisor. SFX believes that it
will be able to capitalize on the synergies which exist between the
representation of athletes in corporate marketing opportunities and the sale of
corporate sponsorships and other marketing rights at its existing venues.
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<PAGE>
FAME has derived a significant portion of its revenues to date from a
small number of its clients, primarily in professional basketball. SFX
estimates that five of FAME's basketball clients accounted for approximately
78% of FAME's revenue for the nine months ended September 30, 1998, and, on a
pro forma basis, FAME's revenues would have comprised approximately 1% of SFX's
revenues for the same period. The amount of endorsement and other revenues that
these clients generate is a function of, among other things, the clients'
professional performance and public appeal. Factors beyond SFX's control, such
as injuries to clients, declining skill or labor unrest, among others, could
have a material adverse affect on SFX's operations. Representation agreements
with clients are generally for a term equal to the term of the player's
professional sports contract but are terminable on 15 days' notice, although
FAME would continue to be entitled to the revenue streams generated during the
remaining term of any contracts that it negotiated. The termination or
expiration of FAME's contracts with certain clients could have a material
adverse affect on SFX's operations.
The pending Marquee and ISI acquisitions would substantially increase
SFX's talent representation business. Marquee represents over 500 professional
athletes, broadcasters, musicians and entertainers. Marquee's services
encompass the negotiation of employment agreements and the creation and
evaluation of endorsement, promotional and other business opportunities for
such personalities. ISI is a full service sports marketing company offering an
extensive array of services, including athlete marketing and representation.
The owners of the teams in the NBA locked out their players from
participation in league activities from July 1, 1998, to January 6, 1999, which
caused cancellation of some of the games for the current basketball season. The
NBA season began on February 5, 1999, with a reduced game schedule. The
cancellation of over 30 games for the current NBA season will have a negative
impact on FAME's revenues and EBITDA.
SPONSORSHIPS AND ADVERTISING; MARKETING AND OTHER SERVICES
To maximize revenues, SFX actively pursues the sale of local, regional and
national corporate sponsorships, including naming venues such as the PNC Bank
Arts Center and designating "official" event or tour sponsors, providers of
concessions such as beer and soda, credit card companies, phone companies, film
manufacturers and radio stations, among others. Sponsorship arrangements can
provide significant additional revenues at negligible incremental cost, and
many of SFX's venues currently have no sponsorship arrangements in many of the
available categories, including naming rights. SFX believes that the national
venue network it has assembled will likely attract a larger number of major
corporate sponsors and enable SFX to sell national sponsorship rights at a
premium over local or regional sponsorship rights. SFX also pursues the sale of
corporate advertising at its venues, and believes that it has substantial
billboard and other advertising space available that it has not yet begun to
utilize. SFX also believes that its relationships with advertisers will enable
it to better utilize available advertising space and the aggregation of its
audiences nationwide will create the opportunity for advertisers to access a
nationwide market.
SFX provides a variety of marketing and consulting services derived from
or complementary to its live entertainment operations, including local,
regional and national live marketing programs and subscription or fee based
radio and music industry data compilation and distribution. Live marketing
programs are generally specialized advertising campaigns designed to promote a
client's product or service by providing samples or demonstrations in a live
format, typically at malls and college campuses. For example, Contemporary
presents live marketing events on behalf of AT&T for the purposes of
demonstrating the advantages of AT&T's long distance service over that of its
competitors. This program is in its third year, and Contemporary is now the
primary vendor for this
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<PAGE>
service. Additionally, SFX believes that Contemporary is one of the leading
producers of national mall touring events, producing over 65 events every year
in the country's shopping malls. These events, either in stores or mall
congregation areas, are designed to promote brand awareness and drive follow-up
sales. Contemporary recently had mall tour campaigns for Newsweek magazine and
for Radio Shack. SFX believes that, along with mall events, Contemporary is one
of the industry leaders in events produced on college campuses. Currently in
its seventh year, the CBS College Tour will appear at 40 colleges in the United
States. In addition to promoting the image of the CBS Television Network, these
tours also create value-added tie-in promotions and marketing programs for the
network's top advertisers. During each year, Contemporary uses over 100
vehicles, traveling nationwide in support of these programs, and draws on over
1,000 independent marketing associates across the country with respect to its
marketing campaigns.
SFX is engaged in music marketing, research and artist development
activities, and is a publisher of trade magazines for radio broadcasters, music
retailers, performers and record industry executives. Each of SFX's magazines
focuses on research and insight common to a specific contemporary radio format.
SFX also provides radio airplay and music retail research services to record
labels, artist managers, retailers and radio broadcasters.
SFX, through Network, creates and distributes network radio special events
and live concert programming for over 400 music radio stations in the top 200
United States radio markets. Additionally, SFX produces eight daily radio "show
prep" services that stations use to supplement in-house content production.
Network also provides consulting and entertainment marketing services to
corporate clients with music business interests.
OPERATING STRATEGY
SFX's principal objectives are to maximize revenue and cash flow growth
opportunities by being a leading promoter and producer of live entertainment
events and a leading provider of talent representation services and owning
and/or operating leading live entertainment venues in the United States. SFX's
specific strategies include the following:
OWN AND/OR OPERATE LEADING LIVE ENTERTAINMENT VENUES IN NATION'S TOP 50
MARKETS
A key component of SFX's strategy is to own and/or operate a network of
leading live entertainment venues in the nation's top 50 markets. SFX believes
that this strategy will enhance its ability to:
o utilize its nationwide venue footprint, significant industry expertise and
access to a large aggregate audience to secure more events and distribute
content on a national scale;
o sell additional products and maximize numerous other related revenue
sources, including sponsorships and other marketing opportunities;
o position itself to produce national tours by leading performers to capture
a greater percentage of revenues from those tours;
o encourage wider use by performers of SFX's venues by providing centralized
access to a nationwide network of venues; and
o take advantage of economies of scale to increase, for example, concession
and related revenues.
SFX believes that it controls the largest network of venues used
principally for music concerts and other live entertainment events in the
United States. Upon closing of the pending Cellar Door acquisition, SFX will
wholly or partially own and/or operate under lease or exclusive booking
arrangements 75 venues, including 14 amphitheaters in 9 of the top 10 markets,
located in 30 of the top 50 markets.
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<PAGE>
MAXIMIZE ANCILLARY REVENUE OPPORTUNITIES
SFX intends to enhance revenues and cash flows by maximizing revenue
sources arising from and related to its leadership position in the live
entertainment business. Management believes that these related revenue sources
generally have higher margins than promotion and production revenues and
include, among others, the sale of corporate sponsorship, naming and other
rights, concessions, merchandise, parking and other products and services and
the sale of rights to advertise to SFX's large aggregate national audience.
Categories available for sponsorship arrangements include the naming of the
venue itself and the designation of "official" event or tour sponsors,
concessions providers, credit card companies, phone companies, film
manufacturers and radio stations, among others. Sponsorship arrangements can
provide significant additional revenues at negligible incremental cost, and
many of SFX's venues currently have no sponsorship arrangements in many of the
available categories, including naming rights. SFX also intends to maximize
related revenues by developing and exploiting intellectual property rights
associated with its production of musical concert tours and themed events such
as regional music festivals and branded characters created as an integral part
of the content, marketing and merchandising of certain motor sports events.
Additionally, SFX intends to maximize related revenues by developing Internet
opportunities, including affinity clubs, through the creation of a common SFX
web site.
SFX has recently agreed to sell naming rights for four venues. SFX has
also recently entered into 16 national sponsorships covering national tours
arranged by SFX or for the exploitation of the SFX national network of venues.
The majority of these sponsorships are for clients that are either new to SFX
or to the entertainment industry generally. SFX believes that significant
additional opportunities for various types of sponsorships remain available for
sale.
EXPLOIT SYNERGIES OF THE ACQUIRED BUSINESSES
SFX plans to maximize revenues by exploiting synergies among, and
incorporating the best business practices of, its various existing businesses,
including the businesses to be acquired. SFX also intends to exploit synergies
resulting from the consolidation of venue ownership and SFX's expanding overall
size. For example, SFX believes that the radio industry trade publications of
Network will enable SFX to introduce new acts and new musical releases to radio
programming directors nationwide. This exposure can enhance recorded music
sales and, in turn, music concert attendance, particularly for artists having
relationships with SFX. In addition, SFX believes that it will be able to
capitalize on the cross-marketing opportunities that may arise by virtue of
representing prominent team athletes while selling corporate sponsorships and
other marketing rights at its existing venues.
INCREASE USE OF VENUES; DIVERSIFICATION OF ACTS AND VENUES
Typically, a venue is not used for many of the dates available for live
entertainment events in any given season. SFX believes that it will be able to
increase the utilization of its venues through:
o its ability to affect scheduling on a nationwide basis;
o its local knowledge, relationships and expertise; and
o its presentation of a variety of additional events, including comedy
acts, magic acts, motivational speeches, national figure skating and
gymnastics competitions and exhibitions and bull riding competitions,
among others.
SFX believes that a diversified portfolio of performers, events and venues
reduces reliance on the commercial success of any one performer, event or
venue.
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<PAGE>
INNOVATIVE EVENT MARKETING
SFX plans to use innovative event marketing to increase admissions,
sponsorship and advertising revenues and to develop ticketing strategies more
accurately reflecting demand, resulting in increases in both lower prices and
premium priced tickets. In particular, SFX believes that it can increase the
profitability of its venues by offering premium ticket packages, including:
o season ticket packages that include amenities such as preferred
seating, VIP parking, waiter service, private club and/or "upscale"
concession menus;
o subscription series packages, allowing customers to purchase tickets
for a set of performances; and
o preferred seating, such as box seating and VIP seating areas, which
typically generate higher revenues per seat.
SFX acquired market research and audience demographics databases through
certain of SFX's 1998 acquisitions. These databases, when combined with SFX's
existing audience data collection efforts, will permit highly-effective
targeted marketing, such as direct-mail and subscription series campaigns,
which SFX believes will increase ticket pre-sales and overall sales in a
cost-efficient manner.
STRICT COST CONTROLS; NATIONALLY COORDINATED BOOKING, MARKETING &
ACCOUNTING
SFX's senior management imposes strict financial reporting requirements
and expense budget limitations on all of its businesses, enabling senior
management to monitor the performance and operations of all of its businesses,
to eliminate duplicative administrative costs and to realize expense savings.
Moreover, SFX believes that its size will enable it to achieve substantial
economies of scale by:
o completing the implementation of a nationally coordinated booking
system for contracting for and scheduling acts, while continuing to
utilize the substantial local expertise of the acquired businesses;
o establishing a centralized marketing team to exploit ancillary
revenue streams on local, regional and national levels, including
from sponsorship, advertising and merchandising opportunities; and
o implementing a centralized accounting system.
PURSUE COMPLEMENTARY ACQUISITION OPPORTUNITIES
The live entertainment business is characterized by numerous participants,
including booking agents, promoters, producers, venue owners and venue
operators, many of which are entrepreneurial, capital-constrained local or
regional businesses that do not achieve significant economies of scale from
their operations. SFX believes that the fragmented nature of the industry
presents attractive acquisition opportunities, and that its larger size will
provide it with improved access to the capital markets that will give it a
competitive advantage in implementing its acquisition strategy. Through
consolidation, SFX believes that it will be better able to coordinate
negotiations with performers and talent agents, addressing what SFX believes is
a growing desire among performers and talent agents to deal with fewer, more
sophisticated promoters. SFX intends to pursue additional strategic
acquisitions of:
o amphitheater and other live entertainment venues;
o local and regional promoters and producers of music concert,
theatrical, specialized motor sports and other live entertainment
events; and
o companies in the sports marketing and talent representation industry.
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In addition to the pending Cellar Door, ISI and Nederlander acquisitions, SFX
is currently in the process of negotiating certain additional acquisitions of
live entertainment and related businesses; however, it has not entered into
definitive agreements with respect to any of such acquisitions and there can be
no assurance that it will do so. See "Risk Factors--Company Specific Risks--If
SFX is unable to complete other acquisitions in the future, SFX's business may
suffer."
REGULATORY MATTERS
Because SFX relies on acquisitions of existing businesses and assets for
its growth, restrictions imposed by local, state and federal regulatory,
licensing, approval and permit requirements, including those relating to
zoning, operation of public facilities, consumer protection and antitrust, will
significantly affect its ability to acquire and operate its business. For
example, the Federal Trade Commission and the Antitrust Division of the U.S.
Department of Justice have the authority to challenge SFX's acquisitions on
antitrust grounds before or after the acquisitions are completed. Each state
where SFX operates may also challenge an acquisition under state or federal
antitrust laws. SFX may be unable to obtain the licenses, approvals and permits
it requires, including approvals under the HSR Act, from time to time to
acquire and operate live entertainment businesses in accordance with its
expansion strategy.
SFX received a preliminary inquiry from the Department of Justice seeking
information on SFX's acquisitions of live entertainment venues and businesses
throughout the United States. The Department of Justice is investigating
whether these acquisitions might give SFX undue market power in producing,
promoting or exhibiting live entertainment events. No assurances can be given
regarding the outcome of this inquiry.
PROPERTIES
SFX's executive offices are located at 650 Madison Avenue, 16th Floor, New
York, New York 10022. SFX wholly or partially owns and/or operates 75 venues as
more fully described under "--Services Provided by SFX--Venue Operations." In
addition, SFX owns or leases office space throughout the United States and
abroad in connection with its operations.
LITIGATION
In a complaint filed October 8, 1998 in the Superior Court of the State of
California, Los Angeles County, Universal Concerts II, Inc., a California
corporation formerly named MCA Concerts II, Inc., brought suit against PACE
Amphitheaters, Inc., PACE Entertainment Group, Inc., SFX Entertainment, Inc.,
Brian Becker and Allen Becker. The complaint alleged, among other things, that
SFX's acquisitions of PACE and Concert/Southern caused breaches of PACE's
various agreements with Universal. The complaint alleged that PACE is in breach
of a co-promotion agreement, that Brian and Allen Becker are in breach of
non-competition agreements and that SFX has intentionally interfered with
contracts between the plaintiff and certain of the defendants. The defendants
have removed the case from the State Court to the Federal Court for the Central
Division of California and have answered the complaint denying liability.
Although the lawsuit seeks damages in an unspecified amount, in SFX
management's view, the realistic amount in controversy is not material to the
business or prospects of SFX. The defendants intend to defend the case
vigorously.
On November 20, 1998, a group of plaintiffs filed a complaint against 11
talent agencies and 29 promoters, including SFX, several of its subsidiaries
and other entities to be acquired
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in the pending Cellar Door acquisition. According to the complaint, the
plaintiffs are five corporations owned by African-Americans. The compliant
alleges action by the defendants to exclude African-Americans from promoting
concerts and seeks injunctive relief and damages for civil rights and antitrust
violations. The focus of the action appears to be industry-wide, rather than
specifically directed at SFX. SFX intends to defend the action vigorously.
On May 5, 1998, Herbert Beherens, a Marquee stockholder, filed a class
action complaint in Chancery Court in the State of Delaware, New Castle County,
CA #16355NC against SFX, certain of its directors and Marquee. The complaint
alleged that SFX proposed an acquisition of Marquee and that the proposed
acquisition would be unfair to Marquee's public stockholders. The complaint
sought an order enjoining the proposed transaction, or, in the alternative,
awarding rescissory and compensatory damages.
On July 22, 1998, the parties entered into a Memorandum of Understanding,
pursuant to which the parties reached an agreement providing for a settlement
of the action. Pursuant to the settlement, SFX acknowledged that the legal
action was a significant factor in SFX improving the terms of its offer to
acquire Marquee. The settlement also provided for the defendants to pay
plaintiffs' counsel an aggregate of $310,000, including all fees and expenses
as approved by the court. The settlement was conditioned on the closing of the
merger, completion of confirmatory discovery and approval of the court.
On October 16, 1998, SFX and Marquee entered into amendment no. 3 to the
merger agreement. In doing so, SFX and Marquee took into consideration the
concerns and interests of the plaintiffs in the litigation, but they did not
amend the Memorandum of Understanding or revise the settlement at that time.
On January 24, 1999, SFX and Marquee entered into amendment no. 4 to the
merger agreement. At or about the same time, the parties to the lawsuit entered
into an amended Memorandum of Understanding which modified the terms of the
settlement. In addition to the terms and conditions in the Memorandum of
Understanding, in the revised settlement, the defendants acknowledged that the
pending lawsuit was the sole factor in SFX's decision to improve the terms of
its offer to acquire Marquee as reflected in amendment no. 4.
The revised settlement also provides that the defendants will pay
plaintiffs' attorneys' fees and expenses, as approved by the Court, in an
amount not to exceed $385,000. The revised settlement is conditioned upon
consummation of the merger, completion of any necessary discovery by the
plaintiffs and approval of the Delaware Court. There can be no assurance,
however, that the revised settlement will be approved by the Court as proposed,
or at all. Pursuant to the revised settlement, the defendants deny that they
have acted improperly in any way or breached any fiduciary duty.
Although SFX is involved in several suits and claims in the ordinary
course of business, it is not currently a party to any legal proceeding that it
believes would have a material adverse effect on its business, financial
condition or results of operations.
EMPLOYEES
As of December 31, 1998, SFX had approximately 1,300 full-time employees.
Upon closing of the pending Marquee and Cellar Door acquisitions, SFX expects
to have approximately 1,650 full-time employees. SFX will also, from time to
time, hire or contract for part-time or seasonal employees or independent
contractors, although its staffing needs will vary. Management believes that
its relations with its employees are good. A number of the employees of SFX are
covered by collective bargaining agreements. See "Management."
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AGREEMENTS RELATED TO THE PENDING ACQUISITIONS
The following is a summary of the anticipated material terms of the
agreements related to the pending Marquee, Cellar Door and Nederlander
acquisitions. This summary is not intended to be a complete description of the
terms of the agreements and is subject to, and qualified in its entirety by
reference to, the agreements, copies of which have been filed as exhibits to
the registration statement filed with the Commission of which this prospectus
is a part, and are incorporated herein by reference. There can be no assurance
that SFX will be able to consummate the Marquee, Cellar Door and Nederlander
acquisitions on the terms described herein, or at all. See "Risk
Factors--Company Specific Risks--If SFX is unable to complete its pending
acquisitions, SFX's business may suffer."
MARQUEE
SFX entered into an agreement and plan of merger, dated July 23, 1998, as
amended, with SFX Acquisition Corp., a wholly-owned subsidiary of SFX ("Sub"),
and Marquee. Pursuant to this agreement, Sub will merge with and into Marquee,
and Marquee will continue as the surviving corporation of the merger. If the
merger is completed, Marquee stockholders will receive shares of SFX's Class A
common stock. The "Exchange Ratio" is the number of shares of SFX's Class A
common stock to be issued for each share of Marquee common stock in the merger.
It will be based on the average of the last reported sale price of the Class A
common stock for the fifteen trading days ending five days before the merger
(the "SFX Stock Price"). The Exchange Ratio will be calculated as follows:
o If the SFX Stock Price is $42.75 or less, the Marquee stockholders will
receive 0.1111 shares of SFX Class A common stock for each share of
Marquee common stock;
o If the SFX Stock Price is over $42.75 but no more than $60.00, the
Marquee stockholders will receive $4.75 worth of SFX Class A common
stock for each share of Marquee common stock;
o If the SFX Stock Price is over $60.00 but no more than $66.00, the
Marquee stockholders will receive shares of SFX stock equal to 0.1 minus
1.25/SFX Stock Price for each share of Marquee common stock; or
o If the SFX Stock Price is over $66.00, the Marquee stockholders will
receive $5.35 worth of SFX Class A common stock for each share of
Marquee common stock.
On February 11, 1999, the closing sale price for the Class A common stock
was $56 7/8 per share.
The consummation of the merger is subject to the satisfaction of a number
of conditions set forth in the merger agreement, including, but not limited to,
the approval by the Marquee stockholders of the transactions contemplated
thereby, the Class A common stock to be issued in the merger being approved for
listing on the Nasdaq National Market, the absence of legal restraints or
prohibitions that prevent the completion of the merger, and the receipt of all
applicable consents to the merger from third parties and regulatory agencies.
See "Business--Regulatory Matters."
The board of directors of SFX and Marquee may jointly agree in writing to
terminate the merger agreement without completing the merger. The merger
agreement may also be terminated in certain other circumstances, including, but
not limited to, the following:
(1) Either SFX or Marquee may terminate the merger agreement if:
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(a) the merger is not completed by April 30, 1999, subject to certain
exceptions;
(b) a law or court order permanently prohibits the merger; or
(c) Marquee stockholders do not approve and adopt the merger agreement and
the transactions it contemplates.
(2) SFX may terminate the merger agreement if, among other things:
(a) the Marquee board of directors or the special committee of the Marquee
board of directors withdraws or modifies its recommendation in favor
of the merger in a manner adverse to SFX;
(b) the Marquee board of directors or the special committee of the Marquee
board of directors recommends to the Marquee stockholders a competing
takeover proposal or fails to recommend against accepting a competing
takeover proposal;
(c) any person, other than SFX, Sub or any of their affiliates, acquires
beneficial ownership or the right to acquire beneficial ownership of,
or any group beneficially owns, more than 25% of the outstanding
shares of Marquee common stock;
(d) Marquee breaches any representation, warranty, covenant or agreement,
or any representation or warranty of Marquee becomes untrue subject to
certain limitations; or
(e) SFX's financial advisor revokes its written fairness opinion under
certain circumstances.
(3) Marquee may terminate the merger agreement if, among other things:
(a) SFX breaches any representation, warranty, covenant or agreement, or
any representation or warranty of SFX becomes untrue, subject to
certain limitations;
(b) Marquee accepts a competing takeover proposal; or
(c) Marquee's financial advisor revokes its written fairness opinion under
certain circumstances.
The merger agreement requires Marquee to pay a termination fee of $900,000
to SFX, and expenses of up to $500,000, if: (i) the merger agreement is
terminated under clauses (2)(a), (2)(b), (2)(c) or (3)(b) above (except for
certain terminations under clause (2)(a)); or (ii) the merger agreement is
terminated under clause (1)(a) or (1)(c) above, and in either event a takeover
proposal was made prior to termination and definitive documentation for the
takeover proposal is entered into within 12 months of such termination. If the
merger agreement is terminated under clause (1)(c) above, but the $900,000 fee
and expenses are not due, then Marquee will be required to pay SFX a
termination fee of $500,000.
CELLAR DOOR
In January 1999, SFX entered into a stock purchase agreement with John J.
Boyle and members of his family, the stockholders of the Cellar Door group of
companies. Under the terms of this agreement, SFX will acquire all of the
issued and outstanding capital stock of Cellar Door for a purchase price of:
o $70.0 million in cash, minus an amount equal to Cellar Door's secured
indebtedness and capitalized leases;
o $8.5 million in cash, to be paid in five equal annual installments;
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o $20.0 million in shares of SFX Class A common stock, valued based on a
twenty-day trading average, provided that SFX will have the option to
substitute up to $15.0 million of such amount in cash; and
o options to purchase an aggregate of 100,000 shares of SFX's Class A
common stock, granted over a five-year period.
Mr. Boyle will be entitled to retain all net income of Cellar Door for 1998,
subject to certain limitations. In addition, Mr. Boyle will become an employee
of SFX and the Chairman of SFX's Music Group at closing, with an annual base
salary of $300,000. He will also be appointed as a non-voting observer to SFX's
board of directors.
The agreement also provides that 50% of the shares issuable at closing
will be subject to:
o a right of Mr. Boyle to "put" any of those shares to SFX at a price
equal to 90% of the value originally ascribed to them, exercisable for
30 days after the second anniversary of the closing of the Cellar Door
acquisition;
o a right of SFX to "call" any of those shares at a price equal to 120%
of the value originally ascribed to them, exercisable during the same
period as the "put" right; and
o a restriction on transfer for 2 years and 30 days after issuance.
The remaining 50% of the shares issuable at closing will be subject to a
restriction on transfer for 1 year after issuance.
The closing of the Cellar Door acquisition is expected to occur during the
first quarter of 1999. The consummation of the Cellar Door acquisition is
subject to the satisfaction of customary conditions. The agreement also
provides that if claims exceed $500,000 in the aggregate, Mr. Boyle will
indemnify SFX in full for certain indemnifiable claims arising after the
closing.
The applicable waiting period under the HSR Act relating to the pending
Cellar Door acquisition has expired.
SFX will be required to pay Mr. Boyle $10.0 million in liquidated damages
if:
o Cellar Door terminates the stock purchase agreement because the
closing of the Cellar Door acquisition does not occur, and Cellar
Door is not in material breach of any of its representations,
warranties or covenants under the agreement, or
o SFX does not complete the acquisition of Cellar Door for reasons
other than a material misrepresentation or material breach of
warranty by Cellar Door under the stock purchase agreement, a
material breach by Cellar Door of its obligations under the
agreement, or failure of certain conditions precedent.
NEDERLANDER
On February 1, 1999, SFX entered into definitive agreements for the
acquisition of certain interests in seven venues and other assets from entities
controlled by members of the Nederlander family and other persons for an
aggregate purchase price of approximately $93.6 million in cash.
The interests in the venues to be acquired consist of:
o 50% interests in long-term leases and booking and management agreements for
The World Music Theatre in Chicago and the Alpine Valley Music amphitheatre
in East Troy, Wisconsin, serving the Milwaukee/North Chicago market;
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o A long-term lease for the MerriweatherPost Pavilion in Columbia, Maryland,
serving the Washington, D.C. and Baltimore markets; and,
o Booking and management agreements for the Riverbend Music Center and the
Crown Arena; a one-third interest in the ownership of the Crown Arena; a
long-term lease for the Taft Theater; and a short-term lease for the
Bogart's Club, all in Cincinnati.
In addition, the agreements cover 100% interests in entities that provide
concert performances and hold rights to construct the Mesa del Sol Centre for
the Performing Arts in Albuquerque, New Mexico.
Consummation of the acquisitions is subject to the satisfaction of a
number of conditions, including, without limitation, the expiration or
termination of the waiting period under the HSR Act.
Under the terms of the agreements, SFX made payments to the sellers upon
the signing of the agreements in the aggregate amount of $7.5 million as a down
payment toward the aggregate purchase price. SFX is required to make an
additional down payment to the sellers of $5 million toward the aggregate
purchase price if and when a second request for additional information is made
under the HSR Act.
Under the terms of the agreements, the sellers will be entitled to retain
the initial $7.5 million down payment if:
o the closing has not occurred on or prior to August 31, 1999, the waiting
period under the HSR Act has not been terminated and the sellers terminate
the agreement, having satisfied all of the other conditions to SFX's
obligation to close; however, the sellers are entitled to retain the entire
$12.5 million down payment in such circumstance if SFX failed to use its
reasonable best efforts to obtain the termination of the waiting period
under the HSR Act,
o the sellers terminate the agreements by reason of a breach by SFX that has
or could reasonably be expected to have a material adverse effect on SFX,
and SFX has failed to cure the breach after not less than 10 days' notice
thereof, or,
o if SFX refuses to close the transaction when all of the conditions to its
obligation to close have been satisfied or are readily capable of being
satisfied, in which case the sellers are entitled to retain the entire
$12.5 million down payment.
The agreement relating to the venues in Cincinnati requires SFX to make an
earn-out payment to the sellers in 2000 of up to $3.2 million depending on the
level of earnings generated by operation of the Crown Arena. In addition, in
the event that SFX sells or otherwise transfers any of the interests in Crown
Arena within ten years after the closing, SFX is obligated to pay one-third--or
one-quarter if the transaction occurs after the fifth anniversary of the
closing--of the consideration received by SFX, less one-third of the debt
encumbering the Crown Arena at the time of closing, closing costs and capital
expenditures incurred at the Crown Arena by SFX prior to the date of such
transaction. The agreement relating to Mesa del Sol provides for an Earn-Out
based on the financial performance of Mesa del Sol.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the Certificate of Incorporation and Bylaws, the Board manages
the business of SFX. The Board conducts its business through meetings of the
Board and its committees. The standing committees of the Board are described
below.
The Bylaws authorize the Board to fix the number of directors from time to
time. The number of directors of SFX is currently eleven. All directors hold
office until the next annual meeting of stockholders following their election
or until their successors are elected and qualified. Officers of SFX are to be
elected annually by the Board and serve at the Board's discretion. In the
election of directors, the holders of the Class A common stock are entitled by
class vote, exclusive of all other stockholders, to elect two-sevenths, rounded
up, of the directors to serve on the Board, with each share of the Class A
common stock entitled to one vote.
Currently, the Board consists of:
o the individuals who previously served as directors of Broadcasting;
o Brian Becker, who was appointed to the SFX board of directors upon the
consummation of the PACE acquisition; and
o David Falk, the Chairman and a founder of FAME, who was appointed as a
director and a Member of the Office of the Chairman of SFX upon the
consummation of the FAME acquisition.
All of the individuals who previously served as directors of Broadcasting
ceased to be directors of Broadcasting at the time of the Broadcasting merger.
All of the executive officers of Broadcasting entered into five-year
employment agreements with SFX, except D. Geoffrey Armstrong, who resigned as
an executive officer of SFX. See "--Employment Agreements and Arrangements with
Certain Officers and Directors."
The following table sets forth information as to the directors and the
executive officers of SFX:
<TABLE>
<CAPTION>
AGE AS OF
NAME POSITION(S) HELD WITH SFX FEBRUARY 10, 1999
- ------------------------------- ---------------------------------------------- ------------------
<S> <C> <C>
Robert F.X. Sillerman ......... Director, Executive Chairman and Member 50
of the Office of the Chairman
Michael G. Ferrel ............. Director, President, Chief Executive Officer 49
and Member of the Office of the Chairman
Brian E. Becker ............... Director, Executive Vice President and 42
Member of the Office of the Chairman
David Falk .................... Director and Member of the Office of the 48
Chairman
Howard J. Tytel ............... Director, Executive Vice President, General 52
Counsel, Secretary and Member of the
Office of the Chairman
Thomas P. Benson. ............. Director, Vice President and Chief Financial 36
Officer
Richard A. Liese .............. Director, Senior Vice President and 48
Associate General Counsel
D. Geoffrey Armstrong ......... Director 41
James F. O'Grady, Jr. ......... Director 70
Paul Kramer ................... Director 66
Edward F. Dugan ............... Director 64
Robert M. Gutkowski(1)......... Non-voting observer to Board of Directors 50
John J. Boyle(2) .............. Non-voting observer to Board of Directors 64
</TABLE>
- ----------
(1) Upon closing of the Marquee acquisition, SFX will appoint Mr. Gutkowski
as a non-voting observer to its Board of Directors.
(2) Upon closing of the Cellar Door acquisition, SFX will appoint Mr. Boyle
as a non-voting observer to its Board of Directors.
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ROBERT F.X. SILLERMAN has served as the Executive Chairman, a Member of
the Office of the Chairman and a director of SFX since its formation in
December 1997. Mr. Sillerman also served as the Executive Chairman of
Broadcasting from July 1, 1995 until the consummation of the Broadcasting
merger. From 1992 through June 30, 1995, Mr. Sillerman served as Chairman of
the board of directors and Chief Executive Officer of Broadcasting. Mr.
Sillerman is Chairman of the board of directors and Chief Executive Officer of
SCMC, a private company that makes investments in and provides financial
consulting services to companies engaged in the media business, and of TSC, a
private company that makes investments in and provides financial advisory
services to media-related companies. Through privately held entities, Mr.
Sillerman controls the general partner of Sillerman Communications Partners,
L.P., an investment partnership. Mr. Sillerman is also the Chairman of the
board of directors and a founding stockholder of Marquee, a publicly-traded
company organized in 1995 which is engaged in various aspects of the sports,
news and other entertainment industries. Mr. Sillerman is also a founder and a
significant stockholder of Triathlon, a publicly-traded company that owns and
operates radio stations in medium and small-sized markets in the mid-western
and western United States. For the last twenty years, Mr. Sillerman has been a
senior executive of and principal investor in numerous entities in the
broadcasting business. In 1993, Mr. Sillerman became the Chancellor of the
Southampton campus of Long Island University.
MICHAEL G. FERREL has served as the President, Chief Executive Officer, a
Member of the Office of the Chairman and a director of SFX since its formation
in December 1997. Mr. Ferrel also served as the President, Chief Executive
Officer and a director of Broadcasting from November 22, 1996 until the
consummation of the Broadcasting merger. Mr. Ferrel served as President and
Chief Operating Officer of Multi-Market Radio, Inc., a wholly-owned subsidiary
of Broadcasting ("MMR"), and a member of MMR's board of directors since MMR's
inception in August 1992 and as Co-Chief Executive Officer of MMR from January
1994 to January 1996, when he became the Chief Executive Officer. From 1990 to
1993, Mr. Ferrel served as Vice President of Goldenberg Broadcasting, Inc., the
former owner of radio station WPKX-FM, Springfield, Massachusetts, which was
acquired by MMR in July 1993.
BRIAN E. BECKER has served as an Executive Vice President, a Member of the
Office of the Chairman and a director of SFX since the consummation of the PACE
acquisition in February 1998. Mr. Becker has served as Chief Executive Officer
of PACE since 1994 and as President of PACE in 1996. He first joined PACE as
the Vice President and General Manager of PACE's theatrical division at the
time of that division's formation in 1982, and subsequently directed PACE's
amphitheater development efforts. He served as Vice Chairman of PACE from 1992
until he was named its Chief Executive Officer in 1994.
DAVID FALK serves as a Member of the Office of the Chairman and a director
of SFX. Mr. Falk serves as a director and as Chairman of SFX's sports group and
several subsidiaries within SFX's sports group, which includes FAME. Mr. Falk,
who has represented professional athletes for over twenty years, is presently a
Director, Chairman and Chief Executive Officer of FAME, positions he has held
since he founded FAME in 1992. Mr. Falk also serves as Chairman of the HTS
Sports-a-Thon to benefit the Leukemia Society of America, is a member of the
Executive Committee of the College Fund and is on the Board of Directors of the
Juvenile Diabetes Foundation and Share the Care for Children.
HOWARD J. TYTEL has served as an Executive Vice President, General
Counsel, Secretary and a director of SFX since its formation in December 1997.
In January 1999, Mr. Tytel was elected as a Member of the Office of the
Chairman. Mr. Tytel also served as a director,
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General Counsel, Executive Vice President and Secretary of Broadcasting from
1992 until the consummation of the Broadcasting merger. Mr. Tytel is Executive
Vice President, General Counsel and a Director of SCMC and TSC and holds an
economic interest in those companies. Mr. Tytel is a Director and a founder of
Marquee and a founder of Triathlon. Mr. Tytel was a Director of Country Music
Television from 1988 to 1991. From March 1995 until March 1997, Mr. Tytel was a
Director of Interactive Flight Technologies, Inc., a publicly-traded company
providing computer-based in-flight entertainment. For the last twenty years,
Mr. Tytel has been associated with Mr. Sillerman in various capacities with
entities operating in the broadcasting business. From 1993 to 1998, Mr. Tytel
was Of Counsel to the law firm of Baker & McKenzie, which represented
Broadcasting and currently represents SFX and other entities with which Messrs.
Sillerman and Tytel are affiliated on various matters.
THOMAS P. BENSON has served as the Vice President, Chief Financial Officer
and a director of SFX since its formation in December 1997. Mr. Benson also
served as the Chief Financial Officer and a director of Broadcasting, having
served in such capacity from November 22, 1996 until the consummation of the
Broadcasting merger. Mr. Benson became the Vice President of Financial Affairs
of Broadcasting in June 1996. He was the Vice President--External and
International Reporting for American Express Travel Related Services Company
from September 1995 to June 1996. From 1984 through September 1995, Mr. Benson
worked at Ernst & Young LLP as a staff accountant, senior accountant, manager
and senior manager.
RICHARD A. LIESE has served as a Senior Vice President since September,
1998, and as a Vice President, Associate General Counsel and a director of SFX
since its formation in December 1997. Mr. Liese also served as a director, Vice
President and Associate General Counsel of Broadcasting, having served in such
capacity from 1995 until the consummation of the Broadcasting merger. Mr. Liese
has also been the Assistant General Counsel and Assistant Secretary of SCMC
since 1988. In addition, from 1993 until April 1995, he served as Secretary of
MMR.
D. GEOFFREY ARMSTRONG has served as a director of SFX since its formation
in December 1997. He served as an Executive Vice President of SFX from its
formation until September 1, 1998. Mr. Armstrong currently serves as a director
of Capstar Broadcasting Corporation, a publicly-traded radio broadcasting
company. Mr. Armstrong also served as the Chief Operating Officer and an
Executive Vice President of Broadcasting, having served in such capacity from
November 22, 1996 until the consummation of the Broadcasting merger. Mr.
Armstrong served as a director of Broadcasting from 1993 until the consummation
of the Broadcasting merger. Mr. Armstrong became the Chief Operating Officer of
Broadcasting in June 1996 and the Chief Financial Officer, Executive Vice
President and Treasurer of Broadcasting in April 1995. Mr. Armstrong was Vice
President, Chief Financial Officer and Treasurer of Broadcasting from 1992
until March 1995. He had been Executive Vice President and Chief Financial
Officer of Capstar, a predecessor of Broadcasting, since 1989. From 1988 to
1989, Mr. Armstrong was the Chief Executive Officer of Sterling Communications
Corporation.
JAMES F. O'GRADY, JR. has served as a director of SFX since its formation
in December 1997. Mr. O'Grady also served as a director of Broadcasting prior
to the consummation of the Broadcasting merger. Mr. O'Grady has been President
of O'Grady and Associates, a media brokerage and consulting company, since
1979. Mr. O'Grady has been a director of Orange and Rockland Utilities, Inc.
and of Video for Broadcast, Inc. since 1991, respectively. Mr. O'Grady has been
the co-owner of Allcom Marketing Corp., a corporation that provides
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marketing and public relations services for a variety of clients, since 1985,
and has been Of Counsel to Cahill and Cahill, Brooklyn, New York, since 1986.
He also served on the Board of Trustees of St. John's University from 1984 to
1996, and has served as a director of The Insurance Broadcast System, Inc.
since 1994.
PAUL KRAMER has served as a director of SFX since its formation in
December 1997, served as a director of Broadcasting prior to the Broadcasting
merger and currently serves as a director of Nations Flooring, Inc. Mr. Kramer
has been a partner in Kramer & Love, financial consultants specializing in
acquisitions, reorganizations and dispute resolution, since 1994. From 1992 to
1994, Mr. Kramer was an independent financial consultant. Mr. Kramer was a
partner in the New York office of Ernst & Young LLP from 1968 to 1992.
EDWARD F. DUGAN has served as a director of SFX since its formation in
December 1997. Mr. Dugan also served as a director of SFX Broadcasting prior to
the Broadcasting merger. Mr. Dugan is President of Dugan Associates Inc., a
financial advisory firm to media and entertainment companies, which he founded
in 1991. Mr. Dugan was an investment banker with Paine Webber Inc., as a
Managing Director, from 1978 to 1990, with Warburg Paribas Becker Inc., as
President, from 1975 to 1978 and with Smith Barney Harris Upham & Co., as a
Managing Director, from 1961 to 1975.
ROBERT M. GUTKOWSKI will become a non-voting observer to the board of
directors of SFX upon closing of the Marquee acquisition. Mr. Gutkowski has
served as President, Chief Executive Officer and a director of Marquee since
December 1995. Since March 1997, Mr. Gutkowski has been a member of the board
of directors of the Professional Bowlers Association. Mr. Gutkowski has more
than 20 years of experience in the television, sports and entertainment
industries. From September 1994 until December 1995, Mr. Gutkowski was a
consultant to sports-related businesses. From November 1991 to September 1994,
he served as President and Chief Executive Officer of Madison Square Garden
Corporation, where he oversaw the operations of the New York Knicks, the New
York Rangers, the MSG Entertainment Group, the MSG Cable Network, Madison
Square Garden and the Paramount Theater. From July 1990 to November 1991, Mr.
Gutkowski served as President of MSG Entertainment Group, having served as
Executive Vice President thereof from September 1987 to July 1990. From October
1985 to September 1987, he served as President of Madison Square Garden
Network. Prior to his tenure at Madison Square Garden, Mr. Gutkowski was Vice
President-Sales for Paramount Television Domestic Distribution. From February
1981 to September 1983, Mr. Gutkowski was Vice President-Programming for ESPN.
JOHN J. BOYLE will become a non-voting observer to the board of directors
of SFX and the Chairman of SFX's Music Group upon closing of the Cellar Door
acquisition. Mr. Boyle currently serves as the Chief Executive Officer and
Chairman of the board of directors of Cellar Door. Mr. Boyle purchased Cellar
Door in 1963, and has been in the concert promotion business for over thirty
years. See "Agreements Related to the Pending Acquisitions--Cellar Door."
AUDIT COMMITTEE
The Audit Committee reviews and reports to the Board on various auditing
and accounting matters, including the selection, quality and performance of
SFX's internal and external accountants and auditors, the adequacy of its
financial controls and the reliability of financial information reported to the
public. The Audit Committee also reviews certain related-party transactions and
potential conflict-of-interest situations involving officers, directors or
stockholders of SFX. The members of the Audit Committee are Messrs. Kramer,
O'Grady and Dugan.
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COMPENSATION COMMITTEE
The Compensation Committee reviews and makes recommendations with respect
to certain SFX compensation programs and compensation arrangements with respect
to certain officers, including Messrs. Sillerman, Ferrel, Tytel, Benson and
Liese. The members of the Compensation Committee are Messrs. Kramer, O'Grady
and Dugan, none of whom is a current or former employee or officer of SFX
Broadcasting or SFX.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board approved the issuance of shares of Class A common stock to
holders, as of the SFX spin-off record date, of stock options or SARs of SFX
Broadcasting, whether or not vested. These holders included the members of the
Compensation Committee. The issuance was approved to allow the holders of these
options and SARs to participate in the SFX spin-off in a similar manner as
holders of SFX Broadcasting's Class A common stock and as consideration for
past services to SFX. In connection with this issuance, Mr. Kramer received
13,000 shares of Class A common stock, Mr. O'Grady received 13,000 shares of
Class A common stock and Mr. Dugan received 3,000 shares of Class A common
stock.
STOCK OPTION COMMITTEE
The Stock Option Committee grants options, determines which employees and
other individuals performing substantial services to SFX may be granted options
and determines the rights and limitations of options granted under SFX's plans.
The members of the Stock Option Committee are Messrs. Kramer, O'Grady and
Dugan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
FOR THE YEAR ENDED DECEMBER 31, 1998
The following table sets forth the annual and long-term compensation
earned by the Executive Chairman and SFX's four other most highly compensated
executive officers (the "Named Executive Officers") during 1998. SFX did not
pay any compensation to its executive officers in 1997 or 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------ --------------------------------
SECUTITIES
UNDERLYING
RESTRICTED STOCK OPTION
NAME AND POSITION SALARY(1) BONUS(2) AWARDS($)(3) AWARDS(#)
- ---------------------------------------- ----------- ---------- ------------------ -----------
<S> <C> <C> <C> <C>
Robert F.X. Sillerman $291,667 -- $14,250,000 620,000
Executive Chairman and Member of the
Office of the Chairman
Michael G. Ferrel 204,167 -- 4,275,000 225,000
President, Chief Executive Officer and
Member of the Office of the Chairman
Brian E. Becker 245,000 -- -- 75,000
Executive Vice President and Member of
the Office of the Chairman
David Falk 183,750 -- -- 100,000
Member of the Office of the Chairman
Howard J. Tytel 175,000 -- 2,280,000 105,000
Executive Vice President, General
Counsel, Secretary and Member of the
Office of the Chairman
</TABLE>
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<PAGE>
- ----------
(1) SFX began compensating Messrs. Sillerman and Ferrel upon the consummation
of the SFX Broadcasting merger, which occurred on May 29, 1998. SFX began
compensating Mr. Falk on June 4, 1998, upon the consummation of the FAME
acquisition. SFX began compensating Mr. Tytel on June 1, 1998. SFX began
compensating Mr. Becker upon the consummation of the PACE acquisition,
which occurred on February 25, 1998. See "Certain Relationships and
Related Party Transactions" for additional transactions between SFX and
the Named Executive Officers.
(2) The employment agreements of each of these executives provide for the
payment of annual incentive bonuses in the discretion of the SFX Board.
While the payment and amount of any such bonus is wholly within the
discretion of the SFX Board, the Board will likely consider each
executive's contribution to SFX's operating results, growth, realization
of strategy and prospects in awarding bonuses. SFX currently expects to
determine and pay bonuses, if any, by the end of the first quarter of
1999.
(3) In the SFX spin-off, SFX awarded Mr. Sillerman 500,000 and Mr. Ferrel
150,000 restricted shares of Class B common stock and Mr. Tytel was
awarded 80,000 restricted shares of Class A common stock. Each such
indiviual paid $2.00 per share for such restricted stock. The price of
Class A common stock, as reported on the Nasdaq National Market, was
$30.50. The value of the shares of restricted stock is reported in the
table above. On December 31, 1998, the closing price of Class A common
stock, as reported on the Nasdaq National Market, was $54.875. On
December 31, 1998, the value of the shares of restricted stock held by
Messrs. Sillerman, Ferrel and Tytel was $26,437,500, $7,931,250 and
$4,230,000, respectively. All calculations of the value of the restricted
stock assumes that the shares of Class B common stock are equal in value
to the shares of Class A common stock.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the exercise of stock options during 1998,
including the year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS
FY-END (#) AT FY-END ($)(1)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------- ----------------- -------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Robert F.X. Sillerman 0 0 0/620,000 0/15,268,750
Michael G. Ferrel 0 0 0/225,000 0/5,562,500
Brian E. Becker 0 0 0/75,000 0/1,225,000
David Falk 0 0 0/100,000 0/1,325,500
Howard J. Tytel 0 0 0/105,000 0/2,588,125
</TABLE>
- ----------
(1) Calculated by determining the difference between the closing price of
Class A common stock as reported on the Nasdaq National Market on
December 31, 1998 ($54.875) and the exercise price of the options.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to each grant of
stock options during 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
------------------------------------------------------------- ASSUMED
ANNUAL RATES OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS FOR OPTION TERM (10 YEARS)(1)
UNDERLYING GRANTED TO EXERCISE OR ---------------------------------
OPTIONS/ EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SHARE)(2) DATE 5%($) 10%($)
- ----------------------- ------------- -------------- -------------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert F.X. Sillerman 250,000 12.9% $ 43.25 5/27/08 $6,812,500 $17,192,500
250,000 12.9 29.125 4/27/08 4,586,250 11,576,250
120,000 6.2 5.50 1/15/08 416,400 1,050,000
Michael G. Ferrel 100,000 5.2 43.25 5/27/08 2,725,000 6,877,000
75,000 3.9 29.125 4/27/08 1,375,875 3,472,875
50,000 2.6 5.50 1/15/08 173,500 437,500
Brian E. Becker 50,000 2.6 43.25 5/27/08 1,362,500 3,438,500
25,000 1.3 29.125 4/27/08 458,625 1,157,625
David Falk 100,000 5.2 41.62 6/4/08 2,622,000 6,618,000
Howard J. Tytel 50,000 2.6 43.25 5/27/08 1,362,500 3,438,500
30,000 1.6 29.125 4/27/08 550,350 1,389,150
25,000 1.3 5.50 1/15/08 86,250 218,750
</TABLE>
- ----------
(1) The dollar gains under these columns result from calculations required by
the SEC and assume 5% and 10% growth rates in the trading prices of the
Class A common stock. The figures given are not intended to forecast
future price appreciation of the Class A common stock. The gains reflect
a future value based upon growth at these prescribed rates.
(2) The $43.25 and $29.125 exercise prices represent the fair market value of
a share of Class A common stock on the date of grant. On January 15, 1998
the shares of Class A common stock had not yet commenced trading on the
Nasdaq National Market System. The Board of Directors of SFX determined
that $5.50 was the fair market value of a share of Class A common stock
on January 15, 1998.
125
<PAGE>
SFX and SFX Broadcasting have also entered into certain agreements and
arrangements with their officers and directors from time to time in the past.
See "Certain Relationships and Related Transactions."
STOCK OPTION AND RESTRICTED STOCK PLAN
SFX's 1998 Stock Option and Restricted Stock Plan provides for the
issuance of options to purchase up to 2,000,000 shares of Class A common stock.
The purpose of the plan is to provide additional incentive to officers and
employees of SFX. Each option granted under the plan will be designated at the
time of grant as either an "incentive stock option" or a "non-qualified stock
option." The plan is administered by the Stock Option Committee. The Board has
approved the issuance of stock options exercisable for an aggregate of
1,982,166 shares under the plan. See "--Employment Agreements and Arrangements
with Certain Officers and Directors" and "--Option Grants."
PROPOSED STOCK OPTION PLAN
Following a recommendation by SFX's compensation committee, SFX has,
subject to stockholder approval, adopted a new incentive stock option plan
covering options to acquire up to 3,000,000 shares of Class A common stock and
granted the options available thereunder to certain officers and employees of
SFX. The plan will be designed to broaden the equity ownership of SFX's
employees at all levels. SFX anticipates that the proposed stock option plan
will be submitted to a vote of the stockholders at SFX's first annual meeting
scheduled to be held in the spring of 1999.
COMPENSATION OF DIRECTORS
Directors employed by SFX receive no compensation for attending meetings.
Each non-employee director receives a fee of $1,500 for each Board meeting
which he attends and is reimbursed for travel expenses. Each non-employee
director who is also a member of a committee receives an additional $1,500 for
each committee meeting he attends that is not held in conjunction with a Board
meeting. If the committee meeting occurs in conjunction with a Board meeting,
each committee member receives $500 for attending the committee meeting.
In addition, SFX adopted a deferred compensation plan for the non-employee
directors effective as of January 1, 1998. Pursuant to the plan, SFX pays each
non-employee director a quarterly retainer of $7,500, at least one-half of
which must be paid in shares of Class A common stock which are credited to a
book-entry account maintained by SFX for each participant. Each non-employee
director's account was initially credited with 5,455 shares of Class A common
stock representing one year's annual retainer fee based upon $5.50 per share.
SPIN-OFF SHARES
SFX issued shares of Class A common stock to holders, as of the spin-off
record date, of stock options or SARs of Broadcasting, whether or not vested.
See "Certain Relationships and Related Transactions--Issuance of Stock to
Holders of SFX Broadcasting's Options and SARs."
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS WITH CERTAIN OFFICERS AND DIRECTORS
SFX has entered into employment agreements with each of its executive
officers. The employment agreements became effective upon the SFX Broadcasting
merger or shortly thereafter, except for Mr. Becker's employment agreement,
which is described below.
126
<PAGE>
AGREEMENTS WITH MESSRS. SILLERMAN, FERREL, TYTEL AND BENSON
The respective employment agreements provide for annual base salaries of
$500,000 for Mr. Sillerman, $350,000 for Mr. Ferrel, $300,000 for Mr. Tytel and
$235,000 for Mr. Benson, increased annually by the greater of five percent or
the rate of inflation. Each executive officer will receive a bonus to be
determined annually in the discretion of the Board, on the recommendation of
its Compensation Committee. Each employment agreement is for a term of five
years, and unless terminated or not renewed by either party, the term will
continue thereafter on a year-to-year basis on terms identical to those at the
time of renewal.
If an executive officer is terminated by SFX without Cause or if there is
a Constructive Termination Without Cause as such terms are defined in the
respective employment agreements then such executive officer will be entitled
to receive the following payments:
o base salary for a period of three years following his termination or
until the end of the term of the employment agreement, whichever is
longer;
o a bonus for the unexpired term of the agreement, based on the bonus
received for the year before termination, multiplied by the unexpired
term; and
o options to purchase shares of Class A common stock.
If the executive officer is terminated for any reason other than Cause, or
if there is a Constructive Termination Without Cause as such terms are defined
in the respective employment agreements following a change in control of SFX,
then the executive officer will be entitled to receive, in addition to the
foregoing, additional options to purchase shares of Class A common stock. SFX
has also agreed to indemnify the executive officers for taxes incurred if any
of the change of control payments are deemed "parachute payments" under the
Internal Revenue Code. Mr. Tytel's agreement permits him or SFX to end his
employment after one year, in which case all of his options would immediately
vest, he would receive two years' salary paid in a lump sum and would be
granted options to purchase between 25,000 and 50,000 shares of Class A common
stock at the lowest exercise price of any options granted by SFX during that
year.
In connection with entering into the employment agreements, SFX sold the
following shares of restricted stock:
o 500,000 shares of Class B common stock to Mr. Sillerman;
o 150,000 shares of Class B common stock to Mr. Ferrel;
o 80,000 shares of Class A common stock to Mr. Tytel; and
o 10,000 shares of Class A common stock to Mr. Benson.
The shares of restricted stock were sold to the officers at a purchase
price of $2.00 per share. In addition, the Board, on the review and
recommendation of the Compensation Committee, also approved the issuance of the
following stock options exercisable for shares of Class A common stock:
o options to purchase 120,000 shares to Mr. Sillerman;
o options to purchase 50,000 shares to Mr. Ferrel;
o options to purchase 25,000 shares to Mr. Tytel;
o options to purchase 10,000 shares to Mr. Benson; and
o options to purchase 40,000 shares to Mr. Armstrong, who was then an SFX
officer.
The Board, other than Messrs. Kramer, O'Grady and Dugan, also approved the
issuance of stock options to purchase 2,500 shares of Class A common stock to
each of Messrs. Kramer, O'Grady and Dugan. The options will vest in one year
and will have an exercise price of $5.50 per share. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
127
<PAGE>
Upon the SFX Broadcasting merger, SFX assumed Broadcasting's obligations
arising under the employment agreements or arrangements between Broadcasting
and SFX's executive officers, with certain exceptions. SFX also assumed the
obligation to make the following change of control payments under the following
individuals' existing employment agreements with SFX Broadcasting:
o Mr. Sillerman -- approximately $3.3 million;
o Mr. Ferrel -- approximately $1.5 million; and
o Mr. Benson -- approximately $200,000.
BECKER EMPLOYMENT AGREEMENT
As a condition to execution of the PACE agreement, SFX entered into an
employment agreement with Brian Becker, the Chief Executive Officer and
President of PACE. The agreement has a term of five years that commenced on
February 25, 1998. Mr. Becker continues to be President and Chief Executive
Officer of PACE. In addition, for the term of his employment, Mr. Becker will
serve as a member of SFX's Office of the Chairman, an Executive Vice President
of SFX and a director of each of PACE and SFX, subject to shareholder approval.
During the term of his employment, Mr. Becker will receive a base salary of
$294,000 for the first year, $313,760 for each of the second and third years
and $334,310 for each of the fourth and fifth years and an annual bonus at the
discretion of the Board.
SFX has agreed that it will not sell either the theatrical or motor sports
lines of business of PACE before February 25, 1999. If SFX sells one of the
lines of business after the first anniversary, it has agreed not to sell the
other line of business before March 11, 2000. Mr. Becker's employment agreement
gives him a right of first refusal if, between February 25, 1999 and February
25, 2000, SFX receives a bona fide offer from a third party to purchase all or
substantially all of either the theatrical or motor sports lines of business at
a price equal to 95% of the proposed purchase price. The Fifth Year Put Option
(as defined in the PACE acquisition agreement and described in note 1 to
Selected Consolidated Financial Data) will also be immediately exercisable as
of such closing. If Mr. Becker does not exercise his right of first refusal and
either of the theatrical or motor sports lines of business is sold, then he
will have an identical right of first refusal for the sale of the remaining
line of business beginning on February 25, 2000, and ending August 25, 2000. If
Mr. Becker does not exercise his right of first refusal and if SFX does not
consummate the proposed sale, he will be paid an administrative fee of
$100,000. Mr. Becker would thereafter retain all rights to Becker's right of
first refusal.
Beginning on December 12, 1999, Mr. Becker will have the option (the
"Becker Second Year Option"), exercisable within 15 days thereafter, to one or
more of the following:
o to sell to SFX any stock or options and/or any compensation to be paid
to Mr. Becker by SFX;
o to become a consultant to SFX for no more than an average of 20 hours
per week for the remainder of the term at the same level of compensation
set forth in his employment agreement; or
o to acquire PACE's motor sports line of business--or, if that line of
business was previously sold, PACE's theatrical line of business--at its
fair market value as determined in his employment agreement.
Exercise of the Becker Second Year Option would result in the termination
of Mr. Becker's employment agreement.
128
<PAGE>
Mr. Becker's employment agreement may be terminated by SFX for Cause, as
defined in the agreement, by SFX upon Mr. Becker's death or permanent
disability, by Mr. Becker at any time for any reason or upon exercise of the
Becker Second Year Option.
In addition, Mr. Becker's employment may be terminated by SFX at any time
in SFX's sole discretion or by Mr. Becker at any time after one of the
following, among other things:
o failure to elect or re-elect Mr. Becker as a director of SFX;
o a reduction in Mr. Becker's base salary or in the formula to calculate
his bonus;
o discontinuation of Mr. Becker's participation in any stock option,
bonus or other employee benefit plan;
o the sale of either the motor sports or theatrical line of business to
any person other than Mr. Becker before March 7, 2000, unless Mr. Becker
elected not to exercise Becker's right of first refusal;
o the sale of all or substantially all of the assets of PACE;
o a change of control of SFX; or
o the failure by SFX to contribute any acquired business, which derives a
majority of its revenues from either a theatrical or motor sports line
of business, to PACE.
If Mr. Becker's employment is terminated, then, among other things:
o from the date of termination until February 25, 2003, SFX must pay Mr.
Becker the base salary and any bonus to which he would otherwise be
entitled and Mr. Becker will be entitled to participate in all of the
profit-sharing, retirement income, stock purchase, savings and executive
compensation plans to the same extent he would otherwise have been
entitled to participate;
o for one year after the date of termination, SFX will maintain Mr.
Becker's life, accident, medical, health care and disability programs or
arrangements and provide Mr. Becker with use of the same office and
related facilities; and
o if the termination occurs before March 11, 2000, Mr. Becker will retain
the Becker Second Year Option and Becker's right of first refusal.
Throughout the term of his employment and for a period of 18 months
thereafter, Mr. Becker has agreed not to, directly or indirectly, engage in any
activity or business that is directly competitive with SFX or its affiliates or
solicit any employees to leave SFX or its affiliates. However, these
restrictions will not apply if Mr. Becker exercises his rights, or SFX breaches
its obligations, with respect to Becker's right of first refusal or the Becker
Second Year Option.
FALK EMPLOYMENT AGREEMENT
On April 29, 1998, SFX entered into an employment agreement with David
Falk. The agreement has a term of five years commencing June 4, 1998. Mr. Falk
is the Chairman of FAME and SFX's Sports Group and is a Member of the Office of
Chairman of SFX and a director of SFX. Pursuant to the agreement, Mr. Falk
directs the day to day operations of FAME and SFX's Sports Group and any other
sports businesses acquired by SFX. The agreement provides for an annual base
salary of $315,000, reviewed annually and increased by a minimum of 4.0% per
year. In addition, Mr. Falk will be considered for an annual bonus consistent
with the bonuses given to other senior executives of SFX. Mr. Falk received an
option to purchase 100,000 shares of Class A common stock at an exercise price
of $41.62 per share. The option will fully vest on June 4, 1999. In addition,
SFX has agreed to make annual stock option grants to Mr. Falk to purchase at
least 30,000 shares of Class A common stock in the first four years of his
employment agreement.
129
<PAGE>
SFX may terminate Mr. Falk's employment at any time With or Without Cause,
as defined in the agreement. If the agreement is terminated for any reason
other than a voluntary termination or termination for cause, then:
o all stock options granted pursuant to the agreement will immediately
vest and become exercisable;
o any remaining stock options to be granted pursuant to the agreement
will immediately be granted and will vest and become exercisable; and
o SFX will be obligated to pay Mr. Falk his base salary and annual
bonuses at a rate equal to 50% of his base salary through the original
term of the agreement, as well as certain additional benefits.
In addition, if a Change in Control, as defined in the agreement, occurs, SFX
may be required to pay a portion of certain taxes incurred by Mr. Falk as a
result of the Change of Control.
For one year following the termination of the employment agreement by Mr.
Falk or termination by SFX for Cause, as defined in the agreement, except in
certain events, Mr. Falk has agreed that he will not become employed in any
capacity by, or become an officer, director, shareholder or general partner of
any entity that competes with any material business of FAME as conducted as of
the closing date of the FAME acquisition and he will not solicit any employee
of SFX or any entities that are directly or indirectly controlled by SFX to
leave such employment.
In the past, SFX and Broadcasting have also entered into certain
additional agreements and arrangements with their officers and directors. See
"Certain Relationships and Related Transactions."
OPTION GRANTS
On April 27, 1998, SFX granted the following options to purchase shares of
Class A common stock at $29.125 per share:
o options to purchase 250,000 shares to Mr. Sillerman;
o options to purchase 75,000 shares to Mr. Ferrel;
o options to purchase 25,000 shares to Mr. Becker;
o options to purchase 30,000 shares to Mr. Tytel;
o options to purchase 35,000 shares to Mr. Armstrong; and
o options to purchase 15,000 shares to Mr. Benson.
On May 27, 1998, SFX granted the following options to purchase shares of
Class A common stock at $43.25 per share:
o options to purchase 250,000 shares to Mr. Sillerman;
o options to purchase 100,000 shares to Mr. Ferrel;
o options to purchase 50,000 shares to Mr. Becker;
o options to purchase 50,000 shares to Mr. Tytel;
o options to purchase 50,000 shares to Mr. Armstrong; and
o options to purchase 25,000 shares to Mr. Benson.
These options vest over five years, starting one year from the date of
grant.
130
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding ownership of SFX's
common stock as of February 11, 1999, by each executive officer of SFX, each
director of SFX, the directors and executive officers of SFX as a group and
each person known by SFX to own beneficially more than 5% of any class of SFX's
common stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK AFTER
THE PENDING MARQUEE
AND CELLAR DOOR ACQUISITIONS
CLASS A AND THE PROPOSED
COMMON STOCK EQUITY OFFERING (1)
------------------------------- -------------------------------
NAME AND ADDRESS OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER(2) SHARES CLASS SHARES CLASS
- ------------------------------- ------------------ ------------ ------------------ ------------
<S> <C> <C> <C> <C>
Directors and Executive
Officers:
Robert F.X. Sillerman ......... 2,653,005(3) 9.2% 2,764,899(4) 7.8%
Michael G. Ferrel ............. 145,303(5) * 145,303(5) *
Brian E. Becker ............... 29,402(6) * 29,402(6) *
David Falk .................... 325,000(7) 1.1 325,000(7) *
Howard J. Tytel ............... 454,604(8) 1.6 471,131(9) 1.4
Thomas P. Benson .............. 22,333(10) * 22,333(10) *
Richard A. Liese .............. 2,800(11) * 0(11) *
D. Geoffrey Armstrong ......... 175,133(12) * 175,133(12) *
James F. O'Grady, Jr. ......... 17,272(13) * 17,272(13) *
Paul Kramer ................... 18,422(14) * 18,422(14) *
Edward F. Dugan ............... 8,422(13) * 8,422(13) *
All directors and executive
officers as a group
(11 persons) ................. 3,397,092 11.8% 3,508,986 9.9%
5% Stockholders:
Zweig-DiMenna International
Limited and affiliated
companies(15) ................ 1,450,400 5.0% 1,450,400 4.1%
P.O. Box N-9932
Maritime House,
Frederick Street
Nassau, Bahamas
<CAPTION>
PERCENT OF
TOTAL VOTING PERCENT OF
POWER BEFORE TOTAL VOTING
THE PENDING POWER AFTER THE
CLASS B MARQUEE AND PENDING MARQUEE
COMMON STOCK CELLAR DOOR AND CELLAR DOOR
------------------------------- ACQUISITIONS AND ACQUISITIONS AND
NAME AND ADDRESS OF NUMBER OF PERCENT OF THE PROPOSED THE PROPOSED
BENEFICIAL OWNER(2) SHARES CLASS EQUITYOFFERING EQUITYOFFERING (1)
- ------------------------------- ------------------ ------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Directors and Executive
Officers:
Robert F.X. Sillerman ......... 1,524,168(4) 89.8% 39.1% 34.3%
Michael G. Ferrel ............. 172,869(5) 10.2 4.1 3.6
Brian E. Becker ............... -- -- * *
David Falk .................... -- -- * *
Howard J. Tytel ............... -- -- 1.0 *
Thomas P. Benson .............. -- -- * *
Richard A. Liese .............. -- -- * *
D. Geoffrey Armstrong ......... -- -- * *
James F. O'Grady, Jr. ......... -- -- * *
Paul Kramer ................... -- -- * *
Edward F. Dugan ............... -- -- * *
All directors and executive
officers as a group
(11 persons) ................. 1,697,037 100.0% 44.5% 39.0%
5% Stockholders:
Zweig-DiMenna International
Limited and affiliated
companies(15) ................ -- -- 3.2% 2.8%
P.O. Box N-9932
Maritime House,
Frederick Street
Nassau, Bahamas
</TABLE>
- ----------
* Less than 1%
(1) Assumes for the Marquee acquisition that the Exchange Ratio is 0.0856,
assuming an SFX stock price of $55.50, and that SFX will issue 360,360
shares of Class A common stock in connection with the Cellar Door
acquisition.
(2) Unless otherwise set forth above, the address of each stockholder is the
address of SFX, which is 650 Madison Avenue, 16th Floor, New York, New
York 10022. Pursuant to Rule 13d-3 of the Exchange Act, as used in this
table, "beneficial ownership" means the sole or shared power to vote, or
to direct the disposition of, a security, and a person is deemed to have
"beneficial ownership" of any security that the person has the right to
acquire within 60 days of February 3, 1999. Unless noted otherwise,
information as to beneficial ownership is based on statements furnished
to SFX by the beneficial owners and stockholders possess sole voting and
dispositive power with respect to shares listed on this table. As of
February 11, 1999, there were issued and outstanding 28,755,784 shares of
Class A common stock and 1,697,037 shares of Class B common stock.
(3) Includes 39,343 shares of Class A common stock held by SCMC and options
to purchase an aggregate of 40,000 shares of Class A common stock held by
Mr. Sillerman which are, or will become, exercisable within 60 days of
February 11, 1999. Also includes 446,271 shares of Class A common stock
and options to purchase 8,333 shares of Class A common stock held by Mr.
Tytel that Mr. Sillerman has the right to vote. Excludes options to
purchase an aggregate of 580,000 shares of Class A common stock held by
Mr. Sillerman which are not exercisable within 60 days of February 11,
1999. If the 1,524,168 shares of Class B common stock held by Mr.
Sillerman were included in calculating his ownership of the Class A
common stock, Mr. Sillerman would beneficially own 4,177,173 shares of
Class A common stock, representing approximately 13.8% of the class. See
"Management--Employment Agreements and Arrangements with Certain Officers
and Directors."
131
<PAGE>
(4) Includes 39,343 shares of Class A common stock held by SCMC and options
to purchase an aggregate of 40,000 shares of Class A common stock held by
Mr. Sillerman which are, or will become, exercisable within 60 days of
February 11, 1999. Also includes 458,814 shares of Class A common stock,
11,329 options and 998 warrants held by Mr. Tytel that Mr. Sillerman has
the right to vote. Includes options to be received by Mr. Sillerman in
the Marquee acquisition to purchase an aggregate of 18,689 shares of
Class A common stock and warrants to be received in the Marquee
acquisition to purchase an aggregate of 5,597 shares of Class A common
stock which are, or will become, exercisable within 60 days of February
11, 1999. Excludes options to be received in the Marquee acquisition to
purchase 9,685 shares of Class A common stock and options previously
issued to purchase an aggregate of 580,000 shares of Class A common stock
which are not exercisable within 60 days of February 11, 1999. If the
1,524,168 shares of Class B common stock held by Mr. Sillerman were
included in calculating his ownership of the Class A common stock, then
Mr. Sillerman would beneficially own 4,289,067 shares of Class A common
stock, representing approximately 11.6% of the class upon closing of the
pending Marquee and Cellar Door acquisitions and this offering. See
"Management--Employment Agreements and Arrangements with Certain Officers
and Directors."
(5) Includes options to purchase an aggregate of 16,666 shares of Class A
common stock held by Mr. Ferrel which are, or will become, exercisable
within 60 days of February 11, 1999. Excludes options to purchase an
aggregate of 208,334 shares of Class A common stock held by Mr. Ferrel
which are not exercisable within 60 days of February 11, 1999. If the
172,869 shares of Class B common stock held by Mr. Ferrel were included
in calculating his ownership of Class A common stock, then Mr. Ferrel
would beneficially own 318,172 shares of Class A common stock,
representing less than 1% of the class upon closing of the pending
Marquee and Cellar Door acquisitions and this offering. See
"Management--Employment Agreements and Arrangements with Certain Officers
and Directors."
(6) Excludes options to purchase an aggregate of 75,000 shares of Class A
common stock held by Mr. Becker which are not exercisable within 60 days
of February 11, 1999.
(7) Excludes options to purchase an aggregate of 100,000 shares of Class A
common stock held by Mr. Falk which are not exercisable within 60 days of
February 11, 1999.
(8) Includes options to purchase an aggregate of 8,333 shares of Class A
common stock held by Mr. Tytel which are, or will become, exercisable
within 60 days of February 11, 1999. Excludes options to purchase an
aggregate of 96,667 shares of Class A common stock held by Mr. Tytel
which are not exercisable within 60 days of February 11, 1999. Mr. Tytel
also has an economic interest in SCMC, which beneficially owns 39,343
shares of Class A common stock, although he lacks voting or dispositive
power with respect to the shares beneficially held by SCMC. Mr. Sillerman
has the right to vote all of the shares of Class A common stock
beneficially owned by Mr. Tytel. See "Management--Employment Agreements
and Arrangements with Certain Officers and Directors."
(9) Includes options to purchase an aggregate of 8,333 shares of Class A
common stock held by Mr. Tytel which are, or will become, exercisable
within 60 days of February 11, 1999. Also includes 2,996 options and 998
warrants that are, or will become, exercisable for shares of Class A
common stock within 60 days of February 11, 1999. Excludes options to be
received in the Marquee acquisition to purchase 1,256 shares of Class A
common stock and 571 stock appreciation rights to be received in the
Marquee acquisition not exercisable within 60 days of February 11, 1999.
Also excludes options previously issued to purchase an aggregate of
96,667 shares of Class A common stock held by Mr. Tytel which are not
exercisable within 60 days of February 11, 1999. Mr. Tytel also has an
economic interest in SCMC, which beneficially owns 39,343 shares of Class
A common stock, although he lacks voting or dispositive power with
respect to the shares beneficially held by SCMC. Mr. Sillerman has the
right to vote all of the shares of Class A common stock beneficially
owned by Mr. Tytel.
132
<PAGE>
(10) Includes options to purchase an aggregate of 3,333 shares of Class A
common stock held by Mr. Benson which are, or will become, exercisable
within 60 days of February 11, 1999. Excludes options to purchase an
aggregate of 46,667 shares of Class A common stock held by Mr. Benson
which are not exercisable within 60 days of February 11, 1999.
(11) Excludes options to purchase an aggregate of 10,000 shares of Class A
common stock held by Mr. Liese which are not exercisable within 60 days
of February 11, 1999.
(12) Includes options to purchase an aggregate of 13,333 shares of Class A
common stock held by Mr. Armstrong which are, or will become, exercisable
within 60 days of February 11, 1999. Excludes options to purchase an
aggregate of 111,667 shares of Class A common stock held by Mr. Armstrong
which are not exercisable within 60 days of February 11, 1999.
(13) Includes options to purchase an aggregate of 2,500 shares of Class A
common stock held by each of Messrs. O'Grady and Dugan which are
currently exercisable. Excludes 5,455 shares credited to each of these
individuals' accounts in the deferred compensation plan for non-employee
directors.
(14) Excludes 5,455 shares credited to Mr. Kramer's account in the deferred
compensation plan for non-employee directors.
(15) Based on information contained in a Schedule 13G filed with the SEC on
June 8, 1998. The aggregate number of shares is beneficially owned as
follows: 714,300 shares by Zweig-DiMenna International Limited, a British
Virgin Islands corporation; 328,200 by Zweig-DiMenna Partners, L.P., a
New York limited partnership; 197,500 shares by Zweig-DiMenna Special
Opportunities, L.P., a Delaware limited partnership; 124,000 shares by
Zweig-DiMenna International Managers, Inc., a Delaware corporation, on
behalf of a discretionary account; 83,400 shares by Gotham Advisors,
Inc., a Delaware corporation, on behalf of a discretionary account and
3,000 shares by Zweig-DiMenna Investors L.P., a Delaware limited
partnership. The principal business office for each of these entities,
other than Zweig-DiMenna International Limited, whose address is set
forth in the above table, is 900 Third Avenue, New York, New York 10022.
POSSIBLE CHANGE IN CONTROL
Mr. Sillerman has pledged an aggregate of 793,401 of his shares of Class B
common stock as collateral for a line of credit, under which he currently has
no outstanding borrowings. He continues to be entitled to exercise voting and
consent rights with respect to the pledged shares, with certain restrictions.
However, if he defaults in the payment of any future loans extended to him
under the line of credit, the bank will be entitled to sell the pledged shares.
Although the Class B common stock has 10 votes per share in most matters, the
pledged shares will automatically convert into shares of Class A common stock
upon such a sale. Such a sale of the pledged shares would reduce Mr.
Sillerman's share of the voting power of SFX's common stock, and would
therefore be likely to result in a change of control of SFX. See "Risk
Factors--Risks Relating to the Notes--SFX may not have the funds necessary to
finance a change of control offer for the notes."
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
POTENTIAL CONFLICTS OF INTEREST
Until the closing of the pending Marquee acquisition, Messrs. Sillerman
and Tytel may have conflicts of interest between Marquee and SFX. Mr. Sillerman
has an aggregate equity interest of approximately 6.1% in Marquee and is the
Chairman of its Board of Directors, and Mr. Tytel has an equity interest in
Marquee of approximately 1.1% and is one of its directors. However, Messrs.
Sillerman and Tytel did not represent the interests of Marquee in negotiations
with SFX relating to the merger. SFX may directly compete with Marquee before
the consummation of the merger in obtaining representation agreements with
particular athletes and endorsement opportunities for its clients. In addition,
SFX anticipates that, from time to time, it will enter into transactions and
booking and other arrangements with Marquee and Marquee's clients. In addition,
TSC, an entity controlled by Mr. Sillerman and in which Mr. Tytel also has an
equity interest, has provided financial consulting services to Marquee and will
continue to do so until consummation of the Marquee acquisition. TSC's services
are provided by certain directors, officers and employees of SFX who are not
separately compensated for their services by TSC. In any transaction,
arrangement or competition with Marquee before the closing of the acquisition,
Messrs. Sillerman and Tytel are likely to have conflicts of interest between
their duties as officers and directors of SFX, on the one hand, and their
duties as directors of Marquee and their interests in TSC and Marquee, on the
other hand. See "--Triathlon Fees."
Pursuant to the employment agreement entered into between Brian Becker and
SFX in connection with the acquisition of PACE, Mr. Becker has the option,
exercisable within 15 days after February 25, 2000, to purchase SFX's motor
sports line of business or, if that line of business has been sold, SFX's
theatrical line of business -- at its then fair market value. Exercise of such
option would result in the termination of Mr. Becker's employment agreement.
Mr. Becker's option may present a conflict of interest in his role as a
director of SFX. See "Risk Factors--Company Specific Risks--SFX may be forced
to sell some of its subsidiaries, which may prevent SFX from realizing the full
value of these subsidiaries" and "Management."
AGREEMENTS PRIOR TO THE SPIN-OFF
In January 1998, to retain the services of certain officers and directors
of SFX and, if necessary, to facilitate Broadcasting's ability to pursue an
alternative transaction to the SFX spin-off, as contemplated in the
Broadcasting merger agreement, SFX reached an agreement with such individuals
to waive the individuals' right to receive shares of SFX in the spin-off in
return for the right to receive one share of Class A common stock regardless of
the number of shares that were otherwise distributable in the spin-off or, in
an alternative transaction, receive $4.20 in value of stock of the acquiring
company or $4.20 in cash depending on the circumstances for each share of
Broadcasting common stock held by them or were entitled to receive. The amount
of $4.20 was based on the value attributed to the Class A common stock in the
fairness opinion obtained by Broadcasting in connection with the Broadcasting
merger. If the spin-off was consummated, SFX was permitted to satisfy its
obligations by delivering shares in connection with the spin-off. The following
table sets forth the executive officers and directors who entered into such an
agreement, along with the number of shares of Broadcasting common stock that
they held or were entitled to receive:
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<TABLE>
<CAPTION>
NAME SHARES OF SFX BROADCASTING
- -------------------------------------- ----------------------------------
<S> <C>
Robert F.X. Sillerman ......... 1,326,248 of Class A common stock
1,024,168 of Class B common stock
Michael G. Ferrel ............. 98,637 of Class A common stock
22,869 of Class B common stock
Howard J. Tytel ............... 248,615 of Class A common stock
Thomas P. Benson .............. 9,000 of Class A common stock
Richard A. Liese .............. 2,800 of Class A common stock
D. Geoffrey Armstrong ......... 161,800 of Class A common stock
James F. O'Grady, Jr. ......... 14,772 of Class A common stock
Paul Kramer ................... 15,922 of Class A common stock
Edward F. Dugan ............... 5,922 of Class A common stock
</TABLE>
In accordance with this agreement, SFX's obligations were deemed satisfied
upon delivery of the shares in connection with the SFX spin-off. No cash
payment was made.
EMPLOYMENT AGREEMENTS
SFX has entered into employment agreements with each of its current
executive officers. The employment agreements provide for annual base salaries
of $500,000 for Mr. Sillerman, $350,000 for Mr. Ferrel, $315,000 for Mr. Falk,
$300,000 for Mr. Tytel and $235,000 for Mr. Benson. Mr. Becker's employment
agreement provides for an annual salary of $294,000 for the first year,
$313,760 for each of the second and third years and $334,310 for each of the
fourth and fifth years.
In connection with entering into the employment agreements, SFX sold the
following restricted shares of stock: 500,000 shares of its Class B common
stock to Mr. Sillerman; 150,000 shares of its Class B common stock to Mr.
Ferrel; 80,000 shares of its Class A common stock to Mr. Tytel; and 10,000
shares of its Class A common stock to Mr. Benson. The shares were sold to the
officers at a purchase price of $2.00 per share. In addition, the SFX Board, on
the recommendation of its compensation committee, also has approved the
issuance of stock options to its officers and directors exercisable for an
aggregate of 252,500 shares of SFX's Class A common stock. The options will
vest over three years and will have an exercise price of $5.50 per share. SFX
will record non-cash compensation charges over the three-year exercise period
to the extent that the fair value of the underlying Class A common stock
exceeds the exercise price. See "Management--Employment Agreements and
Arrangements with Certain Officers and Directors."
ASSUMPTION OF EMPLOYMENT AGREEMENTS; CERTAIN CHANGE OF CONTROL PAYMENTS
Pursuant to the terms of the distribution agreement, at the time of the
consummation of the SFX Broadcasting merger, SFX assumed all obligations under
any employment agreement or arrangement between Broadcasting, or any of its
subsidiaries, and any employee of SFX, including Messrs. Sillerman and Ferrel,
other than obligations relating to Messrs. Sillerman's and Ferrel's change of
control options and existing rights to indemnification. These assumed
obligations included the obligation to make cash payments aggregating
approximately $3.3 million to Mr. Sillerman, $1.5 million to Mr. Ferrel and
$200,000 to Mr. Benson after the termination of their employment with
Broadcasting following the Broadcasting merger. SFX has paid these amounts. In
addition, SFX's assumed
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obligations include the duty to indemnify Messrs. Sillerman and Ferrel to the
extent permitted by law for one-half of the cost of any excise tax that may be
assessed against them for any change-of-control payments made to them by
Broadcasting in connection with the Broadcasting merger.
INDEMNIFICATION OF MR. SILLERMAN
On August 24, 1997, Mr. Sillerman entered into an agreement with
Broadcasting and the Broadcasting buyer to waive his right to receive
indemnification, except to the extent covered by directors' and officers'
insurance, from Broadcasting, its subsidiaries, the Broadcasting buyer and its
subsidiaries for claims and damages arising out of the Broadcasting merger and
related transactions. Mr. Sillerman's employment agreement with SFX provides
that SFX will indemnify Mr. Sillerman for these claims and damages to the
fullest extent permitted by applicable law.
RELATIONSHIP BETWEEN HOWARD J. TYTEL AND BAKER & MCKENZIE
Howard J. Tytel, who is the Executive Vice President, General Counsel,
Secretary, Member of the Office of the Chairman and a director of SFX, was "Of
Counsel" to the law firm of Baker & McKenzie from 1993 to May 31, 1998. Mr.
Tytel was also an executive vice president, the general counsel and a director
of Broadcasting. Baker & McKenzie served as counsel to Broadcasting and
currently serves as counsel to SFX, Marquee and certain other affiliates of Mr.
Sillerman. Baker & McKenzie formerly compensated Mr. Tytel based, in part, on
the fees it received from providing legal services to Broadcasting, SFX,
Marquee, other affiliates of Mr. Sillerman and other clients introduced to the
firm by Mr. Tytel. Baker & McKenzie has agreed to a severance arrangement with
Mr. Tytel, which is not based on fees received by Baker & McKenzie. From April
27, 1998, the date of the spin-off, until May 31, 1998, SFX incurred and paid
Baker & McKenzie approximately $1.5 million for legal services. SFX believes
that this arrangement was as fair to SFX as any that could have been obtained
from an unrelated party on an arms-length basis.
ARRANGEMENT BETWEEN ROBERT F.X. SILLERMAN AND HOWARD J. TYTEL
Since 1978, Messrs. Sillerman and Tytel have been jointly involved in
numerous business ventures, including SCMC, TSC, MMR, Triathlon, Marquee,
Broadcasting and SFX. In consideration for certain services provided by Mr.
Tytel in connection with those ventures, Mr. Tytel has generally received from
Mr. Sillerman either a minority equity interest in the businesses, with Mr.
Sillerman retaining the right to control the voting and disposition of Mr.
Tytel's interest, or cash fees in an amount mutually agreed upon. Although
Broadcasting did not compensate Mr. Tytel directly, except for ordinary fees
paid to him in his capacity as a director, he receives compensation from TSC
and SCMC, companies controlled by Mr. Sillerman, as well as from Mr. Sillerman
personally, with respect to the services he provides to various entities
affiliated with Mr. Sillerman, including Broadcasting. In 1997, these cash fees
aggregated approximately $5.0 million. In connection with the consummation of
the SFX Broadcasting merger and certain related transactions, Mr. Tytel
received 308,374 shares of SFX's Class A common stock, with Mr. Sillerman
retaining the right to vote these shares, and cash fees from TSC, SCMC and Mr.
Sillerman personally. Mr Tytel has also granted Mr. Sillerman the right to vote
all other shares of SFX Class A common stock beneficially owned by him. In
addition, Mr. Tytel continues to have an economic interest in SCMC, which
beneficially owns 39,343 shares of Class A common stock. See "--Assumption of
Employment Agreements; Certain Change of Control Payments" and "--Employment
Agreements."
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TRIATHLON FEES
SCMC, a corporation controlled by Mr. Sillerman and in which Mr. Tytel has
an equity interest, has an agreement to provide consulting and marketing
services to Triathlon, a publicly-traded company in which Mr. Sillerman is a
significant stockholder. Under the terms of the agreement, SCMC has agreed to
provide consulting and marketing services to Triathlon until June 1, 2005 for
an annual fee of $500,000, together with a refundable advance of $500,000 per
year against fees earned in respect of transactional investment banking
services. Triathlon paid fees of $3,000,000 for the year ended December 31,
1996, fees of $1,794,000 for the year ended December 31, 1997 and fees of
$530,000 for the year ended December 31, 1998. These fees vary above the
minimum annual fee of $500,000 depending on the level of acquisition and
financing activities of Triathlon. SCMC previously assigned its rights to
receive fees payable under this agreement to SFX Broadcasting. Pursuant to the
terms of the distribution agreement, SFX Broadcasting assigned its rights to
receive these fees to SFX. All services provided by SCMC are provided by
employees of SFX. Triathlon has announced that it has agreed to be acquired by
a third party. Triathlon will pay a fee to SFX in connection with such
acquisition. When Triathlon is acquired, it will cease paying consulting fees
for SCMC's services.
AGREEMENTS WITH BROADCASTING
SFX and Broadcasting have entered into various agreements with respect to
the spin-off and related matters. For the terms of these agreements, see the
distribution agreement, tax sharing agreement and the employment benefits
agreement, each of which has been filed as an exhibit to the registration
statement of which this prospectus is a part.
COMMON STOCK RECEIVED IN THE SPIN-OFF
In the SFX spin-off, the holders of Broadcasting's Class A common stock,
Series D preferred stock and warrants, upon exercise, received shares of Class
A common stock, whereas Messrs. Sillerman and Ferrel, as the holders of
Broadcasting's Class B common stock, which is entitled to ten votes per share
on most matters, received shares of Class B common stock. Class A common stock
and Class B common stock have similar rights and privileges, except that the
Class B common stock has greater voting rights. See "Description of Capital
Stock." The issuance of the Class B common stock in the spin-off was intended
to preserve Messrs. Sillerman's and Ferrel's relative voting power after the
spin-off. After giving effect to the Marquee acquisition, the Cellar Door
acquisition, the proposed equity offering and this offering, Mr. Sillerman may
be deemed to beneficially own approximately 35.0% of the combined voting power
of SFX, and Messrs. Sillerman and Ferrel may be deemed to beneficially own
approximately 38.5% of the combined voting power of SFX. Accordingly, Mr.
Sillerman, alone and together with SFX's current directors and executive
officers, will generally be able to control the outcome of the votes of the
stockholders on most matters. See "Principal Stockholders."
In addition, in August 1997, the board of directors of Broadcasting
approved amendments to certain warrants to purchase an aggregate of 600,000
shares of SFX Broadcasting's Class A common stock. The warrants were held by
SCMC, an entity controlled by Mr. Sillerman. The amendments memorialized the
original intent of the directors of Broadcasting that SCMC receive the
aggregate number of shares of Class A common stock that it would have received
if it had exercised the warrants immediately before the spin-off. Because of
these amendments, SCMC received 600,000 shares of Class A common stock in the
spin-off.
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ISSUANCE OF STOCK TO HOLDERS OF SFX BROADCASTING'S OPTIONS AND SARS
On April 27, 1998, SFX issued 522,941 shares of its Class A common stock
to holders as of the spin-off record date of the stock options or SARs of
Broadcasting, whether or not vested. SFX also issued 325,000 shares to Mr.
Sillerman and 70,000 shares to Mr. Ferrel with respect to options issuable
under their employment agreements with Broadcasting. In addition, SFX issued
325,000 shares of its Class A common stock to Mr. Sillerman and 30,000 shares
of SFX Class A common stock to Mr. Ferrel, which corresponded to
change-of-control options of SFX Broadcasting that they waived in connection
with the SFX Broadcasting merger. The issuances were made in consideration for
past services to SFX and to allow holders of such options and SARs to
participate in the spin-off in a manner similar to holders of Broadcasting's
Class A common stock. Additionally, many of the option and SAR holders are
officers, directors or employees of SFX. The members of the SFX Board, other
than Messrs. Becker and Falk, received an aggregate of 850,479 shares pursuant
to such issuances.
MEADOWS REPURCHASE
In connection with the acquisition of Meadows Music Theater, Broadcasting
obtained an option, as subsequently amended, to repurchase 247,177 shares of
its Class A common stock (the "Meadows Shares") for an aggregate purchase price
of $8.2 million. However, Broadcasting was restricted from exercising the
Meadows Repurchase by certain loan covenants and other restrictions. Pursuant
to the terms of the Broadcasting merger agreement, since the Meadows Shares
were outstanding at the effective time of the SFX Broadcasting merger, working
capital was decreased by approximately $10.3 million.
In January 1998, Mr. Sillerman committed to finance the $8.2 million
exercise price of the Meadows Repurchase to offset the $10.3 million reduction
to working capital. In consideration for his commitment, the board of directors
of Broadcasting agreed that Mr. Sillerman would receive approximately the
number of shares of Class A common stock to be issued in the spin-off with
respect to the Meadows Shares. At the time Broadcasting accepted Mr.
Sillerman's commitment, the board of directors of Broadcasting valued Class A
common stock to be issued in the spin-off at $4.20 per share, the value
attributed to such shares in the fairness opinion obtained by Broadcasting in
connection with the Broadcasting merger. The transaction was approved by
Broadcasting's board of directors, including the independent directors.
In April 1998, Broadcasting assigned the option for the Meadows Shares to
an unaffiliated third party and, in connection therewith, agreed to pay such
party a fee of $75,000. Mr. Sillerman subsequently advanced such party the $8.2
million exercise price for the Meadows Repurchase, the repayment of which
became due upon the Broadcasting merger. The third party has exercised the
option and transferred to Mr. Sillerman Class A common stock issued in the
spin-off with respect to the Meadows Shares. The Meadows Shares were tendered
in the Broadcasting merger by the third party in exchange for the per share
Broadcasting merger consideration of $75. The third party subsequently repaid
the advance from Mr. Sillerman and transferred $10.3 million, the remainder of
such consideration net of the third party fee, to SFX.
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DESCRIPTION OF INDEBTEDNESS
SENIOR CREDIT FACILITY
The following is a summary of the material terms of the credit agreement
for the Senior Credit Facility. This summary is not complete. It is subject to,
and qualified in its entirety by reference to, the credit agreement for the
Senior Credit Facility, which has been filed as an exhibit to the registration
statement of which this prospectus is a part. See "Where You Can Find More
Information."
In February 1998, SFX executed a Credit and Guarantee Agreement (the
"Senior Credit Facility") which established $300.0 million of senior secured
credit facilities. The Senior Credit Facility was then comprised of the $150.0
million eight-year term loan and the $150.0 million seven-year reducing
revolver. Borrowings under the Senior Credit Facility are secured by
substantially all the assets of SFX, including a pledge of the outstanding
stock of substantially all of its subsidiaries, and are guaranteed by
substantially all of SFX's subsidiaries. On February 27, 1998, SFX borrowed
$150.0 million pursuant to the term loan in connection with certain of its 1998
Acquisitions. On September 10, 1998, SFX entered into an agreement with The
Bank of New York to increase its borrowing availability under the revolving
portion of the Senior Credit Facility by an additional $50.0 million to $200.0
million, which increased the aggregate amount of borrowing availability under
the Senior Credit Facility to approximately $350.0 million. SFX is currently in
discussions with the lenders under the Senior Credit Facility to increase the
total borrowing availability thereunder to $550.0 million. While SFX expects to
be able to secure such additional borrowing availability, no assurances can be
given that it will be able to do so. As of February 5, 1999, SFX had
approximately $285.0 million of borrowings under the Senior Credit Facility.
GENERAL
The Senior Credit Facility provides for borrowings in a principal amount
of up to $350.0 million, subject to certain covenants and conditions.
Borrowings under the Senior Credit Facility may be used by SFX to finance
Permitted Acquisitions (as defined in the Senior Credit Facility) and for
working capital and general corporate purposes. Up to $20.0 million of the
revolver is available for the issuance of standby letters of credit. Each
Permitted Acquisition must be in the same line of business, or other business
incidental or related thereto, as SFX and must have the prior written consent
of the Required Lenders (as defined in the Senior Credit Facility) if the cost
of the Permitted Acquisition exceeds $50.0 million.
INTEREST RATES; FEES
Loans outstanding under the Senior Credit Facility bear interest, at SFX's
option, at certain spreads over LIBOR or the greater of the Federal Funds rate
plus 0.50% or The Bank of New York's prime rate. The interest rate spreads on
the term loan and the revolver are adjusted based on SFX's Total Leverage
Ratio, as defined below. SFX pays an annual commitment fee on unused
availability under the revolver of 0.50% if SFX's Total Leverage Ratio is
greater than or equal to 4.0 to 1.0, and 0.375% if that ratio is less than 4.0
to 1.0. SFX also pays an annual letter of credit fee equal to the Applicable
LIBOR Margin, as defined in the Senior Credit Facility, for the revolver then
in effect.
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MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS
Commitments to lend under the revolver will be reduced in equal quarterly
installments commencing March 31, 2000, in annual percentages of the borrowings
under the revolver as of December 31, 1999 according to the following schedule:
by 10.0% in 2000; by 15.0% in 2001; by 20.0% in 2002; by 25.0% in 2003; by
25.0% in 2004; and by the remaining 5.0% upon final maturity. The term loan
will be reduced by $1.0 million per year until final maturity, at which point
the remaining balance will be due and payable. Amounts outstanding under the
Senior Credit Facility will be subject to, among others, the following
mandatory prepayments, which will also permanently reduce commitments:
o 100.0% of the net cash proceeds received from permitted Asset Sales (as
defined in the Senior Credit Facility), subject to standard reinvestment
provisions;
o 50.0% of Excess Cash Flow (as defined in the Senior Credit Facility),
calculated for each fiscal year beginning with the year ending December
31, 2000; and
o 50.0% of net proceeds of any equity issuance, to the extent that the
Total Leverage Ratio is greater than or equal to 5.0 to 1.0.
COLLATERAL AND GUARANTEES
Each of SFX's present and future direct and indirect domestic subsidiaries
(the "Senior Guarantors") must provide guarantees under the Senior Credit
Facility. In order to secure its obligations under the Senior Credit Facility,
SFX and each of the Senior Guarantors must also grant to the lenders a
continuing security interest in all of their assets, subject to certain
non-material exceptions, all of the capital stock of each Senior Guarantor and
not less than 66% of the capital stock of SFX's present and future direct and
indirect foreign subsidiaries.
The Senior Credit Facility contains various covenants that, subject to
certain specified exceptions, restrict SFX's and its subsidiaries' ability to:
o incur additional indebtedness and other obligations;
o grant liens;
o consummate mergers, acquisitions, investments and asset dispositions;
o declare or pay Restricted Payments (as defined in the Senior Credit
Facility);
o declare or pay dividends, distributions and other prepayments or
repurchases of other indebtedness;
o amend certain agreements, including SFX's organizational documents, and
its outstanding senior subordinated notes and indentures;
o make acquisitions and dispositions;
o engage in transactions with affiliates;
o engage in sale and leaseback transactions; and
o change lines of business.
The Senior Credit Facility also includes covenants relating to compliance with
ERISA, environmental and other laws, payment of taxes, maintenance of corporate
existence and rights, maintenance of insurance and financial reporting. In
addition, the Senior Credit Facility requires SFX to maintain compliance with
certain specified financial covenants relating to:
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o a maximum ratio (the "Total Leverage Ratio") of all outstanding amounts
under the Senior Credit Facility and any other borrowed money and
similar type indebtedness, including capital lease obligations, of SFX
and its subsidiaries, on a consolidated basis ("Total Debt"), less cash
and cash equivalents in excess of $5.0 million, to, for the most
recently completed four fiscal quarters:
(a) revenues, less
(b) expenses, excluding depreciation, amortization other than
amortization of capitalized pre-production costs, interest expense
and income tax expense, plus
(c) non-recurring expense items or non-cash expense items mutually
agreed upon by SFX and the Required Lenders, plus
(d) the lesser of the equity income from Unconsolidated Investments (as
defined in the Senior Credit Facility) and cash dividends and other
cash distributions from Unconsolidated Investments, however, the
total amount determined under this clause (d) will not exceed 10.0%
of Operating Cash Flow before overhead, (the amount referred to
"Operating Cash Flow"); Operating Cash Flow is to be adjusted to
reflect acquisitions and dispositions consummated during the
calculation period as if those transactions were consummated at the
beginning of the period (with adjustment, "Adjusted Operating Cash
Flow");
o a maximum ratio (the "Senior Leverage Ratio") of Total Debt less the
principal amount outstanding under the Notes, less cash and cash
equivalents in excess of $5.0 million, to Operating Cash Flow;
o minimum ratio (the "Pro Forma Interest Expense Ratio") of Adjusted
Operating Cash Flow to the sum of all interest expense and commitment
fees calculated for the four fiscal quarters following the calculation
quarter, giving effect to the Total Debt outstanding and the interest
rates in effect as of the date of the determination and the commitment
reductions and debt amortization scheduled during that period;
o minimum ratio (the "Debt Service Ratio") of Adjusted Operating Cash
Flow, to the sum of:
(a) the sum of all interest expense and commitment fees calculated for
the four fiscal quarters following the calculation quarter, giving
effect to the Total Debt outstanding and the interest rates in
effect as of the date of the determination and the commitment
reductions and debt amortization scheduled during that period, and
(b) the scheduled current maturities of Total Debt and current
commitment reductions with respect to the revolver, each measured
for the four fiscal quarters immediately succeeding the date of
determination; and
o a minimum ratio (the "Fixed Charges Ratio") of the sum of Operating
Cash Flow to the sum of, for the four most recently completed fiscal
quarters, the following paid during that period:
(a) Interest Expense (as defined in the Senior Credit Facility) plus the
scheduled maturities of Total Debt and current commitment
reductions with respect to the revolver,
(b) cash income taxes,
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(c) capital expenditures, excluding certain special capital expenditures
to be mutually agreed upon, and
(d) Unconsolidated Investments (as defined in the Senior Credit
Facility).
The Total Leverage Ratio for the most recently completed 12 month period
may not at any time exceed: 6.50x from September 30, 1998 to December 30, 1998;
6.25x from December 31, 1998 to June 29, 1999; 5.75x from June 30, 1999 to
December 30, 1999; 5.25x from December 31, 1999 to December 30, 2000; 4.50x
from December 31, 2000 to December 30, 2001; and 3.75x on December 31, 2001 and
thereafter.
The Senior Leverage Ratio for the most recently completed 12 month period
may not at any time exceed: 3.25x from September 30, 1998 to December 30, 1999;
3.00x from December 31, 1999 to December 30, 2000; and 2.50x on December 31,
2000 and thereafter.
The Pro Forma Interest Expense Ratio may not at the end of any fiscal
quarter be less than 1.50x before December 31, 1998, and 2.00x on January 1,
1999 and thereafter.
The Pro Forma Debt Service Ratio may not at any fiscal quarter end be less
than 1.25x before December 31, 1998, and 1.50x on January 1, 1999 and
thereafter.
The Fixed Charges Ratio may not at any quarter end be less than 1.05x.
The Senior Credit Facility also prohibits prepayment of any subordinated
notes, including the Notes.
EVENTS OF DEFAULT
The Senior Credit Facility contains customary events of default, including
payment defaults, the occurrence of a Change of Control (as defined below), the
invalidity of guarantees or security documents under the Senior Credit
Facility, any Material Adverse Change (as defined in the Senior Credit
Facility), breach of any representation or warranty under the Senior Credit
Facility and any cross-default to other indebtedness of SFX and its
subsidiaries. The occurrence of any event of default could result in
termination of the commitments to extend credit under the Senior Credit
Facility and foreclosure on the collateral securing those obligations, each of
which, individually, could have a material adverse effect on SFX.
CHANGE OF CONTROL
"Change of Control" is defined in the Senior Credit Facility as the
failure of Mr. Sillerman, any Affiliate (as defined therein) of Mr. Sillerman,
or any Affiliate of Mr. Sillerman together with any executor, heir or successor
appointed to take control of Mr. Sillerman's affairs in the event of his death,
disability or incapacity, to own directly or indirectly, in the aggregate, of
record and beneficially, more than 30% of the voting power of all issued and
outstanding capital stock of SFX; or the occurrence of any Person (as defined
in the Senior Credit Facility), other than as provided above, owning,
beneficially, more than 10% of the voting power of all issued and outstanding
capital stock of SFX.
DESCRIPTION OF THE FEBRUARY 2008 NOTES
The following is a summary of the material terms contained in the
indenture governing the February 2008 Notes. This summary is not complete. It
is subject to the terms of an indenture, which was filed as an exhibit to the
registration statement of which this prospectus is a part. See "Where You Can
Find More Information."
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On February 11, 1998, SFX consummated the private placement of $350.0
million in aggregate principal amount of 9 1/8% Senior Subordinated Notes due
February 1, 2008. The February 2008 Notes bear interest at an annual interest
rate of 9 1/8%, and interest payments are due semi-annually, commencing August
1, 1998. The February 2008 Notes will mature on February 1, 2008. The February
2008 Notes do not contain any sinking fund provision.
RANKING
The February 2008 Notes are general unsecured obligations of SFX,
subordinate in right to all Senior Debt (as defined in the February 2008 Note
indenture), whether outstanding on the date of the Feburary 2008 Note indenture
or thereafter incurred, of SFX and senior in right of payment to or pari passu
with all other indebtedness of SFX. See "Capitalization."
SUBSIDIARY GUARANTEES
SFX's payment obligations under the February 2008 Notes are jointly and
severally guaranteed on a senior subordinated basis by all of its current and
future domestic subsidiaries, with certain specified exceptions.
OPTIONAL REDEMPTION
Except as noted below, the February 2008 Notes are not redeemable at SFX's
option before February 1, 2003. Thereafter, the February 2008 Notes will be
subject to redemption at any time at the option of SFX, in whole or in part, at
specified redemption prices plus accrued and unpaid interest and Liquidated
Damages (as defined in the February 2008 Note indenture), if any, thereon to
the applicable redemption date. In addition, at any time prior to February 1,
2001, SFX may on any one or more occasions redeem up to 35.0% of the original
aggregate principal amount of the February 2008 Notes at a redemption price of
109.125% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of redemption, with the net
proceeds of one or more offerings of common equity of SFX. However, at least
65.0% of the original aggregate principal amount of the February 2008 Notes
must remain outstanding immediately after each occurrence of redemption.
CHANGE OF CONTROL
After the occurrence of a Change of Control (as defined in the February
2008 Note indenture), SFX will be required to make an offer to repurchase the
February 2008 Notes at a price equal to 101% of their principal amount,
together with accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase.
CERTAIN COVENANTS
The February 2008 Note indenture contains certain covenants that, among
other things, significantly limit the ability of SFX and its subsidiaries to
o incur additional Indebtedness (as defined in the February 2008 Note
indenture);
o issue preferred stock;
o pay dividends;
o make certain other restricted payments;
o create certain Liens (as defined in the February 2008 Note indenture);
o enter into certain transactions with affiliates;
o sell assets of SFX or its Restricted Subsidiaries (as defined in the
February 2008 Note indenture);
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o issue or sell Equity Interests (as defined in the February 2008 Note
indenture) of SFX's Restricted Subsidiaries; or
o enter into certain mergers and consolidations.
In addition, under certain circumstances, SFX will be required to offer to
purchase February 2008 Notes at a price equal to 100.0% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase, with the proceeds of certain Asset Sales (as defined in
the February 2008 Note indenture).
EXCHANGE OFFER
On July 15, 1998, SFX consummated the exchange of substantially identical
publicly registered February 2008 Notes for all outstanding February 2008
Notes. All original February 2008 Notes were tendered for exchange and were
cancelled upon the issuance of the same principal amount of exchanged February
2008 Notes.
OTHER DEBT
In addition to the amounts outstanding under the Senior Credit Facility,
the February 2008 Notes and the Old Notes described below, SFX had
approximately $57.0 million of long-term debt outstanding on a pro forma basis
at September 30, 1998, which was incurred primarily in connection with SFX's
1997 and 1998 acquisitions.
DESCRIPTION OF THE OLD NOTES
On November 25, 1998, SFX consummated the $200.0 million private placement
of the Old Notes. The terms of the Old Notes are substantially identical to
those of the New Notes, including ranking, guarantees by subsidiaries of SFX,
redemption, and restrictive covenants. See "Description of the New Notes".
However, the Old Notes have not been registered under the Securities Act, and
may not be offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.
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DESCRIPTION OF THE NEW NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the words
"Company" and "SFX" refer only to SFX Entertainment, Inc. and not to any of its
subsidiaries.
The Old Notes were, and the New Notes will be, issued by SFX under the
Indenture dated November 25, 1998 (the "Indenture") among itself, the
Guarantors and The Chase Manhattan Bank, as trustee (the "Trustee"). The terms
of the Old Notes and the New Notes (collectively, the "Notes") include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
New Notes are substantially identical to the terms and provisions of the Old
Notes, except for certain transfer restrictions and registration rights
relating to the Old Notes. The term "Notes" refers to both the Old Notes and
the New Notes.
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. Because this is a
summary, we urge you to read the Indenture and the relevant portions of the
Trust Indenture Act because they, and not this description, define your rights
as holders of the Notes. We have filed copies of the Indenture as an exhibit to
the registration statement which includes this prospectus.
GENERAL
The Notes are:
- general unsecured obligations of SFX;
- subordinated in right of payment to all existing and future Senior Debt
of SFX;
- equivalent in ranking to February 2008 Notes; and
- unconditionally guaranteed by the Subsidiary Guarantors.
As of September 30, 1998, after giving pro forma effect to the offering of
the Old Notes and the application of the net proceeds therefrom, anticipated
borrowings under the Senior Credit Facility, the consummation of the pending
Marquee and Cellar Door acquisitions and the consummation of the proposed
equity offering and the applications of the proceeds therefrom, SFX would have
had approximately $207.0 million of Senior Debt outstanding. The Indenture
permits SFX to incur additional debt, including additional Senior Debt, subject
to certain restrictions. See "--Certain Covenants--Incurrence of Indebtedness
and Issuance of Preferred Stock."
PRINCIPAL, MATURITY AND INTEREST
SFX issued the Old Notes with a maximum aggregate principal amount of
$200.0 million. SFX will issue Notes in denominations of $1,000 and integral
multiples of $1,000. The Notes will mature on December 1, 2008.
Interest on the Notes will accrue at the rate of 9 1/8% per annum and will
be payable semi-annually in arrears on December 1 and June 1 of each year,
commencing on June 1, 1999. SFX will make each interest payment to the holders
of record of these Notes on the immediately preceding November 15 and May 15.
Interest on the Notes will accrue from the date of original issuance or,
if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
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METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder of a Note has given wire transfer instructions to SFX, SFX
will make all principal, premium and interest payments on those Notes in
accordance with those instructions. All other payments on these Notes will be
made at the office or agency of the Paying Agent and Registrar within the City
and State of New York unless SFX elects to make interest payments by check
mailed to the holders at their address set forth in the register of holders.
SUBORDINATION
The payment of principal, premium, interest and Liquidated Damages, if
any, on the Notes will be subordinated to the prior payment in full of all
Senior Debt of SFX.
The holders of Senior Debt of SFX will be entitled to receive payment in
full of all Obligations due in respect of such Senior Debt--including interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Debt--before the holders of Notes will be entitled to receive
any payment with respect to the Notes. However, holders of Notes may receive
Permitted Junior Securities and payments made from the trust described under
"--Legal Defeasance and Covenant Defeasance" if any distribution to SFX's
creditors occurs:
(1) in a liquidation or dissolution of SFX;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to SFX or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of SFX's assets or liabilities.
SFX also may not make any payment in respect of the Notes except in
Permitted Junior Securities or from the trust described under the caption
"--Legal Defeasance and Covenant Defeasance," if:
(1) a payment default on any Designated Senior Debt occurs and is
continuing beyond any applicable grace period; or
(2) any other default occurs and is continuing with respect to any
Designated Senior Debt that permits holders of that Designated Senior
Debt to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from SFX or the holders of
such Designated Senior Debt.
Payments on the Notes may and must be resumed:
(1) in the case of a payment default, upon the date on which such default
is cured or waived or has ceased to exist or such Designated Senior
Debt has been discharged or repaid in full; and
(2) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the date
on which the applicable Payment Blockage Notice is received or has
ceased to exist or such Designated Senior Debt has been discharged or
repaid in full, unless the maturity of any Designated Senior Debt has
been accelerated.
No new period of payment blockage may be commenced unless and until 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on the
date of delivery of any Payment
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Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default has been cured or waived.
SFX must promptly notify holders of Senior Debt if payment of the Notes is
accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of Notes may recover less ratably than
creditors of SFX who are holders of Senior Debt. See "Risk Factors--Risks
Relating to the Notes--Your right to receive payments on these notes is junior
to our existing indebtedness and possibly all of our future borrowings."
SUBSIDIARY GUARANTEES
Each of SFX's current and future domestic Restricted Subsidiaries (the
"Guarantors"), except for the Non-Guarantor Subsidiaries, will jointly and
severally guarantee SFX's obligations under the Notes (the "Subsidiary
Guarantees"). See "Risk Factors--Risks Relating to the Notes--SFX has a
substantial amount of debt, which may harm our financial health and prevent us
from fulfilling our obligations under the notes." Each Subsidiary Guarantee
will be subordinated in right of payment to all existing and future Senior Debt
of such Guarantor. The Indenture will permit the Guarantors to incur additional
indebtedness, including additional Senior Debt, subject to certain
restrictions. See "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock." The obligations of each Guarantor under its Subsidiary
Guarantee will be limited as necessary to prevent that Subsidiary Guarantee
from constituting a fraudulent conveyance under applicable law.
A Guarantor may not consolidate with or merge with or into, whether or not
such Guarantor is the surviving Person, another corporation, Person or entity
unless:
(1) the Person formed by or surviving any such consolidation or merger,
if other than such Guarantor, assumes all the obligations of such
Guarantor pursuant to a supplemental indenture reasonably satisfactory
to the Trustee, under the Notes, the Indenture and the Registration
Rights Agreement;
(2) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(3) SFX would be permitted by virtue of SFX's pro forma Debt to Cash Flow
Ratio, immediately after giving effect to such transaction, to incur
at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow Ratio test set forth in the covenant described below under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock."
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor, including by way of
merger or consolidation, if SFX applies the Net Proceeds of that sale
or other disposition, in accordance with the applicable provisions of
the Indenture; or
(2) in connection with any sale of all of the capital stock of a
Guarantor, if SFX applies the Net Proceeds of that sale in accordance
with the applicable provisions of the Indenture.
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OPTIONAL REDEMPTION
Before December 1, 2001, SFX may, on any one or more occasions, redeem up
to 35% of the aggregate principal amount of Notes originally issued under the
Indenture at a redemption price of 109.125% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of an offering of common equity of
SFX, other than Disqualified Stock; provided that:
(1) at least 65% of the aggregate principal amount of the Notes
originally issued in the Offering remain outstanding immediately after
the occurrence of each such redemption, excluding Notes held by SFX
and its Subsidiaries; and
(2) each such redemption shall occur within 75 days after the date of the
closing of any such offering of common equity of SFX.
Except pursuant to the preceding paragraph, SFX will not be able to redeem
the Notes prior to December 1, 2003.
After December 1, 2003, SFX may redeem all or a part of the Notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices, expressed
as percentages of principal amount, set forth below, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on December 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------- -------------
<S> <C>
2003 ......................... 104.563%
2004 ......................... 103.042
2005 ......................... 101.521
2006 and thereafter .......... 100.000%
</TABLE>
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed.
If the Notes are not so listed, the Trustee will make the selection of Notes
for redemption on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and appropriate. No Notes of $1,000 or less shall be redeemed
in part. Notices of redemption shall be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each holder of Notes to
be redeemed at its registered address. Notices of redemption may not be
conditional.
If any Note is to be redeemed in part only, the notice of redemption that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under the caption "--Repurchase at the Option of
Holders," SFX is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
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REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of Notes will have the right to
require SFX to make an offer (a "Change of Control Offer") to each holder of
Notes to repurchase all or any part, equal to $1,000 or an integral multiple
thereof, of such holder's Notes. In the Change of Control Offer, SFX will offer
payment in cash equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase
(the "Change of Control Payment"). Within ten days following a Change of
Control, SFX will mail a notice to each holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. SFX will comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable
in connection with the repurchase of the Notes as a result of a Change of
Control.
On the Change of Control Payment Date, SFX will, to the extent lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by SFX.
The Paying Agent will promptly mail to each holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail, or cause to be transferred by book entry, to each holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof.
Prior to complying with the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, SFX
will either repay all outstanding Senior Debt or obtain the requisite consents,
if any, under all agreements governing outstanding Senior Debt to permit the
repurchase of Notes required by this covenant. SFX will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The provisions described above that require SFX to make a Change of
Control Offer following a Change of Control will be applicable whether or not
any other provisions of the Indenture are applicable. Except as described above
with respect to a Change of Control, the Indenture does not contain provisions
that permit the holders of the Notes to require SFX to repurchase or redeem the
Notes in the event of a takeover, recapitalization or similar transaction.
The Senior Credit Facility prohibits SFX from purchasing any Notes
following a Change of Control and provide that certain change of control events
with respect to SFX would constitute a default thereunder. Any other future
credit agreements or other agreements relating to Senior Debt to which SFX
becomes a party may contain similar restrictions. If a
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Change of Control occurs at a time when SFX is prohibited from purchasing
Notes, SFX could seek the consent of its lenders to the purchase of Notes or
could attempt to refinance the borrowings that contain such prohibition. If SFX
does not obtain such a consent or repay such borrowings, SFX will remain
prohibited from purchasing Notes. SFX's failure to purchase tendered Notes
following a Change of Control would constitute an Event of Default under the
Indenture which, in turn, is expected to constitute as default under the Senior
Credit Facility. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the holders of Notes. See
"--Subordination."
SFX will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by SFX and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
ASSET SALES
SFX will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) SFX or the Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of; and
(2) at least 75% of the consideration therefor received by SFX or such
Restricted Subsidiary is in the form of cash. For purposes of this
provision, each of the following shall be deemed cash:
(a) any liabilities, as shown on SFX's or such Restricted Subsidiary's
most recent balance sheet, of SFX or such Restricted Subsidiary,
other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any guarantee thereof, that are
assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases SFX or such Restricted
Subsidiary from further liability;
(b) any securities, notes or other obligations received by SFX or such
Restricted Subsidiary from such transferee that are immediately
converted by SFX or such Restricted Subsidiary into cash, to the
extent of the cash received; and
(c) escrowed cash that SFX reasonably believes will be released from
escrow within 365 days from the date of consummation of such Asset
Sale.
However, SFX and its Restricted Subsidiaries will be permitted to
consummate an Asset Sale without complying with the preceding paragraph if:
(1) SFX or the applicable Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal
to the fair market value of the assets or other property sold, issued
or otherwise disposed of; and
(2) at least 75% of the consideration for such Asset Sale constitutes a
controlling interest in a Permitted Business, long-term assets used or
useful in a Permitted Business and/or cash or Cash Equivalents;
provided that any cash or Cash Equivalents received by SFX or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Proceeds subject to the
provisions of the next paragraph.
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Within 365 days of the receipt of any Net Proceeds from an Asset Sale, SFX
may apply such Net Proceeds, at its option:
(1) to repay Senior Debt;
(2) to acquire a controlling interest in another Permitted Business; and
(3) to make a capital expenditure or to acquire other long-term assets
that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, SFX may temporarily
reduce Senior Debt or otherwise invest such Net Proceeds in any manner that is
not prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, SFX will be required
to make an offer to all holders of Notes and all holders of other pari passu
Indebtedness containing provisions similar to those set forth in the Indenture
with respect to offers to purchase or redeem such other pari passu Indebtedness
with the proceeds of sales of assets (an "Asset Sale Offer"). The offer price
in any Asset Sale Offer will be equal to 100% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase and will be paid in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, SFX may use such Excess Proceeds for any
purpose not otherwise prohibited by the Indenture. If the aggregate principal
amount of Notes and such other pari passu Indebtedness surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other pari passu Indebtedness to be purchased on a pro rata
basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
SFX will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of SFX's or any of its Restricted Subsidiary's Equity
Interests, including, without limitation, any payment in connection
with any merger or consolidation involving SFX or any Restricted
Subsidiary, or to any direct or indirect holders of SFX's Equity
Interests in their capacity as such, other than dividends or
distributions payable in Equity Interests, other than Disqualified
Stock, of SFX to SFX or any Wholly Owned Restricted Subsidiary of SFX;
(2) purchase, redeem or otherwise acquire or retire for value, including,
without limitation, in connection with any merger or consolidation
involving SFX, any Equity Interests of SFX or any of its Restricted
Subsidiaries or any direct or indirect parent of SFX, other than any
such Equity Interests owned by SFX or any Restricted Subsidiary of
SFX;
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness of SFX or
any Restricted Subsidiary that is subordinated to the Notes or any
guarantee of the Notes, except a payment of interest or principal at
Stated Maturity; or
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(4) make any Restricted Investment, all such payments and other actions
set forth in clauses (1) through (4) above being collectively referred
to as "Restricted Payments;"
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(2) SFX would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Debt to Cash Flow Ratio test set forth in the first paragraph
of the covenant described below under caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by SFX and its Restricted Subsidiaries
after November 25, 1998, excluding Restricted Payments permitted by
clauses (2), (3) and (4) of the next paragraph, is less than the sum,
without duplication, of:
(a) 50% of the Consolidated Net Income of SFX for the period, taken as
one accounting period, from the beginning of the first fiscal
quarter commencing after November 25, 1998 to the end of SFX's most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment,
or, if such Consolidated Net Income for such period is a deficit,
less 100% of such deficit; plus
(b) 100% of the aggregate net cash proceeds received by SFX as a
contribution to its common equity capital or from the issue or sale
since November 25, 1998 of Equity Interests of SFX, other than
Disqualified Stock, or from the issue or sale of Disqualified Stock
or debt securities of SFX that have been converted into such Equity
Interests, other than Equity Interests, or Disqualified Stock or
convertible debt securities, sold to a Subsidiary of SFX and other
than Disqualified Stock or convertible debt securities that have
been converted into Disqualified Stock; plus
(c) 50% of any dividends received by SFX or a Wholly Owned Restricted
Subsidiary after November 25, 1998 from an Unrestricted Subsidiary
of SFX, to the extent that such dividends were not otherwise
included in Consolidated Net Income of SFX for such period; plus
(d) to the extent that any Restricted Investment that was made after
November 25, 1998 is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (i) the cash return of capital with
respect to such Restricted Investment, less the cost of
disposition, if any, and (ii) the initial amount of such Restricted
Investment.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after its date of
declaration, if at the date of declaration such payment would have
complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests of SFX or subordinated
Indebtedness of SFX or any Guarantor in
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exchange for, or out of the net cash proceeds of the substantially
concurrent sale, other than to a Subsidiary of SFX, of other Equity
Interests of SFX, other than any Disqualified Stock; provided that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (3)(b) of the preceding paragraph; and
provided further that no Default or Event of Default shall have occurred
and be continuing immediately after such transaction;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; provided that no
Default or Event of Default shall have occurred and be continuing
immediately after such transaction;
(4) the payment of any dividend by a Restricted Subsidiary of SFX to the
holders of Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of SFX or any Restricted Subsidiary of
SFX held by any member of SFX's--or any of its Restricted
Subsidiaries'--management or board of directors pursuant to any
management equity subscription agreement, stock option agreement or
other similar agreement; provided that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $250,000 in any twelve-month period and no Default or
Event of Default shall have occurred and be continuing immediately
after such transaction; and
(6) the repurchase, redemption or other acquisition or retirement for
value or payment made in respect of any Equity Interests of SFX or any
Restricted Subsidiary of SFX pursuant to any of the agreements
relating to the Pending Acquisitions, each as in effect on the date of
the Indenture; provided that no Default or Event of Default shall have
occurred and be continuing immediately after such transaction.
The amount of all Restricted Payments, other than cash, shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by SFX or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The Board
of Directors shall determine in good faith the fair market value of any
non-cash Restricted Payment. The Board of Directors' resolution with respect
thereto shall be delivered to the Trustee. Not later than the date of making
any Restricted Payment, SFX shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, the aggregate fair market value of all
outstanding Investments by SFX and its Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be a Restricted Payment at the time
of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation will only
be permitted if such Restricted Payment would be permitted at such time and if
such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the
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definition of an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture. Any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of SFX as
of such date, and, if such Indebtedness is not permitted to be incurred as of
such date under the covenant described under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock," SFX shall be in default of such
covenant. The Board of Directors of SFX may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary. However, such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of SFX of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if:
(1) such Indebtedness is permitted under the covenant described under the
caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and
(2) no Default or Event of Default would be in existence immediately
following such designation.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
SFX will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness, including Acquired Debt, and SFX will
not issue any shares of Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, that, if no
Default or Event of Default has occurred and is continuing, SFX may incur
Indebtedness, including Acquired Debt, or issue shares of Disqualified Stock
and the Guarantors may issue shares of preferred stock if, SFX's Debt to Cash
Flow Ratio at such time after giving pro forma effect to such incurrence or
issuance as of such date and to the use of the proceeds therefrom as if the
same had occurred at the beginning of the most recently ended four full fiscal
quarter period of SFX for which internal financial statements are available,
would have been no greater than 7.0 to 1.0, if such incurrence or issuance is
prior to December 31, 1999, or 6.5 to 1.0 thereafter.
So long as no Default shall have occurred and be continuing or would be
caused thereby, the preceding paragraph will not apply to the incurrence of any
of the following types of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by SFX, and the guarantee thereof by Guarantors, of
Indebtedness and Letters of Credit under one or more Credit Facilities;
provided that the aggregate principal amount at any time outstanding
does not exceed $400.0 million, with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of SFX
and the Guarantors thereunder, less the aggregate amount of all
repayments, optional or mandatory, of the principal of any term
Indebtedness under a Credit Facility that have been made since the date
of the Indenture and less the aggregate amount of all commitment
reductions of any revolving Indebtedness under a Credit Facility
pursuant to clause (1) of the third paragraph of the covenant described
above under the caption "--Repurchase at the Option of Holders--Asset
Sales";
(2) the incurrence by SFX and the guarantee thereof by the Guarantors of
Indebtedness represented by the Notes and the Subsidiary Guarantees;
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(3) the incurrence by SFX and its Restricted Subsidiaries of the Existing
Indebtedness;
(4) the incurrence by SFX or its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction
or improvement of property, plant or equipment used in the business of
SFX or such Restricted Subsidiary, in an aggregate amount not to exceed
$5.0 million at any time outstanding;
(5) the incurrence by SFX or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness, other
than intercompany Indebtedness, that was permitted by the Indenture to
be incurred by the first paragraph of this covenant, or by clauses (2),
(3), (4), (5), (7) or (10) of this paragraph;
(6) the incurrence of Indebtedness between or among SFX and any of its
Restricted Subsidiaries; provided that:
(a) if SFX is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full of all
Obligations with respect to the Notes; and
(b) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than
SFX or a Restricted Subsidiary, and any sale or other transfer of
any such Indebtedness to a Person that is not either SFX or a
Restricted Subsidiary, shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by SFX or such
Restricted Subsidiary, as the case may be;
(7) the incurrence by SFX or any of its Restricted Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that
is permitted by the terms of this Indenture to be outstanding;
(8) the guarantee by SFX or any of the Guarantors of Indebtedness that was
permitted to be incurred by another provision of this covenant;
(9) the incurrence by SFX's Unrestricted Subsidiaries of Non-Recourse
Debt, provided that if any such Indebtedness ceases to be Non-Recourse
Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of
SFX that was not permitted by this clause (9);
(10) the issuance of preferred stock by SFX pursuant to the Contemporary
Agreement, as in effect on the date of the Indenture; and
(11) the incurrence by SFX or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount at any time
outstanding, including all Permitted Refinancing Indebtedness incurred
pursuant to clause (5) above to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (11), not to exceed
$10.0 million.
For purposes of determining compliance with this covenant, if an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (11) above or is entitled to be incurred
pursuant to the first paragraph of this covenant, SFX shall, in its sole
discretion, classify such item of Indebtedness in any manner that complies with
this covenant and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the first
paragraph hereof.
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LIMITATION ON OTHER SENIOR SUBORDINATED DEBT
The Indenture provides that:
(1) SFX will not directly or indirectly incur any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior
in any respect in right of payment to the Notes; and
(2) no Guarantor will incur any Indebtedness that is subordinate or junior
in right of payment to its Guarantor Senior Debt and senior in any
respect in right of payment to such Guarantor's Subsidiary Guarantee.
LIENS
SFX will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
SALE AND LEASEBACK TRANSACTIONS
SFX will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that SFX and the
Guarantors may enter into a sale and leaseback transaction if:
(1) SFX or such Guarantor could have
(a) incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction
pursuant to the Debt to Cash Flow Ratio test set forth in
the first paragraph of the covenant described above under
the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock;" and
(b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "--Liens;"
(2) the gross cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value of the property that is the
subject of such sale and leaseback transaction; and
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and the proceeds of such transaction are applied in
compliance with, the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales."
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
SFX will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
SFX or any of its Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to SFX or any of its Restricted Subsidiaries;
(2) make loans or advances to SFX or any of its Restricted Subsidiaries;
or
(3) transfer any of its properties or assets to SFX or any of its
Restricted Subsidiaries.
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However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on November 25, 1998;
(2) the Senior Credit Facility and any amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, and any other agreement governing
or relating to Senior Debt, provided that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings and other agreements are no
more restrictive with respect to such dividend and other payment
restrictions than those contained in the Senior Credit Facility;
(3) the Indenture, the Notes and the Subsidiary Guarantees;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of a Person
acquired by SFX or any of its Restricted Subsidiaries as in effect at
the time of such acquisition,except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition,
which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; provided that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of
the Indenture to be incurred;
(6) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (3) above on the property so acquired;
(8) Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described above under the
caption "--Liens" that limits the right of the debtor to dispose of the
assets securing such Indebtedness;
(10) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business; and
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
ISSUANCES AND SALES OF EQUITY INTERESTS IN RESTRICTED SUBSIDIARIES
SFX will not, and will not permit any Restricted Subsidiary of SFX to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests in
any Restricted Subsidiary of SFX to any Person, other than SFX or a Restricted
Subsidiary of SFX, unless:
(1) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Restricted Subsidiary; and
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(2) the cash Net Proceeds, if any, from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the covenant
described above under the caption "--Repurchase at the Option of
Holders--Asset Sales."
Further, SFX will not permit any Restricted Subsidiary of SFX to issue any of
its Equity Interests, other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares, to any Person other than to SFX or a
Restricted Subsidiary of SFX except as permitted pursuant to the covenant
described above under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock."
MERGER, CONSOLIDATION OR SALE OF ASSETS
SFX may not consolidate or merge with or into another corporation, Person
or entity, whether or not SFX is the surviving corporation, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity; unless:
(1) either
(a) SFX is the surviving corporation or
(b) the entity or the Person formed by or surviving any such
consolidation or merger, if other than SFX, or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws
of the United States, any state thereof or the District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation or
merger, if other than SFX, or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of SFX under the Notes, the
Indenture and the Registration Rights Agreement pursuant to a
supplemental indenture in a form reasonably satisfactory to the
Trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) except in the case of a merger of SFX with or into a Wholly Owned
Restricted Subsidiary of SFX, SFX or the entity or Person formed by or
surviving any such consolidation or merger, if other than SFX, or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, both immediately prior to and
immediately after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Cash Flow Ratio test
set forth in the first paragraph of the covenant described above under
the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock."
TRANSACTIONS WITH AFFILIATES
SFX will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
SFX or such Restricted Subsidiary than those that would have been
obtained in a comparable transaction by SFX or such Restricted
Subsidiary with an unrelated Person; and
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(2) SFX delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with
clause (1) above and that a majority of the disinterested
members of the Board of Directors approved such Affiliate
Transaction; and
(b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, an opinion as to the
fairness to SFX of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by, and any compensation paid
by, SFX or any of its Restricted Subsidiaries, in each case, approved
by the Compensation Committee;
(2) transactions between or among SFX and/or its Restricted Subsidiaries;
(3) payment of reasonable and customary directors fees to the Board of
Directors of SFX and of its Restricted Subsidiaries consistent with
past practices and the issuance of shares of SFX to the Directors who
were holders of options or stock appreciation rights in Broadcasting
as of the Spin-Off record date, whether or not vested;
(4) fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of SFX or any of its Restricted
Subsidiaries, as determined by the Board of Directors of SFX or of any
such Restricted Subsidiary, to the extent such fees and compensation
are reasonable, customary and consistent with past practices;
(5) the transactions specifically contemplated by the Merger Agreement,
the agreements relating to the Pending Acquisitions or by instruments
referred to in any such agreements, in each case, as the same are in
effect on the date of the Indenture;
(6) the Spin-Off Transactions;
(7) the transactions specifically contemplated by the Delsener/Slater
Employment Agreements, in each case, as in effect on the date of the
Indenture;
(8) the Meadows Repurchase and the Series E Preferred Repurchase;
provided that SFX receives either:
(a) a cash payment from Broadcasting or Broadcasting Buyer or an
Affiliate thereof at or prior to the date of the Merger at
least equal to the aggregate amount expended by SFX in the
Meadows Repurchase and the Series E Preferred Repurchase less
$3.0 million; or
(b) an increase in favor of SFX in the Working Capital
Adjustment, including the avoidance of a decrease,
contemplated by the Merger Agreement in an amount at least
equal to the aggregate amount expended by SFX in the Meadows
Repurchase and the Series E Preferred Repurchase less $3.0
million; or
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(c) any combination thereof adding up to an amount at least equal
to the aggregate amount expended by SFX in the Meadows
Repurchase and the Series E Preferred Repurchase less $3.0
million; and
(9) any Restricted Payment that is permitted by the provisions of the
Indenture described above under the caption "--Restricted Payments."
ADDITIONAL SUBSIDIARY GUARANTEES
If SFX or any of its Restricted Subsidiaries acquires or creates another
domestic Restricted Subsidiary after the date of the Indenture, other than the
Non-Guarantor Subsidiaries, or if any domestic Unrestricted Subsidiary becomes
a Restricted Subsidiary of SFX, then such Subsidiary will execute a Subsidiary
Guarantee of the Notes and deliver an opinion of counsel, in accordance with
the terms of the Indenture.
PAYMENTS FOR CONSENT
SFX will not, and will not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to any holder of any
Notes as an inducement to any consent, waiver or amendment of any of the terms
or provisions of the Indenture or the Notes unless such consideration is
offered to be paid or is paid to all holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
BUSINESS ACTIVITIES
SFX will not, and will not permit any Restricted Subsidiary to, engage in
any business other than Permitted Businesses, unless it would not be material
to SFX and its Restricted Subsidiaries taken as a whole.
REPORTS
Whether or not required by the Commission, so long as any Notes are
outstanding, SFX will furnish to the holders of Notes, within the time periods
specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if
SFX were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of SFX
and its consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by SFX's certified independent
accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if SFX were required to file such reports.
In addition, whether or not required by the Commission, SFX will file a
copy of all such information and reports referred to in clauses (1) and (2)
above with the Commission for public availability within the time periods
specified in the Commission's rules and regulations, unless the Commission will
not accept such a filing, and make such information available to securities
analysts and prospective investors upon request.
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EVENTS OF DEFAULT AND REMEDIES
Each of the following constitutes an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes, whether or not
prohibited by the subordination provisions of the Indenture;
(2) default in payment when due of the principal of or premium, if any,
on the Notes, whether or not prohibited by the subordination
provisions of the Indenture;
(3) failure by SFX or any Restricted Subsidiary to comply with the
provisions described under the captions "--Repurchase at the Option of
Holders--Change of Control" or "--Certain Covenants--Merger,
Consolidation or Sale of Assets";
(4) failure by SFX or any Restricted Subsidiary for 30 days after written
notice by the Trustee or the holders of at least 25% in principal
amount of the then outstanding Notes to comply with the provisions
described under the captions "--Repurchase at the Option of
Holders--Asset Sales," "--Certain Covenants--Restricted Payments" or
"--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock";
(5) failure by SFX or any Restricted Subsidiary for 60 days after written
notice by the Trustee or the holders of at least 25% in principal
amount of the then outstanding Notes to comply with any of its other
agreements in the Indenture or the Notes;
(6) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by SFX or any of its Restricted
Subsidiaries, or the payment of which is guaranteed by SFX or any of
its Restricted Subsidiaries, whether such Indebtedness or guarantee
now exists or is created after the date of the Indenture, if that
default:
(a) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date
of such default (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity;
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more;
(7) failure by SFX or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(8) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny
or disaffirm its obligations under its Subsidiary Guarantee; and
(9) certain events of bankruptcy or insolvency with respect to SFX or any
of SFX's Restricted Subsidiaries that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries of SFX that, taken
together, would constitute a Significant Subsidiary.
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If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. However, if an Event
of Default arises from certain events of bankruptcy or insolvency, with respect
to SFX, any Restricted Subsidiary of SFX that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries of SFX that, taken together,
would constitute a Significant Subsidiary, all outstanding Notes will become
due and payable immediately.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
holders of the Notes notice of any continuing Default or Event of Default,
except a Default or Event of Default relating to the payment of principal or
interest, if it determines that withholding notice is in their interest.
If an Event of Default occurs by reason of any willful action or inaction
taken or not taken by or on behalf of SFX with the intention of avoiding
payment of the premium that SFX would have had to pay if SFX then had elected
to redeem the Notes pursuant to the optional redemption provisions of the
Indenture, an equivalent premium will also become immediately due and payable
to the extent permitted by law upon the acceleration of the Notes. If an Event
of Default occurs prior to December 1, 2003 by reason of any willful action or
inaction taken or not taken by or on behalf of SFX with the intention of
avoiding the prohibition on redemption of the Notes prior to such date, then
the premium specified in the Indenture will also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
SFX is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture. Upon becoming aware of any Default or Event of
Default, SFX is required to deliver to the Trustee a statement specifying such
Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee or stockholder of SFX or any Guarantor, as
such, will have any liability for any obligations of SFX or any Guarantor under
the Notes, the Subsidiary Guarantees, the Indenture or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. The waiver
may not be effective to waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SFX may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes and to have each
Guarantor's obligation discharged with respect to its Subsidiary Guarantee
("Legal Defeasance"), except for:
(1) the rights of holders of outstanding Notes to receive payments in respect
of the principal of and premium, interest and Liquidated Damages, if any,
on the Notes when such payments are due from the trust referred to below;
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(2) SFX's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes
and the maintenance of an office or agency for payment and money for
security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
SFX's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, SFX may, at its option and at any time, elect to have the
obligations of SFX and each Guarantor released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. If Covenant Defeasance
occurs, certain events, not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events, described under the caption "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) SFX must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and premium,
interest and Liquidated Damages, if any, on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be,
and SFX must specify whether the Notes are being defeased to maturity or
to a particular redemption date;
(2) in the case of Legal Defeasance, SFX shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that:
(a) SFX has received from, or there has been published by, the Internal
Revenue Service a ruling or
(b) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that,
and based thereon such opinion of counsel shall confirm that, the
holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, SFX shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that the holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit, or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the
date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument, other than the Indenture, to which SFX or any of its
Subsidiaries is a party or by which SFX or any of its Subsidiaries is
bound;
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(6) SFX shall have delivered to the Trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) SFX shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by SFX with the intent of preferring the
holders of Notes over the other creditors of SFX with the intent of
defeating, hindering, delaying or defrauding creditors of SFX or others;
and
(8) SFX shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent provided
for relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and SFX may require a
holder to pay any taxes and fees required by law or permitted by the Indenture.
SFX is not required to transfer or exchange any Note selected for redemption.
Also, SFX is not required to transfer or exchange any Note for a period of 15
days before a selection of Notes to be redeemed. The registered holder of a
Note will be treated as the owner of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
The Indenture, the Notes and the Subsidiary Guarantees may be amended or
supplemented with the consent of the holders of at least a majority in
principal amount of the Notes then outstanding, including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes. Any existing default or compliance with any provision of the
Indenture, the Notes or the Subsidiary Guarantees may be waived with the
consent of the holders of a majority in principal amount of the then
outstanding Notes, including consents obtained in connection with a tender
offer or exchange offer for Notes.
However, without the consent of each holder affected, an amendment or
waiver may not, with respect to any Notes held by a non-consenting holder:
(1) reduce the principal amount of Notes whose holders must consent to an
amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes,
other than provisions relating to the covenants described above under
the caption "--Repurchase at the Option of Holders;"
(3) reduce the rate of or change the time for payment of interest on any
Note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, interest or Liquidated Damages, if any, on the Notes except a
rescission of acceleration of the Notes by the holders of at least a
majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration;
(5) make any Note payable in money other than that stated in the Notes;
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(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Notes to receive
payments of principal of or premium, interest or Liquidated Damages,
if any, on the Notes;
(7) waive a redemption payment with respect to any Note, other than a
payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders;"
(8) release any Guarantor from its Subsidiary Guarantee; or
(9) make any change in the foregoing amendment and waiver provisions.
In addition, any amendment to the provisions of Article 10 of the
Indenture relating to subordination will require the consent of the holders of
at least 75% in aggregate principal amount of the Notes then outstanding if
such amendment would adversely affect the rights of holders of Notes.
Notwithstanding the preceding, without the consent of any holder of Notes,
SFX, a Guarantor, with respect to a Subsidiary Guarantee or the Indenture to
which it is a party, and the Trustee may amend or supplement the Indenture, the
Notes or any Subsidiary Guarantee:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of SFX's or any Guarantor's obligations
to holders of Notes in the case of a merger or consolidation or sale
of substantially all of SFX's assets;
(4) to make any change that would provide any additional rights or
benefits to the holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture
Act.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of SFX, the Indenture limits its right
to obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The Trustee
will be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that if an Event of Default occurs
and continues, the Trustee will be required, in the exercise of its power, to
use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any holder of
Notes, unless such holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
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BOOK-ENTRY, DELIVERY AND FORM
The Old Notes have been sold in reliance on Rule 144A ("Rule 144A Notes")
and on Regulation S ("Regulation S Notes"). Rule 144A Notes are represented by
one or more Notes in registered, global form without interest coupons
(collectively, the "Rule 144A Global Notes"). Regulation S Notes initially are
represented by one or more Notes in registered, global form without interest
coupons (collectively, the "Regulation S Global Notes" and, together with the
Rule 144A Global Notes, the "Global Notes"). The Global Notes have been
deposited with the Trustee as custodian for DTC, in New York, New York, and are
registered in the name of DTC or its nominee, in each case, for credit to an
account of a direct or indirect participant in DTC.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for
Notes in certificated form except in the limited circustances described below.
All Old Notes bear restrictive legends and some transfers of beneficial
interests in the Global Notes are subject to the applicable rules and
procedures of DTC and its direct or indirect participants including, if
applicable, those of Euroclear System ("Euroclear") and Cedel S.A. ("Cedel").
Initially, the Trustee will act as Paying Agent and Registrar. The Notes
may be presented for registration of transfer and exchange at the offices of
the Registrar.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC,
Euroclear and Cedel are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them.
DTC has advised SFX that it is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers
and dealers, including the Initial Purchasers, banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised SFX that, pursuant to procedures established by it:
(1) upon deposit of the Global Notes, DTC has credited the accounts of
Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Notes; and
(2) ownership of such interests in the Global Notes is shown on, and the
transfer of ownership thereof may be effected only through, records
maintained by DTC, with respect to the Participants, or by the
Participants and the Indirect Participants, with respect to other
owners of beneficial interest in the Global Notes.
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Investors in the Rule 144A Global Notes may hold their interests therein
directly through DTC, if they are Participants in such system, or indirectly
through organizations, including Euroclear and Cedel, which are Participants in
such system. Investors in the Regulation S Global Notes must initially hold
their interests therein through Euroclear or Cedel, if they are participants in
such systems, or indirectly through organizations that are participants in such
systems. After the expiration of a restricted distribution period, investors
may also hold interests in the Regulation S Global Notes through organizations
other than Euroclear and Cedel that are Participants in the DTC system.
Euroclear and Cedel hold interests in the Regulation S Global Note on behalf of
their Participants through customers' securities accounts in their respective
names on the books of their respective depositories. The depositories, in turn,
hold such interests in the Regulation S Global Notes in customers' securities
accounts in the depositories' names on the books of DTC. All interests in a
Global Note, including those held through Euroclear or Cedel, may be subject to
the procedures and requirements of DTC. Those interests held by Euroclear or
Cedel may be also be subject to the procedures and requirements of such system.
Except as described below, owners of interests in the Global Notes will
not have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
"Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and premium, if any, Liquidated
Damages, if any, and interest on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered holder
under the Indenture. Under the terms of the Indenture, SFX and the Trustee will
treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither SFX, the
Trustee nor any agent of SFX or the Trustee has or will have any responsibility
or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of any
beneficial ownership interest in the Global Notes, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or
Indirect Participant's records relating to the beneficial ownership
interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any
of its Participants or Indirect Participants.
DTC has advised SFX that its current practice, upon receipt of any payment
in respect of securities such as the Notes, including principal and interest,
is to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in the
principal amount of beneficial interest in the relevant security as shown on
the records of DTC unless DTC has reason to believe it will not receive payment
on such payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Trustee or SFX. Neither SFX nor the Trustee will be liable for any
delay by DTC or any of its Participants in identifying the beneficial owners of
the Notes, and SFX and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants,
interests in the Global Notes will trade in DTC's Same-Day Funds Settlement
System and secondary market
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trading activity in such interests will, therefore, settle in immediately
available funds, subject in all cases to the rules and procedures of DTC and it
participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
DTC has advised SFX that it will take any action permitted to be taken by
a holder of Notes only at the direction of one or more Participants to whose
account DTC has credited the interests in the Global Notes and only in respect
of such portion of the aggregate principal amount of the Notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC reserves the right to exchange the
Global Notes for legended Notes in certificated form, and to distribute such
Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the Global Notes among Participants in
DTC, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither SFX nor the Trustee nor any of their respective agents will
have any responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTIFICATED NOTES
If:
(1) DTC
(a) notifies SFX that it is unwilling or unable to continue as depositary
for the Global Notes and SFX fails to appoint a successor depositary
or
(b) has ceased to be a clearing agency registered under the Exchange
Act;
(2) SFX, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the certificated notes; or
(3) there shall have occurred and be continuing a Default or Event of
Default with respect to the Notes,
a Global Note will be exchangeable for definitive Notes in registered form
("Certificated Notes"). Upon any such issuance, the Trustee is required to
register such Certificated Notes in the name of, and cause the same to be
delivered to, such person or persons, or the nominee of any thereof.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon request but only upon prior written notice given to the
Trustee by or on behalf of DTC in accordance with the Indenture. Further,
Certificated Notes may be exchanged for beneficial interests in Global Notes
upon a delivery by the holder of a certificate to the Trustee that the transfer
will comply with the transfer restrictions of the Note.
Neither SFX nor the Trustee will be liable for any delay by the Global
Note holder or the depositary in identifying the beneficial owners of Notes and
SFX and the Trustee may conclusively rely on, and will be protected in relying
on, instructions from the Global Note holder or the depositary for all
purposes.
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SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented
by the Global Notes (including principal, premium, if any, interest and
Liquidated Damages, if any) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note holder. With respect to
certificated Notes, SFX will make all payments of principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the holder thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. SFX expects that secondary trading in the certificated Notes will also
be settled in immediately available funds.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holders of the New Notes are not entitled to any registration rights with
respect to the New Notes. SFX, the Guarantors and the Initial Purchasers
entered into the Registration Rights Agreement for the benefit of the holders
of the Old Notes, pursuant to which SFX and the Guarantors agreed to use its
best efforts to file with the Commission the Exchange Offer Registration
Statement with respect to the New Notes by March 5, 1999 and use their best
efforts to have the Exchange Offer Registration Statement declared effective by
the Commission on or prior to April 19, 1999. Unless the exchange offer would
not be permitted by applicable law or Commission policy, SFX will commence the
exchange offer and use its best efforts to issue, on or before 30 business days
after the date on which the Exchange Offer Registration Statement was declared
effective by the Commission, New Notes in exchange for all Old Notes tendered
prior thereto in the exchange offer. Upon the Exchange Offer Registration
Statement being declared effective, SFX will offer the New Notes in exchange
for surrender of the Old Notes.
If:
(1) SFX and the Guarantors are not required to file the Exchange Offer
Registration Statement or permitted to consummate the exchange offer
because the exchange offer is not permitted by applicable law or
Commission policy; or
(2) any holder of Transfer Restricted Securities notifies SFX before the
20th day following consummation of the exchange offer that:
(a) it is prohibited by law or Commission policy from participating in
the exchange offer; or
(b) that it may not resell the New Notes acquired by it in the exchange
offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is
not appropriate or available for such resales; or
(c) that it is a broker-dealer and owns Notes acquired directly from
SFX or an affiliate of SFX,
SFX and the Guarantors will file with the Commission no later than 30 days
after the filing obligation arises a Shelf Registration Statement to cover
resales of the Notes by the holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. SFX and the Guarantors will use their best efforts to
cause the applicable registration statement to be declared effective as
promptly as possible by the Commission on or prior to 90 days after such
obligation arises.
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For purposes of the foregoing, "Transfer Restricted Securities" means each
Note until:
(1) the date on which such Note has been exchanged by a person other than
a broker-dealer for an a New Note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of an
Old Note for a New Note, the date on which such New Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date
of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement;
(3) the date on which such Old Note has been effectively registered under
the Securities Act and disposed of in accordance with the Shelf
Registration Statement; or
(4) the date on which such Old Note is distributed to the public pursuant
to Rule 144 under the Securities Act.
If:
(1) SFX and the Guarantors fail to file any of the Registration
Statements required by the registration rights agreement on or before
the date specified for such filing;
(2) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness
(the "Effectiveness Target Date");
(3) SFX fails to consummate the exchange offer within 30 business days of
the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement; or
(4) the Shelf Registration Statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective
or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights
Agreement--each such event referred to in clauses (1) through (4)
above a "Registration Default,"
then SFX and the Guarantors will pay Liquidated Damages to each holder of
Notes, with respect to the first 90-day period immediately following the
occurrence of the first Registration Default, equal to $.05 per week per $1,000
principal amount of Notes held by such holder. Liquidated Damages will increase
by an additional $.05 per week per $1,000 principal amount of Notes with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum Liquidated Damages for all Registration Defaults of
$.50 per week per $1,000 principal amount of Notes. SFX will pay all accrued
Liquidated Damages on each Damages Payment Date to the Global Note holder by
wire transfer of immediately available funds or by federal funds check and to
holders of Certificated Securities by wire transfer to the accounts specified
by them or by mailing checks to their registered addresses if no such accounts
have been specified. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, including, without
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limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of
the Voting Stock of a Person is deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"Acquired Businesses" means each of the businesses to be acquired by SFX
pursuant to the Pending Acquisitions.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights--including, without limitation, by way of a sale and
leaseback--excluding sales of services and ancillary products in the
ordinary course of business consistent with past practices; provided
that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of SFX and its Restricted Subsidiaries
taken as a whole will be governed by the provisions of the Indenture
described above under the caption "--Repurchase at the Option of
Holders--Change of Control" and/or the provisions described above
under the caption "--Certain Covenants--Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issue or sale by SFX or any of its Subsidiaries of Equity
Interests of any of SFX's Subsidiaries, in the case of either clause
(1) or (2), whether in a single transaction or a series of related
transactions that have a fair market value in excess of $5.0 million,
or for net proceeds in excess of $5.0 million.
Notwithstanding the preceding, the following items will not be deemed to be an
Asset Sale:
(1) a transfer of assets by SFX to a Wholly Owned Restricted Subsidiary
or by a Wholly Owned Restricted Subsidiary to SFX or to another Wholly
Owned Restricted Subsidiary;
(2) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to SFX or to another Wholly Owned Restricted Subsidiary;
(3) the transfer of obsolete equipment in the ordinary course of
business;
(4) the sale and leaseback of any assets within 90 days of the
acquisition of such assets; and
(5) a Restricted Payment that is permitted by the covenant described
above under the caption "--Certain Covenants--Restricted Payments."
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction,
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including any period for which such lease has been extended or may, at the
option of the lessor, be extended. Such present value shall be calculated using
a discounted rate equal to the rate of interest implicit in such transaction,
determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person", as such term is used in Section 13(d)(3)
of the Exchange Act, such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Broadcasting Merger" means the merger of SBI Radio Acquisition
Corporation with and into SFX Broadcasting, Inc., pursuant to which SFX
Broadcasting, Inc. became a subsidiary of SBI Holding Co.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents, however
designated, of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests, whether general or limited; and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
having maturities of not more than six months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities
of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of
this definition.
"Cellar Door Agreement" means any agreement by SFX to acquire the Cellar
Door music promotion and entertainment business, on terms similar to the letter
of intent dated August 12, 1998, and any additional agreements related thereto.
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"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition, other
than the Spin-Off or by way of merger or consolidation, in one or a
series of related transactions, of all or substantially all of the
assets of SFX and its Subsidiaries taken as a whole to any
"person"--as such term is used in Section 13(d)(3) of the Exchange
Act--other than the Principal or a Related Party of the Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of
SFX;
(3) the consummation of any transaction, including, without limitation,
any merger or consolidation, the result of which is that any "person,"
as defined above, other than the Principal and his Related Parties,
becomes the Beneficial Owner, directly or indirectly, of more than 35%
of the Voting Stock of SFX; or
(4) the first day on which a majority of the members of the Board of
Directors of SFX are not Continuing Directors.
"Compensation Committee" means a committee of at least two members of the
Board of Directors of SFX, a majority of whom are:
(1) independent directors elected by the holders of Class A common stock
of SFX; and
(2) not interested in the particular transactions being approved.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, without
duplication:
(1) an amount equal to any extraordinary loss plus any net loss realized
in connection with an Asset Sale, to the extent such losses were
deducted in computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized, including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net
payments, if any, pursuant to Hedging Obligation, to the extent that
any such expense was deducted in computing such Consolidated Net
Income; plus
(4) depreciation expense for such period, to the extent the same was
deducted in computing such Consolidated Net Income; plus
(5) all amortization expense and other non-cash expenses--excluding any
such non-cash expense to the extent that it represents an accrual of
or reserve for cash expenses in any future period--for such period, to
the extent the same was deducted in computing such Consolidated Net
Income; plus
(6) unusual and nonrecurring charges paid or accrued in 1997 or 1998,
including, but not limited to, legal, accounting, investment banking,
severance, termination, non-compete and consent fees relating to the
Merger Agreement, the Spin-Off, the Pending Acquisitions and
transactions related thereto; minus
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(7) non-cash items increasing such Consolidated Net Income for such
period; minus
(8) except to the extent already deducted in computing Consolidated Net
Income for such period, preproduction expenses and investments in
theatrical productions incurred or made during such period by SFX or
any Restricted Subsidiary as set forth in SFX's Consolidated Statement
of Cash Flows; plus
(9) any cash return of capital paid to SFX or a Restricted Subsidiary
during such period associated with a preproduction expense or
investment in theatrical productions to the extent the same was
deducted pursuant to clause (8) above in computing Consolidated Cash
Flow for such period or a prior period, in each case, on a
consolidated basis and determined in accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of any
date of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness and Attributable Debt of such Person
and its Restricted Subsidiaries; plus
(2) the total amount of Indebtedness and Attributable Debt of any other
Person, to the extent that such Indebtedness or Attributable Debt has
been guaranteed by the referent Person or by one or more of its
Restricted Subsidiaries or is secured by a Lien on assets of the
referent Person or any of its Restricted Subsidiaries; plus
(3) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Restricted Subsidiaries of such
Person, in each case, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income, but not loss, of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval, that has not been obtained, or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) the Net Income, but not loss, of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to SFX or one of its Restricted
Subsidiaries.
"Contemporary Agreement" means the agreement by SFX to acquire The
Contemporary Group, dated as of December 12, 1997, and the agreements related
thereto, each as in effect on the date of the Indenture.
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"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of SFX who
(1) was a member of such Board of Directors on the date of the Indenture;
or
(2) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Credit Facility" or "Credit Facilities" means one or more debt
facilities, including, without limitation, the Senior Credit Facility, or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing, including
through the sale of receivables to such lenders or to special purpose entities
formed to borrow from such lenders against such receivables, or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time. Indebtedness
under Credit Facilities outstanding on the date on which Notes are first issued
and authenticated under the Indenture shall be deemed to have been incurred on
such date in reliance on the exception provided by clause (1) of the definition
of Permitted Debt.
"Debt to Cash Flow Ratio" means, with respect to any Person as of any date
of determination (the "Calculation Date"), the ratio of the Consolidated
Indebtedness of such Person as of such date, to the Consolidated Cash Flow of
such Person for the four most recent full fiscal quarters ending immediately
prior to such date for which internal financial statements are available. Such
determination is made on a pro forma basis after giving effect to all
acquisitions and dispositions of assets made by such Person and its Restricted
Subsidiaries from the beginning of such four-quarter period through and
including such date of determination, including any related financing
transactions, as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period.
For purposes of making the computation referred to above:
(1) acquisitions that have been made by such Person or any of its
Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income; and
(2) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of by SFX or any of its Restricted Subsidiaries prior to the
Calculation Date,
will be excluded.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Delsener/Slater Employment Agreements" means:
(1) the employment agreement dated January 2, 1997, among Broadcasting,
Delsener/Slater Enterprises, Inc. and Mitch Slater; and
(2) the employment agreement dated January 2, 1997 among Broadcasting,
Delsener/Slater Enterprises, Inc. and Ron Delsener, in each case as in
effect on the date of the Indenture.
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"Designated Senior Debt" means:
(1) any Indebtedness outstanding under the Senior Credit Facility; and
(2) any other Senior Debt or Guarantor Senior Debt permitted under the
Indenture the principal amount of which is $25.0 million or more and
that has been designated by SFX as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms, or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof, or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature. Notwithstanding the preceding sentence, any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require SFX to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale will not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Issuer
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described above
under the caption "--Certain Covenants--Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock, but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.
"Existing Indebtedness" means Indebtedness in existence on the date of the
Indenture, other than Indebtedness under Credit Facilities, until such
Indebtedness is repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit and reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means the obligations of any Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Indebtedness" means, with respect to any Person without duplication, any
indebtedness of such Person, whether or not contingent, in respect of
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit, or reimbursement agreements in respect thereof;
(3) banker's acceptances;
(4) representing Capital Lease Obligations; or
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(5) the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness, other than letters of
credit and Hedging Obligations, would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP. In addition,
"Indebtedness" includes all indebtedness of others secured by a Lien on any
asset of such Person, whether or not such indebtedness is assumed by such
Person, and to the extent not otherwise included, the guarantee by such Person
of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other
Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons, including Affiliates, in the forms of direct or
indirect loans, including guarantees of Indebtedness or other obligations,
advances or capital contributions, excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business,
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If SFX or any Subsidiary of SFX sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of SFX such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary
of SFX, SFX shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the third paragraph of the covenant described above under the caption
"--Certain Covenants--Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code, or equivalent statutes of any jurisdiction.
"Marquee" means The Marquee Group, Inc., a Delaware corporation.
"Marquee Merger Agreement" means the Agreement and Plan of Merger dated
July 23, 1998, as amended, providing for the merger of a wholly owned
subsidiary of SFX with and into Marquee, and all transactions and agreements
specifically contemplated thereby or by instruments referred to therein, each
as in effect on the date of the Indenture.
"Meadows Repurchase" means the transfer by Broadcasting to SFX of an
option to repurchase, and the purchase by SFX, of up to 250,838 shares of Class
A common stock of Broadcasting for $33.00 per share, pursuant to an option
granted in connection with the Agreement of Merger, dated February 12, 1997, by
and among Broadcasting, NOC Acquisition Corp., CAPCO Acquisition Corp., QN
Acquisition Corp., Nederlander of Connecticut, Inc., Connecticut Amphitheater
Development Corporation, QN Corp., Connecticut Performing Arts, Inc. and
Connecticut Performing Arts Partners and the
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stockholders of Nederlander of Connecticut, Inc., Connecticut Amphitheater
Development Corporation and QN Corp. listed on the signature pages thereto and
the transfer of such stock to Broadcasting prior to the Broadcasting Merger.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
August 24, 1997, that provides for the Broadcasting Merger and all transactions
and agreements specifically contemplated thereby or by instruments referred to
therein, each as in effect on the date of the Indenture.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain, but not loss, together with any related provision for
taxes on such gain, but not loss, realized in connection with:
(a) any Asset Sale, including, without limitation, dispositions
pursuant to sale and leaseback transactions; or
(b) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted
Subsidiaries; and
(2) any extraordinary gain, but not loss, together with any related
provision for taxes on such extraordinary gain, but not loss.
"Net Proceeds" means the aggregate cash proceeds received by SFX or any of
its Restricted Subsidiaries in respect of any Asset Sale, including, without
limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale, net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"Non-Guarantor Subsidiaries" means Walnut Creek Amphitheater Partnership,
Coral Sky Amphitheater Partnership, PACE Entertainment Charitable Foundation
and PTG-Florida, Inc./BSMG Joint Venture.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither SFX nor any of its Restricted Subsidiaries
(a) provides credit support of any kind, including any
undertaking, agreement or instrument that would constitute
Indebtedness,
(b) is directly or indirectly liable, as a guarantor or
otherwise, or
(c) constitutes the lender;
(2) no default with respect to which, including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary, would permit, upon notice, lapse of time or
both, any holder of any other Indebtedness, other than the Notes
being offered hereby, of SFX or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity;
and
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(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of SFX or any of its
Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Pace Agreement" means the agreement by SFX to acquire PACE Entertainment
Corporation, including the Agreements relating to the Sony Acquisition and the
Blockbuster Acquisition to acquire a 100% interest in Pavilion Partners, dated
December 12, 1997 and the agreements related thereto, each as in effect on the
date of the Indenture.
"Pace Acquisition Facility" means the agreement by SFX, pursuant to the
Pace Agreement, to provide to PACE Entertainment Corporation up to an aggregate
of $25.0 million to be used to fund certain acquisitions, as in effect on the
date of the Indenture.
"Pending Acquisitions" means the acquisition by SFX of
(1) Cellar Door; and
(2) Marquee and including the transactions and agreements specifically
related thereto.
"Permitted Business" means the live entertainment business and any
business reasonably similar, complementary, ancillary or related thereto,
including the Pending Acquisitions.
"Permitted Investments" means:
(1) any Investment in SFX or in a Guarantor;
(2) any Investment in Cash Equivalents;
(3) any Investment by SFX or any Restricted Subsidiary of SFX in a
Person engaged in a Permitted Business, if:
(a) as a result of, or concurrently with, such Investment such
Person becomes a Guarantor; or
(b) as a result of, or concurrently with, such Investment such
Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to,
or is liquidated into, SFX or a Guarantor; or
(c) SFX or a Guarantor has entered into a binding agreement to
acquire such Person or all or substantially all of the
assets of such Person, which agreement is in effect on the
date of such Investment, and such Person becomes a Guarantor
or such transaction is consummated, in each case within 180
days of the date of such Investment;
(4) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales;"
(5) any obligations or shares of Capital Stock received in connection
with or as a result of a bankruptcy, workout or reorganization of the
issuer of such obligations or shares of Capital Stock;
(6) any Investment received involuntarily;
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(7) any acquisition of assets solely in exchange for the issuance of
Equity Interests, other than Disqualified Stock, of SFX;
(8) any Investment made under the Pace Acquisition Facility pursuant to
the Pace Agreement as in effect on the date of the Indenture;
(9) any Investment owned by any of the Acquired Businesses as of the
date such Acquired Business is acquired;
(10) other Investments in Persons engaged in Permitted Businesses,
measured on the date each such Investment was made and without giving
effect to subsequent changes in value, when taken together with all
other Investments made pursuant to this clause (10) that are at the
time outstanding, not to exceed 5% of Total Tangible Assets;
(11) the consummation of the Pending Acquisitions;
(12) the Meadows Repurchase and the Series E Preferred Repurchase;
provided that SFX receives either;
(a) a cash payment from Broadcasting or Broadcasting Buyer or an
Affiliate thereof at or prior to the date of the Merger at
least equal to the aggregate amount expended by SFX in the
Meadows Repurchase and the Series E Preferred Repurchase
less $3.0 million, or
(b) an increase in favor of SFX in the Working Capital
Adjustment, including the avoidance of a decrease,
contemplated by the Merger Agreement in an amount at least
equal to the aggregate amount expended by SFX in the Meadows
Repurchase and the Series E Preferred Repurchase less $3.0
million or
(c) any combination thereof adding up to an amount at least
equal to the aggregate amount expended by SFX in the Meadows
Repurchase and the Series E Preferred Repurchase less $3.0
million; and
(13) other Investments in any Person, measured on the date each such
Investment was made and without giving effect to subsequent changes
in value, when taken together with all other Investments made
pursuant to this clause (13) that are at the time outstanding, not to
exceed $4.0 million.
"Permitted Junior Securities" means Equity Interests in SFX or debt
securities of SFX or the relevant Guarantor that are subordinated to all Senior
Debt, and any debt securities issued in exchange for Senior Debt, or Guarantor
Senior Debt, and any debt securities issued in exchange for Guarantor Senior
Debt, as applicable, to substantially the same extent as, or to a greater
extent than, the Notes are subordinated to Senior Debt or the Subsidiary
Guarantees are subordinated to Guarantor Senior Debt, as applicable, pursuant
to the Indenture.
"Permitted Liens" means:
(1) Liens securing Senior Debt that was permitted by the terms of the
Indenture to be incurred;
(2) Liens in favor of SFX or any of its Restricted Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
merged into or consolidated with SFX or any Restricted Subsidiary of
SFX, provided that such
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Liens were not incurred in contemplation of such merger or
consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with SFX;
(4) Liens on property existing at the time of acquisition thereof by SFX
or any Restricted Subsidiary of SFX, provided that such Liens were in
existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens existing on the date of the Indenture;
(7) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; and
(8) Liens incurred in the ordinary course of business of SFX or any
Restricted Subsidiary of SFX with respect to obligations that do not
exceed $2.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of SFX or any
of its Restricted Subsidiaries or any Disqualified Stock of SFX issued in
exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund other Indebtedness of SFX or any of its
Restricted Subsidiaries; provided that:
(1) the principal amount, or accreted value or liquidation preference,
if applicable, of such Permitted Refinancing Indebtedness does not
exceed the principal amount of, or accreted value, if applicable,
plus accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded, plus the amount of
reasonable expenses incurred in connection therewith;
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life
to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is pari passu with the Notes, such Permitted
Refinancing Indebtedness is pari passu with or subordinated in right
of payment to the Notes or is Disqualified Stock;
(4) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness is subordinated in
right of payment to the Notes on terms at least as favorable to the
holders of Notes as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded or is Disqualified Stock; and
(5) such Indebtedness is incurred either by SFX or by the Restricted
Subsidiary that is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded, or such
Disqualified Stock is issued by SFX, as applicable.
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"Principal" means Robert F.X. Sillerman.
"Related Party" with respect to the Principal means:
(1) any spouse or immediate family member of the Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of the
Principal and/or such other Persons referred to in the immediately
preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Credit Facility" means that certain credit agreement by and among
SFX, the Guarantors, the lenders party thereto, The Bank of New York, as
Administrative Agent, Lehman Commercial Paper Inc. and Goldman Credit Partners
L.P., each as Co-Agents, as contemplated by that certain commitment letter by
and among SFX, the Guarantors, The Bank of New York, as Arranger, and Lehman
Brothers Inc. and Goldman, Sachs & Co., each as Co-Arrangers, each as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Senior Debt" means:
(1) all Indebtedness outstanding under Credit Facilities and all Hedging
Obligations with respect thereto;
(2) any other Indebtedness of SFX or any Guarantor permitted to be
incurred under the terms of the Indenture, other than the February
2008 Notes, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes or the Subsidiary
Guarantees; and
(3) all Obligations of SFX or any Guarantor with respect to the
foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will not
include:
(1) any liability for federal, state, local or other taxes owed or owing
by SFX;
(2) any Indebtedness of SFX or any Guarantor to any of its Subsidiaries
or other Affiliates;
(3) any trade payables; or
(4) any Indebtedness that is incurred in violation of the Indenture;
provided that Indebtedness under Credit Facilities will not cease to be Senior
Debt if borrowed based upon a written certificate from a purported officer of
SFX to the effect that such Indebtedness was permitted by the Indenture to be
incurred. The Notes will be pari passu with the February 2008 Notes.
"Series E Preferred Repurchase" means the purchase by SFX of up to $14.2
million in liquidation preference of 12 5/8% Series E Cumulative Exchangeable
Preferred Stock due October 31, 2006 of Broadcasting and the dividend or other
transfer of such stock to Broadcasting prior to the Broadcasting Merger.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
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"Spin-Off" means the distribution of the common stock of SFX pro rata to
the holders of Broadcasting or other disposition pursuant to, or as permitted
by, the Merger Agreement of all the capital stock and assets of SFX and its
Subsidiaries.
"Spin-Off Transaction" means the Spin-Off, the Merger Agreement and
related transactions described or referred to in the Offering Memorandum of SFX
dated February 5, 1998.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled, without regard to the occurrence of
any contingency, to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person, or a
combination thereof.
"Total Tangible Assets" means, as of any date,
(1) the total consolidated assets of SFX and its Restricted
Subsidiaries, as set forth on SFX's most recently available internal
consolidated balance sheet; minus
(2) the total consolidated intangible assets of SFX and its Restricted
Subsidiaries, as set forth on such consolidated balance sheet.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with SFX or any Restricted Subsidiary unless the terms
of any such agreement, contract, arrangement or understanding are no
less favorable to SFX or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of
SFX;
(3) is a Person with respect to which neither SFX nor any of its
Restricted Subsidiaries has any direct or indirect obligation
(a) to subscribe for additional Equity Interests or
(b) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of
operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of SFX or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of SFX or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of SFX or any of its Restricted
Subsidiaries.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by
(b) the number of years, calculated to the nearest one-twelfth,
that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which, other than directors' qualifying shares, will at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a general discussion of certain United States federal tax
consequences associated with the exchange of the Old Notes for the New Notes
pursuant to the exchange offer and disposition of the New Notes. This summary
applies only to a beneficial owner of New Notes who acquired Old Notes at the
initial offering for the original offering price thereof and who acquires the
New Notes pursuant to the exchange offer. This discussion is based upon the
United States federal tax law now in effect, which is subject to change,
possibly retroactively. This discussion does not consider any specific facts or
circumstances that may apply to a particular holder. Prospective investors are
urged to consult their tax advisors regarding the United States federal tax
consequences of acquiring, holding, and disposing of the New Notes, as well as
any tax consequences that may arise under the laws of any foreign, state,
local, or other taxing jurisdiction.
For purposes of this discussion, a "U.S. Holder" means a holder of New
Notes that is either a citizen or resident of the United States, a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof, an
estate whose income is includible in gross income for United States federal
income tax purposes regardless of its source, or a trust whose administration
is subject to the primary supervision of a United States court and which has
one or more United States persons who have the authority to control all
substantial decisions of the trust. A non-U.S. Holder is a holder of New Notes
other than a U.S. Holder.
EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the exchange offer
will not constitute a "significant modification" of the Old Notes for United
States federal income tax purposes and, accordingly, the New Notes received
will be treated as a continuation of the Old Notes in the hand of such holder.
As a result, there will be no United States federal income tax consequences to
a U.S. Holder who exchanges Old Notes for New Notes pursuant to the exchange
offer, and any such holder will have the same adjusted tax basis and holding
period in the New Notes for United States federal income tax purposes as it had
in the Old Notes immediately before the exchange.
STATED INTEREST
The holders of New Notes will include stated interest in gross income in
accordance with their methods of accounting for tax purposes as if the exchange
had not occurred (including interest on Old Notes to the date of the issuance
of the New Notes).
DISPOSITION
In general, a U.S. Holder of New Notes will recognize gain or loss upon
the sale, exchange, redemption or other taxable disposition of the New Notes
measured by the difference between the amount of cash and fair market value of
property received (not attributable to accrued, but unpaid interest) and the
holder's tax basis in the New Notes. Any such gain or loss will generally be
long-term capital gain or loss, provided that the New Notes constitute a
capital asset in the hands of the holder and had been held for more than one
year (including the period that such holder held the Old Notes exchanged for
such New Notes).
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NON-U.S. HOLDERS
Under present United States federal income and estate tax law, assuming
certain certification requirements are satisfied (which include identification
of the beneficial owner of the instrument), and subject to the discussion of
backup withholding below:
(a) payments of interest on the New Notes to any non-U.S. Holder will not
be subject to United States federal income or withholding tax, provided
that:
(1) the holder does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of SFX entitled
to vote,
(2) the holder is not (i) a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or business
or (ii) a controlled foreign corporation that is related to SFX through
stock ownership, and
(3) such interest payments are not effectively connected with the
conduct of a United States trade or business of the holder;
(b) a holder of New Notes who is a non-U.S. Holder will not be subject to
the United States federal income tax on gain realized on the sale,
exchange, or other disposition of New Notes, unless:
(1) such holder is an individual who is present in the United States
for 183 days or more during the taxable year and certain other
requirements are met, or
(2) the gain is effectively connected with the conduct of a United
States trade or business of the holder; and
(c) if interest on the New Notes is exempt from withholding of United
States federal income tax under the rules described above (without regard
to the certification requirement), the New Notes will not be included in
the estate of a deceased non-U.S. Holder for United States federal estate
tax purposes.
The certification referred to above may be made on an Internal Revenue
Service Form W-8 or a substantially similar substitute form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
SFX will, where required, report to the holders of New Notes and the
Internal Revenue Service the amount of any interest paid on the New Notes in
each calendar year and the amounts of federal tax withheld, if any, with
respect to such payments. A noncorporate U.S. Holder may be subject to
information reporting and to backup withholding at a rate of 31% with respect
to payments of principal and interest made on New Notes, or on proceeds of the
disposition of New Notes before maturity, unless such U.S. Holder provides a
correct taxpayer identification number or proof of an applicable exemption, and
otherwise complies with applicable requirements of the information reporting
and backup withholding rules. Such information may be made on an Internal
Revenue Service Form W-9 or a substantially similar substitute form.
Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally
not apply to interest paid on the New Notes to a non-U.S. Holder at an address
outside the United States. Payments by a United States office of a broker of
the proceeds of a sale of the New Notes are subject to both backup withholding
at a rate of 31% and information reporting unless the holder certifies its
non-U.S. Holder status under penalties of perjury and provides its name and
address or otherwise establishes an exemption. This certification may be made
on an Internal
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Revenue Service Form W-8 or a substantially similar substitute form.
Information reporting requirements (but not backup withholding) will also apply
to payments of the proceeds of sales of the New Notes by foreign offices of
United States brokers, or foreign brokers with certain types of relationships
to the United States, unless the broker has documentary evidence in its records
that the holder is a non-U.S. Holder and certain other conditions are met, or
the holder otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amount withheld under the
backup withholding rules will be refunded or credited against the holder's
United States federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
NEW TREASURY REGULATIONS APPLICABLE TO NON-U.S. HOLDERS
On October 6, 1997, the United States Treasury Department issued final
Treasury regulations governing certification procedures regarding both United
States federal withholding tax and backup withholding tax on certain amounts
paid to non-U.S. Holders after December 31, 1999. The new Treasury regulations
modify and, in general, unify the way in which non-U.S. Holders may establish
eligibility for United States federal withholding tax exemptions, including
that under a tax treaty, and an exemption from backup withholding.
For example, the new Treasury regulations will require new forms, which
non-U.S. Holders will generally have to provide earlier than you would have had
to provide replacements for expiring existing forms. The new Treasury
regulations also clarify the standards upon which withholding agents of
non-U.S. Holders may rely, add requirements in order for non-U.S. Holders to
claim reduced federal tax withholding under a tax treaty, and provide different
procedures in order for foreign intermediaries and flow-through entities (such
as foreign partnerships) to claim the benefit of applicable exemptions if they
receive payments on behalf of non-U.S. Holders.
The new Treasury regulations are particularly complex. Non-U.S. Holders
should consult their tax advisors concerning the effect, if any, of such new
Treasury regulations on their investment in the New Notes.
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PLAN OF DISTRIBUTION
Based on interpretations by the Commission set forth in no-action letters
issued to third parties in similar transactions, SFX believes that the New
Notes issued in the exchange offer for the Old Notes may be offered for resale,
resold and otherwise transferred by holders without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the New Notes are acquired in the ordinary course of such holders'
business and the holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of New Notes. This position does not apply to any holder that is:
(1) an "affiliate" of SFX within the meaning of Rule 406 under the
Securities Act;
(2) a broker-dealer who acquired Notes directly from SFX; or
(3) a broker-dealer who acquired Notes as a result of market-making or
other trading activities.
Any broker-dealers ("Participating Broker-Dealers") receiving New Notes in the
exchange offer are subject to a prospectus delivery requirement with respect to
resales of the New Notes. To date, the Commission has taken the position that
Participating Broker- Dealers may fulfill their prospectus delivery
requirements with respect to transactions involving an exchange of securities
such as the exchange pursuant to the exchange offer, other than a resale of an
unsold allotment from the sale of the Old Notes to the initial purchasers, with
this prospectus.
Each broker dealer that receives New Notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. A broker-dealer may use this
prospectus, as it may be amended or supplemented from time to time, in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. SFX has agreed that for a period of 180 days after the
Expiration Date, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. For
a period of 180 days after the Commission declares the registration statement
containing this prospectus effective, SFX will promptly send additional copies
of the prospectus and any amendment or supplement to this prospectus to any
broker-dealer that requests such document in the Letter of Transmittal.
SFX will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Notes and any
commission or concessions received by any persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
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SFX has agreed to pay all expenses incident to the exchange offer other
than commissions or concessions of any brokers or dealers and will indemnify
the holders of the Notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act.
Each broker-dealer that receives New Notes for its own account pursuant to
the exchange offer agrees that, upon receipt of notice from SFX of the
happening of any event which makes any statement in the prospectus untrue in
any material respect or which requires the making of any changes in the
prospectus in order to make the statements therein not misleading, which notice
SFX agrees to deliver promptly to such broker-dealer, such broker-dealer will
suspend use of the prospectus until SFX has amended or supplemented the
prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemental prospectus to such broker-dealer.
LEGAL MATTERS
Baker & McKenzie, Houston, Texas, will pass upon certain legal matters
with respect to the validity of the issuance of the New Notes.
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EXPERTS
Ernst & Young LLP, independent auditors, have audited the following
financial statements which are included herein, as set forth in their reports:
o the consolidated financial statements of the Company as of and for the year
ended December 31, 1997;
o the consolidated financial statements of Delsener/Slater Enterprises, Ltd.
and Affiliated Companies (Predecessor) as of December 31, 1996 and for the
years ended December 31, 1995 and 1996;
o the consolidated financial statements of PACE Entertainment Corporation and
Subsidiaries as of September 30, 1996, and for the years ended September
30, 1996 and 1995;
o the combined financial statements of Contemporary Group as of December 31,
1996 and 1997, and for the years ended December 31, 1995, 1996, and 1997;
o the combined financial statements of The Album Network, Inc. and Affiliated
Companies as of September 30, 1996 and 1997, and for the years ended
September 30, 1996 and 1997;
o the consolidated financial statements of BG Presents, Inc. and Subsidiaries
as of January 31, 1997 and 1998 and for the years ended January 31, 1996,
1997, and 1998;
o the combined financial statements of Concert/Southern Promotions and
Affiliated Companies as of December 31, 1997, and for the year ended
December 31, 1997;
o the combined financial statements of Falk Associates Management Enterprises,
Inc. as of December 31, 1996 and 1997, and for the years ended December 31,
1996 and 1997;
o the combined financial statements of Blackstone Entertainment LLC as of
December 31, 1996 and 1997 and for the years ended December 31, 1996 and
1997; and
o the consolidated financial statements of The Marquee Group, Inc. as of
December 31, 1997 and for the years ended December 31, 1996 and 1997.
These financial statements are included herein in reliance on their
reports, given on their authority as experts in accounting and auditing.
Arthur Andersen LLP, independent auditors, have audited the following
financial statements which are included herein, as set forth in their reports:
o the combined financial statements of Connecticut Performing Arts, Inc. and
Connecticut Performing Arts Partners as of December 31, 1995 and 1996, and
for the years ended December 31, 1995 and 1996;
o the combined financial statements of Deer Creek Partners, L.P. and Murat
Centre, L.P. as of December 31, 1995 and 1996, and for the years ended
December 31, 1995 and 1996;
o the consolidated financial statements of PACE Entertainment Corporation and
Subsidiaries as of September 30, 1997, and for the year ended September 30,
1997;
o the consolidated financial statements of Pavilion Partners as of September
30, 1997 and for the year ended September 30, 1997;
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o the financial statements of Riverport Performing Arts Centre, Joint Venture
as of December 31, 1997 and 1996 and for the years ended December 31, 1997
and 1996; and
o the consolidated financial statements of Magicworks Entertainment
Incorporated as of December 31, 1996 and 1997, and for the years ended
December 31, 1996 and 1997.
These financial statements are included herein in reliance on their
reports, given on their authority as experts in accounting and auditing.
PricewaterhouseCoopers LLP, independent accountants, have audited the
financial statements of Pavilion Partners for the year ended October 31, 1995,
for the eleven months ended September 30, 1996 and as of September 30, 1996.
These financial statements are included herein in reliance on their report,
given on their authority as experts in auditing and accounting.
Grant Thornton, independent auditors, have audited the financial
statements of Park Associates Limited as of December 31, 1997 and for the year
ended December 31, 1997. These financial statements are included herein in
reliance on their reports, given on their authority as experts in accounting
and auditing.
Richard E. Woodhall, independent auditors, have audited the financial
statements of Tony Stephens Associates Limited as of April 30, 1998 and for the
year ended April 30, 1998. These financial statements are included herein in
reliance on their report, given on their authority as experts in accounting and
auditing.
PricewaterhouseCoopers LLP, independent accountants, have audited the
financial statements of ProServ, Inc. as of December 31, 1996 and for the years
ended December 31, 1996 and 1995. These financial statements are included
herein in reliance on their reports, given on their authority as experts in
accounting and auditing.
David Berdon & Co., LLP, independent auditors, have audited the financial
statements of QBQ Entertainment, Inc. as of December 31, 1995 and 1996. These
financial statements are included herein in reliance on their reports, given on
their authority as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act and
file periodic reports, registration statements and other information with the
Commission. You may inspect and copy the registration statement on Form S-4,
including exhibits, and our periodic reports, registration statements and other
information filed with the Commission at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices located
at 7 World Trade Center, New York, New York 10048 and at Citicorp Center, 500
West Madison Street (Suite 1400), Chicago, Illinois 60661. You may obtain
copies from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. Please call the Commission at
1-800-SEC-0330 for more information on the public reference rooms. The
Commission also maintains a Web site at http://www.sec.gov which contains our
reports, registration statements and information statements and other
information.
We have filed with the Commission a registration statement on Form S-4
under the Securities Act with respect to our offering of New Notes. This
prospectus, which constitutes part of the registration statement, does not
contain all of the information in the registration statement on Form S-4. You
will find additional information about us and the New Notes in the registration
statement on Form S-4. All statements made in this prospectus concerning the
provisions of legal documents are not necessarily complete and you should read
the documents which are filed as exhibits to the registration statement or
otherwise filed by us with the Commission.
If we are not required to be subject to the reporting requirements of the
Exchange Act in the future, we will be required under the indenture for the New
Notes to continue to file with the Commission and to furnish to holders of the
New Notes the information, documents and other reports specified in Sections 13
and 15(d) of the Exchange Act.
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SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
SFX believes that certain statements contained in this prospectus are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are considered prospective. These include
statements contained under "Prospectus Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business." The following statements are or may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995:
o statements before, after or including the words "may," "will," "could,"
"should," "believe," "expect," "future," "potential," "anticipate,"
"intend," "plan," "estimate" or "continue" or the negative or other
variations of these words; and
o other statements about matters that are not historical facts.
SFX may be unable to achieve future results covered by the forward-looking
statements. The statements are subject to risks, uncertainties and other
factors that could cause actual results to differ materially from the future
results that the statements express or imply. Please do not put undue reliance
on these forward-looking statements, which speak only as of the date of this
prospectus.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
SFX ENTERTAINMENT: PAGE
----
SFX ENTERTAINMENT, INC.
Consolidated Balance Sheets as of September 30, 1998 (unaudited) and December 31, 1997 F-6
Consolidated Statements of Operations for the three months ended September 30, 1998 and
1997 (unaudited) ..................................................................... F-7
Consolidated Statements of Operations for the nine months ended September 30, 1998
and 1997 (unaudited) ................................................................. F-8
Consolidated Statements of Shareholders' Equity for the nine months ended September 30,
1998 and 1997 (unaudited) ............................................................ F-9
Consolidated Statements of Cash Flows for the nine months ended September 30, 1998 and
1997 (unaudited) ..................................................................... F-10
Notes to Consolidated Financial Statements (unaudited) ................................ F-11
Reports of Independent Auditors ....................................................... F-22
Consolidated Balance Sheets as of December 31, 1997 and 1996 (Predecessor) ............ F-24
Consolidated Statements of Operations for the years ended December 31, 1997, 1996
(Predecessor) and 1995 (Predecessor) ................................................. F-25
Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996
(Predecessor) and 1995 (Predecessor) ................................................. F-26
Notes to Consolidated Financial Statements ............................................ F-27
CONNECTICUT PERFORMING ARTS, INC. AND CONNECTICUT PERFORMING
ARTS PARTNERS
Report of Independent Public Accountants .............................................. F-42
Combined Balance Sheets as of December 31, 1995 and 1996 .............................. F-43
Combined Statements of Operations for the years ended December 31, 1995 and 1996 ...... F-44
Combined Statements of Shareholders' and Partners' Equity (Deficit) for the years ended
December 31, 1995 and 1996 ........................................................... F-45
Combined Statements of Cash Flows for the years ended December 31, 1995 and 1996 ...... F-46
Notes to Combined Financial Statements ................................................ F-47
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
Report of Independent Public Accountants .............................................. F-55
Combined Balance Sheets as of December 31, 1995 and 1996 and March 31, 1997 (unaudited) F-56
Combined Statements of Operations and Partners' Equity (Deficit) for the years ended
December 31, 1995 and 1996 and the three months ended March 31, 1996 and 1997
(unaudited) .......................................................................... F-58
Combined Statements of Cash Flows for the years ended December 31, 1995 and 1996 and
the three months ended March 31, 1996 and 1997 (unaudited) ........................... F-59
Notes to Combined Financial Statements ................................................ F-60
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Report of Independent Public Accountants .............................................. F-66
Report of Independent Auditors ........................................................ F-67
Consolidated Balance Sheets as of September 30, 1996 and 1997 and December 31, 1997
(unaudited) .......................................................................... F-68
Consolidated Statements of Operations for the years ended September 30, 1995, 1996 and
1997 and the three months ended December 31, 1996 and 1997 (unaudited) ............... F-69
Consolidated Statements of Shareholders' Equity for the years ended September 30, 1995,
1996 and 1997 and the three months ended December 31, 1997 (unaudited) ............... F-70
Consolidated Statements of Cash Flows for the years ended September 30, 1995, 1996 and
1997 and the three months ended December 31, 1996 and 1997 (unaudited) ............... F-71
</TABLE>
F-1
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INDEX TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Notes to Consolidated Financial Statements .............................................. F-72
PAVILION PARTNERS
Report of Independent Public Accountants ................................................ F-86
Report of Independent Accountants ....................................................... F-87
Consolidated Balance Sheets as of September 30, 1996 and 1997 and December 31, 1997
(unaudited) ............................................................................ F-88
Consolidated Statements of Income for the year ended October 31, 1995, eleven months
ended September 30, 1996, the year ended September 30, 1997 and the three months ended
December 31, 1996 and 1997 (unaudited) ................................................. F-89
Consolidated Statements of Partners' Capital for the year ended October 31, 1995, eleven
months ended September 30, 1996, the year ended September 30, 1997 and the three
months ended December 31, 1997 (unaudited) ............................................. F-90
Consolidated Statements of Cash Flows for the year ended October 31, 1995, eleven months
ended September 30, 1996, the year ended September 30, 1997 and the three months ended
December 31, 1996 and 1997 (unaudited) ................................................. F-91
Notes to Consolidated Financial Statements .............................................. F-92
CONTEMPORARY GROUP
Report of Independent Auditors .......................................................... F-101
Combined Balance Sheets as of December 31, 1996 and 1997 ................................ F-102
Combined Statements of Operations for the years ended December 31, 1995, 1996 and 1997 .. F-103
Combined Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997 .. F-104
Combined Statements of Stockholders' Equity for the years ended December 31, 1995, 1996
and 1997 ............................................................................... F-105
Notes to Combined Financial Statements .................................................. F-106
RIVERPORT PERFORMING ART CENTRE, JOINT VENTURE
Report of Independent Public Accountants ................................................ F-110
Balance Sheets as of December 31, 1997 and 1996 ......................................... F-111
Statements of Income and Changes in Partners' Equity for the years ended December 31,
1997 and 1996 .......................................................................... F-112
Statements of Cash Flows for the years ended December 31, 1997 and 1996 ................. F-113
Notes to Financial Statements ........................................................... F-114
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
Report of Independent Auditors .......................................................... F-117
Combined Balance Sheets as of September 30, 1996 and 1997 ............................... F-118
Combined Balance Sheets as of December 31, 1997 (unaudited) ............................. F-119
Combined Statements of Operations and Stockholders' Deficit for the years ended September
30, 1996 and 1997 ...................................................................... F-120
Combined Statements of Operations and Stockholders' Deficit for the three months ended
December 31, 1997 (unaudited) .......................................................... F-121
Combined Statements of Cash Flows for the years ended September 30, 1996 and 1997 ....... F-122
Combined Statements of Cash Flows for the three months ended December 31, 1997
(unaudited) ............................................................................ F-123
Notes to Combined Financial Statements .................................................. F-124
BG PRESENTS, INC. AND SUBSIDIARIES
Report of Independent Auditors .......................................................... F-129
Consolidated Balance Sheets as of January 31, 1997 and 1998 ............................. F-130
Consolidated Income Statements for the years ended January 31, 1996, 1997 and 1998 ...... F-131
</TABLE>
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INDEX TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Consolidated Statements of Cash Flows for the years ended January 31, 1996, 1997 and 1998 F-132
Consolidated Statements of Stockholders' Equity for the years ended January 31, 1996, 1997
and 1998 ................................................................................ F-133
Notes to Consolidated Financial Statements .............................................. F-134
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
Report of Independent Auditors ........................................................... F-140
Combined Balance Sheet as of December 31, 1997 ........................................... F-141
Combined Statement of Operations for the year ended December 31, 1997 .................... F-142
Combined Statement of Cash Flows for the year ended December 31, 1997 .................... F-143
Combined Statements of Stockholders' Equity for the year ended December 31, 1997 ......... F-144
Notes to Combined Financial Statements ................................................... F-145
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
Report of Independent Auditors ........................................................... F-148
Combined Balance Sheets as of December 31, 1996 and 1997 and March 31, 1998 (unaudited) . F-149
Combined Statements of Operations and Stockholders' Equity (Deficit) for the years ended
December 31, 1996 and 1997 and the three months ended March 31, 1997 and 1998
(unaudited) ............................................................................. F-150
Combined Statements of Cash Flows for the years ended December 31, 1996 and 1997 and
the three months ended March 31, 1997 and 1998 (unaudited) .............................. F-151
Notes to Combined Financial Statements ................................................... F-152
BLACKSTONE ENTERTAINMENT LLC
Report of Independent Auditors ........................................................... F-157
Combined Balance Sheets as of December 31, 1996 and 1997 and June 30, 1998 (unaudited) ... F-158
Combined Statements of Income for the years ended December 31, 1996 and 1997 and the six
months ended June 30, 1997 and 1998 (unaudited) ......................................... F-159
Combined Statements of Cash Flows for the years ended December 31, 1996 and 1997 and
the six months ended June 30, 1997 and 1998 (unaudited) ................................. F-160
Combined Statement of Members' Equity for the years ended December 31, 1996 and 1997
and the six months ended June 30, 1998 (unaudited) ...................................... F-161
Notes to Combined Financial Statements ................................................... F-162
MAGICWORKS ENTERTAINMENT INCORPORATED
Report of Independent Certified Public Accountants ....................................... F-169
Consolidated Balance Sheets as of December 31, 1997 and 1996 and June 30, 1998
(unaudited) ............................................................................. F-170
Consolidated Statements of Income for the years ended December 31, 1997 and 1996 and the
six months ended June 30, 1998 and 1997 (unaudited) ..................................... F-171
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997 and
1996 .................................................................................... F-172
Consolidated Statements of Cash Flows for the years ended December 31, 1997 and 1996 and
the six months ended June 30, 1998 and 1997 (unaudited) ................................. F-173
Notes to Consolidated Financial Statements ............................................... F-174
THE MARQUEE GROUP, INC.:
THE MARQUEE GROUP, INC.
Consolidated Balance Sheets at September 30, 1998 (unaudited) and December 31, 1997 ...... F-186
Consolidated Statements of Operations for the three and nine months ended September 30,
1998 and 1997 (unaudited) ............................................................... F-187
</TABLE>
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INDEX TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Consolidated Statements of Cash Flows for the nine months ended September 30, 1998 and
1997 (unaudited) ....................................................................... F-188
Consolidated Statements of Stockholders' Equity for the nine months ended September 30,
1998 (unaudited) ....................................................................... F-189
Notes to Consolidated Financial Statements .............................................. F-190
Report of Independent Auditors .......................................................... F-194
Consolidated Balance Sheet as of December 31, 1997 ...................................... F-195
Consolidated Statements of Operations for the years ended December 31, 1996 and 1997 .... F-196
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996
and 1997 ............................................................................... F-197
Consolidated Statements of Cash Flows for the years ended December 31, 1996 and 1997 .... F-198
Notes to Consolidated Financial Statements .............................................. F-199
ALPHABET CITY SPORTS RECORDS, INC. AND ALPHABET CITY
INDUSTRIES, INC.
Report of Independent Auditors .......................................................... F-210
Combined Balance Sheet as of December 31, 1997 and June 30, 1998 (unaudited) ............ F-211
Combined Statements of Income for the period from April 11, 1996 (inception) to
December 31, 1996 and for the year ended December 31, 1997 and for the six months
ended June 30, 1997 and 1998 (unaudited) ............................................... F-212
Combined Statements of Cash Flows for the period from April 11, 1996 (inception) to
December 31, 1996 and for the year ended December 31, 1997 and for the six months
ended June 30, 1997 and 1998 (unaudited) ............................................... F-213
Notes to Combined Financial Statements .................................................. F-214
CAMBRIDGE HOLDING CORPORATION, INC. AND SUBSIDIARY
Report of Independent Auditors .......................................................... F-218
Consolidated Balance Sheet as of December 31, 1997 and June 30, 1998 (unaudited) ........ F-219
Consolidated Statement of Operations for the year ended December 31, 1997 and for the six
months ended June 30, 1997 and 1998 (unaudited) ........................................ F-220
Consolidated Statement of Cash Flows for the year ended December 31, 1997 and for the six
months ended June 30, 1997 and 1998 (unaudited) ........................................ F-221
Notes to Consolidated Financial Statements .............................................. F-222
PARK ASSOCIATES LIMITED
Report of Independent Auditors .......................................................... F-224
Balance Sheet as of December 31, 1997 ................................................... F-225
Statement of Profit and Loss Account for the year ended December 31, 1997 ............... F-226
Statement of Cash Flows for the year ended December 31, 1997 ............................ F-227
Notes to Financial Statements ........................................................... F-228
Balance Sheet as of June 30, 1998 (unaudited) ........................................... F-236
Statements of profit and loss account for the six months ended June 30, 1997 and 1998
(unaudited) ............................................................................ F-237
Statements of cash flows for the six months ended June 30, 1997 and 1998 (unaudited) .... F-238
Notes to Financial Statements ........................................................... F-239
TOLLIN-ROBBINS ENTERTAINMENT
Report of Independent Auditors .......................................................... F-242
Combined Balance Sheets as of December 31, 1997 and 1996 and June 30, 1998 (unaudited) .. F-243
Combined statements of operations for the years ended December 31, 1997 and 1996 and for
the six months ended June 30, 1997 and 1998 (unaudited) ................................ F-244
</TABLE>
F-4
<PAGE>
INDEX TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Combined Statements of Stockholders' Equity and for the years ended December 31, 1996
and 1997 and for the six months ended June 30, 1998 (unaudited) ......................... F-245
Combined Statements of Cash Flows for the years ended December 31, 1996 and 1997 and for
the six months ended June 30, 1997 and 1998 (unaudited) ................................. F-246
Notes to Combined Financial Statements ................................................... F-247
TONY STEPHENS ASSOCIATES LIMITED
Report of Independent Auditors ........................................................... F-252
Balance Sheet as of April 30, 1998 ....................................................... F-253
Statement of Profit and Loss Account for the year ended April 30, 1998 ................... F-254
Statement of Cash Flows for the year ended April 30, 1998 ................................ F-255
Notes to Financial statements ............................................................ F-256
Balance Sheet as of June 30, 1998 (unaudited) ............................................ F-259
Statements of Profit and Loss Accounts for the six months ended June 30, 1997 and 1998
(unaudited) ............................................................................. F-260
Statements of Cash Flows for the six months ended June 30, 1997 and 1998 (unaudited) ..... F-261
Notes to Financial Statements ............................................................ F-262
PROSERV, INC. AND SUBSIDIARIES
Report of Independent Accountants ........................................................ F-266
Consolidated Balance Sheets as of December 31, 1996 and June 30, 1997 (unaudited) ........ F-267
Consolidated Statements of Operations for the years ended December 31, 1996 and 1995
and for the six months ended June 30, 1997 (unaudited) and 1996 (unaudited) ............. F-268
Consolidated Statements of Stockholders' Equity/(Deficit) for the years ended December 31,
1996 and 1995 and for the six months ended June 30, 1997 (unaudited) .................... F-269
Consolidated Statements of Cash Flows for the years ended December 31, 1996 and 1995
and for the six months ended June 30, 1997 (unaudited) and 1996 (unaudited) ............. F-270
Notes to Consolidated Financial Statements ............................................... F-271
QBQ ENTERTAINMENT, INC.
Report of Independent Auditors ........................................................... F-284
Balance Sheets as of December 31, 1996 and June 30, 1997 (unaudited) ..................... F-285
Statements of Operations for the years ended December 31, 1996 and 1995 and for the
six months ended June 30, 1997 and 1996 (unaudited) ..................................... F-286
Statements of Stockholders' Equity (Deficiency) for the years ended December 31, 1996
and 1995 and the six months ended June 30, 1997 (unaudited) ............................. F-287
Statements of Cash Flows for the years ended December 31, 1996 and 1995 and for the
six months ended June 30, 1997 and 1996 (unaudited) ..................................... F-288
Notes to Financial Statements ............................................................ F-289
</TABLE>
F-5
<PAGE>
SFX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1998 1997
---------- --------
ASSETS ..................................................................... (Unaudited)
Current assets:
Cash and cash equivalents ................................................. $ 65,589 $ 5,979
Accounts receivable ....................................................... 68,042 3,831
Prepaid expenses .......................................................... 27,375 --
Receivables from equity investees ......................................... 974 --
Other current assets ...................................................... 3,747 1,410
---------- --------
Total current assets ....................................................... 165,727 11,220
Property and equipment, net of accumulated depreciation of $12,144 at
September 30, 1998 and $2,610 at December 31, 1998 ........................ 275,000 59,685
Deferred acquisition costs ................................................. 551 6,213
Goodwill and other intangible assets, net of accumulated amortization of
$28,551 at September 30, 1998 and $2,745 at December 31, 1998 ............. 904,929 60,306
Investment in and receivables from equity investees, less current portion... 22,406 937
Note receivable from related parties and employees ......................... 12,610 --
Other assets ............................................................... 10,325 8,581
---------- --------
TOTAL ASSETS ............................................................... $1,391,548 $146,942
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ..................................... $ 66,202 $ 2,715
Deferred revenue .......................................................... 73,608 3,603
Income taxes payable ...................................................... 480 1,707
Due to SFX Broadcasting ................................................... 26,250 11,539
Current portion of long-term debt ......................................... 4,238 755
Current portion of capital lease obligations .............................. 674 168
Current portion of deferred purchase consideration ........................ 2,313 1,950
---------- --------
Total current liabilities .................................................. 173,765 22,437
Long-term debt, less current portion ....................................... 714,884 14,929
Capital lease obligations, less current portion ............................ 12,248 326
Deferred purchase consideration, less current portion ...................... 8,117 4,289
Deferred income taxes ...................................................... 60,601 2,817
Other ...................................................................... 5,354 --
---------- --------
TOTAL LIABILITIES .......................................................... 974,969 44,798
Minority interest .......................................................... 3,868 --
Temporary equity - stock subject to redemption ............................. 16,500 --
Shareholders' equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized, none
issued and outstanding as of September 30, 1998 and December 31,
1997 .................................................................... -- --
Class A common stock, $.01 par value, 100,000,000 shares authorized;
28,753,194 and 13,579,024 shares issued and outstanding as of
September 30, 1998 and December 31, 1997, respectively .................. 288 136
Class B common stock, $.01 par value, 10,000,000 shares authorized;
1,697,037 and 1,047,037 shares issued and outstanding as of
September 30, 1998 and December 31, 1997, respectively .................. 17 10
Additional paid in capital ................................................. 431,617 98,184
Deferred compensation ...................................................... (7,397) --
Accumulated (deficit) earnings ............................................. (28,314) 3,814
---------- --------
Total shareholders' equity ................................................. 396,211 102,144
---------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................. $1,391,548 $146,942
========== ========
</TABLE>
See accompanying notes.
F-6
<PAGE>
SFX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended September 30,
--------------------------------
1998 1997
------------ ----------------
Revenue ....................................................... $ 388,034 $ 43,425
Operating expenses:
Cost of revenue .............................................. 331,857 35,569
Depreciation and amortization, including $1,014 of integration
costs in 1998 .............................................. 21,207 2,345
Corporate expenses, net of Triathlon fees .................... 2,510 259
Non-cash compensation and other non-cash charges ............. 843 --
------------ -----------
356,417 38,173
------------ -----------
Income from operations ........................................ 31,617 5,252
Income from equity investments ................................ (2,139) (1,344)
Interest expense .............................................. 13,488 378
Investment income ............................................. (967) (95)
Minority interest ............................................. 916 --
------------ -----------
Income before provision for income taxes ...................... 20,319 6,313
Provision for income taxes .................................... 1,983 295
------------ -----------
Net income .................................................... 18,336 6,018
Accretion on stock subject to redemption ...................... (825) -
------------ -----------
Net income applicable to common shares ........................ $ 17,511 $ 6,018
============ ===========
Basic Earnings per common share ............................... $ 0.58 $ 0.41
============ ===========
Dilutive earnings per common share ............................ $ 0.57 $ 0.41
============ ===========
Weighted average basic common shares outstanding .............. 30,420,883 14,626,061
Weighted average dilutive common shares outstanding ........... 30,881,777 14,626,061
Pro Forma:
Income before provision for income taxes ...................... $ 20,319 $ 6,313
Pro forma provision for income taxes .......................... 1,983 2,952
------------ -----------
Pro forma net income .......................................... 18,336 3,361
Accretion on stock subject to redemption ...................... (825) --
------------ -----------
Pro forma net income applicable to common stock ............... $ 17,511 $ 3,361
============ ===========
Pro forma earnings per share:
Basic ........................................................ $ 0.58 $ 0.23
============ ===========
Diluted ...................................................... $ 0.57 $ 0.23
============ ===========
</TABLE>
See accompanying notes.
F-7
<PAGE>
SFX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
------------ ---------------
<S> <C> <C>
Revenue ............................................................... $ 680,376 $ 74,396
Operating expenses:
Cost of revenue ...................................................... 602,538 63,045
Depreciation and amortization, including $1,264 of integration
costs in 1998 ...................................................... 40,381 4,041
Corporate expenses, net of Triathlon fees ............................ 5,839 1,307
Non-cash compensation and other non-cash charges ..................... 32,895 --
------------ -----------
681,653 68,393
------------ -----------
Income (loss) from operations ......................................... (1,277) 6,003
Income from equity investments ........................................ (3,964) (1,344)
Interest expense ...................................................... 31,709 956
Investment income ..................................................... (3,466) (213)
Minority interest ..................................................... 1,314 --
------------ -----------
Income (loss) before provision for income taxes ....................... (26,870) 6,604
Provision for income taxes ............................................ 3,333 2,952
------------ -----------
Net income (loss) ..................................................... (30,203) 3,652
Accretion on stock subject to redemption .............................. (1,925) --
------------ -----------
Net income (loss) applicable to common shares ......................... $ (32,128) $ 3,652
============ ===========
Basic and dilutive net income (loss) per common share ................. $ (1.38) $ 0.25
============ ===========
Weighted average basic and dilutive common shares outstanding ......... 23,262,122 14,382,778
Pro Forma:
Income (loss) before provision for income taxes ....................... $ (26,870) $ 6,604
Pro forma provision for income taxes .................................. 3,333 2,956
------------ -----------
Pro forma net income (loss) ........................................... (30,203) 3,652
Accretion on stock subject to redemption .............................. (1,925) --
------------ -----------
Pro forma net income (loss) applicable to common stock ................ $ (32,128) $ 3,652
============ ===========
Pro forma earnings (loss) per share ................................... $ (1.38) $ 0.25
============ ===========
</TABLE>
See accompanying notes.
F-8
<PAGE>
SFX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Balances at January 1, ................................................... $ 102,144 $ --
Net assets contributed by SFX Broadcasting .............................. -- 97,726
Liabilities in excess of assets of SFX Broadcasting, Inc. assumed in
the Spin-Off, principally federal income taxes of $105.0 million......... (129,237) --
Sale of 8,050,000 Shares of Class A Common Stock ......................... 329,004 --
Issuance of 5,837,874 shares of Class A Common Stock for
acquisitions ............................................................ 97,466 --
Issuance of 190,000 shares of Class A Common Stock pursuant to
employment agreements ................................................... 8,511 --
Issuance of 650,000 shares of Class B Common Stock pursuant to
employment agreements ................................................... 18,526 --
Net income (loss) ........................................................ (30,203) 6,309
----------- ---------
Balances at September 30 ................................................. $ 396,211 $104,035
=========== =========
</TABLE>
See accompanying notes.
F-9
<PAGE>
SFX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Operating activities:
Net (loss) income ........................................................ $ (30,203) $ 6,309
Adjustment to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation and amortization, including $1,264 of integration
costs ................................................................. 40,381 4,041
Pretax income of equity investees, net of distributionsreceived ......... 1,030 458
Non-cash charges ........................................................ 32,895 --
Minority interest ....................................................... 1,314 --
Changes in operating assets and liabilities, net of amounts
acquired:
Accounts receivable ..................................................... (9,620) (1,019)
Prepaid expenses ........................................................ (6,296) (2,419)
Other current assets .................................................... (1,744) --
Other assets ............................................................ (3,191) (275)
Receivable from related parties and employees ........................... (2,162) --
Accounts payable and accrued expenses ................................... (14,475) (16)
Accrued interest and dividends .......................................... 7,595 --
Deferred revenue ........................................................ 6,783 (6,290)
----------- ----------
Net cash provided by operating activities ................................ 22,307 789
----------- ----------
Investing activities:
Purchases of businesses, net of cash acquired ........................... (807,135) (69,645)
Deposits and other payments for pending acquisitions .................... (551) --
Purchases of property and equipment ..................................... (44,554) (2,352)
----------- ----------
Net cash used in investing activities .................................... (852,240) (71,997)
----------- ----------
Financing activities:
Capital contributed by SFX Broadcasting ................................. -- 78,855
Proceedsfrom issuance of senior subordinated debt and
borrowings under the credit agreement ................................. 723,500 --
Proceeds from sale of common stock ...................................... 330,683 --
Repayment of debt and capital lease obligation .......................... (33,049) (553)
Payments made to SFX Broadcasting pursuant to the Spin-Off .............. (113,876) --
Other, principally debt issuance costs .................................. (17,715) --
----------- ----------
Net cash provided by financing activities ................................ 889,543 78,302
----------- ----------
Net increase in cash and cash equivalents ................................ 59,610 7,094
Cash and cash equivalents at beginning of period ......................... 5,979 --
=========== ==========
Cash and cash equivalents at end of period ............................... $ 65,589 $ 7,094
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest ................................................... $ 22,807 $ 897
=========== ==========
Cash paid for income taxes ............................................... $ 17,217 $ --
=========== ==========
</TABLE>
Supplemental disclosure of non-cash investing and financing activities:
o Issuance of equity securities, including deferred equity security issuance
and assumption of debt in connection with certain acquisitions (see Note
1).
o Agreements to pay future cash consideration in connection with certain
acquisitions (see Note 1).
o The balance sheet includes certain assets and liabilities that have been
contributed to the Company by SFX Broadcasting.
See accompanying notes.
F-10
<PAGE>
SFX ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
SFX Entertainment, Inc. ("SFX" or the "Company") is a leading promoter,
producer and venue operator for live entertainment events. In addition, the
Company is a leading full-service marketing and management company specializing
in the representation of team sports athletes, primarily in professional
basketball.
The Company owns and/or operates the largest network of venues in the country
used principally for music concerts and other live entertainment events. Upon
completion of all pending acquisitions, it will have 68 venues either directly
owned or operated under lease or exclusive arrangements, including 13
amphitheaters in 9 of the top 10 markets. The Company also develops and manages
touring Broadway shows, selling subscriptions series in 38 of the markets that
maintain active touring schedules with approximately 240,000 subscribers last
year. Through its large number of venues and the long operating histories of
the businesses it has acquired, SFX operates an integrated franchise that
promotes and produces a broad variety of live entertainment events locally,
regionally and nationally. Pro forma for all completed acquisitions, during
1997, approximately 30 million people attended 11,300 events promoted and/or
produced by SFX, including approximately 5,400 music concerts, 5,600 theatrical
shows and over 200 specialized motor sports events.
SFX was formed as a wholly-owned subsidiary of SFX Broadcasting, Inc. in
December 1997 and as the parent company of SFX Concerts, Inc ("Concerts").
Concerts was formed in January 1997 to acquire and hold SFX Broadcasting's live
entertainment operations. The Company had no substantive operations until its
acquisition of Delsener/Slater Enterprises, Ltd. and affiliated companies
("Delsener/Slater") in January 1997.
In August 1997, SFX Broadcasting agreed to the merger (the "Broadcasting Merger
Agreement") among SBI Holdings, Inc. (the "Buyer"), SBI Radio Acquisition
Corporation, a wholly owned subsidiary of the Buyer, and SFX Broadcasting (the
"Broadcasting Merger") and to the spin-off of the Company to the shareholders
of SFX Broadcasting (the "Spin-Off"). The Spin-Off was completed on April 27,
1998 and the Broadcasting Merger was completed on May 29, 1998.
Information with respect to the three and nine months ended September 30, 1998
and 1997 is unaudited. The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, the unaudited interim financial statements contain
all adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the financial position, results of operations and cash flows of
the Company, for the periods presented.
In 1998 the Company's income taxes are calculated on a stand alone basis
including the period through April 27, 1998 in which the Company was a member
of the SFX Broadcasting's Consolidated federal income tax return. In 1997, the
Company's income taxes reflected the federal benefit for the operating losses
of SFX Broadcasting.
In June 1997, the Financial Accounting Standards Board issued Statement No. 131
("SFAS 131"), "Disclosure About Segments of an Enterprise and Related
Information," which establishes new standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that these enterprises report selected information
about operating segments in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. SFAS 131 is effective for financial statements for fiscal
years beginning after December 31, 1997, and therefore the Company will adopt
the new requirements in 1998. Management has completed its review of SFAS 131
and as such has preliminarily determined that its reportable segments will be
music, theatrical, sports and other.
F-11
<PAGE>
In June 1998, the American Institute of Certified Public Accountants issued
Statement of Position No. 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"), which is effective for fiscal years beginning after December 15,
1998. Under SOP 98-5, the costs of start-up activities, including
organizational costs, would be expensed as incurred. SOP 98-5 broadly defines
start-up activities as those one-time activities related to opening a new
facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new class of customer or beneficiary,
initiating a new process in an existing facility or beginning a new operation.
SOP 98-5 is effective for financial statements for fiscal years beginning after
December 15, 1998. Earlier application is encouraged. The initial application
of SOP 98-5 is to be reported as a cumulative
effect of a change in accounting principle. Management has preliminarily
determined that SOP 98-5 will not have a material effect on its financial
position.
The Company's operations and revenues are largely seasonal in nature, with
generally higher revenue generated in the second and third quarters of the
year. The Company's outdoor venues are primarily utilized in the summer months
and do not generate substantial revenue in the late fall, winter and early
spring. Similarly, the musical concerts that the Company promotes largely occur
in the second and third quarters. To the extent that the Company's
entertainment marketing and consulting relate to musical concerts, they also
predominantly generate revenues in the second and third quarters. However, this
seasonality is somewhat offset by typically non-summer seasonal businesses such
as touring Broadway Shows (which typically tour between September and May) and
motor sports (which produces revenue predominantly in the first quarter).
2. ACQUISITIONS
1997 Acquisitions
In January 1997, SFX Broadcasting acquired Delsener/Slater, a concert promotion
company which has long-term leases or is the exclusive promoter for seven of
the major concert venues in the New York City metropolitan area. Total
aggregate consideration was approximately $27,600,000, including $2,900,000 for
working capital and the present value of deferred payments of $3,000,000 to be
paid over five years and $1,000,000 to be paid without interest over ten years.
In March 1997, the Company acquired the stock of certain companies which own
and operate the Meadows Music Theater (the "Meadows"), an indoor/outdoor
complex located in Hartford, Connecticut for $900,000 in cash, 250,838 shares
of SFX Broadcasting Class A Common Stock with a value of approximately
$7,500,000 and the assumption of approximately $15,400,000 in debt. In June
1997, the Company acquired the stock of Sunshine Promotions, Inc. and certain
other related companies ("Sunshine Promotions"), an owner-operator of venues
and a concert promoter in the Midwest for $53,900,000 in cash, of which
$2,000,000 is payable over five years, 62,792 shares of SFX Broadcasting Class
A Common Stock issued with a value of approximately $2,000,000, shares of SFX
Broadcasting stock issuable over a two year period with a value of
approximately $2,000,000 and the assumption of approximately $1,600,000 in
debt.
The Delsener/Slater, Meadows, and Sunshine Promotions acquisitions are
collectively referred to herein as the "1997 Acquisitions." The 1997
Acquisitions were financed through capital contributions from SFX Broadcasting
and were accounted for under the purchase method of accounting.
1998 Acquisitions
Westbury
On January 8, 1998, the Company acquired certain companies which hold a
long-term lease for Westbury Music Fair, located in Westbury, New York, (the
"Westbury Acquisition") for an aggregate consideration of approximately $3.0
million in cash and 75,019 shares of the Company's Class A Common Stock. During
the period between the closing and January 8, 2000, the Company has the right
to repurchase all of such shares for an aggregate consideration of $2.0 million
and the seller has the right to require the Company to purchase all of such
shares for an aggregate consideration of $750,000.
F-12
<PAGE>
BGP
On February 24, 1998, the Company acquired all of the outstanding capital stock
of BG Presents ("BGP"), an owner-operator of venues for live entertainment and
a promoter in the San Francisco Bay area (the "BGP Acquisition"), for total
consideration of approximately $80.3 million (including the repayment of $12.0
million in BGP debt and the issuance upon the Spin-Off of 562,640 shares of
Class A Common Stock of the Company valued by the parties at $7.5 million). The
sellers of BGP provided net working capital (as defined in the acquisition
agreement) at the closing in an amount equal to or greater than long-term debt.
PACE
On February 25, 1998, the Company acquired all of the outstanding capital stock
of PACE Entertainment Corporation ("PACE"), a diversified producer and promoter
of live entertainment in the United States (the "PACE Acquisition"), for total
consideration of approximately $150.1 million (including issuance upon the
Spin-Off of 1,500,000 shares of the Company's Class A Common Stock valued by
the parties at $20.0 million and assumption of approximately $20.6 million of
debt). In related transactions, the Company acquired, for total consideration
of $90.6 million comprised of $41.4 million in cash, the repayment of
approximately $43.1 million of debt and the assumption of approximately $6.1
million of debt related to a capital lease, the 66 2/3% ownership interests of
Blockbuster Entertainment Corporation and Sony Music Entertainment, Inc. in
Amphitheater Entertainment Partnership, a partner of PACE in the Pavilion
Partners venue partnership. As a result, the Company owns 100% of Pavilion
Partners.
The PACE Acquisition agreement further provides that each seller of PACE shall
have an option, exercisable during a period beginning on the fifth anniversary
of the closing of the PACE Acquisition and ending 90 days thereafter, to
require the Company to purchase up to one-third of the PACE consideration stock
received by such PACE seller for a cash purchase price of $33.00 per share.
With certain limited exceptions, these option rights are not assignable by the
PACE sellers. The stock, which is subject to redemption, has been recorded as
temporary equity on the accompanying consolidated balance sheet and is being
accreted over a five-year period.
Under the terms of an employment agreement entered into by the Company with an
officer of PACE, the officer will have the right, two years from the date of
the acquisition, to purchase PACE's motor sports division at fair value. If the
motor sports division has been sold by the Company, the officer would be
entitled to purchase PACE's theatrical division for its fair value. In
addition, on March 25, 1998, PACE paid $4.0 million to acquire a 67% interest
in certain assets and liabilities of USA Motor Sports, a producer and promoter
of motor sports events. The remaining 33% interest is owned by the Contemporary
Group.
Contemporary
On February 27, 1998, the Company acquired the Contemporary Group
("Contemporary"), a fully-integrated live entertainment and special event
promoter and producer, venue owner and operator and consumer marketer, for
total consideration of approximately $101.4 million comprised of $72.8 million
in cash, a payment for working capital of approximately $9.9 million and the
issuance of preferred stock of the Company valued by the parties at $18.7
million which, upon the Spin-Off, was converted into 1,402,850 shares of Class
A Common Stock of the Company (the "Contemporary Acquisition"). The
Contemporary Acquisition involved the merger of Contemporary International
Productions Corporation with and into the Company, the acquisition by a wholly
owned subsidiary of the Company of substantially all of the assets, excluding
certain cash and receivables, of the remaining members of Contemporary and the
acquisition by Contemporary of the 50% interest in the Riverport Amphitheater
Joint Venture not owned by Contemporary. If any of the Contemporary sellers
owns any shares of the Company's Class A Common Stock received in the
Contemporary Acquisition on the second anniversary of the closing date and the
average trading price of such stock over the 20-day period ending on such
anniversary date is less than $13.33 per share, then the Company will make a
one-time cash payment to each individual holding such shares that is equal to
the product of (i) the
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<PAGE>
quotient of the difference between (A) the actual average trading price per
share over such 20-day period and (B) $13.33 divided by two, multiplied by (ii)
the number of shares of Class A Common Stock of the Company's received by such
individual in the Contemporary Acquisition and owned as of such anniversary
date. In May 1998 the Company placed 140,000 of the shares issued in connection
with the Contemporary Acquisition into an escrow account. The Company may, at
its sole discretion, cancel such shares at any time.
Network
On February 27, 1998, the Company acquired the Network Magazine Group ("Network
Magazine"), a publisher of trade magazines for the radio broadcasting industry,
and SJS Entertainment Corporation ("SJS"), an independent creator, producer and
distributor of music-related radio programming, services and research which it
exchanges with radio broadcasters for commercial air-time which, in turn, is
sold to national network advertisers (the "Network Acquisition"), for total
consideration of approximately $66.8 million comprised of $52.0 million in
cash, a payment for working capital of approximately $1.8 million, reimbursed
sellers costs of $500,000, the purchase of an office building and property for
$2.5 million and the issuance upon the Spin-Off of approximately 750,000 shares
of Class A Common Stock of the Company valued by the parties at $10.0 million.
The $2.5 million purchase of the office building and property is comprised of
cash of approximately $700,000 and the assumption of debt of approximately $1.8
million. The Company is also obligated to pay the sellers an additional payment
in Class A Common Stock or, at the Company's option, cash based on future
operating results, as defined, generated on a combined basis by Network
Magazine and SJS in 1998, up to a maximum of $14.0 million. In the Network
Acquisition, the Company, through a wholly owned subsidiary, acquired all of
the outstanding capital stock of each of The Album Network, Inc. and SJS
Entertainment Corporation and purchased substantially all of the assets and
properties and assumed substantially all of the liabilities and obligations of
The Network 40, Inc.
Concert/Southern
On March 4, 1998, the Company acquired Concert/Southern Promotions
("Concert/Southern"), a promoter of live music events in the Atlanta, Georgia
metropolitan area (the "Concert/Southern Acquisition"), for total cash
consideration of approximately $16.9 million, which includes a $300,000 payment
for working capital.
Avalon
On May 14, 1998, the Company acquired all of the outstanding equity interests
of Irvine Meadows Amphitheater, New Avalon, Inc., TBA Media, Inc. and West
Coast Amphitheater (collectively, "Avalon") for a cash purchase price of $26.8
million (subject to upward adjustment), including approximately $300,000 that
the Company paid to reimburse the Avalon sellers for certain third party out of
pocket expenses incurred in the development of the Camarillo Creek Amphitheatre
(the "Avalon Acquisition"). Avalon is a concert promoter and producer that
operates predominantly in the Los Angeles area.
Oakdale
On June 3, 1998, the Company acquired certain assets of Oakdale Concerts, LLC
and Oakdale Development Limited Partnership (collectively, "Oakdale"), a
promoter and producer of concerts in Connecticut and the owner of the 4,800
seat Oakdale Music Theater, for a purchase price of $9.4 million in cash and
the assumption of $2.5 million in liabilities (the "Oakdale Acquisition"). The
Company also made a non-recourse loan to the Oakdale sellers in the amount of
$11.4 million. In addition, pursuant the Oakdale Agreement, if the future
operating results (as defined in the Oakdale Agreement) of the Oakdale Theater
and the Meadows exceeds $5.5 million in 1999, the Company will be obligated to
pay between 5.0 to 5.8 times the amount of such excess to the Oakdale sellers.
FAME
On June 4, 1998, the Company acquired Falk Associates Management Enterprises,
Inc. and Financial Advisory Management Enterprises, Inc. (collectively,
"FAME"), a full-service marketing and
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<PAGE>
management company which specializes in the representation of team sports
athletes, primarily in professional basketball. The aggregate purchase price
for FAME was approximately $82.2 million in cash (including approximately $7.9
million which the Company paid in connection with certain taxes incurred by
FAME and the FAME sellers and excluding $4.7 million of taxes paid on behalf of
the sellers which will be refunded to the Company in 1999) and 1.0 million
shares of Class A Common Stock, valued at approximately $36.0 million (the
"FAME Acquisition"). The agreement also provides for payments by the Company to
the FAME sellers of additional amounts up to an aggregate of $15.0 million in
equal annual installments over 5 years contingent on the achievement of certain
operating performance targets. The agreement also provides for additional
payments by the Company if FAME's operating performance exceed the targets by
certain amounts.
Don Law
On July 2, 1998, the Company acquired certain assets of Blackstone
Entertainment, LLC ("Don Law"), a concert and theater promoter in New England,
for an aggregate consideration of approximately $92.2 million, including the
repayment of approximately $7.0 million in debt. Don Law currently owns and/or
operates three venues in New England with an aggregate seating capacity of
27,400. Don Law also acts as the sole ticket operator for all of its own venues
as well as several third party venues.
Magicworks
On September 11, 1998, the Company purchased all of the outstanding shares of
common stock of Magicworks Entertainment Incorporated ("Magicworks"), a
producer and promoter of theatrical shows, musical concerts, ice skating shows
and other live entertainment events. The total consideration was $118.9 million
in cash, including approximately $3.2 million in fees and expenses and the
repayment of $2.4 million in convertible notes which the Company is required to
repay upon presentation for conversion into Magicworks stock (the "Magicworks
Acquisition"). The acquisition was consummated by means of a tender offer (in
which approximately 98.7% of Magicworks shares were purchased) followed by a
merger (in which the remaining shares were converted into cash consideration).
Other Acquisitions
During the third quarter of 1998, the Company completed the acquisition of
seven companies in the theatrical and music segments, principally in the areas
of programming, touring and merchandising (collectively the "Other
Acquisitions"). The aggregate purchase price was $104.7 million in cash,
approximately $10.0 million in stock (300,000 shares of the Company's Class A
Common Stock) and $10.0 million of deferred payments. In addition, the Company
is required to make a loan to certain sellers in an amount equal to taxes
incurred by the sellers in connection with one of the transactions. The Company
expects that the amount of the loan will be approximately $750,000.
The Westbury Acquisition, the BGP Acquisition, the PACE Acquisition, the
Contemporary Acquisition, the Network Acquisition, the Concert/Southern
Acquisition, the Avalon Acquisition, the Oakdale Acquisition, the FAME
Acquisition, the Don Law Acquisition, the Magicworks Acquisition and the Other
Acquisitions are collectively referred to herein as the "1998 Acquisitions."
The 1998 Acquisitions were accounted for under the purchase method of
accounting and funded with the proceeds of the Note Offering, the Equity
Offering, the Credit Agreement (each as defined herein) and available cash. The
purchase prices of the 1998 Acquisitions have been preliminarily allocated to
the assets acquired and liabilities assumed and are subject to change.
Operating results for the 1997 Acquisitions and the 1998 Acquisitions are
included herein from their respective acquisition dates. Operating results
associated with the assets and liabilities contributed by SFX Broadcasting are
also included herein. Prior to the Spin-Off, SFX Broadcasting provided various
administrative services to the Company. SFX Broadcasting allocated these
expenses on the basis of direct usage. In the opinion of management, this
method of allocation was reasonable and allocated expenses approximated what
the Company would have incurred on a stand-alone basis. Intercompany
transactions and balances have been eliminated in consolidation.
F-15
<PAGE>
The following pro forma summary represents the consolidated results for the
nine months ended September 30, 1998 and the year ended December 31, 1997 as if
the 1997 Acquisitions and the 1998 Acquisitions had occurred at January 1,
1997, after giving effect to certain adjustments, including amortization of
intangible assets and interest expense on the acquisition debt. These pro forma
results have been included for comparative purposes only and do not purport to
be indicative of what would have occurred had the acquisitions been made as of
that date or of results which may occur in the future (in thousands).
<TABLE>
<CAPTION>
PRO FORMA
Nine Months Ended Year Ended
September 30, 1998 December 31, 1997
-------------------- ------------------
<S> <C> <C>
Revenues $ 925,094 $ 883,901
Net loss applicable to common shares $ (38,486) $ (52,714)
Loss applicable to common shares $ (1.29) $ (1.76)
</TABLE>
3. FINANCING
Note Offering and Guarantees by Subsidiaries
On February 11, 1998, the Company completed an offering of $350.0 million
9 1/8% Senior Subordinated Notes (the "Notes" and "Note Offering") due 2008.
Interest is payable on the Notes on February 1 and August 1 of each year. On
July 15, 1998, the Company consummated the exchange of substantially identical
publicly registered notes (the "Exchange Notes") for all outstanding Notes. All
Notes were tendered for exchange and were cancelled upon the issuance of the
same principal amount of Exchange Notes.
The Company is a holding company that has no operating assets or operations of
its own. Substantially all of the Company's subsidiaries are wholly owned and
have jointly and severally guaranteed the Company's indebtedness represented by
the Exchange Notes (the "Guarantors"). Certain subsidiaries which are not
wholly owned (the "Non-Guarantor Subsidiaries"), do not guarantee such
indebtedness.
Full financial statements of the Guarantors and Non-Guarantor Subsidiaries have
not been included because, pursuant to their respective guarantees, the
Guarantors are jointly and severally liable with respect to the Exchange Notes
and management believes that the Non-Guarantor Subsidiaries are not material to
the Company on a consolidated basis. Accordingly, the Company does not believe
that the information contained in separate full financial statements of the
Guarantors or Non-Guarantor Subsidiaries would be material to investors. The
following are summarized unaudited statements setting forth certain financial
information concerning the Guarantors and Non-Guarantor Subsidiaries as of and
for the nine months ended September 30, 1998 (in thousands).
F-16
<PAGE>
<TABLE>
<CAPTION>
SFX SFX
Entertainment Non-Guarantor Entertainment
Inc. Guarantors Subsidiaries Eliminations Consolidated
--------------- -------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Current assets $ 8,910 $ 148,522 $ 8,295 $ -- $ 165,727
Property and equipment, net 8,905 256,182 9,913 -- 275,000
Goodwill and other intangible assets,
net 29,972 853,660 21,297 -- 904,929
Investment in subsidiaries 1,111,914 22,406 -- (1,111,914) 22,406
Other assets 3,648 16,768 3,070 -- 23,486
---------- ---------- ------- ------------ ----------
Total assets $1,163,349 $1,297,538 $42,575 $ (1,111,914) $1,391,548
========== ========== ======= ============ ==========
Current liabilities $ 42,455 $ 127,678 $ 3,632 $ -- $ 173,765
Long-term debt, less current portion 697,753 29,379 12,767 (12,767) 727,132
Other liabilities 10,430 63,179 463 -- 74,072
Minority interest -- 2,579 1,289 -- 3,868
Temporary equity 16,500 -- -- -- 16,500
Shareholders' equity 396,211 1,074,723 24,424 (1,099,147) 396,211
---------- ---------- ------- ------------ ----------
Total liabilities and shareholders'
equity $1,163,349 $1,297,538 $42,575 $ (1,111,914) $1,391,548
========== ========== ======= ============ ==========
Revenue $ -- $ 659,858 $20,518 $ -- $ 680,376
Operating expenses 48,047 615,916 17,690 -- 681,653
Interest expense, net 27,669 591 507 (524) 28,243
Minority interest -- 392 922 -- 1,314
Income from equity investments -- (3,964) -- -- (3,964)
Provision for income taxes -- 3,333 -- -- 3,333
---------- ---------- ------- ------------ ----------
Net (loss) income $ (75,716) $ 43,590 $ 1,399 $ 524 $ (30,203)
========== ========== ======= ============ ==========
Cash flow from operations $ (45,994) $ 70,023 $(1,722) $ -- $ 22,307
Cash flow used in investing activities (844,051) (7,816) (373) -- (852,240)
Cash flow from financing activities 891,252 (1,704) (5) -- 889,543
Cash at the beginning of the period -- 2,916 3,063 -- 5,979
---------- ---------- --------- ------------ ----------
Cash at the end of the period $ 1,207 $ 63,419 $ 963 $ -- $ 65,589
========== ========== ========= ============ ==========
</TABLE>
The following are summarized unaudited statements setting forth certain
financial information concerning the Guarantors and Non-Guarantor Subsidiaries
as of and for the three months ended September 30, 1998 (in thousands).
<TABLE>
<CAPTION>
SFX SFX
Entertainment Non-Guarantor Entertainment
Inc. Guarantors Subsidiaries Eliminations Consolidated
--------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenue $ -- $372,039 $15,995 $ -- $388,034
Operating expenses 7,745 335,722 12,950 -- 356,417
Interest expense, net 12,361 119 208 (167) 12,521
Minority interest -- (7) 923 -- 916
Income from equity investments -- (2,139) -- -- (2,139)
Provision for income taxes -- 1,983 -- -- 1,983
--------- --------- ------- ------ --------
Net (loss) income $ (20,106) $36,361 $ 1,914 $ 167 $ 18,336
========= ========= ======= ====== ========
</TABLE>
Credit Agreement
On February 26, 1998, the Company executed a Credit and Guarantee Agreement
(the "Credit Agreement" or "Credit Facility") which established a $300.0
million senior secured credit facility comprised of (i) a $150.0 million
eight-year term loan (the "Term Loan") and (ii) a $150.0 million seven-year
reducing revolving credit facility (the "Revolver"). In addition, in September
1998, the Company received an increase in its borrowing availability under the
Revolver by $50.0 million, which increased the Company's availability under the
Credit Agreement to $350.0 million. Loans outstanding under the Credit Facility
bear interest, at the Company's option, at 1.875 to 2.375 percentage points
over LIBOR or the greater of the Federal Funds rate plus 0.50% or the Bank of
New York's prime rate. The interest rate spreads on the Term Loan and the
Revolver are adjusted based on the Company's Total Leverage Ratio (as defined
in the Credit Agreement). The Company pays a per annum commitment fee on unused
availability under the Revolver of 0.50% to the extent that the Company's
Leverage Ratio is greater than or equal to 4.0 to 1.0, and 0.375% if such ratio
is less than
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<PAGE>
4.0 to 1.0 and a per annum letter of credit fee equal to the Applicable LIBOR
Margin (as defined in the Credit Agreement) for the Revolver then in effect.
Borrowings under the Credit Agreement are secured by substantially all of the
assets of the Company, including a pledge of the outstanding stock of
substantially all of its subsidiaries and guaranteed by all of the Company's
subsidiaries. As of November 13, 1998, the Company had borrowed $346.0 million
under the Credit Agreement to consummate certain of the 1998 Acquisitions.
In addition, the Company has received a commitment letter from its lenders to
replace its existing credit facility with a new $600.0 million credit facility.
The new facility is subject to the execution of a definitive agreement and will
differ from the current credit facility in several respects including
applicable financial ratios, interest rate margins and term of repayment. The
Company and its lenders are presently reviewing the pending commitment in light
of recent developments in the credit markets. The Company may renegotiate the
existing commitment, which renegotiations may significantly alter the principal
terms, or the Company may consider alternative forms of debt financing. If a
new credit facility is consummated and the terms of the agreement are
substantially different than the terms of the existing credit facility, the
Company may be required to write off the remaining deferred financing costs
related to the current credit facility in the form of an extraordinary loss.
Equity Offering
On May 27, 1998, the Company consummated an offering of 8,050,000 shares of
Class A Common Stock at an offering price of $43.25 per share (the "Equity
Offering"). The proceeds received by the Company, after deducting the
underwriting discount and offering expenses, were approximately $329.0 million.
The proceeds were used to (i) repay certain indebtedness and consummate certain
of the 1998 Acquisitions and (ii) pay $93.7 million of the tax indemnification
obligation related to the Spin-Off (see Note 6).
4. CAPITAL STOCK
In order to facilitate the Spin-Off, the Company revised its capital structure
to increase its authorized capital stock and to effect a stock split. The
authorized capital stock of the Company consists of 110,000,000 shares of
Common Stock (comprised of 100,000,000 shares of Class A Common Stock and
10,000,000 shares of Class B Common Stock), and 25,000,000 shares of preferred
stock, par value $.01 per share.
In the Spin-Off, (a) 13,579,024 shares of Class A Common Stock were distributed
to holders on the Spin-Off record date of SFX Broadcasting's Class A Common
Stock, Series D preferred stock and interests in SFX Broadcasting's director
deferred stock ownership plan, including 609,856 shares of Class A Common Stock
issued upon the exercise of certain warrants of SFX Broadcasting and (b)
1,047,037 shares of Class B Common Stock were distributed to holders on the
Spin-Off record date of SFX Broadcasting Class B Common Stock. The financial
statements have been retroactively adjusted to reflect this transaction.
Holders of Class A Common Stock and Class B Common Stock vote as a single class
on all matters submitted to a vote of the stockholders, with each share of
Class A Common Stock entitled to one vote and each share of Class B Common
Stock entitled to ten votes, except (a) for the election of directors, (b) with
respect to any "going private" transaction between the Company and Mr.
Sillerman or any of his affiliates and (c) as otherwise provided by law.
The Board of Directors has the authority to issue preferred stock and will
assign the designations and rights at the time of issuance.
During January 1998, the Board of Directors and SFX Broadcasting, as sole
stockholder, approved and adopted a stock option and restricted stock plan
providing for the issuance of restricted shares of the Company's Class A Common
Stock and options to purchase shares of the Company's Class A Common Stock
totaling up to 2,000,000 shares. In January 1998, the Company granted options
exercisable for an aggregate of 345,000 shares of the Company's Class A Common
Stock at an exercise price of $5.50 which will vest over three years and 7,500
shares of the Company's Class A Common Stock at an exercise price of $5.50
which vests over one year. The Company will record non-cash compensation
charges over the three-year vesting period of approximately $3.3 million
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<PAGE>
annually. Between April and August 1998, the Company granted options
exercisable for an aggregate of 1,629,666 shares of Class A Common Stock at
exercise prices ranging from $29.125 to $45.875.
During January 1998, in connection with the expectation of certain executive
officers entering into employment agreements with the Company, the Board of
Directors, upon recommendation of the Compensation Committee, approved the sale
of an aggregate of 650,000 shares of the Company's Class B Common Stock and
190,000 shares of the Company's Class A Common Stock to certain officers for a
purchase price of $2.00 per share. Such shares were issued in April 1998. A
non-cash charge to earnings was recorded by the Company in the second quarter
of approximately $23.9 million associated with the sale.
The Board of Directors also approved the issuance of shares of the Company's
Class A Common Stock to holders of stock options or stock appreciation rights
("SARs") of SFX Broadcasting as of the Spin-Off record date, whether or not
vested. The issuance was approved to allow such holders of these options or
SARs to participate in the Spin-Off in a similar manner to holders of SFX
Broadcasting's Class A Common Stock. Additionally, many of the option holders
will become officers, directors and employees of the Company.
5. NON-CASH CHARGES
Non-cash charges recorded in the second and third quarters of 1998 of $32.9
million consisted of (a) $23.9 million of compensation related to the sale of
650,000 shares of Class B Common Stock and 190,000 shares of Class A Common
Stock at a purchase price of $2.00 per share to certain executive officers
pursuant to employment agreements, (b) $7.5 million associated with the
issuance of 247,177 shares of Class A Common Stock to Mr. Robert F.X.
Sillerman, Executive Chairman of the Company, in connection with the repurchase
of shares of SFX Broadcasting issued to the sellers of the Meadows and (c) $1.5
million related to the issuance of stock options to certain executive officers
pursuant to employment agreements exercisable for an aggregate of 352,500
shares of Class A Common Stock.
In addition, a $2.7 million write down of the remaining balance of the deferred
expense relating to the Triathlon Broadcasting Company ("Triathlon") agreement
was recorded in the second quarter of 1998 as a result of Triathlon's recent
agreement to be acquired by a third party. If a third party acquires Triathlon,
the consulting fee agreement would be terminated. The write down was recorded
as a charge to amortization expense.
6. SPIN-OFF
Pursuant to the terms of the Spin-Off, SFX Broadcasting contributed to the
Company all of the assets relating to its live entertainment businesses and the
Company assumed all of SFX Broadcasting's liabilities pertaining to the live
entertainment businesses, as well as certain other liabilities including the
obligation to make change of control payments to certain employees of SFX
Broadcasting of approximately $5.0 million, as well as the obligation to
indemnify one-half of certain of these employees' excise tax. At the time of
the Broadcasting Merger, the Company preliminarily received $2.0 million of net
Working Capital (as defined in the Broadcasting Merger Agreement). Any
additional payments which may be payable upon the final determination of the
Working Capital will be reflected as an increase or decrease, as the case may
be, to equity.
In connection with the Spin-Off, the Company entered into a tax sharing
agreement with SFX Broadcasting. Pursuant to the tax sharing agreement, as
amended, the Company is responsible for certain taxes incurred by SFX
Broadcasting, including income taxes imposed with respect to income generated
by the Company for periods prior to the Spin-Off and taxes resulting from gain
recognized by SFX Broadcasting in the Spin-Off. The Company believes that the
amount of taxes it will be required to pay in connection with the Spin-Off will
be approximately $108.0 million, of which $93.7 million was paid on or before
September 30, 1998. The remaining $14.3 million portion of the tax indemnity
payment is payable on December 31, 1998. Management's estimates of the amount
of the indemnity payment are based on assumptions which management believes are
reasonable. However, upon the completion of all final tax returns, including
any potential tax audits, such assumptions could be modified in a manner that
would result in a significant variance in the actual amount of the tax
indemnity.
F-19
<PAGE>
7. DILUTIVE EARNINGS PER SHARE
A reconciliation of the number of shares used for calculating basic earnings
per common share and diluted earnings per common share for the three months
ended September 30, 1998 follows:
<TABLE>
<S> <C>
Average number of common shares outstanding 30,420,883
Effect of stock options 460,894
----------
30,881,777
==========
</TABLE>
Options to purchase 1,117,666 shares of common stock at prices ranging from
$43.25 to $45.88 were outstanding at September 30, 1998, but were not included
in the computation of diluted earnings per common share because the options'
exercise price was greater than the average market price of the Company's
common stock during the three months ended September 30, 1998. In addition,
diluted earnings per share was not adjusted for the impact of common stock
issued to the PACE sellers, which is subject to redemption by the Company,
because to do so would have been antidilutive.
Outstanding stock options at September 30, 1998 had no dilutive effect on basic
earnings per share during the nine months ended September 30, 1998 due to the
Company's net loss position. The Company did not have any dilutive securities
outstanding during the nine-months and three-months ended September 30, 1997.
8. COMMITMENTS AND CONTINGENCIES
Pursuant to a real estate purchase agreement with the sellers of Oakdale, the
Company has agreed to purchase the land, building and improvements of the
Oakdale Theater at the end of the Company's fifteen-year lease of the premises
in June 2013 for $15.4 million. In June 1998, the Company extended an $11.4
million note receivable to the sellers which is secured by the property.
While the Company is involved in several law suits and claims arising in the
ordinary course of business, the Company is not currently a party to any legal
proceeding that the Company believes would have a material adverse effect on
its business, financial position or results of operations.
9. SUBSEQUENT EVENTS
Pending Acquisitions
Marquee
The Company has entered into an agreement and plan of merger (the "Marquee
Merger Agreement"), dated as of July 23, 1998, as amended, with The Marquee
Group, Inc. ("Marquee"), pursuant to which Marquee will become a wholly-owned
subsidiary of the Company. Pursuant to the Marquee Merger Agreement, at the
effective time of the merger, for each outstanding share of common stock of
Marquee: (i) if the Company's stock price is $42.75 or less, Marquee
shareholders will receive 0.1111 shares of the Company's Class A Common Stock;
(ii) if the Company's stock price is over $42.75 but no more than $60.00,
Marquee shareholders will receive $4.75 worth of the Company's Class A Common
Stock; (iii) if the Company's stock price is over $60.00, but no more than
$66.00, Marquee shareholders will receive between $4.75 and $5.35 worth of the
Company's common stock; or (iv) if the Company's stock price is over $66.00,
Marquee shareholders will receive $5.35 worth of the Company's Class A Common
Stock. Marquee is a publicly traded company that provides integrated event
management, television production, marketing and consulting services in the
sports, news and entertainment industries. The Company expects to incur
approximately $6.0 million in fees and expenses related to the transaction.
Cellar Door
On August 13, 1998, the Company and the beneficial owner of all of the
outstanding equity interests of the entities comprising the Cellar Door Group
of Companies (collectively, "Cellar Door") entered into a letter of intent with
respect to the Company's acquisition of all of the outstanding capital stock of
Cellar Door (the "Cellar Door Acquisition"). Pursuant to the letter of intent,
the aggregate
F-20
<PAGE>
purchase price for Cellar Door will be $70.0 million in cash payable at
closing, Class A Common Stock with a value of $20.0 million (based upon the
average closing price of the Class A Common Stock for the twenty business day
period ending on the business day prior to the closing) and $8.5 million
payable in five equal annual installments beginning on the first anniversary of
the closing date. In addition, the Company will issue to the seller options to
purchase 100,000 shares of the Company's Class A Common Stock. The closing will
be subject to customary closing conditions, including the entry into a
definitive acquisition agreement and obtaining the required approval under the
HSR Act (as defined herein). If the Company is unable to complete the Cellar
Door Acquisition, it may be required to pay the seller $10.0 million as
liquidated damages. Cellar Door is a leading promoter and producer of live
entertainment events. The Company expects to incur approximately $1.5 million
in fees and expenses related to the transaction.
The Marquee merger and the Cellar Door Acquisition are collectively referred to
herein as the "Pending Acquisitions." The Company expects to complete the
Pending Acquisitions during the first quarter of 1999. However, the timing and
completion of the Pending Acquisitions are subject to a number of conditions,
including the approval of the stockholders of Marquee, the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 for the Cellar Door Acquisition, and the
receipt of all applicable consents from third parties and regulatory agencies.
Certain of these conditions are beyond the Company's control and there can be
no assurance that each of the Pending Acquisitions will be consummated during
the first quarter of 1999, on the terms described herein, or at all. In
connection with the HSR Act filing for the Marquee merger, the Company received
notice of a preliminary inquiry from the Antitrust Division of the U.S.
Department of Justice relating to the Cellar Door Acquisition and seeking
information on the overall scope of the Company's operations. The Company
intends to cooperate with the Department of Justice inquiry. While the Company
believes that the Cellar Door Acquisition, along with the Company's overall
business and plan of acquisitions, are in compliance with applicable antitrust
laws, there can be no assurance that the results of such inquiry will not have
a material adverse impact on the Company's ability to consummate the Cellar
Door Acquisition or its business, results of operations and financial
conditions.
ISI
In January 1999, the Company entered into a definitive agreement to acquire
Integrated Sports International ("ISI") for an aggregate purchase price of
$14.1 million in cash and 60,000 shares of Class A Common Stock. In addition,
during the five-year period following the closing of the acquisition, the
Company may be required to make additional payments of up to $7.5 million in
cash and 50,000,000 shares of Class A Common Stock based on the achievement of
ISI of certain target levels of EBITDA, as defined in the acquisition
agreement, during such period. The Company expects to complete the ISI
acquisition during the first quarter of 1999. The Company would be required to
pay liquidated damages of $2.0 million to ISI in the event it is not able to
close the acquisition on or prior to April 15, 1999.
Nederlander
On February 1, 1999, the Company and the owners of Nederlander entered into
definitive agreements for the acquisition of certain interests in seven venues
and other assets of Nederlander for an aggregate purchase price of approximately
$93.6 million in cash plus future earn-out payments depending on the level of
future earnings generated.
Stock Incentive Plan
Following a recommendation of the Company's compensation committee, the Company
has, subject to stockholder approval, adopted a new incentive stock option plan
covering options to acquire up to three million shares of the Company's Class A
Common Stock. The plan will be designed to broaden the equity ownership of the
Company's employees at all levels. The Company anticipates that the proposed
stock plan will be submitted to a vote of the stockholders at the Company's
first annual meeting scheduled to be held in the spring of 1999.
Note Offering
On November 25, 1998, the Company completed an offering of $200.0 million in
principal amount of 9 1/8% Senior Subordinated Notes due December 1, 2008.
Interest is payable on the notes on June 1 and December 1 of each year.
Common Stock Offering
In January 1999 the Company filed a registration statement on Form S-1 with the
Securities and Exchange Commission for the registration of 5,520,000 shares of
its Class A Common Stock.
F-21
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
SFX Entertainment, Inc.
We have audited the accompanying consolidated balance sheet of SFX
Entertainment, Inc. as of December 31, 1997, and the related consolidated
statements of operations and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of SFX Entertainment, Inc. at December 31, 1997, and the consolidated results
of their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
March 5, 1998, except
for Notes 1 and 11, as to
which the date is April 27, 1998
F-22
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Delsener/Slater Enterprises, Ltd.
We have audited the accompanying consolidated balance sheet of
Delsener/Slater Enterprises, Ltd. and Affiliated Companies as of December 31,
1996, and the related consolidated statements of operations and cash flows for
each of the two years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Delsener/Slater Enterprises, Ltd. and Affiliated Companies at December 31,
1996, and the consolidated results of their operations and their cash flows for
each of the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
October 2, 1997
F-23
<PAGE>
SFX ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
PREDECESSOR
1997 1996
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................................... $ 5,979 $5,253
Accounts receivable ......................................................... 3,831 159
Prepaid expenses and other current assets ................................... 1,410 779
-------- ------
Total current assets ......................................................... 11,220 6,191
Property and equipment, net .................................................. 59,685 2,231
Deferred acquisition costs ................................................... 6,213 --
Goodwill, net ................................................................ 60,306 --
Investment in unconsolidated subsidiaries .................................... 937 458
Note receivable from employee ................................................ 900 --
Other assets ................................................................. 7,681 --
-------- ------
Total assets ................................................................. $146,942 $8,880
======== ======
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses ....................................... $ 2,715 $6,078
Deferred revenue ............................................................ 3,603 18
Income taxes payable ........................................................ 1,707 --
Due to stockholder .......................................................... -- 1,877
Due to SFX Broadcasting ..................................................... 11,539 --
Current portion of long-term debt ........................................... 923 --
Current portion of deferred purchase consideration .......................... 1,950 --
-------- ------
Total current liabilities .................................................... 22,437 7,973
Long-term debt, less current portion ......................................... 15,255 --
Deferred purchase consideration, less current portion ........................ 4,289 --
Deferred income taxes ........................................................ 2,817 --
Commitment and contingencies .................................................
Shareholder's equity (Note 11):
Capital contributed by SFX Broadcasting ...................................... 98,184 --
Preferred Stock, $.01 par value, 25,000,000 shares authorized, none issued and
outstanding ................................................................. -- --
Class A common stock, $.01 par value, 100,000,000 shares authorized,
13,579,024 issued and outstanding ........................................... 136 --
Class B common stock, $.01 par value, 10,000,000 shares authorized, 1,047,037
issued and outstanding ...................................................... 10 --
Combined stockholder's equity--predecessor ................................... -- 907
Retained earnings ............................................................ 3,814 --
-------- ------
Total shareholder's equity ................................................... 102,144 907
-------- ------
Total Liabilities and shareholder's Equity ................................... $146,942 $8,880
======== ======
</TABLE>
See accompanying notes.
F-24
<PAGE>
SFX ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
PREDECESSOR PREDECESSOR
1997 1996 1995
-------------- ------------- ------------
<S> <C> <C> <C>
Concert revenue ................................................ $ 96,144 $ 50,362 $47,566
Operating expenses:
Cost of revenue ............................................... 83,417 50,686 47,178
Depreciation and amortization ................................. 5,431 747 750
Corporate expenses, net of Triathlon fees of $1,794 in
1997 ......................................................... 2,206 -- --
----------- -------- -------
$ 91,054 $ 51,433 $47,928
----------- -------- -------
Income (loss) from operations .................................. 5,090 (1,071) (362)
Investment income .............................................. 295 198 178
Interest expense ............................................... (1,590) (60) (144)
Equity in pretax income of unconsolidated subsidiaries ......... 509 524 488
----------- -------- -------
Income (loss) before provision for income taxes ................ $ 4,304 $ (409) $ 160
Provision for income taxes ..................................... 490 106 13
----------- -------- -------
Basic and diluted net income (loss) ............................ $ 3,814 $ (515) $ 147
=========== ======== =======
Net income (loss) per common share ............................. $ 0.26
===========
Weighted average basic and dilutive common shares
outstanding ................................................... 14,445,061
===========
Pro Forma:
Income (loss) before provision for income taxes ................ $ 4,304 $ (409) $ 160
Pro forma provision for income taxes ........................... 2,540 106 13
----------- -------- -------
Pro forma net income (loss) .................................... $ 1,764 $ (515) $ 147
=========== ======== =======
Pro forma earnings per share ................................... $ 0.12
===========
</TABLE>
See accompanying notes.
F-25
<PAGE>
SFX ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
PREDECESSOR PREDECESSOR
1997 1996 1995
----------- ------------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ........................................... $ 3,814 $ (515) $ 147
Adjustment to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation of property and equipment ..................... 2,686 746 750
Amortization of goodwill ................................... 2,745 -- --
Equity in pretax income of unconsolidated subsidiaries,
net of distributions received ............................ (479) 16 2
Deferred income taxes .................................... (427) -- --
Changes in operating assets and liabilities, net of
amounts acquired:
Accounts receivable ...................................... (923) (159) 384
Prepaid expenses and other current assets ................ 419 (649) 374
Other assets ............................................. (275) -- --
Accounts payable and accrued expenses .................... (325) 4,759 (1,326)
Income taxes payable ..................................... 917 -- --
Deferred revenue ......................................... (7,147) 16 (784)
--------- -------- --------
Net cash provided by (used in) operating activities ......... 1,005 4,214 (453)
INVESTING ACTIVITIES:
Purchase of concert promotion businesses, net of cash
acquired ................................................. (71,213) -- --
Investment in GSAC Partnership ............................. -- (435) --
Purchase of property and equipment ......................... (2,083) -- --
--------- -------- --------
Net cash used in investing activities ....................... (73,296) (435) --
--------- -------- --------
FINANCING ACTIVITIES:
Capital contributed by SFX Broadcasting .................... 79,093 -- --
Payment of debt ............................................ (823) -- --
Proceeds from issuance of common stock and capital
contributions ............................................ -- 152 --
Loan from stockholder ...................................... -- 47 --
Distributions paid ......................................... -- (1,630) (216)
--------- -------- --------
Net cash provided by (used in) financing activities ......... 78,270 (1,431) (216)
Net increase in cash and cash equivalents ................... 5,979 2,348 (669)
Cash and cash equivalents at beginning of period ............ -- 2,905 3,574
--------- -------- --------
Cash and cash equivalents at end of period .................. $ 5,979 $ 5,253 $ 2,905
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ...................................... $ 1,504 $ 60 $ 144
========= ======== ========
Cash paid for income taxes .................................. $ -- $ 106 $ 13
========= ======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
o Issuance of equity securities, including deferred equity security issuance
and assumption of debt in connection with certain acquisitions (see Note 1).
o Agreements to pay future cash consideration in connection with certain
acquisitions (see Note 1).
o The balance sheet includes certain assets and liabilities which have been
contributed by SFX Broadcasting to the Company in connection with the
Spin-Off.
See accompanying notes.
F-26
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
SFX Entertainment, Inc. ("SFX" or the "Company") was formed as a
wholly-owned subsidiary of SFX Broadcasting, Inc. ("SFX Broadcasting") in
December 1997 and as the parent company of SFX Concerts, Inc ("Concerts").
Concerts was formed in January of 1997 to acquire and hold SFX Broadcasting's
live entertainment operations. During 1997, the Company made several
acquisitions as described below. The Company had no substantive operations
until its acquisition of Delsener/Slater Enterprises, Ltd. and Affiliated
Companies ("Delsener/Slater" or the "Predecessor") in January 1997, and
Delsener/Slater is considered the Company's predecessor for financial reporting
purposes.
Delsener/Slater
In January 1997, SFX Broadcasting acquired Delsener/Slater, a leading
concert promotion company, for an aggregate consideration of approximately
$27,600,000, including $2,900,000 for working capital and the present value of
deferred payments of $3,000,000 to be paid without interest over five years and
$1,000,000 to be paid without interest over ten years. Delsener/Slater has
long-term leases or is the exclusive promoter for seven of the major concert
venues in the New York City metropolitan area, including the Jones Beach
Amphitheater, a 14,000-seat complex located in Wantagh, New York, and the PNC
Bank Arts Center (formerly known as the Garden State Arts Center), a
17,500-seat complex located in Holmdel, New Jersey.
Meadows
In March 1997, the Company acquired the stock of certain companies which
own and operate the Meadows Music Theater (the "Meadows"), a 25,000-seat
indoor/outdoor complex located in Hartford, Connecticut for $900,000 in cash,
250,838 shares of SFX Broadcasting Class A Common Stock with a value of
approximately $7,500,000 and the assumption of approximately $15,400,000 in
debt.
Sunshine Promotions
In June 1997, the Company acquired the stock of Sunshine Promotions, Inc.
and certain other related Companies ("Sunshine Promotions"), one of the largest
concert promoters in the Midwest, for $53,900,000 in cash, of which $2,000,000
is payable over five years, 62,792 shares of SFX Broadcasting Class A Common
Stock issued with a value of approximately $2,000,000, shares of SFX
Broadcasting stock issuable over a two year period with a value of
approximately $2,000,000 and the assumption of approximately $1,600,000 of
debt. The shares of stock to be issued in the future are classified as deferred
purchase consideration on the balance sheet. Sunshine Promotions owns the Deer
Creek Music Theater, a 21,000-seat complex located in Indianapolis, Indiana,
and the Polaris Amphitheater, a 20,000-seat complex located in Columbus, Ohio,
and has a long-term lease to operate the Murat Centre (the "Murat"), a
2,700-seat theater and 2,200-seat ballroom located in Indianapolis, Indiana.
Pursuant to the Broadcasting Merger Agreement, the Company is responsible for
the payments owing under the Sunshine note, which by its terms accelerates upon
the change in control of SFX Broadcasting resulting from the consummation of
the Broadcasting Merger.
The Delsener/Slater, Meadows, and Sunshine Promotions acquisitions are
collectively referred to herein as the "Completed Acquisitions." The cash
portion of the Completed Acquisitions were financed through capital
contributions from SFX Broadcasting and were accounted for under the purchase
method of accounting. The purchase prices have been preliminarily allocated to
the assets acquired and are subject to change.
The accompanying consolidated financial statements as of December 31, 1997
include the accounts of Delsener/Slater, Sunshine Promotions, the Meadows, and
certain assets and liabilities which have been contributed by SFX Broadcasting
to the Company in connection with the Spin-Off
F-27
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(as defined herein) under the terms of the Broadcasting Merger (as defined
herein) Agreement. Operating results for the Completed Acquisitions are
included herein from their respective acquisition dates. Operating results
associated with the assets and liabilities to be contributed are included
herein. SFX Broadcasting provides various administrative services to the
Company. It is SFX Broadcasting's policy to allocate these expenses on the
basis of direct usage. In the opinion of management, this method of allocation
is reasonable and allocated expenses approximate what the Company would have
incurred on a stand-alone basis. Intercompany transactions and balances among
these companies have been eliminated in consolidation.
The following unaudited pro forma summary represents the consolidated
results for the years ended December 31, 1997 and 1996 as if the Completed
Acquisitions had occurred at the beginning of such year after giving effect to
certain adjustments, including amortization of goodwill and interest expense on
the acquisition debt. These pro forma results have been included for
comparative purposes only and do not purport to be indicative of what would
have occurred had the acquisition been made as of that date or of results which
may occur in the future (in thousands).
<TABLE>
<CAPTION>
PRO FORMA
(UNAUDITED)
----------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------- ------------------
<S> <C> <C>
Revenues ................ $110,387 $104,784
Net income .............. $ 221 $ 2,668
</TABLE>
Spin-Off
In August 1997, SFX Broadcasting agreed to the merger (the "Broadcasting
Merger Agreement") among SBI Holdings, Inc. (the "Buyer"), SBI Radio
Acquisition Corporation, a wholly-owned subsidiary of the Buyer, and SFX
Broadcasting (the "Broadcasting Merger") and to the spin-off of the Company to
the shareholders of SFX Broadcasting (the "Spin-Off"). The Spin-Off was
completed on April 27, 1998 and the Broadcasting Merger is expected to be
completed in the second quarter of 1998.
Pursuant to the terms of the Spin-Off, SFX Broadcasting contributed to the
Company all of its concert and other live entertainment assets along with an
allocation of working capital in an amount estimated by management of SFX
Broadcasting to be consistent with the proper operation of SFX Broadcasting,
and the Company assumed all of SFX Broadcasting's liabilities pertaining to the
live entertainment businesses, as well as certain other liabilities including
the obligation to make change of control payments to certain employees of SFX
Broadcasting of approximately $5,000,000 as well as the obligation to indemnify
one-half of certain of these employees' excise tax. At the time of the
Broadcasting Merger, SFX Broadcasting will contribute its positive Working
Capital (as defined in the Broadcasting Merger Agreement) to the Company. If
Working Capital is negative, the Company must pay the amount of the shortfall
to SFX Broadcasting. As of December 31, 1997, SFX Broadcasting had advanced
approximately $11,539,000 to the Company for use in connection with certain
acquisitions and capital expenditures. This obligation and other costs
subsequently incurred in connection with the Spin-Off were reimbursed with the
proceeds from the Senior Subordinated Notes and the Credit Agreement (see Note
2). SFX Broadcasting advanced additional amounts to the Company prior to the
consummation of the Spin-Off which were reimbursed in April 1998.
SFX Broadcasting and the Company entered into a tax sharing agreement.
Under the tax sharing agreement, the Company will agree to pay to SFX
Broadcasting the amount of the tax liability of SFX Broadcasting and the
Company combined, to the extent properly attributable to the Company for the
period up to and including the Spin-Off, and will indemnify SFX Broadcasting
for any tax adjustment made in subsequent years that relates to taxes properly
attributable to the Company during the period prior to and including the
Spin-Off. SFX Broadcasting, in turn, will indemnify the Company for any
F-28
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
tax adjustment made in years subsequent to the Spin-Off that relates to taxes
properly attributable to the SFX Broadcasting during the period prior to and
including the Spin-Off. The Company also will be responsible for any taxes of
SFX Broadcasting resulting from the Spin-Off, including any income taxes but
only to the extent that the income taxes result from the gain on the
distribution that exceeds the net operating losses of SFX Broadcasting and the
Company available to offset such gain including net operating losses generated
in the current year prior to the Spin-Off.
The actual amount of the gain will be based on the excess of the value of
the Company's Common Stock on the date of the Spin-Off over the tax basis of
that stock. The Company believes that the value of the Company's Common Stock
for tax purposes will be determined by no later than the first trading day
following the date on which the Company's Common Stock is distributed in the
Spin-Off. Increases or decreases in the value of the Company's Common Stock
subsequent to such date will not effect the tax liability. The Company expects
that such indemnity payment will be due on or about June 15, 1998.
2. RECENT ACQUISITIONS AND FINANCING
On February 11, 1998, SFX completed the private placement of $350.0
million of 9 1/8% Senior Subordinated Notes (the "Notes") due 2008. Interest is
payable on the Notes on February 1 and August 1 of each year.
On February 26, 1998 the Company executed a Credit and Guarantee Agreement
(the "Credit Agreement") which established a $300.0 million senior secured
credit facility comprised of (i) a $150.0 million eight-year term loan (the
"Term Loan") and (ii) a $150.0 million seven-year reducing revolving credit
facility. Loans outstanding under the Credit Facility bear interest, at the
Company's option, at 1.875 to 2.375 percentage points over LIBOR or the greater
of the Federal Funds rate plus 0.50% or BNY's prime rate. The interest rate
spreads on the Term Loan and the Revolver will be adjusted based on the
Company's Total Leverage Ratio (as defined in the Credit Agreement). The
Company will pay a per annum commitment fee on unused availability under the
Revolver of 0.50% to the extent that the Company's Leverage Ratio is greater
than or equal to 4.0 to 1.0, and 0.375% if such ratio is less than 4.0 to 1.0
and a per annum letter of credit fee equal to the Applicable LIBOR Margin (as
defined in the Credit Agreement) for the Revolver then in effect. The Revolver
and Term Loan contain provisions providing that, at its option and subject to
certain conditions, the Company may increase the amount of either the Revolver
or Term Loan by $50.0 million. Borrowings under the Credit Agreement are
secured by substantially all of the assets of the Company, including a pledge
of the outstanding stock of substantially all of its subsidiaries and
guaranteed by all of the Company's subsidiaries. On February 27, 1998, the
Company borrowed $150.0 million under the Term Loan. Together with the proceeds
from the Notes, the proceeds from the Term Loan were used to finance the Recent
Acquisitions (as defined below.)
On February 24, 1998, the Company acquired all of the outstanding capital
stock of BG Presents ("BGP"), one of the oldest promoters of, and
owner-operators of venues for, live entertainment in the United States, and a
leading promoter in the San Francisco Bay area (the "BGP Acquisition"), for
total consideration of approximately $80,300,000 (including the repayment of
$12,000,000 in BGP debt and the issuance upon the Spin-Off of 562,640 shares of
common stock of the Company valued by the parties at $7,500,000). The sellers
of BGP provided net working capital (as defined in the acquisition agreement)
at the closing in an amount equal to or greater than long-term debt.
On February 25, 1998, the Company acquired all of the outstanding capital
stock of PACE Entertainment Corporation ("PACE"), one of the largest
diversified producers and promoters of live entertainment in the United States,
having what the Company believes to be the largest distribution network in the
United States in each of its music, theater and specialized motor sports
businesses (the "PACE Acquisition"), for total consideration of approximately
$150,100,000 (including issuance upon
F-29
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the Spin-Off of 1,500,000 shares of the Company's common stock valued by the
parties at $20,000,000 and assumption of approximately $20,600,000 of debt).
Under the terms of the agreement, additional cash consideration would be
required if the deemed value of the Company's common stock was less than $13.33
per share as a result of changes in the consummation of acquisitions. In
related transactions, the Company acquired, for total consideration of
$90,600,000 comprised of $41,400,000 in cash, the repayment of approximately
$43,100,000 of debt and the assumption of approximately $6,100,000 of debt
related to a capital lease, the 66 2/3% ownership interests of Blockbuster
Entertainment Corporation and Sony Music Entertainment, Inc. in Amphitheater
Entertainment Partnership, a partner of PACE in the Pavilion Partners venue
partnership. As a result, the Company owns 100% of Pavilion Partners.
The PACE acquisition agreement further provides that each seller of PACE
shall have an option, exercisable during a period beginning on the fifth
anniversary of the closing of the PACE acquisition and ending 90 days
thereafter, to require the Company to purchase up to one-third of the PACE
consideration stock received by such PACE seller for a cash purchase price of
$33.00 per share. With certain limited exceptions, these option rights are not
assignable by the PACE sellers.
Under the terms of an employment agreement to be entered into by the
Company with an officer of PACE, the officer will have the right, two years
from the date of the acquisition, to purchase PACE's motor sports division at
fair value. If the motor sports division has been sold by the Company, the
officer would be entitled to purchase PACE's theatrical division for the fair
value.
On February 27, 1998, the Company acquired the Contemporary Group
("Contemporary"), a fully-integrated live entertainment and special event
promoter and producer, venue owner and operator and consumer marketer, for
total consideration of approximately $101,400,000 comprised of $72,800,000 in
cash, a payment for working capital of approximately $9,900,000 and the
issuance upon the Spin-Off of 1,402,850 shares of common stock of the Company
valued by the parties at $18,700,000. (the "Contemporary Acquisition"). The
Contemporary Acquisition involved the merger of Contemporary International
Productions Corporation with and into the Company, the acquisition by a wholly
owned subsidiary of the Company of substantially all of the assets, excluding
certain cash and receivables, of the remaining members of Contemporary and the
acquisition by Contemporary of the 50% interest in the Riverport Amphitheater
Joint Venture not owned by Contemporary. If any of the Contemporary sellers
owns any shares of the Company's Class A Common Stock received in the
Contemporary Acquisition on the second anniversary of the closing date and the
average trading price of such stock over the 20-day period ending on such
anniversary date is less than $13.33 per share, then the Company will make a
one-time cash payment to each individual holding any such shares that is equal
to the product of (i) the quotient of the difference between (A) the actual
average trading price per share over such 20-day period and (B) $13.33 divided
by two, multiplied by (ii) the number of shares of Class A Common Stock of the
Company received by such individual in the Contemporary Acquisition and owned
as of such anniversary date.
On February 27, 1998, the Company acquired the Network Magazine Group
("Network Magazine"), a publisher of trade magazines for the radio broadcasting
industry, and SJS Entertainment Corporation ("SJS"), an independent creator,
producer and distributor of music-related radio programming, services and
research which it exchanges with radio broadcasters for commercial air-time
sold, in turn, to national network advertisers (the "Network Acquisition"), for
total consideration of approximately $66,800,000 comprised of $52,000,000 in
cash, a payment for working capital of approximately $1,800,000, reimbursed
sellers costs of $500,000, the purchase of an office building and property for
$2,500,000 and the issuance upon the Spin-Off of 750,188 shares of common stock
of the Company valued by the parties at $10,000,000. The $2,500,000 purchase of
the office building and property is comprised of cash of approximately $700,000
and the assumption of debt of approximately $1,800,000. The Company is also
obligated to pay the sellers an additional payment in
F-30
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
common stock or, at the Company's option, cash based on future operating
results, as defined, generated on a combined basis by Network Magazine and SJS
in 1998, up to a maximum of $14,000,000. In the Network Acquisition, the
Company, through a wholly owned subsidiary, acquired all of the outstanding
capital stock of each of The Album Network, Inc. and SJS Entertainment
Corporation and purchased substantially all of the assets and properties and
assumed substantially all of the liabilities and obligations of the Network 40,
Inc.
On March 4, 1998, the Company acquired Concert/Southern Promotions
("Concert/Southern"), a promoter of live music events in the Atlanta, Georgia
metropolitan area (the "Concert/Southern Acquisition"), for total cash
consideration of approximately $16,900,000, which includes a $300,000 payment
for working capital.
The PACE Acquisition, the Contemporary Acquisition, the Network
Acquisition, the BGP Acquisition and the Concert/Southern Acquisition are
collectively referred to herein as the "Recent Acquisitions."
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Cash and Cash Equivalents
The Company considers all investments purchased with a maturity of three
months or less to be cash equivalents. Included in cash and cash equivalents at
December 31, 1997 is $1,235,000 of cash which has been deposited in a separate
account and will be used to fund committed capital expenditures at PNC Bank
Arts Center.
Property and Equipment
Land, buildings and improvements and furniture and equipment are stated at
cost. Depreciation is provided on a straight-line basis over the estimated
useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and improvements ......... 7-40 years
Furniture and equipment ............ 5-7 years
</TABLE>
Leasehold improvements represent the capitalized costs to renovate the
Jones Beach Theatre. The costs to renovate the theatre included permanent
seats, a new stage and lavatory facilities. These costs are being amortized
over the term of the lease.
Goodwill
Goodwill represents the excess of the purchase price over the fair market
value of the assets purchased in the Completed Acquisitions and is net of
accumulated amortization of $2,745,000. Goodwill is being amortized using the
straight-line method over 15 years. Management reviews the carrying value of
goodwill against anticipated cash flows on a non-discounted basis to determine
whether the carrying amount will be recoverable.
Other Assets
Other assets includes $4,928,000 of costs associated with acquiring the
right to receive fees from Triathlon Broadcasting Company ("Triathlon"), an
affiliate, for certain financial consulting, marketing and administrative
services provided by the Company to Triathlon. Under the terms of the
agreement, the Company has agreed to provide consulting and marketing services
to Triathlon for an annual fee of $500,000, together with a refundable advance
of $500,000 per year against fees to be earned in respect of transactional
investment banking services. These fees, which are recorded as a reduction of
corporate, general and administrative expenses, will fluctuate based upon the
level of acquisition and
F-31
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
financing activity of Triathlon. The cost of acquiring the fees is being
amortized over the term of the agreement which expires on June 1, 2005.
Triathlon has announced its intention to enhance shareholder value through a
sale. The Company's management believes that the capitalized cost of acquiring
the right to receive fees from Triathlon is recoverable.
Revenue Recognition
The Company's operations and revenues are largely seasonal in nature, with
generally higher revenue generated in the second and third quarters of the
year. The Company's outdoor venues are primarily utilized in the summer months
and do not generate substantial revenue in the late fall, winter and early
spring. Similarly, the musical concerts that the Company promotes largely occur
in the second and third quarters. To the extent that the Company's
entertainment marketing and consulting relate to musical concerts, they also
predominantly generate revenues in the second and third quarters.
Revenue from ticket sales is recognized upon occurrence of the event.
Advance ticket sales are recorded as deferred revenue until the event occurs.
Risks and Uncertainties
Accounts receivable are due principally from ticket companies and venue
box offices. These amounts are typically collected within 20 days of a
performance. Generally, management considers these accounts receivable to be
fully collectible; accordingly, no allowance for doubtful accounts is required.
Certain other accounts receivable, arising from the normal course of business,
are reviewed for collectibility and allowances for doubtful accounts are
recorded as required. Management believes that no allowance for doubtful
accounts is required at December 31, 1996 or 1997.
The agreement governing the partnership through which PACE holds its
interest in the Lakewood Amphitheater in Atlanta, Georgia contains a provision
that purports to restrict PACE and its affiliates from directly or indirectly
owning or operating another amphitheater in Atlanta. In management's view, this
provision will not materially affect the business or prospects of the Company.
However, the Company acquired an interest in the Chastain Park Amphitheater,
also in Atlanta, in the Concert/Southern acquisition. The Company intends to
seek a waiver.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Advertising Costs
Advertising costs are expensed as incurred and approximated $7,109,000,
$4,896,000 and $2,687,000 in 1997, 1996, and 1995, respectively.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
statement requires a company to recognize deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
a company's financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the difference between the
financial statement carrying amounts and the tax bases of assets and
liabilities.
In 1998, the Company's income taxes are calculated on a stand alone basis
involving the period through April 27, 1998 in which the Company was a member
of SFX Broadcasting's Consolidated federal income tax return. In 1998, the
Company's income taxes reflected the federal benefit for the operating losses
of SFX Broadcasting.
F-32
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company calculates its tax provision on a separate company basis.
Loss Per Common Share
Basic loss per common share is based upon the net loss applicable to
common shares after preferred dividend requirements and upon the weighted
average of common shares outstanding during the period. Diluted loss per common
share adjusts for the effect of convertible securities and stock options only
in the periods presented in which such effect would have been dilutive. There
were no dilutive securities during the year ended December 31, 1997.
Earnings per share for the years ended December 31, 1996 and 1995 have not
been presented herein since the operations for those years relate to the
predecessor of the Company and such information would not be meaningful.
Reclassification
Certain amounts in 1995 and 1996 have been reclassified to conform to the
1997 presentation.
4. CONNECTICUT DEVELOPMENT AUTHORITY ASSISTANCE AGREEMENT
On September 12, 1994, the Connecticut Development Authority ("CDA")
entered into a non-recourse assistance agreement with the Meadows whereby the
CDA provided grant funds for the construction and development of the Meadows
through the issuance of State of Connecticut General Fund Obligation Bonds
("GFO Bonds"). The Meadows received bond proceeds of $8,863,000. Pursuant to
such agreement, the annual tax revenues derived from the operation of the
amphitheater are utilized to satisfy the annual service requirements under the
GFO Bonds. In the event that annual tax revenues derived from the operation of
the amphitheater do not equal annual service requirements under the GFO Bonds,
the Company must deposit the lesser of the operating shortfall, as defined, or
10% of the annual service under the GFO Bonds. An operating shortfall has not
existed since the inception of the CDA. The GFO Bonds mature on October 15,
2024 and have an average coupon rate of 6.33%. Annual service requirements,
including interest, on the GFO Bonds for each of the next five years and
thereafter are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1998 ............... $ 739
1999 ............... 737
2000 ............... 739
2001 ............... 740
2002 ............... 741
Thereafter ......... 16,399
-------
$20,095
=======
</TABLE>
The assistance agreement requires an annual Meadows attendance of at least
400,000 for each of the first three years of operations. It will not be
considered an event of default if the annual Meadows attendance is less than
400,000 provided that no operating shortfall exists for that year or if an
operating shortfall exists such amount has been deposited by the Company. If
there is an event of default, the CDA may foreclose on the construction
mortgage loan (see Note 5). If the amphitheater's operations are relocated
outside of Connecticut during the ten year period subsequent to the beginning
of the assistance agreement or during the period of the construction mortgage
loan, the full amount of the grant funds plus a penalty of 5% must be repaid to
the State of Connecticut.
F-33
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. LONG-TERM DEBT
The Predecessor did not have any long-term debt as of December 31, 1996.
As of December 31, 1997, the company's long-term debt, which is recorded at
present value, consisted of the following (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Meadows CDA Mortgage Loan .................. $ 7,411
Meadows Concession Agreement Loans ......... 5,872
Meadows CDA Construction Loan .............. 700
Murat notes payable ........................ 790
Meadows note payable ....................... 694
Polaris note payable ....................... 221
Capital lease obligations .................. 490
-------
16,178
Less current portion ....................... 923
-------
$15,255
=======
</TABLE>
Meadows CDA Mortgage Loan
On September 12, 1994, the CDA entered into a construction mortgage loan
agreement for $7,685,000 with the Meadows. The purpose of the loan was to
finance a portion of the construction and development of the Meadows. The loan
agreement contains substantially the same covenants as the CDA assistance
agreement (see Note 4). The mortgage loan bears interest at 8.73% and is
payable in monthly installments of principal and interest. The mortgage loan
matures on October 15, 2019.
The loan is collateralized by a lien on the Meadows' assets. The loan is
secured by an irrevocable standby letter of credit issued by the Company in the
amount of $785,000.
Meadows Concession Agreement Loans
In connection with the Meadows' concession agreement, the concessionaire
loaned the Meadows $4,500,000 in 1995 to facilitate the construction of the
amphitheater. Principal and interest at the rate of 7.5% per annum on the note
is payable via withholdings of the first $31,299 from each monthly concession
commission payment. As of December 31, 1997, the outstanding balance was
$4,343,000.
During 1995, the concessionaire loaned the Meadows an additional
$1,000,000. This loan bears interest at a rate of 9.75% per annum and is
payable via withholdings of an additional $11,900 of principal, plus interest,
from each monthly concession commission payment through December 20, 2002. As
of December 31, 1997, the outstanding balance was $679,000.
The concession agreement also required the Company to supply certain
equipment to the concessionaire at the Company's expense. The cost of the
equipment purchased by the concessionaire was converted to a note payable for
$884,000. The note bears interest at the rate of 9.25% per annum and provides
for monthly principal and interest payments of $10,185. However, the Company is
not required to make any principal or interest payments to the extent that 5%
of receipts, as defined, in any month are less than the amount of the payment
due. As of December 31, 1997, the outstanding balance was $850,000.
Meadows CDA Construction Loan
In March 1997, the Meadows entered into a $1,500,000 loan agreement with
the CDA of which $1,000,000 was funded in March 1997. Principal payments of
$150,000 are due on July 1 and October 1 of each year commencing July 1, 1997
through October 1, 2001. The note bears interest at the rate of
F-34
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.9% per annum through February 1, 1998, and thereafter at the index rate, as
defined, plus 2.5%. In addition, the Meadows is required to make principal
payments in an amount equal to 10% of the annual gross revenue, as defined, in
excess of $13,000,000 on or before the March 1 following each calendar year
commencing March 1, 1998. In 1997, gross revenues did not exceed the defined
threshold and thus no principal payment was made on March 1, 1998.
Murat Notes Payable
The Company has two loans payable to the Massachusetts Avenue Community
Development Corporation (MAC), an $800,000 non-interest bearing note and a
$1,000,000 note. Principal payments on the non-interest bearing note are the
lesser of $0.15 per Murat ticket sold during fiscal year or remaining net cash
flow, as defined. Interest on the other note is calculated annually and is
equal to the lesser of (1) $0.10 per Murat ticket sold during the fiscal year,
(2) prime plus 1% or (3) remaining net cash flow, as defined. Interest and
principal on the $1,000,000 note is payable at the lesser of $0.10 per Murat
ticket sold during fiscal year or remaining net cash flow, as defined.
Provisions of the $800,000 note payable requires the Murat to continue
making payments after the principal has been paid down equal to the lesser of
$0.15 per Murat ticket sold during the fiscal year or remaining cash flow.
These payments are to be made to a not-for-profit foundation and will be
designated for remodeling and upkeep of the theatre.
Meadows Note Payable
Under the terms of a Meadows ticket and sales agreement, a vendor loaned
the Company $824,500 and pays the Company an annual fee of $140,000 for nine
years commencing in March 1996. Proceeds from the annual fee are used by the
Company to make the annual principal and interest payments.
Polaris Note Payable
In 1994, a concessionaire advanced Sunshine Promotions $500,000 to be used
in the construction of the Polaris Amphitheater. The advance is interest free
and is payable in annual installments of $25,000 beginning in 1994 for a period
of 20 years.
Capital Lease Obligations
The Company has entered into various equipment leases. Interest on the
leases range from 6.5% to 18.67%.
Principal maturities of the long-term debt, notes payable and capital
lease obligations over the next five years as of December 31, 1997 are as
follows (in thousands):
<TABLE>
<CAPTION>
LONG-TERM DEBT AND CAPITAL LEASE
NOTES PAYABLE OBLIGATIONS
-------------------- --------------
<S> <C> <C>
1998 ................. $756 $167
1999 ................. 782 157
2000 ................. 611 113
2001 ................. 541 53
2002 ................. $537 --
</TABLE>
F-35
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. PROPERTY AND EQUIPMENT
The Company's property and equipment as of December 31, 1997 and 1996
consisted of the following (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
1997 1996
----------- ------------
<S> <C> <C>
Land .............................. $ 8,752 --
Building and improvements ......... 44,364 --
Furniture and equipment ........... 6,503 $ 131
Leasehold improvements ............ 2,676 6,726
-------- --------
62,295 6,857
Accumulated depreciation .......... (2,610) (4,626)
-------- --------
$ 59,685 $ 2,231
======== ========
</TABLE>
7. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
The Company is a 49% partner in a general partnership which subleases a
theater located in New York City. Income associated with the promotion of
concerts at this theater is recorded as concert revenue. Any such promotion
revenue recognized reduces the Company's share of the partnership's profits.
The Company is also a one-third partner in GSAC Partners, a general partnership
through which it shares in the income or loss of the PNC Bank Arts Center at
varying percentages based on the partnership agreement. The Company records
these investments on the equity method. In connection with the PACE
Acquisition, the Company agreed to purchase the interest in GSAC Partners that
it did not already own and in 1998 completed the purchase. Thus, the financial
position and operations of GSAC Partners will be consolidated into those of the
Company beginning in 1998.
The following is a summary of the unaudited financial position and results
of operations of the Company's equity investees (GSAC Partners in 1997 and 1996
only) as of and for the years ended December 31, 1997, 1996 and 1995 (in
thousands):
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR
1997 1996 1995
--------- ------------- ------------
<S> <C> <C> <C>
Current assets .................................. $ 2,818 $ 756 $ 214
Property, plant and equipment ................... 1,427 239 122
Other assets .................................... 239 819 --
------- ------- ------
Total assets .................................... $ 4,484 $ 1,814 $ 336
======= ======= ======
Current liabilities ............................. $ 1,621 $ 1,534 $ 264
Partners' capital ............................... 2,863 280 72
------- ------- ------
Total liabilities and partners' capital ......... $ 4,484 $ 1,814 $ 336
======= ======= ======
Revenue ......................................... $20,047 $16,037 $4,058
Expenses ........................................ 17,074 14,624 2,954
------- ------- ------
Net income ...................................... $ 2,973 1,413 $1,104
======= ======= ======
</TABLE>
The equity income recognized by the Company represents the appropriate
percentage of investment income less amounts reported in concert revenues for
shows promoted by the Company at these theaters. Such concert revenues of
unconsolidated subsidiaries was approximately $97,000, $205,000 and $110,000
for the years ended December 31, 1997, 1996 and 1995, respectively.
F-36
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
The provisions for income taxes for the years ended December 31, 1997,
1996 and 1995 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR
1997 1996 1995
------ ------------- ------------
<S> <C> <C> <C>
CURRENT:
Federal .............. -- -- --
State ................ $420 $106 $13
DEFERRED:
Federal .............. -- -- --
State ................ 70 -- --
---- ---- ---
Total ................ $490 $106 $13
==== ==== ===
</TABLE>
No Federal income taxes were provided in 1997 as a result of the Company's
inclusion in the consolidated federal income tax return with SFX Broadcasting.
If the Company had filed on a stand alone basis, its federal tax provision
would have been approximately $2,050,000, consisting of $1,760,000 in current
taxes and approximately $290,000 of deferred taxes. The Predecessor had no
Federal tax provision in 1996 or 1995 by virtue of the status of its profitable
included companies as S Corporations. State income taxes were provided to the
extent that S Corporation status was not recognized.
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the Company's deferred tax asset and liabilities as of December
31, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Deferred compensation ........................ $ 783
Deferred tax liabilities:
Depreciable assets ........................... $3,600
------
Net deferred tax liability ................... $2,817
======
</TABLE>
The Predecessor had no deferred tax liabilities as of December 31, 1996.
The acquisition of the Meadows resulted in the recognition of deferred tax
liabilities of approximately $3,200,000 under the purchase method of
accounting. These amounts were based upon the excess of the financial statement
basis over the tax basis in assets, principally fixed assets. The acquisition
of Delsener/Slater resulted in the recognition of deferred tax assets of
approximately $1,200,000 under the purchase method of accounting. These amounts
were based upon the excess of the financial statements basis over the tax basis
in assets, principally deferred compensation.
F-37
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At December 31, 1997, 1996, and 1995 the effective rate varies from the
statutory Federal income tax rate as follows (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
---------------------
1997 1996 1995
----------- ---------- --------
<S> <C> <C> <C>
Income taxes at the statutory rate ........................ $ 1,463 $ (139) $ 54
Effect of Subchapter S status ............................. -- 139 (54)
Nondeductible amortization ................................ 800 -- --
Travel and entertainment .................................. 20 -- --
Effect of consolidated return loss ........................ (2,283) -- --
State and local income taxes (net of Federal benefit) ..... 490 106 13
-------- ------ -----
Total provision ........................................... $ 490 $ 106 $ 13
======== ====== =====
</TABLE>
9. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
Pursuant to the terms of the Spin-Off, upon the consummation of the
Broadcasting Merger, the Company will assume all obligations under any
employment agreements or arrangements between SFX Broadcasting and any employee
of the Company.
While the Company is involved in several suits and claims in the ordinary
course of business, the Company is not now a party to any legal proceeding that
the Company believes would have a material adverse effect on its business.
The Company's operating leases includes primarily leases with respect to
venues, office space and land. Total rent expense was $2,753,000 , $875,000 and
$835,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
The lease terms range from 3 to 37 years. Prior to the Spin-Off, the Company
will enter into contracts with certain officers and other key employees. No
such contracts existed in 1997. The future minimum payments for all
noncancelable operating leases and employee agreements with initial terms of
one year or more are as follows (in thousands):
<TABLE>
<CAPTION>
EMPLOYMENT
OPERATING LEASES AGREEMENTS
------------------ -----------
<S> <C> <C>
1998 ................................ $ 3,366 $1,900
1999 ................................ 3,823 1,864
2000 ................................ 1,648 1,624
2001 ................................ 1,666 1,534
2002 ................................ 1,678 300
2003 and thereafter ................. 14,117 --
------- ------
$26,298 $7,222
======= ======
</TABLE>
The Company has committed to expansion projects at the Jones Beach Theater
and PNC Bank Arts Center and, in connection with the BGP Acquisition, for the
construction of a new amphitheater in the Seattle, Washington market. The Jones
Beach Theater and PNC Bank Arts Center expansions are expected to be completed
in June 1998 and to cost approximately $15,000,000 and $10,500,000,
respectively. As of December 31, 1997, approximately $1,018,000 and $1,500,000,
respectively, of these costs have been incurred. The new amphitheater in
Seattle is expected to cost $10,000,000 and is expected to be completed in the
spring of 1999.
As of December 31, 1997 and 1996, outstanding letters of credit for
$1,110,000 and $400,000, respectively, were issued by banks on behalf of the
Company as security for loans and the rental of theaters.
In connection with the acquisition of Delsener/Slater, SFX Broadcasting
entered into an employment agreement with each of Ron Delsener and Mitch Slater
pursuant to which each of Messrs. Delsener and Slater serve as Co-President and
Co-Chief Executive Officer of Delsener/Slater. Each of the employment
agreements continues until December 31, 2001 unless terminated earlier by the
Company for cause or voluntarily by Mr. Delsener or Mr. Slater.
F-38
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In certain cases, Messrs. Delsener and Slater have rights to purchase the
outstanding capital stock of Delsener/Slater for fair market value as defined
in their employment agreements.
Additionally, in the case of a return event, as defined, which may be
deemed to include the Spin-Off, the Broadcasting Merger and related
transactions, Messrs. Delsener and Slater have the right to receive a portion
of the excess of the proceeds of the return event over a fixed amount
determined in reference to the original purchase price for Delsener/Slater, all
as calculated pursuant to the Delsener and Slater employment agreements.
Management believes that, with respect to the Spin-Off, the Broadcasting Merger
and related transactions, no payment will accrue to Mr. Delsener or Mr. Slater
pursuant to their employment agreements.
The employment agreements further provide that Messrs. Delsener and Slater
shall be paid annual bonuses determined with reference to Delsener/Slater
profits, as defined, for the immediately preceding year. Management believes
that no such bonus was earned for the year ended December 31, 1997.
Messrs. Delsener and Slater and the Company are in the process of
negotiating amendments to their employment agreements to reflect, among other
things, the changes to the business of the Company as a result of the Recent
Acquisitions and the Spin-Off, and each of Messrs. Delsener and Slater have
agreed in principle to waive any rights which may accrue in connection with the
Broadcasting Merger or the Spin-Off. The Company also expects, in connection
with the foregoing, to negotiate mutually satisfactory amendments to certain of
Messrs. Delsener's and Slater's compensation arrangements, including bonus and
profit sharing provisions.
10. RELATED PARTY TRANSACTIONS
The Company's Executive Vice President, General Counsel and Director is Of
Counsel to the law firm of Baker & McKenzie. Baker & McKenzie serves as counsel
to the Company in certain matters. Baker & McKenzie compensates the executive
based, in part, on the fees it receives from providing legal services to the
Company and other clients originated by the executive. In 1997, the Company
incurred fees of approximately $2,948,000 for legal services related to the
Recent Acquisitions. Such fees were funded by SFX Broadcasting on behalf of the
Company. In February 1998, the Company reimbursed SFX Broadcasting for these
fees.
Due to stockholder represents the balance due to Mr. Delsener on his
advances to renovate the Jones Beach Theatre (the "Jones Beach Loan") and the
PNC Bank Arts Center (the "PNC Loan"). Delsener /Slater paid interest at 8% per
annum on the Jones Beach Loan, which was repaid in May 1996. The PNC Loan,
which was originated in 1996 was repaid in connection with the acquisition of
Delsener/Slater by SFX Broadcasting in 1997 (See Note 1).
11. CAPITAL STOCK
In order to facilitate the Spin-Off, the Company recently revised its
capital structure to increase its authorized capital stock and to effect a
stock split. The authorized capital stock of the Company consists of
110,000,000 shares of Common Stock (comprised of 100,000,000 shares of Class A
Common Stock and 10,000,000 shares of Class B Common Stock), and 25,000,000
shares of preferred stock, par value $.01 per share.
In the Spin-Off, (a) 13,579,024 shares of Class A Common Stock were
distributed to holders on the Spin-Off record date of SFX Broadcasting's Class
A common stock, Series D preferred stock and interests in SFX Broadcasting's
director deferred stock ownership plan, (b) 1,047,037 shares of Class B Common
Stock were distributed to holders on the Spin-Off record date of SFX
Broadcasting Class B common stock and (c) 609,856 shares of Class A Common
Stock were placed in escrow to be issued upon the exercise of certain warrants
of SFX Broadcasting. The financial statements have been retroactively adjusted
to reflect this transaction.
Holders of the Company's Class A Common Stock are entitled to one vote and
holders of the Company's Class B Common Stock are entitled to ten votes on all
matters submitted to a vote of
F-39
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
shareholders except for (a) the election of directors, (b) with respect to any
"going private" transaction involving the Chairman and (c) as otherwise
provided by law.
The Board of Directors has the authority to issue preferred stock and will
assign the designations and rights at the time of issuance.
12. DEFINED CONTRIBUTION PLAN
The Company sponsors a 401(k) defined contribution plan in which most
full-time employees are eligible to participate. The Plan presently provides
for discretionary employer contributions. There were no contributions in 1997.
13. SUBSEQUENT EVENTS (UNAUDITED)
During January 1998, the Board of Directors and SFX Broadcasting, as sole
stockholder, approved and adopted a stock option and restricted stock plan
providing for the issuance of restricted shares of the Company's Class A Common
Stock and options to purchase shares of the Company's Class A Common Stock
totaling up to 2,000,000 shares.
During January 1998, in connection with certain executive officers
entering into employment agreements with the Company, the Board of Directors,
upon recommendation of the Compensation Committee, approved the sale of an
aggregate of 650,000 shares of the Company's Class B Common Stock and 90,000
shares of the Company's Class A Common Stock to certain executive officers for
a purchase price of $2.00 per share. Such shares will be issued on or about the
effective date of the Spin-Off. A substantial non-cash charge to earnings will
be recorded by the Company at the time of the Spin-Off based on then fair value
of such shares.
In addition, the Board, upon recommendation of the Compensation Committee,
has approved the issuance of stock options exercisable for 1,002,500 shares of
the Company's Class A Common Stock. Of these options, 252,500 will vest over
three years and will have an exercise price of $5.50 per share, and the
remainder will vest over five years and will have an exercise price of $30.50.
The Company will record non-cash compensation charges over the three-year
period with respect to the 252,000 options to be issued to the extent that the
fair value of the Company's Class A Common Stock exceeds the exercise price of
such options.
Further, the Board of Directors has approved the issuance of shares of the
Company's Class A Common Stock to holders of stock options or stock
appreciation rights ("SARs") of SFX Broadcasting as of the Spin-Off record
date, whether or not vested. The issuance was approved to allow such holders of
these options or SARs to participate in the Spin-Off in a similar manner to
holders of SFX Broadcasting's Class A Common Stock. Additionally, many of the
option holders will become officers, directors and employees of the Company.
In connection with the acquisition of Meadows Music Theater, Broadcasting
obtained an option, as subsequently amended, to repurchase 247,177 shares of
its Class A common stock (the "Meadows Shares") for an aggregate purchase price
of $8.2 million (the "Meadow Repurchase"). However, Broadcasting was restricted
from exercising the Meadows Repurchase by certain loan covenants and other
restrictions. Pursuant to the terms of the Broadcasting Merger agreement, since
the Meadows Shares were outstanding at the effective time of the Broadcasting
Merger, Working Capital was decreased by approximately $10.3 Million.
In January 1998, Mr. Sillerman committed to finance the $8.2 million
exercise price of the Meadows Repurchase in order to offset the $10.3 million
reduction to Working Capital. In consideration for his commitment, the board of
directors of Broadcasting agreed that Mr. Sillerman would receive approximately
the number of shares of SFX's Class A common stock to be issued in the Spin-Off
with respect to the Meadows Shares. At the time Broadcasting accepted Mr.
Sillerman's commitment, the board of directors of Broadcasting valued SFX's
Class A common stock to be issued
F-40
<PAGE>
SFX ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
in the Spin-Off at $4.20 per share, the value attributed to such shares in the
fairness opinion obtained by Broadcasting in connection with the Broadcasting
Merger. The transaction was approved by Broadcasting's board of directors,
including the independent directors.
In April 1998, Broadcasting assigned the option for the Meadows Shares to
an unaffiliated third party and, in connection therewith, agreed to pay such
party a fee of $75,000. Mr. Sillerman subsequently advanced such party the $8.2
million exercise price for the Meadows Repurchase, the repayment of which
became due upon the Broadcasting Merger. The third party has exercised the
option and transferred to Mr. Sillerman SFX's Class A common stock issued in
the Spin-Off with respect to the Meadows Shares. The Meadows Shares were
tendered in the Broadcasting Merger by the third party in exchange for the per
share Broadcasting Merger consideration of $75. The third party subsequently
repaid the advance from Mr. Sillerman and transferred $10.3 million, the
remainder of such consideration net of the third party fee, to SFX.
F-41
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Connecticut Performing Arts, Inc. and
the Partners of Connecticut Performing Arts Partners:
We have audited the accompanying combined balance sheets of Connecticut
Performing Arts, Inc. and Connecticut Performing Arts Partners (collectively,
the Company) as of December 31, 1995 and 1996, and the related combined
statements of operations, shareholders' and partners' equity (deficit) and cash
flows for the years then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1995 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
March 21, 1997
F-42
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------
1995 1996
--------------- ---------------
<S> <C> <C>
ASSETS:
Current assets:
Cash ................................................................ $ 63,061 $ 6,778
Accounts receivable ................................................. 192,382 152,205
Accounts receivable -- related party ................................ 124,700 226,265
Prepaid interest .................................................... 54,982 54,279
Prepaid insurance ................................................... 69,797 87,869
Other current assets ................................................ 21,156 60,784
Deposit ............................................................. -- 110,000
Subscription receivable ............................................. 100 100
----------- ------------
Total current assets ............................................. 526,178 698,280
----------- ------------
Plant and equipment:
Building and building improvements .................................. 14,127,632 14,208,153
Furniture, fixtures and equipment ................................... 1,899,041 1,973,911
Leasehold improvements .............................................. 1,221,069 1,224,071
----------- ------------
17,247,742 17,406,135
Less: Accumulated depreciation and amortization ..................... (408,897) (1,620,297)
----------- ------------
16,838,845 15,785,838
----------- ------------
Other assets:
Deferred costs, net of accumulated amortization of $165,300 and
$503,766 in 1995 and 1996, respectively ............................ 2,453,553 2,115,087
Deposit ............................................................. 110,000 --
Other ............................................................... -- 2,332
----------- ------------
Total other assets ............................................... 2,563,553 2,117,419
----------- ------------
$19,928,576 $ 18,601,537
=========== ============
LIABILITIES AND SHAREHOLDERS' AND PARTNERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable .................................................... $ 915,280 $ 908,986
Accrued expenses .................................................... 1,356,132 655,207
Deferred income ..................................................... 679,476 737,440
Notes payable ....................................................... 1,100,000 1,450,000
Current portion of long-term debt and capital lease obligations ..... 493,362 824,800
----------- ------------
Total current liabilities ........................................ 4,544,250 4,576,433
----------- ------------
Long-term debt and capital lease obligations,
less current portion ............................................... 13,398,700 13,982,196
----------- ------------
COMMITMENTS AND CONTINGENCIES
(Notes 2, 4, 5, 6, 9 and 10)
Shareholders' and Partners' Equity (Deficit):
Shareholders' equity--
Common stock ....................................................... 1,000 1,000
Series A Preferred Stock ........................................... 1,346,341 1,372,174
Series B Preferred Stock ........................................... 1,250,000 1,250,000
Accumulated deficit ................................................ (273,114) (1,999,823)
Partners' equity (deficit) .......................................... (338,601) (580,443)
----------- ------------
Total shareholders' and partners' equity (deficit) ............... 1,985,626 42,908
----------- ------------
$19,928,576 $ 18,601,537
=========== ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-43
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996
---------------- ----------------
<S> <C> <C>
Operating revenues:
Concert revenue ....................... $ 6,830,681 $ 8,122,797
Cost of concerts ...................... (5,524,043) (6,191,777)
------------ ------------
1,306,638 1,931,020
Ancillary income ...................... 1,431,577 2,052,592
------------ ------------
2,738,215 3,983,612
------------ ------------
Operating expenses:
General and administrative ............ 3,068,162 3,080,914
Depreciation and amortization ......... 574,197 1,549,894
Other ................................. 20,046 33,577
------------ ------------
3,662,405 4,664,385
------------ ------------
Loss from operations ............... (924,190) (680,773)
Other income (expense):
Interest income ....................... 428,869 30,015
Interest expense ...................... (509,225) (1,274,660)
------------ ------------
Loss before income taxes ........... (1,004,546) (1,925,418)
Provision for income taxes ............ 10,796 17,300
------------ ------------
Net loss ........................... $ (1,015,342) $ (1,942,718)
============ ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-44
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
COMBINED STATEMENTS OF SHAREHOLDERS'
AND PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY (DEFICIT)
------------------------------------------- PARTNERS'
COMMON PREFERRED ACCUMULATED EQUITY
STOCK STOCK DEFICIT (DEFICIT)
--------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 .................... $1,000 $2,500,000 $ (32) $ 500,000
Accretion of Series A Preferred Stock ......... -- 96,341 (96,341) --
Net loss ...................................... -- -- (176,741) (838,601)
------ ---------- ------------ ----------
Balance, December 31, 1995 .................... 1,000 2,596,341 (273,114) (338,601)
Accretion of Series A Preferred Stock ......... -- 25,833 (25,833) --
Net loss ...................................... -- -- (1,700,876) (241,842)
------ ---------- ------------ ----------
Balance, December 31, 1996 .................... $1,000 $2,622,174 $ (1,999,823) $ (580,443)
====== ========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-45
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1996
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ....................................................... $ (1,015,342) $ (1,942,718)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization ................................. 574,197 1,549,894
Loss on disposal of equipment ................................. -- 1,031
Changes in operating assets and liabilities:
Accounts receivable ........................................... (192,382) 40,177
Accounts receivable -- related party .......................... -- (101,565)
Prepaid expenses and other assets ............................. (143,703) (59,329)
Accounts payable .............................................. -- (6,294)
Accrued expenses .............................................. 505,199 150,008
Deferred income ............................................... 679,476 57,964
------------- -------------
Net cash provided by (used in) operating activities ......... 407,445 (310,832)
------------- -------------
Cash flows from investing activities:
Purchases of plant and equipment .............................. (23,242,858) (159,452)
Grant proceeds ................................................ 7,680,161 --
Deferred start-up costs ....................................... (264,975) --
Accounts receivable -- related party .......................... 827,170 --
Accounts payable .............................................. (438,350) --
------------- -------------
Net cash used in investing activities ...................... (15,438,852) (159,452)
------------- -------------
Cash flows from financing activities:
Proceeds from borrowings on notes payable and long-term
debt ........................................................ 13,943,316 1,278,068
Repayments of notes payable, long-term debt and capital
lease obligations ........................................... (176,917) (864,067)
Proceeds from sales of common and preferred stock ............. 900 --
------------- -------------
Net cash provided by financing activities ................... 13,767,299 414,001
------------- -------------
Net decrease in cash ........................................... (1,264,108) (56,283)
Cash, beginning of year ........................................ 1,327,169 63,061
------------- -------------
Cash, end of year .............................................. $ 63,061 $ 6,778
============= =============
Supplemental Disclosures:
Cash Paid For--
Interest ...................................................... $ 554,342 $ 1,108,291
============= =============
Income taxes .................................................. $ 10,796 $ 17,300
============= =============
Noncash Transactions--
Capital lease obligations ..................................... $ 59,479 $ --
============= =============
Series A Preferred Stock accretion ............................ $ 96,341 $ 25,833
============= =============
Conversion of accrued expense for equipment purchase to
note payable ................................................ $ -- $ 850,933
============= =============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-46
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Operations --
Connecticut Performing Arts, Inc. (the Company) and Connecticut Performing
Arts Partners (the Partnership) were incorporated and formed, respectively, in
1993 pursuant to the laws of the State of Connecticut. The Company's
shareholders and the Partnership's partners are Nederlander of Connecticut,
Inc. and Connecticut Amphitheater Development Corporation. The Company's
shareholders and the Partnership's partners changed in March 1997 (see Note
10). The Company and Partnership are engaged in the ownership and operation of
an amphitheater in Hartford, Connecticut. The construction of the amphitheater
commenced in December 1994 and amphitheater operations commenced in July 1995.
Principles of combination --
The combined financial statements include the accounts of the Company and
the Partnership after elimination of intercompany accounts and transactions.
Use of estimates in the preparation of financial statements --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Plant and equipment --
Plant and equipment is carried at cost. Major additions and betterments
are capitalized, while replacements, maintenance and repairs which do not
extend the lives of the assets are charged to operations as incurred. Upon the
disposition of plant and equipment, any resulting gain or loss is recognized in
the statement of operations as a component of income.
The Company received grant funds from the City of Hartford and Connecticut
Development Authority related to the construction of the amphitheater (see Note
4). Such amounts have been accounted for as a reduction in the cost of the
amphitheater.
Depreciation of plant and equipment is provided for, commencing when such
assets become operational, using straight-line and accelerated methods over the
following estimated useful lives:
<TABLE>
<CAPTION>
USEFUL LIVES
-------------------
<S> <C>
Building and building improvements .......... 39 years
Furniture, fixtures and equipment ........... 4-7 years
Leasehold improvements ...................... Shorter of asset
life or lease term
</TABLE>
Effective January 1, 1996, the Company and Partnership adopted Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" which had no
effect upon adoption. This statement requires that long-lived assets and
certain identifiable intangible assets to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
F-47
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Deferred costs --
Deferred costs consist of start-up costs being amortized over a period of
5 years and deferred financing costs being amortized over the term of the
related debt (24 years and 4 months). As of December 31, 1995 and 1996 deferred
costs were as follows:
<TABLE>
<CAPTION>
1995 1996
------------- -------------
<S> <C> <C>
Deferred start-up ....................... $1,452,669 $1,452,669
Deferred financing ...................... 1,166,184 1,166,184
---------- ----------
2,618,853 2,618,853
Less: Accumulated amortization .......... (165,300) (503,766)
---------- ----------
$2,453,553 $2,115,087
========== ==========
</TABLE>
Deposit --
The deposit represents a deposit held by the City of Hartford related to
an employment agreement between the Partnership and the City of Hartford for
priority hiring of Hartford residents and utilization of minority business
enterprise or women business enterprise contractors and vendors in the future
operation of the amphitheater. The deposit will be returned to the Partnership
in December 1997 if the Partnership is in compliance with the employment
agreement. As of December 31, 1996, the Partnership has compensated the City of
Hartford for noncompliance with the terms of the agreement in connection with
the construction of the facility and the hiring of contractors and the City of
Hartford has agreed to make no additional claims with respect to this matter.
Income taxes --
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
statement requires a company to recognize deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
a company's financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the difference between the
financial statement carrying amounts and the tax bases of assets and
liabilities and net operating loss carryforwards available for tax reporting
purposes, using the applicable tax rates for the years in which the differences
are expected to reverse. A valuation allowance is recorded on deferred tax
assets unless realization is more likely than not.
The income tax effects of the operations of the Partnership accrue to the
partners in accordance with the terms of the Partnership agreement and are not
reflected in the accompanying combined financial statements.
Revenue recognition --
Revenue from ticket sales is recognized upon occurrence of the event.
Advance ticket sales are recorded as deferred income until the event occurs.
Ticket revenue is recorded net of payments in lieu of taxes under the terms of
the City of Hartford lease (see Note 6) and admission taxes.
Advertising --
The Company expenses the cost of advertising when the specific event takes
place. Advertising expense was $639,424 and $689,160 for the years ended
December 31, 1996 and 1995, respectively.
F-48
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. SHAREHOLDERS' EQUITY:
Common stock --
The Company is authorized to issue 5,000 shares of common stock with no
par value. The subscription receivable of $100 as of December 31, 1996
represents the amount due from shareholders for 100 shares of common stock at
$10 per share, of which $900 was received in February 1995.
Preferred stock --
The Company is authorized to issue 295,000 shares of preferred stock at no
par value. As of December 31, 1996 and 1995, 125,000 of such shares have been
designated as Series A Preferred Stock and 125,000 of such shares have been
designated as Series B Preferred Stock. Series A and Series B Preferred Stock
are not entitled to dividends and have liquidation rights of $10 per share.
Series A Preferred Stock is mandatorily redeemable at the rate of 20,835
shares commencing December 31, 1995 (the Initial Redemption Date) and an
aggregate of 20,833 shares on each six month anniversary of the Initial
Redemption Date until all 125,000 shares of the Series A Preferred Stock have
been redeemed, at $11.445 per share. As of December 31, 1996, no shares of
Series A Preferred Stock had been redeemed. The Company is accreting the
difference between the redemption price and the proceeds per share over the
period from the issuance date to the respective scheduled redemption dates.
Series B Preferred Stock is mandatorily redeemable at a per share price of
$10 in whole or in part at the option of the Company at any such time as
legally available funds, as defined in the resolution establishing and
designating the preferred stock, are available. On the tenth anniversary of the
completion date of the amphitheater any Series B Preferred Stock outstanding
shall be redeemed by the Company at a per share price of $10.
The Series A and Series B Preferred Stock will not be redeemed if such
redemption would result in a violation of the provisions of the Connecticut
Development Authority assistance agreement (see Note 4) or the mortgage loan
agreement (see Note 5).
3. PARTNERS' EQUITY:
In 1993, Nederlander of Connecticut, Inc. and Connecticut Amphitheater
Development Corporation each made an initial capital contribution of $250,000.
4. GRANT FUNDS:
Connecticut Development Authority (CDA) Assistance Agreement --
On September 12, 1994, the CDA entered into a non-recourse assistance
agreement with the Company whereby the CDA provided grant funds for the
construction and development of an amphitheater in the City of Hartford (the
Project) through the issuance of State of Connecticut General Fund Obligation
Bonds (GFO Bonds). The Company received bond proceeds of $8,863,000, which
amount is net of CDA bond issuance costs of $593,000 and withholdings of
$429,000 by the CDA to cover the expected operating shortfall, as discussed
below, through December 31, 1995. Commencing January 1, 1996, the annual tax
revenues derived from the operation of the amphitheater are utilized to satisfy
the annual debt service requirements under the GFO Bonds. In the event that
annual tax revenues derived from the operation of the amphitheater do not equal
annual debt service requirements under the GFO Bonds, the Company must deposit
the lesser of the operating shortfall, as defined, or 10% of the annual debt
service under the GFO Bonds. An operating shortfall did not exist for the year
ended December 31, 1996. The GFO Bonds mature on October 15, 2024 and have an
average coupon rate of 6.33%. Annual debt service requirements on the GFO Bonds
for each of the next five years and thereafter are as follows:
F-49
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. GRANT FUNDS: (CONTINUED)
<TABLE>
<CAPTION>
YEAR AMOUNT
- ----------------------- -------------
<S> <C>
1997 ............... $ 740,556
1998 ............... 738,906
1999 ............... 736,656
2000 ............... 738,856
2001 ............... 740,293
Thereafter ......... 17,140,363
-----------
$20,835,630
===========
</TABLE>
The assistance agreement requires an annual attendance of at least 400,000
for each of the first three years of operations. It will not be considered an
event of default if the annual attendance is less than 400,000 provided that no
operating shortfall exists for that year or if an operating shortfall exists
such amount has been deposited by the Company. If there is an event of default,
the CDA may foreclose on the construction mortgage loan (see Note 5). If the
amphitheater's operations are relocated outside of Connecticut during the ten
year period subsequent to the assistance agreement or during the period of the
construction mortgage loan, the full amount of the grant funds plus a penalty
of 5% must be repaid to the State of Connecticut.
City of Hartford Grant Funds --
On February 15, 1995 the Company entered into an agreement with the City
of Hartford whereby the City of Hartford provided grant funds of $2,050,000 for
the remediation and closure of a solid waste disposal area near the
amphitheater. As of December 31, 1995 all funds had been received by the
Company.
5. NOTES PAYABLE AND LONG-TERM DEBT:
Notes payable --
In October 1995, the Company entered into two notes payable with related
parties for an aggregate of $2,000,000. As of December 31, 1996 and 1995,
$1,450,000 and $1,100,000, respectively was outstanding on these notes. The
notes bear interest at 6.6% per annum and are payable upon demand.
CDA mortgage loan --
On September 12, 1994, CDA entered into a construction mortgage loan
agreement for $7,685,000 with the Company. The purpose of the loan was to
finance a portion of the construction and development of the amphitheater. The
loan agreement contains substantially the same covenants as the CDA assistance
agreement (see Note 4). As of December 31, 1995, proceeds of $6,519,000, which
amount is net of deferred financing costs of approximately $1,166,000, had been
received by the Company.
F-50
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
5. NOTES PAYABLE AND LONG-TERM DEBT: (CONTINUED)
The mortgage loan bears interest at 8.73% and is payable in monthly
installments of principal and interest. The mortgage loan matures on October
15, 2019. As of December 31, 1996, future principal payments are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------ -------------
<S> <C>
1997 ................ $ 111,667
1998 ................ 121,667
1999 ................ 131,667
2000 ................ 141,667
2001 ................ 152,500
Thereafter .......... 6,854,498
----------
$7,513,666
==========
</TABLE>
The loan is guaranteed by the Company's shareholders and is collateralized
by a lien on the Company's assets. As of December 31, 1996, the loan was
secured by an irrevocable standby letter of credit issued by a shareholder of
the Company in the amount of $785,000. The letter of credit was replaced in
March 1997 by a letter of credit issued by a new shareholder (see Note 10).
Ogden Entertainment, Inc. (OE) Concession Agreement --
In October 1994, the Partnership entered into a concession agreement with
OE which provides for the payment of concession commissions to the Partnership.
In connection with the concession agreement, OE loaned the Partnership
$4,500,000 in 1995 to facilitate the construction of the amphitheater. On
December 30, 1996, the concession agreement was amended and restated
retroactively to October 18, 1994. In accordance with the terms of the amended
agreement, which expires on July 7, 2025, interest only, at the 6-month LIBOR
rate, through July 7, 1995 and principal and interest, at the rate of 7.5% per
annum, were due on the note payable via withholdings of the first $41,716 from
each monthly commission payment commencing July 20, 1995 through December 20,
1995. Effective January 2, 1996, and through the term of the amended concession
agreement, principal and interest, at the rate of 7.5% per annum on the note is
payable via withholdings of the first $31,299 from each monthly commission
payment.
OE loaned the Partnership an additional $1,000,000 during 1995. This loan
bears interest at a rate of 9.75% per annum and is payable via withholdings of
an additional $11,900 of principal, plus interest, from each monthly commission
payment through December 20, 2002. As of December 31, 1996, aggregate future
principal payments to OE are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------ -------------
<S> <C>
1997 ................ $ 190,722
1998 ................ 194,442
1999 ................ 198,451
2000 ................ 202,772
2001 ................ 207,427
Thereafter .......... 4,218,234
----------
$5,212,048
==========
</TABLE>
The concession agreement provided for the Partnership to supply certain
equipment to OE at the Partnership's expense. This equipment was installed
prior to the opening of the amphitheater (the
F-51
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
5. NOTES PAYABLE AND LONG-TERM DEBT: (CONTINUED)
Initial Equipment). The Initial Equipment was purchased by OE at a cost of
$850,933 and the Partnership was obligated to reimburse OE for the cost of the
equipment. Accordingly, this amount was reflected as an accrued expense in the
accompanying combined balance sheet as of December 31, 1995. In 1996, in
connection with the amended concession agreement, the $850,933, and an
additional $33,067 related to 1996 equipment purchases, was converted to a note
payable for $884,000. The note bears interest at the rate of 9.25% per annum
and provides for monthly principal and interest payments of $10,185 to OE,
however, the Partnership is not required to make any principal or interest
payments to the extent that 5% of receipts, as defined, in any month are less
than the amount of the payment due. As of December 31, 1996, future principal
payments to OE by the Partnership are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------ ----------
<S> <C>
1997 ................ $ 42,210
1998 ................ 46,284
1999 ................ 50,751
2000 ................ 55,650
2001 ................ 61,022
Thereafter .......... 628,083
--------
$884,000
========
</TABLE>
Conn Ticketing Company (CTC) Promissory Note Payable --
On April 1, 1995, CTC (a company related to the Company and the
Partnership via common ownership) entered into a promissory note agreement with
ProTix Connecticut General Partnership (PTCGP). Under the terms of the
agreement, CTC borrowed $825,000 at 9.375% per annum from PTCGP. Principal and
interest are repayable by CTC in nine annual installments of $139,714 which
commenced March 31, 1996. In May 1995, CTC loaned $824,500 to the Company which
is also repayable in nine annual installments of principal and interest of
$139,714. The PTCGP loan to CTC is secured by CTC's receivable from the
Company. As of December 31, 1996, future principal payments to CTC by the
Company are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------ ----------
<S> <C>
1997 ................ $ 68,217
1998 ................ 74,613
1999 ................ 81,608
2000 ................ 89,259
2001 ................ 97,627
Thereafter .......... 351,306
--------
$762,630
========
</TABLE>
In January 1995, the Partnership entered into a ticket and sales agreement
with PTCGP through December 31, 2004. Under the terms of the agreement, PTCGP
pays the Partnership an annual fee of $140,000 commencing in March 1996.
Proceeds from the annual fee for the first nine years will be used by the
Partnership to make the annual principal and interest payment to CTC.
Line of credit --
The Partnership has a line of credit in the amount of $2,000,000, which
bears interest at 8.25% per annum, with a bank. As of December 31, 1996,
$395,000 was outstanding on the line of credit.
F-52
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
5. NOTES PAYABLE AND LONG-TERM DEBT: (CONTINUED)
Capital lease obligations --
The Partnership entered into capital leases for certain office equipment.
The leases expire in 1998 and 2000. As of December 31, 1996 future principal
payments are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------ ----------
<S> <C>
1997 .......... $16,984
1998 .......... 13,905
1999 .......... 4,550
2000 .......... 4,213
-------
$39,652
=======
</TABLE>
6. LAND AND BUILDING LEASES:
Land lease agreement between the City of Hartford and the Partnership --
The Partnership entered into a 40 year lease agreement for certain land
with the City of Hartford, Connecticut on September 14, 1994. The lease
agreement provides for two successive options to extend the term of the lease
for a period of ten years each. The Partnership pays an annual basic rent of
$50,000 commencing July 1, 1995; and additional rent payments in lieu of real
estate taxes (PILOT) in an amount equal to 2% of all admission receipts, food
and beverage revenue, merchandise revenue and parking receipts that exceed 10%
of the total admission receipts, which amount is to be net of any surcharges
and sales or like taxes levied by governmental authorities on the price of such
items.
Assignment of lease by the Partnership to the Company --
The above lease was subsequently assigned by the Partnership to the
Company on September 22, 1994 for consideration of $1.
Lease and sublease agreement between the Company and the Partnership --
On October 19, 1994, the Company subleased the land and buildings and
improvements thereon to the Partnership for a period of 40 years commencing
upon substantial completion of the amphitheater. The sublease agreement
provides for two successive options to extend the term of the lease for a
period of ten years each. The sublease agreement provides for the Partnership
to pay rent to the Company in amounts ranging from $804,000 to $831,100 per
annum for the first 25 years and $100,000 per annum thereafter including the
option periods. Additional rent of six semi-annual installments of $238,452 is
also payable by the Partnership commencing six months after the start of
operations. Subsequent to the six semi-annual installments an aggregate of
$1,250,000 will be payable in semi-annual installments based on available cash
flow of the Partnership, as defined. Additionally, the Partnership is also
required to pay the annual basic rent ($50,000) and any additional payments in
lieu of taxes under the terms of the lease agreement between the City of
Hartford and the Partnership described above. The Partnership will also pay
additional rent equal to principal and interest payable by the Company to the
concession company for a previously arranged concessionaire arrangement (see
Note 5). The accompanying combined statement of operations for the year ended
December 31, 1996 includes rent expense of $50,000 which represents the
aggregate amount due to the City of Hartford under the terms of the above
agreements.
7. INCOME TAXES:
The provision for income taxes for the year ended December 31, 1996
represents minimum state income taxes for the Company. As of December 31, 1996,
the Company has a net deferred tax asset of
F-53
<PAGE>
CONNECTICUT PERFORMING ARTS, INC. AND
CONNECTICUT PERFORMING ARTS PARTNERS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES: (CONTINUED)
approximately $750,000 primarily as a result of aggregate net operating losses
since inception. Usage of the net operating loss carryforwards is restricted in
the event of certain ownership changes. A valuation allowance has been recorded
for the same amount due to the uncertainty related to the realization of this
asset.
8. RELATED PARTY TRANSACTIONS:
Accounts receivable -- related party as of December 31, 1996, includes net
amounts due from a shareholder of $121,265 and receivables from another related
party of $105,000.
9. CONTINGENCIES:
The Company and the Partnership are party to certain litigation arising in
the normal course of business. Management, after consultation with legal
counsel, believes the disposition of these matters will not have a material
adverse effect on the combined results of operations or financial condition.
10. SUBSEQUENT EVENTS:
Effective March 5, 1997, the Partnership and Company entered into a
$1,500,000 loan agreement with the CDA of which $1 million was funded in March
1997. Principal payments of $150,000 are due on July 1 and October 1 of each
year commencing July 1, 1997 through October 1, 2001. The note bears interest
at the rate of 8.9% per annum through February 1, 1998, and thereafter at the
index rate, as defined, plus 2.5%. In addition, the Partnership and Company are
required to make principal payments in an amount equal to 10% of the annual
gross revenue, as defined, in excess of $13 million on or before March 1 of
each calendar year commencing March 1, 1998.
In March 1997, three subsidiaries of SFX Broadcasting, Inc.
(Broadcasting), which were created for such purpose, were merged into
Nederlander of Connecticut, Inc., Connecticut Amphitheater Development
Corporation and QN Corp., a newly formed entity. In connection with the merger,
the name of Nederlander of Connecticut, Inc., was changed to NOC, Inc. (NOC)
and the directors of NOC, Inc., Connecticut Amphitheater Development
Corporation (CADCO) and QN Corp. (QN) were replaced with directors of the
Broadcasting acquisition subsidiaries. Each outstanding share of stock of NOC,
CADCO and QN was canceled and exchanged for an aggregate of $1 million cash and
shares of Broadcasting Class A Common Stock valued at $9 million, subject to
certain adjustments. The shares are subject to a put provision between the
second and seventh anniversary of the closing whereby the holder can put each
share back to Broadcasting for the per share value of Broadcasting stock as of
the merger closing date, as defined, less 10%. Additionally, the shares may be
called by Broadcasting during the same period for an amount equal to the per
share value of the Broadcasting stock as of the merger closing date, as
defined, plus 10%. As consideration for approval of the transaction, the CDA
received shares of Broadcasting stock valued at approximately $361,000.
F-54
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of SFX Broadcasting, Inc.:
We have audited the accompanying combined balance sheets of DEER CREEK
PARTNERS, L.P. (formerly Sand Creek Partners, L.P.) and MURAT CENTRE, L.P., as
of December 31, 1996 and 1995, and the related combined statements of
operations and partners' equity (deficit) and cash flows for the years ended
December 31, 1996 and 1995. These financial statements are the responsibility
of the Partnerships' management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Deer Creek
Partners, L.P. and Murat Centre, L.P. as of December 31, 1996 and 1995, and the
combined results of their operations and their cash flows for the years ended
December 31, 1996 and 1995 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana
September 29, 1997.
F-55
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------------- --------------
1995 1996 1997
------------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ........................... $ 1,894,533 $ 876,776 $ 1,704,847
Accounts receivable ................................. 138,548 155,929 345,891
Prepaid show expense ................................ -- 42,114 95,918
Prepaid expenses .................................... 91,919 118,152 169,771
----------- ----------- -----------
Total current assets ............................. 2,125,000 1,192,971 2,316,427
----------- ----------- -----------
Property and equipment:
Land ................................................ 2,428,770 2,428,770 2,428,771
Buildings ........................................... 6,155,979 6,155,979 6,155,979
Site improvements ................................... 2,328,369 2,230,594 2,238,898
Leasehold improvements .............................. 5,270,038 9,663,357 9,663,357
Furniture and equipment ............................. 1,070,547 1,722,874 1,731,720
----------- ----------- -----------
17,253,703 22,201,574 22,218,725
Less: Accumulated depreciation ...................... 2,167,567 2,850,077 3,039,185
----------- ----------- -----------
Total property and equipment ..................... 15,086,136 19,351,497 19,179,540
----------- ----------- -----------
Other Assets:
Cash surrender value--life insurance policy ......... 62,819 71,815 71,814
Unamortized loan acquisition costs .................. 93,439 350,055 343,841
----------- ----------- -----------
Total other assets ............................... 156,258 421,870 415,655
----------- ----------- -----------
TOTAL ASSETS ..................................... $17,367,394 $20,966,338 $21,911,622
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-56
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------------------- ---------------
1995 1996 1997
--------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Current portion of notes and capital lease obligation..... $ 796,391 $ 611,127 $ 595,503
Current portion of deferred ticket revenue ............... 542,420 841,476 2,854,155
Accounts payable ......................................... 472,365 520,663 1,228,317
Accrued interest ......................................... 663,391 299,600 389,600
Accrued property taxes ................................... 125,524 280,734 361,983
Current portion of loan payable .......................... -- 34,200 --
Construction payable and other accrued liabilities ....... 3,341,284 50,641 --
------------ ------------ ------------
Total current liabilities ............................. 5,941,375 2,638,441 5,429,558
------------ ------------ ------------
Long-term Liabilities:
Notes payable and capital lease obligation,
net of current portion .................................. 12,998,738 17,266,768 17,160,968
Loan, net of current portion (Note 5) .................... -- 99,200 99,200
Deferred ticket revenue, net of current portion .......... -- 168,833 168,833
------------ ------------ ------------
Total long-term liabilities ........................... 12,998,738 17,534,801 17,429,001
------------ ------------ ------------
Partners' equity (deficit):
Contributed capital ...................................... -- 2,200,000 2,200,000
Undistributed earnings (loss) ............................ (1,572,719) (1,406,904) (3,146,937)
------------ ------------ ------------
(1,572,719) 793,096 (946,937)
------------ ------------ ------------
TOTAL LIABILITIES AND PARTNERS'
EQUITY ............................................... $ 17,367,394 $ 20,966,338 $ 21,911,622
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-57
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
COMBINED STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31
--------------------------------- ------------------------------
1995 1996 1996 1997
--------------- ---------------- ---------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenues:
Concert revenue ......................................... $11,073,491 $14,194,502 $ 1,338,260 $1,670,645
Cost of concerts ........................................ 8,939,022 10,724,059 1,206,013 1,328,882
----------- ----------- ----------- ----------
2,134,469 3,470,443 132,247 341,763
Ancillary income:
Royalty commissions ..................................... 1,706,458 1,799,950 48,840 109,840
Corporate sponsorships .................................. 959,518 1,056,161 -- 14,784
Other ancillary income .................................. 789,433 1,375,528 71,025 195,771
----------- ----------- ----------- ----------
5,589,878 7,702,082 119,865 320,395
Operating expenses:
General & administrative ................................ 2,419,679 3,452,990 580,897 872,445
Depreciation & amortization ............................. 343,567 783,167 108,373 195,320
Other operating expenses ................................ 249,812 471,126 -- --
----------- ----------- ----------- ----------
3,013,058 4,707,283 689,270 1,067,765
Income from operations .................................. 2,576,820 2,994,799 (437,158) (405,607)
Other income (expense):
Interest and other income ............................... 86,034 84,123 16,246 25,639
Interest expense ........................................ (2,203,690) (1,549,579) (273,335) (400,469)
----------- ----------- ----------- ----------
Net Income (Loss) .................................... $ 459,164 $ 1,529,343 $ (694,247) $(780,437)
Partners' Equity (Deficit) at beginning of year ......... $(1,857,603) $(1,572,719) $(1,572,719) $(793,096)
Contributions ........................................... -- 2,200,000 2,200,000 --
Distributions ........................................... (174,280) (1,363,528) (563,529) (959,596)
----------- ----------- ----------- ----------
Partners' Equity (Deficit) at end of year ............... $(1,572,719) $ 793,096 $ (630,495) $(946,937)
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-58
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31
--------------------------------- -----------------------------
1995 1996 1996 1997
--------------- --------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating Activities:
Net income ........................................... $ 459,164 $1,529,343 $ (694,249) $ (780,436)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ....................... 461,678 783,167 108,373 195,320
Decrease (increase) in certain assets:
Accounts receivable ................................. (45,317) (17,381) (219,190) (189,962)
Prepaid show expenses ............................... -- (42,114) (88,012) (53,804)
Prepaid expenses and other .......................... 746,307 (33,381) (77,135) (51,619)
Increase (decrease) in certain liabilities:
Accounts payable, construction payable and
other accrued liabilities ......................... 3,424,461 (3,087,135) (2,568,202) 738,263
Deferred ticket revenue ............................. (1,266,654) 467,889 2,205,631 2,012,679
Accrued interest .................................... 389,251 (363,791) (663,391) 90,000
Other ............................................... (75,407) 44,852 -- --
---------- ---------- ---------- ----------
Net cash provided by (used in) operating
activities ....................................... 4,093,483 (718,551) (1,996,175) 1,960,441
---------- ---------- ---------- ----------
Investing Activities:
Capital expenditures ................................ (6,713,889) (5,197,260) (3,738,002) (17,151)
---------- ---------- ---------- ----------
Net cash used by investing activities ............... (6,713,889) (5,197,260) (3,738,002) (17,151)
---------- ---------- ---------- ----------
Financing Activities:
Net proceeds from borrowings ........................ 3,060,087 5,057,249 3,600,229 --
Capital contributions ............................... -- 2,200,000 2,200,000 --
Department of Metropolitan Development
Grant ............................................. 761,014 338,986 338,986 --
Principal payments on notes and loan payable
and capital leases ................................ (20,308) (1,334,653) (47,167) (155,623)
Distributions to partners ........................... (174,280) (1,363,528) (563,529) (959,596)
---------- ---------- ---------- ----------
Net cash provided by financing activities ......... 3,626,513 4,898,054 5,528,519 (1,115,219)
---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents ......................................... 1,006,107 (1,017,757) (205,658) 828,071
Cash and cash equivalents:
Beginning of period ................................. 888,426 1,894,533 1,894,533 876,776
---------- ---------- ---------- ----------
End of period ....................................... $1,894,533 $ 876,776 $1,688,875 $1,704,847
========== ========== ========== ==========
Supplemental disclosures:
Cash paid for interest .............................. $1,148,049 $1,912,494 $ 936,726 $ 310,469
Equipment acquired under capital leases ............. -- 139,000 137,033 $ --
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-59
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS TO MARCH 31, 1997 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Prior to 1997 (See Note 10) Deer Creek Partners, L.P. (the Deer Creek
Partnership) owned and operated Deer Creek Music Center (Deer Creek), a concert
amphitheater located in Hamilton County, near Indianapolis, Indiana which
commenced operations in 1989. Sand Creek Partners, L.P. (the general partner)
was a 50% general partner and is responsible for the management of the Deer
Creek Partnership. Conseco, Inc. (Conseco) was a 50% limited partner of the
Deer Creek Partnership. All distributable cash, as defined by the Deer Creek
partnership agreement, is to be distributed equally between the Partners.
The Deer Creek Partnership was formed on January 5, 1996 as a result of
Conseco exercising its option to become a 50% owner of Deer Creek. Deer Creek
was previously 100% owned by Sand Creek Partners, L.P. This change in ownership
has been accounted for as a reorganization, and thus the carrying value of the
assets and liabilities related to Deer Creek remain unchanged as a result of
the reorganization.
Murat Centre, L.P. (Murat Partnership), formed on August 1, 1995, leases
and operates the Murat Theatre (Theatre), a renovated concert and entertainment
venue located in downtown Indianapolis, Indiana. The Theatre's grand reopening
was in March, 1996. The Theatre is currently owned by and was previously
operated by the Murat Temple Association, Inc. Murat Centre, Inc. is the
general partner and is responsible for management of the Theatre. Profits and
losses of the Murat Partnership are allocated 1% to the general partner and 99%
to the limited partners. Distributions to partners are generally limited to the
income taxes payable by the partners as a result of taxable income generated by
the Murat Partnership. To the extent that cash flow for the applicable year
exceeds all payment requirements as discussed in Note 3, the excess shall be
distributed to the partners.
In connection with reopening the Theatre, the Murat Partnership expended
approximately $11.7 million for renovations which began in 1995. Start-up and
organizational costs of approximately $85,000 in 1995 and $90,000 in 1996 were
expensed as incurred and have been included in general and administrative
expenses in the combined statement of operations for the years ended December
31, 1996 and 1995. The building is leased under a 50 year operating lease with
options for 5 additional consecutive 10 year periods under the same terms and
conditions as the initial 50 year lease.
b. Basis of Accounting
The financial statements have been prepared in accordance with generally
accepted accounting principles. Such principles require management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosures of contingent assets and liabilities at the date of
financial statements and the amounts of income and expenses during the
reporting period. Actual results could differ from those estimated.
c. Property and Equipment
Property and equipment are carried at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. Buildings are depreciated over forty years,
leasehold improvements over thirty years, site improvements over twenty years,
and furniture and equipment over five to seven years.
F-60
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS TO MARCH 31, 1997 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
d. Loan Acquisition Costs
Loan acquisition costs represent agency and commitment fees paid to the
lenders, closing costs and legal fees incurred in connection with the notes
payable (see Note 2). These fees are being amortized on a straight-line basis
over a fifteen year period, which represented the approximate term of the
related debt.
e. Deferred Revenue
Deferred revenue includes individual show ticket revenue, season ticket
revenue, and corporate box seat revenue received in advance of events or the
next concert season and will be recognized over the period in which the shows
are held. A portion of the deferred revenue was derived from the bartering of
tickets for goods and services related to the Murat renovation. Barter
transactions are recorded at the estimated fair value of the materials or
service received.
f. Income Taxes
No provision for Federal or state income taxes is required because the
partners are taxed directly on their distributable shares of the Partnerships'
income or loss.
g. Cash Equivalents
The Partnerships consider all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
h. Advertising and Promotion
Advertising and promotion costs are expensed at the time the related
promotional event is held. The costs were approximately $930,000 in 1996 and
$595,000 in 1995. For the three month periods ended March 31, 1997 and 1996
these costs were approximately $70,000 and $172,000, respectively.
i. Interim Financial Statements
The unaudited interim information as of March 31, 1997 and for the three
months ended March 31, 1996 and 1997 has been prepared on the same basis as the
annual financial statements and, in the opinion of the Company's management,
reflects normal recurring adjustments necessary for a fair presentation of the
information for the periods presented. Interim results are not necessarily
indicative of results for a full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
2. NOTES PAYABLE
Notes payable and capital lease obligations as of December 31, 1995 and
1996 consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1996
-------------- -------------
<S> <C> <C>
MURAT PARTNERSHIP
Note payable to bank with 9.25% interest rate subject to
adjustment in 2001 and 2006; payable in monthly installments
of $30,876, including interest, in addition to annual contingent
principal payments based upon remaining net cash flow as
defined in Note 3; secured by assets of the Murat Partnership
and guaranteed by two of the limited partners for $375,000
each; balance due no later than April 1, 2011. ................. $ -- $2,928,053
</TABLE>
F-61
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS TO MARCH 31, 1997 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1996
-------------- -------------
<S> <C> <C>
Note payable with 9% non-compounding interest rate through
November 14, 1996, 12% non-compounding interest rate from
November 15, 1996 through November 14, 1998, 18%
non-compounding interest rate thereafter; all interest is
cumulative; principal and interest payments are based upon
remaining net cash flow as defined in Note 3; subordinate to
above bank note payable. ........................................... $ 2,647,165 $ 3,000,000
Note payable with 0% interest rate; principal payments the lesser
of $.15 per ticket sold during fiscal year or remaining net cash
flow as defined in Note 3; subordinate to above bank note
payable. ........................................................... -- 800,000
Note payable with interest calculated annually and is equal to the
lesser of (1) $.10 per ticket sold during fiscal year, (2) prime
plus 1% or (3) remaining net cash flow as defined in Note 3;
interest and principal is paid at the lesser of $.10 per ticket sold
during fiscal year or remaining net cash flow as defined in Note
3; principal is also required to be paid down upon sale of
certain Partnership assets or the refinancing of certain
Partnership loans; subordinate to above bank note payable .......... -- 1,000,000
Other .............................................................. 90,940 --
DEER CREEK PARTNERSHIP
Note payable with interest calculated annually at 9.5%; payable in
quarterly installments of approximately $353,000, including
interest, through the year 2010; secured by substantially all of
the assets of the partnership and is guaranteed up to 50%,
jointly and severally, by two officers of Sunshine Promotions,
Inc. (Sunshine), and by Sunshine (See Note 6.) ..................... -- 10,019,361
Note payable with interest at 11.18% payable in monthly
installments and contingent interest based upon net cash flow;
secured by substantially all of the assets of the Partnership;
principal due 1999 with the option for the holder to accelerate
the maturity date to 1996. ......................................... 11,041,024 --
Capital leases ...................................................... 16,000 130,481
----------- -----------
Total notes payable and capital lease obligations ................. 13,795,129 17,877,894
Less -- Current portion ........................................... 796,391 611,127
----------- -----------
$12,998,738 $17,266,768
=========== ===========
</TABLE>
Principal payments made on the Murat Partnership bank term note during
1996 totaled $71,947. The Murat Partnership's 1996 net cash flow (see Note 3)
did not require additional principal payments to be made on its notes payable.
The bank term note contains cash flow and leverage ratio covenants. The Murat
Partnership was not in compliance with the cash flow covenant as of December
31, 1996, but received a waiver dated March 31, 1997 for the December 31, 1996
calculation. Provisions of the $800,000 note payable require the Murat
Partnership to continue making payments after the principal has been paid down
equal to the lesser of $.15 per ticket sold during the fiscal year or remaining
cash flow, as defined in Note 3. These payments are to be made to a
not-for-profit foundation and will be designated for remodeling and upkeep of
the Theatre.
Under the terms of the note payable in 1995, the Deer Creek Partnership
incurred contingent interest, which was based on cash flow, of $885,000. During
1995, Deer Creek Partnership's current
F-62
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS TO MARCH 31, 1997 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
lender (a related party) purchased the note payable and entered into an amended
and restated loan agreement with the partnership on January 5, 1996. For each
year until the Deer Creek loan is repaid, net cash flow (as defined) in excess
of $400,000 shall be paid as a principal payment on the loan, not to exceed
$400,000. In 1995 and 1996, the Deer Creek Partnership's net cash flow was such
that the maximum principal payment of $400,000 was required for each year. In
addition, the promotional management fee paid to Sunshine (see Note 6) is
subordinate to the quarterly loan payments.
Principal maturities of notes payable for the next 5 years, excluding
principal paydowns resulting from excess cash flow:
<TABLE>
<CAPTION>
<S> <C>
1997 .............. $578,895
1998 .............. 635,682
1999 .............. 698,041
2000 .............. 766,518
2001 .............. 841,712
</TABLE>
Future capital lease payments of principal and interest are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 .............. $50,800
1998 .............. 46,250
1999 .............. 37,000
2000 .............. 36,000
2001 .............. 4,000
</TABLE>
3. MURAT CASH FLOW PAYMENTS
Each of the Murat Partnership's debt agreements require certain principal
and interest to be paid in April of each year based upon the Murat
Partnership's net cash flow for the preceding year. The Murat Partnership's
building lease agreement provides for lease payments to be made based upon the
same net cash flow calculation. Net cash flow, as defined in each agreement,
approximates net income, plus depreciation and amortization, less capital
expenditures and partnership distributions necessary to pay applicable income
taxes. Net cash flow in each year will be used by the Murat Partnership to pay
principal, interest and lease payments in the following order of priority:
1. Payment of interest on $1,000,000 note equal to the lesser of (a) $.10 per
ticket sold, (b) prime plus 1% or (c) remaining net cash flow;
2. Additional principal payments on bank note so that the total principal paid
each month (including mandatory term payments discussed in Note 2) equals
up to, but not exceeding, $16,667. If cash flow in any fiscal year is not
sufficient to meet these additional principal payments, the obligation
carries forward to the subsequent year;
3. For 1997 and beyond, building operating lease payments not to exceed
$50,000 per year, non-cumulative;
4. Interest related to the $3 million note (including previous years'
cumulative amounts not paid);
5. Principal payment on the $3 million note until paid in full;
6. Principal payment on $800,000 note equal to lesser of $.15 per ticket sold
during fiscal year or remaining net cash flow;
F-63
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS TO MARCH 31, 1997 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
If cash flow is such that only a portion is paid on the obligation in 2.
above, Sunshine, Inc.'s management fee (see Note 6.) could be reduced by the
amount paid in 1. in order to maximize the amount available to fully pay the
obligation in 2.
4. DMD GRANT
As part of the original financing for renovation of the Theatre, the
Department of Metropolitan Development (DMD) contributed approximately $760,000
in 1995 and $340,000 in 1996 to the Murat Partnership. The DMD stipulated that
the grant was to be used for leasehold improvements on the Theatre. As such,
the grant has been recorded on the balance sheet as a reduction of leasehold
improvements and is being amortized over 30 years.
5. AGREEMENTS WITH OUTSIDE VENDORS
Effective February 1996, the Murat Partnership entered into a ten year
agreement with a caterer to provide exclusive catering services at the Theatre.
The Murat Partnership is entitled to a commission based upon a percentage of
the caterer's net sales. As part of the agreement the caterer loaned the Murat
Partnership $165,000, at a nominal interest rate, for leasehold improvements
necessary to provide catering services. In February 1996 the Murat Partnership
began repaying the loan ratably over 5 years.
Effective February 1996, the Murat Partnership entered into a ten year
agreement with a concessionaire for the exclusive license to sell concession
food and beverages at Theatre events. The Murat Partnership is entitled to
royalty commissions based upon a percentage of the concessionaire's gross
receipts. The concessionaire has paid the Murat Partnership $50,000 to be used
for leasehold improvements (which are being depreciated over 30 years) which
will be used by the concessionaire. This payment has been recorded as deferred
income and is being amortized over the term of the agreement. On March 28, 1997
the rights to the concession agreement were acquired by the caterer under the
same terms as the original concession agreement.
Effective March 1996, the Murat Partnership entered into a five year
agreement with a stagehand union allowing the union to provide services at all
ticketed shows held in the main theater other than the broadway series. The
agreement, among other items, sets minimum hours per show and hourly wages to
be paid to union members. It also sets forth duties which must be performed
solely by union members. A separate agreement between the stagehand union and
Pace Theatrical Group, Inc. (see Note 7) governs the use of union stagehands
for the broadway series.
Effective February 1996, the Murat Partnership entered into a one year
agreement granting another party the right to manage and operate the Theatre
parking lot.
In July 1988, the Deer Creek Partnership entered into a ten-year agreement
with a concessionaire for the exclusive license to sell food and beverages at
Deer Creek events. The Deer Creek Partnership is entitled to royalty
commissions based upon a percentage of the concessionaire's gross receipts.
The Deer Creek Partnership has an agreement with another concessionaire
for an exclusive license to sell consigned nonconsumable novelties and programs
at Deer Creek events. The agreement expires on October 31, 2001. The Deer Creek
Partnership is entitled to royalty commissions based on the concessionaire's
gross receipts.
Total revenues related to the Deer Creek and Murat Center Partnership's
vendor agreements were approximately $1.8 million and $1.7 million in 1996 and
1995, respectively. For the three month periods ended March 31, 1997 and 1996,
there was no revenue related to these agreements.
F-64
<PAGE>
DEER CREEK PARTNERS, L.P. AND MURAT CENTRE, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS TO MARCH 31, 1997 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
6. MANAGEMENT AGREEMENTS
The Deer Creek Partnership and Murat Partnership have entered into
agreements which expire in 2009 and 2015, respectively, with Sunshine whose
stockholders are also the limited partners of the general partner. Sunshine
provides the overall promotional management and booking of the entertainment
events held at respective venues, along with other general management
responsibilities. As compensation for Sunshine's services, the Deer Creek
Partnership pays Sunshine 4 percent of gross ticket sales, royalty income and
various other revenues. Total fees to Sunshine for these services were
approximately $581,000 in 1995 and $560,000 in 1996. The Murat pays Sunshine an
annual management fee of $300,000, adjusted annually each January 1 by the
greater of 4% or the annual increase in the consumer price index. In 1996 no
such fee was recognized by the Murat Partnership as Sunshine permanently waived
the $300,000 management fee due for 1996.
In June 1988, the Deer Creek Partnership entered into a ten-year agreement
with an unrelated management company to provide the on-site operations
management for Deer Creek. At the end of 1995, this agreement was terminated by
mutual consent of both parties. The Deer Creek Partnership entered into a new
agreement with the former management company whereby it agreed to pay $75,000
in 1996, 1997 and 1998 and also to provide to the former management company
selected season tickets at Deer Creek in 1997 and 1998. In return, for 1996,
1997 and 1998, the Deer Creek Partnership is to receive advertising and
promotion.
7. BROADWAY SERIES PARTNERSHIP
In 1996 the Murat Partnership entered into a 5 year partnership agreement
with Pace Theatrical Group, Inc. (Pace) and Broadway Series Management (BSMG)
to co-present a subscription series of touring Broadway type shows in
Indianapolis. This agreement calls for net profits and losses derived from the
series to be split, after the allocation of certain revenues to the Murat
Partnership and Pace, as follows: 45% Murat Partnership, 45% Pace, and 10%
BSMG. No capital was invested by any of the parties and all income has been
distributed to the parties. The Murat Partnership is responsible for the local
marketing and management of the series, while Pace is responsible for booking,
series management, and season ticket sales for the series. The Murat
Partnership recognized earnings related to this partnership of $270,000 in
1996.
8. RELATED PARTIES
In addition to the management agreement with Sunshine discussed in Note 6,
the Deer Creek Partnership and Murat Partnership have conducted business with
certain related parties in which the limited partners of the general partner
have significant interests. Fees paid to all other related parties for
catering, uniforms and marketing services totaled $249,000 in 1995 and $65,000
in 1996 from the Deer Creek Partnership and $46,000 in 1996 from the Murat
Partnership.
9. SALE OF MURAT PARTNERSHIP AND DEER CREEK PARTNERSHIP
In June 1997, the partners of the Murat Partnership and the Deer Creek
Partnership agreed to sell all of the assets of the Murat Partnership and Deer
Creek Partnership to SFX Broadcasting, Inc. (Broadcasting). The total sales
price to Broadcasting of the combined partnership assets was approximately $33
million. As a part of the sale, Broadcasting assumed or retired virtually all
liabilities and acquired all assets of the Murat Partnership and the Deer Creek
Partnership.
F-65
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To PACE Entertainment Corporation:
We have audited the accompanying consolidated balance sheet of PACE
Entertainment Corporation (a Texas Corporation) and subsidiaries as of
September 30, 1997, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of PACE Entertainment
Corporation and subsidiaries as of September 30, 1997, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
December 15, 1997 (except with respect
to the matters discussed in
Note 12, as to which the date
is December 22, 1997)
F-66
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
PACE Entertainment Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheet of PACE
Entertainment Corporation and subsidiaries as of September 30, 1996, and the
related consolidated statements of operations, cash flows, and shareholders'
equity for each of the two years in the period ended September 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of PACE
Entertainment Corporation and subsidiaries at September 30, 1996, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended September 30, 1996, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
December 13, 1996
F-67
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
--------------------- ------------
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $23,165 $23,784 $27,702
Trade receivables, net ...................................... 4,097 4,562 6,741
Accounts receivable, related parties ........................ 1,010 1,007 1,096
Notes receivable ............................................ 3,040 386 81
Prepaid expenses ............................................ 6,106 9,967 10,586
Investments in theatrical productions ....................... 2,489 4,402 3,958
Deferred tax asset .......................................... 1,872 979 943
------- ------- -------
Total current assets ...................................... 41,779 45,087 51,107
INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS ................... 8,816 13,899 15,613
NOTES RECEIVABLE, related parties ............................ 6,958 8,024 7,766
INTANGIBLE ASSETS, net ....................................... 17,244 17,894 17,633
OTHER ASSETS, net ............................................ 4,484 4,933 6,047
------- ------- -------
Total assets .............................................. $79,281 $89,837 $98,166
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities .................... $10,285 $11,078 9,277
Deferred revenue ............................................ 26,909 32,093 33,208
Current maturities of long-term debt ........................ 2,576 2,394 2,688
------- ------- -------
Total current liabilities ................................. 39,770 45,565 45,173
LONG-TERM DEBT ............................................... 21,863 23,129 31,543
OTHER NONCURRENT LIABILITIES ................................. 2,496 1,607 2,080
REDEEMABLE COMMON STOCK ...................................... 3,264 2,456 2,983
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $1 par value; 500,000 shares authorized,
2,579 shares issued as of September 30, 1996 and 1997 ..... 3 3 3
Additional paid-in capital .................................. 1,910 1,942 2,097
Retained earnings ........................................... 10,115 15,275 14,427
Treasury stock, at cost, 544 shares ......................... (140) (140) (140)
------- ------- -------
Total shareholders' equity ................................ 11,888 17,080 16,387
------- ------- -------
Total liabilities and shareholders' equity ................ $79,281 $89,837 $98,166
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-68
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED SEPTEMBER 30 DECEMBER 31
------------------------------------------- ----------------------------
1995 1996 1997 1996 1997
------------- ------------- ------------- -------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
GROSS REVENUES ........................... $ 150,385 $ 156,325 $ 176,046 $ 38,430 $ 38,552
COST OF SALES ............................ (131,364) (135,925) (148,503) (34,221) (33,687)
EQUITY IN EARNINGS (LOSS) OF
UNCONSOLIDATED PARTNERSHIPS
AND THEATRICAL PRODUCTIONS .............. 2,183 3,048 6,838 (111) 1,185
---------- ---------- ---------- -------- ---------
Gross profit ........................... 21,204 23,448 34,381 4,098 6,050
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ................. (13,351) (15,951) (21,260) (4,072) (5,018)
STOCK COMPENSATION ....................... (25) (3,675) (456) (6) (683)
LITIGATION SETTLEMENT .................... -- (3,657) -- -- --
DEPRECIATION AND AMORTIZATION ............ (1,223) (1,737) (1,896) (434) (523)
---------- ---------- ---------- ---------- ---------
Operating profit (loss) ................ 6,605 (1,572) 10,769 (414) (174)
INTEREST INCOME, related parties ......... 305 329 403 75 178
INTEREST INCOME, other ................... 147 176 60 35 6
INTEREST EXPENSE ......................... (655) (1,206) (1,997) (480) (867)
---------- ---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST ................... 6,402 (2,273) 9,235 (784) (857)
INCOME TAX (PROVISION) BENEFIT ........... (2,575) 714 (3,529) 222 182
MINORITY INTEREST ........................ (485) (446) (546) (130) (173)
---------- ---------- ---------- ---------- ---------
NET INCOME (LOSS) ........................ $ 3,342 $ (2,005) $ 5,160 $ (692) $ (848)
========== ========== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-69
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED TREASURY SHAREHOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
-------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1994 ................ $ 3 $1,465 $ 8,778 $ (140) $ 10,106
Amortization of deferred stock compensation -- 25 -- -- 25
Net income .................................. -- -- 3,342 -- 3,342
--- ------ -------- ------ --------
BALANCE AT SEPTEMBER 30, 1995 ................ 3 1,490 12,120 (140) 13,473
Issuance of restricted stock and amortization
of deferred stock compensation ............ -- 420 -- -- 420
Net loss .................................... -- -- (2,005) -- (2,005)
--- ------ -------- ------ --------
BALANCE AT SEPTEMBER 30, 1996 ................ 3 1,910 10,115 (140) 11,888
Issuance of restricted stock and amortization
of deferred stock compensation ............ -- 32 -- -- 32
Net income .................................. -- -- 5,160 -- 5,160
--- ------ -------- ------ --------
BALANCE AT SEPTEMBER 30, 1997 ................ 3 1,942 15,275 (140) 17,080
Issuance of restricted stock and amortization
of deferred stock compensation
(unaudited) ............................... -- 155 -- -- 155
Net loss (unaudited) ........................ -- -- (848) -- (848)
--- ------ -------- ------ --------
BALANCE AT DECEMBER 31, 1997
(unaudited) ................................. $ 3 $2,097 $ 14,427 $ (140) $ 16,387
=== ====== ======== ====== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-70
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED SEPTEMBER 30 DECEMBER 31
-------------------------------------- ---------------------
1995 1996 1997 1996 1997
------------- ------------ ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................ $ 3,342 $ (2,005) $ 5,160 $ (692) $ (848)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities-
Depreciation and amortization .......................... 1,223 1,737 1,896 434 522
Equity in (earnings) loss of unconsolidated
partnerships .......................................... (1,624) (486) (4,912) 607 (1,150)
Distributions from unconsolidated partnerships ......... 1,297 1,090 2,354 1,073 411
Restricted stock compensation .......................... 25 3,675 456 6 683
Deferred income tax expense (benefit) .................. 848 (4,541) 2,037 36 (574)
Changes in operating assets and liabilities- ...........
Trade receivables ..................................... 447 (826) (465) 383 (2,179)
Notes receivable ...................................... (1,813) (1,227) 2,654 1,140 305
Prepaid expenses ...................................... (221) 1,466 (3,861) (2,099) (619)
Investments in theatrical productions ................. 305 (335) (1,913) (1,658) 444
Other assets .......................................... (37) (1,130) (421) (39) (469)
Accounts payable and accrued liabilities .............. 947 (1,142) (920) (264) (2,626)
Deferred revenue ...................................... (1,082) (1,008) 5,184 (7,004) 1,115
Other liabilities ..................................... 171 1,601 (34) 130 3,083
-------- --------- --------- -------- --------
Net cash provided by (used in) operating
activities ......................................... 3,828 (3,131) 7,215 (7,947) (1,902)
-------- --------- --------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired ....................... -- (13,233) (2,215) -- (178)
Capital expenditures ..................................... (728) (827) (1,008) (407) (900)
Loans and advances to related parties .................... (2,301) (535) (2,295) 2 169
Contributions to unconsolidated partnerships ............. (1,212) (1,806) (2,162) (618) (1,980)
-------- --------- --------- -------- --------
Net cash used in investing activities ............... (4,241) (16,401) (7,680) (1,023) (2,889)
-------- --------- --------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt additions ............................. 8,927 24,043 24,287 557 14,593
Payments on debt ......................................... (8,928) (6,512) (23,203) (873) (5,884)
-------- --------- --------- -------- --------
Net cash provided by (used in) financing
activities ......................................... (1) 17,531 1,084 (316) 8,709
---------- --------- --------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ......................................... (414) (2,001) 619 (9,286) 3,918
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ......................................... 25,580 25,166 23,165 23,165 23,784
--------- --------- --------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF
YEAR ..................................................... $25,166 $ 23,165 $ 23,784 $ 13,879 $ 27,702
========= ========= ========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest paid ............................................ $ 620 $ 1,117 $ 1,900 $ 180 $ 644
Income taxes paid ........................................ 2,276 2,804 2,103 565 93
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-71
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION:
Description of Business
PACE Entertainment Corporation (referred to herein as PACE or the
Company), a Texas corporation, is a diversified live entertainment company
operating principally in the United States. The Company presents and produces
theatrical shows, musical concerts and specialized motor sports events. Through
certain unconsolidated partnerships, the Company also owns interests in and
operates amphitheaters, which are used primarily for the presentation of live
performances by musical artists.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
PACE and its majority-owned subsidiaries. The Company accounts for its
investments in 50 percent or less owned entities, including theatrical
production partnerships, using the equity method. Intercompany balances are
eliminated.
The Company has various agreements related to the presentation of events
with other live entertainment organizations whereby the Company retains 50
percent to 80 percent of the profits from such events. The Company consolidates
the revenues and related costs from these events and records the amounts paid
to the other parties in cost of sales.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. At September 30,
1997, the Company had restricted cash and cash equivalents of $2,950,000, which
secured letters of credit totaling $3,750,000.
Trade Receivables
Trade receivables are shown net of allowance for doubtful accounts of
$120,000 and $134,000 at September 30, 1996 and 1997, respectively.
Prepaid Expenses
Prepaid expenses include show advances and deposits, event advertising
costs and other costs directly related to future events. Such costs are charged
to operations upon completion of the related events.
As of September 30, 1996 and 1997, prepaid expenses included event
advertising costs of $1,337,000 and $1,498,000, respectively. The Company
recognized event advertising expenses of $13,818,000, $14,861,000 and
$13,802,000 in cost of sales for the years ended September 30, 1995, 1996 and
1997, respectively.
Investments in Theatrical Productions
Theatrical production partnerships are typically formed to invest in a
single theatrical production and, therefore, have limited lives which are
generally less than one year. Accordingly, the Company's investments in such
partnerships are generally shown as current assets. The partnerships amortize
production costs over the estimated life of each production based on the
percentage of revenues earned in relation to projected total revenues.
F-72
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Intangible Assets
Intangible assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Goodwill ............................................ $ 16,599 $ 17,851
Noncompete agreements and other intangibles ......... 3,940 3,857
-------- --------
20,539 21,708
Accumulated amortization ............................ (3,295) (3,814)
-------- --------
$ 17,244 $ 17,894
======== ========
</TABLE>
Goodwill, which represents the excess of costs of business acquisitions
over the fair value of net assets acquired, is being amortized on a
straight-line basis over periods not exceeding 40 years. The noncompete
agreements and other intangibles are being amortized on a straight-line basis
over periods generally not exceeding five years. The Company evaluates on an
ongoing basis whether events and circumstances indicate that the amortization
periods of intangibles warrant revision. Additionally, the Company periodically
assesses whether the carrying amounts of intangibles exceed their expected
future benefits and value, in which case an impairment loss would be
recognized. Such assessments are based on various analyses, including cash flow
and profitability projections.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
---------------------
1996 1997
--------- ---------
<S> <C> <C>
Accounts payable .................. $ 1,192 $ 1,866
Accrued payroll ................... 2,384 2,936
Other accrued liabilities ......... 6,709 6,276
------- -------
$10,285 $11,078
======= =======
</TABLE>
Revenue Recognition
Revenues from the presentation and production of an event, including
interest on advance ticket sales, are recognized upon completion of the event.
Deferred revenue relates primarily to advance ticket sales.
The Company barters event tickets and sponsorship rights for products and
services, including event advertising. These barter transactions are not
recognized in the accompanying consolidated financial statements and are not
material to the Company's financial position or results of operations.
Stock-Based Compensation
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock-Based Compensation," during the year ended September
30, 1997, and implemented its disclosure provisions. While SFAS No. 123
encourages companies to recognize expense for stock options at estimated fair
value based on an option-pricing model, the Company has elected to continue to
follow Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in accounting for its
employee stock options.
F-73
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Financial Instruments
The carrying amounts of cash equivalents approximate fair value because of
the short maturities of these investments. The carrying amount of long-term
debt approximates fair value as borrowings bear interest at current market
rates.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications
Certain 1995 and 1996 amounts have been reclassified to conform with the
1997 presentation.
Interim Financial Information
The interim financial data as of December 31, 1997 and for the three-month
periods ended December 31, 1996 and 1997 is unaudited and certain information
and disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
However, in the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for the interim periods. The results of
operations for the interim periods are not necessarily indicative of the
results to be expected for the entire year.
2. ACQUISITIONS:
On March 13, 1996, the Company acquired substantially all the assets of
SRO Motorsports (SRO), a division of Madison Square Garden, L.P., under an
asset purchase agreement for an aggregate initial purchase price of
approximately $13,300,000 in cash and $3,800,000 in assumed liabilities. The
agreement also provides for a contingent deferred purchase price not to exceed
$1,000,000, payable if annual earnings before interest, taxes, depreciation and
amortization of the Company's motor sports operations, as defined, exceed
$8,000,000 for any fiscal year through September 30, 2001. No deferred purchase
price costs had been incurred through September 30, 1997.
The acquisition of SRO was accounted for under the purchase method and the
assets acquired and liabilities assumed were recorded at fair value, resulting
in the recognition of $14,250,000 of goodwill and $400,000 of other
intangibles. The results of operations of SRO since March 13, 1996, have been
included in the accompanying consolidated financial statements.
The following unaudited pro forma information assumes that the Company had
acquired SRO as of October 1, 1994. The pro forma information includes
adjustments for interest expense that would have been incurred to finance the
acquisition, amortization of goodwill and other intangibles, the income tax
effects of the operations of SRO, and the elimination of certain intercompany
balances. The unaudited pro forma information, which is not necessarily
indicative of what actual results would have been, is as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30
-------------------------
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Gross revenues ............ $167,422 $172,952
Net income (loss) ......... 3,742 (257)
</TABLE>
F-74
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS AND THEATRICAL
PRODUCTIONS:
Investments in unconsolidated partnerships and theatrical productions
consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
---------------------
1996 1997
--------- ---------
<S> <C> <C>
Investment in--
Pavilion Partners ................................. $ 3,131 $ 4,810
Universal/PACE Amphitheaters Group, L.P. .......... 3,380 3,991
Other ............................................. 2,305 5,098
------- -------
Investments in unconsolidated partnerships ......... 8,816 13,899
Investments in theatrical productions .............. 2,489 4,402
------- -------
$11,305 $18,301
======= =======
</TABLE>
The Company's share of earnings and the distributions received from these
investments were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
---------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Equity in earnings (losses) of--
Pavilion Partners ................. $1,872 $ 103 $2,803
Universal/PACE Amphitheaters
Group, L.P. ............................. 551 871 645
Other ............................. (799) (488) 1,464
------ ------ ------
Equity in earnings of unconsolidated
partnerships ...................... 1,624 486 4,912
Equity in earnings of theatrical
productions ....................... 559 2,562 1,926
------ ------ ------
$2,183 $3,048 $6,838
====== ====== ======
Distributions received from--
Pavilion Partners ................. $ 992 $1,002 $1,124
Universal/PACE Amphitheaters
Group, L.P. ............................. 166 78 34
Other ............................. 139 10 1,196
------ ------ ------
Distributions from unconsolidated
partnerships ...................... 1,297 1,090 2,354
Distributions from theatrical
productions ....................... 4,240 5,836 6,803
------ ------ ------
$5,537 $6,926 $9,157
====== ====== ======
</TABLE>
F-75
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pavilion Partners
Pavilion Partners is a Delaware general partnership between the Company
and Amphitheater Entertainment Partnership (AEP). AEP is a partnership between
Sony Music Entertainment Inc. (Sony) and Blockbuster Entertainment Corporation
(Blockbuster). Pavilion Partners owns and operates amphitheaters, which are
used primarily for the presentation of live performances by musical artists.
Pavilion Partners had interests in 10 and 11 amphitheaters at September 30,
1996 and 1997, respectively. The Company owns a 33-1/3 percent interest in, and
is the managing partner of, Pavilion Partners.
In general, all of Pavilion Partners' income is allocated to the partners
in proportion to their respective ownership interests. The partnership
agreement generally restricts cash distributions to 35 percent of cash flow
after scheduled debt service. Additionally, PACE has been entitled to certain
priority allocations of net income based, in part, on the cash flow from one of
the amphitheaters it contributed to Pavilion Partners. During the periods ended
September 30, 1995, 1996 and 1997, the priority allocations of net income
included in the Company's equity in earnings of Pavilion Partners were
$771,000, $725,000 and $119,000, respectively. The cumulative amount of the
priority allocations of net income was limited; PACE is not entitled to any
future priority allocations. AEP is entitled to receive priority allocations of
net income once a loan related to an amphitheater contributed by Blockbuster is
repaid. The cumulative priority allocations of net income to AEP is limited to
$7,000,000. The loan is scheduled to mature in 2004 and no such allocation has
yet been made.
PACE also received booking fees of $323,000, $235,000 and $395,000 from
Pavilion Partners for the years ended September 30, 1995, 1996 and 1997,
respectively. In addition, the Company is reimbursed for certain costs of
providing management services to Pavilion Partners. These reimbursements
totaled $1,629,000, $1,824,000 and $1,968,000 during the periods ended
September 30, 1995, 1996 and 1997, respectively, and offset general and
administrative expenses.
Summarized financial information as of and for the years ended September
30, 1995, 1996 and 1997, for Pavilion Partners follows (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Current assets ................................ $15,787 $20,700 $ 30,178
Noncurrent assets ............................. 64,619 72,793 72,598
------- ------- --------
Total assets ................................. $80,406 $93,493 $102,776
======= ======= ========
Current liabilities ........................... $ 9,467 $17,194 $ 19,748
Noncurrent liabilities ........................ 51,578 58,695 59,166
Partners' capital ............................. 19,361 17,604 23,862
------- ------- --------
Total liabilities and partners' capital ...... $80,406 $93,493 $102,776
======= ======= ========
Gross revenues ................................ $69,372 $89,223 $100,209
======= ======= ========
Gross profit .................................. $19,440 $27,993 $ 36,157
======= ======= ========
Net income (loss) ............................. $ 3,104 $ (839) $ 6,986
======= ======= ========
</TABLE>
F-76
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Universal/PACE
The Company owns a 32.5 percent interest in Universal/PACE Amphitheaters
Group, L.P. (Universal/PACE), a limited partnership between the Company and
Universal Concerts, Inc., which controls two amphitheaters. PACE earned
management fees of $167,000, $79,000 and $34,000 from Universal/PACE for the
years ended September 30, 1995, 1996 and 1997, respectively. Summarized
financial information as of and for the years ended September 30, 1995, 1996
and 1997, for Universal/PACE follows (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Current assets ................................ $ 4,085 $ 3,420 $ 6,659
Noncurrent assets ............................. 14,654 14,185 14,156
------- ------- -------
Total assets ................................. $18,739 $17,605 $20,815
======= ======= =======
Current liabilities ........................... $ 6,599 $ 3,876 $10,221
Noncurrent liabilities ........................ 6,467 5,618 602
Partners' capital ............................. 5,673 8,111 9,992
------- ------- -------
Total liabilities and partners' capital ...... $18,739 $17,605 $20,815
======= ======= =======
Gross revenues ................................ $24,070 $20,336 $25,299
======= ======= =======
Gross profit .................................. $ 5,968 $ 6,361 $ 5,817
======= ======= =======
Net income .................................... $ 1,183 $ 2,438 $ 1,880
======= ======= =======
</TABLE>
Other
The Company also has investments in numerous theatrical production and
other unconsolidated partnerships. Summarized financial information as of and
for the years ended September 30, 1995, 1996 and 1997, for these partnerships,
excluding Pavilion Partners and Universal/PACE, follows (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------------ ---------- ----------
<S> <C> <C> <C>
Current assets ................................ $ 10,410 $ 12,433 $ 35,743
Noncurrent assets ............................. 5,668 7,267 14,050
-------- -------- --------
Total assets ................................. $ 16,078 $ 19,700 $ 49,793
======== ======== ========
Current liabilities ........................... $ 7,539 $ 6,566 $ 19,134
Noncurrent liabilities ........................ 2,315 2,250 2,957
Partners' capital ............................. 6,224 10,884 27,702
-------- -------- --------
Total liabilities and partners' capital ...... $ 16,078 $ 19,700 $ 49,793
======== ======== ========
Gross revenues ................................ $113,854 $111,715 $249,707
======== ======== ========
Gross profit .................................. $ 221 $ 10,440 $ 34,454
======== ======== ========
Net income (loss) ............................. $ (1,863) $ 9,823 $ 32,164
======== ======== ========
</TABLE>
F-77
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LONG-TERM DEBT:
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Term loan ........................ $ 14,464 $ 12,322
Revolving line of credit ......... 9,250 12,950
Other notes payable .............. 725 251
-------- --------
24,439 25,523
Less- Current portion ............ (2,576) (2,394)
-------- --------
$ 21,863 $ 23,129
======== ========
</TABLE>
In March 1996, the Company entered into a new credit agreement with
certain financial institutions. The credit agreement provides for a term loan
and a revolving line of credit, both of which bear interest at either LIBOR
plus 2 percent or prime, at the option of the Company. At September 30, 1997,
the weighted average interest rate was 7.8 percent. The term loan is scheduled
to mature in March 2001 and is payable in quarterly installments of $536,000
plus interest, with a balloon payment at maturity. The Company may borrow
$27,000,000 under the revolving line of credit until February 1998;
subsequently, borrowings are limited to $13,000,000 until March 2001, when the
revolving line of credit expires. The Company must pay a quarterly commitment
fee equal to 0.375 percent per annum on the average daily unused portion of the
revolving line of credit. The term loan and the revolving line of credit are
secured by substantially all of the Company's assets, including pledges of the
capital stock of its subsidiaries. The credit agreement contains various
restrictions and requirements relating to, among other things, mergers, sales
of assets, investments and maintenance of certain financial ratios.
At September 30, 1997, scheduled maturities of long-term debt were as
follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
For the year ending September 30--
1998 ............................ $ 2,394
1999 ............................ 2,143
2000 ............................ 2,143
2001 ............................ 18,843
-------
$25,523
=======
</TABLE>
F-78
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES:
Deferred taxes reflect the tax effects of temporary differences between
the financial statement carrying amounts and the tax bases of assets and
liabilities. Significant components of the Company's deferred tax assets and
liabilities were as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
---------------------
1996 1997
-------- ----------
<S> <C> <C>
Deferred tax assets--
Investments in unconsolidated partnerships and
theatrical productions ......................... $ 286 $ 237
Accounts payable and accrued liabilities ......... 1,014 1,480
Restricted stock compensation .................... 1,387 409
Other noncurrent liabilities ..................... 1,717 --
Other ............................................ 107 281
------ ------
Total deferred tax assets ...................... 4,511 2,407
------ ------
Deferred tax liabilities--
Investments in unconsolidated partnerships and
theatrical productions ......................... 1,522 1,099
Prepaid expenses ................................. 907 1,237
Intangibles ...................................... 646 672
------ ------
Total deferred tax liabilities ................. 3,075 3,008
------ ------
$1,436 $ (601)
====== ======
</TABLE>
Deferred taxes are included in the consolidated balance sheets as follows
(in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
-----------------------
1996 1997
--------- -----------
<S> <C> <C>
Current deferred tax assets .......... $1,872 $ 979
Other noncurrent liabilities ......... (436) (1,580)
------ --------
$1,436 $ (601)
====== ========
</TABLE>
The income tax (provision) benefit consisted of the following (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
------------------------------------------
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Current--
Federal .............................. $ (1,251) $ (2,817) $ (1,319)
State ................................ (476) (1,010) (173)
Deferred--
Federal .............................. (692) 3,705 (1,777)
State ................................ (156) 836 (260)
-------- -------- --------
Total tax (provision) benefit ......... $ (2,575) $ 714 $ (3,529)
======== ======== ========
Effective tax rate .................... 44% 26% 41%
======== ======== ========
</TABLE>
F-79
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The reconciliation of income tax computed at the U.S. federal statutory
rates to the income tax (provision) benefit is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
---------------------------------------
1995 1996 1997
------------ --------- ------------
<S> <C> <C> <C>
Tax at the federal statutory rate ......... $ (2,012) $ 924 $ (2,954)
Increases resulting from--
State income taxes, net of federal tax
effect ................................. (417) (112) (286)
Nondeductible expenses ................... (60) (98) (185)
Other .................................... (86) -- (104)
-------- ------ --------
Total income tax (provision) benefit ..... $ (2,575) $ 714 $ (3,529)
======== ====== ========
</TABLE>
6. REDEEMABLE COMMON STOCK:
At September 30, 1997, the Company had outstanding 155 shares of common
stock that are redeemable under conditions that are not solely within the
control of the Company. The Company granted this redeemable stock to certain
executives during the years ended September 30, 1996 and 1997. To the extent
that the grants related to prior service, the Company recognized compensation
costs on the grant date. Additionally, the Company recognizes compensation
costs for the change in value of certain shares that, as discussed below, the
Company may be required to purchase from the executives at fair market value.
Restricted stock compensation related to these grants totaled $3,260,000 and
$425,000 during the years ended September 30, 1996 and 1997, respectively. The
Company has the right of first refusal to purchase the redeemable common stock
at fair market value.
Agreements with one executive who received 140 shares of redeemable stock
provide that the Company will have call options to purchase these shares from
the executive for a total of $3,420,000. These agreements also provide that the
executive will have put options to sell such shares to the Company for
$3,420,000. The put and call options are only exercisable if the executive's
employment is terminated before an initial public offering of the Company's
common stock.
Of the redeemable stock granted to this executive, 123 shares were granted
during the year ended September 30, 1996, and vested during the year ended
September 30, 1997. Since the grant related to prior service, the Company
recognized compensation costs on the grant date. During the year ended
September 30, 1997, the Company executed a promissory note in the amount of
$1,232,000 with this executive. This note bears interest at 5.45 percent, is
secured by 140 shares of the Company's common stock, and is scheduled to mature
in October 2001. The proceeds of the note were used to pay the executive's tax
liability related to the 123 shares that vested during the year ended September
30, 1997. Accordingly, the value of redeemable stock outstanding has been
reduced by this note receivable.
The remaining 17 shares of redeemable stock received by this executive
were granted during the year ended September 30, 1997, and vest ratably during
the years ending September 30, 1999 and 2000. To fund the executive's tax
liability related to these 17 shares, the Company may be required to purchase
up to 41 percent of the shares at fair market value when the shares vest. The
Company has similar agreements with the other executives who received the
remaining 15 shares of redeemable stock, which were granted during the year
ended September 30, 1996. In order to fund the executives' tax liabilities
related to these grants and related restricted common stock grants, these 15
shares of redeemable stock must be purchased at fair market value when the
shares vest during the years ended September 30, 1998 and 1999. Although all 32
shares that the Company may be required to purchase in order to satisfy
executives' tax liabilities have future vesting requirements, the Company
recognized
F-80
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
compensation costs on the grant dates to the extent the grants related to prior
service. The difference between such expense recognition and recognition over
the vesting periods is not material to the Company's results of operations and
financial position.
7. SHAREHOLDER'S EQUITY:
The Company granted 23 shares of restricted common stock to certain
executives during the year ended September 30, 1996. These shares vest ratably
during the years ended September 30, 1998 and 1999. Although the shares have
future vesting requirements, the Company recognized compensation costs on the
grant dates to the extent the grants related to prior service. The difference
between such expense recognition, which totaled $390,000 and $6,000 during the
years ended September 30, 1996 and 1997, respectively, and recognition over the
vesting periods is not material to the Company's results of operations and
financial position. The Company has the right of first refusal to purchase at
fair market value all of the shares granted during the year ended September 30,
1996. Additionally, if the executives' employment is terminated before an
initial public offering of the Company's common stock, the Company has a call
option to purchase the vested shares at fair market value.
Effective October 15, 1993, the Company and one of its officers entered
into an employment agreement which provided for the granting of 45 shares of
the Company's common stock. The shares vested over a five-year period and the
Company recorded related compensation expense of $25,000 for each of the years
ended September 30, 1995, 1996 and 1997.
8. STOCK OPTIONS:
The Company adopted the 1996 Stock Incentive Compensation Plan during the
year ended September 30, 1996. Under the plan, the Company may grant awards
based on its common stock to employees and directors. Such awards may include,
but are not limited to, restricted stock, stock options, stock appreciation
rights and convertible debentures. Up to 325 shares of common stock may be
issued under the plan. During the year ended September 30, 1996, the Company
granted options to purchase 117 shares of common stock at a weighted average
exercise price of $18,989 per share, which approximated fair value on the date
of grant. Such options vest and are generally exercisable ratably over a
four-year period. The options expire in 10 years.
An option to purchase 22 shares of common stock at $10,000 per share was
granted to an executive during the year ended September 30, 1994. This option
was canceled subsequent to September 30, 1997.
Because the exercise prices of the Company's employee stock options
equaled the fair market value of the underlying stock on the date of grant, no
compensation expense was recognized in accordance with APB Opinion No. 25. Had
compensation cost for the options been determined based on the fair value at
the grant date pursuant to SFAS No. 123, the Company's net income would have
decreased by $49,000 and $148,000 for the years ended September 30, 1996 and
1997, respectively. For this purpose, the fair value of the options was
estimated using the minimum value method assuming that the risk-free interest
rate was 6.7 percent and that no dividends will be paid.
9. RELATED-PARTY TRANSACTIONS:
The Company contracts with certain theatrical partnerships of which it is
a minority partner to obtain the rights to present theatrical productions in
the Company's markets. Approximately $20,000,000, $33,400,000 and $31,200,000
of expenses were incurred for such rights and included in cost of sales during
the years ended September 30, 1995, 1996 and 1997, respectively.
The Company contracts with certain unconsolidated partnerships to sell the
rights to present musical concerts. Approximately $2,446,000 of revenues was
earned from the sale of such rights during the year ended September 30, 1997.
No such rights were sold during the years ended September 30, 1995 and 1996.
F-81
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As of September 30, 1997, notes receivable, related parties included
$6,453,000 due from executives and $1,571,000 due from other related parties.
Two of the notes receivable from executives are promissory notes from the
Company's principal shareholder. As of September 30, 1997, these two notes
totaled $5,961,000, including accrued interest of $550,000. One note, in the
original principal amount of $2,911,000, bears interest at 5.83 percent, is
secured by 254 shares of PACE common stock and matures on March 28, 1999. The
other note is for $2,500,000, bears interest at 6.34 percent, is secured by 246
shares of PACE common stock and was scheduled to mature on November 3, 1997.
This note has been extended to mature on November 4, 2000. Interest income on
these two notes was approximately $300,000 for each of the years ended
September 30, 1995, 1996 and 1997. At September 30, 1997, the Company also had
a $583,000 receivable from its principal shareholder. The principal shareholder
has represented his intention to pay the outstanding loans and receivable
balance from personal assets or if necessary, the liquidation of certain
ownership interests in the Company.
At September 30, 1997, notes receivable from other related parties
included $945,000 due from a joint venture partner. The terms of the related
joint venture agreement provide for the Company to loan to the joint venture
partner any required capital contributions, to be repaid on a priority basis
from the profits allocated to the joint venture partner. The advances accrue
interest at the prime rate plus 4 percent (12.5 percent at September 30, 1997)
and are secured by the joint venture partner's 50 percent interest in the joint
venture.
10. LITIGATION SETTLEMENT:
The Company was previously named as a defendant in a case filed in Wake
County, North Carolina (Promotion Litigation). There were several other
defendants named in the litigation, including Pavilion Partners, with various
causes of action asserted against one or more of each of the defendants,
including (a) breach of alleged contract, partnership, joint venture and
fiduciary duties between certain of the defendants and Pro Motion Concerts, (b)
constructive fraud, (c) interference with prospective advantage, (d) unfair
trade practices, (e) constructive trust and (f) unjust enrichment. The essence
of the plaintiffs' claims was that certain of the defendants agreed to enter
into a partnership with plaintiffs for the development and operation of an
amphitheater.
On May 1, 1997, the Promotion Litigation was settled. All defendants were
fully and finally released with prejudice from any and all claims and causes of
action. The defendants did not acknowledge or admit any liability. The
settlement called for payments from defendants totaling $4,500,000. The Company
was obligated to pay $1,500,000 immediately after the settlement and is
obligated to pay an additional $2,000,000 on or before May 1, 1998. To
guarantee payment of this $2,000,000 obligation, the Company had a standby
letter of credit outstanding at September 30, 1997. The remaining $1,000,000 of
the settlement was paid by Pavilion Partners during the year ended September
30, 1997. This expense and related legal expenses were charged to operations
for the year ended September 30, 1996.
F-82
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. COMMITMENTS AND CONTINGENCIES:
Leases
The Company leases office facilities under noncancelable operating leases
with future minimum rent payments as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
For the year ending September 30--
1998 ............................ $1,006
1999 ............................ 417
2000 ............................ 215
2001 ............................ 193
2002 ............................ 195
Thereafter ....................... 33
------
Total ........................... $2,059
======
</TABLE>
Rent expense was $676,000, $765,000 and $1,084,000 for the years ended
September 30, 1995, 1996 and 1997, respectively.
Change in Control Provisions
The Company and its unconsolidated partnerships, including Pavilion
Partners, have entered into numerous leases and other contracts in the ordinary
course of business. Certain of these agreements either contain restrictions on
their assignability or would require third-party approval of a change in
control of the Company.
Employment Agreements
The Company has employment agreements with certain key employees. Such
agreements generally provide for minimum salary levels, guaranteed bonuses and
incentive bonuses which are payable if specified financial goals are attained.
As of September 30, 1997, the Company's minimum commitment under these
agreements were as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
For the year ending September 30--
1998 ............................ $4,463
1999 ............................ 3,825
2000 ............................ 2,789
2001 ............................ 1,430
2002 ............................ 743
</TABLE>
The Company is currently negotiating certain other employment agreements
that may result in additional future commitments.
Insurance
The Company carries a broad range of insurance coverage, including general
liability, workers' compensation, stop-loss coverage for its employee health
plan and umbrella policies. The Company carries deductibles of up to $10,000
per occurrence for general liability claims and is self-insured for annual
healthcare costs of up to $25,000 per covered employee and family. The Company
has accrued for estimated potential claim costs in satisfying the deductible
and self-insurance provisions of the insurance policies for claims occurring
through September 30, 1997. The accrual is based on known facts and historical
trends, and management believes such accrual to be adequate.
F-83
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Legal Proceedings
Various legal actions and claims are pending against the Company, most of
which are covered by insurance. In the opinion of management, the ultimate
liability, if any, which may result from these actions and claims will not
materially affect the financial position or results of operations of the
Company.
Guarantees
The Company has guaranteed a $2,438,000 debt of a partnership in which
Pavilion Partners holds a 50 percent interest. PACE has agreements with its
partners whereby they would assume approximately 50 percent of any liability
arising from this guarantee. The debt matures June 1, 2003. Management does not
believe that the guarantee will result in a material liability to the Company.
Income Taxes
The Internal Revenue Service is examining several years of returns of a
majority-owned subsidiary. Management is currently discussing a possible
settlement of approximately $600,000, which has been accrued in the Company's
financial statements.
Subscription Agreement
During April 1995, the Company acquired an interest in a company
incorporated in the United Kingdom. Pursuant to a subscription agreement, the
Company made payments totaling $1,355,000 prior to September 30, 1997. The
Company has agreed to pay an additional (pounds sterling)239,000 in April
1998.
Construction Commitments
An unconsolidated partnership has committed to certain renovation work at
its amphitheater. The Company may be obligated to fund up to approximately $7.3
million of these renovations. Through its investment in another unconsolidated
partnership, the Company has an interest in a performance hall being
constructed for musical and theatrical presentations. The Company had funded
$0.4 million of the performance hall construction costs through September 30,
1997; the Company's estimated additional funding commitments are approximately
$2.0 million. In addition, the Company and several third parties are currently
negotiating definitive agreements to develop a theatrical venue. The Company
may be obligated to fund approximately $3.0 million of the costs of this
development over an undetermined period of time.
Put Option Agreement
The Company has entered into put option agreements with two banks whereby
the Company may be required to repurchase a total of 1,000 shares of the
Company's common stock held by an affiliate that collateralizes the personal
loans of the Company's principal shareholder at a per share price of $1,500.
The put options are effective only in the event of a loan default of the
shareholder prior to July 31, 1999. At September 30, 1997, the loans were not
in default.
12. SUBSEQUENT EVENTS:
Subsequent to September 30, 1997, the Company entered into certain
agreements with an executive who previously had been granted an option to
purchase 22 shares of common stock at $10,000 per share. Pursuant to the new
agreements, the option was canceled and the executive was granted 22 shares of
restricted common stock.
In December 1997, the Company and its shareholders entered into an
agreement with SFX Entertainment, Inc. (SFX), whereby the shareholders would
sell their interests in the Company to SFX (SFX Transaction). The purchase
price of $109 million in cash and 1,500,000 shares of SFX
F-84
<PAGE>
PACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Class A Common Stock is subject to adjustment prior to closing. Closing is
subject to certain conditions, including approval of certain third parties.
Concurrent with closing, the agreement requires, among other things, the
repayment of all outstanding loans and receivables due from the Company's
principal shareholder (see Note 9) and the repayment of the promissory note
received from an executive in connection with a stock grant (see Note 6).
Additionally, the agreement provides for the settlement of all restricted and
redeemable stock, as well as all outstanding stock options. This settlement is
expected to result in a one-time charge by the Company of approximately $4.7
million, net of related tax effects. The agreement also requires SFX to provide
the Company with a $25 million line of credit (Acquisition Facility) to be used
for certain acquisitions being contemplated by the Company. If the acquisition
of the Company is not consummated, this line of credit will be converted to a
term loan in the amount of advances then outstanding or, under certain
circumstances, will become immediately due and payable. This bridge financing
is secured by the assets acquired and an option to purchase the Company's
interest in Pavilion Partners.
In December 1997, the Company entered into agreements to effectively
purchase substantially all of the assets of United Sports of America (USA
Transaction), a producer and presenter of demolition derbies, thrill shows, air
shows, monster truck shows, tractor pull events, motorcycle racing and bull
riding in the United States and Canada. Pursuant to the agreements, the total
purchase price is $6,000,000 in cash of which an option amount of $500,000 was
paid upon the execution of the agreement and closing is subject to the
satisfactory completion of due diligence by the Company. Management does not
expect this transaction to close until May 1998. In the event the transaction
does not close, the option amount will be forfeited if certain conditions are
not met.
In December 1997, the Company entered into an agreement to purchase
Blockbuster's 33 1/3 percent interest in Pavilion Partners (Blockbuster
Transaction) for $4,171,000 in cash, $2,940,000 in assumed liabilities and the
assumption of certain indemnification obligations of Blockbuster under the
Pavilion Partners Partnership Agreement. In addition, the Company has agreed to
purchase a note with a balance of $9,507,000, including accrued interest of
$1,601,000, at September 30, 1997. The transaction is contingent on, among
other things, obtaining acceptable financing including the release of
Blockbuster from certain debt obligations and the approval of Sony. (Note 3)
On December 22, 1997, the Company entered into an agreement to purchase
Sony's 33 1/3 percent interest in Pavilion Partners (Sony Transaction) for
$27,500,000 in cash. The transaction is contingent on, among other things,
government approval and obtaining acceptable financing including the release of
Sony from certain debt obligations. (see Note 3)
13. EVENTS SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED)
Effective February 25, 1998, the SFX Transaction, Blockbuster Transaction
and Sony Transaction closed. In conjunction with the closing, SFX retired the
Company's outstanding term loan and revolving line of credit and purchased or
retired a substantial portion of the indebtedness of Pavilion Partners,
including debt which was previously guaranteed by PACE. No borrowings had been
made under the Acquisition Facility, which expired with the closing of the SFX
Transaction. Additionally, all put option agreements related to the Company's
common stock were terminated.
During February 1998, the Company granted 40 shares of restricted common
stock to an executive. This grant combined with the settlement of all
restricted and redeemable stock, all outstanding stock options and certain
bonuses paid in conjunction with the SFX Transaction resulted in a one-time
charge during February 1998 of approximately $6.4 million, net of related tax
effects.
The USA Transaction closed on March 25, 1998. To effect the USA
Transaction, PACE contributed $4,000,000 to a newly formed partnership and that
partnership acquired a 67% interest in certain assets and liabilities of United
Sports of America from third parties. The remaining 33% interest in those
assets and liabilities was contributed to the partnership by a subsidiary of
SFX.
F-85
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Pavilion Partners:
We have audited the accompanying consolidated balance sheet of Pavilion
Partners, a Delaware general partnership, as of September 30, 1997, and the
related consolidated statements of income, partners' capital and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pavilion Partners
as of September 30, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Houston, Texas
December 15, 1997 (except with
respect to the matters discussed
in Note 11, as to which the date
is December 22, 1997)
F-86
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Pavilion Partners
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of partners' capital and of cash
flows present fairly, in all material respects, the financial position of
Pavilion Partners and its subsidiaries (the Partnership) at September 30, 1996
and the results of their operations and their cash flows for the year ended
October 31, 1995 and the eleven months ended September 30, 1996, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Partnership's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
December 12, 1996
F-87
<PAGE>
PAVILION PARTNERS
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30
---------------------- DECEMBER 31
1996 1997 1997
--------- ---------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .............................. $ 8,554 $ 17,898 $15,464
Accounts receivable .................................... 7,842 6,167 2,067
Accounts receivable, related parties ................... 1,878 3,878 1,687
Notes receivable, related parties ...................... 1,218 1,218 1,218
Prepaid expenses and other current assets .............. 1,208 1,017 622
------- -------- -------
Total current assets .............................. 20,700 30,178 21,058
Prepaid rent ........................................... 7,075 6,938 6,898
Property and equipment, net ............................ 61,292 59,938 59,291
Other assets ........................................... 4,426 5,722 5,777
------- -------- -------
Total assets ...................................... $93,493 $102,776 $93,024
======= ======== =======
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ....................................... $ 1,404 $ 1,193 $ 260
Accounts payable, related parties ...................... 1,866 3,948 2,193
Accrued liabilities .................................... 8,112 7,032 5,614
Deferred revenue ....................................... 3,602 5,081 3,067
Current portion of notes payable and capital lease
obligation ........................................... 1,573 1,614 1,639
Current portion of note payable, related party ......... 637 880 945
------- -------- -------
Total current liabilities ......................... 17,194 19,748 13,718
Notes payable .......................................... 43,680 42,192 41,879
Note payable, related party ............................ 7,268 7,025 6,961
Capital lease obligation ............................... 6,130 5,989 5,952
Other liabilities and minority interests in consolidated
subsidiaries ......................................... 1,617 3,960 2,911
------- -------- -------
Total liabilities ................................. 75,889 78,914 71,421
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL ....................................... 17,604 23,862 21,603
------- -------- -------
Total liabilities and partners' capital ........... $93,493 $102,776 $93,024
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-88
<PAGE>
PAVILION PARTNERS
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
ELEVEN MONTHS THREE MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, -------------------------
1995 1996 1997 1996 1997
------------- --------------- -------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
TICKET REVENUES .................... $43,266 $50,151 $ 58,479 $ 4,186 $ 4,554
OTHER OPERATING REVENUES 28,109 33,942 41,730 3,254 3,141
------- ------- -------- -------- --------
Total revenues .................. 71,375 84,093 100,209 7,440 7,695
COST OF SALES ...................... 49,226 57,723 64,052 4,862 5,229
------- ------- -------- -------- --------
Gross profit .................... 22,149 26,370 36,157 2,578 2,466
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 8,329 9,774 10,858 2,299 1,987
DEPRECIATION AND
AMORTIZATION ...................... 2,461 3,346 3,975 961 1,031
OTHER OPERATING COSTS .............. 5,345 7,390 8,531 961 723
LITIGATION EXPENSES AND
SETTLEMENT ........................ -- 2,380 -- -- --
------- ------- -------- -------- --------
Operating profit (loss) ......... 6,014 3,480 12,793 (1,643) (1,275)
INTEREST INCOME .................... 504 391 532 74 167
INTEREST EXPENSE ................... 2,793 3,855 4,413 1,127 1,102
------- ------- -------- -------- --------
INCOME (LOSS) BEFORE
MINORITY INTEREST ................. 3,725 16 8,912 (2,696) (2,210)
MINORITY INTEREST .................. 276 308 1,926 (63) (59)
------- ------- -------- -------- --------
NET INCOME (LOSS) .................. $ 3,449 $ (292) $ 6,986 $ (2,633) $ (2,151)
======= ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-89
<PAGE>
PAVILION PARTNERS
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
AMPHITHEATER
ENTERTAINMENT
PARTNERSHIP SM/PACE, INC. TOTAL
-------------- --------------- ----------
<S> <C> <C> <C>
BALANCE, October 31, 1994 ...................... $ 13,108 $2,805 $ 15,913
Net income .................................... 1,788 1,661 3,449
Distributions ................................. -- (699) (699)
-------- ------ --------
BALANCE, October 31, 1995 ...................... 14,896 3,767 18,663
Net income (loss) ............................. (330) 38 (292)
Distributions ................................. -- (767) (767)
-------- ------ --------
BALANCE, September 30, 1996 .................... 14,566 3,038 17,604
Net income .................................... 4,578 2,408 6,986
Distributions ................................. -- (728) (728)
-------- ------ --------
BALANCE, September 30, 1997 .................... $ 19,144 $4,718 $ 23,862
Net loss (unaudited) .......................... (1,435) (716) (2,151)
Distributions (unaudited) ..................... -- (108) (108)
-------- ------ --------
BALANCE, December 31, 1997 (unaudited) ......... $ 17,709 $3,894 $ 21,603
======== ====== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-90
<PAGE>
PAVILION PARTNERS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
FOR THE ELEVEN MONTHS FOR THE THREE MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, ---------------------------
1995 1996 1997 1996 1997
------------- --------------- -------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) ....................... $ 3,449 $ (292) $ 6,986 $ (2,633) $ (2,151)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities--
Depreciation and amortization ......... 2,461 3,346 3,975 961 1,031
Minority interest ..................... 276 308 1,926 (63) (59)
Changes in assets and
liabilities--
Accounts receivable .................. (1,455) (3,647) 1,669 5,124 4,100
Accounts receivable and
payable, related parties ........... 32 (756) 82 (299) 436
Prepaid expenses and other
current assets ..................... 191 (296) 266 774 435
Accounts payable and accrued
liabilities ........................ (512) 1,695 (2,184) (1,925) (2,350)
Deferred revenue and other
liabilities ........................ 1,304 2,110 2,284 (2,082) (2,092)
Other, net ........................... (785) (1,259) (1,548) (141) (1,210)
--------- -------- -------- -------- --------
Net cash provided by (used
in) operating activities .......... 4,961 1,209 13,456 (284) (1,860)
--------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments of preoperating costs .......... (1,318) (1,114) (59) (271) --
Capital expenditures .................... (25,856) (7,483) (1,879) (15) (178)
--------- -------- -------- -------- --------
Net cash used in investing
activities ........................ (27,174) (8,597) (1,938) (286) (178)
--------- -------- -------- -------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Funding of capital commitments by
partners .............................. 4,046 -- -- -- --
Distributions to partner ................ (699) (767) (728) (728) (108)
Proceeds from borrowings ................ 24,322 8,323 -- -- --
Repayments of borrowings ................ (639) (1,072) (1,446) (375) (288)
--------- -------- -------- -------- --------
Net cash provided by (used
in) financing activities .......... 27,030 6,484 (2,174) (1,103) (396)
--------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS ............................. 4,817 (904) 9,344 (1,673) (2,434)
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD ..................... 4,641 9,458 8,554 8,554 17,898
--------- -------- -------- -------- --------
CASH AND CASH
EQUIVALENTS AT END OF
PERIOD .................................. $ 9,458 $ 8,554 $ 17,898 $ 6,881 $ 15,464
========= ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-91
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Pavilion Partners (the Partnership) is a Delaware general partnership
between SM/PACE, Inc. (PACE), which is a wholly owned subsidiary of PACE
Entertainment Corporation, and Amphitheater Entertainment Partnership (AEP).
AEP is a partnership between a wholly owned subsidiary of Sony Music
Entertainment Inc. (Sony) and two wholly owned subsidiaries of Blockbuster
Entertainment Corporation (Blockbuster). PACE is the managing partner of the
Partnership. AEP owns a 66 2/3 percent interest in the Partnership, and PACE
owns a 33 1/3 percent interest in the Partnership.
In April 1990, Sony and PACE formed YM/PACE Partnership which changed its
name to the Sony Music/PACE Partnership. Effective April 1, 1994, the partners
entered into an agreement whereby Blockbuster obtained an indirect 33 1/3
percent interest in Sony Music/PACE Partnership, which was renamed Pavilion
Partners. In accordance with the agreement, Sony contributed an
interest-bearing note in the amount of $4,250,000 and its existing interest in
Sony Music/PACE Partnership to AEP. Concurrently, Blockbuster contributed an
interest-bearing note in the amount of $4,250,000 and its interest in three
existing amphitheaters to AEP. AEP in turn contributed these assets to the
Partnership. At the same time, PACE Entertainment Corporation contributed its
interest in two existing amphitheaters to the Partnership. Upon completion of
these contributions to the Partnership, AEP owned a 66 2/3 percent interest in
the Partnership and PACE owned a 33 1/3 percent interest in the Partnership.
The Partnership owns and operates amphitheaters, which are primarily used
for the presentation of live performances by musical artists. As of September
30, 1997, the Partnership owned interests in or leased 10 amphitheaters and had
a long-term management contract to operate an additional amphitheater. All of
the amphitheaters owned or operated by the Partnership are located in the
United States.
In April 1997, the Partnership entered into a new partnership agreement
with a third party to be known as Western Amphitheater Partners (WAP). The
Partnership contributed or licensed the assets and liabilities of the Glen
Helen Amphitheatre, and the other partner contributed or licensed the assets
and liabilities of the Irvine Meadows Amphitheatre. Each partner has a 50
percent interest in WAP. Under the terms of the Partnership agreement, the
partners are required to make an additional capital contribution of
approximately $850,000 each in WAP which was accrued by the Partnership at
September 30, 1997. The fiscal year-end for the WAP partnership will be
December 31.
During 1996, the Partnership changed its fiscal year-end from October 31
to September 30.
2. SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements of the Partnership include all of
its wholly owned subsidiaries and other partnerships in which Pavilion Partners
holds a controlling interest. All partnerships in which Pavilion Partners holds
less than a controlling interest are reported on the equity method of
accounting. All significant intercompany transactions have been eliminated in
consolidation.
Basis of Contributed Assets
All assets contributed to the Partnership by the partners were recorded at
the carrying values of the contributing entities.
Revenue Recognition
The Partnership records revenues from the presentation of events at the
completion of the related event. Advance ticket sales are classified as
deferred revenue until the event has occurred. Sponsorship and other revenues
that are not related to any single event are classified as deferred revenue and
amortized over each of the amphitheaters' various shows during the operating
season.
F-92
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Partnership barters event tickets and sponsorship rights for products
and services, including event advertising. These barter transactions are not
recognized in the accompanying consolidated financial statements and are not
material to the Partnership's financial position or results of operations.
Income Taxes
No provision for federal or state income taxes is necessary in the
financial statements of the Partnership because, as a partnership, it is not
subject to federal or state income taxes and the tax effect of its activities
accrues to the partners.
Prepaid Expenses
Prepaid expenses include show advances and deposits, event advertising
costs and other costs directly related to future events. Such costs are charged
to operations upon completion of the related events.
As of September 30, 1996 and 1997, prepaid expenses included event
advertising costs of $160,000 and $137,000, respectively. The Partnership
recognized event advertising expenses of $5,815,000, $6,439,000 and $6,569,000
in cost of sales for the year ended October 31, 1995, the eleven months ended
September 30, 1996, and the year ended September 30, 1997, respectively.
Other Assets
The Partnership incurs certain costs in identifying and selecting
potential sites for amphitheater development. All costs incurred by the
Partnership during the initial site selection phase are expensed as incurred.
Certain incremental start-up costs that are incurred after a decision has been
made to develop a site are capitalized as preoperating costs. After an
amphitheater is fully developed, these preoperating costs are amortized on a
straight-line basis over a five-year period.
Contract acquisition costs include fees associated with securing a
contract with a booking agent for one of the Partnership's amphitheaters. These
costs are amortized on a straight-line basis over the life of the contract
which is 10 years.
Property and Equipment
Property and equipment is stated at cost. Repair and maintenance costs are
expensed as incurred. Interest incurred in connection with the construction of
an amphitheater is capitalized as part of the cost of the amphitheater. During
1995 and 1996, the Partnership capitalized interest in connection with the
construction of amphitheaters of $645,000 and $161,000, respectively. No
interest was capitalized in 1997.
Leasehold improvements are amortized on a straight-line basis over the
shorter of their estimated useful lives or the term of the lease. Other
property and equipment is depreciated on a straight-line basis over the
estimated useful lives of the assets. A summary of the principal ranges of
useful lives used in computing the annual provision for depreciation and
amortization is as follows:
<TABLE>
<CAPTION>
RANGE OF YEARS
---------------
<S> <C>
Buildings ....................... 27-31.5
Leasehold improvements .......... 5-31.5
Equipment ....................... 3-7
Furniture and fixtures .......... 5-10
</TABLE>
The Partnership evaluates on an ongoing basis whether events and
circumstances indicate that the estimated useful lives of property and
equipment warrant revision. The Partnership adopted Statement
F-93
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
of Financial Accounting Standard (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," in 1997. The
adoption of SFAS No. 121 did not have a material effect on the Partnership's
financial position or results of operations.
Fair Value of Financial Instruments
The carrying amounts of the Partnership's financial instruments
approximate their fair value at September 30, 1996 and 1997.
Statement of Cash Flows
The Partnership considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Interest paid was
$2,319,000, $3,652,000 and $3,917,000 for 1995, 1996 and 1997, respectively.
During the year ended October 31, 1995, the Partnership issued a note payable
with a fair value of $1,300,000 to a vendor in exchange for certain equipment
with a fair value which approximated the amount of the note. During 1997, the
Partnership contributed or licensed the assets and liabilities of the Glen
Helen Amphitheatre into the new WAP Partnership in which it holds a 50 percent
interest. The net book value of the investment made in the WAP Partnership was
$54,000.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Partnership to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the 1995 and 1996 consolidated financial statements
have been reclassified to conform to the 1997 presentation.
Interim Financial Information
The interim financial data as of December 31, 1997 and for the three-month
periods ended December 31, 1996 and 1997 is unaudited and certain information
and disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
However, in the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for the interim periods. The results of
operations for the interim periods are not necessarily indicative of the
results to be expected for the entire year.
3. PARTNERSHIP AGREEMENT:
The Partnership agreement provides, among other things, for the following:
Contributions and Project Loans
In addition to the initial contributions as discussed in Note 1, the
partners are obligated to contribute, in proportion to their respective
Partnership interests, any deficiency in the funding for the construction of
each approved amphitheater development or any operational shortfall, as defined
in the Partnership agreement. No such funding was required in 1995, 1996 or
1997.
In addition, AEP is responsible for providing project financing, as
defined, for each approved amphitheater development. To the extent AEP does not
fulfill this responsibility, AEP must indemnify, defend and hold harmless the
Partnership from all claims, demands, liabilities or other losses (including
the loss of any earnest money deposits and any reasonable attorneys' fees)
which might result from AEP's failure to provide such project loan.
F-94
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income Allocation
In general, all of the Partnership's income is allocated to the partners
in proportion to their respective Partnership interests. However, PACE receives
a priority allocation of net income, as defined in the Partnership agreement,
until the cumulative amount of such allocations is equal to $2,000,000
increased by 7 percent of the unpaid allocation on the last day of each fiscal
year. Any such allocation of net income to PACE is distributed in the following
year. The priority allocation of net income to PACE for 1995, 1996 and 1997 was
approximately $767,000, $716,000 and $119,000, respectively. This allocation
obligation was fully satisfied with the distribution of the fiscal 1997 income
allocation amount during October 1997.
AEP is entitled to receive a priority allocation of net income once a loan
related to an amphitheater contributed by Blockbuster is repaid. At September
30, 1997, the loan balance is $7,905,000 and is payable in quarterly
installments with a balloon payment due at its maturity on April 1, 2004. The
priority allocation of net income is equal to 65 percent of the cash flow
attributable to the amphitheater, as defined in the Partnership agreement. The
cumulative priority allocation of net income to AEP is limited to $7,000,000.
No such allocation was made in 1995, 1996 or 1997.
On November 1 of each calendar year, the executive committee of the
Partnership determines if any excess cash exists in the Partnership's accounts
above what is necessary to fund future operations and obligations. Any such
excess cash may be distributed to the partners in proportion to their
respective interests in the Partnership. No distributions of excess cash flow
have been made.
4. PROPERTY AND EQUIPMENT:
The components of the Partnership's property and equipment are as follows
(in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
-------------------
1996 1997
--------- ---------
<S> <C> <C>
Property ................................................ $ 695 $ 695
Buildings ............................................... 10,817 10,817
Leasehold improvements .................................. 53,148 53,826
Equipment ............................................... 5,007 4,488
Furniture and fixtures .................................. 705 722
Construction in progress ................................ -- 786
------- -------
70,372 71,334
Less--Accumulated depreciation and amortization ......... 9,080 11,396
------- -------
$61,292 $59,938
======= =======
</TABLE>
Depreciation and amortization expense associated with property and
equipment for 1995, 1996 and 1997 was $1,905,000, $2,693,000 and $3,179,000,
respectively.
Assets under capital lease included above are as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Building ............................... $5,333 $5,333
Furniture and equipment ................ 841 841
------ ------
6,174 6,174
Less--Accumulated depreciation ......... 2,068 2,237
------ ------
$4,106 $3,937
====== ======
</TABLE>
F-95
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Amortization expense associated with assets under capital lease for 1995,
1996 and 1997 was $169,000, $156,000 and $169,000, respectively.
5. OTHER ASSETS:
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Preoperating costs, net of accumulated amortization of $2,092,000 and
$1,094,000, respectively.................................................. $2,153 $1,709
Investment in unconsolidated partnerships .................................. 1,302 2,797
Contract acquisition costs, net of accumulated amortization of $45,000 and
$129,000, respectively ................................................... 624 815
Other ...................................................................... 347 402
------ ------
$4,426 $5,723
====== ======
</TABLE>
During 1995, 1996 and 1997, the Partnership recognized equity in earnings
of unconsolidated partnerships of $263,000, $129,000 and $1,592,000,
respectively, which is included in other operating revenues.
6. ACCRUED LIABILITIES:
Accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
--------------------
1996 1997
-------- ---------
<S> <C> <C>
Interest ................................... $ 544 $ 522
Rent ....................................... 638 580
Taxes ...................................... 748 613
Litigation expenses and settlement ......... 1,873 --
Insurance .................................. 1,216 1,656
Other ...................................... 3,093 3,660
------ ------
$8,112 $7,031
====== ======
</TABLE>
Accrued liabilities do not include accrued interest on the notes payable
to Blockbuster (see Note 7). Such accrued interest, which is included in
accounts payable, related parties, was $1,082,000 and $1,601,000 as of
September 30, 1996 and 1997, respectively.
F-96
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. NOTES PAYABLE:
Notes payable to third parties consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Note payable to a bank, interest at LIBOR plus 0.18% (6% at
September 30, 1996 and 1997), payments due semiannually
with a balloon payment due on maturity in July 2005,
guaranteed by Sony ........................................... $13,122 $12,573
Note payable to a bank, interest at 8.35% through July 2002 and
LIBOR plus 0.18% thereafter, due in July 2005, guaranteed by
Sony ......................................................... 10,000 10,000
Note payable to a bank, interest at LIBOR plus 0.85% (6.78% at
September 30, 1996 and 1997), payments due annually with a
balloon payment due on maturity in December 2005,
guaranteed by Blockbuster and Sony ........................... 7,732 7,575
Note payable to a bank, interest at prime minus 105 basis points
(7.2% and 7.45% at September 30, 1996 and 1997,
respectively), payments due quarterly with a balloon payment
due on maturity in April 2000, guaranteed by Sony ............ 6,449 6,356
Note payable to a bank, interest at 9.46%, payments due
quarterly with a balloon payment due on maturity in
December 1999, guaranteed by Sony ............................ 3,958 3,914
Note payable to a vendor, interest imputed at 8.98%, payments
due weekly through May 2005 .................................. 1,826 1,671
Other notes payable to vendors, interest at fixed rates ranging
from 8.2% to 10.72%, due in equal installments with final
maturities ranging from December 1996 through
February 2006 ................................................ 2,040 1,591
------- -------
Total ........................................................ 45,127 43,680
Less--Current maturities ....................................... 1,447 1,488
------- -------
Noncurrent portion ........................................... $43,680 $42,192
======= =======
Note payable to a related party consist of the following (in
thousands):
SEPTEMBER 30
--------------------------
1996 1997
-------- --------
Note payable to Blockbuster, interest at 7%, payments due
quarterly with a balloon payment due on maturity in
April 2004, secured by property and equipment with a net
book value of $6,212 ......................................... $ 7,905 $ 7,905
Less--Current maturities ....................................... 637 880
-------- --------
Noncurrent portion ........................................... $ 7,268 $ 7,025
======== ========
</TABLE>
The terms of contracts with concessionaires such as food and beverage
vendors generally require the vendors to make a significant initial payment to
the Partnership at the time of the construction of an amphitheater. These
advances are repayable in periodic installments from amounts otherwise due to
the Partnership under the concession contracts. As of September 30, 1997, the
notes payable to
F-97
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
vendors under such arrangements had a weighted-average effective interest rate
of 9.15 percent. The Partnership's weighted-average interest rate on notes
payable to banks was 7.3 percent on September 30, 1997.
Interest expense on the note payable to a related party was $547,000,
$489,000 and $519,000 for 1995, 1996 and 1997, respectively. Principal and
interest on the note payable to a related party have not been paid as accounts
receivable, related parties from Blockbuster remain outstanding.
As of September 30, 1997, scheduled maturities of notes payable were as
follows:
<TABLE>
<CAPTION>
<S> <C>
1998 ............... $ 2,368
1999 ............... 1,841
2000 ............... 11,560
2001 ............... 1,751
2002 ............... 1,811
Thereafter ......... 32,254
-------
$51,585
=======
</TABLE>
8. LEASE COMMITMENTS:
The Partnership leases various amphitheaters under operating and capital
leases. Initial lease terms are 25 to 60 years with varying renewal periods at
the Partnership's option on most leases. A number of the amphitheater leases
provide for escalating rent over the lease term. Rental expense on operating
leases is recognized on a straight-line basis over the life of such leases. The
majority of the amphitheater leases provide for contingent rentals, generally
based upon a percentage of gross revenues, as defined in the respective lease
agreements. Minimum rental expense associated with operating leases for 1995,
1996 and 1997 was $648,000, $2,353,000 and $2,612,000, respectively. Contingent
rental expense associated with operating leases for 1995, 1996 and 1997 was
$2,407,000, $2,515,000 and $2,571,000, respectively. Contingent rental expense
associated with capital leases for 1995, 1996 and 1997 was $144,000, $155,000
and $149,000, respectively.
Minimum rental commitments on long-term capital and operating leases at
September 30, 1997, were as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- ----------
<S> <C> <C>
Year ending September 30--
1998 ............................................ $ 757 $ 2,902
1999 ............................................ 757 3,056
2000 ............................................ 756 3,148
2001 ............................................ 757 3,248
2002 ............................................ 757 3,297
Thereafter ...................................... 9,714 54,693
------- -------
13,498 $70,344
=======
Less--Amount representing interest ............... 7,383
-------
Present value of minimum rental payments ......... 6,115
Less--Current portion ............................ 126
-------
Noncurrent portion ............................... $ 5,989
=======
</TABLE>
9. RELATED PARTIES:
The responsibility for the day-to-day business and affairs of the
Partnership has been delegated by the partners to a managing director and
support staff employed by PACE Entertainment
F-98
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Corporation and its subsidiaries. PACE Entertainment Corporation and its
subsidiaries provide the Partnership with management and consulting services in
connection with the development, construction, maintenance and operation of
amphitheaters owned or leased by the Partnership. The Partnership paid
$1,650,000, $1,687,000 and $1,968,000 during 1995, 1996 and 1997, respectively,
to PACE Entertainment Corporation as reimbursement for the costs of these
services.
The Partnership paid PACE Music Group (PMG), a subsidiary of PACE
Entertainment Corporation, $289,000, $225,000 and $395,000 during 1995, 1996
and 1997, respectively, for services provided by PMG as a local presenter at
one of the Partnership's amphitheaters.
Accounts receivable from and accounts payable to related parties at
September 30, 1997, of $3,878,000 and $3,948,000, respectively, relate to
amounts owed to and due from the partners arising from the formation of the
Partnership and general and administrative expenses paid by or on behalf of the
Partnership.
Notes receivable, related parties consist of two notes due from AEP which
bear interest at 5.62 percent per annum and matured April 1, 1997. Principal
payments on the notes are due upon request by the Partnership in order to fund
the construction of proposed amphitheaters. Interest on the partners' notes
amounted to $192,000, $63,000 and $68,000 for 1995, 1996 and 1997,
respectively.
10. COMMITMENTS AND CONTINGENCIES:
Commitments
The Partnership guarantees 50 percent of a $2,305,000 promissory note
issued by its 50 percent equity partner in the Starwood Amphitheater. The note
matures on June 1, 2003.
The Partnership has committed to fund certain renovation work at one of
its amphitheaters in proportion to its 66 2/3 percent partnership interest in
that amphitheater. The renovations are to include increasing seating capacity
and upgrading the amphitheater's concession plazas and parking facilities. The
total budget for these renovations is approximately $11.0 million of which $5.0
million will be funded by the minority partner and a note payable to vendor,
therefore the Partnership's funding commitment is approximately $6.0 million.
The Partnership maintains cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Partnership has not experienced any
losses in such accounts. Management performs periodic evaluations of the
relative credit standards of the financial institutions with which it deals.
Additionally, the Partnership's cash management and investment policies
restrict investments to low-risk, highly liquid securities. Accordingly,
management does not believe that the Partnership is currently exposed to any
significant credit risk on cash and cash equivalents.
The Partnership is subject to other claims and litigation arising in the
normal course of its business. The Partnership does not believe that any of
these proceedings will have a material adverse effect on its financial position
or results of operations.
The Partnership was previously named as a defendant in a case filed in
Wake County, North Carolina (Promotion Litigation). There were several
defendants named in the litigation with various causes of action asserted
against one or more of each of the defendants, including (a) breach of alleged
contract, partnership, joint venture and fiduciary duties between certain of
the defendants and Pro Motion Concerts, (b) constructive fraud, (c)
interference with prospective advantage, (d) unfair trade practices, (e)
constructive trust and (f) unjust enrichment. The essence of the plaintiff's
claims was that certain of the defendants agreed to enter into a partnership
with the plaintiffs for the development and operation of an amphitheater. On
May 1, 1997, the Promotion Litigation was settled. All defendants were fully
and finally released with prejudice from any and all claims and causes of
action. Although the defendants believe that they would have prevailed at a
trial of the Promotion
F-99
<PAGE>
PAVILION PARTNERS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Litigation, the defendants chose to settle rather than risk the uncertainties
of a trial. The defendants did not acknowledge or admit any liability. The
settlement called for payments to plaintiffs totaling $4.5 million, of which
$1.0 million was paid by the Partnership. The Partnership recorded litigation
settlement expense of $1.0 million at September 30, 1996. The settlement was
paid during May 1997.
Change in Control Provisions
The Partnership has entered into numerous leases and other contracts in
the ordinary course of business. Certain of these agreements either contain
restrictions on their assignability or would require third-party approval of a
change in control of the Partnership.
Employment Agreements
The Partnership has employment agreements with certain key employees. Such
agreements generally provide for minimum salary levels, guaranteed bonuses and
incentive bonuses which are payable if specified financial goals are attained.
As of September 30, 1997, the Company's minimum commitment under these
agreements were as follows (in thousands):
<TABLE>
<S> <C>
For the year ending September 30--
1998 ............................. $335
1999 ............................. 177
</TABLE>
Insurance
The Partnership carries a broad range of insurance coverage, including
general liability, workers' compensation, employee health coverage and umbrella
policies. The Partnership carries deductibles of up to $10,000 per occurrence
for general liability claims. The Partnership has accrued for estimated
potential claim costs in satisfying the deductible provisions of the insurance
policies for claims occurring through September 30, 1997. The accrual is based
on known facts and historical trends, and management believes such accrual to
be adequate.
11. SUBSEQUENT EVENTS:
In December 1997, the managing partner and its shareholders entered into
an agreement whereby the shareholders would sell their interests in PACE
Entertainment Corporation to SFX Entertainment, Inc. (SFX Transaction). Closing
is subject to certain conditions, including the approval of third parties.
On December 19, 1997, the PACE Entertainment Corporation entered into an
agreement to purchase Blockbuster's 33 1/3 percent interest in the Partnership
(Blockbuster Transaction) for $4,171,000 in cash, $2,940,000 in assumed
liabilities and the assumption of certain indemnification obligations of
Blockbuster under the Partnership agreement. In addition, PACE Entertainment
Corporation has agreed to purchase the note payable to Blockbuster with a
balance of $9,507,000, including accrued interest of $1,601,000, at September
30, 1997. The transaction is contingent on, among other things, obtaining
acceptable financing including the release of Blockbuster from certain debt
obligations and the approval of Sony.
On December 22, 1997, PACE Entertainment Corporation entered into an
agreement to purchase Sony's 33 1/3 percent interest in the Partnership (Sony
Transaction) for $27,500,000 in cash. The transaction is contingent on, among
other things, government approval and obtaining acceptable financing including
the release of Sony from certain debt obligations (see Note 7).
12. EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED)
Effective February 25, 1998, the SFX Transaction, Blockbuster Transaction
and Sony Transaction closed. In conjunction with the closing, SFX purchased or
retired approximately $38 million of the Partnership's outstanding notes
payable.
F-100
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Boards of Directors
Contemporary Group
We have audited the accompanying combined balance sheets of Contemporary
Group as of December 31, 1997 and 1996 and the related combined statements of
operations, cash flows and stockholders' equity for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
Contemporary Group at December 31, 1997 and 1996 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
May 22, 1998
F-101
<PAGE>
CONTEMPORARY GROUP
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
1996 1997
--------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash .............................................................. $ 2,972,409 $10,427,805
Accounts receivable ............................................... 4,067,444 7,672,187
Notes receivable - related party .................................. -- 1,000,000
Prepaid expenses and other current assets ......................... 272,105 210,640
------------ -----------
Total current assets ............................................... 7,311,958 19,310,632
Property and equipment, at cost, less accumulated depreciation and
amortization of $2,723,986 in 1996 and $3,264,972 in 1997 ......... 2,438,210 2,813,902
Reimbursable event costs ........................................... 474,469 152,617
Deferred event expenses ............................................ 250,973 402,460
Investment in Riverport ............................................ 4,934,513 5,436,717
Other assets ....................................................... 120,256 199,518
------------ -----------
Total assets ....................................................... $ 15,530,379 $28,315,846
============ ===========
LIABILITIES AND COMBINED STOCKHOLDERS' EQUITY
Current liabilities:
Accrued compensation and bonuses .................................. $ 2,906,153 $ 6,721,459
Accrued expenses and other current liabilities .................... 1,994,036 6,169,861
Accounts payable .................................................. 1,733,676 1,347,539
Current portion of note payable ................................... 667,138 1,075,000
------------ -----------
Total current liabilities .......................................... 7,301,003 15,313,859
Deferred revenue and other liabilities ............................. 2,586,880 5,570,295
Note payable, less current portion ................................. 1,659,723 739,424
Combined stockholders' equity ...................................... 3,982,773 6,692,268
------------ -----------
Total liabilities and combined stockholders' equity ................ $ 15,530,379 $28,315,846
============ ===========
</TABLE>
See accompanying notes.
F-102
<PAGE>
CONTEMPORARY GROUP
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------
1995 1996 1997
-------------- -------------- ----------------
<S> <C> <C> <C>
Operating revenues:
Event promotion revenue ..................... $39,159,137 $38,023,454 $ 48,057,060
Marketing revenue ........................... 7,670,138 12,969,621 30,195,359
Other event revenue ......................... 8,813,999 8,859,218 10,800,118
----------- ----------- ------------
55,643,274 59,852,293 89,052,537
Cost of revenue .............................. 44,240,953 46,410,935 66,940,088
----------- ----------- ------------
11,402,321 13,441,358 22,112,449
Operating expenses:
Salary and bonus expense .................... 5,944,644 8,010,991 18,992,476
Depreciation and amortization ............... 559,980 566,573 540,986
General and administrative expenses ......... 3,468,742 3,767,111 4,887,615
----------- ----------- ------------
9,973,366 12,344,675 24,421,077
Income (loss) from operations ................ 1,428,955 1,096,683 (2,308,628)
Other income (expense):
Interest income ............................. 226,024 158,512 201,310
Interest expense ............................ (140,773) (213,658) (192,130)
Loss on asset disposal ...................... -- -- (84,261)
Equity in income of Riverport ............... 1,332,898 822,716 1,002,204
----------- ----------- ------------
1,418,149 767,570 927,123
----------- ----------- ------------
Income before income taxes ................... 2,847,104 1,864,253 (1,381,505)
Federal and state taxes ...................... 20,677 35,367 --
----------- ----------- ------------
Net income (loss) ............................ $ 2,826,427 $ 1,828,886 $ (1,381,505)
=========== =========== ============
</TABLE>
See accompanying notes.
F-103
<PAGE>
CONTEMPORARY GROUP
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------
1995 1996 1997
--------------- --------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................................. $ 2,826,427 $ 1,828,886 $ (1,381,505)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............................. 559,980 566,573 540,986
Loss on asset disposal ..................................... -- -- 84,261
Non cash interest expense .................................. 142,068 148,113 154,701
Equity in income of Riverport, net of distributions
received ................................................. (82,897) (222,716) (502,204)
Changes in operating assets and liabilities:
Accounts receivable ...................................... (1,451,090) (659,486) (3,604,743)
Prepaid expenses and other current assets ................ (331,184) 225,754 61,465
Reimbursable event costs ................................. (75,913) (361,599) 321,852
Deferred event expenses .................................. (15,608) (45,150) (151,487)
Other assets ............................................. (1,575) (29,923) (79,262)
Accounts payable ......................................... 398,369 970,553 (386,137)
Accrued compensation and bonuses ......................... 665,488 954,175 3,815,306
Accrued expenses and other current liabilities ........... 907,053 301,652 4,175,825
Deferred revenue ......................................... (1,569,486) 245,216 3,227,827
Other liabilities ........................................ -- 162,860 (244,412)
------------ ------------ ------------
Net cash provided by operating activities ................... 1,971,632 4,084,908 6,032,473
INVESTING ACTIVITIES
Loan to related party ....................................... -- -- (1,000,000)
Purchase of property and equipment .......................... (281,306) (1,159,382) (1,063,848)
Proceeds from sale of property and equipment ................ -- -- 62,909
------------ ------------ ------------
Net cash used in investing activities ....................... (281,306) (1,159,382) (2,000,939)
FINANCING ACTIVITIES
Borrowings .................................................. 226,970 626,970 --
Payments of notes payable ................................... (75,000) (336,802) (667,138)
Proceeds received from capital contributions ................ -- -- 5,000,000
Distributions paid .......................................... (2,578,000) (2,993,000) (909,000)
------------ ------------ ------------
Net cash provided by (used in) financing activities ......... (2,426,030) (2,702,832) 3,423,862
------------ ------------ ------------
Net increase in cash ........................................ (735,704) 222,694 7,455,396
Cash at beginning of period ................................. 3,485,419 2,749,715 2,972,409
------------ ------------ ------------
Cash at end of period ....................................... $ 2,749,715 $ 2,972,409 $ 10,427,805
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest ...................................... $ 24,000 $ 143,271 $ 37,421
============ ============ ============
Cash paid for income taxes .................................. $ 45,805 $ 34,550 $ 27,077
============ ============ ============
</TABLE>
See accompanying notes.
F-104
<PAGE>
CONTEMPORARY GROUP
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C>
Balance, January 1, 1995 ................................. $ 4,898,460
Distributions to stockholders ........................... (2,578,000)
Net income for the year ended December 31, 1995 ......... 2,826,427
------------
Balance, December 31, 1995 ............................... 5,146,887
Distributions to stockholders ........................... (2,993,000)
Net income for the year ended December 31, 1996 ......... 1,828,886
------------
Balance, December 31, 1996 ............................... 3,982,773
Distributions to stockholders ........................... (909,000)
Capital contributions ................................... 5,000,000
Net loss for the year ended December 31, 1997 ........... (1,381,505)
------------
Balance, December 31, 1997 ............................... $ 6,692,268
============
</TABLE>
See accompanying notes.
F-105
<PAGE>
CONTEMPORARY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The accompanying combined financial statements include the accounts of
Contemporary International Productions Corporation, Contemporary Productions
Incorporated, Contemporary Marketing, Inc. ("CMI"), Contemporary Sports
Incorporated, Innovative Training and Education Concepts Corporation, n/k/a
Contemporary Group, Inc., Contemporary Investments Corporation ("CIC"),
Contemporary Investments of Kansas, Inc., Continental Entertainment Associates,
Inc., Dialtix, Inc., and Capital Tickets L.P. (collectively, the "Contemporary
Group" or the "Companies"). Intercompany transactions and balances among these
companies have been eliminated in combination. The Companies are subject to
common ownership and to the transaction described in Note 8.
The Contemporary Group is a live entertainment and special events
producer, venue operator and consumer marketer. Income from operations
originates from the operation of the concert division which earns promotion
income in two ways: either a fixed fee for organizing and promoting an event or
an arrangement that entitles it to a profit percentage based on a predetermined
formula. The Companies recognize revenue from the promotion of events when
earned, which is generally upon exhibition. The Companies record commissions on
booking acts as well as sponsorship and concession income as other event
revenues.
CIC is a 50% partner in Riverport Performing Arts Centre Joint Venture
("Riverport"), a Missouri general partnership which operates a 20,000 seat
outdoor amphitheater located in St. Louis, Missouri. The investment in
Riverport is recorded under the equity method of accounting.
Income Taxes
As of December 31, 1997, all of the entities combined are either "S
Corporations" or partnerships and therefore no tax provision has been provided.
In 1996 and 1995, certain of the entities were "C Corporations" for which a tax
provision has been provided.
For the year ended December 31, 1996 and 1995, with respect to the "C
Corporations," the total provision for income taxes is $35,367 and $20,677
respectively.
Certain of the "C Corporations" filed elections to be treated as "S
Corporations" beginning January 1, 1997. Therefore, with respect to such
corporations, no provision for income taxes has been provided for the year
ended December 31, 1997. These Companies have subsequently revoked the election
to be taxed as "S Corporations", effective January 1, 1998.
Accounts Receivable
Accounts receivable consist of amounts due from ticket vendors, venue box
offices and customers of marketing services. Management considers these
accounts receivable as of December 31, 1997, 1996 and 1995 to be collectible;
accordingly, no allowance for doubtful accounts is recorded.
Revenue Recognition
Deferred revenue relates primarily to an advance on future concession
revenues which is evidenced by a noninterest bearing note payable and advances
on marketing services. Payments collected in advance are recognized as income
as events occur or services are provided. Reimbursable event costs represent
amounts paid by the Companies on behalf of co-promoters and other parties with
interests in the events which will be reimbursed by such parties.
Sales under long-term contracts for the Company's marketing division are
recorded under the percentage-of-completion method, wherein revenues and
estimated costs are recorded as the work is performed.
F-106
<PAGE>
CONTEMPORARY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Significant Customer
CMI's most significant customer is AT&T, which provided approximately 23%
and 12% of the Companies' combined revenues for the years ended December 31,
1997 and 1996, respectively. In March 1998, AT&T has indicated that it will no
longer be using the services of CMI.
Advertising Costs
Advertising costs are expensed as incurred. For the year ended December
31, 1997, 1996 and 1995, advertising costs were $115,634 and $71,879 and
$44,226, respectively.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed on
either the straight-line method or accelerated methods over the estimated
useful lives of the assets or the term of the related lease as follows:
<TABLE>
<CAPTION>
<S> <C>
Furniture, fixtures and equipment ......... 5-7 years
Land improvements ......................... 15 years
Leasehold improvements .................... 10 years
</TABLE>
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassification
Certain prior year amounts in the financial statements have been
reclassified to conform with the current year's presentation.
2. INVESTMENTS
The following is a summary of the financial position and results of
operations of Riverport as of and for the year ended December 31, 1995, 1996
and 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Current assets .................................. $ 350,532 $ 473,275 $ 284,424
Property and equipment .......................... 12,388,989 11,815,552 11,188,826
Other assets .................................... 27,573 16,553 --
----------- ----------- -----------
Total assets .................................... $12,767,094 $12,305,380 $11,473,250
=========== =========== ===========
Current liabilities ............................. $ 1,524,364 $ 1,993,981 $ 318,028
Other liabilities ............................... 1,819,136 442,374 281,789
Partners' capital ............................... 9,423,594 9,869,025 10,873,433
----------- ----------- -----------
Total liabilities and partners' capital ......... $12,767,094 $12,305,380 $11,473,250
=========== =========== ===========
Revenue ......................................... $15,256,314 $11,693,138 $14,247,109
Net operating income ............................ $ 3,200,738 $ 1,970,887 $ 2,616,839
Net income ...................................... $ 2,665,796 $ 1,645,431 $ 2,004,408
</TABLE>
F-107
<PAGE>
CONTEMPORARY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
During the years ended December 31, 1997, 1996 and 1995, CIC received a
cash distribution of $500,000, $600,000 and $1,250,000, respectively, from
Riverport.
3. NOTES PAYABLE
In November 1995, the Company obtained a $750,000 unsecured line of credit
with a bank which matured in May 1996. The note bore a rate of interest based
on the prime lending rate (8.75% in 1995). At December 31, 1995, $226,970 was
outstanding under this line of credit.
At December 31, 1997, 1996 and 1995, CIC held a $2,322,500 non
interest-bearing note payable to its partner in Riverport. The carrying value
of the note was $1,814,424, $1,734,723 and $1,661,610 at December 31, 1997,
1996 and 1995, respectively, which includes imputed interest at a rate of
approximately 9%. The note, which was payable in installments through December
1, 2000 and was secured by CIC's investment in Riverport, was repaid in 1998 in
connection with the transaction described in Note 8.
At December 31, 1996, the Companies had a $592,138 bank note payable which
bore interest based on the prime lending rate (8.25% in 1996, 8.5% in 1997) and
was repaid in full during 1997.
4. COMMON STOCK
The Companies' stock and tax status for 1997 are as follows:
<TABLE>
<CAPTION>
TAX SHARES SHARES PAR
STATUS AUTHORIZED ISSUED VALUE
------------- ------------ ---------- ------
<S> <C> <C> <C> <C>
Contemporary International Productions
Corporation ................................. S-Corp. 30,000 10 $ 1
Contemporary Productions Incorporated ......... S-Corp. 30,000 100 $ 1
Contemporary Marketing, Inc. .................. S-Corp. 30,000 100 $ 1
Contemporary Sports, Incorporated ............. S-Corp. 30,000 100 $ 1
Innovative Training and Education
Concepts Corporation n/k/a
Contemporary Group, Inc. .................... S-Corp. 30,000 100 $ 1
Contemporary Investments Corporation .......... S-Corp. 30,000 200 $ 1
Contemporary Investments of Kansas, Inc. S-Corp. 30,000 30,000 $ 1
Continental Entertainment Associates, Inc. C-Corp. 300 6 $100
Dialtix, Inc. ................................. S-Corp. 300 6 $100
Capital Tickets L.P. .......................... Partnership N/A N/A N/A
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
Leases
The Companies lease office facilities and concert venues under
noncancellable leases which expire at various dates through 2004. Such leases
contain various operating escalations and renewal options.
Total rent expense for the years ended December 31, 1997, 1996 and 1995
was $705,489, $818,123 and $734,785, respectively.
F-108
<PAGE>
CONTEMPORARY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Future minimum lease payments under noncancellable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 ......................... $ 858,757
1999 ......................... 863,757
2000 ......................... 440,050
2001 ......................... 264,000
Thereafter ................... 317,000
----------
$2,743,564
==========
</TABLE>
Compensation
During 1996, CMI entered into an employment agreement with one of its
employees which provided her rights to future cash payments based on the fair
value of CMI, as defined. These rights would vest on January 1, 2002 or upon
the occurrence of certain transactions, including a change of control. On
December 31, 1997, in connection with an amendment to her employment agreement,
the rights became fully vested and CMI paid this employee $1,329,284. In
addition, she is entitled to receive as a bonus $2,854,899 under the amendment,
which will be paid in 1998 and is accrued at December 31, 1997.
Litigation
The Companies are party to various legal proceedings generally incidental
to their businesses. Although the ultimate disposition of these proceedings is
not presently determinable, management, after discussions with counsel, does
not expect the outcome of these proceedings to have a material adverse effect
on the financial condition of the Companies.
6. EMPLOYEE RETIREMENT PLAN
In January 1992, the Companies began a retirement plan for their employees
under Section 401(k) of the Internal Revenue Code. All employees are eligible
to participate once they obtain the minimum age requirement of 21 years and
have satisfied the service requirement of one year with the Companies.
Participant contributions are subject to the limitations of Section 402(g) of
the Internal Revenue Code. The Companies contribute to participant employees'
accounts at the rate of 25% of the first 5% of the participating employees'
contributions. During the years ended December 31, 1997, 1996 and 1995, the
Companies contributions totaled approximately $37,769, $25,600 and $18,887,
respectively.
7. RELATED PARTY TRANSACTIONS
During 1997, the Company loaned $1,000,000 to its co-presidents. The loans
which bore a rate of interest of approximately 5.8% were repaid in full in
early 1998.
8. SUBSEQUENT EVENTS
In February 1998, the owners of the Companies sold 100% of the capital
stock of Contemporary International Productions Corporation and the assets of
the remaining companies comprising the Contemporary Group, excluding cash and
1997 receivables, to SFX Entertainment, Inc. for an aggregate consideration of
$62,300,000 in cash and the issuance of preferred stock which was converted
into 1,402,850 shares of SFX Entertainment Class A Common Stock. In connection
with this transaction, SFX Entertainment and its affiliates also acquired the
50% interest of Riverport not owned by CIC for $12,585,000.
F-109
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Riverport Performing Arts Centre, Joint Venture:
We have audited the accompanying balance sheets of Riverport Performing
Arts Centre, Joint Venture (a Missouri General Partnership) as of December 31,
1997 and 1996, and the related statements of income and changes in partners'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Joint Venture's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Riverport Performing Arts
Centre, Joint Venture as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
February 27, 1998
F-110
<PAGE>
RIVERPORT PERFORMING ARTS CENTRE, JOINT VENTURE
BALANCE SHEETS -- AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................... $ 202,251 $ 76,231
Accounts receivable ............................... -- 324,275
Prepaid expenses and other current assets ......... 82,173 72,769
------------ ------------
Total current assets ............................... 284,424 473,275
------------ ------------
FACILITY:
Land and leasehold interest ....................... 5,156,342 5,156,342
Buildings and improvements ........................ 8,516,251 8,449,225
Furniture, fixtures and equipment ................. 2,293,356 2,218,987
Less- Allowance for depreciation .................. (4,777,123) (4,009,002)
------------ ------------
11,188,826 11,815,552
------------ ------------
OTHER ASSETS--Deferred financing fees, net ......... -- 16,553
------------ ------------
$ 11,473,250 $ 12,305,380
============ ============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt .............. $ 160,585 $ 1,376,762
Accounts payable and accrued expenses ............. 120,043 453,804
Deferred income ................................... 37,400 163,415
------------ ------------
Total current liabilities .......................... 318,028 1,993,981
LONG-TERM DEBT ..................................... 281,789 442,374
------------ ------------
599,817 2,436,355
PARTNERS' EQUITY ................................... 10,873,433 9,869,025
------------ ------------
$ 11,473,250 $ 12,305,380
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-111
<PAGE>
RIVERPORT PERFORMING ARTS CENTRE, JOINT VENTURE
STATEMENTS OF INCOME AND CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
REVENUES:
Show admission ..................................... $ 9,901,214 $ 8,053,939
Sponsorships and promotions ........................ 1,113,100 914,690
Concession rental .................................. 1,970,742 1,724,060
Parking ............................................ 1,122,979 843,283
Other .............................................. 139,074 157,166
------------ ------------
Operating revenues ............................... 14,247,109 11,693,138
------------ ------------
EXPENSES:
Talent ............................................. 5,825,962 4,382,735
Other show expenses ................................ 1,866,910 1,706,317
Advertising and marketing .......................... 1,037,048 887,673
Producer fees and commissions ...................... 1,187,253 1,071,946
General and administrative ......................... 1,713,097 1,673,580
------------ ------------
Operating expenses ............................... 11,630,270 9,722,251
------------ ------------
Net operating income ............................. 2,616,839 1,970,887
------------ ------------
OTHER EXPENSES (INCOME):
Depreciation and amortization ...................... 779,278 767,258
Interest, net ...................................... 13,167 112,947
Other income ....................................... (180,014) (554,749)
------------ ------------
Other expenses, net .............................. 612,431 325,456
------------ ------------
Net income ....................................... 2,004,408 1,645,431
PARTNERS' EQUITY AT THE BEGINNING OF PERIOD ......... 9,869,025 9,423,594
DISTRIBUTION TO PARTNERS ............................ (1,000,000) (1,200,000)
------------ ------------
PARTNERS' EQUITY AT THE END OF THE PERIOD ........... $ 10,873,433 $ 9,869,025
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-112
<PAGE>
RIVERPORT PERFORMING ARTS CENTRE, JOINT VENTURE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 2,004,408 $ 1,645,431
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization ............................... 779,278 767,258
Change in accounts receivable ............................... 324,275 (215,712)
Change in prepaid expenses and other current assets ......... (4,008) (3,606)
Change in accounts payable and accrued expenses ............. (333,761) 284,945
Change in deferred income ................................... (126,015) (31,505)
------------ ------------
Net cash provided by operating activities .................. 2,644,177 2,446,811
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Facility additions ............................................ (141,395) (182,801)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt ............................................. (1,376,762) (1,160,585)
Distribution to Partners ...................................... (1,000,000) (1,200,000)
------------ ------------
Net cash used in financing activities ...................... (2,376,762) (2,360,585)
------------ ------------
Change in cash and cash equivalents ........................ 126,020 (96,575)
CASH AND CASH EQUIVALENTS, beginning of year ................... 76,231 172,806
------------ ------------
CASH AND CASH EQUIVALENTS, end of year ......................... $ 202,251 $ 76,231
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-113
<PAGE>
RIVERPORT PERFORMING ARTS CENTRE, JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SIGNIFICANT ACCOUNTING POLICIES:
Organization
The Riverport Performing Arts Centre, Joint Venture (the Joint Venture) is
a Missouri General Partnership between Contemporary Investments Corporation
(Contemporary) and Sverdrup/BRC Joint Venture (formerly Sverdrup/MDRC Joint
Venture). The partners each hold a 50% interest in the equity and operations of
the Joint Venture. The term of the Joint Venture continues until
December 31, 2045. The Joint Venture is the developer, owner and operator of a
20,000 seat outdoor amphitheater located in St. Louis, Missouri. The Joint
Venture contracts with popular musical performing artists for the entertainment
of its guests. Entertainment is provided during the months of April through
October to guests primarily from the St. Louis metropolitan area.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash equivalents consist of investments with a maturity of three months or
less when purchased. Cash equivalents are carried at cost, which approximates
market. Interest income of $61,199 and $56,708 for 1997 and 1996, respectively,
is netted against interest expense in the accompanying statements of income.
Depreciation and Amortization
Depreciation is provided using the straight-line method over estimated
useful lives of 5 to 20 years. Deferred financing fees are amortized over the
life of the related debt.
Leasehold Interest
The facility was constructed on land obtained through a leasehold interest
that expires on
April 25, 2011. The Sverdrup/BRC Joint Venture sold to Contemporary an
undivided 50% interest in the leasehold interest. Concurrently, both
Sverdrup/BRC Joint Venture and Contemporary contributed their undivided 50%
interests in the leasehold interest into the Joint Venture. Ground rent is $1
per year under the lease with the Joint Venture assigned as landlord.
Deferred Income
Deferred income reflects advance sales of season tickets for the
subsequent operating season and is amortized into show admission revenues as
the subsequent operating season progresses.
Income Taxes
Income taxes have not been provided for in the financial statements since
the Joint Venture is organized as a partnership, and each partner is liable for
its own tax payments.
F-114
<PAGE>
RIVERPORT PERFORMING ARTS CENTRE, JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. LONG-TERM DEBT
Notes payable outstanding at December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
---------- -------------
<S> <C> <C>
Mortgage note due in installments through 1997, bearing
interest at prime plus 1/2% which averaged 8.875% during
1997 and 1996 .............................................. $ -- $1,216,178
Noninterest-bearing note due in installments through 2000..... 442,374 602,958
-------- ----------
442,374 1,819,136
Less-Current maturities ...................................... 160,585 1,376,762
-------- ----------
$281,789 $ 442,374
======== ==========
</TABLE>
The mortgage note contains covenants that require the Joint Venture to
maintain certain financial ratios and also prohibit certain transactions. The
mortgage note is secured by buildings, improvements, furniture, fixtures and
equipment, limited to the remaining term of the leasehold interest expiring
April 25, 2011. The mortgage note was paid off on September 25, 1997. The
noninterest-bearing note is secured by all concession equipment. Cash paid for
interest totaled $79,391 and $173,172 for 1997 and 1996, respectively.
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 ......... $160,585
1999 ......... 160,585
2000 ......... 121,204
--------
$442,374
========
</TABLE>
3. CONCESSION RENTAL:
The Joint Venture rents certain premises at its location for the sale of
concessions under a lease that expires in 2000. Rental income is based on a
percentage of gross receipts for some products sold and gross margin for other
products sold.
4. RELATED-PARTY TRANSACTIONS
Contempro Group, Inc., an affiliate of Contemporary, provides various
services to the Joint Venture. These services include marketing, media
placement, sales and show production. Approximately $2,235,000 and $1,766,000
was paid for these services in 1997 and 1996, respectively.
In addition to the payments described above, the Joint Venture also
compensates Contempro Group, Inc. as an agent for the procurement of these
services.
Sverdrup Investments, Inc., an affiliate of Sverdrup/BRC Joint Venture,
was paid $36,000 for accounting services in 1997 and $147,000 for accounting
and landscaping services in 1996.
Riverport Trust, an affiliate of Sverdrup/BRC Joint Venture, provides
ground maintenance to the tenants of the Riverport complex. The fees charged
for these services is based on the total space occupied by the tenant. The
Joint Venture paid approximately $62,000 and $73,000 for these services in 1997
and 1996, respectively.
The Joint Venture had liabilities for related-party transactions and
pass-through costs to affiliates of Contemporary totaling approximately $56,000
and $416,000 as of December 31, 1997 and 1996, respectively. The Joint Venture
also had receivables for income collected by Contemporary totaling
approximately $273,000 as of December 31, 1996.
F-115
<PAGE>
RIVERPORT PERFORMING ARTS CENTRE, JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CONTINGENCIES:
From time to time, the Joint Venture is a party to certain lawsuits and
other claims related to the normal conduct of its business. Management believes
that liabilities, if any, resulting from the resolution of pending or
threatened proceedings would not materially affect the financial condition
or results of operations of the Joint Venture.
6. SUBSEQUENT EVENT:
On February 27, 1998, Sverdrup/BRC Joint Venture and Contemporary sold
their 50% interests in the equity and operations of the Joint Venture to SFX
Entertainment, Inc. and Contemporary Acquisition Corporation, respectively.
F-116
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
The Album Network, Inc.
We have audited the accompanying combined balance sheets of The Album
Network, Inc. and Affiliated Companies as of September 30, 1997 and 1996, and
the related combined statements of operations and stockholders' deficit and
cash flows for the years then ended. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of The Album Network,
Inc. and Affiliated Companies at September 30, 1997 and 1996, and the combined
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
November 20, 1997
New York, New York
F-117
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------
1996 1997
-------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................................... $ 160,453 $ 272,423
Accounts receivable, less allowance for doubtful
accounts of $153,728 in 1997and $95,450 in 1996 ................... 2,148,159 2,229,237
Officers' loans receivable ......................................... 423,447 390,794
Prepaid expenses and other current assets .......................... 125,558 234,914
------------ ------------
Total current assets ................................................ 2,857,617 3,127,368
Property, plant and equipment, at cost, less accumulated depreciation
of $1,056,689 in 1997 and $ 914,513 in 1996 ........................ 278,898 303,614
Deferred software costs, less accumulated amortization of $106,639 in
1997 and $45,768 in 1996 ........................................... 172,302 262,061
Other noncurrent assets ............................................. 39,477 37,033
------------ ------------
Total assets ........................................................ $ 3,348,294 $ 3,730,076
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued officers' bonuses .......................................... $ 1,200,000 $ 1,251,000
Accounts payable and other accrued expenses ........................ 1,081,469 1,208,424
Officers' loans payable ............................................ 650,000 489,085
Unearned subscription income ....................................... 530,255 406,529
Taxes payable and other current liabilities ........................ 339,551 224,011
Current portion of long-term debt .................................. 636,723 506,228
------------ ------------
Total current liabilities ........................................... 4,437,998 4,085,277
Long-term debt ...................................................... 1,294,133 1,051,881
Deferred income taxes ............................................... 279,434 114,178
Combined stockholders' deficit ...................................... (2,663,271) (1,521,260)
------------ ------------
Total liabilities and stockholders' deficit ......................... $ 3,348,294 $ 3,730,076
============ ============
</TABLE>
See accompanying notes.
F-118
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
COMBINED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 169,498
Accounts receivable, less allowance for doubtful
accounts of $157,682 ................................................... 2,268,205
Officers' loans receivable .............................................. 406,421
Prepaid expenses and other current assets ............................... 133,293
------------
Total current assets ..................................................... 2,977,417
Property, plant and equipment, at cost, less accumulated depreciation
of $1,098,747 ........................................................... 307,096
Deferred software costs, less accumulated amortization of $127,116 ....... 282,453
Other noncurrent assets .................................................. 9,525
------------
Total assets ............................................................. $ 3,576,491
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and other accrued expenses ............................. $ 1,346,095
Officers' loans payable ................................................. 717,336
Unearned subscription income ............................................ 558,358
Taxes payable and other current liabilities ............................. 749,108
Current portion of long-term debt ....................................... 635,464
------------
Total current liabilities ................................................ 4,006,361
Long-term debt ........................................................... 939,200
Deferred income taxes .................................................... 53,575
Combined stockholders' deficit ........................................... (1,422,645)
------------
Total liabilities and stockholders' deficit .............................. $ 3,576,491
============
</TABLE>
See accompanying notes.
F-119
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
COMBINED STATEMENTS OF OPERATIONS AND
STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------
1996 1997
---------------- ----------------
<S> <C> <C>
OPERATING REVENUES
Advertising revenue ......................................... $ 7,040,465 $ 7,619,751
Research services revenue ................................... 2,453,026 2,441,703
Direct mail & subscription revenue .......................... 1,791,887 1,837,248
Broadcast revenue ........................................... 2,085,714 2,235,788
Consulting revenue .......................................... 720,000 470,000
Other revenue ............................................... 675,790 1,152,448
------------ ------------
14,766,882 15,756,938
Direct costs of revenue ..................................... 4,408,997 4,107,328
------------ ------------
10,357,885 11,649,610
OPERATING EXPENSES
Officers' salary expense .................................... 3,384,870 3,662,427
Other salary expense ........................................ 3,956,910 3,949,715
Depreciation and amortization ............................... 183,976 203,047
General and administrative expenses ......................... 2,524,704 2,483,197
------------ ------------
10,050,460 10,298,386
------------ ------------
Income from operations ...................................... 307,425 1,351,224
OTHER INCOME (EXPENSE)
Interest income--officers' loans ............................ 35,000 41,600
Interest income--third party ................................ 6,961 1,295
Interest expense--officers' loans ........................... (35,000) (55,940)
Interest expense--third party ............................... (256,164) (175,490)
------------ ------------
Income before income taxes .................................. 58,222 1,162,689
INCOME TAXES
Provision for income taxes .................................. 211,832 20,678
------------ ------------
Net income (loss) ........................................... (153,610) 1,142,011
Combined stockholders' deficit at beginning of year ......... (2,509,661) (2,663,271)
------------ ------------
Combined stockholders' deficit at end of year ............... $ (2,663,271) $ (1,521,260)
============ ============
</TABLE>
See accompanying notes.
F-120
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
COMBINED STATEMENT OF OPERATIONS AND
STOCKHOLDERS' DEFICIT
THREE MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
OPERATING REVENUES
Advertising revenue ........................................... $ 1,605,422
Research services revenue ..................................... 604,961
Direct mail & subscription revenue ............................ 521,851
Broadcast revenue ............................................. 825,686
Other revenue ................................................. 97,437
------------
3,655,357
Direct costs of revenue ....................................... 1,056,785
------------
2,598,572
OPERATING EXPENSES
Officers' salary expense ...................................... 209,424
Other salary expense .......................................... 1,090,662
Depreciation and amortization ................................. 62,535
General and administrative expenses ........................... 1,034,159
------------
2,396,780
------------
Income from operations ........................................ 201,792
OTHER INCOME (EXPENSE)
Interest income--officers' loans .............................. 4,171
Interest income--third party .................................. 169
Interest expense--officers' loans ............................. (15,596)
Interest expense--third party ................................. (26,921)
------------
Income before income taxes .................................... 163,615
INCOME TAXES
Provision for income taxes .................................... 65,000
------------
Net income (loss) ............................................. 98,615
Combined stockholders' deficit at beginning of period ......... (1,521,260)
------------
Combined stockholders' deficit at end of period ............... $ (1,422,645)
============
</TABLE>
See accompanying notes.
F-121
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ......................................................... $ (153,610) $1,142,011
Adjustment to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization .................................... 183,976 203,047
Provision for doubtful accounts .................................. 13,584 58,278
Changes in operating assets and liabilities:
Accounts receivable ............................................. (246,873) (139,356)
Prepaid expenses and other current assets ....................... 154,120 (109,356)
Other non current assets ........................................ (3,378) 2,444
Accounts payable and accrued expenses ........................... 69,816 126,955
Unearned subscription income .................................... 101,623 (123,726)
Accrued officers' bonus ......................................... 639,000 51,000
Deferred income taxes ........................................... 39,268 (165,256)
Taxes payable and other current liabilities ..................... 143,423 (115,540)
---------- ----------
Net cash provided by operating activities .......................... 940,949 930,501
---------- ----------
INVESTING ACTIVITIES
Purchase of property and equipment ................................. (65,731) (166,892)
Deferred software costs ............................................ (97,463) (150,630)
---------- ----------
Net cash used in investing activities .............................. (163,194) (317,522)
---------- ----------
FINANCING ACTIVITIES
Payments on long term debt ......................................... (860,236) (527,747)
Proceeds from additional debt borrowings ........................... 52,500 155,000
Proceeds from (repayments of) officers' loans, net ................. 61,355 (128,262)
---------- ----------
Net cash used in financing activities .............................. (746,381) (501,009)
---------- ----------
Net increase in cash and cash equivalents .......................... 31,374 111,970
Cash and cash equivalents at beginning of year ..................... 129,079 160,453
---------- ----------
Cash and cash equivalents at end of year ........................... $ 160,453 $ 272,423
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest ............................................. $ 304,726 $ 190,168
========== ==========
Cash paid for income taxes ......................................... $ 21,375 $ 26,316
========== ==========
</TABLE>
See accompanying notes.
F-122
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
COMBINED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net income ......................................................... $ 98,615
Adjustment to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization .................................... 62,535
Provision for doubtful accounts .................................. 3,954
Changes in operating assets and liabilities:
Accounts receivable ............................................. (42,922)
Prepaid expenses and other current assets ....................... 101,621
Other non current assets ........................................ 27,508
Accounts payable and accrued expenses ........................... 137,671
Unearned subscription income .................................... 151,829
Accrued officers' bonus ......................................... (1,251,000)
Deferred income taxes ........................................... (60,603)
Taxes payable and other current liabilities ..................... 525,097
------------
Net cash used in operating activities .............................. (245,695)
INVESTING ACTIVITIES
Purchase of property and equipment ................................. (45,540)
Deferred software costs ............................................ (40,869)
------------
Net cash used in investing activities .............................. (86,409)
FINANCING ACTIVITIES
Payments on long term debt ......................................... (112,681)
Proceeds from additional debt borrowings ........................... 129,236
Proceeds from officers' loans, net ................................. 212,624
------------
Net cash provided by financing activities .......................... 229,179
------------
Net decrease in cash and cash equivalents .......................... (102,925)
Cash and cash equivalents at beginning of year ..................... 272,423
------------
Cash and cash equivalents at end of year ........................... $ 169,498
============
</TABLE>
See accompanying notes.
F-123
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of Combination
The accompanying combined financial statements include the accounts of The
Album Network, Inc., The Network 40, Inc., The Urban Network, Inc. and
In-the-Studio (collectively, the "Companies"). Intercompany transactions and
balances among the Companies have been eliminated in combination.
On August 27, 1997, the board of directors and shareholders of the
Companies approved a plan of agreement and merger which provided that The Urban
Network, Inc. merge into The Album Network, Inc. (the "Company") effective
September 24, 1997. The Companies accounted for the transaction as a merger of
companies under common control.
The Companies publish six music trade magazines, produce rock, urban and
top 40 programming specials and manufacture compact disc samplers. They also
serve as product marketing advisors to contemporary music talent and their
managers in providing creative content and innovative marketing campaigns. In
addition, the Companies provide research services for radio station program
directors and record label executives. The Companies publishes five print
periodicals for rock and top 40 music broadcasters, retailers and music
industry executives. The weekly publications are the "Album Network" and the
"Network 40". The monthly publications are the "Virtually Alternative" and
"Totally Adult" and the quarterly publication is titled "AggroActive."
Additionally, "The Urban Network" trade magazine is published each week.
Revenue Recognition
The Companies' magazines generate revenue from advertising sales,
complemented by subscription sales and incremental direct mail revenue.
Unearned subscription income represents revenues on subscriptions for
which publications have not been delivered to customers as of the balance sheet
date. Unearned subscription income at September 30, 1996 also includes unearned
income on certain advertising and direct mail packages.
Revenue from research services is recognized straight-line over the
license term or upon the sale of computer software developed for licensees and
other customers. Advertising and broadcast revenues are recognized when
advertisements are run or aired.
Furniture and Equipment
Furniture and equipment are valued at cost less accumulated depreciation.
Depreciation is provided on the straight-line and declining balance methods
over the estimated useful lives of the assets, as follows:
<TABLE>
<CAPTION>
<S> <C>
Computer hardware ............... 5 years
Software ........................ 5 years
Furniture and equipment ......... 5-7 years
Leasehold improvements .......... 5 years
</TABLE>
Deferred Software Costs
Costs incurred to produce software masters and subsequent enhancements to
such software are capitalized and amortized over the remaining economic life of
the master (generally, five years). Costs of maintenance and customer support
are charged to expense when incurred.
Cash and Cash Equivalents
The Companies consider all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
F-124
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Income Taxes
Each of the affiliated Companies file a separate tax return. The Album
Network, Inc. and the Urban Network, Inc. are "C Corporations." The Network 40,
Inc. has elected to be taxed as an "S Corporation". The "S Corporation"
election is effective for both federal and state tax purposes. Accordingly all
items of income, loss, deduction or credit are reported by the shareholders on
their respective personal income tax returns. The corporate tax rate for S
Corporations in California is one and one-half percent (1.5%).
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company maintains bank balances with City National Bank in excess of
the federally insured limit of $100,000.
Reclassification
Certain amounts in the financial statements have been reclassified to
conform with the current presentations.
Interim Financial Information
Financial information as of December 31, 1997 and for the three months
ended December 31, 1997 is unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of the results for such period
have been included, all adjustments are of a normal and recurring nature.
Interim results are not necessarily indicative of results for a full year.
2. RELATED PARTY TRANSACTIONS
Officers' Loans
The Companies have several loan agreements outstanding with its officers
in order to satisfy the cash flow needs of operations. The interest rates on
the loans to and from the officers range from approximately 10% to 12%.
At October 1, 1995, the officers owed the Companies $471,918 and the
Companies owed the officers $637,116. During the year ended September 30, 1996,
the officers repaid $48,471 and loaned the Companies an additional $12,884.
At October 1, 1996, the officers owed the Companies $423,447 and the
Companies owed the officers $650,000. During the year ended September 30, 1997,
the officers repaid $32,653 to the Companies and the Companies repaid $160,915
to the officers.
F-125
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
3. LONG-TERM DEBT
A summary of long-term debt as of September 30, 1997 and 1996 is as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Note payable to City National Bank, collateralized by certain
equipment and personally guaranteed by the stockholders; payable
in monthly installments of $2,917 plus interest at 10.5%; due
May 1999 .......................................................... $ 96,994 $ 62,740
Note payable to City National Bank, personally guaranteed by the
stockholders; payable in monthly installments of $41,233 plus
interest at 8.75% through January 22, 1997 and at 8.25% thereafter;
due December 2000.(A) ............................................. 1,821,862 1,415,369
Other .............................................................. 12,000 80,000
---------- ----------
1,930,856 1,558,109
Less current portion ............................................... 636,723 506,228
---------- ----------
Long-term debt ..................................................... $1,294,133 $1,051,881
========== ==========
</TABLE>
- ----------
(A) In September 1995 The Album Network, Inc., The Network 40, Inc. and The
Urban Network, Inc. entered into a loan agreement with City National Bank
for $2,330,000 in connection with a redemption of common stock. Interest
was set at 8.75% per year and principal and interest were payable in
monthly installments of $57,846 through September 1999. In January 1997,
the loan agreement was revised. Interest was reset at 8.25% and monthly
payments of $41,233 were extended through December 2000. The principal
balance at the date of revision was $1,687,560.
4. COMMON STOCK
The Companies' stock and tax status at September 30, 1997 are as follows:
<TABLE>
<CAPTION>
SHARES
ISSUED
TAX SHARES AND
STATUS AUTHORIZED OUTSTANDING
------------- ------------ ------------
<S> <C> <C> <C>
The Album Network, Inc. ......... C-Corp. 1,000,000 220
The Network 40, Inc. ............ S-Corp. 100,000 825
The Urban Network, Inc. ......... C-Corp. 100,000 825
In-the-Studio ................... Partnership n/a n/a
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
Leases
The Companies lease an office facility under noncancellable leases which
expire in February 1998.
Total rent expense for the years ended September 30, 1997 and 1996 under
operating leases was $262,812 and $256,026, respectively.
Future minimum lease payments under noncancellable operating leases as of
September 30, 1997 total $121,155, all of which is payable in 1998.
Other Matters
As of September 30, 1997, approximately $80,000 was drawn on lines of
credit with City National Bank. There were no amounts drawn as of September 30,
1996.
F-126
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
The Album Network has received a Statutory Notice of Deficiency from the
Internal Revenue Service ("IRS") for the years ended September 30, 1994, 1995
and 1996 asserting tax deficiencies resulting primarily from an IRS position
that compensation paid to officers was unreasonable and excessive. In total,
approximately $3.5 million of adjustments increasing taxable income have been
proposed. The total additional tax, penalties and interest through September
30, 1997 related to these adjustments would be approximately $1.8 million. The
company has analyzed these matters with tax counsel and believes it has
meritorious defenses to the deficiencies asserted by the IRS. The company has
filed a petition with the United States Tax Court contesting the asserted
liability. While the company believes that a successful defense of this case
may be made, in light of the economic burdens of the defense, the company may
entertain a settlement for up to $291,000. Accordingly, the company has
recorded reserves in such amount, including $23,000, $115,000 and $153,000 for
the years ended September 30, 1997, 1996 and prior periods, respectively.
For the years ended September 30, 1996 and 1997 the provision for income
taxes is as follows:
<TABLE>
<CAPTION>
1996 1997
----------- -------------
<S> <C> <C>
Current:
Federal ................ $129,911 $ 143,056
State .................. 17,710 42,878
-------- ----------
Total ................. 147,621 185,934
-------- ----------
Deferred:
Federal ................ 49,764 (150,383)
State .................. 14,447 (14,873)
-------- ----------
Total ................. 64,211 (165,256)
-------- ----------
Total ................... $211,832 $ 20,678
======== ==========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the Companies' deferred tax assets and liabilities as of
September 30, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
----------- ----------
<S> <C> <C>
Deferred tax assets:
Contributions carryforward ............. $ 8,194 $ 10,078
Deferred tax liabilities:
Fixed assets ........................... 12,280 11,830
Intangible assets ...................... 275,346 112,424
-------- --------
Total deferred tax liabilities ......... 287,628 124,254
-------- --------
Net deferred tax liabilities ............ $279,434 $114,176
======== ========
</TABLE>
F-127
<PAGE>
THE ALBUM NETWORK, INC. AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
7. EMPLOYEE RETIREMENT PLAN
In January 1997, the Companies began a retirement plan for their employees
under Section 401(k) of the Internal Revenue Code. All employees are eligible
to participate once they obtain the minimum age requirement of 21 years, and
have satisfied the service requirement of one year with the Companies.
Participant contributions are subject to the limitations of Section 402 (g) of
the Internal Revenue Code. The Companies contribute monthly to participating
employees accounts at the rate of 10% of the participating employees
contributions. During the year ended September 30, 1997, the Companies
contributions totaled approximately $14,000.
8. SUBSEQUENT EVENTS (UNAUDITED)
On February 27, 1998, the Company was acquired by SFX Entertainment Inc.
F-128
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
BG Presents, Inc.
We have audited the accompanying consolidated balance sheets of BG
Presents, Inc. and Subsidiaries as of January 31, 1997 and 1998, and the
related consolidated statements of income, cash flows and stockholders' equity
for each of the three years in the period ended January 31, 1998. These
financial statements are the responsibility of management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of BG Presents,
Inc. and subsidiaries at January 31, 1997 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended January 31, 1998, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
New York, New York
March 20, 1998
F-129
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31
------------------------------
1997 1998
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................................... $11,819,831 $ 5,380,984
Accounts receivable--trade ......................................... 3,164,543 5,460,915
Accounts receivable--related parties ............................... 1,347,150 776,174
Investments ........................................................ 370,000 --
Inventories ........................................................ 236,078 227,766
Prepaid assets ..................................................... 450,883 3,001,450
Income tax receivable .............................................. 418,528 --
Deferred income taxes .............................................. 94,000 --
Other current assets ............................................... -- 118,455
----------- -----------
Total current assets ................................................ 17,901,013 14,965,744
Property and equipment, net ......................................... 9,661,910 8,904,509
Goodwill, net of accumulated amortization of $238,400 and
$357,600 at January 31, 1997 and 1998, respectively................. 1,549,600 1,430,400
Other assets (Note 6) ............................................... 167 4,100,011
----------- -----------
Total assets ........................................................ $29,112,690 $29,400,664
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable--current portion ..................................... $ 722,966 $ 879,040
Lease commitment--current portion .................................. 35,676 --
Accounts payable ................................................... 3,229,054 1,816,959
Deferred revenue ................................................... 1,362,533 1,480,145
Accrued liabilities and other current liabilities .................. 3,721,749 3,753,613
----------- -----------
Total current liabilities ........................................... 9,071,978 7,929,757
Lease commitment, less current portion .............................. 6,704,719 --
Notes payable, less current portion ................................. 5,233,709 11,134,834
Deferred income taxes ............................................... 2,617,000 2,617,000
Stockholders' equity:
Common stock, no par value; 10,000,000 shares authorized;
1,000,000 shares issued and outstanding in 1997 and 1998 ......... 1,198,947 1,198,947
Retained earnings .................................................. 4,286,337 6,520,126
----------- -----------
Total stockholders' equity .......................................... 5,485,284 7,719,073
----------- -----------
Total liabilities and stockholders' equity .......................... $29,112,690 $29,400,664
=========== ===========
</TABLE>
See accompanying notes.
F-130
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
-------------------------------------------------
1996 1997 1998
-------------- -------------- ---------------
<S> <C> <C> <C>
REVENUES
Concert revenues ................................. $ 62,996,606 $ 74,981,534 $ 75,898,464
Contract management .............................. 7,844,248 10,255,060 23,632,596
Concessions/merchandise .......................... 5,536,287 7,094,593 6,021,845
------------ ------------ ------------
76,377,141 92,331,187 105,552,905
Cost of revenues ................................. 54,383,763 69,916,840 81,092,377
------------ ------------ ------------
21,993,378 22,414,347 24,460,528
EXPENSES
General and administrative ....................... 17,614,296 17,602,501 18,866,259
Depreciation and amortization .................... 1,441,439 1,474,414 1,026,684
------------ ------------ ------------
Income from operations ........................... 2,937,643 3,337,432 4,567,585
OTHER INCOME (EXPENSE)
Interest expense ................................. (1,324,219) (1,257,758) (916,723)
Interest income .................................. 307,756 295,057 294,888
Miscellaneous .................................... 535,191 289,222 (24,300)
------------ ------------ ------------
Income before provision for income taxes ......... 2,456,371 2,663,953 3,921,450
Provision for income taxes ....................... 1,160,718 1,272,190 1,687,661
------------ ------------ ------------
Net income ....................................... $ 1,295,653 $ 1,391,763 $ 2,233,789
============ ============ ============
</TABLE>
See accompanying notes.
F-131
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
---------------------------------------------------
1996 1997 1998
--------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ................................................... $ 1,295,653 $ 1,391,763 $ 2,233,789
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property and
equipment ................................................. 1,322,239 1,355,214 907,484
Amortization of goodwill .................................... 119,200 119,200 119,200
Loss on sale of property and equipment ...................... 13,603 -- --
Changes in operating assets and liabilities:
Accounts receivable--trade ................................ 524,566 (1,356,263) (2,296,372)
Accounts receivable--related parties ...................... (496,971) (821) 570,976
Inventories ............................................... (228,294) (7,784) 8,312
Prepaid assets and other .................................. (322,524) 478,391 (2,550,567)
Income tax receivable ..................................... (50,888) (328,390) 300,073
Accounts payable and accrued expenses ..................... (491,982) 3,128,476 (1,380,231)
Deferred income taxes ..................................... 1,139,000 45,000 94,000
Deferred revenue .......................................... (67,859) 379,748 117,612
Other ..................................................... 288,367 160 74,347
------------ ------------ ------------
Net cash provided by (used in) operating activities .......... 3,044,110 5,204,694 (1,801,377)
INVESTING ACTIVITIES
Purchase of SAP limited partnership interest ................. (4,250,000) -- --
Proceeds from sale of equipment .............................. 13,150 -- --
Capital expenditures, including White River
Amphitheatre ................................................ (469,447) (367,678) (4,247,528)
Other ........................................................ (644,496) (247,000) 293,254
------------ ------------ ------------
Net cash used in investing activities ........................ (5,350,793) (614,678) (3,954,274)
FINANCING ACTIVITIES
Payments of notes payable .................................... (444,985) (775,756) --
Borrowings on notes payable .................................. -- 1,000,000 6,057,199
Payments of lease commitments ................................ (395,330) (405,275) (6,740,395)
Retirement of stock .......................................... -- (21,053) --
------------ ------------ ------------
Net cash used in financing activities ........................ (840,315) (202,084) (683,196)
Net increase (decrease) in cash and cash equivalents ......... (3,146,998) 4,387,932 (6,438,847)
Cash and cash equivalents at beginning of year ............... 10,578,897 7,431,899 11,819,831
------------ ------------ ------------
Cash and cash equivalents at end of year ..................... $ 7,431,899 $ 11,819,831 $ 5,380,984
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest ....................................... $ 1,324,219 $ 1,257,664 $ 1,092,356
Cash paid for income taxes ................................... 888,738 1,280,000 1,325,000
</TABLE>
See accompanying notes.
F-132
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C>
Balance--January 31, 1995 .............................. $2,818,921
Net income for the year ended January 31, 1996 ......... 1,295,653
----------
Balance--January 31, 1996 .............................. 4,114,574
Net income for the year ended January 31, 1997 ......... 1,391,763
Repurchase and retirement of stock ..................... (21,053)
----------
Balance--January 31, 1997 .............................. 5,485,284
Net income for the year ended January 31, 1998 ......... 2,233,789
----------
Balance--January 31, 1998 .............................. $7,719,073
==========
</TABLE>
See accompanying notes.
F-133
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Business and Principles of Consolidation
BG Presents, Inc. ("BGP" or the "Company") is a holding company for
various operating subsidiaries which principally promote and manage musical and
special events in the San Francisco Bay Area. In addition, the Company owns the
Shoreline Amphitheatre in Mountain View, California. Bill Graham Enterprises,
Inc. ("BGE"), Bill Graham Presents, Inc. ("BGPI"), Bill Graham Management, Inc.
("BGM"), AKG, Inc. ("AKG"), Shoreline Amphitheatre, Ltd. ("SAL"), Fillmore
Fingers, Inc. ("FF"), and Shoreline Amphitheatre Partners ("SAP" and,
collectively, the "Companies") are wholly-owned subsidiaries of the Company.
The accompanying consolidated financial statements include the accounts of the
Company and all of its wholly-owned subsidiaries. Intercompany transactions and
balances have been eliminated in consolidation.
BGE and BGPI earn promotion income in two ways: either a fixed fee for
organizing and promoting an event, or an arrangement that entitles them to a
profit percentage based on a predetermined formula. In addition, the Companies
earn revenue from merchandise and concessions sold during events which they
promote. BGM manages the careers of various artists and records a percentage of
the artists' gross sales from publishing rights, record sales, and tours as
contract management revenue.
AKG operates the Fillmore, Warfield, and Punchline theatres located in San
Francisco, which generate revenue from food and beverage sales, sponsorships,
and ticket sales. Bill Graham Special Events, a division of AKG, records
management/contract fees from organizing corporate and other parties at various
venues in the San Francisco Bay Area. FF provides table service (food and
beverage) for two theatres located in Los Angeles owned by third parties.
Revenue Recognition
Revenue from talent management and the sales of tickets is recognized when
earned. Cash received from the sale of tickets for events not yet performed is
deferred. Revenue from the direct sale of compact discs is recognized upon the
date of sale. The Company's revenue included $305,017, $14,562,000 and
$13,483,683 during the fiscal years ended January 31, 1996, 1997 and 1998,
respectively, from various gymnastics tours, ice skating tours and television
specials.
Cash and Cash Equivalents
The Company considers all investments purchased with an original maturity
date of three months or less to be cash equivalents. At January 31, 1996, 1997
and 1998, the Companies had cash balances in excess of the federally insured
limits of $100,000 per institution.
Use of Estimates
Generally accepted accounting principles require management to make
assumptions in estimates that affect the amount reported in the financial
statements for assets, liabilities, revenues, and expenses. In addition,
assumptions and estimates are used to determine disclosure for contingencies,
commitments, and other matters discussed in the notes to the financial
statements. Actual results could differ from those estimates.
Accounts Receivable
The Company's accounts receivable are principally due from ticket service
and merchandising companies in the San Francisco Bay Area. In addition, related
party receivables include amounts due from owners of the Company and from
affiliated companies. Management believes that all accounts receivable as of
January 31, 1996, 1997 and 1998 were fully collectible; therefore, no allowance
for doubtful accounts was recorded.
F-134
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
(CONTINUED)
Property and Equipment
Property and equipment are recorded at cost and depreciated over their
estimated useful lives, which range from 3 to 40 years. Leasehold improvements
are amortized on the straight-line basis over the shorter of the lease term or
estimated useful lives of the assets. Maintenance and repairs are charged to
expense as incurred.
Goodwill
The Company amortizes goodwill over a 15 year period.
Income Taxes
The Companies account for income taxes under the liability method, whereby
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
Inventories
Inventories, which consist principally of compact discs and beverage
items, are stated at first-in, first-out (FIFO) cost, which is not in excess of
market.
Advertising and Promotion Costs
The Company expenses all advertising and promotion costs as incurred,
except in instances where management believes these costs generate a direct
response from customers. Advertising expenses were $3,408,322, $4,319,291 and
$4,519,049 for the fiscal years ended January 31, 1996, 1997 and 1998,
respectively.
2. INCOME TAXES
The provision for income taxes for the fiscal years ended January 31, 1997
and 1998 is summarized as follows:
<TABLE>
<CAPTION>
1997 1998
------------- -------------
<S> <C> <C>
Current:
Federal ................... $ 984,500 $1,304,837
State ..................... 285,800 378,824
---------- ----------
1,270,300 1,683,661
Deferred:
Federal ................... 1,500 3,100
State ..................... 400 900
---------- ----------
1,900 4,000
---------- ----------
$1,272,200 $1,687,661
========== ==========
</TABLE>
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company's net
deferred tax liabilities as of January 31, 1997 and 1998 are primarily the
result of the difference between the book basis of depreciable assets and the
related tax basis.
The difference between the tax provision at Federal statutory rates and
the effective rate is due to state taxes, amortization of goodwill and other
nondeductible items.
F-135
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment as of January 31, 1997 and 1998 consists of the
following:
<TABLE>
<CAPTION>
1997 1998
---------------- ----------------
<S> <C> <C>
Buildings ....................... $ 8,234,231 $ 8,251,729
Leasehold improvements .......... 10,326,553 10,403,033
Equipment ....................... 2,166,037 2,184,855
Office furniture ................ 693,068 711,235
Computer equipment .............. 330,367 343,493
Vehicle ......................... 61,211 67,205
------------- -------------
21,811,467 21,961,550
Accumulated depreciation and
amortization ........................... (12,783,510) (13,528,140)
------------- -------------
9,027,957 8,443,410
Land ............................ 633,953 633,953
------------- -------------
$ 9,661,910 $ 9,067,363
============= =============
</TABLE>
4. PENSION PLAN
The Company sponsors a 401(k) Tax Advantage Savings Plan that covers
employees who have one year of service, have worked at least 1,000 hours, are
21 years of age or older, and are not covered by a union contract. At its
discretion, the Company may contribute a percentage of gross pay to the plan,
up to a maximum gross pay of $150,000 per participant. In addition, the Company
makes a matching contribution of 25% of each participant's account up to $400
of their salary deferral each year, for a maximum company matching contribution
of $100. Total contributions to the plan were approximately $182,000, $186,000
and $213,049 for the years ended January 31, 1996, 1997 and 1998, respectively.
F-136
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. NOTES PAYABLE
Notes payable as of January 31, 1997 and 1998 consists of the following:
<TABLE>
<CAPTION>
1997 1998
------------- ---------------
<S> <C> <C>
Note payable to Midland Loan Services LP; monthly
payments of $16,574, including interest at the bank's
index rate plus 3.5% (8.4% and 8.375% at January 31,
1997 and 1998, respectively; matures May 1, 2004;
secured by deed .......................................... $2,215,001 $ 2,193,732
Note payable to Sanwa Bank; quarterly payments range
from $75,000 to $200,000, interest accrued monthly at
the bank's prime rate plus 0.5% (8.75% and 8.75% at
January 31, 1997 and 1998, respectively); matures
January 31, 2001 ......................................... 2,925,000 2,425,000
Note payable to Sanwa Bank; monthly payments of
$16,666, including interest at a rate of London Inter-
Bank Offered Rate (LIBOR) plus 2.5%; matures
January 31, 2002; secured by assets of the Company
(excluding the office building) .......................... 816,674 616,682
Note payable to Sanwa Bank; monthly payments range
from $12,000 to $25,000, interest accrued monthly at the
bank's index rate plus 2.375%; matures March 1, 2007;
secured by deed .......................................... -- 6,778,460
---------- -----------
5,956,675 12,013,874
Less current portion ....................................... (722,966) (879,040)
---------- -----------
$5,233,709 $11,134,834
========== ===========
</TABLE>
The first note payable with Sanwa Bank also provided for a line-of-credit
of up to $1,000,000 that expired on April 30, 1997. At January 31, 1998, there
were no borrowings outstanding against this credit line.
F-137
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. NOTES PAYABLE (CONTINUED)
At January 31, 1998, the Company has a $3,000,000 unused line-of-credit
with a bank to be drawn upon as needed, with interest at the bank's prime rate
plus 0.5%. In addition, the Company may use up to $1,500,000 of the line for
letters-of-credit. This line-of-credit is secured by the assets of the Company.
Maturities of long-term debt are approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ended January 31:
1999 ........................... $ 879,040
2000 ........................... 893,998
2001 ........................... 1,851,908
2002 ........................... 227,764
2003 ........................... 246,791
Thereafter ..................... 7,914,373
-----------
$12,013,874
===========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases nightclubs, theaters and storage space pursuant to
noncancellable operating leases. Certain leases require contingent rentals to
be paid based on a percentage of gross sales of tickets, merchandise, and food
and beverage. These leases expire on various dates through June 2021.
At January 31, 1998, the future minimum operating lease payments under
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ended January 31:
1999 ........................... $ 543,354
2000 ........................... 547,211
2001 ........................... 485,961
2002 ........................... 451,694
2003 ........................... 425,633
Thereafter ..................... 2,367,353
----------
$4,821,206
==========
</TABLE>
Total minimum rental expense included in operating expenses for the years
ended January 31, 1996, 1997 and 1998 was $810,956, $438,500 and $706,219,
respectively, and the contingent rental expense was $541,334, $627,222 and
$725,787, respectively. Included in cost of revenues is $6,145,944, $6,392,616
and $7,265,769 of contingent rentals paid based on gross sales for the years
ended January 31, 1996, 1997 and 1998, respectively.
Shoreline Amphitheater Lease and Agreement
The Shoreline Amphitheater Lease and Agreement, as amended, provides for,
among other things, that the City of Mountain View, California (the "City")
owns certain real property (the "Site") which it has leased to the Company for
the purpose of constructing and operating the amphitheater. The lease
terminates after 35 years on November 30, 2021, and the Company has the option
to extend for three additional five-year periods.
F-138
<PAGE>
BG PRESENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company is obligated to pay as rent to the City a certain percentage
of "gross receipts" received annually by the Company and additional rent based
on the "net available cash" of the Company, as such terms are defined in the
agreement.
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Rent expense charged to operations for the years ended January 31, 1996,
1997 and 1998 amounted to $594,002, $396,789 and $613,933, respectively.
As of the year ended January 31, 1997, the Company was obligated to pay
the City $93,200 monthly, which related to $9,500,000 of funds provided the
Company by the City pursuant to the lease. Prior to the refinancing of this
arrangement as a $6.9 million note payable to Sanwa Bank (see Note 5), the
Company had accounted for this obligation as a long-term liability amortizable
on a monthly basis over the 20-year period commencing August 1, 1986. The
principal and interest (10.24%) on this liability were being amortized monthly.
At January 31, 1997, the outstanding balance amounted to $6,740,395, of which
$35,676 was current.
Seattle White River Amphitheatre
The Company has committed payments for the construction of an amphitheatre
in the Seattle, Washington market totaling $10 million. Through January 31,
1998, the Company has paid $3,921,812 toward this project. This amount is
included in other assets on the balance sheet. The Company has also capitalized
interest pertaining to the capital expenditures for the amphitheatre of
$175,633 at January 31, 1998, which is also included in other assets on the
balance sheet.
Employment Contracts
The Company has entered into employment contracts with certain key
employees which amount to $2,300,000 per year. These contracts are in effect
until the first note payable to Sanwa Bank (see Note 5) is paid in full or six
years, whichever comes first. According to these agreements, compensation and
other benefits will cease if discharged with just cause, death or disability,
and resignation of employment. Benefits do not cease if discharged without just
cause.
Contingencies
The Company is involved in various legal and other matters arising in the
normal course of business. Based upon information available to management, its
review of these matters to date and consultation with counsel, management
believes that any liability relating to these matters would not have a material
effect on the Company's financial position and results of operations.
7. SUBSEQUENT EVENTS
Acquisition of Companies by SFX Entertainment, Inc.
On February 24, 1998, the stockholders of the Company sold all of the
outstanding capital stock of the Companies to SFX Entertainment, Inc. for cash
consideration of $60.8 million (including the repayment of $12 million in the
Companies' debt and the issuance of 562,640 shares of common stock of SFX
Entertainment, Inc.). The Company has agreed to have net working capital, as
defined, at the closing at least equal to the Company's debt.
F-139
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Concert/Southern Promotions
We have audited the accompanying combined balance sheet of
Concert/Southern Promotions and Affiliated Companies as of December 31, 1997,
and the related combined statements of operations, cash flows and stockholders'
equity for the year then ended. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Concert/Southern
Promotions and Affiliated Companies at December 31, 1997, and the combined
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
March 13, 1998
F-140
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
COMBINED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 612,967
Accounts receivable ........................................ 185,437
Due from owners (Note 3) ................................... 332,754
Prepaid expenses and other current assets .................. 115,844
----------
Total current assets ........................................ 1,247,002
Investments in equity investees (Note 2) .................... 895,790
Property and equipment:
Land ....................................................... 19,638
Leasehold improvements ..................................... 286,998
Furniture and equipment .................................... 496,265
----------
802,901
Accumulated depreciation and amortization .................. 460,483
----------
342,418
----------
Total assets ................................................ $2,485,210
==========
LIABILITIES AND COMBINED STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ...................... $ 229,558
Deferred income ............................................ 368,150
----------
Total current liabilities ................................... 597,708
Combined stockholders' equity (Note 4) ...................... 1,887,502
----------
Total liabilities and combined stockholders' equity ......... $2,485,210
==========
</TABLE>
See accompanying notes.
F-141
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Operating revenues:
Concert revenue ............................. $14,796,977
Cost of concerts ............................ 9,877,586
-----------
4,919,391
Operating expenses:
Salaries--officers .......................... 364,000
Bonuses--officers ........................... 564,767
Salaries--other ............................. 367,356
Rent expense ................................ 207,220
Legal and accounting fees ................... 201,435
Depreciation and amortization ............... 78,682
General and administrative expenses ......... 1,367,304
-----------
3,150,764
-----------
Income from operations ....................... 1,768,627
Other income:
Interest income ............................. 59,624
Losses from equity investees ................ (79,629)
-----------
Net income ................................... $ 1,748,622
===========
</TABLE>
See accompanying notes.
F-142
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net income ...................................................................... $ 1,748,622
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ................................................ 78,682
Losses from equity investees ................................................. 79,629
Changes in operating assets and liabilities:
Accounts receivable ......................................................... 1,000,781
Prepaid expenses and other current assets ................................... 69,896
Accounts payable and accrued expenses ....................................... (452,361)
Deferred income ............................................................. 368,150
Net cash provided by operating activities ....................................... 2,893,399
FINANCING ACTIVITIES
Due to/from owner ............................................................... (398,080)
Distributions paid to stockholder ............................................... (2,722,827)
------------
Net cash used in financing activities ........................................... (3,120,907)
------------
Net decrease in cash and cash equivalents ....................................... (227,508)
Cash and cash equivalents at beginning of year .................................. 840,475
------------
Cash and cash equivalents at end of year ........................................ $ 612,967
============
</TABLE>
See accompanying notes.
F-143
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Balance, January 1, 1997 ............. $ 2,861,707
Distributions to stockholder ......... (2,722,827)
Net income ........................... 1,748,622
------------
Balance, December 31, 1997 ........... $ 1,887,502
============
</TABLE>
See accompanying notes.
F-144
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of Combination
The accompanying combined financial statements include the accounts of
Southern Promotions, Inc., High Cotton, Inc., Buckhead Promotions, Inc.,
Northern Exposure, Inc., Pure Cotton, Inc., Cooley and Conlon Management, Inc.
("CCMI") and Interfest, Inc. and their wholly-owned subsidiaries:
Concert/Southern Chastain Promotions ("Concert/Southern"), Roxy Ventures,
Cotton Club and Midtown Music Festival (collectively, the "Companies").
Intercompany transactions and balances among these companies have been
eliminated in combination. The Companies are presented on a combined basis to
reflect common ownership by Alex Cooley, Peter Conlon and Stephen Selig III.
Concert/Southern is the predominant musical event promoter in the Atlanta,
Georgia region, and through Chastain Joint Ventures ("Chastain Ventures") is
the operator, pursuant to a long-term lease with the City of Atlanta, of the
Chastain Park Amphitheater. Chastain Ventures is owned equally by
Concert/Southern and the Atlanta Symphony Orchestra, and is accounted for by
Concert/Southern on the equity method. Buckhead Promotions and Northern
Exposure equally own Roxy Ventures which holds a long-term lease for the Roxy
Theatre, and Pure Cotton holds a long-term lease for the Cotton Club.
Interfest, Inc. promoted the three-day Midtown Music Festival held in downtown
Atlanta during 1997. In addition, High Cotton owns 52.6% of HC Properties,
Inc., a real estate investment company which is accounted for on the equity
method.
The Companies record revenue when earned. Concert revenue includes
ticketing, concession, and sponsorship revenue. Deferred income relates
primarily to deposits received in advance of the concert season.
Property and Equipment
Land, leasehold improvements, and furniture and equipment are stated at
cost. Depreciation of furniture and equipment is provided primarily by the
straight-line method over the estimated useful lives of the respective classes
of assets. Leasehold improvements are amortized over the life of the lease or
of the improvement, whichever is shorter.
Income Taxes
The Companies have been organized as either partnerships or corporations
which have elected to be taxed as "S Corporations." The "S Corporation"
elections are effective for both federal and state tax purposes. Accordingly,
all items of income, loss, deduction or credit are reported by the partners or
shareholders on their respective personal income tax returns and, therefore, no
current or deferred federal or state taxes have been provided in the
accompanying combined financial statements.
The difference between the tax basis and the reported amounts of the
Companies' assets and liabilities was $16,576 at December 31, 1997.
Risks and Uncertainties
Accounts receivable are due from ticket vendors and venue box offices.
These amounts are typically collected within 20 days of a performance.
Management considers accounts receivable to be fully collectible; accordingly,
no allowance for doubtful accounts is required.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-145
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENTS IN EQUITY INVESTEES
The following is a summary of the financial position and results of
operations of the Companies' equity investees as of and for the period ended
December 31, 1997:
<TABLE>
<CAPTION>
CHASTAIN
PARK AMPHITHEATER HC PROPERTIES
------------------- --------------
(50% OWNED) (52.6% OWNED)
<S> <C> <C>
Current assets ......................... $ 322,527 $ 51,820
Property and equipment ................. 468,145 810,480
Other assets ........................... -- 415,145
--------- ----------
Total assets ........................... $ 790,672 $1,277,445
========= ==========
Current liabilities .................... $ 129,953 $ 1,927
Partners' capital ...................... 660,719 1,275,518
--------- ----------
Total liabilities and partners' capital $ 790,672 $1,277,445
========= ==========
Revenue ................................ $ 653,251 $ 87,407
Expenses ............................... 747,055 165,328
--------- ----------
Net income (loss) ...................... $ (93,804) $ (77,921)
========= ==========
</TABLE>
3. RELATED PARTY TRANSACTIONS
The Companies have an arrangement with Stephen Selig III whereby the cash
receipts of Concert/Southern, Buckhead Promotions and Roxy Ventures are
transferred to the Selig Enterprises, Inc. Master Cash Account (the "Master
Account"). All subsequent payments made by the Companies are funded by the
Master Account. Accordingly, the Companies' cash held by the Master Account of
$281,058 is recorded as due from owner.
In addition, CCMI has recorded a receivable from its stockholders of
$51,696.
4. STOCKHOLDERS' EQUITY
The Companies' stocks are as follows:
<TABLE>
<CAPTION>
SHARES SHARES PAR
AUTHORIZED ISSUED VALUE
------------ -------- ------
<S> <C> <C> <C>
Southern Promotions ......... 1,000,000 5,000 $1
High Cotton ................. 10,000 550 1
Buckhead Promotions ......... 1,000,000 500 1
Northern Exposure ........... 1,000,000 1,000 1
Pure Cotton ................. 100,000 500 1
CCMI ........................ 10,000 1,000 1
Interfest ................... 100,000 500 1
-----
9,050
=====
</TABLE>
F-146
<PAGE>
CONCERT/SOUTHERN PROMOTIONS AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
5. COMMITMENTS AND CONTINGENCIES
Leases
The following is a schedule of future minimum rental payments under
operating leases (principally office and venue facilities) that have initial or
remaining lease terms in excess of one year as
of December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Year ended December 31:
1998 ................ $ 222,539
1999 ................ 183,198
2000 ................ 188,991
2001 ................ 133,350
2002 ................ 136,350
Thereafter .......... 174,375
----------
Total ............... $1,038,803
==========
</TABLE>
Certain office facilities have renewal and escalation clauses.
Legal Matters
On October 10, 1997, Concert/Southern settled a lawsuit agreeing to pay
$100,000. Such amount has been provided for in the accompanying combined
statement of operations.
The Companies have also been named in various other lawsuits arising in
the normal course of business. It is not possible at this time to assess the
probability of any liability against the Companies as a result of these
lawsuits. Management has stated that all cases will be vigorously defended.
6. SUBSEQUENT EVENTS
On March 4, 1998, SFX Entertainment Inc. acquired the Companies for a
total cash purchase price of $16,900,000 (including a working capital payment
of $300,000).
Prior to the sale of the Companies to SFX, the sole shareholder of High
Cotton received a distribution of High Cotton's interest in HC Properties, Inc.
F-147
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Falk Associates Management Enterprises, Inc.
We have audited the accompanying combined balance sheets of Falk
Associates Management Enterprises, Inc. as of December 31, 1996 and 1997, and
the related combined statements of operations and stockholders' equity
(deficit) and cash flows for the years then ended. These financial statements
are the responsibility of management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
Falk Associates Management Enterprises, Inc. at December 31, 1996 and 1997, and
the combined results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 10, 1998
F-148
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------- MARCH 31
1996 1997 1998
------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash ..................................................... $ 964,265 $ 34,586 $ 691,718
Cash surrender value of officers' life insurance ......... 73,336 115,436 125,436
Accounts receivable ...................................... 641,204 614,051 663,484
Current portion of stockholder loan receivable ........... 92,669 116,524 237,528
Other current assets ..................................... 13,428 33,456 24,904
---------- ------------ ------------
1,784,902 914,053 1,743,070
---------- ------------ ------------
Fixed assets, net of accumulated depreciation and
amortization ............................................. 85,200 63,714 62,377
Certificate of deposit, noncurrent ........................ 200,906 211,331 202,044
Accounts receivable ....................................... 514,051 -- --
Stockholder loan receivable ............................... 506,400 389,873 136,542
Other ..................................................... 58,900 7,119 7,119
---------- ------------ ------------
Total assets .............................................. $3,150,359 $ 1,586,090 $ 2,151,152
========== ============ ============
LIABILITIES AND COMBINED STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses .................... $ 221,952 $ 165,504 $ 898,054
Payroll taxes payable .................................... 907,446 -- --
Stockholder loan payable ................................. 95,000 95,000 95,000
Current portion of settlement agreement .................. 134,552 145,652 149,253
Current portion of deferred revenue ...................... 673,744 1,358,149 1,263,080
Current portion of long-term debt ........................ 309,313 310,162 310,472
---------- ------------ ------------
2,342,007 2,074,467 2,715,859
---------- ------------ ------------
Settlement agreement, less current portion ................ 658,756 513,103 473,103
Deferred revenue, less current portion .................... -- 1,031,250 937,500
Long-term debt, less current portion ...................... 46,548 36,200 33,428
Combined stockholders' equity (deficit) ................... 103,048 (2,068,930) (2,008,738)
---------- ------------ ------------
Total liabilities and combined stockholders' equity
(deficit) ................................................ $3,150,359 $ 1,586,090 $ 2,151,152
========== ============ ============
</TABLE>
See accompanying notes.
F-149
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
COMBINED STATEMENTS OF OPERATIONS AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31
-------------------------------- -------------------------------
1996 1997 1997 1998
------------- ---------------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES
Agent fees .................................... $6,364,503 $ 10,881,588 $1,219,282 $ 1,812,804
EXPENSES
Stockholders' salary expense .................. 4,732,430 10,594,773 1,173,341 1,289,251
Other salary expense .......................... 969,293 1,177,197 130,372 143,250
Depreciation and amortization ................. 113,486 115,309 29,897 14,053
Travel and entertainment ...................... 503,475 552,951 118,418 140,141
General and administrative expenses ........... 627,174 677,453 137,664 169,452
---------- ------------ ---------- ------------
6,945,858 13,117,683 1,589,692 1,756,147
---------- ------------ ---------- ------------
(Loss) income from operations ................. (581,355) (2,236,095) (370,410) 56,657
OTHER INCOME (EXPENSE)
Interest income -- stockholders' loan ......... 32,305 27,237 6,810 9,288
Interest income -- third party ................ 142,917 115,714 28,148 15,171
Interest expense -- third party ............... (91,996) (78,834) (21,414) (20,924)
Other income .................................. 2,200 -- -- --
---------- ------------ ---------- ------------
85,426 64,117 13,544 3,535
Net (loss) income ............................. (495,929) (2,171,978) (356,866) 60,192
Combined stockholders' equity at
beginning of year ............................ 598,977 103,048 103,048 (2,068,930)
---------- ------------ ---------- ------------
Combined stockholders' equity (deficit)
at end of year ............................... $ 103,048 $ (2,068,930) $ (253,818) $ (2,008,738)
========== ============ ========== ============
</TABLE>
See accompanying notes.
F-150
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31 ENDED MARCH 31
---------------------------------- -----------------------------
1996 1997 1997 1998
-------------- ----------------- -------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income ............................. $ (495,929) $ (2,171,978) $ (356,866) $ 60,192
Adjustments to reconcile net (loss)
income to net cash provided by
(used in) operating activities:
Depreciation and amortization .............. 113,486 115,309 29,897 14,053
Non-cash interest expense .................. 75,702 65,447 16,399 13,601
Non-cash interest income ................... (32,188) (37,753) (9,402) 4,041
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable ................................ 17,538 541,204 47,786 (49,433)
Decrease (increase) in other
current assets ............................ 559 (20,028) (7,736) 8,552
Increase (decrease) in accounts
payable and accrued expenses .............. 71,526 (56,448) 325,813 732,550
Increase (decrease) in payroll taxes
payable ................................... 461,584 (907,446) (907,446) --
Increase (decrease) in deferred
revenue ................................... 479,319 1,715,655 229,918 (188,819)
---------- ------------- ---------- ----------
Net cash provided by (used in)
operating activities ......................... 691,597 (756,038) (631,637) 594,737
---------- ------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets ...................... (70,467) (42,042) (20,441) (12,716)
Increase in cash surrender value of
officers' life insurance ..................... (31,336) (42,100) (10,000) (10,000)
---------- ------------- ---------- ----------
Net cash used in investing activities ......... (101,803) (84,142) (30,441) (22,716)
---------- ------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt .................... (300,000) (309,499) (102,432) (2,462)
Proceeds from long-term debt
borrowings ................................... 355,861 300,000 -- --
Proceeds from stockholder loan
receivable ................................... -- 120,000 120,000 137,573
Payment on settlement agreement ............... (200,000) (200,000) (50,000) (50,00)
---------- ------------- ---------- ----------
Net cash (used in) provided by financing
activities ................................... (144,139) (89,499) (32,432) 85,111
---------- ------------- ---------- ----------
Net increase (decrease) in cash ............... 445,655 (929,679) (694,510) 657,132
Cash at beginning of period ................... 518,610 964,265 964,265 34,586
---------- ------------- ---------- ----------
Cash at end of period ......................... $ 964,265 $ 34,586 $ 269,755 $ 691,718
========== ============= ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest ........................ $ 16,294 $ 13,386 $ 5,014 $ 7,324
========== ============= ========== ==========
</TABLE>
See accompanying notes.
F-151
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The accompanying combined financial statements include the accounts of
Falk Associates Management Enterprises, Inc. ("FAME") and Financial Advisory
Management Enterprises, Inc. ("FINAD") (collectively, the "Companies").
Transactions and balances among the Companies have been eliminated in
combination. The Companies are subject to common ownership.
In exchange for a percentage fee or commission, FAME provides
representation services regarding the negotiation of professional sporting
contracts and marketing and endorsement contracts. FINAD provides financial
management services including, but not limited to, the implementation of
financial planning to meet clients' savings and financial goals, the receipt
and deposit of funds, cash flow budgeting and analysis, preparation of
financial statements and tax return services, in exchange for an annual fixed
fee and an additional percentage fee based on the dollar value of assets
managed and monitored.
Revenue Recognition
The Companies revenues arise primarily from percentage fees or commissions
received for the negotiation of professional sporting contracts and marketing
and endorsement contracts. The Companies recognize revenue ratably over the
period of the associated contract. Deferred revenue is recorded on the
accompanying combined balance sheets when funds are received in advance of the
performance period and is recognized over the period of performance.
Accounts Receivable
Accounts receivable consist of amounts due from professional athletes for
services rendered or for fees due related to prior performance that has been
contractually deferred to a later date. Management considers these accounts
receivable as of December 31, 1996 and 1997 to be collectible; accordingly, no
allowance for doubtful accounts is recorded.
Fixed Assets
Fixed assets are stated at cost. Depreciation and amortization of fixed
assets is provided on the straight-line method over the estimated useful lives
of the assets including 5 years for technical equipment, 7 years for furniture
and office equipment and 10 years for leasehold improvements.
Income Taxes
The Companies are cash-basis taxpayers and have elected to be taxed as S
Corporations for federal and state income tax purposes. All items of income,
loss and credits are reported by the Companies stockholders on their respective
personal income tax returns. Accordingly, no current and deferred federal
corporate income taxes have been provided in the accompanying combined
financial statements. However, since the Companies operate in the District of
Columbia ("D.C.") they are subject to D.C. income tax. No D.C. income tax
benefits have been provided on the Companies' D.C. net operating loss
carryforwards and other deductible temporary differences due to the uncertainty
of recognizing future tax benefits for these items.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the combined financial
statements and accompanying notes. Actual results could differ from those
estimates.
F-152
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
The Companies derive substantially all of its agent fees from the
representation services they provide regarding the negotiation of professional
sporting contracts and marketing and endorsement contracts for professional
athletes in the National Basketball Association ("NBA"). In March 1998, the NBA
Board of Governors voted to exercise the league's right to re-open its
Collective Bargaining Agreement (the "Agreement") with the National Basketball
Players Association. As a result, the Agreement will expire as of June 30,
1998. As a matter of Collective Bargaining, the Agreement, when it expires,
continues in place until it is replaced by a successor agreement, or until some
other labor remedies are utilized by one party or the other, meaning a strike
or a lockout or a moratorium collectively. Should there be a work stoppage due
to either a lockout or strike and NBA games are not played, it would be likely
that the Companies agent fees would be negatively impacted.
Significant Customer
The Companies three most significant sources of revenue provided a
majority of the Companies combined agent fees for the year ended December 31,
1996 and 1997, respectively.
Interim Financial Information
The interim financial data as of March 31, 1998 and for three-month
periods ended March 31, 1997 and 1998 is unaudited and certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. However, in
the opinion of Management, the interim data includes all adjustments,
consisting only of normal recurring adjustments necessary for a fair statement
of the results for the interim periods. The results of operations for the
interim periods are not necessarily indicative of the results to be expected
for the entire year.
2. FIXED ASSETS
Fixed assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Furniture and office equipment ......................... $ 150,739 $ 159,467
Technical equipment .................................... 169,112 200,300
Leasehold improvements ................................. 4,841 6,967
---------- ----------
324,692 366,734
Less accumulated depreciation and amortization ......... (239,492) (303,020)
---------- ----------
$ 85,200 $ 63,714
========== ==========
</TABLE>
3. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Time note (A) ................... $ 200,000 $ 200,000
Line of credit (B) .............. 100,000 100,000
Note payable (C) ................ 55,861 46,362
---------- ----------
Long term debt .................. 355,861 346,362
Less current maturities ......... (309,313) (310,162)
---------- ----------
Total long-term debt ............ $ 46,548 $ 36,200
========== ==========
</TABLE>
- ----------
(A) On December 31, 1996 and 1997, respectively, the Companies had
outstanding a six-month $200,000 time note (the "Time Note") with a
bank (the "Bank"). Interest was set at the prime rate which
approximated 8.25% at both December 31, 1996 and 1997, respectively.
Interest is payable monthly in arrears. The Companies may repay the
principal at any time during the
F-153
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
six-month period ended June 30, 1998, with all remaining principal
and outstanding interest in full on June 30, 1998. The time note
contains covenants which, among other things, restrict the pledging
of assets without prior written approval of the Bank.
(B) On December 31, 1996 and 1997, respectively, the Companies had
outstanding a $100,000 one-year line of credit with the Bank which
was fully drawn as of those dates. Interest was set at the prime
rate which approximated 8.25% at both December 31, 1996 and 1997,
respectively. Interest is payable monthly in arrears. Principal and
any outstanding interest is payable in full at December 31, 1998.
The line of credit contains covenants which are similar to those in
the Time Note.
(C) In December 1996, the Companies entered into a five year $55,861
note payable with the Bank. Interest was fixed at 8.75%. Commencing
January 1997, the note became payable in 59 monthly installments
consisting of principal and interest with the final payment equal to
any remaining principal and interest due. The note is secured by
specific computer hardware and software which was purchased with the
proceeds of the note payable.
At December 31, 1997, the aggregate amounts of long-term debt due during
the next four years are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 AMOUNT
- ------------------------- -----------
<S> <C>
1998 ............... $310,162
1999 ............... 11,088
2000 ............... 12,098
2001 ............... 13,014
--------
$346,362
========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Companies are obligated under certain noncancellable operating leases.
Rent expense, principally for office space, amounted to approximately $149,400
and $167,300 for the years ended December 31, 1996 and 1997, respectively. In
March 1998, the Companies entered into a sublease for additional office space.
Future minimum rental payments under noncancellable operating leases are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 OPERATING LEASES
- ------------------------- -----------------
<S> <C>
1998 ............... $ 214,000
1999 ............... 244,000
2000 ............... 247,000
2001 ............... 250,000
2002 ............... 184,000
----------
$1,139,000
==========
</TABLE>
Settlement Agreement
In 1994, the Companies were party to a $1.9 million legal settlement
arising from a civil suit wherein they were jointly and severally liable to
make settlement payments over a seven year period. The carrying value of the
settlement agreement was approximately $793,300 and $658,800 at December 31,
1997 and 1996, respectively, discounted at a 8.25% interest rate.
Agreement and Memorandum of Understanding
In January 1992, an Agreement and Memorandum of Understanding (the
"Agreement") was executed between the Companies' principal stockholder and a
third party which formerly employed the principal stockholder. Under the terms
of the Agreement, the Companies are obligated to remit to the third party a
percentage of the Companies fees as received for the representation services
provided regarding the negotiation of professional sporting contracts and
marketing and endorsement
F-154
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
contracts. Agreement terms are limited to those professional athletes who
became clients of the Companies at the time of the Companies formation and
generally does not give the third party any right to fees related to contract
renewals.
Stock Appreciation Rights
In December 1996, the Companies issued stock appreciation rights ("SARs")
to a stockholder and executive vice president of the Companies. The SARs are
exercisable only upon the occurrence of defined terms and conditions, including
the sale or merger of the Companies to a third party or upon termination of
employment. Accordingly, upon the exercise of the SAR's, the Companies will
record expense in the combined statement of operations equal to the fair value
of the SARs.
5. RELATED PARTY TRANSACTIONS
Stockholder Loan Receivable
In January 1993, the Companies entered into two eight-year promissory loan
notes with a stockholder of the Companies for face amounts of $384,000 and
$96,000. The loans accrue interest at a fixed rate of 5.7% with monthly
payments of principal and accrued interest commencing January 1, 1997.
Stockholder Loan Payable
In January 1993, the principle stockholder of the Companies made a $95,000
non-interest bearing advance to the Companies in connection with its formation.
This advance is due on demand and has been classified as a current liability in
the accompanying combined balance sheets.
Stockholders' Life Insurance
The Companies are the owners and beneficiaries of key-man life insurance
policies carried on the lives of its stockholders' with cash surrender values
totaling approximately $73,300 and $115,400 as of December 31, 1996 and 1997,
respectively. No loans are outstanding against the policies, but there is no
restriction in the policy regarding loans.
The life insurance contracts are accompanied by mandatory stock purchase
agreements relating to the amount of the proceeds of the life insurance. Upon
death, the insured's estate will be obligated to sell, and the Companies will
be obligated to purchase the insured's stock up to the value of the stock or
the proceeds of insurance, whichever is lesser. The purpose is to protect the
Companies against an abrupt change in ownership.
6. EMPLOYEE BENEFIT PLAN
During 1997, the Companies began sponsoring a deferred contribution plan
(the "Plan"). The Plan enables all full time employees who have completed one
year of service with the Companies to make voluntary contributions to the Plan
not to exceed the dollar limits as prescribed by the Internal Revenue Service.
Under the Plan, the Companies matches an employee's contribution up to a
maximum of 3% of their salary. The Companies contribution for the year ended
December 31, 1997 was approximately $40,800.
7. STOCKHOLDERS AGREEMENT
The stockholders of the Companies currently maintain a Stockholders
Agreement (the "Agreement") which place restrictions on the transfer (as
defined in the Agreement) of their stock.
8. SUBSEQUENT EVENT
On June 4, 1998 the stockholders of the Companies completed the sale of
the Companies to a subsidiary of SFX Entertainment, Inc. ("SFX") whereby SFX
acquired all of the outstanding capital
F-155
<PAGE>
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
stock of the Companies for a total purchase price of approximately $82.2
million (including approximately $7.9 million which the Companies received for
the reimbursement of certain taxes incurred and excluding $4.7 million of taxes
paid on behalf of the Companies which will be refunded to SFX in 1999) and the
issuance of 1.0 million shares of SFX's Class A Common Stock. The sale
agreement also provides for payments by SFX to the Companies for additional
amounts up to an aggregate of $15.0 million in equal annual installments over
five years contingent on the achievement of certain EBITDA (as defined) targets
and for additional payments by SFX if the companies EBITDA performance exceeds
the targets by certain amounts.
F-156
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Members
Blackstone Entertainment LLC
We have audited the accompanying combined balance sheets of Blackstone
Entertainment LLC as of December 31, 1996 and 1997, and the related combined
statements of income, members' equity and cash flows for the years then ended.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We have conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
Blackstone Entertainment LLC at December 31, 1996 and 1997, and the combined
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
May 1, 1998 ERNST & YOUNG LLP
New York, New York
F-157
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
----------------------------- --------------
1996 1997 1998
------------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, including $50,000 and $55,000
of restricted cash at December 31, 1996 and 1997,
respectively ......................................... $ 2,025,731 $ 3,529,135 $16,664,490
Accounts receivable .................................... 551,776 275,820 1,154,574
Due from related parties ............................... 60,751 310,874 --
Due from members ....................................... 234,822 165,117 --
Other current assets ................................... 151,872 219,789 1,440,463
----------- ----------- -----------
Total current assets .................................... 3,024,952 4,500,735 19,259,527
Fixed assets, net ....................................... 14,680,344 13,394,676 12,856,629
Intangible assets, net .................................. 212,682 177,823 149,302
----------- ----------- -----------
Total assets ............................................ $17,917,978 $18,073,234 $32,265,458
=========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses .................. $ 819,690 $ 1,675,061 $ 1,859,872
Notes payable, current portion ......................... 1,427,172 1,388,806 8,940,357
Capital leases payable, current portion ................ 344,038 487,334 496,655
Deferred income ........................................ 545,537 547,270 14,601,337
Due to related parties ................................. 241,677 -- --
Loans payable to members ............................... 1,500,000 2,461,239 --
----------- ----------- -----------
Total current liabilities .............................. 4,878,114 6,559,710 25,898,221
Notes payable, net of current portion ................... 8,564,888 6,816,668 --
Capital leases payable, net of current portion .......... 1,080,959 693,061 405,813
Other ................................................... 50,825 -- --
----------- ----------- -----------
Total liabilities ....................................... 14,574,786 14,069,439 26,304,034
Members' equity ......................................... 3,343,192 4,003,795 5,961,424
----------- ----------- -----------
Total liabilities and members' equity ................... $17,917,978 $18,073,234 $32,265,458
=========== =========== ===========
</TABLE>
See accompanying notes.
F-158
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30,
------------------------------- -------------------------------
1996 1997 1997 1998
-------------- -------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Gross revenues ............................. $ 48,824,066 $ 50,587,721 $21,451,061 $21,443,331
Operating costs and expenses:
Operating costs ........................... 35,631,428 35,806,833 13,640,379 15,192,627
Promotion expenses ........................ 2,596,861 2,837,208 1,863,062 947,315
General and administrative
expenses ................................ 4,634,399 5,756,993 2,179,883 2,437,189
Depreciation and amortization ............. 2,026,637 2,033,245 571,555 689,842
------------ ------------ ----------- -----------
Total operating costs and expenses ......... 44,889,325 46,434,279 18,254,879 19,266,973
Operating income (loss) .................... 3,934,741 4,153,442 3,196,182 2,176,358
Investment income .......................... 189,970 329,696 119,125 165,504
Interest expense ........................... (1,132,556) (1,071,731) (487,080) (384,233)
------------ ------------ ----------- -----------
Net income (loss) .......................... $ 2,992,155 $ 3,411,407 $ 2,848,227 $ 1,957,629
============ ============ =========== ===========
</TABLE>
See accompanying notes.
F-159
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30,
--------------------------------- --------------------------------
1996 1997 1997 1998
--------------- --------------- -------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ................................. $ 2,992,155 $ 3,411,407 $ 2,848,000 $ 1,957,629
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................. 2,226,637 2,033,245 572,000 689,842
Other .......................................... 543 --
(Increase) decrease in assets:
Accounts receivable .............................. (180,773) 275,956 (975,000) (402,763)
Other current assets ............................. 284,240 (67,917) (133,000) (1,220,674)
Increase (decrease) in liabilities:
Deferred income ............................... (149,523) 1,733 11,901,000 14,054,067
Accounts payable and accrued
expenses .................................... (34,164) 855,371 676,000 184,811
Due to/from related parties and
members ..................................... (68,475) (422,095) (68,000) --
Other ......................................... (11,461) (50,825) (462,000) --
------------ ------------ ------------ ------------
Net cash provided by operating activities ......... 5,059,179 6,036,875 14,359,000 15,262,912
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets ....................... (1,678,666) (386,983) (15,000) (123,274)
------------ ------------ ------------ ------------
Net cash used in investing activities ............. (1,678,666) (386,983) (15,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable and consulting
agreement ........................................ (1,227,498) (1,986,586) (695,000) (765,117)
Payments on to capital leases ..................... (17,182) (370,337) (3,000) (277,927)
Changes in loans payable to members ............... (119,189) -- (11,000) (967,239)
Distributions to members .......................... (1,720,546) (1,789,565) (300,000) --
------------ ------------ ------------ ------------
Net cash used in financing activities ............. (3,084,415) (4,146,488) (1,009,000) (2,004,283)
------------ ------------ ------------ ------------
Net increase in cash and cash equivalents ......... 296,098 1,503,404 13,335,000 13,135,355
Cash and cash equivalents, beginning of
period ........................................... 1,729,633 2,025,731 1,925,000 3,529,135
------------ ------------ ------------ ------------
Cash and cash equivalents, end of period .......... $ 2,025,731 $ 3,529,135 $ 15,260,000 $ 16,664,490
============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Capital lease additions ........................... $ 125,735 $ 538,526 $ -- $ --
Cash paid during the year for interest ............ $ 1,301,210 $ 1,017,371 $ 431,778 $ 384,233
</TABLE>
See accompanying notes.
F-160
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
COMBINED STATEMENT OF MEMBERS' EQUITY
<TABLE>
<CAPTION>
MEMBERS'
EQUITY
---------------
<S> <C>
Balance, January 1, 1996 ................... $ 2,071,583
Net income ................................. 2,992,155
Distributions to members ................... (1,770,546)
Capital contributions ...................... 50,000
------------
Balance, December 31, 1996 ................. 3,343,192
Net income .................................
Distributions to members ................... (2,750,804)
------------
Balance, December 31, 1997 ................. 4,003,795
Net loss ................................... 1,957,629
------------
Balance, June 30, 1998 (unaudited) ......... $ 5,961,424
============
</TABLE>
See accompanying notes.
F-161
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Blackstone Entertainment LLC ("the Company") was organized on October 1,
1997 as a Massachusetts Limited Liability Company. On that date, the net assets
of the following companies (collectively, "Don Law and Affiliates"), which had
been commonly controlled and functionally related, and a related parcel of land
located in Mansfield, Massachusetts were contributed in formation of the
Company:
o Great Woods, Inc.
o Time Trust Associates Joint Venture
o Harborlights Pavilion, Inc.
o NEXT, Inc.
o Don Law Company, Inc.
o Orpheum Management Corporation
o Black and Copper, Ltd.
o Andrew Trust LLC
These financial statements reflect the businesses subject to the
transaction described in Note 10 and accordingly, represent the combined
results of Blackstone Entertainment LLC and Don Law and Affiliates as a
predecessor. The net assets transferred to the Company have been recorded at
their historical book values.
Nature of Business
Great Woods, Inc., a Massachusetts corporation, managed and operated the
Great Woods Center for the Performing Arts in Mansfield, Massachusetts. Time
Trust Associates Joint Venture, a Massachusetts general partnership, held title
to the real estate on which the facility is situated.
Harborlights Pavilion, Inc., a Massachusetts corporation, managed and
operated the Harborlights Pavilion in Boston, Massachusetts.
NEXT, Inc., a Massachusetts corporation, operated a computerized ticketing
system for entertainment facilities and theaters throughout the New England
area.
Don Law Company, Inc., a Massachusetts corporation, promoted concerts and
other entertainment events throughout the New England area.
Orpheum Management Corporation, a Massachusetts corporation, managed the
Orpheum Theatre in Boston, Massachusetts.
Black and Copper, Ltd., a Massachusetts corporation, provided graphic
design, advertising, marketing and promotional services principally to its
related entities.
Andrew Trust LLC owned additional parcels of land surrounding the Great
Woods Center for the Performing Arts in Mansfield, Massachusetts.
Limited Liability Company
The Company's operating agreement provides that liability of its members
is limited to their capital invested in the Company. The Company's operating
agreement does not limit its term
of existence, and provides for dissolution upon the occurrence of certain
events, one of which is the acquisition by one member of all of the outstanding
ownership interest.
F-162
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Member Classes and Priorities
The Company's operating agreement provides for one of its members to
receive a priority distribution of current year earnings and liquidation
proceeds to $2,250,000. The remaining members receive a matching distribution
subsequent to the priority distribution of $2,250,000. All additional proceeds
are then divided evenly among the members. The operating agreement provides for
both priorities to disappear upon the Company's attainment of certain
distribution levels.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, time deposits, commercial paper
and money market mutual funds. The Company invests its excess cash in highly
rated companies and financial institutions. These deposits have original
maturities that do not exceed three months. During the course of the year, the
Company maintained balances in financial institutions in excess of FDIC insured
limits. Included in cash and cash equivalents at December 31, 1996 and 1997 is
approximately $50,000 and $55,000, respectively, of restricted cash to be used
for future Orpheum Theatre renovations and improvements.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed over estimated
useful lives ranging from three to thirty-nine years utilizing straight-line
and accelerated methods. Depreciation expense charged to operations was
$1,992,321 and $1,798,386 during the years ended December 31, 1996 and 1997,
respectively.
Intangible Assets, Net
Intangible assets consisting of goodwill which is being amortized over
fifteen years using the straight-line method and organization costs incurred
when Harborlights Pavilion, Inc. and NEXT, Inc. were established are being
amortized over five years using the straight-line method. These assets are
shown on the combined balance sheets net of accumulated amortization of
$125,665 and $360,524 as of December 31, 1996 and 1997. Total amortization
expense charged to operations was $34,316 and $234,859 during the years ended
December 31, 1996 and 1997.
Revenue Recognition
All divisions, except for NEXT, recognize event-related revenue upon
completion of each performance. Advance ticket receipts for performances are
recorded as deferred revenue. Costs incurred which relate to future
performances are recorded as prepaid expenses. The NEXT division recognizes
revenues as tickets are sold and services are performed.
Income Taxes
The Company is treated as a partnership for federal and state income tax
purposes. The Company's earnings and losses are included in the members' income
tax returns in relation to their respective ownership interests; accordingly,
no provision is required for federal and state income taxes.
Advertising Expense
The Company expenses advertising costs as incurred. Advertising expense
amounted to approximately $1,849,000 and $2,061,000 during the years ended
December 31, 1996 and 1997, respectively.
F-163
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Year 2000 (unaudited)
The Company has addressed the risks associated with year 2000 compliance
with respect to its ticketing system based on consultation with its vendors.
Future costs associated with such compliance are not expected to be
significant.
Interim Financial Information
The interim financial data as of June 30, 1998 and for the six-month
periods ending June 30, 1997 and 1998 is unaudited and certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. However, in
the opinion of Management, the interim data includes all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the results for the interim period. The results of operations for the
interim periods are not necessarily indicative of the results to be expected
for the entire year.
2. FIXED ASSETS, NET
Fixed assets, net consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------
1996 1997
--------------- ----------------
<S> <C> <C>
Performing art facilities .............. $ 21,454,305 $ 21,496,711
Land and site improvements ............. 2,133,905 2,327,127
Equipment under capital leases ......... 1,426,874 1,567,690
Machinery and equipment ................ 1,484,682 1,628,996
Furniture and fixtures ................. 494,480 522,372
Leasehold improvements ................. 243,982 244,982
Motor vehicles ......................... 156,135 189,663
------------- -------------
27,394,363 27,977,541
Less accumulated depreciation .......... (12,714,019) (14,582,865)
------------- -------------
$ 14,680,344 $ 13,394,676
============= =============
</TABLE>
F-164
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
3. NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
1. The Company is obligated under a note payable to the FDIC
dated May 11, 1988 in the original amount of $10,600,000. On
May 9, 1995, the note was modified and extended to mature
February 15, 2005. At such time, a balloon payment of
approximately $3,500,000 will be required. The note is
payable in monthly principal installments of $44,167 plus
interest at 8.98% per annum. The note is collateralized by
substantially all assets of the Great Woods Inc. and Time
Trust Join Venture, including a mortgage on the real estate
and facility, and a security interest in all operating permits
and licenses, programming and concession contracts, and
insurance policies on the lives of two members. ........................ $7,752,942 $7,222,942
2. The Company is obligated to a concessionaire under an
unsecured five-year installment note in the original amount of
$1,600,000 which matures on June 30, 1998. The note is
payable in annual principal installments of $320,000 with
interest payable quarterly at 1.5% over the prime rate. ................ 640,000 320,000
3. The Company is obligated under a five-year installment note
dated May 18, 1994 payable to a bank in the original amount
of $1,600,000. The note is payable in monthly installments of
$33,136 including interest at 8.9% per annum and is
collateralized by all assets of the Harborlights Pavilion Inc. ......... 829,118 492,532
4. The Company is obligated to a concessionaire under an
unsecured installment note dated August 19, 1994 in the
original amount of $350,000 bearing interest at 1% over the
prime rate. The remaining outstanding principal balance and
any accrued interest is due November 1, 1998. The note is
personally guaranteed by the members of the Company. ................... 210,000 140,000
5. The Company is obligated to a concessionaire under an
unsecured and noninterest bearing note dated July 11, 1994 in
the original amount of $150,000. The note is due in annual
installments of $30,000 with the final installment due
October 15, 1998. ...................................................... 60,000 30,000
6. The Company is obligated under a note payable from
Andrew Trust LLC to a bank dated December 12, 1996 in
the original amount of $500,000. Interest is payable monthly
at 0.75% over the prime rate and the principal reaches
maturity on December 12, 1999. ......................................... 500,000 --
---------- ----------
9,992,060 8,205,474
Current maturities ..................................................... 1,427,172 1,388,806
---------- ----------
Long-term debt ......................................................... $8,564,888 $6,816,668
========== ==========
</TABLE>
F-165
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Maturities of long-term debt are as follows:
December 31:
<TABLE>
<CAPTION>
<S> <C>
1999 ................ $ 653,726
2000 ................ 530,000
2001 ................ 530,000
2002 ................ 530,000
2003 ................ 530,000
Thereafter .......... 4,042,942
----------
$6,816,668
==========
</TABLE>
The Company has an unsecured demand line of credit with a bank of
$2,000,000 which expires April 30, 1998. Interest is payable monthly at 1% over
the prime rate. The Company had no amounts outstanding under this line of
credit as of December 31, 1996 and 1997.
The bank note payable collaterialized by the assets of Harborlights
Pavilion, Inc. and the demand line of credit are subject to several financial
covenants which the company is currently in the process of renegotiating. For
the years ended December 31, 1996 and 1997, Harborlights Pavilion, Inc. failed
at least one of these financial covenants. Management anticipates that based
upon discussions with the bank, the loan will not be called.
4. CAPITAL LEASE OBLIGATIONS
The Company is obligated under capital lease agreements for certain
business equipment. The leases have been capitalized at the fair value of the
leased equipment with a corresponding liability recorded. Each payment is
allocated between a reduction of the liability and interest expense to yield a
constant periodic rate of interest on the remaining balance of the obligation.
At December 31, 1997, future minimum payments due on the lease agreements
are as follows:
Year ended December 31:
<TABLE>
<CAPTION>
<S> <C>
1998 ................................................ $ 564,474
1999 ................................................ 564,625
2000 ................................................ 155,095
2001 ................................................ 15,961
---------
1,300,155
Amount representing interest ........................ 119,760
---------
Present value of net minimum lease payments ......... 1,180,395
Current portion ..................................... 487,334
---------
Long-term portion ................................... $ 693,061
=========
</TABLE>
5. LOANS PAYABLE TO MEMBERS
The Company is obligated to members in the amount of $961,239 which
represents the balance of advances made by them in conjunction with the
transfer of assets on October 1, 1997. The loans are unsecured and noninterest
bearing, and are expected to be repaid during 1998.
The Company is obligated to two members for loans totaling $1,500,000 at
both December 31, 1996 and 1997. The loans are unsecured, bear interest at 6.5%
per annum, and have no formal repayment terms.
F-166
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
6. COMMITMENTS AND RELATED PARTY TRANSACTIONS
Lease Commitments and Rent Expense
Total rent expense amounted to approximately $487,000 and $577,000 for the
years ended December 31, 1996 and 1997, respectively, of which $92,700 was paid
to an affiliate during 1996 and 1997. At December 31, 1997, the Company is
committed under the following noncancellable operating leases:
1) The Company is obligated under a five-year license agreement dated
March 31, 1994 for the lease of a parcel of real estate located on Fan Pier in
Boston, Massachusetts. The agreement provides for a minimum annual rent of
$250,000 through 1998. Additional rent is required based on the number of
tickets sold annually in excess of a 100,000 ticket base. The landlord has the
right to terminate the license agreement upon giving written notice by November
of each year, for termination in the following calendar year.
2) Under an agreement with the owner of the Orpheum Theatre, the Company
has exclusive booking and scheduling rights for the Theatre and sole
responsibility for granting concessions for the sale of food and refreshments
at the Theatre. Under the terms of the agreement, the Company is required to
pay a hall rental charge of $4,750 per performance for the period January 1998
through December 2000, plus additional amounts for artist rehearsals. The
Company is reimbursed for the hall rental charges by the shows' promoters and
earns commissions from the Theatre's owner based on the annual volume of rental
fees paid.
3) The company is obligated under three leases with an affiliate. During
1996 and 1997, the combined rent for these three leases was $92,700 each year.
4) The company is obligated under a one year lease for the NEXT, Inc.
premises for rent payments of $53,750 through December 31, 1998.
Other Commitments
The Company is obligated under a ten-year consulting agreement with the
former owner of a concert promotion business which was acquired in 1992. The
consulting agreement requires scheduled annual payments totaling of $828,000
over the next four years.
The Company is obligated under a consulting agreement with a member
requiring annual payments of $100,000 renewable annually.
7. PROFIT SHARING PLANS
The Company maintains 401(k) profit sharing plans covering eligible
employees who meet certain age and length of service requirements. Employees
may elect voluntary salary reductions; company contributions are made at the
discretion of the managing member. The Company did not make any matching
contributions during the years ended December 31, 1996 and 1997.
8. LITIGATION
Great Woods, Inc. is a defendant in several lawsuits that management
believes are without merit. In the event of an adverse judgment, management
believes its insurance coverage is sufficient to cover any potential losses.
9. EMPLOYMENT AGREEMENTS
Two employees have employment agreements pursuant to which they may
received contingent consideration upon the occurrence of specified events. One
of the employees is entitled to 0.6% of the
F-167
<PAGE>
BLACKSTONE ENTERTAINMENT LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
net proceeds from the sale, refinancing or other disposition of the Company or
its ownership interests. The other is entitled to 5% of the defined after tax
proceeds from the sale of Great Woods , Inc. less certain defined contingent
consideration paid prior to the date of sale. The Company is obligated under an
informal employment arrangement with the General Manager of the NEXT, Inc.
which provides for a base salary of $150,000 in addition to a bonus based on
performance. The arrangement is renewable annually.
In connection with employment agreements, certain employees were paid
$610,000 in 1997 in connection with the sale of membership interests by the
principal owner to the Company. Such amount was recorded as a charge to
earnings in 1997.
10. SUBSEQUENT EVENT
On July 2, 1998, SFX Entertainment, Inc. acquired the Company for
aggregate consideration of approximately $92.2 million, including the repayment
of approximately $7.0 million in debt.
F-168
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders of Magicworks Entertainment Incorporated:
We have audited the accompanying balance sheets of Magicworks Entertainment
Incorporated (a Delaware corporation) and subsidiaries as of December 31, 1997
and 1996, and the related statements of income, stockholders' equity and cash
flows for each of the two years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Magicworks Entertainment
Incorporated and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the two years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Miami, Florida,
February 23, 1998.
F-169
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------
1998 1997 1996
-------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents .......................... $ 6,383,715 $ 5,410,837 $ 5,936,611
Accounts and notes receivable, net ................. 2,614,418 1,802,623 1,288,558
Inventories ........................................ 715,443 486,954 268,959
Advances and temporary deposits .................... 233,158 582,809 121,196
Due from affiliates ................................ -- -- 39,170
Prepaid show expenses .............................. 8,532,595 929,566 117,363
Other current assets ............................... 462,275 409,503 397,170
----------- ----------- -----------
TOTAL CURRENT ASSETS ............................. 18,941,604 9,622,292 8,169,027
PROPERTY AND EQUIPMENT, NET ......................... 2,104,950 2,098,785 2,048,255
INVESTMENTS IN PARTNERSHIPS ......................... 3,855,219 4,273,973 1,907,678
DEFERRED COSTS, NET ................................. 1,703,050 983,679 1,105,114
INTANGIBLE ASSETS, NET .............................. 374,167 399,167 325,745
OTHER ASSETS ........................................ 117,500 67,500 --
----------- ----------- -----------
TOTAL ASSETS ....................................... $27,096,490 $17,445,396 $13,555,819
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Borrowings under credit agreement .................. $ 3,100,000 $ -- $ --
Current portion of long-term debt .................. 306,635 299,557 302,956
Accounts payable ................................... 1,077,712 1,252,517 983,691
Accrued liabilities ................................ 530,108 532,648 228,808
Advance ticket sales ............................... -- 3,479,469 844,373
Deferred income taxes .............................. 9,770,271 -- 137,131
Due to affiliates .................................. 30,198 357,451 --
----------- ----------- -----------
TOTAL CURRENT LIABILITIES ........................ 14,814,924 5,921,642 2,496,959
DEFERRED INCOME TAXES ............................... -- -- 274,263
LONG-TERM DEBT, NET OF CURRENT PORTION .............. 5,810,422 6,047,163 6,177,492
----------- ----------- -----------
TOTAL LIABILITIES .................................. 20,625,346 11,968,805 8,948,714
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 9)
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 5,000,000 shares
authorized; none issued .......................... -- -- --
Common stock, $.001 par value; 50,000,000 shares
authorized; 24,404,300 and 24,394,300 issued and
outstanding in 1997 and 1996, respectively ....... 24,427 24,404 24,394
Additional paid-in capital ......................... 4,160,326 4,078,618 4,151,026
Retained earnings .................................. 2,286,391 1,373,569 431,685
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY ....................... 6,471,144 5,476,591 4,607,105
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY .......................................... $27,096,490 $17,445,396 $13,555,819
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-170
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
--------------------------- -----------------------------
1998 1997 1997 1996
------------- ------------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES
Production ............................ $2,630,405 $3,134,762 $5,334,130 $ 4,649,009
Promotion ............................. 25,376,916 5,413,958 26,762,607 35,510,618
Merchandising ......................... 7,718,846 2,477,829 4,881,577 2,603,691
Other ................................. 1,145,778 951,159 1,984,589 3,629,858
----------- ----------- ----------- ------------
TOTAL REVENUES ...................... 36,871,945 11,977,708 38,962,903 46,393,176
----------- ----------- ----------- ------------
OPERATING EXPENSES
Production ............................ 2,187,153 47,658 1,533,922 4,046,160
Promotion ............................. 22,226,188 4,793,391 23,667,541 30,290,201
Salaries, wages, and benefits ......... 2,456,860 1,551,572 3,617,180 3,416,590
Merchandising ......................... 6,326,419 1,733,984 3,596,529 1,933,983
General and administrative ............ 2,030,748 2,803,211 4,673,482 3,373,100
----------- ----------- ----------- ------------
TOTAL OPERATING EXPENSES ............ 35,227,368 10,929,816 37,088,654 43,060,034
----------- ----------- ----------- ------------
INCOME FROM OPERATIONS ................. 1,644,577 1,047,892 1,874,249 3,333,142
OTHER INCOME (EXPENSE)
Interest income ....................... 74,473 89,768 135,372 280,708
Interest expense ...................... (610,537) (403,845) (686,275) (491,630)
----------- ----------- ----------- ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES, PRO FORMA INCOME
TAXES AND INCOME FROM
INVESTMENTS IN UNCONSOLIDATED
PARTNERSHIPS ....................... 1,108,513 733,815 1,323,346 3,122,220
PROVISION FOR INCOME TAXES ............. (458,566) (600,616) (747,324) (597,216)
----------- ----------- ----------- ------------
INCOME BEFORE PRO FORMA INCOME
TAXES FOR PERIODS PRIOR TO JULY
29, 1996 AND INCOME FROM
INVESTMENTS IN UNCONSOLIDATED
PARTNERSHIPS ....................... 649,947 133,199 576,022 2,525,004
----------- ----------- ----------- ------------
PRO FORMA INCOME TAXES ................. -- -- -- (1,161,758)
----------- ----------- ----------- ------------
INCOME AND PRO FORMA INCOME
BEFORE INCOME FROM INVESTMENTS
IN UNCONSOLIDATED PARTNERSHIPS ..... 649,947 133,199 576,022 1,363,246
INCOME FROM INVESTMENTS IN
UNCONSOLIDATED PARTNERSHIPS ........... 262,875 806,225 540,977 40,759
----------- ----------- ----------- ------------
NET INCOME AND PRO FORMA NET INCOME $ 912,822 $ 939,424 $1,116,999 $ 1,404,005
=========== =========== =========== ============
NET INCOME AND PRO FORMA NET INCOME
PER SHARE, BASIC AND DILUTED .......... $ 0.04 $ 0.04 $ 0.05 $ 0.06
=========== =========== =========== ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
BASIC ................................. 24,417,467 24,394,299 24,398,546 22,907,463
=========== =========== =========== ============
DILUTED ............................... 24,739,388 24,475,876 24,434,440 22,989,112
=========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-171
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED
STOCK PAID-IN EARNINGS TOTAL
---------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 ............... $21,831 $ 129,507 $ 2,077,894 $ 2,229,232
Issuance of common stock, net of cost of
$1,255,668............................... 2,563 3,927,519 -- 3,930,082
Stock options granted to non-employees..... -- 94,000 -- 94,000
Distributions ............................. -- -- (4,211,972) (4,211,972)
Net income ................................ -- -- 2,565,763 2,565,763
------- ---------- ------------ ------------
BALANCE AT DECEMBER 31, 1996 ............... 24,394 4,151,026 431,685 4,607,105
Stock registration costs .................. -- (91,148) -- (91,148)
Stock issued to an employee ............... 10 18,740 -- 18,750
Distributions ............................. -- -- (175,115) (175,115)
Net income ................................ -- -- 1,116,999 1,116,999
------- ---------- ------------ ------------
BALANCE AT DECEMBER 31, 1997 ............... $24,404 $4,078,618 $ 1,373,569 $ 5,476,591
======= ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-172
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------------- -------------------------------
1998 1997 1997 1996
--------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .................................................. $ 912,822 $ 939,424 $ 1,116,999 $ 2,565,763
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING
ACTIVITIES
Depreciation and amortization .............................. 188,285 145,361 578,553 388,607
Bad debt expense ........................................... -- -- 1,143,499 --
Write-down of investments in partnerships .................. -- -- 58,226 269,519
Deferred income tax (benefit) provision .................... -- (205,697) (631,362) 411,394
Income from investments in partnerships .................... (262,875) (806,225) (540,977) (40,759)
Stock issued to an employee ................................ -- -- 18,750 --
Stock options granted to non employees ..................... -- -- -- 94,000
Gain (loss) on sale of property and equipment .............. -- (24,685) (62,327) 27,734
CHANGES IN OPERATING ASSETS AND
LIABILITIES
Accounts and notes receivable ............................. (879,295) 265,346 (1,657,564) (520,522)
Inventories ............................................... (228,489) 42,749 (217,995) (108,029)
Advances and temporary deposits ........................... 349,651 91,479 (461,613) 75,478
Prepaid show expenses ..................................... (7,603,029) (1,173,833) (812,203) (117,363)
Other current assets ...................................... 14,728 76,007 207,635 (158,312)
Other assets .............................................. (50,000) -- (67,500) --
Deferred costs ............................................ (719,371) 47,614 (44,604) 182,929
Accounts payable .......................................... (174,805) 226,942 268,826 72,290
Accrued liabilities ....................................... (809) 384,943 303,840 134,428
Advance ticket sales ...................................... -- -- 2,635,096 (2,767,831)
Deferred Income ........................................... 6,290,802 1,212,027 -- --
------------ ------------ ------------ ------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES ............................................. (2,162,385) 1,221,452 1,835,279 509,326
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment .......................... (169,450) (15,151) (480,639) (925,875)
Proceeds from sale of assets ................................ -- 143,500 206,500 --
Investments in partnerships ................................. 681,629 (4,033,595) (1,883,544) (873,720)
Payments from (advances to) affiliates ...................... (327,253) 39,170 396,621 (189,198)
Intangible assets ........................................... -- 34,592 (200,000) 4,952
------------ ------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES .................... 184,926 (3,831,484) (1,961,062) (1,983,841)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt .......................................... 3,100,000 375,000 8,243,700 1,914,057
Repayment of debt ........................................... (149,663) (290,755) (8,377,428) (3,070,417)
Net proceeds from (cash used for) private placement ......... -- -- -- 9,115,832
Distributions ............................................... -- (175,115) (175,115) (4,211,972)
Deferred debt issuance costs ................................ -- -- -- (792,577)
Stock registration costs .................................... -- (91,148) (91,148) --
------------ ------------ ------------ ------------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES ................................... 2,950,337 (182,018) (399,991) 2,954,923
------------ ------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS ....................................... 972,878 (2,792,050) (525,774) 1,480,408
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR ....................................................... 5,410,837 5,936,611 5,936,611 4,456,203
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR ...................... $ 6,383,715 $ 3,144,561 $ 5,410,837 $ 5,936,611
============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest .................................................. $ 343,506 $ 311,145 $ 681,996 $ 490,628
============ ============ ============ ============
Income taxes .............................................. $ 457,388 $ 997,105 $ 1,264,475 $ 250,000
============ ============ ============ ============
SUPPLEMENTAL INFORMATION ON NONCASH
INVESTING AND FINANCING ACTIVITIES:
Conversion of notes to common stock ....................... $ 81,736 $ -- $ -- $ --
------------ ------------ ------------ ------------
Distribution of notes receivable to affiliates ............ $ -- $ -- $ -- $ --
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-173
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Magicworks Entertainment Incorporated (the "Company"), through its
subsidiaries and partnerships, acquires domestic and international stage and
ancillary rights to theatrical productions, produces and promotes live
entertainment, manages and books performances and shows, and provides ancillary
services including transportation and merchandising of a broad range of
products associated with its productions and performers.
MERGERS, ACQUISITIONS AND BUSINESS COMBINATIONS
On July 29, 1996, the Company consummated a simultaneous merger (the
"Merger") with certain other affiliated businesses. On the same date and on
September 27, 1996, the Company issued and sold 400.06 and 14.8 Units,
respectively, in a private placement (see Note 4). Upon completion of the
private placement, the Company merged with and into Shadow Wood Corporation
("Shadow Wood"), a publicly-traded Delaware corporation. In accordance with the
terms of the Merger, each share of the Company's common stock issued and
outstanding was converted into one share of Shadow Wood's common stock. Shadow
Wood was the surviving corporation and investors in the private placement
became security holders of Shadow Wood. Shadow Wood changed its name to
Magicworks Entertainment Incorporated.
On August 28, 1996, the Company acquired all of the outstanding capital
stock of MovieTime Entertainment, Inc. ("MovieTime") in exchange for 1,199,999
shares of the Company's common stock. MovieTime was formed in May 1995. The
principals of MovieTime are the same as the principals and management of the
Company. Accordingly, the acquisition was accounted for on a historical cost
basis in a manner similar to a pooling of interests. The consolidated financial
statements presented for periods prior to the acquisition date have been
restated to reflect the accounts of MovieTime since inception. Revenues and
loss generated by MovieTime since inception and included in the accompanying
consolidated statements of income are as follows:
<TABLE>
<CAPTION>
1996
--------------
<S> <C>
Revenues .................................... $ 81,077
----------
Loss before pro forma income taxes .......... $ (674,703)
==========
</TABLE>
Revenues and loss generated by MovieTime prior to the date of acquisition
and included in the accompanying consolidated statements of income for the year
ended December 31, 1996 were $59,546 and ($449,161), respectively. Effective
April 30, 1997, the Company dissolved MovieTime and ceased its operations.
F-174
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On December 31, 1996, the Company acquired all of the outstanding capital
stock of Space Agency, Inc. ("Space"), now known as Magicworks West, Inc. (see
Name changes section of Note 1), in exchange for 1,320,001 shares of the
Company's common stock. The acquisition has been accounted for using the
pooling of interests method of accounting. Accordingly, the consolidated
financial statements presented for periods prior to the acquisition date have
been restated to reflect the accounts of Space since inception. Revenues,
income and distributions to stockholders generated by Space since inception and
included in the accompanying consolidated statements of income are as follows:
<TABLE>
<CAPTION>
1996
--------------
<S> <C>
Revenues ...................................... $24,740,750
===========
Income before pro forma income taxes .......... $ 1,149,712
===========
Distributions to stockholders ................. $ 1,606,331
===========
</TABLE>
A final S-Corporation distribution of $175,115 was made to the Space
stockholders during 1997.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Magicworks Entertainment Incorporated, all its subsidiaries and certain
partnerships involved in theatrical productions. All significant intercompany
balances and transactions have been eliminated.
For periods prior to July 29, 1996, the accompanying financial statements
present the combined results of Magic Promotion, Inc., Magic Promotions, Inc.,
Touring Artists Group, Inc., Performing Arts Management of North Miami, Inc.,
Diamond Bullet Merchandising, Inc., MovieTime Entertainment, Inc. and Space
Agency, Inc.
NAME CHANGES
The Company has effectuated corporate name changes for the following
subsidiaries:
<TABLE>
<CAPTION>
FORMER NAME NEW NAME
- ------------------------------------ ---------------------------------------------
<S> <C>
Magic Promotion, Inc. Magicworks Entertainment International, Inc.
Magic Promotions, Inc. Magicworks Theatricals, Inc. ("MTI")
Diamond Bullet Merchandising, Inc. Magicworks Merchandising, Inc. ("MMI")
MagicSpace, Inc. (1) Magicworks West, Inc. ("MWI")
Magic Concert Promotions, Inc. Magicworks Concerts, Inc. ("MCI")
</TABLE>
- ----------
(1) Space, which was acquired by the Company on December 31, 1996, was
subsequently merged into MagicSpace, Inc.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and investments in short-term
highly liquid financial instruments, primarily time deposits and money market
accounts, with original maturities of three months or less. Due to the short
maturity period of the cash equivalents, the carrying amount of these
instruments approximates their fair values. Included in cash and cash
equivalents are interest-bearing deposits of $3,752,423 and $3,886,969 at
December 31, 1997 and 1996, respectively.
F-175
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INVENTORIES
Inventories are valued at the lower of cost, determined on a first-in
first-out basis, or net realizable value.
PREPAID SHOW EXPENSES
Prepaid show costs consist of all costs relating to promoting a show
including artist advances and advertising. These costs are expensed over the
term of the related show for a period not to exceed six months.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation
and amortization. Assets are depreciated using the straight-line method over
the estimated useful lives of the assets, or the lease terms if shorter, as
follows:
<TABLE>
<CAPTION>
<S> <C>
Leasehold improvements .......... Lease term
Furniture and equipment ......... 3 to 7 years
Vehicles ........................ 10 to 15 years
</TABLE>
Repairs of property and equipment and minor replacements and renewals are
charged to maintenance expense, which is included in general and administrative
expenses, as incurred.
INVESTMENTS IN PARTNERSHIPS
The Company has partnership interests, ranging from 1% to 20%, in various
theatrical productions. Because the Company does not exercise significant
influence over the operating and financial policies of these productions, these
investments are carried at cost, $1,069,716 and $397,331 at December 31, 1997
and 1996, respectively, and income is only recognized when received in the form
of distributions. The Company recognized no income from these partnerships in
1997 and 1996.
The Company has eleven joint venture interests ranging from 21% to 50%, in
various seasonal productions. Because the Company exercises influence over the
operating and financial policies of these productions, these investments are
accounted for under the equity method. The carrying value of such investments
was $3,204,257 and $1,510,347 at December 31, 1997 and 1996, respectively. The
Company recognized income from investments in partnerships of $540,977 and
$40,759 in 1997 and 1996, respectively.
DEFERRED COSTS
Deferred costs include pre-opening legal and professional fees incurred in
connection with the North Miami Performing Arts Center (The "Arts Center")
amounting to $373,532 which will be amortized over a maximum period of three
years once operations commence (see Note 9).
Additionally, deferred debt costs of approximately $836,000 were incurred
in connection with the private placement of debt (see Note 4), and are being
amortized over the 5-year term of the debt. Amortization of deferred debt costs
amounted to $166,039 and $68,566 in 1997 and 1996, respectively.
F-176
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTANGIBLE ASSETS
Intangible assets consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Booking agreement (1) ........................ $ -- $ 341,595
Management operating agreements (2) .......... 300,000 466,962
Trademark (3) ................................ 200,000 --
---------- ----------
500,000 808,557
Less accumulated amortization ................ (100,833) (482,812)
---------- ----------
Intangible assets, net ....................... $ 399,167 $ 325,745
========== ==========
</TABLE>
- ----------
(1) The booking agreement resulted from the acquisition of the National
Artists Management Company, Inc. in 1992. The agreement was amortized
over a period of five years and was fully amortized at December 31, 1997.
(2) Management operating agreements consist of various agreements being
amortized over periods from five to thirty years. As of December 31, 1997
agreements amounting to $166,962 have been fully amortized and only one
agreement remains in effect, the management operating agreement relating
to the proposed Arts Center (see Note 9). That agreement is being
amortized over a thirty-year period, the term of the agreement which
began in 1993.
(3) The trademark was acquired when the Company entered into a limited
liability company agreement to form The Booking Group, LLC, and will be
amortized over a five-year period beginning in 1997.
Amortization expense incurred associated with intangible assets amounted
to $126,579 and $123,745 for 1997 and 1996, respectively.
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," the Company reviews long-lived assets and intangible
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of such assets may not be fully recoverable. If this review
indicates the asset will not be recoverable, as generally determined based on
estimated undiscounted cash flows over the remaining amortization period, the
carrying amount of the asset would be adjusted to fair value.
REVENUES
Revenues are recognized when earned, which is generally at the time of the
theatrical performance or entertainment event. Production revenues represent
the Company's share of performance revenues earned for events where the Company
functions as the event's producer. Producer activities include acquisition of
theatrical stage rights and all activities necessary to mount the production.
Such activities include, but are not limited to, engaging a director, set
construction, costume preparation, arrangements of lighting and sound
equipment, staging rehearsals and theater bookings. Cash received in advance of
a performance is reflected as advance ticket sales in the accompanying
consolidated balance sheets. Promotion revenues represent the Company's share
of performance operating results where the Company serves as promoter. The
promotion of an event involves the presentation of such event at particular
venues. The promoter is responsible for ticket sales, advertising and marketing
of the event. In certain cases, the Company may function as both the producer
and promoter of an event. With respect to the Company's share of production and
promotion receipts, when the Company holds an interest in a show of less than
51%, the Company records its share of the net profits, but does not record the
corresponding revenues or expenses.
F-177
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RECEIVABLES
Receivables include amounts due from shows which the Company acts as the
promoter, advances to shows for start-up costs which will be repaid from profit
distributions, and amounts due from theaters for ticket sales. The Company
provides an allowance for losses on accounts receivable based on a monthly
review of the outstanding receivables and evaluation of their collectibility.
In 1997, the Company generated significant production and promotion revenues by
its new concert and international divisions. As a result of these new ventures,
the timing in which these receivables are expected to be collected requires the
Company to set up a provision for potential uncollectible accounts. Changes in
the allowance for losses on accounts receivable for the year ended December 31,
1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance, beginning of the year ......... $ --
Provision for uncollectibles ........... 1,143,499
Write-offs ............................. (471,428)
---------
Balance, end of the year ............... $672,071
=========
</TABLE>
A substantial portion of the Company's revenues are derived from the
production and promotion of live entertainment acts and events throughout the
United States, Canada and South America. Changes in the entertainment
preferences of the general populations could affect the Company's future
revenues.
CONCENTRATIONS OF CREDIT RISK
The Company has no significant off balance sheet concentration of credit
risk. The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents.
INCOME TAXES
As a result of the Merger, the Company and its subsidiaries, previously
S-Corporations, became subject to U.S. corporate income tax. Prior to July 30,
1996, the stockholders included their proportionate share of the Company's
income in their respective tax returns.
The accompanying consolidated statements of income include pro forma
income taxes due for periods prior to the Merger as if the Company had been
subject to federal and state corporate income taxes, based on the tax laws in
effect during those periods and statutory rates applied to pre-tax accounting
income.
The Company follows the SFAS No. 109, "Accounting for Income Taxes," which
requires, among other things, recognition of future tax benefits measured at
enacted rates attributable to deductible temporary differences between
financial statement and income tax bases of assets and liabilities and to tax
net operating loss carryforwards to the extent that realization of said
benefits is more likely than not.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1997 and 1996, the carrying amount of cash and cash
equivalents, accounts and notes receivable and accounts payable approximates
fair value due to the short-term nature of these accounts.
F-178
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NET INCOME AND PRO FORMA NET INCOME PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share." SFAS No. 128 simplifies the current
standards for computing earnings per share ("EPS") under Accounting Principles
Board Opinion ("APB") 15, "Earnings per Share," by replacing the existing
calculation of primary EPS with a basic EPS calculation. It requires a dual
presentation, for complex capital structures, of basic and diluted EPS on the
face of the income statement and requires a reconciliation of basic EPS factors
to diluted EPS factors. The impact of adopting SFAS 128 in 1997 was immaterial.
Basic net income and pro forma net income per common share is computed by
dividing net income or pro forma net income by the weighted average number of
common shares outstanding. Diluted net income and pro forma net income per
common share assumes the maximum dilutive effect from stock options and
warrants, and conversion of the Company's convertible notes (see Note 4). For
all periods presented, basic and diluted net income per share are the same.
The following is the reconciliation of the numerators and denominators of
the basic and dilutive earnings per share calculation:
<TABLE>
<CAPTION>
1997 1996
------------ -------------
<S> <C> <C>
Weighted average number of common shares ......................... 24,398,546 22,907,463
Impact of dilutive warrants and options (1) ...................... 35,894 81,649
---------- ----------
Weighted average number of shares of common stock and common
stock equivalents for fully diluted earnings per share .......... 24,434,440 22,989,112
========== ==========
</TABLE>
- ----------
(1) Unsecured senior convertible notes are anti-dilutive.
STOCK-BASED COMPENSATION
In accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation", which applies to transactions with non-employees, the Company
has recognized expense for stock options issued to consultants in fiscal 1996,
as more fully described in Note 10. The Company intends to continue applying
the provisions of APB 25, "Accounting for Stock Issued to Employees" for
transactions with employees, as permitted by SFAS 123.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the FASB issued SFAS No. 129, "Disclosures of
Information about Capital Structure" which is effective for fiscal years ending
after December 15, 1997. SFAS No. 129 requires disclosing information about an
entity's capital structure. The impact of adopting SFAS No. 129 in fiscal 1997
was immaterial.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" which is required to be adopted in fiscal 1998. This statement
establishes standards to reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. This
statement requires that an enterprise (a) classify items of other comprehensive
income by their nature in financial statements and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of statements of financial
position. Comprehensive income is defined as the change in equity during the
financial reporting period of a business enterprise resulting from non-owner
sources. The Company currently does not have other comprehensive income and
therefore does not believe the adoption of SFAS No. 130 will have a significant
impact on its financial statement presentation.
F-179
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which is required to be adopted in
fiscal 1998. This statement requires that a public business enterprise report
financial and descriptive information about its reportable operating segments
including, among other things, a measure of segment profit or loss, certain
specific revenue and expense items, and segment assets. The Company currently
has one reporting segment and therefore does not believe the adoption of SFAS
No. 131 will have a significant impact on its financial statement presentation.
RECLASSIFICATIONS
Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform to the current fiscal year's presentation.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Leasehold improvements ............... $ 134,100 $ 121,001
Furniture and equipment .............. 665,534 587,781
Vehicles ............................. 1,834,200 2,085,022
---------- ----------
2,633,834 2,793,804
---------- ----------
Less accumulated depreciation and
amortization ........................ (535,049) (745,549)
---------- ----------
Property and equipment, net .......... $2,098,785 $2,048,255
========== ==========
</TABLE>
3. ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Payroll-related accruals .......... $130,249 $ 90,996
Accrued show expenses ............. 240,582 --
Other ............................. 161,817 137,812
-------- --------
$532,648 $228,808
======== ========
</TABLE>
4. PRIVATE PLACEMENT
On July 29, 1996, the Company issued and sold 400.06 Units for which it
received net proceeds of $8,782,832. On September 27, 1996, the Company sold an
additional 14.8 Units pursuant to the private placement for which it received
additional net proceeds of $333,000. Each unit consists of an unsecured senior
convertible note (the "Notes") in the principal amount of $12,500 bearing
interest at a rate of 10% per annum, and 5,000 shares of common stock. The
value attributable to the common shares was $2.50 per share. As a placement
fee, the placement agent received 488,820 shares of the Company's common stock.
The Notes require interest payments semi-annually on June 30 and December
31. The Notes contain mandatory sinking fund requirements which are calculated
to retire 75% of the face amount of the Notes after payment of seven
consecutive equal quarterly contributions, the first such contribution to occur
on October 1, 1999 and every ninety days thereafter.
The principal amount and accrued and unpaid interest on each Note is
convertible (in whole but not in part), at any time prior to July 30, 2001, at
a conversion price of $3.50 per share (subject to adjustment in certain
circumstances). The Notes may be prepaid by the Company at its option, at the
principal amount plus accrued but unpaid interest.
F-180
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition to the placement fee described above, the Company issued the
placement agent 500,000 warrants at an exercise price of $3.00 per share,
(subject to adjustment in certain circumstances), and has authorized up to
1,481,643 redeemable warrants that may be issued in connection with the
prepayment of the Notes in certain circumstances at $3.50 per share.
5. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Various notes payable with interest ranging from 9.75% to
10.9%, principal due monthly through February 2004,
collateralized by vehicles. ................................... $1,160,970 $1,276,348
Convertible notes (see Note 4) ................................. 5,185,750 5,185,750
Capital lease obligation payable in monthly installments through
September 1997 including interest imputed at a rate of 10%,
collateralized by a vehicle. .................................. -- 18,350
---------- ----------
6,346,720 6,480,448
Less current portion ........................................... (299,557) (302,956)
---------- ----------
$6,047,163 $6,177,492
========== ==========
</TABLE>
Scheduled maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1998 ................... $ 299,557
1999 ................... 869,330
2000 ................... 2,480,791
2001 ................... 2,511,529
2002 ................... 185,513
----------
$6,346,720
==========
</TABLE>
The Company has a committed line of credit agreement expiring in May 1998
with a bank that provides for short-term borrowings of up to $5.0 million by
the Company. Borrowings under this agreement bear interest at the London
Interbank Offered Rate (LIBOR) plus 250 basis points. This agreement is
collateralized by substantially all the Company's assets. At December 31, 1997,
the full amount of the line of credit was available for borrowing.
6. EMPLOYEE BENEFIT PLANS
Effective January 1, 1988, the Company initiated a Money Purchase Plan and
Trust (the "Plan") for all full-time employees of MTI who have completed one
year of service and are at least 21 years of age. The Company contributes an
amount not to exceed 10% of the participating employee's compensation or
$16,000. In addition, the Plan permits the Company to make additional
discretionary contributions to the Plan. Total contributions to the Plan were
$85,000 and $55,792 in 1997 and 1996, respectively. Employees vest in the
Company's discretionary contributions at the rate of 20% per year upon
completion of two years of service.
MWI has a qualified profit sharing plan for the employees. Contributions
to the plan are determined by the Board of Directors each year, and are limited
to an amount not to exceed 15% of eligible compensation paid to participants
for the year. Employees are eligible to participate in the plan after one year
if they are over 21 and work at least 1,000 hours each year. MWI made
contributions to the plan of $23,500 and $59,222 in 1997 and 1996,
respectively.
F-181
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Effective fiscal 1998, the Company plans to adopt a resolution to submit a
proposal to the Internal Revenue Service ("IRS") to freeze, distribute and
terminate both of the aforementioned plans, with the assets not to be
distributed until a final determination letter is received by the IRS. Through
a professional employer organization, effective January 1998, the Company has
implemented a 401(k) Profit Sharing Plan and Trust, (the "401(k) Plan"). With
the exception of individuals employed by the Company as of the initial plan
year effective date, who will be immediately eligible to participate in the
plan, employees will become eligible to participate after completing one year
of service provided the employee is over the age 21. Participants may elect to
contribute from 1% to 15% of their annual compensation into the 401(k) Plan.
The Company will make matching contributions in an amount equal to 25% of the
participant's contribution. Participants shall become vested in the employer
contribution portion of their account as follows:
<TABLE>
<CAPTION>
YEARS OF VESTING SERVICE VESTING %
- -------------------------------- ----------
<S> <C>
1 ............................ 0%
2 ............................ 20%
3 ............................ 40%
4 ............................ 60%
5 ............................ 80%
6 or more .................... 100%
</TABLE>
The 401(k) Plan will be administered by, and offer the funds and
investment options of, a national asset management company.
7. RELATED PARTY TRANSACTIONS
In the normal course of its business, the Company conducts business with
certain stockholders and their respective affiliates. In the opinion of
management, the transactions with related parties are equivalent to terms from
unrelated parties.
Fees paid by the Company for accounting, general management, office and
other administrative services to entities controlled by certain principal
stockholders were $0 and $25,750 in 1997 and 1996, respectively, and are
reflected in general and administrative expenses in the accompanying
consolidated statements of income for the applicable periods.
The Company entered into three non-cancelable operating leases for office
space with related entities. As of December 31, 1997, one of the above
mentioned non-cancelable operating leases has expired and the Company continues
to occupy the premises on a month to month rental basis. The Company is
required to pay taxes, maintenance, insurance and utility costs. Payments under
these leases and rental arrangements totaled $106,832 and $80,504 in 1997 and
1996, respectively. See Note 9 for a summary of future minimum commitments
under the non-cancelable operating leases.
8. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1997 1996
------------- -----------
<S> <C> <C>
Current .................. $1,378,686 $185,822
Deferred ................. (631,362) 411,394
---------- --------
$ 747,324 $597,216
========== ========
Federal .................. $ 653,436 $514,028
State .................... 93,888 83,188
---------- --------
$ 747,324 $597,216
========== ========
</TABLE>
F-182
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Prior to July 29, 1996, the stockholders included their proportionate
share of the Company's income in their respective tax returns. Pro forma income
taxes represent the estimated tax provision, at 39%, which would have been
recorded had the Company been a taxable entity in 1996.
A reconciliation of the difference between the expected provision for
income taxes using the statutory federal tax rate and the Company's actual
provision is as follows:
<TABLE>
<CAPTION>
1997 1996
----------- ---------------
<S> <C> <C>
Provision using statutory rate of 34% ................... $633,870 $ 1,071,424
State income taxes ...................................... 61,522 50,745
Income earned in period prior to July 29, 1996 .......... -- (1,161,758)
Deferred income taxes recorded at July 29,
1996 ................................................... -- 548,525
Other ................................................... 51,932 88,280
-------- ------------
$747,324 $ 597,216
======== ============
</TABLE>
Deferred taxes are due to timing differences in reporting of certain
income and expense items for book purposes and income tax purposes. Deferred
taxes at December 31, 1996 consist primarily of the impact, prior to July 29,
1996, of the Company reporting its income on a cash basis.
9. COMMITMENTS AND CONTINGENCIES
LITIGATION
An arbitration proceeding had been instituted by MMI, a subsidiary of the
Company, against Robert L. Ferman ("Ferman"), a former financial advisor to
certain of the Company's predecessors. MMI's claim had been for rescission,
fraud and breach of fiduciary duty in connection with a consulting agreement
under which MMI agreed to pay Ferman a monthly retainer fee of $2,500 and an
equity position in MMI in the event that Ferman was successful in locating an
acceptable underwriter for a proposed initial public offering of the securities
of the Company or its affiliates. In March 1997, the Company and Ferman settled
the proceeding. The parties are in the process of revising the definitive
agreement for execution and expect the matter to be resolved in the near future
at a cost of approximately $60,000 to the Company.
In October 1994, a former independent contractor filed a complaint against
the partnership that produced "Jesus Christ Superstar" in the Common Pleas
Court of Philadelphia County seeking consequential damages of $5,000,000
arising from the termination of an employment contract by such partnership. A
trial date has been set for June 1, 1998. Management believes, based on the
advice of counsel, that the lawsuit is without merit, and that the outcome of
this suit will not have a material adverse effect on its financial condition or
results of operations.
Performing Arts Management of North Miami, Inc., a wholly-owned subsidiary
of the Company ("PAM"), commenced an action against the City of North Miami
(the "City") for failure to perform under the operating management agreement
between PAM and the City relating to PAM's management of the Arts Center (see
Note 1). The City filed a counterclaim alleging that the Company had breached
the management contract. The dispute stems from the City's inability to deliver
a permit to the Company to build the Arts Center as required under the
operating agreement and the City's assertion that PAM breached the agreement by
failing to make certain payments alleged to be required thereunder. The Company
has incurred expenditures related to its PAM contract totaling $626,032 at
December 31, 1997, which were capitalized and are included in deferred costs
and intangible assets in the accompanying consolidated balance sheets. In
August 1998, the Company determined that the assets capitalized were no longer
realizable and wrote off all related assets.
F-183
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In July 1997, Spinnaker III filed suit against MCI, U.S. Tobacco and Club
LaVela, alleging (among other things not related to Magic) that Magic breached
its contract with Spinnaker to host the ROAR Tour performance. The case is in
the discovery phase with no trial date yet set. Management believes, based on
the advice of counsel, that Spinnaker's claims are without merit, and that the
outcome of this suit will not have a material adverse effect on its financial
condition or results of operations.
MANAGEMENT AGREEMENTS
The Company entered into management agreements with Niko Associates
("Niko") to manage the daily general operations during the entire periods of
production of Dolliko, Judas and Impossible. Management fees are calculated
based on fixed weekly fees ranging from $2,000 to $5,000 per performance week
plus reimbursement of certain overhead related costs. Management fees paid by
the Company to Niko amounted to $405,000 and $635,000 in 1997 and 1996,
respectively, and are reflected in production expenses in the accompanying
consolidated statements of income.
OPERATING LEASES
The Company leases office space from affiliated (see Note 7) and
unaffiliated entities under operating lease agreements that extend through June
2001. The following is a schedule of approximate future minimum lease payments
required under such non-cancelable operating leases at December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, AFFILIATED UNAFFILIATED TOTAL
- ------------------------- ------------ -------------- -----------
<S> <C> <C> <C>
1998 .................... $ 77,800 $ 58,300 $136,100
1999 .................... 80,200 67,450 147,650
2000 .................... 82,600 5,650 88,250
2001 .................... 28,000 -- 28,000
-------- -------- --------
$268,600 $131,400 $400,000
======== ======== ========
</TABLE>
The Company also has month-to-month leases with affiliated (see Note 7)
and unaffiliated entities. Rent expense amounted to $200,023 and $161,140, for
the years ended December 31, 1997 and 1996, respectively, and is included in
general and administrative expenses in the accompanying consolidated statements
of income.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with key personnel that
require future minimum payments as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -------------------------
<S> <C>
1998 .................. $1,631,000
1999 .................. 1,484,583
2000 .................. 1,191,250
2001 .................. 700,000
----------
$5,006,833
==========
</TABLE>
F-184
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. STOCK OPTIONS
At the discretion of management, the Company may grant options to purchase
the Company's stock to employees, directors, consultants, and other unrelated
parties. The Company granted options to purchase an aggregate of 637,750 and
216,500 shares in 1997 and 1996, respectively as follows:
<TABLE>
<CAPTION>
EXERCISE
OPTIONS PRICE
--------- --------------
<S> <C> <C>
Balance at December 31, 1995 ......... --
Grants .............................. 216,500 $2.50 - $3.50
Exercises ........................... --
Canceled ............................ --
-------
Balance at December 31, 1996 ......... 216,500 $2.50 - $3.50
Grants .............................. 637,750 $1.75 - $3.56
Exercises ........................... --
Canceled ............................ --
-------
Balance at December 31, 1997 ......... 854,250 $1.75 - $3.56
=======
</TABLE>
Options exercisable December 31, 1997 and 1996 were 259,250 and 166,500,
respectively.
The Company applies APB 25 and its related interpretations in accounting
for options granted to employees. Accordingly, no compensation cost has been
recognized related to such grants. Had compensation cost for the Company's
stock options been based on fair value at the grant dates for awards granted,
consistent with the provisions of SFAS 123, the Company's 1997 net income and
net income per share, and the 1996 pro forma net income and pro forma income
per share would have been reduced to the amounts indicated below:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Net income and pro forma net income ..........
As reported .................................. $1,116,999 $1,404,005
Pro forma for the impact of SFAS 123 ......... $1,011,728 $1,384,146
Net income per share and pro forma income per
share, basic and diluted
As reported .................................. $ .05 $ .06
Pro forma for the impact of SFAS 123 ......... $ .04 $ .06
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
expected volatility of 25.0%, risk-free interest rate of 6.5%, expected
dividends of $0 and expected terms of 3 years.
In 1996, the Company recorded expense of $94,000 related to 200,000 stock
options granted to non-employees of the Company. In determining the expense to
be recorded, the Company applied the Black-Scholes model using the same
assumptions described above.
11. SUBSEQUENT EVENTS
On September 11, 1998 the Company was acquired by SFX Entertainment Inc.
F-185
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------------- -------------
(UNAUDITED) (NOTE 1)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ................................................... $ 4,500 $ 8,944
Cash escrow ................................................................. 746 704
Accounts receivable, net .................................................... 14,791 6,930
Prepaid production costs .................................................... 1,193 553
Prepaid expenses and other current assets ................................... 595 436
-------- --------
Total current assets ...................................................... 21,825 17,567
Property and equipment, net .................................................. 2,895 2,040
Receivables--non current ..................................................... 1,365 668
Notes receivable ............................................................. 2,135 1,887
Deposits and deferred expenses ............................................... 2,314 677
Intangible assets--net ....................................................... 59,648 23,951
-------- --------
$ 90,182 $ 46,790
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses ....................................... $ 8,728 $ 4,592
Acquisition indebtedness--current portion ................................... 1,515 775
Escrow payable .............................................................. 685 527
Deferred revenues ........................................................... 523 626
-------- --------
Total current liabilities ................................................. 11,451 6,520
Notes payable--bank .......................................................... 33,140
Acquisition indebtedness--non-current ........................................ 3,777 2,144
Deferred rent ................................................................ 651 696
Deferred income taxes ........................................................ 964 960
Common stock (545 shares) subject to put options ............................. 3,420 3,184
Stockholders' equity
Preferred stock, $.01 par value; 5,000 shares authorized, no shares issued
Common stock, $.01 par value; 25,000 shares authorized, 18,086
(September 30, 1998) and 17,913 (December 31, 1997) shares issued
and outstanding ............................................................. 175 174
Additional paid-in capital .................................................. 39,593 36,885
Accumulated deficit ......................................................... (3,003) (3,781)
Cumulative translation adjustment ........................................... 14 8
-------- --------
Total stockholders' equity ................................................ 36,779 33,286
-------- --------
$ 90,182 $ 46,790
======== ========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 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.
F-186
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues ............................................ $14,199 $5,817 $35,470 $ 11,991
Operating expenses .................................. 8,739 3,716 23,726 7,664
General and administrative expenses ................. 2,865 1,500 8,239 4,502
Non cash compensation ............................... (157) 81 367 165
Depreciation and amortization ....................... 660 72 1,463 91
------- ------ ------- --------
Income/(loss) from operations ....................... 2,092 448 1,675 (431)
Interest expense, net ............................... 227 222 120 224
Financing expense ................................... -- 756 -- 756
------- ------ ------- --------
Income/(loss) before income taxes ................... 1,865 (530) 1,555 (1,411)
Income taxes ........................................ 423 77 541 77
------- ------ ------- --------
Net income/(loss) ................................... 1,442 (607) 1,014 (1,448)
Accretion of obligation related to the put option
issued in connection with the ProServ
acquisition ........................................ 79 -- 236 --
------- ------ ------- --------
Net income/(loss) applicable to common
stockholders ....................................... $ 1,363 $ (607) $ 778 $ (1,488)
======= ====== ======= ========
Net income/(loss) per share--basic and dilutive ..... $ .08 $ (.08) $ .05 $ (.20)
======= ====== ======= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-187
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
------------ ------------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES ................................ $ (3,547) $ (2,184)
INVESTING ACTIVITIES
Recent Acquisitions, net of cash acquired ........................... (30,736) --
Purchase of equipment and leasehold improvements, net of landlord
contribution ...................................................... (702) (1,240)
Employee loan ....................................................... -- (424)
Deposits and deferred expenses ...................................... (970) (2,200)
Increase in other assets ............................................ (568)
--------
Net cash used in investing activities ............................. (32,408) (4,432)
--------- --------
FINANCING ACTIVITIES
Proceeds under Credit Agreement ..................................... 33,140 --
Proceeds from Bridge Financing ...................................... -- 10,500
Costs related to stock offerings .................................... (187) (131)
Costs related to Credit Agreement ................................... (667) --
Costs related to Tender Offer ....................................... -- (9,580)
Payment of acquisition indebtedness ................................. (775) (500)
--------- --------
Net cash provided by financing activities ......................... 31,511 289
--------- --------
NET DECREASE/INCREASE IN CASH ........................................ (4,444) (6,327)
CASH AT BEGINNING OF PERIOD .......................................... 8,944 7,231
--------- --------
CASH AT END OF PERIOD ................................................ $ 4,500 $ 904
========= ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
Issuance of common stock to an employee ............................. $ 100 --
========= ========
In connection with Recent Acquisitions
Issuance of common stock .......................................... $ 2,616 --
========= ========
Notes payable ..................................................... $ 2,594 --
========= ========
Obligation to issue common stock in future ........................ $ 416 --
========= ========
Note received in connection with sale of an interest in an associated
company ........................................................... $ 300 --
========= ========
Issuance of options to purchase 105 shares of Common stock in
connection with Bridge Financing for the Tender Offer ............. $ 394
========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-188
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
NUMBER OF COMMON PAID-IN ACCUMULATED TRANSLATION STOCKHOLDERS'
SHARES STOCK CAPITAL DEFICIT ADJUSTMENT EQUITY
----------- -------- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance--December 31, 1997 ..... 17,913 $174 $36,885 $ (3,781) 8 $33,286
Issuance of common stock:
In connection with
acquisitions ................ 549 5 2,611 2,616
To an employee ................ 16 100 100
Cancellation of IPO Escrow
Shares ........................ (392) (4) 4 --
QBQ Escrow Shares .............. 180 180
Secondary Offering costs ....... (187) (187)
Foreign currency translation
adjustment .................... 6 6
Net income for period .......... 778 778
-------- -------
Balance--September 30, 1998
(unaudited) ................... 18,086 $175 $39,593 $ (3,003) $14 $36,779
====== ==== ======= ======== === =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-189
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- MERGER WITH SFX ENTERTAINMENT
On July 23, 1998, The Marquee Group, Inc. (the "Company") entered into an
Agreement and Plan of Merger, as amended (the "Merger Agreement"), with SFX
Entertainment, Inc. ("Parent") and SFX Acquisition Corp., a wholly-owned
subsidiary of Parent ("Sub"), pursuant to which Sub will merge with and into
the Company (the "Merger") and the Company will continue as the surviving
corporation of the Merger. Pursuant to the Merger Agreement, upon the
consummation of the Merger, each outstanding share of common stock, $.01 par
value, of the Company will be converted into the right to receive from Parent
0.1111 shares of Class A Common Stock, $.01 par value, of Parent (the "SFX
Class A Common Stock")(the "Exchange Ratio"). If the SFX Class A Common Stock
Price (as defined below) is greater than $42.75, then the Exchange Ratio shall
be the quotient obtained by dividing $4.75 by the SFX Class A Common Stock
Price. The term "SFX Class A Common Stock Price" means the average of the last
reported sale price for the fifteen consecutive trading days ending on the
fifth trading day prior to the effective time of the Merger on the primary
exchange on which the SFX Class A Common Stock is traded (the NASDAQ National
Market).
Additionally, the Merger Agreement places certain restrictions on the
conduct of business by the Company, including a restriction on the incurrence
of indebtedness and the making of capital expenditures.
The consummation of the Merger is subject to the satisfaction of a number
of conditions set forth in the Merger Agreement, including approval by the
Company's stockholders. Certain of these conditions have been satisfied as of
November 12, 1998, including the expiration of the applicable waiting period
for the merger under the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
as amended. The Merger is expected to be consummated in the first quarter of
1999.
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
Item 310(b) 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 Company's annual report on Form 10-K for
the year ended December 31, 1997.
The Company was formed in July 1995 for the purpose of providing
integrated event management, television programming and production, marketing,
talent representation and consulting services in the sports, news and
entertainment industries. In furtherance of its business strategy, the Company
acquired by merger on December 12, 1996, concurrently with the closing of its
initial public offering ("IPO"), Sports Marketing & Television International,
Inc. ("SMTI"), which provides production and marketing services to sporting
events, sports television shows, and professional and collegiate leagues and
organizations, and Athletes and Artists, Inc. ("A&A"), a sports and media
representation firm. The acquisitions of SMTI and A&A are referred to as the
"1996 Acquisitions". In October 1997, the Company acquired ProServ, Inc. and
ProServ Television, Inc. (collectively, "ProServ") (the "ProServ Acquisition")
and QBQ Entertainment, Inc. ("QBQ") (the "QBQ Acquisition") (collectively, the
"1997 Acquisitions"). The Company also completed the secondary offering (the
"Second Offering") of 8,500,000 shares of its common stock at $5.00 per share
in the
F-190
<PAGE>
fourth quarter of 1997. In August and September 1998, the Company acquired
Alphabet City Industries, Inc. and Alphabet City Sports Records, Inc.,
Cambridge Holding Corporation, Park Associates Limited, Tony Stephens
Associates Limited, and Tollin/Robbins Productions (collectively, the "Recent
Acquisitions"). Accordingly, the accompanying condensed consolidated financial
statements include the accounts of the Company, the 1997 Acquisitions and the
Recent Acquisitions from their respective dates of acquisition. All significant
intercompany transactions and accounts have been eliminated.
NOTE 3 -- EARNINGS PER COMMON SHARE
Basic earnings per share applicable to common stockholders is based upon
the net loss after reduction of amounts, if any, for accretion of the
obligation related to the put option issued in connection with the ProServ
Acquisition divided by the weighted average number of shares of common stock
outstanding during the year. Shares of common stock placed in escrow upon
completion of the Company's initial public offering have been excluded from the
calculation of basic earnings per share. The Company's outstanding options,
warrants and contingently issuable shares are not included for diluted earnings
per share because the effect would be anti-dilutive for 1997. The following
table sets forth the computation of the adjusted weighted average number of
common stock outstanding:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
---------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Denominator for basic earnings per share--weighted
average shares .............................................. 16,859 16,660
Effect of dilutive securities--Employee stock options ......... 177 141
------ ------
Denominator for dilutive earnings per share--adjusted
weighted average shares ..................................... 17,036 16,801
====== ======
</TABLE>
NOTE 4 -- NON-CASH COMPENSATION CHARGE
In connection with the acquisition of QBQ in October 1997, the Company
placed in escrow 78,702 shares of its common stock issued to the seller as a
portion of the purchase price. As of March 31, 1998, the Company has determined
that it is probable that the financial thresholds required to be met for the
release of these escrowed shares will be achieved in 1998, and, accordingly has
recorded a charge of $180,000 for the nine months ended September 30, 1998 as
non-cash compensation in the accompanying condensed consolidated statements of
operations. This compensation charge will be adjusted based upon the changes in
the fair market value of the shares subject to the escrow arrangement through
the actual release date.
NOTE 5 -- BANK CREDIT AGREEMENT
On July 31, 1998, the Company and its subsidiaries entered into a Credit
Agreement, as amended, (the "Credit Agreement") with BankBoston, NA, which
provides for a revolving line of credit for loans and letters of credit
(subject to a $2 million sublimit) of up to $35 million in the aggregate. The
revolving credit facility under the Credit Agreement may be used to finance
acquisitions and to fund working capital needs. Loans under the Credit
Agreement bear interest at a floating rate equal to a base rate which
approximates prime plus an applicable margin, or a Eurocurrency rate plus an
applicable margin. The applicable margin is dependent on the Company achieving
certain leverage ratios. In August and September 1998, the Company borrowed a
total of approximately $33.1 million under the revolving credit facility in
connection with the Recent Acquisitions, with the interest rate associated with
such borrowings of approximately 8.3% for domestic borrowings and 10.5% for
British (pounds sterling) borrowings (at September 30, 1998). The obligations
of
F-191
<PAGE>
the Company under the Credit Agreement are secured by a first priority security
interest in all existing and future acquired property of the Company, including
the capital stock of its subsidiaries. The Company's obligations under the
Credit Agreement are also guaranteed by the Company's present and future
subsidiaries and secured by a first priority security interest in all existing
and future property of these subsidiaries. The Credit Agreement also contains
financial leverage and coverage ratios, which may inhibit the Company's ability
to incur other indebtedness, and restrictions on capital expenditures,
distributions and other payments. However, the Company will be permitted to
incur additional indebtedness outside of the Credit Agreement to acquire
businesses secured solely by the assets of such acquired businesses, as long as
the Company is in compliance with the financial covenants of the Credit
Agreement exclusive of such indebtedness and the related borrowing base
applicable to the businesses acquired. The term of the Credit Agreement is
three years with borrowing availability reduced periodically commencing January
1, 2000. See "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" for
additional information.
NOTE 6 -- RECENT ACQUISITIONS
On August 3, 1998, the Company consummated its acquisition of
substantially all of the assets of Alphabet City Industries, Inc. and all of
the outstanding stock of Alphabet City Sports Records, Inc., both of which are
sports and music marketing companies which develop strategic alliances among
sports leagues, music companies and corporate sponsors (collectively, the
"Alphabet City Acquisition"). The aggregate purchase price for the Alphabet
City Acquisition was approximately $4.0 million consisting of $3.4 million in
cash (excluding assumed liabilities) and 200,000 shares of the Company's common
stock. In addition, the Company may be obligated to make significant additional
payments (up to $9 million) based upon the financial performance of the
acquired businesses.
On August 6, 1998, the Company consummated its acquisition of all of the
outstanding stock of Cambridge Holding Corporation ("Cambridge"), a golf
representation company, whose client roster includes a mix of established PGA
Tour winners and many prospects on the Nike Tour (the "Cambridge Acquisition").
The aggregate purchase price for Cambridge was approximately $3.9 million
consisting of $3.5 million in cash and 89,536 shares of the Company's common
stock. In addition, the Company may be obligated to make additional payments
aggregating approximately $2.0 million based upon the future financial
performance of Cambridge.
On August 13, 1998, the Company acquired Park Associates Limited ("PAL"),
a sports and media talent representation firm in the United Kingdom. (the "PAL
Acquisition"). The initial consideration for the PAL Acquisition was
approximately (pounds sterling)2.6 million (approximately $3.2 million)
consisting of (pounds sterling)1.6 million (approximately $2.6 million) in
cash and 117,440 shares of the Company's common stock. In addition, the Company
will pay an additional (pounds sterling)800,000 (approximately $1.3 million)
in cash and (pounds sterling)200,000 (approximately $330,000) in common stock
(based on the closing price of such stock as reported in The Wall Street
Journal during the twenty days prior to the date of each payment) in five equal
annual installments.
On September 2, 1998, the Company consummated its acquisition of Tony
Stephens Associates Limited ("TSA"), a major soccer talent representation firm
in the United Kingdom (the "TSA Acquisition"). The initial consideration for
the TSA Acquisition was approximately consisting of (pounds sterling)1.8
million (approximately $3.0 million), of which (pounds sterling)1.4 million
(approximately $2.3 million) was paid in cash and 142,291 shares of the
Company's common stock were issued. In addition, the Company will pay an
additional (pounds sterling)200,000 (approximately $330,000) in cash and
(pounds sterling)50,000 (approximately $83,000) in the form of shares of the
Company's common stock.
On September 18, 1998, the Company consummated its acquisition of all the
issued and outstanding equity interests in Halcyon Days, Productions, Inc.,
Robbins Entertainment Group, Inc. and Tollin/Robbins Management, LLC
(collectively, "Tollin/Robbins") (the "Tollin/Robbins Acquisition").
Tollin/Robbins is an award-winning independent film and television production
F-192
<PAGE>
company. The initial consideration for the Tollin/Robbins Acquisition was $20.5
million in cash. In addition, the two sellers will each receive $800,000 in
cash, payable in four equal annual installments beginning September 1, 1999 and
will receive additional consideration based on the EBITDA (as defined in the
acquisition agreement) of the acquired entities through 2003, payable in shares
of the Company's common stock and cash.
The funds used to consummate each of the Recent Acquisitions were
principally obtained from borrowings under the Credit Agreement.
F-193
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
The Marquee Group, Inc.
We have audited the accompanying consolidated balance sheet of The Marquee
Group, Inc. and Subsidiaries (the "Company") as of December 31, 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the two years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly in
all material respects, the consolidated financial position of the Company at
December 31, 1997, and the consolidated results of its operations and its cash
flows for the two years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
March 5, 1998
F-194
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1997
-------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................................ $ 8,944
Cash escrow .............................................................. 704
Accounts receivable -- net ............................................... 6,930
Television and event costs ............................................... 553
Prepaid expenses and other current assets ................................ 436
--------
Total current assets .................................................. 17,567
Property and equipment, net ............................................... 2,040
Noncurrent receivables .................................................... 668
Notes receivable .......................................................... 1,887
Deposits .................................................................. 677
Intangible assets -- net .................................................. 23,951
--------
$ 46,790
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ................................. $ 4,592
Acquisition indebtedness -- current portion .............................. 775
Escrow payable ........................................................... 527
Deferred revenues ........................................................ 626
--------
Total current liabilities ............................................. 6,520
Acquisition indebtedness -- non-current ................................... 2,144
Deferred rent ............................................................. 696
Deferred income taxes ..................................................... 960
Common stock (545 shares) subject to put options .......................... 3,184
Stockholders' equity
Preferred stock, $.01 par value, 5,000 shares authorized, no shares issued
Common stock, $.01 par value; 25,000 shares authorized, 8,769 and
17,913 shares issued and outstanding ................................... 174
Additional paid-in capital ............................................... 36,885
Accumulated deficit ...................................................... (3,781)
Cumulative translation adjustment ........................................ 8
--------
Total stockholders' equity ............................................ 33,286
--------
$ 46,790
========
</TABLE>
See accompanying notes.
F-195
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Revenues .................................................................. $ 21,268 $ 2,869
Operating expenses ........................................................ 14,459 2,563
General and administrative expenses ....................................... 6,316 2,199
Loss on abandonment of lease .............................................. 466 --
Deferred compensation ..................................................... 145 56
Depreciation and amortization ............................................. 371 5
-------- --------
Loss from operations ...................................................... (489) (1,954)
Interest expense, net ..................................................... 22 283
Financing expense ......................................................... 756 193
-------- --------
Loss before income taxes .................................................. (1,267) (2,430)
Income tax benefit (provision) ............................................ (45) 20
-------- --------
Net loss .................................................................. (1,312) (2,410)
Accretion of obligation related to the put option issued in connection with
the ProServ acquisition .................................................. 59 --
-------- --------
Net loss applicable to common stockholders ................................ $ (1,371) $ (2,410)
======== ========
Net loss per share applicable to common stockholders-basic and dilutive ... $ (0.15) $ (1.03)
======== ========
Weighted number of shares outstanding ..................................... 9,377 2,347
======== ========
</TABLE>
See accompanying notes.
F-196
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF COMMON ADDITIONAL
SHARES STOCK PAID-IN CAPITAL
----------- -------- -----------------
<S> <C> <C> <C>
Balance -- December 31, 1995 .......... 1,938 $ 19 $ --
Issuance of common stock:
Issuance to employee ................. 50 -- 119
Conversion of Debentures ............. 667 7 1,993
Initial public offering, net of
offering costs ..................... 3,852 39 15,547
Acquisitions ......................... 2,262 23 1,488
Distribution to acquired companies'
former stockholders .................. -- -- (10,970)
"S" Corporation dividend .............. -- -- (382)
Amortization of deferred
compensation ......................... -- -- --
Net loss for the year ended
December 31, 1996 .................... -- -- --
----- ---- ----------
Balance -- December 31, 1996 .......... 8,769 88 7,795
Initial public offering costs ......... -- -- (131)
Issuance of common stock:
Second offering, net of offering
costs .............................. 8,500 85 38,470
Acquisitions ......................... 644 1 624
Tender Offer .......................... -- -- (10,280)
Issuance of options:
In connection with financing of
Tender Offer ....................... -- -- 394
In connection with acquisitions ...... -- -- 13
Amortization of deferred
compensation ......................... -- -- --
Foreign currency translation
adjustment ........................... -- -- --
Net loss for the year ended
December 31, 1997 .................... -- -- --
----- ---- ----------
17,913 $174 $ 36,885
====== ==== ==========
<CAPTION>
CUMULATIVE
DEFERRED ACCUMULATED TRANSLATION
COMPENSATION DEFICIT ADJUSTMENT TOTAL
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance -- December 31, 1995 .......... $ -- $ -- -- $ 19
Issuance of common stock:
Issuance to employee ................. (119) -- -- --
Conversion of Debentures ............. -- -- -- 2,000
Initial public offering, net of
offering costs ..................... -- -- -- 15,586
Acquisitions ......................... -- -- -- 1,511
Distribution to acquired companies'
former stockholders .................. -- -- -- (10,970)
"S" Corporation dividend .............. -- -- -- (382)
Amortization of deferred
compensation ......................... 56 -- -- 56
Net loss for the year ended
December 31, 1996 .................... -- (2,410) -- (2,410)
------- -------- -- ----------
Balance -- December 31, 1996 .......... (63) (2,410) -- 5,410
Initial public offering costs ......... -- -- -- (131)
Issuance of common stock:
Second offering, net of offering
costs .............................. -- -- -- 38,555
Acquisitions ......................... -- -- -- 625
Tender Offer .......................... -- -- -- (10,280)
Issuance of options:
In connection with financing of
Tender Offer ....................... -- -- -- 394
In connection with acquisitions ...... -- -- -- 13
Amortization of deferred
compensation ......................... 63 -- -- 63
Foreign currency translation
adjustment ........................... -- -- 8 8
Net loss for the year ended
December 31, 1997 .................... -- (1,371) -- (1,371)
------- -------- -- ----------
$ -- $ (3,781) $ 8 $ 33,286
======= ======== === ==========
</TABLE>
See accompanying notes.
F-197
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Operating activities
Net loss ......................................................................... $ (1,371) $ (2,410)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ................................................... 385 5
Deferred compensation ........................................................... 145 56
Deferred income taxes ........................................................... -- (40)
Noncash financing expense ....................................................... 394 --
Accretion of put option and imputed interest .................................... 189 --
Loss on abandonment of lease .................................................... 335 --
Changes in operating assets and liabilities:
Cash escrow ................................................................... (461) --
Accounts receivable ........................................................... (2,297) 906
Television and event costs .................................................... (553) --
Prepaid expenses .............................................................. 100 (178)
Accounts payable and accrued liabilities ...................................... (1,551) (173)
Escrow payable ................................................................ 323 --
Deferred revenues ............................................................. 573 --
--------- --------
Net cash used in operating activities ............................................ (3,789) (1,834)
--------- --------
Investing activities
Acquisitions, net of cash acquired ........................................... (15,223) --
Loan to seller of business acquired .......................................... (1,500) --
Payment of acquired indebtedness ............................................. (2,469) --
Distribution to subsidiaries' former stockholders ............................ -- (9,000)
Cash acquired through acquisition of subsidiaries ............................ -- 504
Purchase of equipment and leasehold improvements, net of landlord contribution (1,473) (122)
Employee loan ................................................................ (446) --
Security deposits ............................................................ (527) (45)
--------- --------
Net cash used in investing activities ............................................ (21,638) (8,663)
--------- --------
Financing activities
Proceeds from loans payable -- related parties ............................... -- 767
Repayments of loans payable to related parties ............................... (122) (200)
Proceeds of private placement ................................................ -- 1,555
Proceeds from IPO, net of offering costs ..................................... (131) 15,586
Proceeds from bridge financing ............................................... 10,500 --
Costs related to Tender Offer ................................................ (10,280) --
Proceeds from second offering, net of offering costs ......................... 38,555 --
Payment of acquisition indebtedness .......................................... (882) --
Repayment of bridge financing ................................................ (10,500) --
--------- --------
Net cash provided by financing activities ........................................ 27,140 17,708
--------- --------
Increase in cash and cash equivalents ............................................ 1,713 7,211
Cash at beginning of period ...................................................... 7,231 20
--------- --------
Cash at end of period ............................................................ $ 8,944 $ 7,231
--------- --------
Supplemental disclosure of non-cash financing activities:
Exchange of loans payable to related parties for Debentures ...................... -- $ 445
========= ========
Conversion of debentures to common stock ......................................... -- $ 2,000
========= ========
Issuance of acquisition indebtedness ............................................. $ 1,319 $ 1,970
========= ========
S Corporation dividend payable ................................................... -- $ 382
========
Issuance of common stock in connection with acquisitions ......................... $ 3,750 --
=========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes .................................................................... $ 313 $ --
========= ========
Interest ........................................................................ $ 285 $ 254
========= ========
</TABLE>
See accompanying notes.
F-198
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND ORGANIZATION
The Marquee Group, Inc. (the "Company"), which began operations in 1996,
provides integrated event management, television programming and production,
marketing, talent representation and consulting services in the sports, news
and other entertainment industries.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries after elimination of all intercompany accounts
and transactions.
REVENUE RECOGNITION
The primary sources of the Company's revenues are fees from providing
event management, television programming and production, sports marketing and
consulting services and commissions from representation of sports, news and
entertainment personalities. Revenues from events are recognized when the
events are held. Revenues from television programming and production services
are recognized when the programs are available for broadcast. Marketing
revenues are recognized for guaranteed amounts when contractual obligations are
met (subsequent royalties are recorded when received). Revenues from
advertising services are recognized in the month the advertisement is broadcast
or printed. Commissions based on profit or gross receipt participations are
recorded upon the determination of such amounts. Consulting revenue is
recognized as services are provided. Commissions from the Company's talent
representation services are recognized as revenue when they become payable to
the Company under the terms of the Company's agreements with its clients.
Generally, such commissions are payable by clients upon their receipt of
payments for performance of services.
CASH EQUIVALENTS
The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents.
TELEVISION AND EVENT COSTS
Television and event costs are recorded as incurred and are expensed when
the programs are available for use or when the event is held.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated on a
straight-line basis over their estimated useful lives ranging from five to
seven years. Leasehold improvements are amortized over the shorter of their
estimated useful lives or the remaining lease term.
INTANGIBLES
Intangibles represent the excess of the purchase price of acquisitions
over the tangible net assets acquired and are amortized over twenty years using
the straight-line method. The Company periodically reviews the recoverability
of the carrying value of these assets and the period of amortization based on
the current and expected future non-discounted income from operations of the
entities giving rise to these intangibles to determine whether events and
circumstances warrant revised estimates of carrying value or useful lives.
F-199
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DEFERRED RENT
The Company leases premises under leases which provide for periodic
increases over the lease term. Pursuant to Statement of Financial Accounting
Standards No. 13, "Accounting for Leases," the Company records rent expense on
a straight-line basis. The effect of these differences is recorded as deferred
rent.
INCOME TAXES
The Company accounts for income taxes under the liability method as
required by Statement of Financial Accounting Standards Board Statement No. 109
("FAS 109"), "Accounting for Income Taxes." FAS 109 requires an asset and
liability approach to financial accounting and reporting for income taxes.
Under this approach, differences between financial statement and tax bases of
assets and liabilities are determined, and deferred income tax assets and
liabilities are recorded for those differences that have future tax
consequences. Valuation allowances are established, if necessary, to reduce any
deferred tax asset recorded to an amount that will more likely than not be
realized in future periods. Income tax expense is composed of the current tax
payable or refundable for the period plus or minus the net change in deferred
tax assets and liabilities.
EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share. Statement No. 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings, basic earnings per share excludes any dilutive effects
of options, warrants and convertible securities. Diluted earnings per share is
very similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented in conformity
with the Statement No. 128 requirements.
Basic earnings per share applicable to common stockholders is based upon
net loss after reduction of amounts, if any, for accretion of the obligation
related to the put option issued in connection with the ProServ Acquisition
(see Note 3) divided by the weighted average number of shares of common stock
outstanding during the year. Shares of common stock placed in escrow upon
completion of the Initial Public Offering ("IPO") described in Note 2 and in
connection with the QBQ Acquisition described in Note 3 have been excluded from
the calculation of basic earnings per share. The shares of common stock issued
upon the automatic conversion of the debentures (see Note 5) are considered
outstanding for all periods presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash investments and trade
accounts receivable.
At December 31, 1997 and 1996, approximately 90% of the Company's cash and
cash equivalents was invested with one financial institution.
F-200
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
For the year ended December 31, 1997, one client represented approximately
28% of reported revenues.
Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of entities comprising the Company's client
base.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates that the carrying amounts of its financial
instruments, principally noncurrent receivables and liabilities, approximates
the fair value.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1996 financial statements
to conform to the 1997 presentation.
2. PUBLIC OFFERINGS AND TENDER OFFER
In December 1996, the Company closed its initial public offering ("IPO")
of 3,852,500 units (the "Units"), each unit consisting of one share of common
stock and one redeemable warrant, at a price of $5.00 per Unit. Each warrant
entitles the holder to purchase one share of common stock at an exercise price
of $7.50, subject to adjustment, at any time until December 4, 2001. The
warrants are redeemable by the Company under certain circumstances at a
redemption price of $.05 per warrant. (See below.)
The Company also granted to the underwriters, or their designees, options
(the "IPO Options") to purchase up to 335,000 Units. The Units purchasable upon
exercise of the IPO Options are identical to the Units described above, except
that the underlying warrants are redeemable only by the Company under limited
circumstances. The IPO Options are exercisable during a three-year period
commencing December 12, 1998 at an exercise price of $8.25, subject to
adjustment in certain events.
Certain of the Company's officer/stockholders have placed an aggregate of
1,275,000 of their shares of common stock in escrow. These shares will not be
assignable or transferable (but may be voted) until such time as they are
released from escrow based upon the Company meeting certain annual earnings
levels or the common stock attaining certain price levels. All reserved shares
remaining in escrow on March 31, 2000 will be forfeited and contributed to the
Company's capital. In the event the Company attains any of the earnings
thresholds or stock prices providing for the release of the escrow shares to
the stockholders, the Company will recognize compensation expense at such time
based on the then fair market value of the shares.
In September 1997, the Company purchased in a tender offer approximately 4
million of the 4.5 million outstanding warrants at a cash purchase price of
$2.40 per warrant. In order to consummate its purchase of the Warrants, the
Company borrowed $10.5 million pursuant to a loan agreement (the "Bridge
Facility"). The Company repaid such borrowing with a portion of the net
proceeds of its second public offering described below. In connection with the
Bridge Facility, the Company paid the lender fees and expenses of $362,000 and
issued to the lender immediately exercisable options to acquire an aggregate of
105,000 shares of common stock, at an exercise price of $2.25, subject to
adjustment in certain circumstances. The options will expire in 2007. As a
result of the issuance of the options, the Company recorded financing expense
of $394,000 in 1997.
On October 14, 1997 and November 12, 1997, the Company consummated a
second public offering (the "Second Offering") of 8.5 million shares (including
the Underwriters' overallotment) of the Company's common stock at $5.00 per
share. The proceeds to the Company after deducting the underwriting discount
and commissions and other expenses was approximately $39 million.
F-201
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. ACQUISITIONS
1996 ACQUISITIONS
On December 12, 1996, the Company acquired by merger, concurrently with
the closing of its IPO, Sports Marketing & Television International, Inc.
("SMTI") which provides production and marketing services to sporting events,
sports television shows and professional and collegiate leagues and
organizations and, Athletes and Artists, Inc. ("A&A"), a sports and media
talent representation firm, collectively the "1996 Acquisitions". The SMTI
stockholders received cash of $6,500,000 from the proceeds of the IPO, an
additional $1,500,000 payable in five equal installments over five years and
1,292,307 shares of the Company's common stock. The A&A stockholders received
cash of $2,500,000 from the proceeds of the IPO, miscellaneous reimbursements
of $80,000, an additional $1,000,000 payable in five equal installments over
five years and 969,231 shares of the Company's common stock.
The 1996 Acquisitions were accounted for as a consolidation at historical
cost due to the significance of the equity interests in the Company held by the
former stockholders of SMTI and A&A following completion of the acquisitions.
Accordingly, the acquired assets and liabilities were recorded at their
historical amounts. The capital stock of SMTI and A&A was included in
additional paid-in capital. In addition, the cash paid to the former
stockholders of SMTI and A&A was recorded as a dividend charged to additional
paid-in capital.
SMTI was an S Corporation prior to the merger. The SMTI stockholders
received a distribution of approximately $350,000 during 1997, which represents
40% of the taxable earnings of SMTI prior to the merger.
The accompanying consolidated financial statements include the accounts of
SMTI and A&A from December 12, 1996.
ACQUISITION OF PROSERV
On October 14, 1997, the Company acquired all of the outstanding stock of
ProServ, Inc. and ProServ Television, Inc. (collectively, "ProServ"), an
established provider of international sports event management, television
production, marketing, talent representation and consulting. The aggregate
purchase price for ProServ was approximately $10.8 million in cash and 250,000
shares of the Company's common stock. The Company may be obligated to make
additional earn-out payments over the next four years of up to $2.5 million
based upon ProServ achieving, during this period, certain levels of revenues
and earnings before interest, taxes, depreciation and amortization. The Company
also repaid approximately $2.5 million of ProServ's outstanding indebtedness at
the acquisition date. The Company used a portion of the proceeds of the Second
Offering to finance the acquisition and the repayment of the outstanding
indebtedness. Under certain circumstances, the Company may be required to
repurchase up to all of the 250,000 shares of the common stock issued in
connection with the acquisition for an aggregate purchase price of up to $1.9
million.
The acquisition was accounted for using the purchase method, with the
aggregate puchase price allocated to the tangible net assets based upon
estimated fair market values. The total purchase price of $13.4 million, which
includes costs incurred in connection with the acquisition, exceeded the
tangible net asset deficiency acquired by approximately $17 million, which has
been recorded as an intangible. ProServ's results of operations for the period
from the October 14, 1997 have been included in the accompanying consolidated
financial statements. The potential earn-out will be recorded as additional
purchase price when earned.
ACQUISITION OF QBQ
On October 14, 1997, the Company acquired substantially all of the assets
of QBQ Entertainment, Inc. ("QBQ"), a company that books tours and appearances
for a variety of
F-202
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
entertainers. The aggregate purchase price for QBQ was approximately $3.1
million in cash, $1.6 million payable in annual installments payable over eight
years and 393,514 shares of common stock, including 78,702 shares held in
escrow and subject to forfeiture if certain financial performance tests are not
met. In connection with an employment agreement with the chief executive
officer and sole stockholder of QBQ, the Company granted a five-year,
non-recourse loan of $1.5 million, secured by the common stock issued in
connection with the QBQ acquisition. The Company used a portion of the proceeds
of the Second Offering to finance the acquisition and the loan. Under certain
circumstances, the Company may be required to repurchase up to 295,135 shares
of common stock issued in connection with the acquisition for an aggregate
purchase price of up to $1.9 million.
The QBQ acquisition was accounted for using the purchase method of
accounting and the results of its operations have been included in the
accompanying financial statements from October 14, 1997. The total purchase
price of approximately $7.2 million, which includes costs incurred in
connection with the acquisition, exceeded the tangible net assets acquired by
approximately the same amount and has been recorded as intangibles.
The following unaudited pro forma information is presented as if the
Company had completed the acquisition of ProServ, QBQ, SMTI and A&A and the
Secondary Offering at the beginning of the respective periods and gives effect
to the related contractually required reductions in personnel, officers'
salaries and employee benefits:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996
---------- ------------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Pro forma revenues ................................... $34,953 $ 29,932
Pro forma net loss applicable to common stockholders . $ (521) $ (2,814)
Pro forma net loss per share applicable to common
stockholders--basic and dilutive ................... $ (.03) $ (.17)
Pro forma weighted average shares .................... 16,559 16,559
</TABLE>
Aggregate maturities for the indebtedness related to the Company's
acquisitions, exclusive of the put options, as of December 31, 1997 is as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
<S> <C>
1998 ............................................. $ 775
1999 ............................................. 775
2000 ............................................. 730
2001 ............................................. 730
2002 ............................................. 230
Thereafter ....................................... 375
------
3,615
Less: amounts representing interest .............. 696
------
Total, including current portion of $775.......... $2,919
------
</TABLE>
F-203
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
At December 31, 1997, property and equipment consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
<S> <C>
Furniture and fixtures ............................. $ 952
Leasehold improvements ............................. 1,190
Vehicles ........................................... 27
------
2,169
Accumulated depreciation and amortization .......... 129
------
$2,040
======
</TABLE>
5. PRIVATE PLACEMENT
In August 1996, the Company issued debentures (the "Debentures"), in the
aggregate principal amount of $2 million, each Debenture consisted of $50,000
principal amount of 10% Convertible Debentures. Interest on the Debentures of
$254,000 was calculated for the period from the final closing of the Private
Placement to a date one year from the effective date of the Company's IPO. The
Debentures were automatically converted into units (see Note 2) identical in
all respects to those offered in the IPO at a rate of one unit for each $3.00
principal amount of Debentures.
Stockholders of the Company and stockholders of SMTI and A&A purchased an
aggregate of $750,000 principal amount of Debentures, of which $445,103 was in
exchange for existing indebtedness of the Company to the stockholders. In
addition, the Company repaid $125,000 to one of the officer/stockholders from
the proceeds of the private placement.
6. INCOME TAXES
The income tax expense (benefit) consists of:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31,
-----------------
1997 1996
------ --------
(IN THOUSANDS)
<S> <C> <C>
Current:
Federal ................. $-- $ --
State and local ......... 45 (20)
--- -----
45 (20)
--- -----
Deferred:
Federal ................. -- 30
State and local ......... -- 10
--- -----
-- 40
--- -----
$45 $ 20
=== =====
</TABLE>
F-204
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A reconciliation of the federal statutory tax rate to the actual effective
rate is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- ------------
<S> <C> <C>
Statutory rate ............................................... (34.0)% (34.0)%
State and local income taxes, net of federal benefit ......... 2.3 .4
Valuation allowance .......................................... 26.3 31.8
Permanent differences ........................................ 8.9 1.0
----- -----
Effective rate ............................................... 3.5% (.8)%
===== =====
</TABLE>
The deferred tax assets and liabilities is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER, 31,
-----------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cumulative effect of change in tax accounting basis ......... $ (228) $ (343)
Deferred compensation expense ............................... (67) (29)
Deferred rent ............................................... (48) --
Net operating losses ........................................ 1,494 1,051
ProServ tax audits .......................................... (617) --
Valuation allowance ......................................... (1,494) (1,022)
-------- --------
Net deferred tax liabilities ................................ $ (960) $ (343)
======== ========
</TABLE>
At December 31, 1997, the Company had net operating loss carryforwards of
approximately $3.3 million which will begin to expire in 2011. ProServ had net
operating losses of approximately $2.6 million at the time of the acquisition.
These losses are subject to limitations under the Internal Revenue Code and
will begin to expire in 2010.
In connection with examinations of the consolidated federal tax returns of
ProServ for years 1993 through 1995, the Internal Revenue Service has
challenged the tax treatment of certain significant transactions. The French
taxing authorities are conducting an audit of ProServ's former subsidiary,
located in France, for the same period. Although ProServ's management believes
that there are valid defenses to defeat any tax assessment, the Company has
provided for these contingencies. Such amounts have been included in deferred
tax liabilities at December 31, 1997.
The Company recorded an increase in the valuation allowance of $472,000
for the year ended December 31, 1997.
7. STOCKHOLDERS' EQUITY
On July 17, 1996, the Board of Directors and stockholders of the Company
approved an increase in the authorized capitalization of the Company to 25
million shares of common stock, par value $.01 per share, and 5 million shares
of preferred stock, par value $.01 per share. In addition, in August 1996 the
Board of Directors and the stockholders of the Company approved a stock split
whereby 999 shares of the 1,000 shares of common stock outstanding at that time
were split on the basis of approximately 1,940-for-1 and the remaining one
share of common stock outstanding at that time was split on the basis of
50,000-for-1. All share information in the financial statements reflect the
stock split.
COMMON STOCK RESERVED FOR ISSUANCE
As of December 31, 1997, the Company has 1,197,503 shares of common stock
reserved for issuance upon the exercise of the warrants and the IPO Options
(see Note 2), 800,000 shares of
F-205
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
common stock reserved for issuance upon exercise of options pursuant to the
1996 and 1997 Stock Option Plans and 315,000 shares reserved for issuance under
other options and warrants of the Company.
8. STOCK OPTION PLAN
The Company's Board of Directors has adopted and the stockholders have
approved the Company's 1996 and 1997 Stock Option Plans (the "Plan"). The Plan
provides for the grant, at the discretion of the Board of Directors, of (i)
options that are intended to qualify as incentive stock options within the
meaning of Section 422A of the Internal Revenue Code to certain employees and
consultants and (ii) options not intended to so qualify. The aggregate number
of shares of common stock for which options may be granted under the Plan is
800,000 shares.
The Plan is administered by a Stock Option Committee (the "Committee")
which is appointed by the Board of Directors. The Committee determines who
among those eligible will be granted options, the time or times at which
options will be granted, the terms of the options, including the exercise
price, the number of shares subject to the options and the terms and conditions
of exercise.
A summary of the activity in the Plan is as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
----------- -----------------
<S> <C> <C>
Granted--1996 ............................ 230,000 $5.71
Granted--1997 ............................ 7,500 $5.875
Forfeited--1997 .......................... (4,000) $5.00
------- ------
Outstanding at December 31, 1997 ......... 233,500 $5.72
======= ======
Exercisable at December 31, 1996 ......... -- --
======= ======
Exercisable at December 31, 1997 ......... 23,575 $5.69
======= ======
</TABLE>
Options outstanding as of December 31, 1997 have exercise prices ranging
from $5 to $6.25 per share. The options vest in annual installments over the
three to five year period commencing one year from the date of grant.
The Company has elected to follow Accounting Principles Board opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation," requires use of
options valuation models that were not developed for use in valuing employee
stock options. The exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant and,
therefore, no compensation expense is recognized.
F-206
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its stock options under the fair value method of that Statement.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996:
<TABLE>
<CAPTION>
ASSUMPTION 1997 1996
- -------------------------------------------------------- --------- ---------------
<S> <C> <C>
Risk-free rate ...................................... 5.47% 5.45% to 6.18%
Dividend yield ...................................... 0% 0%
Volatility factor of the expected market price of the
Company's common stock ............................ .54 .72
Average life ........................................ 3 years 4 years
</TABLE>
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1996 1997
------------ ------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Pro forma net loss applicable to common stockholders ......... $ (2,454) $ (1,547)
Pro forma net loss per share applicable to common
stockholders--basic and dilutive ........................... $ (1.05) $ (0.16)
</TABLE>
The weighted average fair value of options granted during the years ended
December 31, 1997 and 1996 was $2.43 and $2.57, respectively. The weighted
average remaining contractual life of options outstanding at December 31, 1997
is 4.8 years.
9. RELATED PARTY TRANSACTIONS
In December 1997, the Company repaid an officer/stockholder the $121,615
outstanding at December 31, 1996. Interest on the loan accrued at 12%.
The Company provided services as a subcontractor for SMTI aggregating
$724,000, for the period from January 1, 1996 to December 12, 1996 (see Note
3), which are included in 1996 revenues in the accompanying consolidated
statement of operations.
During August 1996, the Company entered into a six-year consulting
agreement with Sillerman Communications Management Corporation ("SCMC"), which
is controlled by Robert F.X. Sillerman, the Chairman of the Company and the
controlling stockholder of The Sillerman Companies, Inc. ("TSC"), a principal
stockholder of the Company, that provides for a monthly fee of $30,000
commencing in September 1997. In March 1997, SCMC assigned its rights,
obligations, and duties under the consulting agreement to The Sillerman
Companies, Inc. In October 1997, TSC waived its right to future monthly
payments under the consulting agreement.
F-207
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In February 1997, the Company paid $400,000 to SCMC as an advance against
special advisory services to be provided. In connection with the ProServ
Acquisition and the QBQ Acquisition, TSC received Special Advisory Fees of
$450,000 (of which $400,000 was offset against the amounts previously
advanced), and, in connection with the Tender Offer, an immediately exercisable
option to purchase 200,000 shares of common stock at $7.00 per share. In
addition, the Company paid $75,000 to TSC for expenses.
In consideration for Mr. Sillerman's guarantee of a portion of the $1.5
million letter of credit issued to replace the escrow in connection with the
ProServ Acquisition, the Company, in November 1997, granted Mr. Sillerman an
immediately exercisable, five-year option to purchase 10,000 shares of common
stock at an exercise price per share of $5.00 and paid Mr. Sillerman $75,000,
including $25,000 for his related legal fees and expenses.
In April 1997, in connection with the employment of an officer of the
Company, the Company loaned the officer $446,000 which loan by its terms may be
forgiven. In addition, the officer will over a three year period beginning with
his date of employment receive $100,000 payable in shares of Common Stock.
10. INVESTMENT IN JOINT VENTURE
SMTI and NBC formed a limited liability corporation, Celebrity Golf
Championship, LLC ("CGC") to conduct the annual golfing tournament known as The
Celebrity Golf Championship. Earnings are allocated 75% to NBC and 25% to SMTI
in accordance with the LLC agreement. All profits from CGC are distributed
annually.
Condensed financial information for CGC is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
---------------
(IN THOUSANDS)
<S> <C> <C>
Cash ....................... $ 232
======
Due to SMTI ................ $ 232
======
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
----------- ------
(IN THOUSANDS)
Revenues ................... $3,529 $2,743
Operating expenses ......... 2,699 2,067
----------- -------
Net income ................. $ 830 $ 676
=========== =======
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
The Company leases office space under operating leases that expire through
2008. These operating leases provide for basic annual rents plus escalation
charges. The aggregate future minimum lease payments (including the deferred
rent liability of $696,000) required under these leases, net of noncancelable
sublease income of $2,370,000 as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
<S> <C> <C>
1998 ................ $1,223
1999 ................ 1,124
2000 ................ 1,173
2001 ................ 1,078
2002 ................ 999
Thereafter .......... 3,862
------
$9,459
======
</TABLE>
F-208
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company also rents office space on a month-to-month basis. Rent
expense amounted to $45,000 and $303,000, respectively, for the years ended
December 31, 1996 and 1997.
The Company has notified the landlord for space previously occupied by one
of the Company's subsidiaries that the space has been abandoned. The Company
has recorded a loss of $466,000 for the year ended December 31, 1997 related to
the settlement with the landlord and to write-off the related abandoned fixed
assets.
The Company has entered into employment agreements with key executives for
periods ranging from three to five years.
The Company is subject to certain legal proceedings and claims, which have
arisen, in the ordinary course of its business. In the opinion of management,
settlement of these actions, when ultimately concluded, will not have a
material adverse effect on the Company's financial condition, results of
operations and liquidation.
12. SUBSEQUENT EVENT
In March 1998, the Company entered into a non-binding letter of intent to
acquire Alphabet City Industries and Alphabet City Sports Records, Inc.
(collectively, the "Pending Acquisition"), both of which are sports and music
marketing companies which develop strategic alliances among sports leagues,
music companies and corporate sponsors. The aggregate purchase price for the
Pending Acquisition will be approximately $4.0 million consisting of $3.0
million in cash and 1.0 million in shares of Common Stock. In addition, the
Company may be obligated to make additional payments based upon the financial
performance of the acquired businesses. In connection with entering into the
letter of intent, the Company advanced Alphabet City Industries $350,000.
F-209
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders
Alphabet City Sports Records, Inc. and
Alphabet City Industries, Inc.
We have audited the accompanying combined balance sheet of Alphabet City
Sports Records, Inc. and Alphabet City Industries, Inc. as of December 31,
1997, and the related combined statements of income and cash flows for the year
ended December 31, 1997 and for the period from April 11, 1996 (inception) to
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Alphabet City
Sports Records, Inc. and Alphabet City Industries, Inc. at December 31, 1997
and the combined results of their operations and their cash flows for the year
ended December 31, 1997 and for the period from April 11, 1996 (inception) to
December 31, 1996 in conformity with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
May 21, 1998
F-210
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
-------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash .............................................. $ 651 $ 56,643
Accounts receivable ............................... 527,207 902,561
Prepaid expenses and other current assets ......... 444,684 627,992
---------- ----------
Total current assets ............................... 972,542 1,587,196
Property and equipment, net ........................ 31,340 31,920
Other assets ....................................... 10,669 17,191
---------- ----------
Total assets ....................................... $1,014,551 $1,636,307
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable ...................................... $ -- $ 350,000
Accounts payable .................................. 836,247 990,898
Accrued liabilities ............................... 56,627 254,217
---------- ----------
Total current liabilities .......................... 892,874 1,595,115
Stockholders' equity ............................... 121,677 41,192
---------- ----------
Total liabilities and stockholders' equity ......... $1,014,551 $1,636,307
========== ==========
</TABLE>
See accompanying notes.
F-211
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 11, 1996 SIX MONTHS ENDED
YEAR ENDED (INCEPTION) TO JUNE 30,
DECEMBER 31, DECEMBER 31, -----------------------------
1997 1996 1998 1997
-------------- --------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues ..................................... $2,976,331 $1,316,763 $1,476,069 $1,930,736
Cost of revenues ............................. 1,796,194 1,003,949 968,846 1,192,385
---------- ---------- ---------- ----------
Gross profit ................................. 1,180,137 312,814 507,223 738,351
Operating expenses:
Selling expenses ............................ 424,109 196,984 217,700 199,258
General and administrative expenses ......... 663,836 59,919 350,008 294,701
---------- ---------- ---------- ----------
Total operating expenses .................. 1,087,945 256,903 567,708 493,959
---------- ---------- ---------- ----------
Income from operations ....................... 92,192 55,911 (60,485) 244,392
Other income/(expenses) ...................... 10,944 -- -- (12,676)
---------- ---------- ---------- ----------
Income before income taxes ................... 103,136 55,911 (60,485) 231,716
Provision for income taxes ................... 23,000 14,370 20,000 14,789
---------- ---------- ---------- ----------
Net income ................................... $ 80,136 $ 41,541 $ (80,485) $ 216,927
========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-212
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 11, 1996 SIX MONTHS ENDED
YEAR ENDED (INCEPTION) TO JUNE 30,
DECEMBER 31, DECEMBER 31, -----------------------------
1997 1996 1998 1997
-------------- --------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income ........................................ $ 80,136 $ 41,541 $ (80,485) $ 216,927
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization .................. 3,527 983 4,123 2,068
Changes in operating assets and liabilities:
Accounts receivable ........................... (256,870) (270,337) (375,354) (112,324)
Other current assets .......................... (414,684) (30,000) (183,308) (29,949)
Other assets .................................. (5,081) -- (6,522) (1,775)
Accounts payable .............................. 595,330 240,917 154,651 136,649
Accrued liabilities ........................... 2,472 54,155 197,590 57,256
---------- ---------- ---------- ----------
Net cash provided by (used in) operating
activities ....................................... 4,830 37,259 (289,305) 268,852
---------- ---------- ---------- ----------
INVESTING ACTIVITIES
Purchases of fixed assets ......................... (30,617) (5,233) (4,703) (27,352)
Payment of security deposit ....................... (5,588) -- -- (5,588)
---------- ---------- ---------- ----------
Net cash used in investing activities ............. (36,205) (5,233) (4,703) (32,940)
---------- ---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from loan ................................ -- -- 350,000 --
---------- ---------- ---------- ----------
Net cash provided by financing activities ......... -- -- 350,000 --
---------- ---------- ---------- ----------
Net (decrease) increase in cash ................... (31,375) 32,026 55,992 235,912
Cash at beginning of year ......................... 32,026 -- 651 32,026
---------- ---------- ---------- ----------
Cash at end of year ............................... $ 651 $ 32,026 $ 56,643 $ 267,938
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Income taxes paid ................................. $ 53,740 $ -- $ 15,133 $ --
========== ========== ========== ==========
Interest paid ..................................... $ -- $ -- $ -- $ --
========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-213
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND 1997 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND ORGANIZATION
Alphabet City Sports Records, Inc. and Alphabet City Industries, Inc.
(collectively, the "Company") were organized in New York on April, 11, 1996 and
May 14, 1997, respectively. The Company's main purpose is creating, licensing,
marketing and distributing recorded music through non-music retail outlets in
association with a broad spectrum of professional and college sports teams and
leagues. The Company also provides non-traditional marketing and media services
to various corporations.
PRINCIPLES OF COMBINATION
The accompanying combined financial statements include the accounts of
Alphabet City Sports Records, Inc. and Alphabet City Industries, Inc. The
companies are under common ownership. All significant intercompany transactions
have been eliminated in combination.
REVENUE RECOGNITION
Revenues from the sale of music CDs and cassettes are recognized upon
shipment to the customers. Marketing and media revenues are recognized as
services are provided or upon the delivery to the client of the materials
created for them by the Company.
ADVANCES AND RECOUPABLE COSTS
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 50, Financial Reporting in the Record and Music Industry, advances to
artists and producers are capitalized as an asset when the current popularity
and past performance of the artist or producer provides a sound basis for
estimating the probable future recoupment of such advances from sales. Any
portion of such advances not deemed to be recoupable from future sales is
reserved at the balance sheet date. All other advances which do not meet the
above criteria are expensed when incurred.
LICENSE AGREEMENTS
Certain of the Company's compilation products are master recordings under
license from various sports teams and organizations for the right to use the
names, logos and other material directly related to the team or organization.
Typically, minimum guarantees or non-returnable advances are required to obtain
the licenses and are realized through future sales of the product. The amounts
paid for minimum guarantees or non-returnable advances are charged to expense
over the license term. When anticipated sales appear to be insufficient to
fully recover the minimum guarantees or non-returnable advances, a provision
against current operations is made for anticipated losses.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated on a
straight-line basis over their estimated useful lives ranging from three to
seven years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-214
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND 1997 IS UNAUDITED)
INTERIM FINANCIAL STATEMENTS
The unaudited interim information as of June 30, 1998 and for the six
months ended June 30, 1997 and 1998 has been prepared on the same basis as the
annual financial statements and, in the opinion of the Company's management,
reflects normal recurring adjustments necessary for a fair presentation of the
information for the periods presented. Interim results are not necessarily
indicative of results for a full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
INCOME TAXES
Income taxes are provided on the liability method as required by Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes.
Deferred income taxes (which are not material) reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
The shareholders of Alphabet City Industries, Inc. have elected under
Subchapter S of the Internal Revenue Code to include the Company's income in
their own income for Federal income tax purposes. Alphabet City Sports Records,
Inc. was incorporated as a "C Corporation."
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
-------------- -----------
<S> <C> <C>
Furniture and equipment ............... $ 35,850 $ 40,553
Less accumulated depreciation ......... (4,510) (8,633)
-------- --------
$ 31,340 $ 31,920
======== ========
</TABLE>
3. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
-------------- -----------
<S> <C> <C>
Project costs ................ $352,397 $441,322
Inventory .................... 33,161 50,161
Prepaid expenses ............. 34,076 40,881
Other current assets ......... 25,050 95,628
-------- --------
$444,684 $627,992
======== ========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Company leases its office space. The lease provides for escalations of
rent based upon the increase in certain operating expenses.
F-215
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND 1997 IS UNAUDITED)
Future minimum payments under operating leases consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Year ending December 31:
1998 ........................ $51,200
1999 ........................ 9,200
-------
$60,400
=======
</TABLE>
There was no rent expense in 1996; rent expense was $36,084, $15,055 and
$21,197 for the year ended December 31, 1997 and for the six months ended June
30, 1997 and 1998, respectively.
5. STOCKHOLDERS' EQUITY
Stockholders' equity consists of the following:
<TABLE>
<CAPTION>
COMMON RETAINED DUE FROM
TOTAL STOCK EARNINGS STOCKHOLDERS
------------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Alphabet City Sports Records, Inc.:
Issuance of common stock--1996 ......... $ -- $ 1,000 $ -- $ (1,000)
Net income ............................. 41,541 -- 41,541 --
--------- ------- --------- ---------
Balance at December 31, 1996 ............ 41,541 1,000 41,541 (1,000)
Net income ............................. 40,781 -- 40,781 --
--------- ------- --------- ---------
Balance at December 31, 1997 ............ 82,322 1,000 82,322 (1,000)
--------- ------- --------- ---------
Alphabet City Industries, Inc.:
Issuance of common stock--1997 ......... -- 1,000 -- (1,000)
Net income ............................. 39,355 -- 39,355 --
--------- ------- --------- ---------
Balance at December 31, 1997 ............ 39,355 1,000 39,355 (1,000)
--------- ------- --------- ---------
Combined stockholders' equity at
December 31, 1997 ...................... $ 121,677 $ 2,000 $ 121,677 $ (2,000)
========= ======= ========= =========
</TABLE>
Alphabet City Sports Records, Inc. has 200 shares of no par value common
stock authorized and 20 shares are issued and outstanding. Alphabet City
Industries, Inc. has 200 shares of no par value common stock authorized and 20
shares are issued and outstanding.
6. MAJOR CUSTOMERS/SUPPLIER
For the period from April 11, 1996 to December 31, 1996, approximately 92%
of combined revenues were derived from one customer. For the year ended
December 31, 1997, three customers accounted for approximately 22%, 17%, and
13% of combined revenues, respectively. For the six months ended June 30, 1998
two customers accounted for approximately 52% and 19% of combined revenues,
respectively. For the six months ended June 30, 1997, three customers accounted
for approximately 26%, 23% and 21% of combined revenues respectively.
For the period from April 11, 1996 to December 31, 1996, 100% of the CDs
produced were manufactured by one vendor. For the year ended December 31, 1997,
86% of the CDs produced were manufactured by one vendor. For the six months
ended June 30, 1998, two vendors manufactured 53% and 32%, respectively, of the
CD's produced.
F-216
<PAGE>
ALPHABET CITY SPORTS RECORDS, INC.
ALPHABET CITY INDUSTRIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND 1997 IS UNAUDITED)
7. IMPACT OF YEAR 2000 (UNAUDITED)
The Company has conducted a review of its computer systems to identify the
systems that could be affected by the "Year 2000" issue and has developed an
implementation plan to resolve the issue. The Company presently believes that,
with modifications to existing software, the cost of which is not material to
the results of operations or financial condition of the Company, the Year 2000
problem will not pose significant operational problems for the Company's
computer systems.
8. SUBSEQUENT EVENT
On August 3, 1998, The Marquee Group, Inc. consummated its acquisition of
substantially all of the assets of Alphabet City Industries, Inc. and all of
the outstanding stock of Alphabet City Sports Records, Inc. (collectively, the
"Alphabet City Acquisition"). The aggregate purchase price for the Alphabet
City Acquisition was approximately $3.4 million in cash (excluding assumed
liabilities) and 200,000 shares of The Marquee Group, Inc. common stock.
F-217
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders
Cambridge Holding Corporation, Inc.
We have audited the accompanying consolidated balance sheet of Cambridge
Holding Corporation, Inc. and Subsidiary (the "Company") as of December 31,
1997 and the related consolidated statements of operations and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
December 31, 1997 and the consolidated results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
June 3, 1998
F-218
<PAGE>
CAMBRIDGE HOLDING CORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
-------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash ........................................................ $ 162,781 $ 241,425
Accounts receivable ......................................... 767,204 773,613
Other current assets ........................................ 24,345 13,330
---------- ----------
Total current assets ......................................... 954,330 1,028,368
Property and equipment, net .................................. 4,537 2,186
Other assets ................................................. 62,878 62,878
---------- ----------
Total assets ................................................. $1,021,745 $1,093,432
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................ $ 883,411 $ 723,279
Accrued liabilities ......................................... 25,938 112,153
---------- ----------
Total current liabilities .................................... 909,349 835,432
---------- ----------
Stockholders' equity:
Common stock, $1 par; authorized 25,000 shares; 10,000 shares
issued .................................................... 10,000 10,000
Retained earnings ........................................... 123,552 269,156
---------- ----------
133,552 279,156
Less 6,666 shares held in treasury, at cost ................. (21,156) (21,156)
---------- ----------
Total stockholders' equity ................................... 112,396 258,000
---------- ----------
Total liabilities and stockholders' equity ................... $1,021,745 $1,093,432
========== ==========
</TABLE>
See accompanying notes.
F-219
<PAGE>
CAMBRIDGE HOLDING CORPORATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -------------------------
1997 1998 1997
------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Revenue ...................................... $1,318,763 $691,276 $874,692
Expenses:
Stockholders' salary expense ................ 487,974 182,576 173,880
Other salary expense ........................ 153,536 48,935 58,619
Travel and entertainment .................... 127,458 71,886 65,316
General and administrative expenses ......... 581,520 158,135 273,488
---------- -------- --------
Total expenses ............................... 1,350,488 461,532 571,303
(Loss) income from operations ................ (31,725) 229,744 303,389
Other income:
Interest income ............................. 12,746 860 1,656
Other income ................................ 2,000 -- --
---------- -------- --------
14,746 860 1,656
---------- -------- --------
(Loss) income before income taxes ............ (16,979) 230,604 305,045
Income tax provision ......................... -- 85,000 113,000
---------- -------- --------
Net loss ..................................... $ (16,979) $145,604 $192,045
========== ======== ========
</TABLE>
See accompanying notes.
F-220
<PAGE>
CAMBRIDGE HOLDING CORPORATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
DECEMBER 31, -------------------------
1997 1998 1997
------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................ $ (16,979) $ 145,604 $ 192,045
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation ....................................... 9,405 2,351 4,702
Changes in operating assets and liabilities:
Accounts receivable .............................. (476,866) (6,409) 210,630
Other current assets ............................. (4,800) 11,015 8,615
Other assets ..................................... (2,444) -- --
Accounts payable and accrued liabilities ......... 616,394 (73,917) (11,847)
---------- --------- ---------
Net cash provided by operating activities ........... 124,710 78,644 404,145
---------- --------- ---------
INVESTING ACTIVITIES
Purchase of fixed assets ............................ (2,773) -- (2,773)
---------- --------- ---------
Net cash used in investing activities ............... (2,773) -- (2,773)
---------- --------- ---------
Net increase in cash ................................ 121,937 78,644 401,372
Cash at beginning of year ........................... 40,844 162,781 40,844
---------- --------- ---------
Cash at end of year ................................. $ 162,781 $ 241,425 $ 442,216
========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid ................................... $ 9,222 $ 8,219 $ --
========== ========= =========
Interest paid ....................................... $ -- $ -- $ --
========== ========= =========
</TABLE>
See accompanying notes.
F-221
<PAGE>
CAMBRIDGE HOLDING CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND 1997 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND BASIS OF PRESENTATION
The Company is a full service sports management and marketing firm,
specializing in both the representation of professional athletes and corporate
consulting. The accompanying consolidated financial statements include the
accounts of Cambridge Holding Corporation, Inc. and its wholly owned
subsidiary, Cambridge Sports International, Inc. All significant intercompany
accounts and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
The Company's revenues arise primarily from percentage fees or commissions
received for the negotiation of professional sporting contracts and marketing
and endorsement contracts. The Company recognizes revenue ratably over the
performance period of the associated contract.
ACCOUNTS RECEIVABLE
Accounts receivable at December 31, 1997 and June 30, 1998 include
approximately $731,000 and $582,000, respectively, which represents amounts
billed on behalf of professional athletes relating to sporting contracts and
marketing and endorsement contracts. Such amounts are to be paid, net of the
Company's commission, to the professional athletes upon collection.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated on a
straight-line basis over their estimated useful lives ranging from five to
seven years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INTERIM FINANCIAL STATEMENTS
The unaudited interim information as of June 30, 1998 and for the six
months ended June 30, 1997 and 1998 has been prepared on the same basis as the
annual financial statements and, in the opinion of the Company's management,
reflects normal recurring adjustments necessary for a fair presentation of the
information for the periods presented. Interim results are not necessarily
indicative of results for a full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
INCOME TAXES
Income taxes are provided on the liability method as required by Statement
of Financial Accounting Standard Statement No. 109, "Accounting for Income
Taxes." Deferred income taxes (which are not material), reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes.
F-222
<PAGE>
CAMBRIDGE HOLDING CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND 1997 IS UNAUDITED)
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
-------------- ------------
<S> <C> <C>
Furniture and equipment ............... $ 13,734 $ 13,734
Computer equipment .................... 27,333 27,333
--------- ---------
41,067 41,067
Less accumulated depreciation ......... (36,530) (38,881)
--------- ---------
$ 4,537 $ 2,186
========= =========
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
The Company leases its office space. The lease provides for escalations of
rent based upon the increase in certain operating expenses.
Future minimum payments under noncancelable operating leases is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Years ending December 31:
1998 .................. $25,000
1999 .................. 4,200
-------
$29,200
=======
</TABLE>
Rent expense was $32,878, $16,309, and $14,242 for the year ended December
31, 1997 and for the six months ended June 30, 1997 and 1998, respectively.
4. SIGNIFICANT CLIENTS
For the year ended December 31, 1997, three professional athletes
accounted for approximately 32%, 18% and 11% of consolidated revenue,
respectively.
For the six months ended June 30, 1998 and 1997, two professional athletes
accounted for approximately 12% and 12% and 34% and 6% of consolidated revenue,
respectively.
5. IMPACT OF YEAR 2000 (UNAUDITED)
The Company has conducted a review of its computer systems to identify the
systems that could be effected by the "Year 2000" issue and has developed an
implementation plan to resolve the issue. The Company presently believes that,
with modifications to existing software, the cost of which is not material to
the results of operations or financial condition of the Company, the Year 2000
problem will not pose significant operational problems for the Company's
computer systems.
6. SUBSEQUENT EVENT
On August 6, 1998, The Marquee Group, Inc. consummated its acquisition of
all of the outstanding stock of Cambridge Sports International, Inc. The
aggregate purchase price was approximately $3.5 million in cash and 89,536
shares of The Marquee Group, Inc.'s common stock.
F-223
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and the Shareholders of Park Associates Limited.
We have audited the accompanying balance sheet of Park Associates Limited
("the Company") as of December 31, 1997 and the related statements of profit
and loss account and cash flows for the year ended December 31, 1997 all
expressed in pounds sterling, (together, "the financial statements") which, as
described in the financial statements (pages F-225 to F-235), have been
prepared on the basis of accounting principles generally accepted in the United
Kingdom. These financial statements are the responsibility of the Directors of
the Company. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United Kingdom, which are substantially the same as auditing
standards generally accepted in the United States. These standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Park Associates Limited as
of December 31, 1997, and the results of its operations and its cash flows for
the year ended December 31, 1997, in conformity with accounting principles
generally accepted in the United Kingdom.
United Kingdom accounting principles vary in certain material respects
from accounting principles generally accepted in the United States. The
application of the latter would have affected the determination of
shareholders' equity and financial position as of December 31, 1997, and the
determination of net profit for year ended December 31, 1997 to the extent
summarized in Note 22 to the financial statements.
Grant Thornton
Chartered Accountants
Nottingham
England
May 28, 1998 except for the information presented in the Cash Flow Statement,
notes 13, 14, 15 and 22 for which the date is September 22, 1998.
F-224
<PAGE>
PARK ASSOCIATES LIMITED
BALANCE SHEET
AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
1997
NOTE (pounds sterling)
------ -------------------
<S> <C> <C>
Fixed assets:
Tangible assets ........................................ 7 331,588
Investments ............................................ 8 194
-------
331,782
Current assets:
Debtors ................................................ 9 216,862
Cash at bank and in hand ............................... 87,806
-------
304,668
Creditors: amounts falling due within one year ......... 10 (323,189)
--------
Net current liabilities ................................ (18,521)
--------
Net assets ............................................. 313,261
========
Capital and reserves:
Called up share capital ................................ 11 10,000
Profit and loss account ................................ 12 303,261
--------
Shareholders' fund ..................................... 13 313,261
========
</TABLE>
The accompanying accounting policies and notes form an integral part of this
financial statement.
F-225
<PAGE>
PARK ASSOCIATES LIMITED
PROFIT AND LOSS ACCOUNT
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1997
NOTE (pounds sterling)
------ -------------------
<S> <C> <C>
Commission and fees receivable ........................ 2,971,136
Commission and fees payable ........................... (2,294,181)
----------
676,955
Administrative expenses ............................... (523,039)
Other operating income ................................ 15,400
----------
Operating profit ...................................... 169,316
Net interest .......................................... 3 4,702
----------
Profit on ordinary activities before taxation ......... 174,018
Tax on profit on ordinary activities .................. 5 (44,706)
----------
Profit for the financial year ......................... 13 129,312
Dividends ............................................. 6 (60,000)
----------
Profit transferred to reserves ........................ 12 69,312
==========
</TABLE>
There were no recognized gains or losses other than the profit for the year.
The accompanying accounting policies and notes form an integral part of this
financial statement.
F-226
<PAGE>
PARK ASSOCIATES LIMITED
CASH FLOW STATEMENT
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1997
NOTE (pounds sterling)
------ -------------------
<S> <C> <C>
Net cash inflow from operating activities .............................. 14 249,887
Returns on investments and servicing of finance:
Interest received ...................................................... 4,702
-------
Net cash inflow from returns on investments and servicing of finance ... 4,702
-------
Taxation ............................................................... (47,370)
-------
Capital expenditure and financial investment:
Purchase of tangible fixed assets ...................................... (54,995)
Sale of tangible fixed assets .......................................... 13,700
-------
Net cash outflow from capital expenditure and financial investment ..... (41,295)
-------
Acquisitions and disposals:
Purchase of investments ................................................ (194)
-------
Net cash outflow from acquisitions and disposals ....................... (194)
-------
Equity dividends paid .................................................. (104,000)
--------
Increase in cash ....................................................... 15 61,730
========
</TABLE>
The accompanying accounting policies and notes form an integral part of this
financial statement.
F-227
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
1. PRINCIPAL ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention.
The principal accounting policies of the company have remained unchanged
from the previous year and are set out below.
TURNOVER
Turnover is the gross amount receivable by the company, invoiced on behalf
of the clients when the company acts as agents and for other services provided,
excluding VAT and trade discounts.
INCOME FROM INVESTMENTS
Investment income comprises interest receivable on bank deposits.
DEPRECIATION
Depreciation is calculated to write down the cost less estimated residual
value of all tangible fixed assets other than freehold land and buildings by
the reducing balance method. The rates generally applicable are:
<TABLE>
<CAPTION>
<S> <C>
Motor vehicles ................ 25%
Fixtures and fittings ......... 10%
Computer equipment ............ 33%
</TABLE>
No depreciation is provided on freehold land and buildings as it is the
company's policy to maintain these assets in a continual state of sound repair.
The useful lives of these assets are thus so long and residual values so high
that any depreciation would not be material. Residual values are based on
prices prevailing at the date of acquisition or subsequent valuation. Provision
is made in the profit and loss account for any permanent diminution in value.
INVESTMENTS
Investments are included at cost less amounts written off. Profits or
losses arising from disposals of fixed asset investments are treated as part of
the result from ordinary activities.
DEFERRED TAXATION
Deferred tax is provided using the tax rates estimated to arise when the
timing differences reverse and is accounted for to the extent that it is
probable that a liability or asset will crystallize. Unprovided deferred tax is
disclosed as a contingent liability.
Debit balances arising in respect of advance corporation tax on dividends
payable or proposed are carried forward to the extent that they are expected to
be recoverable.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated at the exchange rate
ruling at the date of the transaction. Monetary assets and liabilities in
foreign currencies are translated at the rates of exchange
F-228
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
ruling at the balance sheet date. Where exchange differences result from the
translation of foreign currency borrowings raised to acquire foreign assets
they are taken to reserves and offset against the differences arising from the
translation of those assets. All other exchange differences are dealt with
through the profit and loss account.
CONTRIBUTIONS TO PENSION FUNDS
DEFINED CONTRIBUTION SCHEME
The pension costs charged against profits represent the amount of the
contributions payable to the scheme in respect of the accounting period.
LEASED ASSETS
All other leases are regarded as operating leases and the payments made
under them are charged to the profit and loss account on a straight-line basis
over the lease term.
2. TURNOVER AND PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
The profit on ordinary activities is stated after:
Auditors' remuneration ......................................... 2,000
Depreciation and amortization:
Tangible fixed assets, owned ................................... 13,990
Other operating lease rentals .................................. 3,000
Rent receivable in respect of:
Operating leases including rents of land and buildings ......... 15,400
</TABLE>
3. NET INTEREST
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Other interest receivable and similar income ......... 4,702
=====
</TABLE>
4. DIRECTORS AND EMPLOYEES
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Staff costs during the year were as follows:
Wages and salaries ......................... 253,818
Social security costs ...................... 26,317
Other pension costs ........................ 76,791
-------
356,926
=======
</TABLE>
F-229
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
The average number of employees of the company during the year was nine.
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Emoluments ...................................................... 112,760
Pension contributions to money purchase pension schemes ......... 57,765
-------
170,525
=======
</TABLE>
During the year two directors participated in money purchase pension schemes.
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
UK Corporation tax at 21.75% ......... 44,706
======
</TABLE>
6. DIVIDENDS
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Ordinary shares -- first interim dividend of (pounds sterling)6 per share .. 60,000
======
</TABLE>
7. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
FREEHOLD
LAND AND MOTOR
BUILDINGS VEHICLES
(pounds sterling) (pounds sterling)
-------------------- --------------------
<S> <C> <C>
Cost:
At January 1, 1997 ........................... 261,382 22,375
Additions .................................... -- 42,250
Disposals .................................... -- (22,375)
------- -------
At December 31, 1997 ......................... 261,382 42,250
Depreciation:
At January 1, 1997 ........................... -- 9,778
Provided in the year ......................... -- 8,787
Eliminated on disposals ...................... -- (10,604)
------- -------
At December 31, 1997 ......................... -- 7,961
------- -------
Net book amount at December 31, 1998 ......... 261,382 34,289
======= =======
<CAPTION>
FIXTURES
AND COMPUTER
FITTINGS EQUIPMENT TOTAL
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Cost:
At January 1, 1997 ........................... 34,343 8,146 326,246
Additions .................................... 9,367 3,378 54,995
Disposals .................................... -- -- (22,375)
------ ----- -------
At December 31, 1997 ......................... 43,710 11,524 358,866
Depreciation:
At January 1, 1997 ........................... 12,106 2,008 23,892
Provided in the year ......................... 2,565 2,638 13,990
Eliminated on disposals ...................... -- -- (10,604)
------ ------ -------
At December 31, 1997 ......................... 14,671 4,646 27,278
------ ------ -------
Net book amount at December 31, 1998 ......... 29,039 6,878 331,588
====== ====== =======
</TABLE>
8. FIXED ASSETS INVESTMENTS
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Cost:
Additions .................................... 194
---
Net book amount at December 31, 1997 ......... 194
===
</TABLE>
F-230
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
9. DEBTORS
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Trade debtors .......................... 199,783
Other debtors .......................... 13,871
Prepayments and accrued income ......... 3,208
-------
216,862
=======
</TABLE>
10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Trade creditors ......................... 196,000
Advance corporation tax ................. 15,000
Corporation tax ......................... 17,036
Social security and other taxes ......... 34,106
Other creditors ......................... 22,606
Loans from directors .................... 25,435
Accruals and deferred income ............ 13,006
-------
323,189
=======
</TABLE>
11. SHARE CAPITAL
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Authorized:
10,000 ordinary shares of (pounds sterling)1 each ......... 10,000
======
Allotted, called up and fully paid:
10,000 ordinary shares of (pounds sterling)1 each ......... 10,000
======
</TABLE>
Allotments during the year:
On July 31, 1997, the company by passing Resolutions at an Extraordinary
General Meeting increased its authorized share capital to (pounds
sterling)10,000 ordinary shares of (pounds sterling)1 each. The company
capitalized (pounds sterling)9,900 standing to the credit of accumulated
reserves and applied these funds to take up the allotment of 9,900 (pounds
sterling)1 ordinary shares at par to its existing shareholders.
12. RESERVES
<TABLE>
<CAPTION>
PROFIT AND
LOSS ACCOUNT
(pounds sterling)
-------------------
<S> <C>
At January 1, 1997 ................... 243,849
Retained profit for the year ......... 69,312
Bonus issue of shares ................ (9,900)
-------
At December 31, 1997 ................. 303,261
=======
</TABLE>
F-231
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
13. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Profit for the financial year .................... 129,312
Dividends ........................................ (60,000)
-------
Net increase in shareholders' funds .............. 69,312
Shareholders' funds at January 1, 1997 ........... 243,949
-------
Shareholders' funds at December 31, 1997 ......... 313,261
=======
</TABLE>
14. NET CASH INFLOW FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Operating profit ............................................. 169,316
Depreciation ................................................. 13,990
Profit on sale of tangible fixed assets- ..................... (1,929)
Increase in debtors .......................................... (84,759)
Increase in creditors ........................................ 153,269
-------
Net cash inflow from continuing operating activities ......... 249,887
=======
</TABLE>
15. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Increase in cash in the year ............. 61,730
------
Movement in net debt in the year ......... 61,730
Net funds at January 1, 1997 ............. 26,076
------
Net funds at December 31, 1997 ........... 87,806
======
</TABLE>
16. ANALYSIS OF CHANGES IN NET DEBT
<TABLE>
<CAPTION>
AT AT
JANUARY 1 DECEMBER 31
1997 CASH FLOW 1997
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Cash in hand, at bank ......... 26,076 61,730 87,806
====== ====== ======
</TABLE>
17. CAPITAL COMMITMENTS
The company had no capital commitments at December 31, 1997.
18. CONTINGENT LIABILITIES
There were no contingent liabilities at December 31, 1997.
F-232
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
19. PENSIONS
Defined Contribution Scheme
The company operates a defined contribution pension scheme for the benefit
of the directors and senior employees. The assets of the scheme are
administered by trustees in a fund independent from those of the company.
20. LEASING COMMITMENTS
Operating lease payments amounting to (pounds sterling)7,750 are due
within one year. The leases to which these amounts relate expire as follows:
<TABLE>
<CAPTION>
1997
LAND AND
BUILDINGS
(pounds sterling)
-------------------
<S> <C>
Between one and five years ......... 7,750
=====
</TABLE>
21. TRANSACTIONS WITH DIRECTORS AND RELATED PARTIES
(a) Transactions with directors
Amounts due in respect of loans, quasi-loans and credit transactions by
directors were as follows:
<TABLE>
<CAPTION>
AMOUNT MAXIMUM
OUTSTANDING LIABILITY
1997 DURING YEAR
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
J R Holmes ......... -- 496
P McGarvey ......... -- 69
</TABLE>
(b) Transactions with other related parties were as follows:
J R Holmes and P McGarvey are partners in Benson McGarvey Henderson and
the inter business transactions in the year were rent receivable and management
charges amounting to (pounds sterling)15,400 and (pounds sterling)8,709.
J R Holmes is a director of both Gary Lineker Promotions Limited and David
Gower Promotions Limited. Park Associates Limited was involved in normal
trading activities with both companies during the year. Commission and fees
receivable in respect of Gary Lineker Promotions Limited being (pounds
sterling)128,175 and David Gower Promotions Limited (pounds sterling)31,222
with debtors due at the period end of (pounds sterling)8,842 and (pounds
sterling)2,181.
22. RECONCILIATION TO US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US
GAAP)
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United Kingdom ("UK
GAAP"), which differ in certain material respects from generally accepted
accounting principles in the United States ("US GAAP"). Such differences
involve methods for measuring the amounts shown in the financial statements, as
well as additional disclosures required by US GAAP.
F-233
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
The following is a summary of the material adjustment to profit on
ordinary activities and shareholders' equity which would have been required in
applying the significant differences between UK and US GAAP.
(a) Reconciliation of profit and loss accounts:
<TABLE>
<CAPTION>
1997
(pounds sterling)
-------------------
<S> <C>
Profit for financial year reported under:
UK GAAP ........................................................... 69,312
Depreciation expense .............................................. (5,420)
------
Net income in accordance with US GAAP ............................. 63,892
======
Earnings per share -- basic and dilutive .......................... 15.12
======
Weighted average shares outstanding -- basic and dilutive ......... 4,225
======
(b) Reconciliation of shareholders' equity
Shareholders' equity per GAAP ..................................... 313,261
Depreciation expense .............................................. (42,005)
=======
Shareholders' equity in accordance with US GAAP ................... 271,256
=======
(c) Changes in shareholders' equity on a US GAAP basis
Shareholders' equity at beginning of year ......................... 207,364
Net income ........................................................ 63,892
=======
Shareholders' equity at end of year ............................... 271,256
=======
</TABLE>
In preparing the summary of differences between UK and US GAAP, management
is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities,
and the estimates of revenue and expenses. Accounting estimates have been
employed in these financial statements to determine reported amounts, including
realizability, useful lives of tangible assets, income taxes and other areas.
Actual results could differ from those estimates.
The following is a description of the US GAAP reconciling item:
Under UK GAAP no depreciation has been provided on freehold buildings as
it is the company's policy to maintain these assets in a continual state of
sound repair. The useful lives of these assets are thus so long and residual
values so high that any depreciation would not be material. Residual value is
based on prices prevailing at the date of acquisition or subsequent valuation.
For US GAAP purposes the acquisition cost of the freehold buildings is
depreciated over 39 years from the original date of purchase.
CASH FLOW INFORMATION
Under UK GAAP, the Cash Flow Statement is presented in accordance with UK
Financial Reporting Standard No. 1, as revised ("FRS 1"). The Statement
prepared under FRS 1 presents substantially the same information as that
required under US GAAP as interpreted by Statement of Financial Accounting
Standard No. 95.
Under UK GAAP, cash flows are presented for operating activities; returns
on investments and servicing of finance; taxation; capital expenditure and
financial investment acquisitions and disposals and equity dividends paid. US
GAAP requires the classification of cash flows as resulting from operating,
investing and financing activities.
F-234
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
Cash flows under UK GAAP in respect of interest received and taxation
would be included within the operating activities. Capital expenditure and
financial investment and cash flows from acquisitions and disposals would be
included within investing activities under US GAAP. Equity dividends paid would
be included within financing activities under US GAAP.
F-235
<PAGE>
PARK ASSOCIATES LIMITED
UNAUDITED INTERIM BALANCE SHEET
<TABLE>
<CAPTION>
AT JUNE 30,
------------------------------------------
1998 1997
NOTE (pounds sterling) (pounds sterling)
------ -------------------- -------------------
<S> <C> <C> <C>
Fixed assets:
Tangible assets ........................................ 2 23,994 330,622
Investments ............................................ -- 194
------ -------
23,994 330,816
------ -------
Current assets:
Debtors ................................................ 274,167 202,572
Cash at bank and in hand ............................... 104,354 98,686
------- -------
378,521 301,258
------- -------
Creditors: amounts falling due within one year ......... (306,437) (305,303)
-------- --------
Net current assets/(liabilities) ....................... 72,084 (4,045)
-------- --------
Total assets less current liabilities .................. 96,078 326,771
Provisions for liabilities and charges ................. (2,437) --
-------- --------
93,641 326,771
======== ========
Capital and reserves:
Called up share capital ................................ 10,000 100
Profit and loss account ................................ 83,641 326,671
-------- --------
Shareholders' funds .................................... 3 93,641 326,771
======== ========
</TABLE>
The accompanying notes form an integral part of these financial statements.
F-236
<PAGE>
PARK ASSOCIATES LIMITED
UNAUDITED INTERIM PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------------------
1998 1997
NOTE (pounds sterling) (pounds sterling)
------ -------------------- -------------------
<S> <C> <C> <C>
Commission and fees receivable ............................... 1,558,380 1,348,246
Commission and fees payable .................................. (1,189,489) (1,069,103)
---------- ----------
368,891 279,143
---------- ----------
Administrative expenses ...................................... 2 (554,533) (179,863)
Other operating income ....................................... 7,260 8,140
---------- ----------
Operating (loss)/profit ...................................... (178,382) 107,420
Net interest ................................................. 4,691 1,856
---------- ----------
(Loss)/profit on ordinary activities before taxation ......... (173,691) 109,276
Tax on (loss)/profit on ordinary activities .................. 18,071 (26,454)
---------- ----------
(Loss)/profit for the financial period ....................... 3 (155,620) 82,822
Dividends .................................................... 3 (64,000) --
---------- ----------
(Loss)/profit transferred to reserves ........................ (219,620) 82,822
========== ==========
</TABLE>
There were no recognized gains or losses other than the (loss)/profit for the
financial periods.
The accompanying notes form an integral part of these financial statements.
F-237
<PAGE>
PARK ASSOCIATES LIMITED
UNAUDITED INTERIM CASH FLOW STATEMENT
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------------------
1998 1997
NOTE (pounds sterling) (pounds sterling)
------ -------------------- -------------------
<S> <C> <C> <C>
Net cash inflow from operating activities ......................... 4 78,625 158,118
Return on investments and servicing of finance:
Interest received ................................................. 4,691 1,856
------ -------
Net cash inflow from returns on investments and servicing of
finance .......................................................... 4,691 1,856
------ -------
Taxation .......................................................... (31,000) (11,000)
------- -------
Capital expenditure and financial investment:
Purchase of tangible fixed assets ................................. (487) (45,870)
Sale of tangible fixed assets ..................................... 28,525 13,700
------- -------
Net cash inflow/(outflow) from capital expenditure and
financial investment ............................................. 28,038 (32,170)
------- -------
Acquisition and disposals:
Purchase of investments ........................................... -- (194)
Sale of investments ............................................... 194 --
------- -------
Net cash inflow/(outflow) from acquisitions and disposals ......... 194 (194)
------- -------
Equity dividends paid ............................................. (64,000) (44,000)
------- -------
Increase in cash .................................................. 5 16,548 72,610
======= =======
</TABLE>
The accompanying notes form an integral part of these financial statements.
F-238
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1998 AND JUNE 30 1997
1. BASIS OF ACCOUNTING
The interim financial statements for the six months to June 30, 1998 and
1997 are unaudited and have been prepared in accordance with the accounting
policies adopted in the financial statements for the year ended December 31,
1997.
2. STAFF COSTS AND DISPOSAL OF FREEHOLD PROPERTY
(a) On June 17, 1998 the company voted to directors, J R Holmes and P
McGarvey, bonuses in equal share by way of transfer of the freehold property at
open market value at that date.
The following amounts are included in Administrative expenses in respect
of the above transaction:
<TABLE>
<CAPTION>
(pounds sterling)
------------------
<S> <C>
Directors' bonuses ............................. 200,000
Loss on disposal of freehold property .......... 61,382
</TABLE>
The net book value of tangible fixed assets at June 30, 1998 has been
reduced by (pounds sterling)261,382 as a result of the above disposal.
(b) Additional costs relating to other staff in respect of bonuses,
pension contributions and redundancy amounting to (pounds sterling)77,365 were
paid in the six months ended June 30, 1998 for which there were no equivalent
costs in the six-month period to June 30, 1997.
3. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
(Loss)/profit for the financial period ................. (155,620) 82,822
Dividends .............................................. (64,000) --
-------- ------
Net (decrease)/increase in shareholders' funds ......... (219,620) 82,822
Shareholders' funds at January 1 ....................... 313,261 243,949
-------- -------
Shareholders' funds at June 30 ......................... 93,641 326,771
======== =======
</TABLE>
4. NET CASH INFLOW FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Operating (loss)/profit ...................................... (178,382) 107,420
Depreciation ................................................. 6,428 5,831
Directors' bonuses by transfer of property ................... 200,000 --
Loss/(profit) on sale of tangible fixed assets ............... 73,128 (1,929)
Increase in debtors .......................................... (22,395) (70,469)
(Decrease)/increase in creditors ............................. (154) 117,265
-------- -------
Net cash inflow from continuing operating activities ......... 78,625 158,118
======== =======
</TABLE>
F-239
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1998 AND JUNE 30 1997
5. ANALYSIS OF CHANGES IN NET DEBT
<TABLE>
<CAPTION>
AT AT
JANUARY 1 JUNE 30
1998 CASH FLOW 1998
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Cash in hand, at bank ......... 87,806 16,548 104,354
====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
AT AT
JANUARY 1 JUNE 30
1997 CASH FLOW 1998
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Cash in hand, at bank ......... 26,076 72,610 98,686
====== ====== ======
</TABLE>
6. RECONCILIATION TO US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(US GAAP)
The US GAAP reconciliations of net profit/(loss) and shareholders' equity
included herein is unaudited. Certain information and disclosures, normally
included in financial statements prepared in accordance with US GAAP, have been
omitted as permitted by such requirements. However, the company believes that
the disclosures made are adequate to make the information presented not
misleading.
SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES ("GAAP")
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United Kingdom ("UK
GAAP"), which differ in certain material respects from generally accepted
accounting principle in the United States ("US GAAP"). Such differences involve
methods for measuring the amounts shown in the financial statements, as well as
additional disclosures required by US GAAP.
The following is a summary of the material adjustments to profit/(loss) on
ordinary activities and shareholders' equity which would have been required in
applying the significant differences between UK and US GAAP.
(a) Reconciliation of profit and loss accounts for the six months ended
June 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Net (loss)/profit per UK GAAP ..................................... (219,620) 82,822
Depreciation expense .............................................. (2,258) (2,710)
Difference in loss on disposal .................................... 44,263 --
-------- ------
Net (loss)/income in accordance with US GAAP ...................... (177,615) 80,112
======== ======
(Loss)/earnings per share --basic and dilutive .................... (17.76) 801.12
======== ======
Weighted average shares outstanding -- basic and dilutive ......... 10,000 100
======== ======
</TABLE>
F-240
<PAGE>
PARK ASSOCIATES LIMITED
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1998 AND JUNE 30 1997
6. RECONCILIATION TO US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(US GAAP) (CONTINUED)
(b) Reconciliation of shareholders' equity at June 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Shareholders' equity per UK GAAP ........................ 93,641 326,771
Depreciation expense .................................... (44,263) (39,295)
Difference in loss on disposal .......................... 44,263 --
------- -------
Shareholders' equity in accordance with US GAAP ......... 93,641 287,476
======= =======
</TABLE>
(c) Changes in Shareholders' equity on a US GAAP basis:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Shareholders' equity at beginning of period ......... 271,256 207,364
Net (loss)/profit ................................... (177,615) 80,112
-------- -------
Shareholders' equity at end of period ............... 93,641 287,476
======== =======
</TABLE>
In preparing the summary of differences between UK and US GAAP, management
is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities,
and the estimates of revenue and expenses. Accounting estimates have been
employed in these financial statements to determine reported amounts, including
realizability, useful lives of tangible assets, income taxes and other areas.
Actual results could differ from those estimates.
The following is a description of the US GAAP reconciling item:
Under UK GAAP no depreciation has been provided on freehold buildings as
it is the company's policy to maintain these assets in a continual state of
sound repair. The useful lives of these assets are thus so long and residual
values so high that any depreciation would not be material. Residual value is
based on prices prevailing at the date of acquisition or subsequent valuation.
For US GAAP purposes the acquisition cost of the freehold buildings is
depreciated over 39 years from the original date of purchase.
CASH FLOW INFORMATION
Under UK GAAP, the Cash Flow Statement is presented in accordance with UK
Financial Reporting Standard No. 1, as revised ("FRS 1"). The Statement
prepared under FRS 1 presents substantially the same information as that
required under US GAAP as interpreted by SFAS No. 95.
Under UK GAAP, cash flows are presented for operating activities; returns
on investments and servicing of finance; taxation; capital expenditure and
financial investment acquisitions and disposals and equity dividends paid. US
GAAP requires the classification of cash flows as resulting from operating,
investing and financing activities.
Cash flows under UK GAAP in respect of interest received and taxation
would be included within the operating activities. Capital expenditure and
financial investment and cash flows from acquisitions and disposals would be
included within investing activities under US GAAP. Equity dividends paid would
be included within financing activities under US GAAP.
F-241
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
The Marquee Group, Inc.
We have audited the accompanying combined balance sheets of Tollin-Robbins
Entertainment as of December 31, 1997 and 1996, and the related combined
statements of operations and comprehensive income, stockholders' equity
(deficit), and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of
Tollin-Robbins Entertainment at December 31, 1997 and 1996, and the results of
its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
July 6, 1998
F-242
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
COMBINED BALANCE SHEETS
(000'S OMITTED)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------- JUNE 30
1997 1996 1998
--------- ----------- ------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................... $ 102 $ 712 $ 2,243
Marketable securities ....................................... -- -- 723
Producer fee receivable ..................................... -- -- 130
Management fee receivable ................................... 60 -- --
Advances to stockholders .................................... -- -- 132
Deferred income tax ......................................... -- 80 --
Other ....................................................... 8 -- 59
------ ------- -------
Total current assets ......................................... 170 792 3,287
Property and equipment, net .................................. 310 321 298
------ ------- -------
Total assets ................................................. $ 480 $ 1,113 $ 3,585
====== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses ....................... $ 73 $ 68 $ 99
Payable to stockholders ..................................... 388 840 1,536
Deferred revenue ............................................ 152 762 77
------ ------- -------
Total current liabilities .................................... 613 1,670 1,712
Stockholders' equity (deficit):
Capital stock ............................................... 4 4 4
Accumulated equity (deficit) ................................ (137) (561) 1,880
Accumulated other comprehensive income (loss) ............... -- -- (11)
------ ------- -------
Total stockholders' equity (deficit) ......................... (133) (557) 1,873
------ ------- -------
Total liabilities and stockholders' equity (deficit) ......... $ 480 $ 1,113 $ 3,585
====== ======= =======
</TABLE>
See accompanying notes.
F-243
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
COMBINED STATEMENTS OF OPERATIONS
(000'S OMITTED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED
31 JUNE 30
--------------------- ---------------------
1997 1996 1998 1997
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Producer fees .......................... $4,284 $3,133 $3,955 $2,270
Post-production revenue ................ 595 490 247 268
Management services .................... 60 -- 40 --
Other .................................. 134 52 50 15
------ ------ ------ ------
Total revenues .......................... 5,073 3,675 4,292 2,553
Operating expenses:
Compensation to stockholders and related
benefits ............................. 3,223 3,551 1,600 1,612
Post-production expenses ............... 374 274 111 166
General and administrative ............. 846 482 529 363
Depreciation expense ................... 75 50 35 35
Other expenses ......................... 51 60 -- --
------ ------ ------ ------
Total operating expenses ................ 4,569 4,417 2,275 2,176
Income (loss) before income tax provision
(benefit) .............................. 504 (742) 2,017 377
Income tax provision (benefit) .......... 80 (80) -- 52
------ ------ ------ ------
Net income (loss) ....................... $ 424 $ (662) $2,017 $ 325
====== ====== ====== ======
</TABLE>
See accompanying notes.
F-244
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ACCUMULATED
RETAINED OTHER
COMMON EARNINGS COMPREHENSIVE
STOCK (DEFICIT) INCOME TOTAL
-------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1996 ................... $ 4 $ 101 $ -- $ 105
Net loss .................................... -- (662) (662)
--- ------- -------
Balance at December 31, 1996 ................. 4 (561) -- (557)
Net income .................................. -- 424 -- 424
--- ------- ------ -------
Balance at December 31, 1997 ................. 4 (137) -- (133)
Net income (unaudited) ...................... -- 2,017 -- 2,006
Other comprehensive income (loss)
(unaudited) ............................... -- -- (11) (11)
--- ------- ------ -------
Balance at June 30, 1998 (unaudited) ......... $ 4 $ 1,880 $ (11) $ 1,873
=== ======= ====== =======
</TABLE>
See accompanying notes.
F-245
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
COMBINED STATEMENTS OF CASH FLOWS
(000'S OMITTED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
----------------------- -------------------------
1997 1996 1998 1997
---------- ---------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) .................................. $ 424 $ (662) $ 2,017 $ 325
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization ..................... 75 50 35 35
Loss on disposal of fixed assets .................. 51 60 -- --
Deferred income tax ............................... 80 (80) -- 52
Changes in operating assets and liabilities:
Producer fee receivable ......................... -- -- (130) --
Management fee receivable ....................... (60) -- 60 --
Advances to stockholders ........................ -- -- (132) (330)
Other assets .................................... (8) 4 (51) --
Accounts payable and accrued expenses ........... 5 (104) 26 23
Payable to stockholders ......................... (452) 681 1,148 772
Deferred revenue ................................ (610) 903 (75) (469)
------- ------ ------- -------
Net cash provided by (used in) operating
activities ........................................ (495) 852 2,898 (392)
INVESTING ACTIVITIES
Purchases of marketable securities ................. -- -- (734) --
Purchases of equipment ............................. (115) (336) (23) (101)
------- ------ ------- -------
Net cash used in investing activities .............. (115) (336) (757) (101)
------- ------ ------- -------
Increase (decrease) in cash ........................ (610) 516 2,141 307
Cash and cash equivalents at beginning of
period ............................................ 712 196 102 712
------- ------ ------- -------
Cash and cash equivalents at end of period ......... $ 102 $ 712 $ 2,243 $ 1,019
======= ====== ======= =======
</TABLE>
See accompanying notes.
F-246
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION FOR THE PERIOD ENDED JUNE 30, 1997
AND SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION AND BUSINESS ACTIVITIES
The combined financial statements of Tollin-Robbins Entertainment are
comprised of the following entities: Tollin-Robbins Productions; Halcyon Days
Productions, Inc. (Halcyon); Robbins Entertainment Group, Inc. (Robbins); and
Tollin-Robbins Management (TRM) (collectively referred to herein as the
Company). All significant intercompany accounts and transactions have been
eliminated.
Tollin-Robbins Productions, a California General Partnership (the
Partnership), was formed in November 1993. Halcyon and Robbins are the equal
partners of the Partnership. Profit and losses are allocated equally to each
partner. The Partnership is engaged in the business of providing executive
producer, director, writer, post-production, and other creative services to
owners and distributors of entertainment programming.
Halcyon was incorporated in California in November 1990, and is an S
Corporation under the Internal Revenue Code; Mr. Tollin is the sole stockholder
of this entity. Robbins was initially incorporated in California in May 1991 as
a C Corporation and elected, effective January 1, 1998, an S Corporation status
under the Internal Revenue Code. Mr. Robbins is the sole stockholder of this
entity. These two entities each receive their 50% share of the results of
operations generated by the Partnership.
TRM, a California limited liability company which was formed in April
1997, is engaged in the business of providing management services to artists.
Messrs. Tollin and Robbins are the sole members of TRM. TRM typically receives
a percentage of the compensation paid to the artists it represents.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited combined financial statements at June 30, 1998
and for the six month periods ended June 30, 1998 and 1997 have been prepared
on the same basis as the audited combined financial statements and, in the
opinion of management, include all adjustments (consisting only of normal and
recurring accruals) necessary to present fairly the combined financial
information set forth therein, in accordance with generally accepted accounting
principles. The results of operations for the six month period ended June 30,
1998 are not necessarily indicative of the results to be expected for the
entire fiscal year.
SIGNIFICANT CUSTOMER
Approximately 79% in 1997 and 87% in 1996 of the Company's total producer
fees and post-production revenues shown in the accompanying combined statement
of operations was received from Nickelodeon/MTV Networks and affiliated
companies.
REVENUE RECOGNITION
Executive producer and other creative services revenue is recognized as
the related production services are rendered. Pursuant to a two-year production
services agreement with Nickelodeon/MTV Networks (Agreement) which commenced as
of February 1, 1996, the Partnership will receive $1,750,000 per year in
guaranteed payments (payable in equal bi-monthly installments over the term).
Such revenue is recognized ratably over the Agreement's term. In addition to
the guaranteed
F-247
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE PERIOD ENDED JUNE 30, 1997
AND SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)
payments, the Partnership received a signing bonus of $500,000, which is being
recognized ratably over the original two year term. Both parties to the
Agreement have agreed to extend the term to a third year (February 1, 1998 --
January 31, 1999). The Partnership will receive a guaranteed minimum payment of
$2,500,000 for its services over the third year.
Management fee commissions are recognized as services are rendered by the
related artists who are represented by TRM.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less and investments in money market
accounts to be cash equivalents.
MARKETABLE SECURITIES
Marketable securities are accounted for using Statement of Financial
Account Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." At June 30, 1998, the Company's marketable securities,
all of which are classified as available-for sale as defined by SFAS 115,
consist primarily of municipal securities. Pursuant to SFAS 115, such
investments are stated at market value, and unrealized gains and losses on such
securities are reflected, net of tax, in other comprehensive income or loss.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method, generally ranging from
seven to ten years.
INCOME TAXES
Income taxes are accounted for using Statement of Financial Account
Standards No. 109, "Accounting for Income Taxes." Under this method, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
COMPREHENSIVE INCOME
Effective January 1, 1998 the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income." SFAS 130
established new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. SFAS 130 requires unrealized
gains and losses on the Company's available-for-sale securities to be included
in other comprehensive income.
For the six month period ended June 30, 1998, the Company's comprehensive
income was $2,006,000. The comprehensive income differs from the net income in
the first six months of 1998 due to the inclusion of the Company's unrealized
loss on marketable securities in its comprehensive income.
F-248
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE PERIOD ENDED JUNE 30, 1997
AND SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. MARKETABLE SECURITIES (UNAUDITED)
At June 30, 1998, the Company has classified all investments as
available-for-sale.
The amortized cost, gross unrealized loss and fair value of the marketable
securities are as follows (in 000's):
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST LOSS VALUE
----------- ------------ ------
<S> <C> <C> <C>
Municipal obligations ......... $734 $ (11) $723
</TABLE>
Contractual maturities of marketable debt securities at June 30, 1998 are
as follows (in 000's):
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- ------
<S> <C> <C>
Due in one year or less ....................... $102 $100
Due after one year through five years ......... 160 156
Due after 10 years ............................ 472 467
---- ----
Total debt securities ......................... $734 $723
==== ====
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment is comprised of the following (in 000's):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1996 1998
--------- --------- ------------
(Unaudited)
<S> <C> <C> <C>
Equipment ............................. $ 185 $ 167 $ 208
Furniture and fixtures ................ 306 279 306
------ ------ ------
491 446 514
Less accumulated depreciation ......... (181) (125) (216)
------ ------ ------
$ 310 $ 321 $ 298
====== ====== ======
</TABLE>
4. STOCKHOLDERS' EQUITY (DEFICIT)
The Company's capital stock consists of the common stock of Halcyon and
Robbins. The partners' equity of the Partnership has been eliminated.
At December 31, 1997 and 1996, there were 1,000 shares of common stock
authorized, issued and outstanding of Halcyon, and 3,000 shares of common stock
authorized, issued and outstanding of Robbins. All shares of common stock were
issued at $1 per share.
F-249
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE PERIOD ENDED JUNE 30, 1997
AND SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)
5. INCOME TAXES
Partnerships and limited liability companies are not subject to federal or
state income taxes and, accordingly, no provision for income taxes has been
provided for the Partnership and TRM. The partners of the Partnership and
members of TRM are required to report their proportional share of gains,
losses, credits and deductions on their respective income tax returns.
Halcyon is an S Corporation under Section 1361 of the Internal Revenue
Code. Under the provisions of the Internal Revenue Code, federal and state
taxes based on income for S Corporations are generally the direct liability of
the stockholders. Therefore, no federal and state tax provision has been
provided on S Corporation earnings other than certain state minimum taxes based
on income.
Robbins was a C Corporation as of December 31, 1997 and 1996 and,
accordingly, was subject to federal and state taxes. Robbins elected S
Corporation status effective January 1, 1998; accordingly, no federal and state
tax provision has been provided for the three months ended June 30, 1998 other
than certain state minimum taxes based on income.
The Company's provision for income taxes (benefit) consists of the
applicable amounts based on Robbins' result of operations and was as follows
(in 000's):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
------------------ JUNE 30,
1997 1996 1997
------ --------- ------------
(Unaudited)
<S> <C> <C> <C>
Deferred ..........
Federal ............ $50 $ (50) $33
State .............. 30 (30) 19
--- ----- ---
$80 $ (80) $52
=== ===== ===
</TABLE>
A reconciliation from the provision for income taxes based on the federal
statutory rate of 15% to the actual rate follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, SIX MONTHS
---------------------- ENDED
1997 1996 JUNE 30, 1997
---------- --------- --------------
(Unaudited)
<S> <C> <C> <C>
Statutory rate applied to income before income taxes...... 15.0% 15.0% 15.0%
State income taxes, net of federal income tax benefit..... 7.5 7.5 7.5
Income from non-taxable entities ......................... (12.6) (8.4) (11.9)
Other non-deductible expenses ............................ 0.5 0.5 0.4
Other, net ............................................... 5.5 (3.8) 2.8
----- ---- -----
15.9% 10.8% 13.8%
===== ==== =====
</TABLE>
The Company's deferred tax assets as of December 31, 1996 was principally
comprised of deferred revenue.
6. DEFERRED REVENUE
Deferred revenue consists of advances from television networks and
production companies for services not yet rendered.
F-250
<PAGE>
TOLLIN-ROBBINS ENTERTAINMENT
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE PERIOD ENDED JUNE 30, 1997
AND SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)
7. COMMITMENT AND CONTINGENCIES
The Company rents its office facilities on a month-to-month basis from an
entity controlled by Messrs. Tollin and Robbins, the owners of the building.
The monthly rent is $3,750.
8. YEAR 2000 (UNAUDITED)
Until recently, computer programs were written to store only two digits of
date-related information in order to more efficiently handle and store data.
Such programs are unable to properly distinguish between the year 1900 and the
year 2000. This situation is frequently referred to as the "Year 2000 problem."
The Company believes that all of its own computer software is year 2000
compliant and that it will not need to make significant modifications or
replacements to its software so that its computer systems will function
properly with respect to dates in the year 2000 and beyond.
F-251
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and the shareholders of Tony Stephens Associates
Limited
We have audited the accompanying balance sheet of Tony Stephens Associates
Limited ("the Company") as of April 30, 1998 and the related statements of
profit and loss account and cash flows for the year ended April 30, 1998 all
expressed in pounds sterling, (together, "the financial statements") which, as
described in the financial statements (pages F-252 to F-257), have been
prepared on the basis of accounting principles generally accepted in the United
Kingdom. These financial statements are the responsibility of the Directors of
the Company. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the
United Kingdom, which are substantially the same as auditing standards
generally accepted in the United States. These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tony Stephens Associates
Limited as of April 30, 1998, and the results of its operations and its cash
flows for the year ended April 30, 1998, in conformity with accounting
principles generally accepted in the United Kingdom.
United Kingdom accounting principles vary in certain respects from
accounting principles generally accepted in the United States. The application
of the latter would have affected the determination of shareholders' equity and
financial position as of April 30, 1998 and the determination of net profit for
year ended April 30, 1998 to the extent summarised in Note 11 to the financial
statements.
Richard E Woodhall
Chartered Accountants and Registered Auditors
Birmingham
England
July 14, 1998 except for information presented in the Cash Flow Statement, and
notes 10 and 11 which the date is October 2, 1998.
F-252
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
ABBREVIATED BALANCE SHEET
AT 30 APRIL 1998
<TABLE>
<CAPTION>
1998
NOTES (pounds sterling)000
------- ----------------------
<S> <C> <C>
FIXED ASSETS ...........................................
Tangible assets ........................................ 4 31
--
CURRENT ASSETS
Debtors ................................................ 235
Cash at bank ........................................... 97
---
332
CREDITORS: amounts falling due within one year ......... 5 (326)
----
NET CURRENT ASSETS ..................................... 6
----
TOTAL ASSETS LESS CURRENT LIABILITIES .................. 37
====
CAPITAL AND RESERVES
Called up share capital ................................ 6 1
Profit and loss account ................................ 7 36
----
8 37
====
</TABLE>
The accompanying notes form an integral part of the financial statements.
F-253
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 APRIL 1998
<TABLE>
<CAPTION>
1998
NOTES (pounds sterling)000
------- ----------------------
<S> <C> <C>
TURNOVER .............................................. 3,106
Cost of sales ......................................... (2,646)
------
GROSS PROFIT .......................................... 460
Administrative expenses ............................... (206)
------
OPERATING PROFIT ...................................... 2 254
Interest received ..................................... 9
------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION ......... 263
Taxation .............................................. 3 (70)
------
PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION .......... 193
Retained profit brought forward ....................... 7 33
------
226
Dividends paid ........................................ (190)
------
RETAINED PROFIT CARRIED FORWARD ....................... 7 36
======
</TABLE>
There were no recognised gains or losses other than the profit for the
financial period.
The accompanying notes form an integral part of the financial statements.
F-254
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 1998
<TABLE>
<CAPTION>
1998
NOTES (pounds sterling)000
----------- ------------------------
<S> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES 10(a) 261
---
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received ................................. 9
---
TAXATION
Corporation tax paid .............................. (76)
---
CAPITAL EXPENDITURE
Payments to acquire tangible fixed assets ......... (17)
---
EQUITY DIVIDENDS PAID
(190)
----
DECREASE IN CASH .................................. 10(b) (13)
====
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1998
(pounds sterling)000
------------------------
Decrease in cash in the year ...................... 10(b) (13)
------
MOVEMENT IN NET FUNDS IN THE YEAR ................. (13)
NET FUNDS AT 1 MAY 1997 ........................... 110
------
NET FUNDS AT 30 APRIL 1998 ........................ 97
======
</TABLE>
The accompanying notes form an integral part of the financial statements.
F-255
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE ACCOUNTS
AT 30 APRIL 1998
1. ACCOUNTING POLICIES
ACCOUNTING CONVENTION
The accounts have been prepared under the historical cost convention and
in accordance with the Financial Reporting Standard for Small Entities.
TURNOVER
Turnover represents net invoiced services, excluding VAT.
DEPRECIATION
Depreciation is provided on all tangible fixed assets, at rates calculated
to write off the cost evenly over a period which does not exceed anticipated
useful life.
Equipment and vehicles -- over 4 years.
PENSION COSTS
The Company operates a money purchase pension scheme and contributions are
charged to the profit and loss account in the year in which they are paid.
OPERATING LEASES
Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged to profit
and loss account as incurred.
2. OPERATING PROFIT
This is stated after charging:
<TABLE>
<CAPTION>
1998
(pounds sterling)000
----------------------
<S> <C>
Depreciation of tangible fixed assets ......... 13
Auditors' remuneration ........................ 2
Directors' remuneration ....................... 109
Operating lease rentals ....................... 8
Pension costs ................................. 40
===
</TABLE>
During the year retirement benefits were accruing to 2 directors (1997 --
2) in respect of money purchase pension schemes.
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1998
(pounds sterling)000
----------------------
<S> <C>
UK corporation tax ......... 70
==
</TABLE>
F-256
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE ACCOUNTS
AT 30 APRIL 1998
4. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
VEHICLES AND
EQUIPMENT
(pounds sterling)000
----------------------
<S> <C>
Cost:
At 1 May 1997 ........................... 43
Additions ............................... 17
--
At 30 April 1998 ........................ 60
--
Depreciation:
At 1 May 1997 ........................... 16
Provided in the year .................... 13
--
At 30 April 1998 ........................ 29
--
Net book value at 30 April 1998 ......... 31
==
</TABLE>
5. CREDITORS: amounts falling due within one year
<TABLE>
<CAPTION>
1998
(pounds sterling)000
----------------------
<S> <C>
Trade creditors .................... 272
Corporation tax .................... 24
Tax and National Insurance ......... 30
---
326
===
</TABLE>
6. SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1998
NO. (pounds sterling)000
------- ----------------------
<S> <C> <C>
Authorised ordinary shares of (pounds sterling)1 each ......... 1,000 1,000
===== =====
</TABLE>
<TABLE>
<CAPTION>
1998 1998
NO. (pounds sterling)
------ -------------------
<S> <C> <C>
Allotted, called up and fully paid ordinary shares of (pounds sterling)1 each .. 500 500
=== ===
</TABLE>
7. RESERVES
<TABLE>
<CAPTION>
PROFIT AND
LOSS ACCOUNT
(pounds sterling)000
----------------------
<S> <C>
At 1 May 1997 ........................ 33
Retained profit for the year ......... 3
--
At 30 April 1998 ..................... 36
==
</TABLE>
F-257
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE ACCOUNTS
AT 30 APRIL 1998
8. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1998
(pounds sterling)000
----------------------
<S> <C>
Profit for the year .......................... 193
Dividends .................................... (190)
----
Net increase in shareholders' funds .......... 3
Shareholders' funds at 1 May 1997 ............ 34
----
Shareholders' funds at 30 April 1998 ......... 37
====
</TABLE>
9. LEASING COMMITMENTS
As at 30 April 1998 the company had annual commitments of (pounds
sterling)8,319 and on a non con-cancellable operating lease which expires in
January 2000.
10. NOTES TO THE STATEMENT OF CASH FLOWS
a) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1998
(pounds sterling)000
----------------------
<S> <C>
Operating profit .................................. 254
Depreciation of tangible fixed assets ............. 13
Increase in debtors ............................... (210)
Increase in creditors ............................. 204
----
Net cash inflow from operating activities ......... 261
====
</TABLE>
b) Analysis of changes in net funds
<TABLE>
<CAPTION>
AT 1 MAY AT 30 APRIL
1997 CASH FLOW 1998
(pounds sterling)000 (pounds sterling)000 (pounds sterling)000
----------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Cash at bank and in hand ......... 110 (13) 97
=== === ==
</TABLE>
11. RECONCILIATION TO US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP)
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United Kingdom ("UK
GAAP"), which differ in certain respects from generally accepted accounting
principles in the United States ("US GAAP"). Such differences involve methods
for measuring the amounts shown in the financial statements as well as
additional disclosures required by US GAAP.
There are no material adjustments to profit for the year, cash flows and
shareholders' equity in applying the significant differences between UK and US
GAAP.
F-258
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
UNAUDITED INTERIM BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------
1998 1997
NOTES (pounds sterling)000 (pounds sterling)000
------- ----------------------- ----------------------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets ........................................ 6 32 25
-- --
CURRENT ASSETS
Debtors ................................................ 7 334 84
Cash at bank and in hand ............................... 28 263
--- ---
362 347
CREDITORS: amounts falling due within one year ......... 8 (308) (331)
---- ----
NET CURRENT ASSETS ..................................... 54 16
---- ----
TOTAL ASSETS LESS CURRENT LIABILITIES .................. 86 41
==== ====
CAPITAL AND RESERVES
Called up share capital ................................ 9 1 1
Profit and loss account ................................ 10 85 40
---- ----
SHAREHOLDERS' FUNDS .................................... 11 86 41
==== ====
</TABLE>
The accompanying notes form an integral part of these financial statements.
F-259
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
UNAUDITED INTERIM PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------
1998 1997
NOTES (pounds sterling)000 (pounds sterling)000
------- ----------------------- ----------------------
<S> <C> <C> <C>
COMMISSIONS AND FEES RECEIVABLE .............. 1,891 1,118
Commissions and fees payable ................. (1,612) (881)
------ -----
279 237
Administrative expenses ...................... (102) (89)
------ -----
OPERATING PROFIT ............................. 2 177 148
Bank interest receivable ..................... 5 3
------ -----
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION .................................... 182 151
Tax on profit on ordinary activities ......... 5 (52) (38)
------ -----
PROFIT FOR THE PERIOD ........................ 130 113
Dividends .................................... (64) (83)
------ -----
PROFIT RETAINED FOR THE PERIOD ............... 66 30
====== =====
</TABLE>
There were no recognised gains or losses other than the profit for the
financial period.
The accompanying notes form an integral part of these financial statements.
F-260
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
UNAUDITED INTERIM STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------------------
1998 1997
NOTES (pounds sterling)000 (pounds sterling)000
----------- ----------------------- --------------------------
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES ............ 14(a) 86 110
---- ----
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received .................................... 5 3
---- ----
TAXATION
Corporation tax paid ................................. (54) (46)
---- ----
CAPITAL EXPENDITURE
Payments to acquire tangible fixed assets ............ (18) (6)
Receipts from sales of tangible fixed assets ......... -- 19
---- ----
(18) 13
---- ----
EQUITY DIVIDENDS PAID ................................ (120) (120)
---- ----
DECREASE IN CASH ..................................... 14(b) (101) (40)
==== ====
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- --------------------------
Decrease in cash in period ........................... 14(b) (101) (40)
---- ----
MOVEMENTS IN NET FUNDS IN THE YEAR ................... (101) (40)
NET FUNDS AT 1 JANUARY ............................... 129 303
---- ----
NET FUNDS AT 30 JUNE ................................. 28 263
==== ====
</TABLE>
The accompanying notes form an integral part of these financial statements.
F-261
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE UNAUDITED INTERIM ACCOUNTS
AT 30 JUNE 1998
1. ACCOUNTING POLICIES
BASIS FOR PREPARATION
The financial statements have been prepared under the historical cost
convention.
The principal accounting policies of the company are set out below.
TURNOVER
Turnover is gross amount receivable by the company, invoiced on behalf of
clients when the company acts as agents and for other services provided,
excluding VAT and trade discounts.
DEPRECIATION
Depreciation is provided on all tangible fixed assets, at rates calculated
to write off the cost, less estimated residual value based on prices prevailing
at the date of acquisition, of each asset evenly over its expected useful life,
as follows:
Equipment and vehicles - over 4 years
DEFERRED TAXATION
Deferred taxation is provided using the liability method on all timing
differences which are expected to reverse in the future without being replaced,
calculated at the rate at which it is anticipated the timing differences will
reverse. Advance corporation tax which is expected to be recoverable in the
future is deducted from the deferred taxation balance.
Deferred tax assets are only recognised if recovery without replacement by
equivalent debit balances is reasonably certain.
CONTRIBUTIONS TO PENSION FUNDS
The pension costs for the money purchase scheme charged against profits
represent the amount of the contributions payable to the scheme in respect of
the accounting period.
LEASED ASSETS
All other leases are regarded as operating leases and the payments made
under them are charged to the profit and loss account on a straight-line basis
over the lease term.
2. OPERATING PROFIT
This is stated after charging:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- ----------------------
<S> <C> <C>
Auditors' remuneration ..................... 1 1
Depreciation of owned fixed assets ......... 7 5
Other operating lease rentals .............. 4 4
======================= ======================
</TABLE>
F-262
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE UNAUDITED INTERIM ACCOUNTS (CONTINUED)
AT 30 JUNE 1998
3. STAFF COSTS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- ----------------------
<S> <C> <C>
Wages and salaries ............ 49 31
Social security costs ......... 6 3
Other pension costs ........... 15 25
-- --
70 59
== ==
</TABLE>
The average number of employees of the company during the period was 5
(1997 - 4).
4. DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
-------------------- --------------------
<S> <C> <C>
Emoluments ...................................................... 35 27
Pension contributions to money purchase pension schemes ......... 14 24
-- --
49 51
== ==
</TABLE>
During the period 2 directors (1997 -2 directors) participated in money
purchase pension schemes.
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
-------------------- --------------------
<S> <C> <C>
UK corporation tax ......... 52 38
== ==
</TABLE>
6. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
MOTOR
VEHICLES
(pounds sterling)000
-----------------------
<S> <C>
Cost
At 1 January 1998 ....................... 16
Additions ............................... 18
--
At 30 June 1998 ......................... 34
--
Depreciation
At 1 January 1998 ....................... 10
Provided in the period .................. 4
--
At 30 June 1998 ......................... 14
--
Net book amount at 30 June 1998 ......... 20
==
Net book amount at 30 June 1997 ......... 7
==
<CAPTION>
FIXTURES
AND COMPUTER
FITTINGS EQUIPMENT TOTAL
(pounds sterling)000 (pounds sterling)000 (pounds sterling)000
----------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Cost
At 1 January 1998 ....................... 10 17 43
Additions ............................... -- -- 18
-- -- --
At 30 June 1998 ......................... 10 17 61
-- -- --
Depreciation
At 1 January 1998 ....................... 4 8 22
Provided in the period .................. 1 2 7
-- -- --
At 30 June 1998 ......................... 5 10 29
-- -- --
Net book amount at 30 June 1998 ......... 5 7 32
== == ==
Net book amount at 30 June 1997 ......... 7 11 25
== == ==
</TABLE>
F-263
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE UNAUDITED INTERIM ACCOUNTS (CONTINUED)
AT 30 JUNE 1998
7. DEBTORS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
-------------------- --------------------
<S> <C> <C>
Trade debtors .......................... 234 74
Loans to directors ..................... 100 --
Prepayments and accrued income ......... -- 10
--- --
334 84
=== ==
</TABLE>
8. CREDITORS: amounts falling due within one year
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- ----------------------
<S> <C> <C>
Trade creditors ......................... 221 254
Corporation tax ......................... 39 29
Social security and other taxes ......... 45 32
Other creditors ......................... 3 --
Dividend payable ........................ -- 16
--- ---
308 331
=== ===
</TABLE>
9. SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1997
NO. NO.
------- ------
<S> <C> <C>
Authorised ordinary shares of (pounds sterling)1 each ......... 1,000 1,000
===== =====
</TABLE>
<TABLE>
<CAPTION>
1998 1997
NO. NO.
------ ------
<S> <C> <C>
Allotted, called up and full paid ordinary shares of (pounds sterling)1
each ................................................................. 500 500
=== ===
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
----------------- -----------------
<S> <C> <C>
Allotted, called up and full paid ordinary shares of (pounds sterling)1
each ................................................................. 500 500
=== ===
</TABLE>
10. RESERVES
<TABLE>
<CAPTION>
PROFIT AND
LOSS ACCOUNT
(pounds sterling)000
----------------------
<S> <C>
At 1 January 1998 ...................... 19
Retained profit for the period ......... 66
--
At 30 June 1998 ........................ 85
==
</TABLE>
11. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- ----------------------
<S> <C> <C>
Profit for the period ....................... 130 113
Dividends ................................... (64) (83)
--- ---
Net increase in shareholders' funds ......... 66 30
Shareholders' funds at 1 January ............ 20 11
--- ---
Shareholders' funds at 30 June .............. 86 41
=== ===
</TABLE>
F-264
<PAGE>
TONY STEPHENS ASSOCIATES LIMITED
NOTES TO THE UNAUDITED INTERIM ACCOUNTS (CONTINUED)
AT 30 JUNE 1998
12. LEASING COMMITMENTS
Operating lease payments amounting to (pounds sterling)8,319 (1997 -
(pounds sterling)8,719) are due within one year. The leases to which these
amounts relate expire as follows:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- ----------------------
<S> <C> <C>
Between one and five years ......... 8 8
======================= ======================
</TABLE>
13. PENSIONS
Money Purchase Scheme
The company operates a money purchase pension scheme for the benefit of
the directors and senior employees. The assets of the scheme are administered
by trustees in a fund independent from those of the company.
14. NOTES TO THE STATEMENT OF CASH FLOWS
a) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1998 1997
(pounds sterling)000 (pounds sterling)000
----------------------- ----------------------
<S> <C> <C>
Operating profit ................................................. 177 148
Depreciation of tangible fixed assets ............................ 7 5
Profit on sale of tangible fixed assets .......................... (2) --
(Increase)/decrease in operating debtors and prepayments ......... (93) (23)
Increase/(decrease) in operating creditors and accruals .......... (3) (20)
----- ---
Net cash inflow from operating activities ........................ 86 110
===== ===
</TABLE>
b) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
AT AT
1 JANUARY 30 JUNE
1998 CASH FLOW 1998
(pounds sterling)000 (pounds sterling)000 (pounds sterling)000
----------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Cash at bank and in hand ......... 129 (101) 28
=== ==== ==
</TABLE>
15. RECONCILIATION TO US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(US GAAP)
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United Kingdom ("UK
GAAP"), which differ in certain respects from generally accepted accounting
principles in the United States ("US GAAP"). Such differences involve methods
for measuring the amounts shown in the financial statements as well as
additional disclosures required by US GAAP.
There are no material adjustments to profit for the year, cash flows and
shareholders' equity in applying the significant differences between UK and US
GAAP.
F-265
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
ProServ, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of ProServ,
Inc. and Subsidiaries as of December 31, 1996 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
years ended December 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ProServ, Inc.
and Subsidiaries as of December 31, 1996, and the consolidated results of their
operations and their cash flows for the years ended December 31, 1996 and 1995,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Washington, D.C.
June 25, 1997
F-266
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
-------------- --------------
1996 (UNAUDITED)
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 168,295 $ 1,181,889
Restricted cash .............................................. -- 254,401
Accounts receivable, net ..................................... 3,241,184 4,099,189
Prepaid expenses and other current assets .................... 158,364 259,944
------------ ------------
Total current assets .......................................... 3,567,843 5,795,423
Property and equipment, net ................................... 468,444 450,949
Noncurrent accounts receivable ................................ 1,228,206 1,158,819
Other assets .................................................. 76,426 49,019
------------ ------------
Total assets .................................................. $ 5,340,919 $ 7,454,210
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of notes payable ............................. $ 900,000 $ 2,175,000
Accounts payable ............................................. 1,104,623 2,330,864
Accrued expenses ............................................. 1,003,968 554,250
Income tax payable ........................................... 48,290 156,207
Production rights payable .................................... 42,741 370,588
Accounts payable--clients .................................... -- 254,401
Deferred revenue ............................................. 659,386 1,098,213
Deferred income taxes ........................................ 259,000 259,000
------------ ------------
Total current liabilities ..................................... 4,018,008 7,198,523
Notes payable ................................................. 650,000 --
Deferred rent ................................................. 875,778 776,726
Minority interest ............................................. -- 24,683
------------ ------------
Total liabilities ............................................. 5,543,786 7,999,932
------------ ------------
Commitments and contingencies
Stockholders' deficit:
Class A preferred stock, $1,000 par value--2,000 shares
authorized; 600 shares issued and outstanding .............. 600,000 600,000
Common stock, $1.00 par value--20,000 shares authorized; 1,250
shares issued and outstanding .............................. 1,250 1,250
Additional paid-in capital ................................... 3,571,692 3,571,692
Unearned compensation ........................................ (341,369) (258,475)
Accumulated deficit .......................................... (4,232,051) (4,659,107)
Cumulative translation adjustment ............................ 197,611 198,918
------------ ------------
Total stockholders' deficit ................................... (202,867) (545,722)
------------ ------------
Total liabilities and stockholders' deficit ................... $ 5,340,919 $ 7,454,210
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-267
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------- -------------------------------
1996 1995 1997 1996
---------------- ---------------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenue .............................. $ 13,387,810 $ 17,792,247 $6,438,343 $ 5,253,016
Operating expenses ............................. 10,130,353 11,926,379 4,739,531 4,872,175
General and administrative expenses ............ 5,000,927 6,581,388 1,921,300 2,481,005
Restructuring costs ............................ 565,000 -- -- --
Legal settlement ............................... -- 300,000 -- --
Loss on sublease ............................... -- 293,832 -- --
------------ ------------ ---------- ------------
Loss from operations ........................... (2,308,470) (1,309,352) (222,488) (2,100,164)
Interest expense, net .......................... 208,691 190,967 71,368 124,438
Equity in loss of joint venture ................ -- (6,927) -- --
Gain on sale of joint venture interest ......... -- 67,763 -- --
Minority interest .............................. -- -- 24,683 --
------------ ------------ ---------- ------------
Loss before income taxes ....................... (2,517,161) (1,439,483) (318,539) (2,224,602)
Provision (benefit) for income taxes ........... 239,824 (1,126) 108,517 2,003
------------ ------------ ---------- ------------
Net loss ....................................... $ (2,756,985) $ (1,438,357) $ (427,056) $ (2,226,605)
============ ============ ========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-268
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN TREASURY
STOCK STOCK CAPITAL STOCK
----------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 ........ $600,000 $1,000 $ 248,041 $ (218,020)
Net loss ........................ -- -- -- --
Treasury stock reissued
under restricted
purchase ....................... -- -- -- 218,020
Amortization of unearned
compensation ................... -- -- -- --
Foreign currency
translation adjustment ......... -- -- -- --
-------- ------ ---------- ----------
Balance, December 31,
1995 ........................... 600,000 1,000 248,041 --
Net loss ........................ -- -- -- --
Issuance of stock options ....... -- -- 323,901 --
Issuance of common stock -- 250 2,999,750 --
Amortization of unearned
compensation ................... -- -- -- --
Foreign currency
translation adjustment ......... -- -- -- --
-------- ------ ---------- ----------
Balance, December 31,
1996 ........................... 600,000 1,250 3,571,692 --
Net loss (unaudited) ............ -- -- -- --
Amortization of unearned
compensation
(unaudited) .................... -- -- -- --
Foreign currency
translation adjustment
(unaudited) .................... -- -- -- --
-------- ------ ---------- ----------
Balance, June 30, 1997
(unaudited) .................... $600,000 $1,250 $3,571,692 $ --
======== ====== ========== ==========
<CAPTION>
CUMULATIVE
UNEARNED ACCUMULATED TRANSLATION
COMPENSATION DEFICIT ADJUSTMENT TOTAL
-------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 ........ $ (59,778) $ (36,709) $ 141,468 $ 676,002
Net loss ........................ -- (1,438,357) -- (1,438,357)
Treasury stock reissued
under restricted
purchase ....................... (218,020) -- -- --
Amortization of unearned
compensation ................... 164,937 -- -- 164,937
Foreign currency
translation adjustment ......... -- -- 107,332 107,332
---------- ------------ --------- -------------
Balance, December 31,
1995 ........................... (112,861) (1,475,066) 248,800 (490,086)
Net loss ........................ -- (2,756,985) -- (2,756,985)
Issuance of stock options ....... (323,901) -- -- --
Issuance of common stock -- -- -- 3,000,000
Amortization of unearned
compensation ................... 95,393 -- -- 95,393
Foreign currency
translation adjustment ......... -- -- (51,189) (51,189)
---------- ------------ --------- -------------
Balance, December 31,
1996 ........................... (341,369) (4,232,051) 197,611 (202,867)
Net loss (unaudited) ............ -- (427,056) -- (427,056)
Amortization of unearned
compensation
(unaudited) .................... 82,894 -- -- 82,894
Foreign currency
translation adjustment
(unaudited) .................... -- -- 1,307 1,307
---------- ------------ --------- -------------
Balance, June 30, 1997
(unaudited) .................... $ (258,475) $ (4,659,107) $ 198,918 $ (545,722)
========== ============ ========= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-269
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................................ $ (2,756,985) $ (1,438,357)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation ...................................................... 181,048 152,349
Deferred income taxes ............................................. 77,000 (288,119)
Provision for bad debts ........................................... 537,820 385,616
Amortization of unearned compensation ............................. 95,393 164,937
Equity in loss of investee ........................................ -- 6,927
Gain on distribution from joint venture ........................... -- (67,763)
Realized gain on sale of marketable securities .................... -- (4,511)
Minority interest ................................................. -- --
Changes in assets and liabilities:
Restricted cash .................................................. (332,999) (31,886)
Accounts receivable .............................................. (256,278) 466,686
Income tax receivable ............................................ 83,175 143,959
Prepaid expenses and other current assets ........................ 233,664 (74,220)
Noncurrent accounts receivable ................................... 410,016 445,949
Other assets ..................................................... (6,202) 37,275
Accounts payable ................................................. (702,583) 212,128
Accrued expenses ................................................. 21,551 35,000
Income tax payable ............................................... (47,869) 96,159
Production rights payable ........................................ (12,573) (522,327)
Deferred revenue ................................................. (211,276) (1,109,279)
Deferred rent .................................................... (172,879) 263,036
Accounts payable-clients ......................................... 332,999 31,886
------------ ------------
Net cash (used in) provided by operating activities ............. (2,526,978) (1,094,555)
------------ ------------
Cash flows from investing activities:
Proceeds from sale of marketable securities ......................... -- 216,590
Purchases of property and equipment ................................. (74,297) (142,609)
Investment in joint venture ......................................... (10,836) (89,164)
------------ ------------
Net cash used in investing activities ........................... (85,133) (15,183)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of capital stock ............................. 3,000,000 --
Proceeds from notes payable ......................................... 1,250,000 2,460,000
Payments on notes payable ........................................... (1,800,000) (1,822,500)
------------ ------------
Net cash provided by financing activities ....................... 2,450,000 637,500
------------ ------------
Effect of exchange rate changes on cash and cash equivalents ......... 47,626 30,090
------------ ------------
Increase (decrease) in cash and cash equivalents ..................... (114,485) (442,148)
Cash and cash equivalents, beginning of period ....................... 282,780 724,928
------------ ------------
Cash and cash equivalents, end of period ............................. $ 168,295 $ 282,780
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes, net of refunds .......... $ 127,518 $ 61,930
============ ============
Cash paid during the year for interest .............................. $ 224,461 $ 181,106
============ ============
Noncash investing and financing activities:
Issuance of treasury stock for restricted stock award ............... $ -- $ 218,020
============ ============
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------
1997 1996
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................................ $ (427,056) $ (2,226,605)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation ...................................................... 51,408 60,111
Deferred income taxes ............................................. -- --
Provision for bad debts ........................................... -- --
Amortization of unearned compensation ............................. 82,894 35,000
Equity in loss of investee ........................................ -- 10,836
Gain on distribution from joint venture ........................... -- --
Realized gain on sale of marketable securities .................... -- --
Minority interest ................................................. 24,683 --
Changes in assets and liabilities:
Restricted cash .................................................. (260,238) (303,193)
Accounts receivable .............................................. (964,658) (862,833)
Income tax receivable ............................................ -- 83,175
Prepaid expenses and other current assets ........................ (112,525) (63,933)
Noncurrent accounts receivable ................................... 69,387 --
Other assets ..................................................... (37,195) 13,791
Accounts payable ................................................. 1,466,375 1,798,750
Accrued expenses ................................................. (315,592) (278,124)
Income tax payable ............................................... 107,917 (16,754)
Production rights payable ........................................ 327,847 540,732
Deferred revenue ................................................. 442,410 840,737
Deferred rent .................................................... (99,052) (339,969)
Accounts payable-clients ......................................... 260,238 303,193
---------- ------------
Net cash (used in) provided by operating activities ............. 616,843 (405,086)
---------- ------------
Cash flows from investing activities:
Proceeds from sale of marketable securities ......................... -- --
Purchases of property and equipment ................................. (5,001) (14,770)
Investment in joint venture ......................................... -- (10,836)
---------- ------------
Net cash used in investing activities ........................... (5,001) (25,606)
---------- ------------
Cash flows from financing activities:
Proceeds from issuance of capital stock ............................. -- --
Proceeds from notes payable ......................................... 425,000 957,500
Payments on notes payable ........................................... -- --
---------- ------------
Net cash provided by financing activities ....................... 425,000 957,500
---------- ------------
Effect of exchange rate changes on cash and cash equivalents ......... (23,248) 1,194
---------- ------------
Increase (decrease) in cash and cash equivalents ..................... 1,013,594 528,002
Cash and cash equivalents, beginning of period ....................... 168,295 282,780
---------- ------------
Cash and cash equivalents, end of period ............................. $1,181,889 $ 810,782
========== ============
Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes, net of refunds .......... $ -- $ --
========== ============
Cash paid during the year for interest .............................. $ 71,368 $ 124,438
========== ============
Noncash investing and financing activities:
Issuance of treasury stock for restricted stock award ............... $ -- $ --
========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-270
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
ProServ, Inc. and Subsidiaries (the Company) is an international
corporation operating as one segment in the business of sports marketing. The
Company provides career management and advisory services to professional
athletes and also engages in sports event management and promotion, production
and distribution of television sports broadcasting, and corporate sports
consulting. The Company conducts its business principally in North America and
Europe.
The Company experienced negative cash flow from operations during the
years ended December 31, 1996 and 1995, and the Company has been reliant on
financing activities to fund its operations. As further described in Note 4,
the Company has certain lines of credit available to fund working capital
through May 31, 1998. In management's opinion, the Company has sufficient
financing available to meet its current obligations as they come due.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Company's wholly-owned subsidiaries and a partially owned subsidiary in which
the Company has a controlling financial interest through its direct and
indirect ownership. The following entities are included in the consolidated
financial statements:
o ProServ, Inc.
o ProServ Europe
o ProServ, U.K.
o ProServ Financial Services, Inc.
o ProServ Television, Inc.
The above subsidiaries are wholly-owned except for ProServ Television,
Inc. (ProServ TV), which is 49% owned by the Company and 51% owned by an
officer/majority shareholder of the Company. The 51% ownership is accounted for
as a minority interest in the accompanying consolidated financial statements.
As of December 31, 1996, there was no minority interest liability. All
significant intercompany balances and transactions have been eliminated in
consolidation.
INVESTMENT IN JOINT VENTURE
The Company accounts for its investment in joint venture (see Note 10)
under the equity method. Under this method, the original investment is recorded
at cost and adjusted by the Company's share of undistributed earnings of the
joint venture. The investment balance is further adjusted for additional
investments in and cash distributions from the joint venture.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingencies at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
F-271
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company's revenues arise primarily from a percentage fee or
commissions received for performing services. The Company recognizes revenue
when services have been performed. Fees or commissions collected in advance for
services to be performed in subsequent years are recorded on the accompanying
consolidated balance sheets as deferred revenue. Deferred revenue is recognized
when the event is held or the Company's client performs under the related
contract. Revenue associated with television event production is recorded net
of fees payable to the related events. All recognized but unpaid fees are
included in the accompanying consolidated balance sheets as production rights
payable. The Company manages or represents various sporting events and has an
ownership interest in certain of these events. Revenues and expenses from these
events are recognized on the accrual basis.
CASH EQUIVALENTS
Short-term investments with an original maturity of three months or less
are considered to be cash equivalents.
RESTRICTED CASH
The Company collects endorsement fees, special appearance fees, and
tournament earnings on behalf of its clients. These funds are held in separate
bank accounts pending disbursement to the individual clients. These cash
balances are reflected separately on the accompanying consolidated balance
sheets as restricted cash with a corresponding accounts payable to clients.
ACCOUNTS RECEIVABLE
Accounts receivable are recorded net of an allowance for doubtful accounts
of $577,650 and $569,559 at December 31, 1996 and June 30, 1997, respectively.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of cash and cash equivalents
and accounts receivable. The Company deposits its cash and cash equivalents in
two financial institutions which are insured by the Federal Depository
Insurance Corporation (FDIC). The Company has not experienced any losses on
these balances to date. In addition, the Company maintains a repurchase
agreement with one of the financial institutions, in which excess funds are
deposited by the financial institution in an overnight investment account. The
Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific clients, historical trends and other
information.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments including cash and cash
equivalents, restricted cash, accounts receivable, notes payable and accounts
payable approximate fair value as of December 31, 1996 because of the
relatively short maturity of these instruments. The carrying value of
noncurrent receivables approximates fair value as of December 31, 1996 based on
discounted future cash flows using a discount rate that approximates the
current interest rate available from the Company's financial institutions.
F-272
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets,
ranging from five to fifteen years. Leasehold improvements are amortized over
the remaining lease term using the straight-line method. Upon retirement or
disposition of property and equipment, the cost and accumulated depreciation
are removed from the accounts and any resulting gain or loss is reflected in
operations.
INCOME TAXES
ProServ, Inc. and ProServ Financial Services, Inc. file a consolidated
Federal income tax return. ProServ TV files separate Federal and state returns
and ProServ Europe and ProServ U.K. file separate tax returns in their
respective tax jurisdictions. The Company accounts for income taxes utilizing
the liability method. Deferred income taxes are recognized for the tax
consequences in future years for differences between the tax bases of assets
and liabilities and their financial reporting amounts at each year end, based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The provision for income taxes is the current tax
expense for the period plus the change during the period in deferred tax assets
and liabilities.
STOCK OPTIONS
In October 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation." SFAS 123 is effective for the year
ended December 31, 1996. SFAS 123 permits companies to account for stock based
compensation based on the provisions prescribed in SFAS 123 or based on the
authoritative guidance in Accounting Principles Board Opinion No. 25 ("APB
25"), "Accounting for Stock Issued to Employees." The Company has elected to
continue to account for its stock based compensation in accordance with APB 25,
however, as required by SFAS 123, the Company has disclosed the pro forma
impact on the financial statements assuming the recognition provisions of SFAS
No. 123 had been adopted.
CURRENCY TRANSLATION
The assets and liabilities of the Company's foreign subsidiaries are
translated at the exchange rates in effect on the reporting date and revenues
and expenses are translated at the weighted average exchange rate in effect
during the period. Adjustments resulting from these translations are included
as a separate component of stockholders' equity.
UNAUDITED INTERIM FINANCIAL INFORMATION
The interim financial information as of June 30, 1997 and for the six
months ended June 30, 1997 and 1996 is unaudited. The unaudited interim
financial statements reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly present
the results of operations, changes in cash flows and financial position as of
and for the periods presented. The unaudited interim financial information
should be read in conjunction with the audited financial statements and related
notes thereto. The results for the interim periods presented are not
necessarily indicative of results to be expected for the full year.
F-273
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Office equipment ........................................ $ 1,651,915 $ 1,570,645
Leasehold improvements .................................. 264,639 225,351
Tape library ............................................ 229,813 229,813
------------ ------------
2,146,367 2,025,809
Less: accumulated depreciation and amortization ......... (1,677,923) (1,574,860)
------------ ------------
$ 468,444 $ 450,949
============ ============
</TABLE>
Depreciation and amortization expense was $181,048 and $152,349 for the
years ended December 31, 1996 and 1995, respectively and $51,408 and $60,111
for the six months ended June 30, 1997 and 1996, respectively.
3. NONCURRENT ACCOUNTS RECEIVABLE
Noncurrent accounts receivable include certain contractually earned
amounts for which there is no future performance required by the Company and
outstanding loans that will not be collected within one year from the balance
sheet date. Amounts to be collected during the twelve months subsequent to
December 31, 1996 are included in accounts receivable. The noncurrent accounts
receivable are reflected at the present value of future receipts based on the
discount rate prevailing on the date upon which the earnings process is
complete and are recorded net of an unamortized discount of approximately
$872,000 and $837,000 as of December 31, 1996 and June 30, 1997, respectively.
Interest resulting from the amortization of the discount, which is included in
operating revenues, was approximately $80,000 and $129,000 for the years ended
December 31, 1996 and 1995, respectively and approximately $35,000 and $50,000
for the six months ended June 30, 1997 and 1996, respectively. Based on the
present value at December 31, 1996 of future cash receipts, the noncurrent
accounts receivable will be realized over the next five years and thereafter as
follows as of
December 31, 1996 and June 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
-------------- --------------
(UNAUDITED)
<S> <C> <C>
1997 .......................... $ 482,559 $ 482,559
1998 .......................... 534,836 465,449
1999 .......................... 52,695 52,695
2000 .......................... 11,724 11,724
2001 .......................... 12,566 12,566
Thereafter .................... 616,385 616,385
---------- ----------
1,710,765 1,641,378
Less: current portion ......... (482,559) (482,559)
---------- ----------
Total ........................ $1,228,206 $1,158,819
========== ==========
</TABLE>
F-274
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
4. NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Lines of credit ............... $1,450,000 $ 2,150,000
Term notes payable ............ 100,000 25,000
---------- ------------
Total notes payable .......... 1,550,000 2,175,000
Less: current portion ......... (900,000) (2,175,000)
---------- ------------
Noncurrent portion ........... $ 650,000 $ --
========== ============
</TABLE>
LINES OF CREDIT
The Company maintains three lines of credit providing an aggregate working
capital facility of $1,850,000 and $2,100,000 at December 31, 1996 and June 30,
1997, respectively, of which $1,450,000 and $1,950,000 was outstanding as of
December 31, 1996 and June 30, 1997, respectively. Specific descriptions of
these lines of credit are set forth below.
The Company maintains two of its lines of credit with one financial
institution for an aggregate working capital facility of up to $1,100,000.
Total amounts outstanding under these lines of credit were $700,000 and
$1,100,000 at December 31, 1996 and June 30, 1997, respectively. Interest
payments are due monthly on these facilities at the bank's prime rate (8.25% at
December 31, 1996 and 8.5% at June 30, 1997). These lines of credit are
collateralized by substantially all of the Company's assets and certain future
contract rights and are guaranteed by a shareholder of the Company. One of the
lines maintained by ProServ TV is also guaranteed by ProServ, Inc. The line of
credit agreements contain certain restrictive covenants, including a minimum
cash flow coverage requirement, a minimum net worth requirement and
restrictions on incurring additional indebtedness and issuing shares of common
stock. As of December 31, 1996, the Company was not in compliance with these
covenants but received a waiver from the bank related to each covenant
violation. These facilities expired on May 31, 1997. On June 17, 1997, the
Company renegotiated these lines of credit. The lines were combined into one
$1,100,000 line of credit with a maturity date of May 31, 1998. The revised
line of credit agreement requires a principal payment of $550,000 on the
earlier of October 15, 1997 or the closing of a definitive purchase and sale
agreement (the Agreement) between the majority shareholder of the Company and
The Marquee Group (see Note 10) and a principal payment on the earlier of
October 30, 1997 or 15 days after the closing of the Agreement. All other terms
of the previous lines of credit remain the same.
The Company has an additional line of credit at another bank that provides
for a working capital facility of up to $750,000 and $1,000,000 at December 31,
1996 and June 30, 1997, respectively, of which $750,000 and $850,000 was
outstanding as of December 31, 1996 and June 30, 1997, respectively. Interest
payments were due monthly on this facility at the prime rate as published in
the Wall Street Journal (8.25% at December 31, 1996 and 9.5% at June 30, 1997).
This line of credit expired on December 31, 1996. The Company subsequently
renegotiated this line of credit, and the resulting new terms include a
scheduled principal payment of $150,000 on or before September 30, 1997 with
the remaining outstanding balance due May 31, 1998. The terms of the
renegotiated line of credit terms included an increase in the maximum principal
available on the line of credit to $1,000,000 and an increased interest rate of
prime (as published in the Wall Street Journal) plus 1%. This line is
collateralized by the rights to the Company's earnings generated by an
agreement related to a specific Company sponsored event, earnings generated
from certain ongoing management contracts, the rights to certain cash flow
generated from the Company's team sports operations and certain royalties
F-275
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
4. NOTES PAYABLE (CONTINUED)
received by the Company pursuant to a specific contract. The line is also
guaranteed by a shareholder of the Company. The line contains certain
restrictive covenants, including a requirement that the Company maintain thirty
consecutive days with a zero balance on this line. The Company was not in
compliance with this covenant as of December 31, 1996, but received a waiver
from the bank related to this covenant violation.
During 1996, the Company borrowed an additional $482,500 from this
financial institution. Interest payments were due monthly on this facility at
the prime rate (as published in the Wall Street Journal) plus 2%. This loan was
repaid in full during July 1996.
The majority shareholder of the Company also entered into a line of credit
agreement with a third financial institution during 1996. This line provides
the Company with up to $600,000 in borrowings, none of which was outstanding at
December 31, 1996 and $200,000 of which was outstanding at June 30, 1997.
Interest payments are due monthly at the bank's prime rate (8.50% at December
31, 1996 and 9% at June 30, 1997) plus .50%, and this line expired July 31,
1997. This line is collateralized by the majority shareholder's primary
residence. The line was subsequently renewed through December 31, 1997 with all
of the terms remaining the same.
The weighted average interest rate on short term borrowings was
approximately 8.75% and
9.25% for the years ended December 31, 1996 and 1995, respectively and
approximately 9% and 8.5% for the six months ended June 30, 1997 and 1996,
respectively.
TERM NOTES PAYABLE
The Company maintains a term note payable with a financial institution
with quarterly principal payments and monthly interest payments at the bank's
prime rate (8.25% at December 31, 1996). The note is collateralized by
substantially all of the Company's assets as well as certain future contract
rights and is guaranteed by a shareholder of the Company. This note expired on
July 31, 1997 and was repaid in full at that time. The term notes payable
agreement contained certain restrictive covenants including a minimum cash flow
coverage requirement, a minimum net worth requirement, and restrictions on
incurring additional indebtedness and issuing common stock. As of December 31,
1996, the Company was not in compliance with these covenants but received a
waiver from the bank related to each covenant violation.
5. INCOME TAXES
The components of the provision (benefit) for income taxes were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- ----------------------
1996 1995 1997 1996
----------- ------------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current:
Federal ......... $123,116 $ 220,340 $ 74,117 $1,903
State ........... 39,708 41,313 13,100 100
Foreign ......... -- 25,340 21,300 --
-------- ---------- -------- ------
162,824 286,993 108,517 2,003
-------- ---------- -------- ------
Deferred
Federal ......... -- (276,119) -- --
State ........... -- (12,000) -- --
Foreign ......... 77,000 -- -- --
-------- ---------- -------- ------
77,000 (288,119) -- --
-------- ---------- -------- ------
Total .......... $239,824 $ (1,126) $108,517 $2,003
======== ========== ======== ======
</TABLE>
F-276
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
5. INCOME TAXES (CONTINUED)
Although the Company has a loss before income taxes on a consolidated
basis for the years ended December 31, 1996 and 1995, ProServ TV has generated
taxable income for both of those years, giving rise to the current provision.
The Company's consolidated provision (benefit) for income taxes differs from
the provision (benefit) that would have resulted from applying the federal
statutory rates to net income before taxes. The reasons for these differences
are as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- ------------------------------
1996 1995 1997 1996
-------------- -------------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
(Benefit) provision based upon Federal
statutory rate of 34% ................. $ (855,835) $ (489,424) $ (99,911) $ (756,365)
State tax provision--ProServ TV ......... 20,000 28,432 13,000 --
IRS contingency (see Note 7) ............ -- 57,000 -- --
Increase in deferred tax asset valuation
allowance ............................. 1,054,000 312,000 220,000 746,868
French tax audit (see Note 7) ........... 77,000 -- -- --
Other ................................... (55,341) 90,866 24,572 11,500
---------- ---------- --------- ----------
$ 239,824 $ (1,126) $ 108,517 $ 2,003
========== ========== ========= ==========
</TABLE>
The sources and tax effects of temporary differences which give rise to
deferred tax assets (liabilities) are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ......... $ 1,244,000 $ 1,464,000
AMT credit carryforwards ................. 109,000 109,000
Deferred rent ............................ 333,000 310,000
Accrued liabilities ...................... 302,000 300,000
Foreign tax credit carryforwards ......... 360,000 360,000
------------ ------------
2,348,000 2,543,000
Less: valuation allowance ................ (1,726,000) (1,946,000)
------------ ------------
Total deferred tax assets ................ 622,000 597,000
------------ ------------
Deferred tax liabilities:
Property and equipment ................... (80,000) (80,000)
Accounts receivable ...................... (535,000) (510,000)
IRS contingency .......................... (182,000) (182,000)
French Tax Audit ......................... (77,000) (77,000)
Other .................................... (7,000) (7,000)
------------ ------------
Total deferred tax liabilities ........... (881,000) (856,000)
------------ ------------
Net deferred tax liability ............... $ (259,000) $ (259,000)
============ ============
</TABLE>
As of December 31, 1996 and June 30, 1997, the Company had foreign tax
credit carryforwards (FTC's) of $360,000 expiring in 1997. Utilization of the
FTC's is subject to certain limitations, including the generation of future
foreign source taxable income, the effective tax rate on such income and the
amount of future U.S. taxable income. Based on the expiration of the FTC's in
1997, their recoverability is doubtful; therefore, a valuation allowance has
been established for the full amount of these FTC's at December 31, 1996 and
June 30, 1997. The $1,054,000 and $320,000 increases in the valuation allowance
at December 31, 1996 and June 30, 1997, respectively, relate primarily to the
Company's net operating loss carryforwards generated during 1996 and 1997.
F-277
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
5. INCOME TAXES (CONTINUED)
The Company has approximately $3,054,000 in domestic net operating loss
carryforwards and approximately $220,000 in foreign net operating loss
carryforwards. The realizability of the deferred tax asset generated from these
operating loss carryforwards is dependent upon future taxable income generated
by the entity to which the operating loss carryforwards relate. The Company's
net operating loss carryforwards expire as follows:
<TABLE>
<S> <C>
2010 ................ $1,324,000
2011 ................ 1,950,000
----------
$3,274,000
==========
</TABLE>
6. RESTRUCTURING COSTS
During 1996, the Company incurred $565,000 in restructuring costs related
to closing down the Paris office of ProServ Europe. Included in these costs
were approximately $432,000 in severance, resulting from the termination of 16
employees and $133,000 in other miscellaneous costs. There were no significant
accrued expenses resulting from this restructuring included in the consolidated
balance sheet as of December 31, 1996.
7. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company rents all of its space under operating leases, primarily a
twelve-year lease that expires in May 2001. The terms of this lease included a
waiver of rental payments for the first year of the lease term and scheduled
rent increases at specified intervals during the twelve year term of the lease.
The Company is recognizing rent expense on a straight-line basis over the life
of the lease, giving rise to deferred rent. The rental payments prescribed in
the lease are also subject to changes resulting from changes in the consumer
price index. During 1995, the Company entered into an agreement with the lessor
resulting in a reduction of the space under lease and a corresponding reduction
in annual rental payments. In connection with this agreement and in connection
with a sublease entered into during 1995, the Company recorded a non-cash loss
of $293,832 in the consolidated statement of operations for the year ended
December 31, 1995. The loss reflects the Company's future lease commitments for
space for which no future benefit to the Company is anticipated. Aggregate
future minimum rental payments, net of noncancelable subleases, greater than
one year as of December 31, 1996, are as follows:
<TABLE>
<CAPTION>
RENTAL SUBLEASE
PAYMENTS INCOME NET
------------- ----------- -------------
<S> <C> <C> <C>
1997 ......... $ 825,501 $169,057 $ 656,444
1998 ......... 838,869 182,511 656,358
1999 ......... 847,086 186,161 660,925
2000 ......... 844,548 189,884 654,664
2001 ......... 351,895 80,166 271,729
---------- -------- ----------
$3,707,899 $807,779 $2,900,120
========== ======== ==========
</TABLE>
Rent expense, net of sublease income of $160,902 and $11,572, was $740,444
and $1,321,612 for the years ended December 31, 1996 and 1995, respectively.
Rent expense, net of sublease income of $81,612 and $74,870, was $244,553 and
$305,305 for the six months ended June 30, 1997 and 1996, respectively.
F-278
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain key
officers of the Company. These employment agreements set forth salary terms and
provide for the issuance of restricted common stock of the Company that will be
released to the officers at specified dates if the officers remain with the
Company. Unearned compensation, representing the difference between the price
of the restricted stock issued to the officers and the estimated fair value of
the stock on the effective date of the agreements, is amortized over the stated
period of performance. Amortization of unearned compensation, which represents
a non-cash charge, was $95,393 and $164,937 for the years ended December 31,
1996 and 1995, respectively, and $82,894 and $35,000 for the six months ended
June 30, 1997 and 1996, respectively.
During 1996, one of the employment agreements with an officer of the
Company was revised. The terms of this revised agreement include a reduction in
the period of performance associated with the restricted common stock mentioned
above and certain cash bonus provisions based on the achievement of specific
criteria set forth in the agreement. Additionally, the officer was granted
options to purchase 50 shares of the Company's common stock at an exercise
price of $2,585 per share. Twenty-five of these options will vest on December
31, 1997 and the remaining 25 options will vest on December 31, 1998. All 50
options were outstanding and there were none exercisable as of December 31,
1996. The fair value of these options, which was determined using the
Black-Scholes Valuation method, was $10,042 per share on the date of grant, and
the assumptions used to estimate the fair value were as follows: risk-free
interest rate 5.71%; expected term of 5 years; expected volatility of 0%; and
dividend yield of 0%. The remaining contractual life of these options was 4.8
years as of December 31, 1996. Had the recognition provisions of SFAS 123 been
implemented and this compensation cost recorded based on the fair value of the
stock options at the date of grant, the Company's net loss would have been
$2,771,000 for the year ended December 31, 1996.
Subsequent to December 31, 1996, an employment agreement with a second key
officer was revised. This revised employment agreement included the grant of
new options to purchase 30 shares of the Company's common stock that will vest
at specified dates in 1997 and 1998 based on the achievement of certain
performance criteria.
OTHER
In the normal course of business, the Company enters into certain
contracts in which specified revenue levels are guaranteed to its clients. Any
material known future losses related to these guarantees are recorded in the
period in which the losses are determined.
CONTINGENCIES
The Company was a party to a suit filed by a former client alleging legal
and investment advisory wrongdoing on the part of the Company and several other
named parties. Pursuant to an agreement dated May 28, 1996, the Company and the
other named parties reached a settlement with the former client. Under the
terms of the agreement, the Company is required to pay $300,000 in aggregate
from March 1997 through March 1999 in three annual installments. Additionally,
the Company could be liable for recapture taxes due by the former client on any
passive income to be generated by certain of the investments in question. The
Company's potential liability related to these recapture taxes is not presently
estimable. The Company's payments related to this settlement agreement are
guaranteed by a shareholder of the Company. As a result of the settlement
agreement, the Company recorded a one-time expense of $300,000 in the
consolidated statement of operations for the year ended December 31, 1995. The
related liability is recorded in accrued expenses as of December 31, 1996 and
June 30, 1997.
F-279
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company, a former employee (current business associate) and a former
client have been named as defendants in a lawsuit, in which the plaintiff
alleges that the Company's former client breached a contract to act in a motion
picture and that the Company and the former employee tortiously interfered with
the former client's contractual relations to the plaintiff. The Company, the
former employee and its former client have each filed motions for summary
judgment, requesting the dismissal of the complaint. The Company is not
presently able to determine the likelihood of any exposure resulting from this
lawsuit.
The Company, a former employee (current business associate) and a client
are defendants in a lawsuit. The plaintiff alleges that the Company's client
breached a contract to act in a motion picture and the former employee (current
business associate) and the Company tortiously interfered with the client's
contractual relations with the plaintiff. The plaintiff seeks unspecified
damages. The parties are engaging in discovery. The Company is not presently
able to determine the likelihood of any exposure resulting from this lawsuit.
In connection with examinations of the consolidated federal tax returns of
ProServ, Inc. and ProServ Financial Services, Inc. for the years 1990 through
1993, the Internal Revenue Service (IRS) has raised questions regarding the tax
treatment of certain significant transactions. Although the Company believes it
has valid defenses to defeat any tax assessment, the Company has accrued
$182,000, reflected in deferred income taxes (see Note 5), for this
contingency, representing the best estimate of the exposure to the Company as
of December 31, 1996 and June 30, 1997.
The French taxing authorities are conducting an audit of ProServ Europe's
tax returns for the years 1993 through 1995. The Company has accrued $77,000,
reflected in deferred income taxes (see Note 5), for this contingency,
representing the best estimate of the exposure to the Company as of December
31, 1996 and June 30, 1997.
In the normal course of business, the Company is involved in various
lawsuits. Management is of the opinion that any liability or loss resulting
from such litigation will not have a material adverse effect on the
consolidated financial statements.
8. EMPLOYEE BENEFIT PLAN
The Company sponsors a qualified defined contribution plan under section
401(k) of the Internal Revenue Code. The defined contribution plan enables all
full time employees who have completed one year of service with the Company to
make voluntary contributions to the plan of up to 15% of their compensation not
to exceed the dollar limits prescribed by the IRS. Additional contributions to
be made by the Company are prescribed in the Plan, subject to certain
limitations. The Company's expense related to the plan totaled approximately
$35,000 and $45,000 for the years ended December 31, 1996 and 1995,
respectively.
9. AGREEMENT AND MEMORANDUM OF UNDERSTANDING
In January 1992, an Agreement and Memorandum of Understanding was executed
with a former officer of the Company under which the former officer represents,
through a separate company, certain former clients of the Company. Under the
terms of the agreements, the revenue on certain playing and endorsement
contracts was divided between the companies based on varying percentages and
terms, including dates of execution, renegotiations and renewals of such
playing and endorsement contracts. Net revenue recognized under this agreement
was approximately $694,000 and $1,228,000 for the years ended December 31, 1996
and 1995, respectively and $81,000 and $184,000 for the six months ended June
30, 1997 and 1996, respectively.
F-280
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
10. INVESTMENT IN JOINT VENTURE
On March 30, 1995, the Company and a former executive of the Company
formed a corporate joint venture to produce sports and entertainment events for
television. Under the terms of the original joint venture agreement, the
Company invested $48,000 in cash, certain contracts and events with a fair
value of $400,000, and $52,000 in professional service, valued at cost, to be
contributed over a one year period, collectively representing a 50% interest in
the joint venture. The fair value of the contracts and events was agreed upon
by both original shareholders of the joint venture. As of December 31, 1996 and
1995, the Company had incurred $52,000 and $41,000, respectively, of the
professional services as part of the Company's investment in the joint venture.
In December 1995, the joint venture entered into an agreement with a third
investor for the purchase of a 20% ownership interest in the joint venture for
$550,000 in cash. The agreement stipulated that each previously existing
shareholder in the joint venture would receive a $150,000 payment as a result
of this cash infusion. Upon completion of this transaction, the Company's
interest in the joint venture was reduced to 40%
The Company's basis in the contracts and events that were contributed to
the joint venture was $0 upon the initial contribution. The Company is
amortizing the resulting basis difference over the seven year estimated life of
the related contracts and events.
The joint venture allocates and distributes income and losses in
proportion to each shareholders' percentage ownership. The following represents
a rollforward of the investment in joint venture for the years ending December
31, 1996 and 1995:
<TABLE>
<CAPTION>
<S> <C> <C>
Balance, January 1, 1995 ..................... $ --
Cash investment .............................. 48,000
Professional services ........................ 41,164
Equity in loss of investee:
Share of investee net loss .................. (52,165)
Amortization of basis difference ............ 45,238
-------
(6,927)
Reduction of investment based on sale of joint
venture interest ............................ (82,237)
---------
Balance, December 31, 1995 ................... --
Professional services ........................ 10,836
Equity in loss of investee:
Amortization of basis difference ............ 57,142
Share of investee net loss .................. (67,978)
-------
(10,836)
---------
Balance December 31, 1996 .................... $ --
=========
</TABLE>
The Company's proportionate share of the joint venture's net loss for the
year ended December 31, 1996 and the six month period ended June 30, 1997 was
approximately $72,000 and $89,000, respectively; however, since the investment
in joint venture balance is $0, these losses were only recognized to the extent
of the amortization of the basis difference in the contracts and events and the
professional services contributed to the joint venture.
F-281
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
10. INVESTMENT IN JOINT VENTURE (CONTINUED)
Summarized unaudited financial information of the joint venture are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------------------- ---------------------------------
1996 1995 1997 1996
--------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
Operating revenues ........... $ 910,000 $ 505,000 $ 828,000 $ 713,000
Operating expenses ........... (1,090,000) (609,000) (1,051,000) (1,039,000)
------------ ----------- ------------ ------------
Net loss ..................... $ (180,000) $ (104,000) $ (223,000) $ (326,000)
============ =========== ============ ============
BALANCE SHEET
Total assets ................. $ 1,266,000 $ 904,000
Total liabilities ............ (301,000) (132,000)
------------ ------------
Shareholders' equity ......... $ 965,000 $ 772,000
============ ============
</TABLE>
11. FINANCIAL INFORMATION BY GEOGRAPHIC AREA
Operating revenue, (loss) income from operations and identifiable assets
for the Company's North America and European operations are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
----------------------------------- --------------------------------
1996 1995 1997 1996
---------------- ---------------- ------------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenue
North America .............. $ 10,910,000 $ 14,551,000 $5,472,071 $ 4,369,182
Europe ..................... 2,478,000 3,241,000 966,272 883,834
------------ ------------ ---------- ------------
Total .................... $ 13,388,000 $ 17,792,000 $6,438,343 $ 5,253,016
============ ============ ========== ============
(Loss) income from operations
North America .............. $ (1,465,000) $ (1,421,000) $ (257,554) $ (1,337,216)
Europe ..................... (843,000) 112,000 35,066 (762,948)
------------ ------------ ---------- ------------
Total .................... $ (2,308,000) $ (1,309,000) $ (222,488) $ (2,100,164)
============ ============ ========== ============
Identifiable assets
North America .............. $ 4,786,000 $ 5,384,000 $5,598,000
Europe ..................... 555,000 1,604,000 1,856,000
------------ ------------ ----------
Total .................... $ 5,341,000 $ 6,988,000 $7,454,000
============ ============ ==========
</TABLE>
12. SUBSEQUENT EVENTS (UNAUDITED)
The majority shareholder of the Company has entered into a Purchase and
Sale Agreement dated as of June 25, 1997 with The Marquee Group, Inc.
("Marquee"), pursuant to which he has agreed to sell 70.4% of the outstanding
common stock and 100% of the outstanding preferred stock of ProServ, Inc. and
51% of the outstanding capital stock of ProServ TV, the remainder of which is
owned by ProServ, Inc. Pursuant to the agreement, the aggregate purchase price
is $6.5 million, subject to certain adjustments, and 250,000 shares of common
stock of Marquee. The majority shareholder of the Company has the option to
receive the $6.5 million in cash or $3.5 million in cash and a $3.0 million
promissory note payable on January 2, 1998. In June 1997, Marquee deposited
$1.5 million, in escrow,
F-282
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996 IS UNAUDITED)
12. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
as a down payment of the purchase price to secure its obligations under the
purchase agreement. In August 1997, the agreement was amended to permit Marquee
to replace its down payment with a $1.5 million letter of credit delivered to
the majority shareholder of the Company.
Marquee has also entered into a Stock Purchase Agreement dated as of July
2, 1997 (the "Non-Employee Stock Purchase Agreement") with the holder of 250
shares of the Company's common stock, pursuant to which Marquee has agreed to
purchase the shares held for an aggregate purchase price of $3.0 million. The
consummation of the purchase will take place concurrently with the consummation
of the purchase of the majority shareholders' shares.
Marquee has also entered into agreements with William J. Allard, the
president and chief operating officer of the Company, and two other officers of
the Company, pursuant to which Marquee has agreed to purchase an aggregate of
120 shares of the Company's Common Stock and options to purchase an aggregate
of 70 shares of the Company's Common Stock for an aggregate purchase price of
$1.3 million.
F-283
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholder
of QBQ Entertainment, Inc.
We have audited the accompanying balance sheet of QBQ Entertainment, Inc.
as of December 31, 1996, and the related statements of operations,
stockholder's equity (deficiency) and cash flows for each of the two years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of QBQ Entertainment, Inc. as
of December 31, 1996, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
As discussed in Note 3 to the financial statements, the Company changed
its method of computing rent expense and depreciation and amortization of
property and equipment in 1995.
David Berdon & Co. LLP
New York, New York
June 13, 1997
F-284
<PAGE>
QBQ ENTERTAINMENT, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
------------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................... $ 323,237 $1,243,145
Accounts receivable ......................................... 27,634 39,880
Prepaid expenses ............................................ 6,070 5,189
Loan receivable--stockholder ................................ 60,936 33,820
--------- ----------
TOTAL CURRENT ASSETS ...................................... 417,877 1,322,034
PROPERTY AND EQUIPMENT--NET .................................. 82,235 69,391
CASH--RESTRICTED ............................................. 17,554 16,287
--------- ----------
$ 517,666 $1,407,712
========= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accrued expenses and other liabilities ...................... $ 130,005 $ 84,774
Loan payable--bank .......................................... 170,000 --
Clients' deposits payable ................................... 266,610 1,049,651
--------- ----------
TOTAL CURRENT LIABILITIES ................................. 566,615 1,134,425
--------- ----------
DEFERRED LEASE OBLIGATION .................................... 10,736 6,709
--------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY (DEFICIENCY)
Common stock--no par value; 100 shares authorized, issued and
outstanding ............................................... 100 100
Additional paid-in capital .................................. 900 900
Accumulated earnings (losses) ............................... (60,685) 265,578
--------- ----------
TOTAL STOCKHOLDER'S EQUITY (DEFICIENCY) ................... (59,685) 266,578
--------- ----------
$ 517,666 $1,407,712
========= ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-285
<PAGE>
QBQ ENTERTAINMENT, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
----------------------------- ------------------------------
1996 1995 1997 1996
------------- ------------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUE
Commissions ............................ $1,358,922 $1,495,245 $1,013,115 $ 468,137
---------- ---------- ---------- ----------
EXPENSES
Operating .............................. 274,224 299,484 126,963 122,671
General and administrative ............. 930,815 1,071,657 457,246 437,433
Depreciation and amortization .......... 38,043 49,398 12,844 28,212
---------- ---------- ---------- ----------
TOTAL EXPENSES ....................... 1,243,082 1,420,539 597,053 588,316
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS ........... 115,840 74,706 416,062 (120,179)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Interest income ........................ 12,329 13,764 7,863 4,901
Interest expense ....................... (24,329) (1,797) (5,404) (19,663)
Gain on sale of automobile ............. -- -- 25,000 --
---------- ---------- ---------- ----------
TOTAL OTHER INCOME (EXPENSE) ......... (12,000) 11,967 27,459 (14,762)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME
TAXES .................................. 103,840 86,673 443,521 (134,941)
PROVISION FOR STATE AND
LOCAL INCOME TAXES ..................... 12,521 15,140 41,680 120
---------- ---------- ---------- ----------
NET INCOME (LOSS) ....................... $ 91,319 $ 71,533 $ 401,841 $ (135,061)
========== ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-286
<PAGE>
QBQ ENTERTAINMENT, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
AND THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL ACCUMULATED
NUMBER OF PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (LOSSES) TOTAL
----------- -------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE--JANUARY 1, 1995 as
previously reported ................... 100 $100 $900 $ 193,484 $ 194,484
Prior period adjustments ............... -- -- -- (41.410) (41,410)
--- ---- ---- ---------- ----------
BALANCE--JANUARY 1, 1995 as
restated .............................. 100 100 900 152,074 153,074
Net income for the year ended
December 31, 1995 ..................... -- -- -- 71,533 71,533
Distribution to stockholder ............ -- -- -- (282,033) (282,033)
--- ---- ---- ---------- ----------
BALANCE--DECEMBER 31, 1995 ............. 100 100 900 (58,426) (57,426)
Net income for the year ended
December 31, 1996 ..................... -- -- -- 91,319 91,319
Distribution to stockholder ............ -- -- -- (93,578) (93,578)
--- ---- ---- ---------- ----------
BALANCE--DECEMBER 31, 1996 ............. 100 100 900 (60,685) (59,685)
Net income for the six months ended June
30, 1997 .............................. -- -- -- 401,841 401,841
Distribution to stockholder ............ -- -- -- (75,578) (75,578)
--- ---- ---- ---------- ----------
BALANCE--JUNE 30, 1997
(Unaudited) ........................... 100 $100 $900 $ 265,578 $ 266,578
=== ==== ==== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-287
<PAGE>
QBQ ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------- ----------------------------
1996 1995 1997 1996
------------ ------------ ------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................... $ 91,319 $ 71,533 $ 401,841 $ (135,061)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization .................... 38,043 49,398 12,844 28,212
(Gain) on sale of automobile ..................... -- -- (25,000) --
Decrease (increase) in:
Accounts receivable ............................. 1,639 19,879 (12,246) 16,138
Prepaid expenses ................................ 8,936 (9,556) 881 (3,626)
Increase (decrease) in:
Accrued expenses and other liabilities .......... 37,185 (40,650) (45,231) (21,619)
Clients' deposits payable ....................... 222,035 (21,400) 783,041 1,591,665
Deferred lease obligation ....................... (6,385) (3,052) (4,027) (2,359)
---------- ---------- ---------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES ......................................... 392,772 66,152 1,112,103 1,473,350
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ................. (34,440) (21,682) -- (19,288)
Proceeds from sale of automobile .................... -- -- 25,000 --
(Increase) decrease in loans to stockholder ......... (5,034) (55,902) 27,116 143,029
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES ............................... (39,474) (77,584) 52,116 123,741
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of loan payable--bank .................... (300,000) -- (170,000) --
(Increase) decrease in restricted cash .............. (898) (864) 1,267 (461)
Distributions to stockholder ........................ (93,578) (282,033) (75,578) --
Proceeds from loan payable--bank .................... 170,000 300,000 -- --
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ............................... (224,476) 17,103 (244,311) (461)
---------- ---------- ---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS ........................................ 128,822 5,671 919,908 1,596,630
CASH AND CASH EQUIVALENTS--
BEGINNING OF PERIOD ................................ 194,415 188,744 323,237 194,415
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS--
END OF PERIOD ...................................... $ 323,237 $ 194,415 $1,243,145 $1,791,045
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest ......................................... $ 23,479 $ 379 $ 6,253 $ 10,596
========== ========== ========== ==========
Income taxes ..................................... $ 558 $ 64,307 $ 4,104 $ 565
========== ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-288
<PAGE>
QBQ ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 IS UNAUDITED)
NOTE 1 -- ORGANIZATION
QBQ Entertainment, Inc. (the "Company") was incorporated and commenced
operations in April 1986 as a booking agent in the music and entertainment
industry.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition
The Company receives advance deposits, on behalf of its clients, in the
ordinary course of business, to book an artist/entertainer for a future event
(i.e., concert). Commission income is recognized when the event takes place.
The funds held on behalf of the Company's clients are held in a separate bank
account.
(b) Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents,
and accounts receivable. The Company places its cash and cash equivalents,
which at times exceed federally insured amounts, with a major financial
institution.
Commissions earned during 1996 includes approximately $521,000 from two
clients, which represents approximately 38% of revenue earned during the year
ended December 31, 1996. Commissions earned during 1995 includes approximately
$875,000 from three clients, which represents approximately 58% of revenue
earned during the year ended December 31, 1995.
Commissions earned during the six months (unaudited) ended June 30, 1997
includes approximately $534,000 from one client and accounts for approximately
53% of the commissions earned. Commissions earned during the six months
(unaudited) ended June 30, 1996 includes approximately $369,000 from five
clients and account for approximately 79% of the commissions earned.
(c) Income Taxes
The Company has elected "S" corporation status under the applicable
provisions of the Internal Revenue Code and New York State tax law. The Company
will be treated for federal and New York State income tax purposes
substantially as if it were a partnership while a valid election is in effect,
and the stockholder's respective share in the net income (loss) of the Company
will be reportable on his individual returns. The Company remains liable for
New York City general corporation tax and certain New York State corporate
income taxes.
(d) Property and Equipment
Property and equipment are stated at cost and are being depreciated under
the straight-line method over the estimated useful lives of the related assets,
which range from 31/2 to 7 years.
(e) Use of Estimates in Financial Statement Presentation
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at December 31, 1996 and June
30, 1997, and the reported amounts of revenues and expenses during the two
years ended December 31, 1996, and the six months ended June 30, 1997 and 1996.
Actual results could differ from those estimates.
F-289
<PAGE>
QBQ ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 IS UNAUDITED)
(f) Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers as
cash equivalents all highly liquid investments with a maturity of three months
or less when purchased.
(g) Accounts Receivable
The Company has deemed all receivables collectible at December 31, 1996
and June 30, 1997 (unaudited) and does not anticipate any additional probable
material losses as at those dates.
NOTE 3 -- PRIOR PERIOD ADJUSTMENTS
The Company has changed its method of accounting in computing rent expense
and depreciation and amortization of property and equipment in 1995 as a result
of the misapplication of accounting principles prior to the year ended December
31, 1995. Accordingly, accumulated earnings has been reduced by $41,410 as of
January 1, 1995 for the cumulative effect of these prior period adjustments.
The Company has not determined the effect of these changes on income as
previously reported for the year ended December 31, 1994.
NOTE 4 -- LOAN RECEIVABLE -- STOCKHOLDER
At December 31, 1996 and June 30, 1997 (unaudited), $60,936 and $33,820,
respectively, were due from the Company's sole stockholder. These amounts
represent noninterest-bearing demand loans made to the stockholder.
NOTE 5 -- PROPERTY AND EQUIPMENT
Property and equipment -- net consists of the following at December 31,
1996 and June 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
-------------- ------------
(UNAUDITED)
<S> <C> <C>
Furniture and fixtures .................................. $ 70,770 $ 70,770
Equipment ............................................... 170,053 170,053
Automobiles ............................................. 108,235 --
Leasehold improvements .................................. 6,138 6,138
-------- --------
355,196 246,961
Less, accumulated depreciation and amortization ......... 272,961 177,570
-------- --------
$ 82,235 $ 69,391
======== ========
</TABLE>
NOTE 6 -- LOAN PAYABLE -- BANK
Loan payable -- bank at December 31, 1996, amounting to $170,000,
represents borrowings by the Company under a $300,000 unsecured grid demand
promissory loan agreement ("grid loan"). These borrowings were repaid by the
Company during the six months ended June 30, 1997.
Interest charged under the grid loan is payable monthly at the rate of 1%
above the bank's reference rate. Interest expense on the grid loan amounted to
$24,329 and $1,797 for the years ended December 31, 1996 and 1995,
respectively, and $5,404 and $19,663 for the six months (unaudited) ended June
30, 1997 and 1996, respectively.
All borrowings under the grid loan are guaranteed by the Company's
stockholder.
F-290
<PAGE>
QBQ ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 IS UNAUDITED)
NOTE 7 -- LEASE COMMITMENT
The Company occupies premises for its office facilities under a
noncancelable operating lease agreement which commenced on May 15, 1993 and
expires on May 14, 1998. Minimum lease payments required under the terms of
such lease agreement at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 .......... $65,625
1998 .......... 21,875
-------
Total ......... $87,500
=======
</TABLE>
The lease also requires payment of additional sums under escalation
clauses. Rent expense, which is reflected on a straight-line basis over the
term of the lease, amounted to $51,948 for the years ended December 31, 1996
and 1995, and $25,956 for the six months (unaudited) ended June 30, 1997 and
1996. Obligations of $10,736 and $6,709, representing pro-rata future payments,
are reflected in the accompanying December 31, 1996 and June 30, 1997
(unaudited) balance sheets, respectively.
The Company is contingently liable for a standby letter of credit, in the
sum of $15,156, given to its landlord in lieu of a security deposit. This
letter of credit is secured by a certificate of deposit that matures on April
14, 1998.
NOTE 8 -- RETIREMENT PLANS
The Company has two defined contribution plans, a profit sharing plan and
a money purchase plan, both of which cover all eligible employees.
Contributions to the profit-sharing plan are based on 0% to 15% of eligible
employees' annual salaries. Contributions to the money purchase plans are based
on 5% of eligible employees' annual salaries. Costs of the plans charged to
operations for the years ended December 31, 1996 and 1995 amounted to $74,951
and $67,165, respectively, and $37,476 and $33,582 for the six months
(unaudited) ended June 30, 1997 and 1996, respectively.
NOTE 9 -- SUBSEQUENT EVENTS
(a) On July 3, 1997, the Company received approximately $2,959,000 from a
promoter on behalf of one of the Company's clients as an advance deposit for a
series of concerts beginning in March 1998. The Company has placed this deposit
into an interest-bearing escrow account, in which the promoter is entitled to
the interest earned.
(b) In July 1997, the Company entered into an agreement with The Marquee
Group, Inc. and Subsidiaries ("Purchaser") to sell substantially all its assets
for an aggregate purchase price of $7.2 million, of which $3.1 million is
payable at closing, $1.6 million is payable over eight years and $2.5 million
is payable in shares of common stock of the Purchaser.
F-291
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE YOU ANY INFORMATION OR
REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON
UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY
SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS
PROSPECTUS IS CURRENT AS OF FEBRUARY , 1999. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE.
-----------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Prospectus Summary ....................... 1
Risk Factors ............................. 12
The Exchange Offer ....................... 20
Use of Proceeds .......................... 32
Capitalization ........................... 33
SFX Unaudited Pro Forma Condensed
Combined Financial Statements ......... 35
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................ 64
Overview of the Live Entertainment
Industry .............................. 89
Business ................................. 92
Agreements Related to the Pending
Acquisitions .......................... 115
Management ............................... 119
Principal Stockholders ................... 131
Certain Relationships and Related
Transactions .......................... 134
Description of Indebtedness .............. 139
Description of the Old Notes ............. 144
Description of the New Notes ............. 145
United States Federal Tax Considerations 185
Plan of Distribution ..................... 188
Legal Matters ............................ 189
Experts .................................. 190
Where You Can Find More Information ...... 192
Safe Harbor for Forward-Looking
Statements ............................ 193
Index to Financial Statements ............ F-1
</TABLE>
[SFX ENTERTAINMENT LOGO]
OFFER TO EXCHANGE ALL
OUTSTANDING 9 1/8% SENIOR
SUBORDINATED NOTES
DUE 2008
($200,000,000 PRINCIPAL AMOUNT)
FOR
REGISTERED 9 1/8% SENIOR
SUBORDINATED NOTES
DUE 2008
($200,000,000 PRINCIPAL AMOUNT)
The Information Agent for the Offer is:
[GEORGESON & COMPANY LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
FEBRUARY , 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of Delaware Law empowers a Delaware corporation to indemnify
any person who is, or is threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal
administrative or investigative, other than an action by or in the right of the
corporation, by reason of the fact that the person is or was an officer or
director of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses, including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with the action, suit or proceeding,
provided that he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Where an officer or director is successful on the merits
or otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses which he actually and reasonably
incurred in connection therewith.
The SFX Certificate of Incorporation provides that no director of SFX will
be personally liable to SFX or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability:
o for any breach of the director's duty of loyalty to SFX or its
stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o under Section 174 of Delaware Law; or
o for any transaction from which the director derived an improper
personal benefit.
In addition to the circumstances in which a director of SFX is not
personally liable as set forth above, no director will be liable to SFX or its
stockholders to such further extent as permitted by any law enacted after the
date of the SFX Certificate of Incorporation, including any amendment to
Delaware Law.
The SFX Certificate of Incorporation requires SFX to indemnify any person
who was, is, or is threatened to be made a party to any action, suit or
proceeding, by reason of the fact that he (1) is or was a director or officer
of SFX or (2) is or was serving at the request of SFX as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar functionary
of another corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise. This indemnification is to be to
the fullest extent permitted by Delaware Law. The right to indemnification will
be a contract right and, as such, will run to the benefit of any director or
officer who is elected and accepts the position of director or officer of SFX
or elects to continue to serve as a director or officer of SFX while this
provision of the SFX Certificate of Incorporation is in effect. The right to
indemnification includes the right to be paid by SFX for expenses incurred in
defending any such action, suit or proceeding in advance of its final
disposition to the maximum extent permitted under Delaware Law. If a claim for
indemnification or advancement of expenses is not paid in full by SFX within 60
days after a written claim has been received by SFX, the claimant may, at any
time thereafter, bring suit against SFX to recover the unpaid amount of the
claim and, if successful in whole or in part, expenses of prosecuting his
claim. It will be a
II-1
<PAGE>
defense to any such action that the requested indemnification or advancement of
costs of defense are not permitted under Delaware Law, but the burden of
proving this defense will be on SFX.
The rights described above do not exclude any other right that any person
may have or acquire under any statute, by-law, resolution of stockholders or
directors, agreement or otherwise.
The SFX Bylaws require SFX to indemnify its officers, directors, employees
and agents to the full extent permitted by Delaware Law. The SFX Bylaws also
require SFX to pay expenses incurred by a director in defending a civil or
criminal action, suit or proceeding by reason of the fact that he is/was a
director--or was serving at SFX's request as a director or officer of another
corporation--in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director to
repay the advance if it ultimately is determined that the director is not
entitled to be indemnified by SFX as authorized by relevant sections of
Delaware Law. The indemnification and advancement of expenses provided in the
SFX Bylaws are not to be deemed exclusive of any other rights provided by any
agreement, vote of stockholders or disinterested directors or otherwise.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------
<S> <C>
2.1 Distribution Agreement between SFX Entertainment, SFX Broadcasting and SFX Buyer
(incorporated by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with
the SEC on May 5, 1998)
2.2 Amended and Restated Tax Sharing Agreement between SFX Entertainment, SFX
Broadcasting and SBI Holding Corporation (incorporated by reference to Amendment No. 1
to Exhibit 1.1 to Current Report on Form 8-K (File No. 000-24017) filed with the SEC on
June 3, 1998)
2.3 Employee Benefits Agreement between SFX Entertainment and SFX Broadcasting
(incorporated by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with
the SEC on May 5, 1998)
2.4 Amendment No. 1 to Distribution Agreement among SFX Entertainment, Inc., SFX
Broadcasting, Inc. and SBI Holding Corporation (incorporated by reference to Exhibit 2.1 to
Form 8-K (File No. 000-24017) filed with the SEC on June 3, 1998)
3.1 Amended and Restated Certificate of Incorporation of SFX Entertainment, Inc. (incorporated
by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on
May 5, 1998)
3.2 Bylaws of SFX Entertainment, Inc. (incorporated by reference to Amendment No. 2 to Form
S-1 (File No. 333-43287) filed with the SEC on February 2, 1998)
3.3 Restated Articles of Incorporation of AKG, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.4 Bylaws of AKG, Inc. (incorporated by reference to Registration Statement on Form S-4 (File
No. 333-50331) filed with the SEC on April 16, 1998)
3.5+ Articles of Organization of American Artists, Inc.
3.6+ Bylaws of American Artists, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------
<S> <C>
3.7+ Articles of Organization of American Artists Limited, Inc.
3.8+ Bylaws of American Artists Limited, Inc.
3.9 Articles of Incorporation of American Broadway, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.10 Bylaws of American Broadway, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.11+ Second Amended Restated Partnership Agreement of Amphitheater Entertainment
Partnership
3.12+ Certificate of Incorporation of Ant Theatrical Productions, Inc.
3.13+ Bylaws of Ant Theatrical Productions, Inc.
3.14 Certificate of Incorporation of Ardee Festivals N.J., Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.15 Bylaws of Ardee Festivals N.J., Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.16 Certificate of Incorporation of Atlanta Concerts, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.17 Bylaws of Atlanta Concerts, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.18+ Articles of Incorporation of Audrey & Jane, Inc.
3.19+ Certificate of Amendment of Articles of Incorporation of Audrey & Jane, Inc.
3.20+ Bylaws of Audrey & Jane, Inc.
3.21+ Certificate of Incorporation of Avalon Acquisition Corp.
3.22+ Bylaws of Avalon Acquisition Corp.
3.23 Certificate of Incorporation of Beach Concerts, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.24 Bylaws of Beach Concerts, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.25 Certificate of Formation of BGP Acquisition, LLC (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.26 Articles of Incorporation of Bill Graham Enterprises, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.27 Bylaws of Bill Graham Enterprises, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.28 Articles of Incorporation of Bill Graham Management, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.29 Bylaws of Bill Graham Management, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<S> <C>
3.30 Articles of Incorporation of Bill Graham Presents, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.31 Amended and Restated Bylaws of Bill Graham Presents, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.32 Articles of Incorporation of BG Presents, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.33 Bylaws of BG Presents, Inc. (incorporated by reference to Registration Statement on Form
S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.34+ Articles of Organization of Boston Playhouse Realty, Inc.
3.35+ Bylaws of Boston Playhouse Realty, Inc.
3.36+ Certificate of Incorporation of BGP Denver, Inc.
3.37+ By-laws of BGP Denver, Inc.
3.38+ Articles of Organization of Boylston Street Theatre Corp.
3.39+ Bylaws of Boylston Street Theatre Corp.
3.40 Certificate of Incorporation of Broadway Concerts, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.41 Bylaws of Broadway Concerts, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.42+ Articles of Incorporation of Broadway Series Associates, Inc.
3.43+ Regulations of Broadway Series Associates, Inc.
3.44+ Articles of Incorporation of Broadway Series Management Group, Inc.
3.45+ Regulations of Broadway Series Management Group, Inc.
3.46+ Articles of Incorporation of Camarillo Amphitheater Managing Partners, Inc.
3.47+ Bylaws of Camarillo Amphitheater Managing Partners, Inc.
3.48+ Joint Venture Agreement of Cheva Touring Company
3.49* Memorandum of Association of Concert Productions International B.V.
3.50* Certificate of Incorporation of Concert Productions (UK) Limited
3.51 Articles of Incorporation of Cooley and Conlon Management Co. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.52 Bylaws of Cooley and Conlon Management Co. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.53 Articles of Incorporation of Concerts, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.54 Bylaws of Concerts, Inc. (incorporated by reference to Registration Statement on Form S-4
(File No. 333-50331) filed with the SEC on April 16, 1998)
3.55 Certificate of Incorporation of Connecticut Amphitheater Development Corporation
(incorporated by reference to Registration Statement on Form S-4 (File No. 333-50331) filed
with the SEC on April 16, 1998)
3.56 Bylaws of Connecticut Amphitheater Development Corporation (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------
<S> <C>
3.57 Certificate of Incorporation of Connecticut Concerts Incorporated (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.58 Bylaws of Connecticut Concerts Incorporated (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.59 Certificate of Incorporation of Connecticut Performing Arts, Inc. (incorporated by reference
to Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with
the SEC on May 27, 1998)
3.60 Bylaws of Connecticut Performing Arts, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.61+ Joint Venture Agreement of Connecticut Performing Arts Partners
3.62+ General Partnership Agreement of Conn Ticketing Company
3.63 Certificate of Incorporation of Contemporary Group Acquisition Corp. (incorporated by
reference to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
April 16, 1998)
3.64 Bylaws of Contemporary Group Acquisition Corp. (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.65 Articles of Incorporation of Contemporary Group, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.66 Bylaws of Contemporary Group, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.67 Certificate of Incorporation of Contemporary Marketing, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.68 Bylaws of Contemporary Marketing, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.69 Certificate of Incorporation of Contemporary Productions Incorporated (incorporated by
reference to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
April 16, 1998)
3.70 Bylaws of Contemporary Productions Incorporated (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.71 Certificate of Incorporation of Contemporary Sports Incorporated (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.72 Bylaws of Contemporary Sports Incorporated (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.73 Certificate of Incorporation of Deer Creek Amphitheater Concerts, Inc. (incorporated by
reference to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
April 16, 1998)
3.74 Bylaws of Deer Creek Amphitheater Concerts, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.75 Certificate of Limited Partnership of Deer Creek Amphitheater Concerts, LP. (incorporated
by reference to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC
on April 16, 1998)
3.76 Certificate of Incorporation of Delsener/Slater Enterprises, Ltd. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
</TABLE>
II-5
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NO. DESCRIPTION
- -------- ----------------------------------------------------------------------------------------------------
<S> <C>
3.77 Bylaws of Delsener/Slater Enterprises, Ltd. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.78+ Certificate of Incorporation of DiCesare-Engler, Inc.
3.79+ Certificate of Amendment of the Certificate of Incorporation of DiCesare-Engler, Inc.
3.80+ Bylaws of DiCesare-Engler, Inc.
3.81+ Articles of Incorporation of DiCesare-Engler Promotions, Inc.
3.82+ Bylaws of DiCesare-Engler Promotions, Inc.
3.83+ Certificate of Incorporation of DLC Corp.
3.84+ Certificate of Amendment of Certificate of Incorporation of DLC Corp.
3.85+ Bylaws of DLC Corp.
3.86+ Certificate of Incorporation of DLC Funding Corp.
3.87+ Bylaws of DLC Funding Corp.
3.88 Certificate of Incorporation of Dumb Deal, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.89 Bylaws of Dumb Deal, Inc. (incorporated by reference to Registration Statement on Form S-4
(File No. 333-50331) filed with the SEC on April 16, 1998)
3.90+ Articles of Amalgamation of Eagle Eye Entertainment Inc.
3.91+ Bylaw No. 1 of Eagle Eye Entertainment Inc.
3.92+ Certificate of Incorporation of Eagle Eye Entertainment USA Inc.
3.93+ Bylaws of Eagle Eye Entertainment USA Inc.
3.94+ Certificate of Incorporation of EMI Acquisition Sub, Inc.
3.95+ Bylaws of EMI Acquisition Sub, Inc.
3.96 Articles of Incorporation of Entertainment Performing Arts, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.97 Bylaws of Entertainment Performing Arts, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.98+ Articles of Incorporation of Event Merchandising, Inc.
3.99+ Certificate of Amendment of Articles of Incorporation of Event Merchandising, Inc.
3.100+ Bylaws of Event Merchandising, Inc.
3.101 Certificate of Incorporation of Exit 116 Revisited, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.102 Bylaws of Exit 116 Revisited, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.103+ Certificate of Incorporation of Falk Associates Management Enterprises, Inc.
3.104+ Bylaws of Falk Associates Management Enterprises, Inc.
3.105 Articles of Incorporation of Festival Productions, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.106 Bylaws of Festival Productions, Inc. (incorporated by reference to Amendment No. 2 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on June 9, 1998)
</TABLE>
II-6
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------------
<S> <C>
3.107 Restated Certificate of Incorporation of Fillmore Corporation (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.108 Bylaws of Fillmore Corporation (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.109 Restated Articles of Incorporation of Fillmore Fingers, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.110 Bylaws of Fillmore Fingers, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.111+ Certificate of Incorporation of Financial Advisory Management Enterprises, Inc.
3.112+ Bylaws of Financial Advisory Management Enterprises, Inc.
3.113+ Joint Venture Agreement of Gershwins' Fascinating Rhythm
3.114+ Articles of Incorporation of Grand Slam Sports Marketing, Inc.
3.115+ Bylaws of Grand Slam Sports Marketing, Inc.
3.116+ Partnership Agreement of GSAC Partners
3.117 Articles of Incorporation of High Cotton, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.118 Bylaws of High Cotton, Inc. (incorporated by reference to Registration Statement on Form
S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.119 Certificate of Incorporation of In House Tickets, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.120 Bylaws of In House Tickets, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.121* Articles of Incorporation and Memorandum of Association of International Music (Canada) Inc.
3.122* Certificate of Incorporation of International Music (USA) Inc.
3.123* Bylaws of International Music (USA) Inc.
3.124* Certificate of Incorporation and Memorandum of Association of International Music Ltd.
3.125* Certificate of Incorporation and Memorandum of Association of International Music Tour I Ltd.
3.126* Certificate of Incorporation and Memorandum of Association of International Music Tour II Ltd.
3.127* Certificate of Incorporation of International Music Tour I (USA) Inc.
3.128* Bylaws of International Music Tour I (USA) Inc.
3.129* Certificate of Incorporation of International Music Tour II (USA) Inc.
3.130* Bylaws of International Music Tour II (USA) Inc.
3.131+ Second Amended and Completely Restated Agreement of General Partnership of Irvine
Meadows Amphitheater
3.132 Certificate of Incorporation of Irving Plaza Concerts, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.133 Bylaws of Irving Plaza Concerts, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.134+ Joint Venture Agreement of Jefko Touring Company
3.135+ Articles of Incorporation of Magicsports-Grand Slam Management, Inc.
</TABLE>
II-7
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------------------------------------------------------------------------------------
<S> <C>
3.136+ Bylaws of Magicsports--Grand Slam Management, Inc.
3.137+ Articles of Incorporation of Magicworks Concerts, Inc.
3.138+ Articles of Amendment of Magicworks Concerts, Inc.
3.139+ Bylaws of Magicworks Concerts, Inc.
3.140+ Memorandum and Articles of Association of Magicworks Entertainment Asia Limited
3.141+ Certificate of Incorporation of Magicworks Entertainment Incorporated
3.142+ Certificate of Amendment to Certificate of Incorporation of Magicworks Entertainment
Incorporated
3.143+ Certificate of Ownership and Merger of MWE Acquisition Corp. into Magicworks
Entertainment Incorporated
3.144+ Certificate and Articles of Merger of Magicworks Entertainment Incorporated into Shadow
Wood Corporation
3.145+ Certificate of Amendment to Certificate of Incorporation of Magicworks Entertainment
Incorporated
3.146+ Amended and Restated Bylaws of Magicworks Entertainment Incorporated
3.147+ Articles of Incorporation of Magicworks Entertainment International, Inc.
3.148+ Articles of Amendment to Articles of Incorporation of Magicworks Entertainment
International, Inc.
3.149+ Bylaws of Magicworks Entertainment International, Inc.
3.150+ Joint Venture Agreement of Magicworks Exhibitions Joint Venture
3.151+ Articles of Incorporation of Magicworks Exhibitions, Inc.
3.152+ Bylaws of Magicworks Exhibitions, Inc.
3.153+ Articles of Incorporation of Magicworks Fashion Management, Inc.
3.154+ Bylaws of Magicworks Fashion Management, Inc.
3.155+ Articles of Incorporation Magicworks Merchandising, Inc.
3.156+ Articles of Amendment of the Articles of Incorporation of Magicworks Merchandising, Inc.
3.157+ Bylaws of Magicworks Merchandising, Inc.
3.158+ Articles of Incorporation of Magicworks Sports Management, Inc.
3.159+ Bylaws of Magicworks Sports Management, Inc.
3.160+ Articles of Incorporation of Magicworks Theatricals, Inc.
3.161+ Certificate of Amendment by Shareholders to the Articles of Incorporation of Magicworks
Theatricals, Inc.
3.162+ Bylaws of Magicworks Theatricals, Inc.
3.163+ Articles of Incorporation of Magicworks Transportation, Inc.
3.164+ Bylaws of Magicworks Transportation, Inc.
3.165+ Articles of Incorporation of Magicworks West, Inc.
3.166+ Articles of Merger of Space Agency, Inc. into Magicspace Corporation
3.167+ Articles of Amendment of the Articles of Incorporation of Magicworks West, Inc.
3.168+ Bylaws of Magicworks West, Inc.
</TABLE>
II-8
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -------------------------------------------------------------------------------------------------
<S> <C>
3.169+ Articles of Incorporation of Marco Entertainment, Inc.
3.170+ Articles of Merger of Marco Entertainment, Inc. and Magicsports -- Marco Management, Inc.
3.171+ Articles of Amendment to the Articles of Incorporation of Marco Entertainment, Inc.
3.172+ Articles of Amendment to the Articles of Incorporation of Marco Entertainment, Inc.
3.173+ Bylaws of Marco Entertainment, Inc.
3.174+ Articles of Incorporation of Melody Tent and Amphitheater, Inc.
3.175+ Articles of Amendment of Melody Tent and Amphitheater, Inc.
3.176+ Bylaws of Melody Tent and Amphitheater, Inc.
3.177 Certificate of Incorporation of Murat Center Concerts, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.178 Bylaws of Murat Center Concerts, Inc. (incorporated by reference to Registration Statement
on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.179 Certificate of Limited Partnership of Murat Center Concerts, LP. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.180+ Articles of Incorporation of New Avalon, Inc.
3.181+ Certificate of Amendment of Articles of Incorporation of New Avalon, Inc.
3.182+ Bylaws of New Avalon, Inc.
3.183 Certificate of Incorporation of NOC, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.184 Bylaws of NOC, Inc. (incorporated by reference to Registration Statement on Form S-4 (File
No. 333-50331) filed with the SEC on April 16, 1998)
3.185 Certificate of Incorporation of Northeast Ticketing Company (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.186 Bylaws of Northeast Ticketing Company (incorporated by reference to Registration Statement
on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.187+ Certificate of Incorporation of Oakdale Theater Concerts, Inc.
3.188+ Bylaws of Oakdale Theater Concerts, Inc.
3.189 Articles of Incorporation of Old PCI, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.190 Bylaws of Old PCI, Inc. (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.191 Articles of Incorporation of PACE AEP Acquisition, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.192 Bylaws of PACE AEP Acquisition, Inc. (incorporated by reference to Registration Statement
on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.193 Articles of Incorporation of PACE Amphitheatres, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.194 Bylaws of PACE Amphitheatres, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.195 Articles of Incorporation of PACE Amphitheater Management, Inc. (incorporated by
reference to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
April 16, 1998)
</TABLE>
II-9
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EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------
<S> <C>
3.196 Bylaws of PACE Amphitheater Management, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.197 Articles of Incorporation of PACE Bayou Place, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.198 Bylaws of PACE Bayou Place, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.199 Articles of Incorporation of PACE Communications, Inc. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.200 Bylaws of PACE Communications, Inc. (incorporated by reference to Registration Statement
on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.201 Articles of Incorporation of PACE Concerts GP, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.202 Bylaws of PACE Concerts GP, Inc. (incorporated by reference to Registration Statement on
Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.203 Certificate of Limited Partnership for PACE Concerts, Ltd. (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on April 16, 1998)
3.204 Articles of Incorporation of PACE Entertainment Corporation (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.205 Bylaws of PACE Entertainment Corporation (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.206 Articles of Incorporation of PACE Entertainment GP Corp. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.207 Bylaws of PACE Entertainment GP Corp. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.208 Certificate of Limited Partnership for PACE Entertainment Group, Ltd. (incorporated by
reference to Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331)
filed with the SEC on May 27, 1998)
3.209 Articles of Incorporation of PACE Milton Keynes, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.210 Bylaws of PACE Milton Keynes, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.211 Articles of Incorporation of PACE Motor Sports, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.212 Bylaws of PACE Motor Sports, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.213 Articles of Incorporation of PACE Music Group, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.214 Bylaws of PACE Music Group, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
</TABLE>
II-10
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ------------------------------------------------------------------------------------------------
<S> <C>
3.215 Articles of Incorporation of PACE Productions, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.216 Bylaws of PACE Productions, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.217 Articles of Incorporation of PACE Theatrical Group, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.218 Bylaws of PACE Theatrical Group, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.219 Articles of Incorporation of PACE Touring, Inc. (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.220 Bylaws of PACE Touring, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.221 Articles of Incorporation of PACE Variety Entertainment, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.222 Bylaws of PACE Variety Entertainment, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.223+ Memorandum and Articles of Association of PACE (UK)
3.224 Articles of Incorporation of PACE U.K. Holding Corporation (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.225 Bylaws of PACE U.K. Holding Corporation (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.226 Certificate of Limited Partnership of Pavilion Partners (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.227 Certificate of Incorporation of PEC, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.228 Bylaws of PEC, Inc. (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.229+ Articles of Incorporation of Performing Arts Management of North Miami, Inc.
3.230+ Bylaws of Performing Arts Management of North Miami, Inc.
3.231 Certificate of Incorporation of Polaris Amphitheater Concerts, Inc. (incorporated by reference
to Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with
the SEC on May 27, 1998)
3.232 Bylaws of Polaris Amphitheater Concerts, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.233 Articles of Incorporation of PTG-Florida, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.234 Bylaws of PTG-Florida, Inc. (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
</TABLE>
II-11
<PAGE>
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------
<S> <C>
3.235 Certificate of Incorporation of QN Corp. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.236 Bylaws of QN Corp. (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.237+ Certificate of Formation of a Limited Partnership of Rugrats American Tour, Ltd.
3.238+ Certificate of Incorporation of SFX Acquisition Corp.
3.239+ Bylaws of SFX Acquisition Corp.
3.240 Certificate of Incorporation of SFX Broadcasting of the Midwest, Inc. (incorporated by
reference to Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331)
filed with the SEC on May 27, 1998)
3.241+ Certificate of Amendment of the Certificate of Incorporation of SFX Broadcasting of the
Midwest, Inc.
3.242 Bylaws of SFX Broadcasting of the Midwest, Inc. (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.243 Certificate of Incorporation of SFX Concerts, Inc. (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.244 Bylaws of SFX Concerts, Inc. (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.245 Certificate of Incorporation of SFX Delaware, Inc. (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.246 Bylaws of SFX Delaware, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.247 Certificate of Formation of SFX Network Group, L.L.C. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.248+ Certificate of Incorporation of SFX Sports Group, Inc.
3.249+ Bylaws of SFX Sports Group, Inc.
3.250+ Certificate of Incorporation of SFX Touring, Inc.
3.251+ Bylaws of SFX Touring, Inc.
3.252+ Articles of Incorporation of Shelli Meadows, Inc.
3.253+ Bylaws of Shelli Meadows, Inc.
3.254 Articles of Incorporation of Shoreline Amphitheatre, Ltd. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.255 Bylaws of Shoreline Amphitheatre, Ltd. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.256 Certificate of Limited Partnership of Shoreline Amphitheatre Partners (incorporated by
reference to Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331)
filed with the SEC on May 27, 1998)
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ---------------------------------------------------------------------------------------------
<S> <C>
3.257 Articles of Incorporation of SFX Radio Network, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.258+ Articles of Amendment of SFX Radio Network, Inc.
3.259 Bylaws of SFX Radio Network, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.260 Articles of Incorporation of SM/PACE, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.261 Bylaws of SM/PACE, Inc. (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.262 Certificate of Incorporation of Southeast Ticketing Company (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.263 Bylaws of Southeast Ticketing Company (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.264 Articles of Incorporation of Southern Promotions, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.265 Bylaws of Southern Promotions, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.266+ Articles of Association of STEP Entertainment Services, Inc.
3.267 Certificate of Formation of Sunshine Concerts, L.L.C. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.268 Certificate of Incorporation of Sunshine Designs, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.269 Bylaws of Sunshine Designs, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.270 Certificate of Limited Partnership of Sunshine Design, LP (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.271 Certificate of Incorporation of Suntex Acquisition, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.272 Bylaws of Suntex Acquisition, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.273 Certificate of Limited Partnership of Suntex Acquisition, L.P. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.274+ Articles of Organization of TAP Productions, Inc.
3.275+ Bylaws of TAP Productions, Inc.
3.276+ Articles of Incorporation of TBA Media, Inc.
3.277+ Bylaws of TBA Media, Inc.
</TABLE>
II-13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------------------------------------------------------------------------------------------
<S> <C>
3.278 Articles of Incorporation of The Album Network, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.279 Bylaws of The Album Network Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.280+ Articles of Incorporation of Tennis Events, Inc.
3.281+ Bylaws of Tennis Events, Inc.
3.282+ Joint Venture Agreement of The Gin Touring Company
3.283+ Joint Venture Agreement of The Wedding Tour Company
3.284+ Articles of Incorporation of Ticket Service, Inc.
3.285+ Bylaws of Ticket Service, Inc.
3.286+ Articles of Incorporation of Touring Artists Group, Inc.
3.287+ Bylaws of Touring Artists Group, Inc.
3.288+ Articles of Incorporation of Touring Artists Group, Inc.
3.289+ Regulations of Touring Artists Group, Inc.
3.290 Articles of Incorporation of Touring Productions, Inc. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.291 Bylaws of Touring Productions, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.292+ Articles of Organization of Tremont Street Theatre Corporation II, Inc.
3.293+ Articles of Amendment of Tremont Street Theater Corporation II, Inc.
3.294+ Bylaws of Tremont Street Theatre Corporation II, Inc.
3.295 Articles of Incorporation of Tuneful Company, Inc. (incorporated by reference to Amendment
No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on
May 27, 1998)
3.296 Bylaws of Tuneful Company, Inc. (incorporated by reference to Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.297+ Articles of Organization of Warrenton Street Theatre Corp.
3.298+ Articles of Amendment of Warrenton Street Theater Corp.
3.299+ Bylaws of Warrenton Street Theatre Corp.
3.300+ Articles of Incorporation of West Coast Amphitheater Corp.
3.301+ Bylaws of West Coast Amphitheater Corp.
3.302 Certificate of Formation of Westbury Music Fair, L.L.C. (incorporated by reference to
Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-50331) filed with the
SEC on May 27, 1998)
3.303+ Partnership Agreement of Western Amphitheater Partners
3.304 Articles of Incorporation of Wolfgang Records (incorporated by reference to Amendment No. 1
to Registration Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
3.305 Bylaws of Wolfgang Records (incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-50331) filed with the SEC on May 27, 1998)
</TABLE>
II-14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- -----------------------------------------------------------------------------------------------
<S> <C>
4.1 Indenture, dated February 11, 1998, by and among SFX Entertainment, Inc., certain of its
subsidiaries and the Chase Manhattan Bank (incorporated by reference to Current Report on
Form 8-K of SFX Broadcasting, Inc. (File No. 000-22486) filed with the SEC on February 18,
1998)
4.2 Indenture, dated November 25, 1998, by and among SFX Entertainment, Inc., certain of its
subsidiaries and Chase Manhattan Bank (incorporated by reference to Registration Statement
on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
4.3 Registration Rights Agreement, dated as of November 25, 1998, relating to the 9 1/8% Senior
Subordinated Notes due December 1, 2008 (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
5.1* Opinion of Baker & McKenzie
8.1* Opinion of Baker & McKenzie regarding certain tax matters
10.1 Agreement and Plan of Merger and Asset Purchase Agreement, dated as of December 10,
1997, by and among SFX Entertainment, Inc., Contemporary Investments Corporation,
Contemporary Investments of Kansas, Inc., Continental Entertainment Associates, Inc.,
Capital Tickets, LP, Dialtix, Inc., Contemporary International Productions Corporation, Steven
F. Schankman Living Trust, dated 10/22/82, Irving P. Zuckerman Living Trust, dated 11/24/81,
Steven F. Schankman and Irving P. Zuckerman (incorporated by reference to Registration
Statement on Form S-1 (File No. 333-43287) filed with the SEC)
10.2 Stock Purchase Agreement, dated as of December 11, 1997, among each of the shareholders
of BGP Presents, Inc. and BGP Acquisitions, LLC (incorporated by reference to Registration
Statement on Form S-1 (File No. 333-43287) filed with the SEC)
10.3 Stock and Asset Purchase Agreement, dated December 2, 1997, between and among SFX
Network Group, L.L.C. and SFX Entertainment, Inc., and Elias N. Bird, individually and as
Trustee under the Bird Family Trust u/d/o 11/18/92, Gary F. Bird, individually and as Trustee
under the Gary F. Bird Corporation Trust u/d/o 2/4/94, Stephen R. Smith, individually and as
Trustee under the Smith Family Trust u/d/o 7/17/89, June E. Brody, Steven A. Saslow and The
Network 40, Inc. (incorporated by reference to Registration Statement on Form S-1 (File No.
333-43287) filed with the SEC).
10.4 Purchase and Sale Agreement, dated as of December 15, 1997, by and among Alex Cooley, S.
Stephen Selig, III, Peter Conlon, Southern Promotions, Inc., High Cotton, Inc., Cooley and
Conlon Management, Inc., Buckhead Promotions, Inc., Northern Exposure, Inc., Pure Cotton,
Inc., Interfest, Inc., Concert/Southern Chastain Promotions Joint Venture, Roxy Ventures
Joint Venture and SFX Concerts, Inc. (incorporated by reference to Registration Statement on
Form S-1 (File No. 333-43287) filed with the SEC).
10.5 Stock Purchase Agreement, dated as of December 12, 1997 by and between PACE
Entertainment Corporation and SFX Entertainment, Inc. (incorporated by reference to
Registration Statement on Form S-1 (File No. 333-43287) filed with the SEC)
10.6 Agreement and Plan of Merger, dated as of August 24, 1997, as amended on February 9,
1998, among SFX Buyer, SFX Buyer Sub and SFX Broadcasting, Inc. (composite version)
(incorporated by reference to Annex A of SFX Broadcasting, Inc.'s Definitive Proxy
Statement (File No. 000-22486) filed with the SEC on February 17, 1998)
10.7 Partnership Formation Agreement, dated as of January 22, 1988, by and among MCA
Concerts II, Inc. and PACE Entertainment Group, Inc. (incorporated by reference to
Amendment No. 1 to Form S-1 (File No. 333-43287) filed with the SEC on January 22, 1998)
</TABLE>
II-15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ------------------------------------------------------------------------------------------
<S> <C>
10.8 Lease and Use Agreement, dated as of December 9, 1987, by and between City of Dallas and
PACE Entertainment Group, Inc. (incorporated by reference to Amendment No. 1 to Form S-1
(File No. 333-43287) filed with the SEC on January 22, 1998)
10.9 Agreement, dated as of October 10, 1988, by and between the City of Atlanta and MCA
Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File No.
333-43287) filed with the SEC on January 22, 1998)
10.10 Amended Indenture of Lease, February 2, 1984, by and between the City of Atlanta and
Filmworks U.S.A., Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File
No. 333-43287) filed with the SEC on January 22, 1998)
10.11 Amendment to Lease Agreement, dated as of October 10, 1988, between the City of Atlanta,
Georgia and Filmworks U.S.A., Inc. (incorporated by reference to Amendment No. 1 to Form
S-1 (File No. 333-43287) filed with the SEC on January 22, 1998)
10.12 Agreement Regarding Sublease, dated as of January 20, 1988, by and between Filmworks
U.S.A., Inc. and MCA Concerts, Inc. (incorporated by reference to Amendment No. 1 to
Form S-1 (File No. 333-43287) filed with the SEC on January 22, 1998)
10.13 First Amendment to Sublease, dated as of January 21, 1988, between Filmworks U.S.A., Inc.
and MCA Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File
No. 333-43287) filed with the SEC on January 22, 1998)
10.14 Second Amendment to Sublease, dated as of April 19, 1988, between Filmworks U.S.A., Inc.
and MCA Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File
No. 333-43287) filed with the SEC on January 22, 1998)
10.15 Third Amendment to Sublease, dated as of September 15, 1988, between Filmworks U.S.A.,
Inc. and MCA Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1
(File No. 333-43287) filed with the SEC on January 22, 1998)
10.16 Memorandum of Agreement, dated as of October 10, 1988, by and between the City of
Atlanta and MCA Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form
S-1 (File No. 333-43287) filed with the SEC on January 22, 1998)
10.17 Assignment of Sublease, dated as of June 15, 1989, by Filmworks U.S.A., Inc. and MCA
Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File No.
333-43287) filed with the SEC on January 22, 1998)
10.18 Assignment of Sublease, dated as of June 23, 1989, by Filmworks U.S.A., Inc. and MCA
Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File No.
333-43287) filed with the SEC on January 22, 1998)
10.19 Assignment of Agreement, dated as of June 15, 1989, by the City of Atlanta and MCA
Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File No.
333-43287) filed with the SEC on January 22, 1998)
10.20 Assignment of Agreement, dated as of June 23, 1989, by the City of Atlanta and MCA
Concerts, Inc. (incorporated by reference to Amendment No. 1 to Form S-1 (File No.
333-43287) filed with the SEC on January 22, 1998)
10.21 1998 Stock Option and Restricted Stock Plan of the Company (incorporated by reference to
Form S-8 filed with the SEC)
</TABLE>
II-16
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------
<S> <C>
10.22 Credit and Guarantee Agreement, dated as of February 26, 1998, by and among SFX
Entertainment, the Subsidiary Guarantors party thereto, the Lenders party thereto, Goldman
Sachs Partners, L.P., as co-documentation agent, Lehman Commercial Paper, Inc., as
co-documentation agent and the Bank of New York, as administrative agent (incorporated by
reference to Exhibit 10.2 to Current Report on Form 8-K (File No. 333-43287) filed with the
SEC on March 10, 1998)
10.23 Increase Supplement to the Credit and Guarantee Agreement, dated as of September 10,
1998, by and among SFX Entertainment, Inc., the Subsidiary Guarantors party thereto, the
Lenders party thereto, Goldman Sachs Partners, L.P., as co-documentation agent, Lehman
Commercial Paper, Inc., as co-documentation agent and The Bank of New York, as
administrative agent (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the
SEC on September 22, 1998)
10.24 Amendment to the Credit and Guarantee Agreement, dated as of November 20, 1998, by and
among SFX Entertainment, Inc., the Subsidiary Guarantors party thereto, the Lenders party
thereto, Goldman Sachs Partners, L.P., as co-documentation agent, Lehman Commercial
Paper, Inc., as co-documentation agent and The Bank of New York, as administrative agent
(incorporated by reference to Registration Statement on Form S-4 (File No. 333-71195) filed
with the SEC on January 26, 1999)
10.25 Purchase Agreement, dated November 25, 1998, relating to the 9 1/8% Senior Subordinated
Notes due December 1, 2008 of SFX Entertainment, Inc., by and among SFX Entertainment,
Inc., Morgan Stanley & Co. Incorporated, Lehman Brothers Inc., BancBoston Robertson
Stephens Inc. and BNY Capital Markets, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
10.26 Amendment No. 2 to Agreement and Plan of Merger among SBI Holdings Corporation, SBI
Radio Acquisition Corporation and SFX Broadcasting, Inc., dated March 9, 1998
(incorporated by reference to Annual Report on Form 10-K (File No. 333-43287) filed with
the SEC on March 18, 1998)
10.27 Stock Purchase Agreement, dated as of April 29, 1998, among SFX Sports Group, Inc., SFX
Entertainment, Inc. and David Falk, Curtis Polk and G. Michael Higgins (incorporated by
reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on
May 5, 1998)
10.28 Asset Purchase Agreement, dated April 29, 1998, by and among Blackstone Entertainment
LLC, its members, DLC Acquisition Corp., and SFX Entertainment, Inc. (incorporated by
reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on
May 5, 1998)
10.29 Purchase and Sale Agreement, dated April 22, 1998, by and among Oakdale Concerts, LLC,
Oakdale Development Limited Partnership and Oakdale Theater Concerts, Inc. (incorporated
by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on
May 5, 1998)
10.30 Amended and Restated Employment Agreement, dated as of December 12, 1997, by and
between SFX Entertainment, Inc. and Brian E. Becker (incorporated by reference to
Amendment No. 1 to Form S-1 (File No. 333-43287) filed with the SEC on January 22, 1998)
10.31 Employment Agreement between SFX Entertainment, Inc. and David Falk, dated as of
April 29, 1998 (incorporated by reference to Amendment No. 2 to Form S-1 (File No.
333-50079) filed with the SEC on May 19, 1998)
10.32 Employment Agreement between SFX Entertainment, Inc. and Robert F.X. Sillerman, dated
as of May 28, 1998 (incorporated by reference to Amendment No. 2 to Form S-4 (File No.
333-50331) filed with the SEC on June 9, 1998)
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ------------------------------------------------------------------------------------------------
<S> <C>
10.33 Employment Agreement between SFX Entertainment, Inc. and Michael G. Ferrel, dated as of
May 28, 1998 (incorporated by reference to Amendment No. 2 to Form S-4 (File No.
333-50331) filed with the SEC on June 9, 1998)
10.34 Employment Agreement between SFX Entertainment, Inc. and Thomas P. Benson, dated as
of May 28, 1998 (incorporated by reference to Amendment No. 2 to Form S-4 (File No.
333-50331) filed with the SEC on June 9, 1998)
10.35 Employment Agreement between SFX Entertainment, Inc. and Howard J. Tytel, dated as of
May 28, 1998 (incorporated by reference to Amendment No. 2 to Form S-4 (File No.
333-50331) filed with the SEC on June 9, 1998)
10.36 Agreement and Plan of Merger, dated as of August 6, 1998, among SFX Entertainment, Inc.,
MWE Acquisition Corp. and Magicworks Entertainment Incorporated (incorporated by
reference to Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with the SEC on
August 13, 1998)
10.37 Agreement and Plan of Merger, as amended, among SFX Entertainment, Inc., SFX
Acquisition Corp. and The Marquee Group, Inc. (incorporated by reference to Registration
Statement on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
10.38 Director Deferred Stock Ownership Plan of the Company (incorporated by reference to
Registration Statement on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
10.39 Stock Purchase Agreement, dated January 25, 1999, by and among SFX Entertainment, Inc.
and the sellers party thereto (incorporated by reference to Amendment No. 1 to Form S-4
(File No. 333-71195) filed with the SEC on February 5, 1999).
10.40 Purchase Agreement, dated February 1, 1999, by and among SFX Entertainment, Inc.,
Concert Acquisition Sub, Inc., Nederlander of New Mexico LLC, Nederlander Festivals, Inc
and the other sellers party thereto (incorporated by reference to Amendment No. 1 to Form
S-4 (File No. 333-71195) filed with the SEC on February 5, 1999).
10.41 Asset Purchase Agreement, dated February 1, 1999, by and among SFX Entertainment, Inc.,
Concert Acquisition Sub, Inc. and Nederlander of Ohio, Inc. (incorporated by reference to
Amendment No. 1 to Form S-4 (File No. 333-71195) filed with the SEC on February 5, 1999)
10.42 Membership Interest Purchase Agreement, dated February 1, 1999, by and among SFX
Entertainment, Inc., Concert Acquisition Sub, Inc., Nederlander Arena Management, LLC,
Nederlander Cincinnati, LLC, Nederlander Club Management LLC and the other sellers party
thereto (incorporated by reference to Amendment No. 1 to Form S-4 (File No. 333-71195)
filed with the SEC on February 5, 1999).
10.43 Stock Purchase Agreement, dated February 1, 1999, by and among SFX Entertainment, Inc.,
Concert Acquisition Sub, Inc., Greater Detroit Theatres, Inc. and the other sellers party
thereto (incorporated by reference to Amendment No. 1 to Form S-4 (File No. 333-71195)
filed with the SEC on February 5, 1999).
12.1+ SFX Entertainment, Inc. Ratio of Earnings To Fixed Charges.
21.1 Subsidiaries of SFX Entertainment, Inc. (incorporated by reference to Registration Statement
on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
23.1* Consent of Baker & McKenzie (included in Exhibits 5.1 and 8.1)
23.2+ Consent of Ernst & Young LLP
23.3+ Consents of Arthur Andersen LLP
23.4+ Consents of PricewaterhouseCoopers LLP
23.5+ Consent of Grant Thornton
23.6+ Consent of Richard E. Woodhall
</TABLE>
II-18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------
<S> <C>
23.7+ Consent of David Berdon & Co., LLP
24.1+ Power of Attorney for Ronald D. Andrew
24.2+ Power of Attorney for D. Geoffrey Armstrong
24.3+ Power of Attorney for William O.S. Ballard
24.4+ Power of Attorney for Allen J. Becker
24.5+ Power of Attorney for Brian Becker
24.6+ Power of Attorney for Gary Becker
24.7+ Power of Attorney for Thomas P. Benson
24.8+ Power of Attorney for Bill Brusca
24.9+ Power of Attorney for Robert Brian Cayne, Jr.
24.10+ Power of Attorney for Nicholas P. Clainos
24.11+ Power of Attorney for Michael Cohl
24.12+ Power of Attorney for Peter Conlon
24.13+ Power of Attorney for Ron Delsener
24.14+ Power of Attorney for Edward F. Dugan
24.15+ Power of Attorney for David B. Falk
24.16+ Power of Attorney for Michael G. Ferrel
24.17+ Power of Attorney for Kraig Fox
24.18+ Power of Attorney for Greg Gamble
24.19+ Power of Attorney for G. Michael Higgins
24.20+ Power of Attorney for Jonathan Hochwald
24.21+ Power of Attorney for Paul Kramer
24.22+ Power of Attorney for Richard A. Liese
24.23+ Power of Attorney for Joe Marsh
24.24+ Power of Attorney for Nina Mitchell
24.25+ Power of Attorney for Terence Moloney
24.26+ Power of Attorney for James F. O'Grady, Jr.
24.27+ Power of Attorney for Gregg W. Perloff
24.28+ Power of Attorney for Robert F.X. Sillerman
24.29+ Power of Attorney for Mitch Slater
24.30+ Power of Attorney for Peter Strauss
24.31+ Power of Attorney for Stephen Welkom
24.32+ Power of Attorney for Miles C. Wilkin
25.1+ Statement of Eligibility and Qualification on Form T-1 of Trustee
99.1+ Form of Letter of Transmittal
99.2+ Form of Notice of Guaranteed Delivery
99.3+ Form of Letter to Clients
99.4+ Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
</TABLE>
- ----------
+ Filed herewith.
* To be filed by amendment
II-19
<PAGE>
(b) Financial Schedules.
None.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
II-20
<PAGE>
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX ENTERTAINMENT, INC.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel
Executive Vice President, General
Counsel, Member of the Office of
the
Chairman and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- --------------------------------- ------------------
<S> <C> <C>
* Executive Chairman, Member February 12, 1999
-----------------------
of the Office of the Chairman
Robert F.X. Sillerman
and Director (principal
executive officer)
* President, Chief Executive February 12, 1999
-----------------------
Officer, Member of the Office
Michael G. Ferrel
of the Chairman and Director
* Director, Executive Vice February 12, 1999
-----------------------
President and Member of the
Brian Becker
Office of the Chairman
* Member of the Office of the February 12, 1999
-----------------------
Chairman and Director
David Falk
/s/ Howard J. Tytel Executive Vice President, February 12, 1999
-----------------------
General Counsel, Secretary,
Howard J. Tytel
Member of the Office of the
Chairman and Director
* Chief Financial Officer, Vice February 12, 1999
-----------------------
President and Director
Thomas P. Benson
(principal financial and
accounting officer)
* Director, Senior Vice President February 12, 1999
-----------------------
and Associate Counsel
Richard A. Liese
</TABLE>
II-22
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ---------- ------------------
<S> <C> <C>
* Director February 12, 1999
-----------------------
D. Geoffrey Armstrong
* Director February 12, 1999
-----------------------
James F. O'Grady, Jr.
* Director February 12, 1999
-----------------------
Paul Kramer
* Director February 12, 1999
-----------------------
Edward F. Dugan
</TABLE>
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
AKG, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Vice President February 12, 1999
- -----------------------------
Thomas P. Benson (principal financial and accounting
officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
American Artists, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- -----------------------------
(principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
American Artists Limited, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- -----------------------------
(principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
American Broadway, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-Fact for Gary Becker,
President and Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* President and Director February 12, 1999
- -----------------------------
(principal executive officer)
Gary Becker
* Director February 12, 1999
- -----------------------------
Kraig G. Fox
* Director February 12, 1999
- -----------------------------
Peter Strauss
* Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Terence Moloney principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Amphitheater Entertainment Partnership
By: SM/PACE, Inc., as general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson
principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- -----------------------------
(principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Ant Theatrical Productions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Chief Executive Officer and Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson
and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Ardee Festivals N.J., Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Atlanta Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson
principal accounting officer)
* Director February 12, 1999
- -----------------------------
Peter Conlon
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Audrey & Jane, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson
principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Avalon Acquisition Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson
principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-33
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Beach Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson
principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-34
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
BGP Acquisition, L.L.C. By: SFX
Entertainment, Inc., its managing
member
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------------ ------------------
<S> <C> <C>
* Executive Chairman, Member of the February 12, 1999
- ----------------------------- Office of the Chairman and Director
Robert F.X. Sillerman
(principal executive officer)
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
D. Geoffrey Armstrong
* Chief Financial Officer, Vice President February 12, 1999
- ----------------------------- and Director (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Richard A. Liese
* Director February 12, 1999
- -----------------------------
James F. O'Grady, Jr.
* Director February 12, 1999
- -----------------------------
Paul Kramer
* Director February 12, 1999
- -----------------------------
Edward F. Dugan
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-35
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
BGP Denver, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Stephen Welkom
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-36
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
BG Presents, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-37
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Bill Graham Enterprises, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-38
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Bill Graham Management, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-39
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Bill Graham Presents, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-40
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Boston Playhouse Realty, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- -----------------------------
(principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- -----------------------------
(principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- -----------------------------
(principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-41
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Boylston Street Theatre Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- -----------------------------
(principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-42
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Broadway Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-43
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Broadway Series Associates, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson
principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-44
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Broadway Series Management Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-45
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Camarillo Amphitheater Managing
Partners, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-46
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Cheva Touring Company
By: Magicworks Entertainment
Incorporated,
as a majority holder
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-47
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Concert Productions International B.V.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Managing Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Attorney-in-fact February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Managing Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-48
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Concert Productions (UK) Limited
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-49
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* President, Chief Executive Officer and February 12, 1999
- ----------------------------- Director (principal executive officer)
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-50
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Conn Ticketing Company
By: Northeast Ticketing Company,
a general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Vice President and Chief Financial February 12, 1999
- ----------------------------- Officer (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-51
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Connecticut Amphitheater Development
Corporation
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-52
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Connecticut Concerts Incorporated
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-53
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Connecticut Performing Arts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------ ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer (principal February 12, 1999
- ----------------------------- financial officer and principal
Thomas P. Benson accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-54
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Connecticut Performing Arts Partners
By: NOC, Inc., a general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Vice President and Chief Financial February 12, 1999
- ----------------------------- Officer (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-55
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Contemporary Group Acquisition Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer & Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-56
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Contemporary Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-57
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Contemporary Marketing, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-58
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Contemporary Productions Incorporated
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-59
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Contemporary Sports Incorporated
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-60
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Cooley and Conlon Management Co.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Peter Conlon
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-61
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Deer Creek Amphitheater Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-62
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Deer Creek Amphitheater Concerts, L.P.
By: Deer Creek Amphitheater Concerts,
Inc., its general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President and Chief Financial February 12, 1999
- ----------------------------- Officer (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-63
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Delsener/Slater Enterprises, Ltd.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-fact
for Ron Delsener and Mitch Slater,
Co-Presidents and Co-Chief Executive Officers
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------- ------------------
<S> <C> <C>
* Co-President, Co-Chief Executive February 12, 1999
- ----------------------------- Officer and Director (co-principal
Ron Delsener executive officer)
* Co-President, Co-Chief Executive February 12, 1999
- ----------------------------- Officer and Director (co-principal
Mitch Slater executive officer)
* Chief Financial Officer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-64
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
DiCesare-Engler, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (prinicpal executive officer)
Howard J. Tytel
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-65
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
DiCesare-Engler Promotions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (prinicpal executive officer)
Howard J. Tytel
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-66
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
DLC Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-67
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
DLC Funding Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-68
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Dumb Deal, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-69
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Eagle Eye Entertainment, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Miles C. Wilkin
* Director February 12, 1999
- -----------------------------
Ronald D. Andrew
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-70
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Eagle Eye Entertainment USA Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert R.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-71
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
EMI Acquisition Sub, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-72
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Entertainment Performing Arts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-73
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Event Merchandising, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Chief Executive Officer, President and February 12, 1999
- ----------------------------- Director
Michael G. Ferrel (principal executive officer)
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
Director February 12, 1999
- -----------------------------
Howard Kaufman
Director February 12, 1999
- -----------------------------
Howard Rose
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-74
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Exit 116 Revisited, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-75
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Falk Associates Management Enterprises,
Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Chairman of the Board and Director February 12, 1999
- ----------------------------- (principal executive officer)
David B. Falk
* Director February 12, 1999
- -----------------------------
Curtis J. Polk
* Director February 12, 1999
- -----------------------------
Richard A. Liese
* Director February 12, 1999
- -----------------------------
G. Michael Higgins
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-76
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Festival Productions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Vice February 12, 1999
- ----------------------------- President (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Brian J. Becker
* Director February 12, 1999
- -----------------------------
Allen Becker
* Treasurer February 12, 1999
- ----------------------------- (principal accountng officer)
Greg Gamble
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-77
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Fillmore Corporation
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Vice President and Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-78
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Fillmore Fingers, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-79
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Financial Advisory Management
Enterprises, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-fact
for David B. Falk, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
G. Michael Higgins
* Director February 12, 1999
- -----------------------------
Richard A. Liese
* Director February 12, 1999
- -----------------------------
Thomas P. Benson
* Chairman of the Board and Director February 12, 1999
- ----------------------------- (principal executive officer)
David B. Falk
* Director February 12, 1999
- -----------------------------
Curtis Polk
* Vice President, Secretary and Director February 12, 1999
- ----------------------------- (principal financial officer and
Nina Mitchell principal accounting officer)
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-80
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Gershwins' Fascinating Rhythm By:
Magicworks Entertainment Incorporated,
as a majority holder
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-81
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Grand Slam Sports Marketing, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-82
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
GSAC Partners By: Pavilion Partners,
its general partner By: SM/PACE, Inc.,
its general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Vice February 12, 1999
- ----------------------------- President (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-83
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
High Cotton, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Peter Conlon
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-84
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
In House Tickets, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-85
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music (Canada) Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President, and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Chief Executive Officer February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
* Director February 12, 1999
- -----------------------------
Michael Cohl
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-86
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music (USA) Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-87
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music Ltd.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-88
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music Tour I Ltd.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-89
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music Tour II Ltd.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-90
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music Tour I (USA) Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-91
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
International Music Tour II (USA) Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-92
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Irvine Meadows Amphitheater
By: Avalon Acquisition Corp., as
general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-93
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Irving Plaza Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-Fact for Thomas P. Benson,
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Bill Brusca
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal executive officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-94
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Jefko Touring Company By: Magicworks
Entertainment Incorporated,
as a majority holder
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-95
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicsports -- Grand Slam Management, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-96
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-97
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Entertainment Asia Limited
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
General Manager
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------ ------------------
<S> <C> <C>
* Managing Director February 12, 1999
- -----------------------------
Robert Brian Cayne, Jr.
* Director February 12, 1999
- -----------------------------
Joe Marsh
/s/ Howard J. Tytel General Manager February 12, 1999
- ----------------------------- (principal executive, financial and
Howard J. Tytel accounting officer)
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-98
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Entertainment Incorporated
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-99
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Entertainment International,
Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-100
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Exhibitions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-101
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Exhibitions Joint Venture
By: Magicworks Entertainment
Incorporated,
as a majority holder
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-102
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Fashion Management, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-103
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Merchandising, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-104
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Sports Management, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-105
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Theatricals, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-106
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks Transportation, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-107
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Magicworks West, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-108
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Marco Entertainment, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-109
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Melody Tent and Amphitheater, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-110
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Murat Center Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-111
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Murat Center Concerts, L.P. By: Murat
Center Concerts, Inc.,
its general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, General February 12, 1999
- ----------------------------- Counsel, Secretary and Director
Howard J. Tytel (principal executive officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-112
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
New Avalon, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Chief Executive Officer, President and February 12, 1999
- ----------------------------- Director
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-113
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
NOC, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson accounting officer)
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-114
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Northeast Ticketing Company
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director
Howard J. Tytel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson accounting officer)
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-115
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Oakdale Theater Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-116
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Old PCI, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President, and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-117
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE AEP Acquisition, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-118
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE (UK)
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* President February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel (principal executive officer, principal February 12, 1999
------------------------- financial officer and principal
Howard J. Tytel accounting officer)
Attorney-in-fact
</TABLE>
II-119
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Amphitheatres, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-120
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Amphitheater Management, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-121
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Bayou Place, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-122
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Communications, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-123
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Concerts GP, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------ ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-124
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Concerts, Ltd.
By: PACE Concerts GP, Inc., as general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-125
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Entertainment Corporation
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-126
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Entertainment GP Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-127
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Entertainment Group, Ltd.
By: PACE Entertainment GP Corp.,
as a general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-128
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Milton Keynes, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-129
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Motor Sports, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-130
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Music Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-131
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Productions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-132
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Theatrical Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-133
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Touring, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-134
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE U.K. Holding Corporation
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-135
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PACE Variety Entertainment, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-Fact for Jonathan Hochwald,
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* President February 12, 1999
- ----------------------------- (principal executive officer)
Jonathan Hochwald
* Director February 12, 1999
- -----------------------------
Kraig Fox
* Director February 12, 1999
- -----------------------------
Gary Becker
* Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Terence Moloney principal accounting officer)
* Director February 12, 1999
- -----------------------------
Peter Strauss
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-136
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Pavilion Partners
By: SM/PACE, Inc., its general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-137
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PEC, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President (principal financial February 12, 1999
- ----------------------------- officer and principal accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-138
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Performing Arts Management of
North Miami, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-139
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Polaris Amphitheater Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-140
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
PTG-Florida, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-141
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
QN Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-142
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Rugrats American Tour, Ltd.
By: PACE Variety Entertainment, Inc.,
as general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-Fact for Jonathan
Hochwald, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* President February 12, 1999
- ----------------------------- (principal executive officer)
Jonathan Hochwald
* Director February 12, 1999
- -----------------------------
Kraig Fox
* Director February 12, 1999
- -----------------------------
Gary Becker
* Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Terence Moloney principal accounting officer)
* Director February 12, 1999
- -----------------------------
Peter Strauss
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-143
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Acquisition Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-144
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Concerts of the Midwest, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Vice President and Chief Financial February 12, 1999
- ----------------------------- Officer (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-145
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Concerts, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Treasurer and Chief Financial Officer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-146
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Delaware, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-147
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Network Group, L.L.C.
By: SFX Entertainment, Inc.,
its Managing Member
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------------ ------------------
<S> <C> <C>
* Executive Chairman, Member of the February 12, 1999
- ----------------------------- Office of the Chairman and Director
Robert F.X. Sillerman (principal executive officer)
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
D. Geoffrey Armstrong
* Chief Financial Officer, Vice President February 12, 1999
- ----------------------------- and Director (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Richard A. Liese
* Director February 12, 1999
- -----------------------------
James F. O'Grady, Jr.
* Director February 12, 1999
- -----------------------------
Paul Kramer
* Director February 12, 1999
- -----------------------------
Edward F. Dugan
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-148
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Sports Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-149
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Radio Network, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- -------------------------------------- ------------------
<S> <C> <C>
* Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Director February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-150
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SFX Touring, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-151
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Shelli Meadows, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-152
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Shoreline Amphitheatre, Ltd.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-153
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Shoreline Amphitheatre Partners
By: Shoreline Ampitheatre, Ltd.,
its general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Chief Financial Officer and Vice February 12, 1999
- ----------------------------- President (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-154
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
SM/PACE, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Vice February 12, 1999
- ----------------------------- President (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-155
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Southeast Ticketing Company
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Ron Delsener
* Director February 12, 1999
- -----------------------------
Mitch Slater
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-156
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Southern Promotions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Peter Conlon
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-157
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
STEP Entertainment Services, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Chief Executive Officer February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Vice President of Finance and February 12, 1999
- ----------------------------- Treasurer (principal financial officer
Thomas P. Benson and principal accounting officer)
* Director February 12, 1999
- -----------------------------
William O.S. Ballard
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-158
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Sunshine Concerts, L.L.C.
By: SFX Concerts of the Midwest, Inc.,
its managing member
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ----------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Vice President and Chief Financial February 12, 1999
- ----------------------------- Officer (principal financial officer and
Thomas P. Benson principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-159
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Sunshine Designs, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-160
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Sunshine Designs, L.P.
By: Sunshine Designs, Inc., its general
partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-161
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Suntex Acquisition, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-162
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Suntex Acquisition, L.P.
By: Suntex Acquisition, Inc., its
general partner
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Vice President and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-163
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
TAP Productions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-164
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
TBA Media, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Chief Executive Officer, President and February 12, 1999
- ----------------------------- Director (principal executive officer)
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-165
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Tennis Events, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-166
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
The Album Network, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- -------------------------------------- ------------------
<S> <C> <C>
* Chief Executive Officer and Director February 12, 1999
- ----------------------------- (principal executive officer)
Michael G. Ferrel
* Treasurer and Director (principal February 12, 1999
- ----------------------------- financial officer and principal
Thomas P. Benson accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-167
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
The Gin Touring Company
By: Magicworks Entertainment Incorporated,
as a majority holder
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Joe Marsh
* Director February 12, 1999
- -----------------------------
Brian Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-168
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
The Wedding Tour Company
By: PACE Variety Entertainment, Inc.,
as a majority holder
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-Fact for Jonathan
Hochwald, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* President February 12, 1999
- ----------------------------- (principal executive officer)
Jonathan Hochwald
* Director February 12, 1999
- -----------------------------
Kraig Fox
* Director February 12, 1999
- -----------------------------
Gary Becker
* Director February 12, 1999
- -----------------------------
Peter Strauss
* Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Terence Moloney principal accounting officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-169
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Ticket Service, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (prinicpal executive officer)
Howard J. Tytel
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-170
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Touring Artists Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-171
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Touring Artists Group, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Treasurer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-172
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Touring Productions, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-173
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Tremont Street Theatre Corporation II, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-174
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Tuneful Company, Inc.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-175
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Warrenton Street Theatre Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Vice President February 12, 1999
- ----------------------------- (principal financial officer)
Thomas P. Benson
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
* Director February 12, 1999
- -----------------------------
Allen J. Becker
* Director February 12, 1999
- -----------------------------
Brian Becker
* Treasurer February 12, 1999
- ----------------------------- (principal accounting officer)
Greg Gamble
*By: /s/ Howard J. Tytel February 12, 1999
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-176
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Westbury Music Fair, L.L.C.
By: Delsener/Slater Enterprises, Ltd.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Attorney-in-fact
for Ron Delsener and Mitch Slater,
Co-Presidents and Co-Chief Executive Officers
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ------------------------------------ ------------------
<S> <C> <C>
* Chief Financial Officer (principal February 12, 1999
- ----------------------------- financial officer and principal
Thomas P. Benson accounting officer)
* Co-President, Co-Chief Executive February 12, 1999
- ----------------------------- Officer and Director (co-principal
Ron Delsener executive officer)
* Co-President, Co-Chief Executive February 12, 1999
- ----------------------------- Officer and Director (co-principal
Mitch Slater executive officer)
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-177
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
West Coast Amphitheater Corp.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------- ------------------
<S> <C> <C>
* Executive Chairman and Director February 12, 1999
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer February 12, 1999
- ----------------------------- (principal financial officer and
Thomas P. Benson principal accounting officer)
/s/ Howard J. Tytel Director February 12, 1999
- -----------------------------
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-178
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Western Amphitheater Partners
By: Pavilion Partners, as general
partner and SM/PACE, Inc. as general
partner of Pavilion Partners
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Michael G. Ferrel
* Chief Financial Officer and Vice February 12, 1999
- ----------------------------- President (principal financial officer
Thomas P. Benson and principal accounting officer)
/s/ Howard J. Tytel Executive Vice President, Secretary February 12, 1999
- ----------------------------- and Director (principal executive
Howard J. Tytel officer)
* Director February 12, 1999
- -----------------------------
Brian Becker
* Director February 12, 1999
- -----------------------------
Allen J. Becker
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-179
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on February 12, 1999.
Wolfgang Records
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of
the registrant, its general partner or managing member, as the case may be, and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -----------------------------
Robert F.X. Sillerman
* Director February 12, 1999
- -----------------------------
Nicholas P. Clainos
* Director February 12, 1999
- -----------------------------
Gregg W. Perloff
* Director February 12, 1999
- -----------------------------
Stephen Welkom
* Vice President February 12, 1999
- ----------------------------- (principal financial and accounting
Thomas P. Benson officer)
/s/ Howard J. Tytel Executive Vice President and Director February 12, 1999
- ----------------------------- (principal executive officer)
Howard J. Tytel
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-180
<PAGE>
The Commonwealth of Massachusetts
Articles of Organization
Incorporators
Jon B. Platt 1011 Beacon Street #4
Brookline, MA 02146
Name by which known:
American Artists, Inc.
Purpose:
To present, produce, manage, conduct, and represent at any
theater, music hall, or place or amusement or entertainment, such
plays, dramas, comedies, operas, and other concerts, musical and other
pieces, ballets, shows, exhibitions, variety and other entertainments
as the company may from time to time think fit; to own, lease,
control, maintain and operate theaters and other places of
entertainment to carry on the above-described business; to act as
consultants and agents for actors, entertainers and other performers;
and to engage in any and all activities necessary or incidental to the
above activities.
To carry on any business or other activity which may be
lawfully carried on by a corporation organized under the Business
Corporation Law of the Commonwealth, whether or not related to those
referred to in the foregoing paragraph.
1
<PAGE>
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK ------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES PAR AMOUNT
VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Preferred None None $
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Common 15,000 None
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Not applicable.
Restrictions
See 5a attached hereto
None
2
<PAGE>
5a.
Any stockholder, including the heirs, assigns, executors or
administrators of a deceased stockholder, desiring to sell or transfer such
stock owned by him or them, shall first offer it to the corporation through the
Board of Directors, in the manner following:
He shall notify the directors of his desire to sell or transfer by
notice in writing, which notice shall contain the price at which he is willing
to sell or transfer and the name of one arbitrator. The directors shall within
thirty days thereafter either accept the offer, or by notice to him in writing
name a second arbitrator, and these two shall name a third. It shall then be
the duty of the arbitrators to ascertain the value of the stock, and if any
arbitrator shall neglect or refuse to appear at any meeting appointed by the
arbitrators, a majority may act in the absence of such arbitrator.
After the acceptance of the offer, or the report of the arbitrators as
to the value of the stock, the Directors shall have thirty days within which to
purchase the same at such valuation, but if at the expiration of thirty days,
the corporation shall not have exercised the right to purchase, the owner of
the stock shall be at liberty to dispose of the same in any manner he may see
fit.
No shares of stock shall be sold or transferred on the books of the
corporation until these provisions have been complied with, but the Board of
Directors may, in any particular instance, waive these requirements.
In the event the corporation does not choose to purchase the stock,
any stockholder desiring to sell or transfer such stock owned by him, shall
then offer it to the remaining stockholders in the same manner set out above.
3
<PAGE>
Principal Office
1011 Beacon St., #4, Brookline, MA 02146
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C> <C>
PRESIDENT: Jon Platt 1011 Beacon Street 1011 Beacon Street
Brookline, MA Brookline, MA
TREASURER: Donald Tirabassi 109 West Foster Road 109 West Foster Road
Melrose, MA Melrose, MA
CLERK: Michael Greenblatt 117 Commonwealth Avenue 117 Commonwealth Avenue
Boston, MA Boston, MA
DIRECTORS: Jon Platt 1011 Beacon Street 1011 Beacon Street
Brookline, MA Brookline, MA
Donald Tirabassi 109 West Foster Road 109 West Foster Road
Melrose, MA Melrose, MA
Michael Greenblatt 117 Commonwealth Avenue 117 Commonwealth Avenue
Boston, MA Boston, MA
</TABLE>
Fiscal year end
December 31st in each year
4
<PAGE>
Annual Meeting
Third Monday in January in each year
None
Witnesseth this 14th day of June, 1984
/s/ Jon B. Platt
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
5
<PAGE>
BYLAWS
OF
AMERICAN ARTISTS, INC.
Article I
Offices
Section 1. Registered Office. The registered office of the
Corporation required by the Massachusetts Business Corporation Law to be
maintained in the Commonwealth of Massachu setts, shall be the registered
office named in the original Certificate of Incorporation of the Corporation,
or such other office as may be designated from time to time by the Board of
Directors in the manner provided by law. Should the Corporation maintain a
principal office within the Commonwealth of Massachusetts such registered
office need not be identical to such principal office of the Corporation.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the Commonwealth of
Massachusetts as the Board of Directors may from time to time determine or the
business of the Corporation may require.
Article Il
Stockholders
Section 1. Place of Meetings. All meetings of the
stockholders shall be held at the principal office of the Corporation, or at
such other place within or without the Commonwealth of Massachusetts as shall
be specified or fixed in the notices or waivers of notice thereof.
Section 2. Quorum: Adjournment of Meetings. Unless otherwise
required by law or provided in the Certificate of Incorporation or these
bylaws, the holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of stockholders for the transaction of
business and the act of a majority of such stock so represented at any meeting
of stockholders at which a quorum is present shall constitute the act of the
meeting of stockholders. The stockholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Notwithstanding the other provisions of the Certificate of
Incorporation or these bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy, at any meeting of stockholders, whether or not a quorum is present,
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If
<PAGE>
the adjournment is for more than thirty (30) days, or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at such
meeting. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally called.
Section 3. Annual Meetings. An annual meeting of the
stockholders, for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the Commonwealth of
Massachusetts, on such date, and at such time as the Board of Directors shall
fix and set forth in the notice of the meeting, which date shall be within
thirteen (13) months subsequent to the later of the date of incorporation or
the last annual meeting of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board (if
any), by the President or by a majority of the Board of Directors, or by a
majority of the executive committee (if any), and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent
(10%) of the issued and outstanding stock entitled to vote at such meeting.
Section 5. Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders,
or any adjournment thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors of the Corporation
may fix, in advance, a date as the record date for any such determination of
stockholders, which date shall not be more than sixty (60) days nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the Board of Directors does not fix a record date for any
meeting of the stockholders, the record date for determining stockholders
entitled to notice of or to vote at such meeting shall be at the close of
business on the day next preceding the day on which notice is given, or, if in
accordance with Article VIII, Section 3 of these bylaws notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. If, in accordance with Section 12 of this Article II, corporate action
without a meeting of stockholders is to be taken, the record date for
determining stockholders entitled to express consent to such corporate action
in writing, when no prior action by the Board of Directors is necessary, shall
be the day on which the first written consent is expressed. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
- 2 -
<PAGE>
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
Section 6. Notice of Meetings. Written notice of the place,
date and hour of all meetings, and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be given by or at the
direction of the Chairman of the Board (if any) or the President, the Secretary
or the other person(s) calling the meeting to each stockholder entitled to vote
thereat not less than ten (10) nor more than sixty (60) days before the date of
the meeting. Such notice may be delivered either personally or by mail. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 7. Stock List. A complete list of stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order
for each class of stock and showing the address of each such stockholder and
the number of shares registered in the name of such stockholder, shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The stock list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to a corporate action
in writing without a meeting may authorize another person or persons to act for
him by proxy. Proxies for use at any meeting of stockholders shall be filed
with the Secretary, or such other officer as the Board of Directors may from
time to time determine by resolution, before or at the time of the meeting. All
proxies shall be received and taken charge of and all ballots shall be received
and canvassed by the secretary of the meeting who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions.
No proxy shall be valid after three (3) years from its date,
unless the proxy provides for a longer period. Each proxy shall be revocable
unless expressly provided therein to be irrevocable and coupled with an
interest sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as
proxies, unless such instrument shall provide the contrary, a majority of such
persons present at any meeting at which their powers thereunder are to be
exercised shall have and may exercise all the powers of voting or giving
consents thereby conferred, or if only one be present, then such powers may be
exercised by that one; or, if an even number attend and a majority do not agree
on any particular issue, each proxy
- 3 -
<PAGE>
so attending shall be entitled to exercise such powers in respect of the same
portion of the shares as he is of the proxies representing such shares.
Section 9. Voting; Elections; Inspectors. Unless otherwise
required by law or provided in the Certificate of Incorporation, each
stockholder shall have one vote for each share of stock entitled to vote which
is registered in his name on the record date for the meeting. Shares registered
in the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the bylaw (or comparable instrument) of such
corporation may prescribe, or in the absence of such provision, as the Board of
Directors (or comparable body) of such corporation may determine. Shares
registered in the name of a deceased person may be voted by his executor or
administrator, either in person or by proxy.
All voting, except as required by the Certificate of
Incorporation or where otherwise required by law, may be by a voice vote;
provided, however, that upon demand therefor by stockholders holding a majority
of the issued and outstanding stock present in person or by proxy at any
meeting a stock vote shall be taken. Every stock vote shall be taken by written
ballots, each of which shall state the name of the stockholder or proxy voting
and such other information as may be required under the procedure established
for the meeting. All elections of directors shall be by ballot, unless
otherwise provided in the Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the
chairman of the meeting may appoint one or more inspectors, each of whom shall
subscribe an oath or affirmation to execute faithfully the duties of inspector
at such meeting with strict impartiality and according to the best of his
ability. Such inspector shall receive the ballots, count the votes and make and
sign a certificate of the result thereof. The chairman of the meeting may
appoint any person to serve as inspector, except no candidate for the office of
director shall be appointed as an inspector.
Unless otherwise provided in the Certificate of
Incorporation, cumulative voting for the election of directors shall be
prohibited.
Section 10. Conduct of Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board (if any), or
if he is not present, by the President, or if neither the Chairman of the Board
(if any), nor President is present, by a chairman elected at the meeting. The
Secretary of the Corporation, if present, shall act as secretary of such
meetings, or if he is not present, an Assistant Secretary shall so act; if
neither the Secretary nor an Assistant Secretary is present, then a secretary
shall be appointed by the chairman of the meeting. The chairman of any meeting
of stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order. Unless the chairman of the meeting of
stockholders shall otherwise determine, the order of business shall be as
follows:
(a) Calling of meeting to order.
- 4 -
<PAGE>
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting
called for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
Section 11. Treasury Stock. The Corporation shall not vote,
directly or indirectly, shares of its own stock owned by it and such shares
shall not be counted for quorum purposes.
Section 12. Action Without Meeting. Unless otherwise provided
in the Certificate of Incorporation, any action permitted or required by law,
the Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
Article III
Board of Directors
Section 1. Power; Number; Term of Office. The business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors, and subject to the restrictions imposed by law or the
Certificate of Incorporation, they may exercise all the powers of the
Corporation.
The number of directors which shall constitute the whole
Board of Directors, shall be determined from time to time by resolution of the
stockholders (provided that no decrease in the number of directors which would
have the effect of shortening the term of an incumbent director
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may be made by the stockholders). If the stockholders make no such
determination, the number of directors shall be the number set forth in the
Certificate of Incorporation. Each director shall hold office for the term for
which he is elected, and until his successor shall have been elected and
qualified or until his earlier death, resignation or removal.
Unless otherwise provided in the Certificate of
Incorporation, directors need not be stockholders nor residents of the
Commonwealth of Massachusetts.
Section 2. Quorum. Unless otherwise provided in the
Certificate of Incorporation, a majority of the total number of directors shall
constitute a quorum for the transaction of business of the Board of Directors
and the vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
Section 3. Place of Meetings; Order of Business. The
directors may hold their meetings and may have an office and keep the books of
the Corporation, except as otherwise provided by law, in such place or places,
within or without the Commonwealth of Massachusetts, as the Board of Directors
may from time to time determine by resolution. At all meetings of the Board of
Directors business shall be transacted in such order as shall from time to time
be determined by the Chairman of the Board (if any), or in his absence by the
President, or by resolution of the Board of Directors.
Section 4. First Meeting. Each newly elected Board of
Directors may hold its first meeting for the purpose of organization and the
transaction of business, if a quorum is present, immediately after and at the
same place as the annual meeting of the stockholders. Notice of such meeting
shall not be required. At the first meeting of the Board of Directors in each
year at which a quorum shall be present, held next after the annual meeting of
stockholders, the Board of Directors shall proceed to the election of the
officers of the Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as shall be designated from
time to time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board (if any), the President
or, on the written request of any two directors, by the Secretary, in each case
on at least twenty-four (24) hours personal, written, telegraphic, cable or
wireless notice to each director. Such notice, or any waiver thereof pursuant
to Article VIII, Section 3 hereof, need not state the purpose or purposes of
such meeting, except as may otherwise be required by law or provided for in the
Certificate of Incorporation or these bylaws.
Section 7. Removal. Any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors; provided that,
if the Certificate of Incorporation expressly grants to stockholders the right
to cumulate votes for the election of directors and if less than the entire
board is to be removed,
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no director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire Board of Directors, or, if there be classes of directors, at an
election of the class of directors of which such director is a part.
Section 8. Vacancies; Increases in the Number of Directors.
Unless otherwise provided in the Certificate of Incorporation, vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in
office, although less there a quorum, or a sole remaining director; and any
director so chosen shall hold office until the next annual election and until
his successor shall be duly elected and shall qualify, unless sooner displaced.
If the directors of the Corporation are divided into classes,
any directors elected to fill vacancies or newly created directorships shall
hold office until the next election of the class for which such directors shall
have been chosen, and until their successors shall be duly elected and shall
qualify.
Section 9. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority
to fix the compensation of directors.
Section 10. Action Without a Meeting; Telephone Conference
Meeting. Unless otherwise restricted by the Certificate of Incorporation, any
action required or permitted to be taken at any meeting of the Board of
Directors, or any committee designated by the Board of Directors, may be taken
without a meeting if all members of the Board of Directors or committee, as the
case may be consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or committee. Such
consent shall have the same force and effect as a unanimous vote at a meeting,
and may be stated as such in any document or instrument filed with the
Secretary of State of Massachusetts.
Unless otherwise restricted by the Certificate of
Incorporation, subject to the requirement for notice of meetings, members of
the Board of Directors, or members of any committee designated by the Board of
Directors, may participate in a meeting of such Board of Directors or
committee, as the case may be, by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 11. Approval or Ratification of Acts or Contracts by
Stockholders. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the
stockholders, or at any special meeting of the stockholders called for the
purpose of considering any such act or contract, and any act or contract that
shall be approved or be ratified by the vote of the stockholders holding a
majority of the issued and outstanding shares of stock of the Corporation
entitled to vote and present in person or by proxy at such meeting (provided
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that a quorum is present), shall be as valid and as binding upon the
Corporation and upon all the stockholders as if it has been approved or
ratified by every stockholder of the Corporation. In addition, any such act or
contract may be approved or ratified by the written consent of stockholders
holding a majority of the issued and outstanding shares of capital stock of the
Corporation entitled to vote and such consent shall be as valid and as binding
upon the Corporation and upon all the stockholders as if it had been approved
or ratified by every stockholder of the Corporation.
Article IV
Committees
Section 1. Designation: Powers. The Board of Directors may,
by resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that
no such committee shall have the power or authority of the Board of Directors
in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution of the Corporation, or amending,
altering or repealing the bylaws or adopting new bylaws for the Corporation
and, unless such resolution or the Certificate of Incorporation expressly so
provides, no such committee shall have the power of authority to declare a
dividend or to authorize the issuance of stock. Any such designated committee
may authorize the seal of the Corporation to be affixed to all papers which may
require it. In addition to the above such committee or committees shall have
such other powers and limitations of authority as may be determined from time
to time by resolution adopted by the Board of Directors.
Section 2. Procedure; Meetings; Quorum. Any committee
designated pursuant to Section 1 of this Article shall choose its own chairman,
shall keep regular minutes of its proceedings and report the same to the Board
of Directors when requested, shall fix its own rules or procedures, and shall
meet at such times and at such place or places as may be provided by such
rules, or by resolution of such committee or resolution of the Board of
Directors. At every meeting of any such committee, the presence of a majority
of all the members thereof shall constitute a quorum and the affirmative vote
of a majority of the members present shall be necessary for the adoption by it
of any resolution.
Section 3. Substitution of Members. The Board of Directors
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of such committee.
In the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting,
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whether or not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of the absent or
disqualified member.
Article V
Officers
Section 1. Number, Titles and Term of Office. The officers of
the Corporation shall be a President, a Secretary and, if the Board of
Directors so elects, a Chairman of the Board and such other officers as the
Board of Directors may from time to time elect or appoint. Each officer shall
hold office until his successor shall be duly elected and shall qualify or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided. Any number of offices may be held by the same
person, unless the Certificate of Incorporation provides otherwise. Except for
the Chairman of the Board, if any, no officer need be a director.
Section 1. Salaries. The salaries or other compensation of
the officers and agents of the Corporation shall be fixed from time to time by
the Board of Directors.
Section 3. Removal. Any officer or agent elected or appointed
by the Board of Directors may be removed, either with or without cause, by the
vote of a majority of the whole Board of Directors at a special meeting called
for the purpose, or at any regular meeting of the Board of Directors, provided
the notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. Any vacancy occurring in any office of
the Corporation may be filled by the Board of Directors.
Section 5. Powers and Duties of the Chief Executive Officer.
The President shall be the chief executive officer of the Corporation unless
the Board of Directors designates the Chairman of the Board as chief executive
officer. Subject to the control of the Board of Directors and the executive
committee (if any), the chief executive officer shall have general executive
charge, management and control of the properties, business and operations of
the Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation
and may sign all certificates for shares of capital stock of the Corporation;
and shall have such other powers and duties as designated in accordance with
these bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 6. Powers and Duties of the Chairman of the Board. If
elected, the Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors; and he
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shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors.
Section 7. Powers and Duties of the President. Unless the
Board of Directors otherwise determines, the President shall have the authority
to agree upon and execute all leases, contracts, evidences of indebtedness and
other obligations in the name of the Corporation; and, unless the Board of
Directors otherwise determines, he shall, in the absence of the Chairman of the
Board or if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should he be a director) of the Board of Directors; and he
shall have such other powers and duties as designated in accordance with these
bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 8. Vice Presidents. In the absence of the President,
or in the event of his inability or refusal to act, a Vice President designated
by the Board of Directors shall perform the duties of the President, and when
so acting shall have all the powers of and be subject to all the restrictions
upon the President. In the absence of a designation by the Board of Directors
of a Vice President to perform the duties of the President, or in the event of
his absence or inability or refusal to act, the Vice President who is present
and who is senior in terms of time as a Vice President of the Corporation shall
so act. The Vice Presidents shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall have responsibility
for the custody and control of all the funds and securities of the Corporation,
and he shall have such other powers and duties as designated in these bylaws
and as from time to time may be assigned to him by the Board of Directors. He
shall perform all acts incident to the position of Treasurer, subject to the
control of the chief executive officer and the Board of Directors; and he
shall, if required by the Board of Directors, give such bond for the faithful
discharge of his duties in such form as the Board of Directors may require.
Section 10. Assistant Treasurers. Each Assistant Treasurer
shall have the usual powers and duties pertaining to his office, together with
such other powers and duties as designated in these bylaws and as from time to
time may be assigned to him by the chief executive officer or the Board of
Directors. The Assistant Treasurers shall exercise the powers of the Treasurer
during that officer's absence or inability or refusal to act.
Section 11. Secretary. The Secretary shall keep the minutes
of all meetings of the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the
seal of the Corporation to all contracts of the Corporation and attest the
affixation of the seal of the Corporation thereto; he may sign with the other
appointed officers all certificates for shares of capital stock of the
Corporation; he shall have charge of the certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors may
direct, all of which shall at all reasonable times be open to inspection of any
director upon application at the office of
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the Corporation during business hours; he shall have such other powers and
duties as designated in these bylaws and as from time to time may be assigned
to him by the Board of Directors; and he shall in general perform all acts
incident to the office of Secretary, subject to the control of the chief
executive officer and the Board of Directors.
Section 12. Assistant Secretaries. Each Assistant Secretary
shall have the usual powers and duties pertaining to his office, together with
such other powers and duties as designated in these bylaws and as from time to
time may be assigned to him by the chief executive officer or the Board of
Directors. The Assistant Secretaries shall exercise the powers of the Secretary
during that officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other
Corporations. Unless otherwise directed by the Board of Directors, the chief
executive officer shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of security holders of or
with respect to any action of security holders of any other corporation in
which this Corporation may hold securities and otherwise to exercise any and
all rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
Article VI
Indemnification of Directors,
Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was or
has agreed to become a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the Corporation as a director
or officer of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official capacity
as a director or officer or in any other capacity while serving or having
agreed to serve as a director or officer, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Massachusetts Business Corporation Law, as the same exists or may hereafter be
amended, (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment)
against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as to a
person who has ceased to serve in the capacity which initially entitled such
person to indemnity hereunder and shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or
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part thereof was authorized by the board of directors of the Corporation. The
right to indemnification conferred in this Article VI shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Massachusetts Business Corporation Law requires, the
payment of such expenses incurred by a current, former or proposed director or
officer in his or her capacity as a director or officer or proposed director or
officer (and not in any other capacity in which service was or is or has been
agreed to be rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the
final disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such indemnified person, to
repay all amounts so advanced if it shall ultimately be determined that such
indemnified person is not entitled to be indemnified under this Section or
otherwise.
Section 2. Indemnification of Employees and Agent. The
Corporation may, by action of its Board of Directors, provide indemnification
to employees and agents of the Corporation, individually or as a group, with
the same scope and effect as the indemnification of directors and officers
provided for in this Article.
Section 3. Right of Claimant to Bring Suit. If a written
claim received by the Corporation from or on behalf of an indemnified party
under this Article VI is not paid in full by the Corporation within ninety days
after such receipt, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the
Massachusetts Business Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Massachusetts
Business Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 4. Nonexclusivity of Rights. The right to
indemnification and the advancement and payment of expenses conferred in this
Article VI shall not be exclusive of any other right which any person may have
or hereafter acquire under any law (common or statutory), provision of the
Certificate of Incorporation of the Corporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
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Section 5. Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any person who is or was serving as a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Massachusetts Business Corporation law.
Section 6. Savings Clause. If this Article VI or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify and hold
harmless each director and officer of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VI that shall not have been invalidated and
to the fullest extent permitted by applicable law.
Article VII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares
of the capital stock of the Corporation shall be in such form, not inconsistent
with that required by law and the Certificate of Incorporation, as shall be
approved by the Board of Directors. The Chairman of the Board (if any),
President or a Vice President shall cause to be issued to each stockholder one
or more certificates, under the seal of the Corporation or a facsimile thereof
if the Board of Directors shall have provided for such seal, and signed by the
Chairman of the Board (if any), President or a Vice President and the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer certifying
the number of shares (and, if the stock of the Corporation shall be divided
into classes or series, the class and series of such shares) owned by such
stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures
shall have been placed upon any such certificate or certificates shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued by the Corporation, such certificate may nevertheless be issued by
the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue. The stock certificates shall
be consecutively numbered and shall be entered in the books of the Corporation
as they are issued and shall exhibit the holder's name and number of shares.
Section 2. Transfer of Shares. The shares of stock of the
Corporation shall be transferable only on the books of the Corporation by the
holders thereof in person or by their duly authorized attorneys or legal
representatives upon surrender and cancellation of certificates for a like
number of shares. Upon surrender to the Corporation or a transfer agent of the
Corporation of a
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certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be
entitled to treat the holder of record of any share or shares of capital stock
of the Corporation as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the
Commonwealth of Massachusetts.
Section 4. Regulations Regarding Certificates. The Board of
Directors shall have the power and authority to make all such rules and
regulations as they may deem expedient concerning the issue, transfer and
registration or the replacement of certificates for shares of capital stock of
the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of
Directors may determine the conditions upon which a new certificate of stock
may be issued in place of a certificate which is alleged to have been lost,
stolen or destroyed; and may, in their discretion, require the owner of such
certificate or his legal representative to give bond, with sufficient surety,
to indemnify the Corporation and each transfer agent and registrar against any
and all losses or claims which may arise by reason of the issue of a new
certificate in the place of the one so lost, stolen or destroyed.
Article VIII
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation
shall be such as established from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may provide
a suitable seal, containing the name of the Corporation. The Secretary shall
have charge of the seal (if any). If and when so directed by the Board of
Directors or a committee thereof, duplicates of the seal may be kept and used
by the Treasurer or by the Assistant Secretary or Assistant Treasurer.
Section 3. Notice and Waiver of Notice. Whenever any notice
is required to be given by law, the Certificate of Incorporation or under the
provisions of these bylaws, said notice shall be deemed to be sufficient if
given (i) by telegraphic, cable or wireless transmission or (ii) by deposit of
the same in a post office box in a sealed prepaid wrapper addressed to the
person entitled thereto at his post office address, as it appears on the
records of the Corporation, and such notice shall be deemed to have been given
on the day of such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the
Certificate of Incorporation or under any of the provisions of these bylaws, a
written waiver thereof, signed by the person entitled
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to notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the Certificate of Incorporation or the bylaws.
Section 4. Resignations. Any director, member of a committee
or officer may resign at any time. Such resignation shall be made in writing
and shall take effect at the time specified therein, or if no time be
specified, at the time of its receipt by the chief executive officer or
Secretary. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
Section 5. Facsimile Signatures. In addition to the
provisions for the use of facsimile signatures elsewhere specifically
authorized in these bylaws, facsimile signatures of any officer or officers of
the Corporation may be used whenever and as authorized by the Board of
Directors.
Section 6. Reliance upon Books, Reports and Records. Each
director and each member of any committee designated by the Board of Directors
shall, in the performance of his duties, be fully protected in relying in good
faith upon the books of account or reports made to the Corporation by any of
its officers, or by an independent certified public accountant, or by an
appraiser selected with reasonable care by the Board of Directors or by any
such committee, or in relying in good faith upon other records of the
Corporation.
Article IX
Amendments
If provided in the Certificate of Incorporation of the
Corporation, the Board of Directors shall have the power to adopt, amend and
repeal from time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to amend or repeal such
bylaws as adopted or amended by the Board of Directors.
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THE COMMONWEALTH OF MASSACHUSSETTS
ARTICLES OF ORGANIZATION
ARTICLE I
The name of the corporation is:
American Artists Limited, Inc.
ARTICLE II
The purpose of the corporation is to engage in the following
business activities:
the production of off-Broadway and Broadway productions
and to carry on any business or other activity which may be
carried on by a corporation organized under the Business Corporation Law of the
Commonwealth of Massachusetts, whether or not related to those referred
hereinabove.
<PAGE>
December 18, 1992
Secretary of the Commonwealth
Department of Corporations
One Ashburton Place
Boston, Massachusetts 02108
Re: American Artists Limited, Inc.
Dear Sir or Madam:
I am writing to consent the formation of the corporation, American
Artists Limited, Inc. I have no objection to the use of the name American
Artists Limited, Inc.
Very Truly Yours,
/s/ J. B. Platt
---------------------------
John B. Platt
President
<PAGE>
CONTINUATION SHEET 5A
Any stockholder, including the heirs, assigns, executors or
administrators of a deceased stockholder, desiring to sell or transfer such
stock owned by him or them, shall first offer it to the corporation through the
Board of Directors, in the manner following:
He shall notify the Directors of his desire to sell or transfer by
notice in writing, which notice shall contain the price at which he is willing
to sell or transfer and the name of one arbitrator. The directors shall, within
thirty days thereafter, either accept the offer or by notice to him in writing
name a second arbitrator, and these two shall name a third. It shall then be
the duty of the arbitrators to ascertain the value of the stock, and if any
arbitrator shall neglect or refuse to appear at any meeting appointed by the
arbitrators, a majority may act in the absence of such arbitrator.
After the acceptance of the offer, or the report of the arbitrators as
to the value of the stock, the directors shall have thirty days to purchase the
same at such valuation, but if at the expiration of thirty days, the
corporation shall not have exercised the right so to purchase, the owner of the
stock shall be at liberty to dispose of the same in any manner he may see fit.
No shares of stock shall be sold or transferred on the books of the
corporation until these provisions have been complied with, but the Board of
Directors may in any particular instance waive the requirement.
<PAGE>
CONTINUATION SHEET 6A
OTHER LAWFUL PROVISIONS:
1. Meetings of the stockholders may be held within the Commonwealth and
elsewhere in the United States to the extent permitted by the By-Laws.
2. The corporation may be a partner in any business enterprise which the
corporation would have power to conduct by itself.
3. The corporation shall, to the extent legally permissible, indemnify each
of its present or former directors and officers and any person who may be
then serving or who may have previously served at its request as a
director or officer of any other organization in which it owned or owned
shares or of which it is or was a creditor and it may, to the extent
authorized by the directors, indemnify present of former employees and
other agents or any person who may be then servicing or who may have
previously served at its request as an employee or agent or any other
organization in which it directly or indirectly owns or owned shares or of
which it is or was a creditor against all liabilities, expenses and
attorneys' fees, including amounts incurred or paid by him (a) in
connection with the defense or disposition of any action, suit or
proceeding, civil or criminal, and any appeal therein, in which he is made
a party or involved by reason of being or having been such director,
officer, employee or other agent, (b) in connection with any proceeding in
advance of the final disposition of such action, suit or proceeding, (c)
in satisfaction of judgments or laws fines and penalties, or (d) in
connection with any compromise or settlement first approved by (i) a
disinterested majority of the directors then in office, or (ii) a majority
of the disinterested directors then in office, provided that there has
been obtained an opinion in writing of independent legal counsel to the
effect that such director, officer, employee or other agent appears to
have acted in good faith in the reasonable belief that his action was in
the best interests of the corporation, or (iii) by the holders of a
majority of the outstanding stock at the time entitled to vote for
directors, voting as a single class, exclusive of any stock owned by any
interested director or officer, upon receipt of an undertaking by the
person indemnified to repay such amount if he shall be adjudicated to be
not entitled to indemnification. An "interested" directors is one against
whom in such capacity the proceedings in questions or another proceeding
on the same or similar grounds is then pending.
Such indemnification may include payment by the corporation of expenses
incurred in defending a civil or criminal action or proceeding in advance
of the final disposition of such action or proceeding, upon receipt of an
undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be not entitled to indemnification under this section.
<PAGE>
Notwithstanding the foregoing, indemnification shall not be provided for
any person with respect to any matter as to which he shall have been
adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that his action was in the best interests of the
corporation.
Any right to indemnification arising hereunder shall inure to the benefit
of the heirs, executors or administrators of any such officer or director,
employee or other agent and shall be in addition to all other rights to
which such officer, director, employee or other agent may be entitled as a
matter of law.
The corporation may purchase and maintain insurance on behalf of any such
director, officer, employee or other agent above-mentioned against any
liability incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability.
4. The Board of Directors of the corporation may make, amend, or repeal the
By-Laws of the corporation, in whole or in part, except with respect to
any provision thereof which, by law, the Articles of Organization, or the
By-Laws, require action exclusively by the stockholders entitled to voted
thereon; but any By-Law adopted by the Board of Directors may be amended
or repealed by the stockholders.
5. The directors shall have the power to fix, from time to time, their own
compensation and the compensation of officers and employees of the
corporation.
6. No contract or other transaction between this corporation and any other
firm or corporation shall be affected or invalidated by reason of the fact
that any one or more of the directors or officers of this corporation is
or are interested in, or is a member, stockholder, director, or officer,
or are members, stockholders, directors, or officers, of such other firm
or corporation; and any director or officer or officers, individually or
jointly, may be a party or parties to, or may be interested in, any
contract transaction of this corporation or in which this corporation is
interested, and no contract, act or transaction of this corporation with
any person or persons, firm, association or corporation, shall be affected
or invalidated by reason of the fact that any director or directors or
officer or officers of this corporation is a party or are parties to, or
interest in, such contract, act or transaction, or in any way connected
with such person or persons, firm, association or corporation, and each
and every person who may become a director or officer of this corporation
is hereby relieved from any liability that might otherwise exist from thus
contracting with this corporation for the benefit of himself or any firm,
association or corporation which he may be anyway interested.
7. No director shall be personably liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director notwithstanding any provisions of laws imposing such liability;
provided, however, that this provision shall not affect the liability of a
director, to the extent that such liability is imposed by applicable law,
(i) for any
<PAGE>
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 61 or 62 or successor provisions of the Massachusetts Business
Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. In addition, to the fullest extent
that the Business Corporation Law may hereafter be amended to enlarge upon
the ability of the Corporation to provide herein for the elimination or
limitation of the liability of directors, no director shall be personally
liable to the Corporation or its stockholders for breach of his fiduciary
duty as a director. No amendment to or repeal of this provision shall
apply to or have any effect upon the liability or alleged liability of any
director for or with respect to any acts or omissions of such director
occurring prior to the effective date of such amendment or repeal.
<PAGE>
ARTICLE VII
..............
ARTICLE VII
.......... address in Massachusetts
120 Boylston Street, Boston, MA 02116
NAME RESIDENCE POST OFFICE ADDRESS
PRESIDENT: Jon B. Platt 6 Chilton Street Brookline, MA 02146
TREASURER: Jon B. Platt 6 Chilton Street Brookline, MA 02146
CLERK: Jon B. Platt 6 Chilton Street Brookline, MA 02146
DIRECTORS: Jon B. Platt 6 Chilton Street Brookline, MA 02146
.........fiscal year end....
December 31
ARTICLE X
In Witness Whereof ..... signed ... 26, January 1993
N/A
Jay F. Theise, Esq. /s/ Jay F. Thiese
Jay F. Theise and Associates
50 Rowes Wharf
Boston, MA 02110
(617) 330-7140
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B. SECTION 12
JANUARY 10, 1999 ...........FILED..............JANUARY 26, 1993
/s/ MICHAEL JOSEPH CONNOLLY
MICHAEL JOSEPH CONNOLLY
Secretary of State
Photocopy sent to:
Jay F. Theise, Esq.
Jay F. Theise and Associates
50 Rowes Wharf
Boston, MA 02110
(617) 330-7140
<PAGE>
BYLAWS
OF
AMERICAN ARTISTS LIMITED, INC.
Article I
Offices
Section 1. Registered Office. The registered office of the Corporation
required by the Massachusetts Business Corporation Law to be maintained in the
Commonwealth of Massachusetts, shall be the registered office named in the
original Certificate of Incorporation of the Corporation, or such other office
as may be designated from time to time by the Board of Directors in the manner
provided by law. Should the Corporation maintain a principal office within the
Commonwealth of Massachusetts such registered office need not be identical to
such principal office of the Corporation.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the Commonwealth of Massachusetts as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
Article II
Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall
be held at the principal office of the Corporation, or at such other place
within or without the Commonwealth of Massachusetts as shall be specified or
fixed in the notices or waivers of notice thereof.
Section 2. Quorum: Adjournment of Meetings. Unless otherwise required
by law or provided in the Certificate of Incorporation or these bylaws, the
holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
at any meeting of stockholders for the transaction of business and the act of a
majority of such stock so represented at any meeting of stockholders at which a
quorum is present shall constitute the act of the meeting of stockholders. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Notwithstanding the other provisions of the Certificate of
Incorporation or these bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy, at any meeting of stockholders, whether or not a quorum is present,
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed
<PAGE>
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at such meeting. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 3. Annual Meetings. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, within or without the Commonwealth of
Massachusetts, on such date, and at such time as the Board of Directors shall
fix and set forth in the notice of the meeting, which date shall be within
thirteen (13) months subsequent to the later of the date of incorporation or
the last annual meeting of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board (if
any), by the President or by a majority of the Board of Directors, or by a
majority of the executive committee (if any), and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent (10
%) of the issued and outstanding stock entitled to vote at such meeting.
Section 5. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors of the Corporation
may fix, in advance, a date as the record date for any such determination of
stockholders, which date shall not be more than sixty (60) days nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the Board of Directors does not fix a record date for any meeting
of the stockholders, the record date for determining stockholders entitled to
notice of or to vote at such meeting shall be at the close of business on the
day next preceding the day on which notice is given, or, if in accordance with
Article VIII, Section 3 of these bylaws notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. If, in
accordance with Section 12 of this Article II, corporate action without a
meeting of stockholders is to be taken, the record date for determining
stockholders entitled to express consent to such corporate action in writing,
when no prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is expressed. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
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<PAGE>
Section 6. Notice of Meetings. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by or at the direction
of the Chairman of the Board (if any) or the President, the Secretary or the
other person(s) calling the meeting to each stockholder entitled to vote
thereat not less than ten (10) nor more than sixty (60) days before the date of
the meeting. Such notice may be delivered either personally or by mail. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 7. Stock List. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in the name of such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The stock list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to
time determine by resolution, before or at the time of the meeting. All proxies
shall be received and taken charge of and all ballots shall be received and
canvassed by the secretary of the meeting who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless
the proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless
such instrument shall provide the contrary, a majority of such persons present
at any meeting at which their powers thereunder are to be exercised shall have
and may exercise all the powers of voting or giving consents thereby conferred,
or if only one be present, then such powers may be exercised by that one; or,
if an even number attend and a majority do not agree on any particular issue,
each proxy so attending shall be entitled to exercise such powers in respect of
the same portion of the shares as he is of the proxies representing such
shares.
Section 9. Voting; Elections; Inspectors. Unless otherwise required by
law or provided in the Certificate of Incorporation, each stockholder shall
have one vote for each share of stock entitled to vote which is registered in
his name on the record date for the meeting. Shares registered in the name
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<PAGE>
of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the bylaw (or comparable instrument) of such corporation may
prescribe, or in the absence of such provision, as the Board of Directors (or
comparable body) of such corporation may determine. Shares registered in the
name of a deceased person may be voted by his executor or administrator, either
in person or by proxy.
All voting, except as required by the Certificate of Incorporation or
where otherwise required by law, may be by a voice vote; provided, however,
that upon demand therefor by stockholders holding a majority of the issued and
outstanding stock present in person or by proxy at any meeting a stock vote
shall be taken. Every stock vote shall be taken by written ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
All elections of directors shall be by ballot, unless otherwise provided in the
Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of
the meeting may appoint one or more inspectors, each of whom shall subscribe an
oath or affirmation to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. Such
inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation,
cumulative voting for the election of directors shall be prohibited.
Section 10. Conduct of Meetings. The meetings of the stockholders
shall be presided over by the Chairman of the Board (if any), or if he is not
present, by the President, or if neither the Chairman of the Board (if any),
nor President is present, by a chairman elected at the meeting. The Secretary
of the Corporation, if present, shall act as secretary of such meetings, or if
he is not present, an Assistant Secretary shall so act; if neither the
Secretary nor an Assistant Secretary is present, then a secretary shall be
appointed by the chairman of the meeting. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order. Unless the chairman of the meeting of
stockholders shall otherwise determine, the order of business shall be as
follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
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<PAGE>
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting
called for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
Section 11. Treasury Stock. The Corporation shall not vote, directly
or indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes.
Section 12. Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action permitted or required by law, the
Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
Article III
Board of Directors
Section 1. Power; Number; Term of Office. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the Certificate of
Incorporation, they may exercise all the powers of the Corporation.
The number of directors which shall constitute the whole Board of
Directors, shall be determined from time to time by resolution of the
stockholders (provided that no decrease in the number of directors which would
have the effect of shortening the term of an incumbent director may be made by
the stockholders). If the stockholders make no such determination, the number
of directors shall be the number set forth in the Certificate of Incorporation.
Each director shall hold office for the term for which he is elected, and until
his successor shall have been elected and qualified or until his earlier death,
resignation or removal.
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<PAGE>
Unless otherwise provided in the Certificate of Incorporation,
directors need not be stockholders nor residents of the Commonwealth of
Massachusetts.
Section 2. Quorum. Unless otherwise provided in the Certificate of
Incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote
of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 3. Place of Meetings: Order of Business. The directors may
hold their meetings and may have an office and keep the books of the
Corporation, except as otherwise provided by law, in such place or places,
within or without the Commonwealth of Massachusetts, as the Board of Directors
may from time to time determine by resolution. At all meetings of the Board of
Directors business shall be transacted in such order as shall from time to time
be determined by the Chairman of the Board (if any), or in his absence by the
President, or by resolution of the Board of Directors.
Section 4. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which
a quorum shall be present, held next after the annual meeting of stockholders,
the Board of Directors shall proceed to the election of the officers of the
Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as shall be designated from
time to time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board (if any), the President
or, on the written request of any two directors, by the Secretary, in each case
on at least twenty-four (24) hours personal, written, telegraphic, cable or
wireless notice to each director. Such notice, or any waiver thereof pursuant
to Article VIII, Section 3 hereof, need not state the purpose or purposes of
such meeting, except as may otherwise be required by law or provided for in the
Certificate of Incorporation or these bylaws.
Section 7. Removal. Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided that, if the
Certificate of Incorporation expressly grants to stockholders the right to
cumulate votes for the election of directors and if less than the entire board
is to be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which such director is a
part.
Section 8. Vacancies: Increases in the Number of Directors. Unless
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any
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<PAGE>
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or a sole remaining
director; and any director so chosen shall hold office until the next annual
election and until his successor shall be duly elected and shall qualify,
unless sooner displaced.
If the directors of the Corporation are divided into classes, any
directors elected to fill vacancies or newly created directorships shall hold
office until the next election of the class for which such directors shall have
been chosen, and until their successors shall be duly elected and shall
qualify.
Section 9. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority
to fix the compensation of directors.
Section 10. Action Without a Meeting: Telephone Conference Meeting.
Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee. Such consent
shall have the same force and effect as a unanimous vote at a meeting, and may
be stated as such in any document or instrument filed with the Secretary of
State of Massachusetts.
Unless otherwise restricted by the Certificate of Incorporation,
subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors,
may participate in a meeting of such Board of Directors or committee, as the
case may be, by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 11. Approval or Ratification of Acts or Contracts by
Stockholders. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the
stockholders, or at any special meeting of the stockholders called for the
purpose of considering any such act or contract, and any act or contract that
shall be approved or be ratified by the vote of the stockholders holding a
majority of the issued and outstanding shares of stock of the Corporation
entitled to vote and present in person or by proxy at such meeting (provided
that a quorum is present), shall be as valid and as binding upon the
Corporation and upon all the stockholders as if it has been approved or
ratified by every stockholder of the Corporation. In addition, any such act or
contract may be approved or ratified by the written consent of stockholders
holding a majority of the issued and outstanding shares of capital stock of the
Corporation entitled to vote and such consent shall be as valid and as binding
upon the Corporation and upon all the stockholders as if it had been approved
or ratified by every stockholder of the Corporation.
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<PAGE>
Article IV
Committees
Section 1. Designation; Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that
no such committee shall have the power or authority of the Board of Directors
in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution of the Corporation, or amending,
altering or repealing the bylaws or adopting new bylaws for the Corporation
and, unless such resolution or the Certificate of Incorporation expressly so
provides, no such committee shall have the power of authority to declare a
dividend or to authorize the issuance of stock. Any such designated committee
may authorize the seal of the Corporation to be affixed to all papers which may
require it. In addition to the above such committee or committees shall have
such other powers and limitations of authority as may be determined from time
to time by resolution adopted by the Board of Directors.
Section 2. Procedure; Meetings; Quorum. Any committee designated
pursuant to Section 1 of this Article shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of
Directors when requested, shall fix its own rules or procedures, and shall meet
at such times and at such place or places as may be provided by such rules, or
buy resolution of such committee or resolution of the Board of Directors. At
every meeting of any such committee, the presence of a majority of all the
members thereof shall constitute a quorum and the affirmative vote of a
majority of the members present shall be necessary for the adoption by it of
any resolution.
Section 3. Substitution of Members. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
Article V
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a President, a Secretary and, if the Board of Directors so
elects, a Chairman of the Board and such
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<PAGE>
other officers as the Board of Directors may from time to time elect or
appoint. Each officer shall hold office until his successor shall be duly
elected and shall qualify or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided. Any number of offices may
be held by the same person, unless the Certificate of Incorporation provides
otherwise. Except for the Chairman of the Board, if any, no officer need be a
director.
Section 2. Salaries. The salaries or other compensation of the
officers and agents of the Corporation shall be fixed from time to time by the
Board of Directors.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed, either with or without cause, by the vote of
a majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors.
Section 5. Powers and Duties of the Chief Executive Officer. The
President shall be the chief executive officer of the Corporation unless the
Board of Directors designates the Chairman of the Board as chief executive
officer. Subject to the control of the Board of Directors and the executive
committee (if any), the chief executive officer shall have general executive
charge, management and control of the properties, business and operations of
the Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation
and may sign all certificates for shares of capital stock of the Corporation;
and shall have such other powers and duties as designated in accordance with
these bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 6. Powers and Duties of the Chairman of the Board. If elected,
the Chairman of the Board shall preside at all meetings of the stockholders and
of the Board of Directors; and he shall have such other powers and duties as
designated in these bylaws and as from time to time may be assigned to him by
the Board of Directors.
Section 7. Powers and Duties of the President. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, he shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should he be a director) of the Board of Directors; and he
shall have such other powers and duties as designated
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in accordance with these bylaws and as from time to time may be assigned to him
by the Board of Directors.
Section 8. Vice Presidents. In the absence of the President, or in the
event of his inability or refusal to act, a Vice President designated by the
Board of Directors shall perform the duties of the President, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the President. In the absence of a designation by the Board of Directors of a
Vice President to perform the duties of the President, or in the event of his
absence or inability or refusal to act, the Vice President who is present and
who is senior in terms of time as a Vice President of the Corporation shall so
act. The Vice Presidents shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 9. Treasure. The Treasurer shall have responsibility for the
custody and control of all the funds and securities of the Corporation, and he
shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors. He shall
perform all acts incident to the position of Treasurer, subject to the control
of the chief executive officer and the Board of Directors; and he shall, if
required by the Board of Directors, give such bond for the faithful discharge
of his duties in such form as the Board of Directors may require.
Section 10. Assistant Treasurers. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
Section 11. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the
seal of the Corporation to all contracts of the Corporation and attest the
affixation of the seal of the Corporation thereto; he may sign with the other
appointed officers all certificates for shares of capital stock of the
Corporation; he shall have charge of the certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors may
direct, all of which shall at all reasonable times be open to inspection of any
director upon application at the office of the Corporation during business
hours; he shall have such other powers and duties as designated in these bylaws
and as from time to time may be assigned to him by the Board of Directors; and
he shall in general perform all acts incident to the office of Secretary,
subject to the control of the chief executive officer and the Board of
Directors.
Section 12. Assistant Secretaries. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board
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of Directors. The Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the chief executive
officer shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of security holders of or
with respect to any action of security holders of any other corporation in
which this Corporation may hold securities and otherwise to exercise any and
all rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
Article VI
Indemnification of Directors,
Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was or has agreed to
become a director or officer of the Corporation or is or was serving or has
agreed to serve at the request of the Corporation as a director or officer of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving or having agreed to
serve as a director or officer, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Massachusetts Business
Corporation Law, as the same exists or may hereafter be amended, (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment) against all expense,
liability and loss (including, without limitation, attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to serve in the capacity which initially entitled such person to indemnity
hereunder and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however , that the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof was
authorized by the board of directors of the Corporation. The right to
indemnification conferred in this Article VI shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however , that, if the Massachusetts Business Corporation Law requires, the
payment of such expenses incurred by a current, former or proposed director or
officer in his or her capacity as a director or officer or proposed director or
officer (and not in any other capacity in which service was or is or has been
agreed to be rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the
final disposition
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of a proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such indemnified person, to repay all amounts
so advanced if it shall ultimately be determined that such indemnified person
is not entitled to be indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in
this Article.
Section 3. Right of Claimant to Bring Suit . If a written claim
received by the Corporation from or on behalf of an indemnified party under
this Article VI is not paid in full by the Corporation within ninety days after
such receipt, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the
Massachusetts Business Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Massachusetts
Business Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 4. Nonexclusivity of Rights. The right to indemnification and
the advancement and payment of expenses conferred. in this Article VI shall not
be exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Massachusetts Business Corporation Law.
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Section 6. Savings Clause. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director
and officer of the Corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Article VII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board (if any), President or a
Vice President shall cause to be issued to each stockholder one or more
certificates, under the seal of the Corporation or a facsimile thereof if the
Board of Directors shall have provided for such seal, and signed by the
Chairman of the Board (if any), President or a Vice President and the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer certifying
the number of shares (and, if the stock of the Corporation shall be divided
into classes or series, the class and series of such shares) owned by such
stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures
shall have been placed upon any such certificate or certificates shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued by the Corporation, such certificate may nevertheless be issued by
the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue. The stock certificates shall
be consecutively numbered and shall be entered in the books of the Corporation
as they are issued and shall exhibit the holder's name and number of shares.
Section 2. Transfer of Shares. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal
representatives upon surrender and cancellation of certificates for a like
number of shares. Upon surrender to the Corporation or a transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share
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or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the
Commonwealth of Massachusetts.
Section 4. Regulations Regarding Certificates. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of Directors may
determine the conditions upon which a new certificate of stock may be issued in
place of a certificate which is alleged to have been lost, stolen or destroyed;
and may, in their discretion, require the owner of such certificate or his
legal representative to give bond, with sufficient surety, to indemnify the
Corporation and each transfer agent and registrar against any and all losses or
claims which may arise by reason of the issue of a new certificate in the place
of the one so lost, stolen or destroyed.
Article VIII
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
such as established from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation. The Secretary shall have
charge of the seal (if any). If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by the Assistant Secretary or Assistant Treasurer.
Section 3. Notice and Waiver of Notice. Whenever any notice is
required to be given by law, the Certificate of Incorporation or under the
provisions of these bylaws, said notice shall be deemed to be sufficient if
given (i) by telegraphic, cable or wireless transmission or (ii) by deposit of
the same in a post office box in a sealed prepaid wrapper addressed to the
person entitled thereto at his post office address, as it appears on the
records of the Corporation, and such notice shall be deemed to have been given
on the day of such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the Certificate of
Incorporation or under any of the provisions of these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or the bylaws.
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Section 4. Resignations. Any director, member of a committee or
officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, or if no time be specified, at
the time of its receipt by the chief executive officer or Secretary. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
Section 5. Facsimile Signatures. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
Section 6. Reliance upon Books, Reports and Records. Each director and
each member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
Article IX
Amendments
If provided in the Certificate of Incorporation of the Corporation,
the Board of Directors shall have the power to adopt, amend and repeal from
time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to amend or repeal such
bylaws as adopted or amended by the Board of Directors.
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SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT
FOR
AMPHITHEATER ENTERTAINMENT PARTNERSHIP
THIS SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT is
made as of April 1, 1994, by and between The Westside Amphitheatre Corporation,
an Arizona corporation ("WAC"), San Bernardino Amphitheater Corporation, a
Delaware corporation ("SBAC"), Charlotte Amphitheater Corporation, a Delaware
corporation ("CAC," and, together with SBAC and WAC, "Blockbuster"), and YM
Corp., a Delaware corporation ("Sony") . Certain capitalized terms used herein
are defined in Section 1 hereof. Unless otherwise specifically provided herein,
all obligations of Blockbuster hereunder shall be joint and several obligations
of SBAC, CAC and WAC.
RECITALS
WHEREAS, Blockbuster and Sony desire to pool certain
expertise in the ownership and operation of outdoor amphitheater entertainment
facilities.
WHEREAS, Sony, WAC and CAC formed a general partnership for
the above-referenced purposes on September 29, 1993, pursuant to that certain
Partnership Agreement for Amphitheater Entertainment Partnership Agreement for
Amphitheater Entertainment Partnership, which Partnership Agreement was amended
and restated as of February 18, 1994 (the "Old Partnership Agreement").
WHEREAS, the Old Partnership Agreement contemplated that the
San Bernardino Asset, currently owned by SBAC (which is, like CAC, an indirect
wholly owned subsidiary of Blockbuster Entertainment Corporation), would be
contributed by WAC to the Partnership. SBAC now desires to become a partner of
the Partnership so that it may transfer the San Bernardino Asset to the
Partnership directly, rather than through WAC.
WHEREAS, in order to promote efficiency of operation, achieve
high standards of performance and obtain a reasonable return upon the
investments of Sony and Blockbuster, each of Sony, WAC and CAC desire to admit
SBAC as a partner of the Partnership and to continue such Partnership subject
to the terms of this Agreement.
WHEREAS, following SBAC's Initial Capital Contribution, SBAC
will merge with and into Amphitheater Entertainment Corporation, a Delaware
corporation and the sole shareholder of SBAC ("AEC"), with AEC being the
surviving corporation, and then AEP will merge with and into CAC, a wholly
owned subsidiary of AEC, with CAC being the surviving corporation (such mergers
being referred to herein collectively as the ("SBAC Mergers") . Upon the
consummation of the SBAC Mergers, among other things, (i) SBAC will cease to be
a
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Partner of the Partnership and (ii) CAC will succeed to all of the rights and
obligations of SBAC as a Partner of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
Section 1.1 Definitions. Capitalized terms used in this
Agreement and not otherwise defined shall have the meaning given to such terms
in the SBPAP Agreement. When used in this Agreement the following terms shall
have the meanings set forth below:
"Act" means the Delaware Uniform Partnership Act, as in
effect from time to time.
"Acquiring Partner" means the Partner acquiring the
Partnership Interest of the other Partner(s) pursuant to Section 9.3 of this
Agreement.
"Additional Capital Contributions" means the Capital
Contributions made by the Partners pursuant to Sections 3-1(d), (e), (g), (i)
and (j).
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) credit to such Capital Account any amounts which
such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Sections 1.
704-2 (g) (1) and 1. 704-2 (i) (5) of the Regulations; and
(ii) debit to such Capital Account the items described
in Sections 1. 704-1(b) (2)(ii)(d)(4),
1.704-l(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the
Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted and applied in a manner consistent therewith.
"Admission Agreement" means the Agreement to Admit New
Partner And To Amend And Restate Partnership Agreement, dated as of October 29,
1993, by and among, Sony, WAC, CAC, Pace, Sony Music/Pace Partnership and the
Partnership.
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"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with, such Person; for purposes of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or otherwise; provided,
however, that for purposes of this Agreement, neither H. Wayne Huizenga nor any
Person directly or indirectly controlled by Mr. Huizenga (other than
Blockbuster Entertainment Corporation ("BEC") and any Person directly or
indirectly controlled by BEC) shall be deemed to be an "Affiliate" of or
"affiliated" with SBAC, WAC, CAC or any Sony/Block Related Party.
"Agreement" means this Amended and Restated Partnership
Agreement, as from time to time amended.
"Allocation Percentage" means each Partner's allocation
percentage, which shall initially be equal to 70% less the Initial Sony
Percentage for CAC, 25% for SBAC, 5% for WAC and the Initial Sony Percentage
for Sony. After the SBAC Mergers, the Allocation Percentages shall be equal to
95% less the Initial Sony Percentage for CAC, 5% for WAC and the Initial Sony
Percentage for Sony. After Sony's Additional Capital Contribution pursuant to
Section 3.1(d), the Allocation Percentages shall be equal to 47.5% for CAC,
2.5% for WAC and 50% for Sony.
"Amphitheater Liabilities" means, with respect to any
Amphitheater, the liabilities and obligations of the owner of a Controlling
Interest in such Amphitheater which, as of the Existing Facility Closing Date,
are (x) related to the ownership or operation of such Amphitheater and (y) to
be. contributed to and assumed by SBPAP pursuant to the Executory Contract,
including, without limitation, the Amphitheater Loan to which such Amphitheater
is subject.
"Assignee" means a person to whom an interest in the
Partnership has been transferred in accordance with the provisions of this
Agreement but who has not been admitted as a substitute or additional Partner.
"Benefitting Partner" means (A) Sony if the Sony/Block Net
Benefit Amount is a negative number and (B) CAC if the Sony/Block Net Benefit
Amount is a positive number.
"Blockbuster" shall have the meaning given to such term in
the opening paragraph of this Agreement.
"Blockbuster Amphitheaters" means the Phoenix Amphitheater,
the San Bernardino Amphitheater and the Charlotte Amphitheater.
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"Blockbuster Benefit Amount" means the aggregate amount
payable by Sony/Block to Pace pursuant to Sections 9.4(g) (2), 9.4(k) (4) and
9.4(k) (5) of the SBPAP Agreement (disregarding, for purposes of this
definition, the Netting Provisions).
"Blockbuster Note" shall have the meaning given to such term
in Section 3.1(b) (i) of this Agreement.
"Blockbuster Unwind Contribution Amount" means the positive
difference, if any, between:
(x) the sum of:
(A) the positive difference, if any, between:
(I) the product of (a) the aggregate Allocation
Percentage of WAC and CAC at the time of the Unwind
Closing, multiplied by (b) the sum of (i) the Pace
Separate Benefit Amount, plus (ii) the portion of the
MCA Amount which would have been payable to the
Partnership in cash at the Unwind Closing but for the
Netting Provisions, minus
(II) the sum of (1) the Clause G&K Sum, if any,
owed to the Partnership from Pace pursuant to Section
9.4(k) of the SBPAP Agreement, plus(2) the portion of
the MCA Amount paid to the Partnership in cash at the
Unwind Closing,plus
(B) the portion of the clause G&K Sum, if any, owed to
Pace at the Unwind Closing pursuant to Sections 9.4(k)
which is not offset against the principal amount of
the Pace Note pursuant to Section 5.4(b), minus
(y) the Blockbuster Unwind Contribution Reduction Amount;
provided that under no circumstances shall the Blockbuster Unwind
Contribution Amount exceed the Blockbuster Benefit Amount.
"Blockbuster Unwind Contribution Offset Amount" means the
portion of the Make-up Amount which does not exceed the Blockbuster Unwind
Contribution Amount.
"Blockbuster Unwind Contribution Reduction Amount" means the
sum of (x) the Sony/Pace Joint Benefit Amount,plus (y) if CAC is the
Non-Benefitting Partner, the Blockbuster Unwind Contribution Offset Amount.
"Buy Price" shall have the meaning given to such term in
Section 9.2 of this Agreement.
"Buy/Sell Notice" shall have the meaning given to such term
in Section 9.2 of this Agreement.
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"CAC" shall have the meaning given to such term in the
opening paragraph of this Agreement.
"Capital Account" of a Partner means the Capital Account
established for such Partner under Section 3.3.
"Capital Contribution" means, with respect to any Partner or
Assignee, the amount of cash and the initial Gross Asset Value of any property
other than cash contributed by the Partner or Assignee (or its predecessor in
interest) to the Partnership.
"Charlotte Distribution" shall have the meaning given to such
term in Section 5.3 of this Agreement.
"Closing" shall have the meaning given to such term in
Section 9.5 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications" shall have the meaning given to such term in
Section 13.9 of this Agreement.
"Compensable Damages" shall have the meaning given to such
term in Section 12.1 of this Agreement.
"Covered Capacities" shall have the meaning given to such
term in Section 6.5(a) of this Agreement.
"Deciding Partner" shall have the meaning given to such term
in Section 9.2 of this Agreement.
"Default Notice" shall have the meaning given to such term in
Section 11.1 of this Agreement.
"Defaulting Partner" shall have the meaning given to such
term in Section 11.1 of this Agreement.
"Delivering Partner" shall have the meaning given to such
term in Section 9.2 of this Agreement.
"Depreciation" means, for each fiscal year or other period,
an amount equal to the depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year or other
period, Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such
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year or other period bears to such beginning adjusted tax basis; provided,
however, that if the federal income tax depreciation, amortization, or other
cost recovery deduction for such year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the Management Committee.
"Dissolution" of a Partner which is not a natural person
means that such Partner has terminated its existence, whether partnership or
corporate, wound up its affairs and dissolved.
"Distribution" means, with respect to any Partner, the amount
of cash and the Gross Asset Value of any property other than cash distributed
by the Partnership to the Partner.
"Division of Responsibility" means an allocation and division
of the Partnership's rights and responsibilities under the SBPAP Agreement
pursuant to Section 17.3 thereof.
"Event of Withdrawal" means the occurrence of any of the
following events in respect of a Partner: (i) the withdrawal by such Partner
from the Partnership in violation of Section 13.10, (ii) the granting of relief
against such Partner in an involuntary case under the Federal Bankruptcy Code
which is not removed or discharged within ninety (90) days, or in any such
involuntary case, the approval of the petition by such Partner as properly
filed, or the admission of such Partner of material allegations contained in
the petition, (iii) the execution by such Partner of a general assignment for
the benefit of creditors, (iv) the commencement of a voluntary case under the
Federal Bankruptcy Code by such Partner, or (v) the appointment of a receiver
for a Partner or for all or a substantial part of the assets of such Partner
and such receivership proceedings are not removed or discharged within ninety
(90) days after the receiver's appointment.
"Existing Facility Closing Date" means the date of the
Existing Facility Closing.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of each of the
Charlotte Asset, the Phoenix Asset, the San Bernardino Asset
and Sony's SBPAP Interest shall be the Net Value of each such
asset as determined pursuant to the Admission Agreement and
the Executory Contract. For purposes of the immediately
preceding sentence, the initial Gross Asset Value of Sony's
SBPAP Interest shall be the sum of 50% of the Net Value, as
determined pursuant to the Admission Agreement and the
Executory Contract, of each of the Camden Asset, the Tampa
Asset, the Raleigh Asset and the Pittsburgh Asset. The
initial Gross Asset Value of any other asset contributed by a
Partner to the Partnership shall be the gross fair market
value of such asset, as determined by the contributing
Partner and the Management Committee.
(ii) The Gross Asset values of all Partnership assets
shall be adjusted to equal their respective gross fair market
values, as determined by the Management
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Committee, as of the following times: (a) the acquisition of
an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis
Capital Contribution; (b) the distribution by the Partnership
to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) the
liquidation of the Partnership within the meaning of Section
1.7041(b)(2)(ii)(y) of the Regulations; provided, however,
that adjustments pursuant to clauses (a) and (b) above shall
be made only if the Management Committee, by the agreement of
all of its members, reasonably determines that such
adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Section
734(b) or Section 743(b) of the Code, but only to the extent
that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of
the Regulations; provided, however, that Gross Asset Values
shall not be adjusted pursuant to this clause (iv) to the
extent the Management Committee, by the agreement of all of
its members, determines that an adjustment pursuant to clause
(ii) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment
pursuant to this clause (iv)
If the Gross Asset Value of an asset has been determined or adjusted pursuant
to clauses (i), (ii) or (iv), above, such Gross Asset Value shall thereafter be
adjusted in the same manner as would the asset's basis for federal income tax
purposes except that in lieu of regular depreciation, the Partnership shall
take deductions for Depreciation.
"Indemnified Parties" shall have the meaning given to such
term in Section 12.1 of this Agreement.
"Indemnifying Party" shall have the meaning given to such
term in Section 12.1 of this Agreement.
"Initial Capital Contributions" means the Capital
Contributions made by the Partners pursuant to Sections 3.1(a), (b) and (c).
"Initial Sony Percentage" means the percentage equivalent of
a fraction, the numerator of which is the sum of (x) the amount credited to
Sony's Capital Account pursuant to Section 3.3(a)(iii) hereof, plus (y) the
principal amount of the Sony Note, and the denominator of which is the sum of
(I) the total amount credited to the Partners' Capital Accounts pursuant to
Section 3.3(a) hereof, plus (II) the principal amount of the Sony Note and the
Blockbuster Note.
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"Interim Development Costs Amount" shall have the meaning
given to such term in Section 3.1(b)(i) of this Agreement.
"Make-Up Amount" means the absolute value (expressed as a
positive number) of the Sony/Block Net Benefit Amount.
"MCA Amount" means the amount, if any, payable to the
Partnership from Pace at the Unwind Closing pursuant to Section 7.2(d) of the
SBPAP Agreement (whether in cash or by means of the Pace Note and disregarding,
for purposes of this definition, the Netting Provisions).
"Netting Provisions" means the provisions of Article IX of
the SBPAP Agreement relating to the netting of payments due from the
Partnership and Pace against one another.
"1933 Act" shall have the meaning given to such term in
Section 13.4 of this Agreement.
"1934 Act" shall have the meaning given to such term in
Section 13.4 of this Agreement.
"Non-Defaulting Partner" shall have the meaning given to such
term in Section 11.1 of this Agreement.
"Non-Receiving Partner" shall have the meaning given to such
term in Section 3.6(a) of this Agreement.
"Non-Benefitting Partner" means (A) Sony if the Benefitting
Partner is CAC, and (B) CAC if the Benefitting Partner is Sony.
"Non-Withdrawing Partner" shall have the meaning given to
such term in Section 10.1 of this Agreement.
"Pace" means SM/Pace, Inc., a Texas corporation.
"Pace Benefit Amount " means the sum of (x) the Sony/Pace
Joint Benefit Amount, plus (y) the Pace Separate Benefit Amount.
"Pace Note" shall have the meaning given to such term in
Section 5.4(b) of this Agreement.
"Pace Note Offset Amount" shall have the meaning given to
such term in Section 5.4(b) of this Agreement.
"Pace Note Payment" shall have the meaning given to such term
in Section 5.4(b) of this Agreement.
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"Pace Separate Benefit Amount" means the aggregate amount
payable by Pace to the Partnership pursuant to Sections 9.4(g)(1) and 9.4(k)(1)
of the SBPAP Agreement (disregarding, for purposes of this definition, the
Netting Provisions and excluding the MCA Amount).
"Partner Default" shall have the meaning given to such term
in Section 11.1 of this Agreement.
"Partners" means, as of any particular time, those Persons
who are at such time the partners of the Partnership.
"Partnership" means the partnership formed hereby.
"Partnership Books" shall have the meaning given to such term
in Section 8.2 of this Agreement.
"Partnership Interest" means the interest of a Partner in the
capital, Profit, Losses and distributions of the Partnership.
"Partnership Major Decision" shall have the meaning given to
such term in Section 6.3 of this Agreement.
"Person" means an individual, corporation, partnership,
association, trust, joint venture, unincorporated organization, other entity or
group.
"Profits" or "Losses" means, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or loss), with the following adjustments:
(i) any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall
be added to such taxable income or loss;
(ii) any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Section 705(a)(2)(B)
expenditures pursuant to Section 1. 704-1 (b) (2) (iv) (i) of
the Regulations and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall
be subtracted from such taxable income or loss;
(iii) gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to
the Gross Asset Value of the property disposed of,
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notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value; and
(iv) in lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken
into account Depreciation for such fiscal year or other
period, computed in accordance with the definition of
Depreciation.
"Promissory Notes" means the Blockbuster Note and the Sony
Note.
"Receiving Partner" shall have the meaning given to such term
in Section 3.6(a) of this Agreement.
"SBAC" shall have the meaning given to such term in the
opening paragraph of this Agreement.
"SBPAP" means Pavilion Partners, a Delaware genera1
partnership (formerly known as Sony Music/Pace Partnership).
"SBPAP Agreement" means the Partnership Agreement to be made
and entered into on the Existing Facility Closing Date, by and between Pace and
the Partnership, in the form attached hereto as Exhibit A.
"Sell Price" shall have the meaning given to such term in
Section 9.2 of this Agreement.
"Selling Partner" shall have the meaning given to such term
in Section 9.4 of this Agreement.
"Sony" shall have the meaning given to such term in the
opening paragraph of this Agreement.
"Sony Note" shall have the meaning given to such term in
Section 3.1(c) of this Agreement.
"Sony Unwind Credit Amount" shall have the meaning given to
such term in Section 5.4(e) of this Agreement.
"Sony/Block Net Benefit Amount" means (x) the Blockbuster
Benefit Amount minus (y) the Sony/Pace Joint Benefit Amount.
"Sony/Pace Joint Benefit Amount" means the aggregate amount
payable by Pace to the Partnership pursuant to Sections 9.4(g) (3), 9.4(h),
9.4(k) (2) and 9.4(k) (3) of the SBPAP Agreement (disregarding, for purposes of
this definition, the Netting Provisions and excluding the MCA Amount).
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"Sony's SBPAP Interest" means Sony's interest in SBPAP
immediately following the Existing Facility Closing.
"Sony's SMP Interest" shall have the meaning given to such
term in Section 9.6 of this Agreement.
"Special Distribution" shall have the meaning given to such
term in Section 5.3 of this Agreement.
"Tax Matters Partner" shall have the meaning given to such
term in Section 8.5(a) of this Agreement.
"Unwind Closing" means the closing of the Unwind Procedure.
"Withdrawing Partner" shall have the meaning given to such
term in Section 10.1 of this Agreement.
"Woodlands Distribution" shall have the meaning given to such
term in Section 5.3 of this Agreement.
ARTICLE II
Section 2.1 Formation of Partnership. The Partnership was
formed as a partnership pursuant to the Act on September 29, 1993. The parties
hereby admit SBAC as a Partner in the Partnership and continue the Partnership
as a partnership pursuant to the Act, and the rights and liabilities of the
Partners shall be as provided in the Act, except as otherwise expressly
provided herein. The Partners shall promptly prepare and see to the execution,
filing and recording in the appropriate public offices of assumed or fictitious
business name statements and such other certificates, notices and statements as
may be required by law for the operation of the Partnership in all
jurisdictions where the Partnership may elect to do business. The parties agree
that, upon the SBAC Mergers, CAC will succeed to all of the rights and
privileges, and will assume all of the obligations, of SBAC hereunder. The
parties further agree that the Partnership shall continue following the SBAC
Mergers and that the SBAC Mergers are not intended to, and shall not, cause a
termination of the Partnership created by the Old Partnership Agreement and
continued pursuant to the terms and provisions contained in this Agreement, it
being the intent of the Partners to continue the Partnership in existence
without termination.
Section 2.2 Partnership Name. The business of the Partnership
shall be conducted under the name Amphitheater Entertainment Partnership or
under such other name as the Management Committee may from time to time
determine.
Section 2.3 Purposes of Partnership. The Partnership is
organized for the purposes of (i) being a partner in SBPAP, (ii) engaging in
any and all activities related or incidental to the activities described in
clause (i) above, and (iii) doing all things necessary or
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appropriate in connection therewith. In addition, the Partners and their
respective Affiliates may from time to time after the date hereof consider and
enter into additional entertainment ventures in the Restricted Portion of the
Earth in partnership with one another pursuant to separate partnership
agreements appropriate for such ventures.
Section 2.4 Title to Partnership Property. Title to
Partnership property shall be held in the name of the Partnership or its
nominee.
Section 2.5 Principal Place of Business. The principal place
of business of the Partnership shall be at One Blockbuster Plaza, 200 South
Andrews Avenue, Ft. Lauderdale, Florida. The Management Committee may change
the location of the Partnership's principal place of business or establish
additional places of business at such locations as the Management Committee may
from time to time determine.
Section 2.6 Term. Subject to the provisions of Article X, the
Partnership shall continue in effect until thirty-five (35) years after the
Existing Facility Closing Date, unless such term is extended for such further
period or periods as may be agreed in writing by all of the Partners.
ARTICLE III
Section 3.1 Capital Contributions and Loans of the Partners;
Certain Additional Obligations.
(a) Simultaneously herewith, CAC and Sony shall each
contribute $5.00 in cash to the capital of the Partnership.
(b) On the Existing Facility Closing Date, Blockbuster shall
make the following contributions to the capital of the Partnership:
(i) CAC shall contribute (A) an amount of cash (the
"Interim Development Costs Amount") sufficient to enable the
Partnership to make the capital contribution to SBPAP
required under Section 4.15(b) of the SBPAP Agreement, (B)
the Charlotte Asset in accordance with the terms of the
Executory Contract for such Asset and (C) at CAC's option,
either (I) a promissory note (the "Blockbuster Note") in the
principal amount of the Blockbuster Subsidiary Cash Amount
substantially in the form of Sony/Block Note #2 (in which
case CAC shall also cause the Blockbuster Guaranty to be
provided to SBPAP), or (II) the Blockbuster Subsidiary Cash
Amount;
(ii) SBAC shall contribute the San Bernardino Asset in
accordance with the terms of the Executory Contract for such
Asset; and
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(iii) WAC shall contribute the Phoenix Asset in
accordance with the terms of the Executory Contract for such
Asset.
(c) On the Existing Facility Closing Date, Sony shall
contribute to the capital of the Partnership at Sony's option, either (i) a
promissory note (the "Sony Note") in the principal amount of the Sony
Subsidiary Cash Amount substantially in the form of Sony/Block Note #1 (in
which case Sony shall also cause the Sony Guaranty to be provided to SBPAP), or
(ii) the Sony Subsidiary Cash Amount.
(d) Within seven days after the Existing Facility Closing
Date, but in no event before the next day after the Existing Facility Closing
Date, Sony shall contribute Sony's SBPAP Interest to the capital of the
Partnership.
(e) Not later than one business day prior to the date on
which the Partnership is required, under the SBPAP Agreement, to make an
additional capital contribution to SBPAP pursuant to Section 4.11, 5.1(b) or
6.2(b) of the SBPAP Agreement, each Partner shall contribute funds to the
capital of the Partnership in an amount equal to its Allocation Percentage of
such additional capital contribution so as to enable the Partnership to make
such additional capital contribution to SBPAP in the amount and at the time
required under the SBPAP Agreement.
(f) Not later than one business day prior to the date on
which the Partnership is required, under the SBPAP Agreement, to make a loan to
SBPAP pursuant to Section 4.12, 4.13, 5.1(a), 5.4(a), 5.5(a) or 6.2(a) of the
SBPAP Agreement, each Partner shall make a loan to the Partnership in an amount
equal to its Allocation Percentage of such loan required to be made to SBPAP so
as to enable the Partnership to make a loan to SBPAP in the amount and at the
time required under the SBPAP Agreement. Such loans shall be repaid to the
respective Partners on such terms, at such times and in such amounts as SBPAP
shall repay to the Partnership the corresponding loans by the Partnership to
SBPAP pursuant to the SBPAP Agreement. All repayments of such loans shall be
made pro rata among the Partners in accordance with their respective Allocation
Percentages. Notwithstanding the foregoing, it is acknowledged that either
Partner shall have the right, in its sole discretion, to fulfill its
obligations to make any such loan required to be made by reason of the
operation of Section 5.1(a), 5.4(a), 5.5(a) or 6.2(a) of the SBPAP Agreement by
causing a third party lender to make such loan in accordance with the terms of,
and as contemplated by, the applicable provision of the SBPAP Agreement.
(g) If at any time the Partnership shall be entitled, under
the SBPAP Agreement, to exercise rights to purchase Pace's partnership interest
in SBPAP pursuant to Section 16.2 or 17.2(e) of the SBPAP Agreement and the
Management Committee shall have determined to exercise such rights, not later
than one business day prior to the date on which the Partnership is required,
under the SBPAP Agreement, to consummate such purchase pursuant to the SBPAP
Agreement, each Partner shall contribute funds to the capital of the
Partnership (or shall make available funds to the Partnership's designee) in an
amount equal to its Allocation Percentage of the purchase price therefore so as
to enable the Partnership (or such designee) to consummate such purchase for
the purchase price and at the time required under the SBPAP Agreement.
'
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(h) Sony agrees that it shall be solely responsible for, and
it shall pay or perform when and as required under the SBPAP Agreement, each of
the Sony Specific Obligations. WAC and CAC agree that they shall be solely
responsible for, and they shall pay or perform when and as required under the
SBPAP Agreement, each of the Blockbuster Specific Obligations. In furtherance
of the foregoing, not later than one business day prior to the date on which
the Partnership is required, under the SBPAP Agreement, to make payments of
principal and interest to SBPAP under (x) Sony/Block Note #1, Sony shall make
equivalent payments of principal and interest to the Partnership under the Sony
Note, and (y) Sony/Block Note #2, CAC shall make equivalent payments of
principal and interest to the Partnership under the Blockbuster Note. Each
Partner agrees that it shall not take or omit to take any action (or permit any
Sony/Block Related Party affiliated with it to take or omit to take any
action), which action or omission would constitute a breach of or default by
the Partnership under the SBPAP Agreement. Each Partner hereby indemnifies and
holds harmless the other from and against any and all loss, cost, damage or
expense (including, without limitation, reasonable attorneys' fees) arising out
of or relating to any breach by the Partnership of or default by the
Partnership under the SBPAP Agreement occasioned by the breach by such Partner
of its obligations under this Section 3.1(h).
(i) Simultaneously with the Unwind Closing, (x) the
Benefitting Partner shall contribute cash funds to the capital of the
Partnership in an amount equal to the Make-Up Amount, and (y) CAC shall
contribute cash funds to the capital of the Partnership equal to the
Blockbuster Unwind Contribution Amount.
(j) If at any time the Management Committee determines that
funds in excess of retained operating earnings and any Partnership borrowings
are required by the Partnership for the operation of its business or any of its
related obligations, expenses, costs, liabilities or expenditures, the Partners
shall contribute cash to the capital of the Partnership in the amounts and on
the dates as are established by unanimous vote of the Management Committee.
Each Partner shall contribute such amount in proportion to its Allocation
Percentage.
(k) Except as provided in Sections 3.1(a)-(j), the Partners
shall not be required to make any capital contributions, loans, or other
advances to the Partnership; provided, however, that a Partner may voluntarily
make a loan to the Partnership. Such loan to the Partnership shall only be made
on such terms as shall be approved by the Management Committee. Subject to
Section 3.4 hereof, the Partners shall have no personal liability to each other
for the repayment by the Partnership of their respective loans and capital
contributions made to the Partnership.
(l) Sony hereby acknowledges and agrees that each of SBAC,
WAC and CAC shall be permitted to make the Capital Contributions, loans and
other payments required to be made by the other Blockbuster entities pursuant
to this Section 3.1 and, in such event (provided that all applicable Capital
Contributions, loans and other payments to be made by SBAC, WAC and CAC are
made in full by one or more of the Blockbuster entities), the failure of SBAC,
WAC or CAC to comply with its obligations under this Section 3.1 shall not give
rise to any right, claim or cause of action against such Person by Sony under
this Agreement or otherwise.
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(m) The provisions of this Section 3.1 are not intended to be
for the benefit of any creditor or other person (other than a Partner in such
Partner's capacity as a Partner) to whom any debts, liabilities or obligations
are owed by, or who otherwise has any claim against, the Partnership or any of
the Partners. No such creditor or other person shall have any right to make any
claim in respect of any debt, liability or obligation against the Partnership
or any of the Partners under the provisions of this Agreement.
Section 3.2 Prohibition Against Withdrawals. No Partner shall
be entitled to withdraw all or any portion of its Capital Contribution, or to
receive any payment of interest on its Capital Contribution.
Section 3.3 Capital Accounts. The Partnership shall create
upon its books and records a capital account ("Capital Account") for each
Partner, which shall be maintained in accordance with the provisions of this
Section 3.3.
(a) Upon the making of the Initial Capital Contributions, the
Partner's Capital Accounts shall be credited as follows:
(i) there shall be credited to CAC's Capital Account
the sum of (w) $5.00 plus (x) the Interim Development Costs
Amount, plus (y) the Net Value of the Charlotte Asset and the
San Bernardino Asset (after taking into account the
Amphitheater Liabilities related to such assets) plus (z) if
CAC elected to contribute the Blockbuster Subsidiary Cash
Amount to the capital of the Partnership, the Blockbuster
Subsidiary Cash Amount; provided, however, that if CAC
elected to contribute the Blockbuster Note to the capital of
the Partnership, the Blockbuster Note shall be credited to
CAC's Capital Account in accordance with Section 3.5 hereof;
(ii) there shall be credited to SBAC's Capital Account
the Net Value of the San Bernardino Asset (after taking into
account the Amphitheater Liabilities related to the San
Bernardino Amphitheater);
(iii) there shall be credited to WAC's Capital Account
the Net Value of the Phoenix Asset (after taking into account
the Amphitheater Liabilities related to the Phoenix
Amphitheater); and
(iv) there shall be credited to Sony's Capital Account
the sum of (x) $5.00, plus (y) if Sony elected to contribute
the Sony Subsidiary Cash Amount to the capital of the
Partnership, the Sony Subsidiary Cash Amount; provided,
however, that if Sony elected to contribute the Sony Note to
the capital of the Partnership, the Sony Note shall be
credited to Sony's Capital Account in accordance with Section
3.5 hereof.
(b) Upon the making by Sony of the Additional Capital
Contribution contemplated by section 3. 1 (d) , there shall be credited to
Sony's Capital Account, the positive
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balance of Sony's capital account in SBPAP at such time, as determined pursuant
to Section 4.8 (b) of the SBPAP Agreement. Upon the making of any other
Additional Capital Contribution by a Partner, a credit shall be made to such
Partner's Capital Account in the amount of cash and the fair market value of
such Additional Capital Contribution (net of any liabilities of such Partner
which are assumed by the Partnership or which are secured by the property
contributed by such Partner).
(c) Upon the allocation to a Partner of a distributive share
of Profits or any items in the nature of income or gain which are specially
allocated pursuant to Section 4.2, a credit shall be made to such Partner's
Capital Account in the amount of such allocation.
(d) To each Partner's Capital Account there shall be debited
(i) the amount of cash and the Gross Asset Value of any property distributed to
such Partner pursuant to any provision of this Agreement (net of any
liabilities of the Partnership which are assumed by such Partner or which are
secured by the property distributed to such Partner by the Partnership) , and
(ii) such Partner's distributive share of Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 4.2.
(e) In the event all or a portion of an interest in the
Partnership is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest.
(f) In determining the amount of any liability for purposes
of clauses (a) and (b), above, there shall be taken into account any applicable
provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Regulations, and shall be interpreted and applied in a manner
consistent therewith.
Section 3.4 Capital Account Make-up Provision. If a Partner's
Capital Account has a deficit balance following liquidation (as defined in
Treasury Regulation section 1.704-1(b) (2) (ii) (g)) of the Partner's
Partnership Interest (after taking into account all Capital Account adjustments
for the taxable year of the Partnership in which liquidation occurs), the
Partner shall, by the end of such taxable year (or, if later, within 90 days
after the date of such liquidation), contribute to the Partnership an amount
necessary to increase the balance in its Capital Account to zero. Any amount so
contributed shall be used, first, to satisfy the Partnership's obligations, if
any, under Section 8.3 (h) of the SBPAP Agreement and the balance, if any,
shall be distributed in accordance with Section 10.5 hereof.
Section 3.5 Effect of Sony/Block Notes on Capital Accounts.
Pursuant to Section 1.704-1(b) (2) (iv) (d) (2) of the Regulations, the Capital
Accounts of Sony and CAC shall not be increased by the principal amount of the
Promissory Notes upon contribution of the Promissory Notes to the Partnership;
provided, however, that such Partner's Capital Account shall be increased upon
(i) a taxable disposition of its Promissory Note by the Partnership, or (ii)
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any principal payments made on its Promissory Note. Interest payments made on
the Promissory Notes shall not be treated as contributions to the capital of
the Partnership and therefore shall not be credited to the Capital Accounts of
Sony or CAC.
Section 3.6 Effect of Distributions In Kind on Capital
Accounts. If any asset of the Partnership is distributed to a Partner in kind,
then pursuant to Section 1.704-1(b) (2) (iv) (e) of the Regulations and
notwithstanding anything to the contrary in this Agreement, such asset shall be
treated as if it were sold in a taxable disposition for an amount equal to its
then fair market value (determined by taking into account the effect of Section
7701(g) of the Code, if applicable) immediately prior to its distribution and,
for purposes of adjusting the balances of the Capital Accounts of the Partners
(and only for such purpose), the resulting deemed gain or loss shall be
allocated pursuant to the following provisions:
(a) If such asset is being distributed pursuant to or in
connection with the Unwind Procedure, then (i) the deemed gain from such asset
shall be allocated first to the Partner that does not receive and is not deemed
to receive such asset (the "Non-Receiving Partner") to the extent of the
depreciation deductions previously allocated to the Non-Receiving Partner with
respect to such asset and then to the Partner that receives or is deemed to
receive such asset (the "Receiving Partner"); and (ii) the deemed loss from
such asset shall be allocated to the Receiving Partner; and
(b) If such asset is being distributed for any other reason,
then the deemed gain or loss from such asset shall be allocated in the manner
described in Section 4.1 hereof.
ARTICLE IV
Section 4.1 Allocation of Profits and Losses. Except as
otherwise provided in this Article IV, Profits and Losses for any fiscal year
shall be allocated to the Partners in accordance with their Allocation
Percentages.
Section 4.2 Special Allocations. Prior to making the
allocations required by Section 4.1 above, the following special allocations
shall be made in the following order:
(a) Except as otherwise provided in Section 1.7042(f) of the
Regulations, notwithstanding any other provision of this Section 4.2, if there
is a net decrease in Partnership Minimum Gain during any Partnership fiscal
year, each Partner shall be specially allocated items of Partnership income and
gain for such fiscal year (and, if necessary subsequent fiscal years) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Section 1.7042(g) of the Regulations.
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in accordance with
Sections 1.704-2 (f) (6) and 1. 7 04 -2 (j) (2) of the Regulations. This
Section 4. 2 (a) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(f) of the Regulations and shall be interpreted
consistently therewith.
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(b) Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership fiscal year or other period shall be specially allocated among the
Partners in proportion to their Allocation Percentages.
(c) Partner Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i) (4) of the Regulations, notwithstanding any
other provision of this Section 4.2, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during
any Partnership fiscal year, each Partner who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Section 1.704-2(i) (5) of the Regulations, shall
be specially allocated items of Partnership income and gain for such fiscal
year (and, if necessary, subsequent fiscal years) in an amount equal to such
Partner's share of the net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i) (4) of the Regulations. Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Sections 1.704-2(i) (4) and 1.704-2(j) (2) of
the Regulations. This Section 4.2(b) is intended to comply with the minimum
gain chargeback requirement in section 1.704-2(i) (4) of the Regulations and
shall be interpreted consistently therewith.
(d) Any Partner Nonrecourse Deductions for any Partnership
fiscal year shall be specially allocated to the Partner who bears the economic
risk of loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Sections 1.704-2(i)
(1) and (2) of the Regulations.
(e) All tax credits for amounts paid or incurred in any
taxable year shall be allocated to the Partners in the same proportions as the
related items of loss and deduction are allocated to the Partners in such
fiscal year.
(f) Any income or gain which is specially allocated to the
Partnership with respect to the Charlotte Asset pursuant to Sections 8.1(c) (2)
(i) or 8.1(h), respectively, of the SBPAP Agreement shall be allocated entirely
to CAC.
(g) Any SBPAP deductions or losses which are specially
allocated to the Partnership with respect to Previously Allocated Interim
Development Deductions pursuant to Section 4.15(b) of the SBPAP Agreement shall
be allocated entirely to CAC.
Section 4.3 Section 704(c) Allocations.
(a) In accordance with Section 704(c) of the Code and the
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall be allocated among
the Partners so as to take account of any variation between the adjusted basis
of such property to the Partnership for federal income tax purposes and its
initial Gross Asset Value.
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(b) In the event the Gross Asset Value of any asset is
adjusted pursuant to the provisions contained in the definition of "Gross Asset
Value," subsequent allocations of income, gain, loss, and deduction with
respect to such asset shall take account of basis of such asset for federal
income tax purposes and the value at which such asset is reflected in the
Capital Accounts of the Partners, to the extent such variation was not
previously taken into account pursuant to Section 4.3(a), in the same manner as
under Section 704(c) of the Code and the Regulations thereunder.
(c) Allocations pursuant to Sections 4.3(a) and (b) are
solely for purposes of federal, state, and local income taxes. Notwithstanding
any other provision of this Agreement, such allocations (x) shall be consistent
with any income, gain, loss or deduction allocated to the Partnership by SBPAP
pursuant to Section 704(c) of the Code and the Regulations thereunder, and (y)
shall not affect, or in any way be taken into account in computing, any
Partner's Capital Account or share of Profits, Losses, other items, or
Distributions pursuant to any provision of this Agreement.
Section 4.4 Certain Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any
other items allocable to any period, Profits, Losses, and any such other items
shall be determined on a daily, monthly or other basis, as determined by the
Management Committee using any permissible method under Section 706 of the Code
and the Regulations thereunder.
(b) Except as otherwise provided in this Agreement, all items
of Partnership income, gain, loss, deduction for any fiscal year or other
period, and any other allocations not otherwise provided for shall be divided
among the Partners in the same proportions as they share Profits or Losses, as
the case may be, for such year or other period.
ARTICLE V
Section 5.1 Distributions. Subject to the other provisions of
this Article V, Distributions shall be declared and made at such time or times
and in such amounts as shall be determined by the Management Committee and
shall be made to the Partners in proportion to their Allocation Percentages at
the time of such Distribution.
Section 5.2 SBPAP Distributions. Notwithstanding the
provisions of Section 5.1, within ten (10) days after receipt by the
Partnership of any distributions of Free Cash from SBPAP pursuant to Section
8.4(b)(2)(ii) of the SBPAP Agreement, the Management Committee shall cause
Distributions to be made to each Partner in an amount equal to the product of
such Partner's Allocation Percentage (as determined after Sony's Additional
Capital Contribution pursuant to Section 3.1(d)) multiplied by the aggregate
amount so received by the Partnership from SBPAP.
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Section 5.3 Special Distributions. Notwithstanding the
provisions of Section 5.1, the Partners shall, within three days after receipt
by the Partnership of a Special Distribution, cause the Partnership to
distribute such Special Distribution to the Partners as follows:
(a) the entire amount of each Charlotte Distribution shall be
distributed to CAC; and
(b) the entire amount of any Woodlands Distribution shall be
distributed to the Partners in accordance with their respective Allocation
Percentages at the time of such Distribution.
For purposes of this Section 5.3, (x) a "Charlotte Distribution" means any
distribution received by the Partnership from SBPAP pursuant to Section
5.6(b)(1) or 5.6(c)(1) of the SBPAP Agreement, (y) a "Special Distribution"
means a Charlotte Distribution or a Woodlands Distribution, and (z) a
"Woodlands Distribution" means any distribution received by the Partnership
from SBPAP pursuant to Section 4.17(b)(2) of the SBPAP Agreement.
Section 5.4 Unwind Distributions. It is the intention of the
Partners that, by means of the operation of this Section 5.4, in conjunction
with the operation of Section 9.4 of the SBPAP Agreement, each of Sony and
Blockbuster, as part of the Unwind Procedure, shall repay in cash and receive
property and cash at the Unwind Closing such cash amounts and items of property
required in order to equalize the aggregate financial benefit received by each
such Person as a result of their respective interests in the Amphitheaters
distributed by SBPAP at the Unwind Closing. Accordingly, the Partners hereby
agree that irrespective of the operation of this Section 5.4, they shall do all
things necessary to cause Sony, on the one hand, and WAC and CAC, on the other
hand, to achieve such result. Examples of the intended operation this Section
5.4 and Section 3.1(i) are attached hereto as Annex A. Notwithstanding the
provisions of Section 5.1, all distributions of cash and property received by
the Partnership pursuant to Section 9.4 of the SBPAP Agreement shall be made to
the Partners within three (3) business days after receipt by the Partnership of
such distributions in accordance with this Section 5.4.
(a) Upon receipt of the Blockbuster Amphitheaters pursuant to
Section 9.4(d) of the SBPAP Agreement, the Partnership shall distribute (x) all
of SBPAP's right, title and interest in and to the Phoenix Amphitheater to WAC
or WAC's designee, and (y) all of SBPAP's right, title and interest in and to
the Charlotte Amphitheater and the San Bernardino Amphitheater to CAC or CAC's
designee; provided, however, that in the event of a distribution of the
Blockbuster Amphitheaters to the Partnership on and after the Closing
contemplated by Section 9.5 hereof, all of SBPAP's right, title and interest in
and to the Blockbuster Amphitheaters shall be distributed to the Acquiring
Partner, and each Partner hereby authorizes the Acquiring Partner to so notify
SBPAP upon a closing pursuant to such Section 9.5.
(b) All amounts received by the Partnership pursuant to
Section 9.4(f) of the SBPAP Agreement shall be distributed to Sony and CAC pro
rata in accordance with the respective principal balances of the Sony Note and
Blockbuster Note outstanding immediately prior to the Unwind Closing. All cash
received by the Partnership at the Unwind Closing
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pursuant to Section 9.4(h) of the SBPAP Agreement (excluding any portion of the
MCA Amount deemed distributed pursuant to Section 9.4(h) of the SBPAP Agreement
in accordance with Section 7.2(d) (2) of the SBPAP Agreement) shall be
distributed to CAC. All cash received by the Partnership pursuant to Section
9.4(i) of the SBPAP Agreement at the Unwind Closing shall be distributed to
Sony and CAC pro rata in accordance with the respective differences between (i)
the Sony Subsidiary Cash Amount or the Blockbuster Subsidiary Cash Amount, as
applicable, and (ii) the principal balances of the Sony Note and Blockbuster
Note, as applicable, outstanding immediately prior to the Unwind Closing. If
Pace elects to deliver a promissory note (the "Pace Note") to the Partnership
at the Unwind Closing pursuant to Section 9.4(j) of the SBPAP Agreement in lieu
of delivering the cash amount then due to the Partnership pursuant to Sections
9.4(h) and (i) of the SBPAP Agreement (including any portion of the MCA Amount
deemed distributed pursuant to Section 9.4(h) of the SBPAP Agreement in
accordance with Section 7.2(d)(2) of the SBPAP Agreement), then the Partnership
shall distribute each Pace Note Payment to Sony and CAC within three business
days after receipt by the Partnership as follows:
(i) CAC shall receive a portion of each Pace Note
Payment determined by multiplying (x) the entire amount of
such Pace Note Payment by (y) a fraction, the numerator of
which shall be the cash amount owed to the Partnership by
Pace at the Unwind Closing pursuant to Section 9.4(h) of the
SBPAP Agreement (excluding any portion of the MCA Amount
deemed distributed pursuant to Section 9.4(h) of the SBPAP
Agreement in accordance with Section 7. 2 (d) (2) of the
SBPAP Agreement)and the denominator of which shall be
(ii) the remaining portion of each Pace Note Payment
shall be distributed to Sony and CAC pro rata in accordance
with the respective differences between (i) the Sony
subsidiary Cash Amount or the Blockbuster Subsidiary Cash
Amount, as applicable,. and (ii) the principal balances of
the Sony Note and Blockbuster Note, as applicable,
outstanding immediately prior to the Unwind Closing.
For purposes of this Section 5.4(b), a "Pace Note Payment" means all of the
following: (x) each payment received by the Partnership from Pace under the
Pace Note, (y) each receipt by the Partnership of proceeds from the sale or
other disposition of the collateral held by the Partnership in respect of Pace
Note, and (z) the offset by the Partnership of the Pace Note Offset Amount, in
which event the Pace Note Payment shall be the portion of the Blockbuster
Unwind Contribution Amount equal to the Pace Note Offset Amount. The Partners
hereby agree that if Pace delivers the Pace Note to the Partnership, then the
Clause G&K Sum, if any, owed to Pace at the Unwind Closing pursuant to Section
9.4(k) of the SBPAP Agreement shall be offset against the principal of the Pace
Note to the fullest extent possible (the amount so offset being hereinafter
referred to as the "Pace Note Offset Amount").
(c) The Partnership shall distribute cash in the amount of
the Make-Up Amount to the Non-Benefitting Partner; provided that if CAC is the
Non-Benefitting Partner, then such distribution shall be reduced by the
Blockbuster Unwind Contribution Offset Amount, if any.
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(d) The Partnership shall distribute all amounts received
from SBPAP pursuant to Section 9.4(1) (4) (ii) (A) to CAC and all amounts
received from SBPAP pursuant to Section 9.4(l) (4) (ii) (B) to Sony.
(e) All cash, if any, which was received by the Partnership
in connection with the Unwind Closing (including, without limitation, the
Blockbuster Unwind Contribution Amount) and remains after the distributions, if
any, required by Sections 5.4(b), (c) and (d) and the payment, if any, to Pace
required pursuant to Section 9.4 of the SBPAP Agreement, shall be distributed
as follows: (i) to Sony in an amount equal to the Sony Unwind Credit Amount,
and (ii) the balance to CAC. For purposes of this Section 5.4(e), "Sony Unwind
Credit Amount" means the product of (x) Sony's Allocation Percentage at the
time of the Unwind Closing, multiplied by (y) the sum of (A) the Pace Separate
Benefit Amount, plus (B) the portion of the MCA Amount which was paid to the
Partnership in cash at the Unwind Closing or which would have been paid to the
Partnership in cash at the Unwind Closing but for the Netting Provisions.
ARTICLE VI
Section 6.1 Management Committee. The overall management and
control of the business and affairs of the Partnership shall be vested in the
Management Committee. The Management Committee will consist of one (1) person
designated by CAC and one (1) person designated by Sony. Each Management
Committee member will serve at the pleasure of the Partner who designated such
member and such member may be replaced, with or without cause, at any time by
such designating Partner upon notice to the other Partners. No action shall be
taken by the Management Committee unless (i) approved by all of the members of
the Management Committee, or (ii) approved by unanimous ;written consent of all
the members of the Management Committee for action taken without a meeting.
Section 6.2 Meetings. The Management Committee shall meet
regularly at such times and places as it shall determine, provided that any
Partner may call a special meeting of the Management Committee on ten (10)
days' advance written notice to all members of the Committee. Notice may be
waived in writing, and attendance at a meeting shall be deemed to be waiver of
notice. The Management Committee may take action without a meeting by consent
in writing signed by all members of the Management Committee and setting forth
the action so taken. Meetings of the Management Committee may be held by means
of conference telephone or similar communications equipment which permits all
members participating in a meeting to hear and speak to each other. Written
minutes of each Management Committee meeting shall be kept by the Management
Committee and shall be provided to each Partner within fifteen (15) business
days following any such meeting.
Section 6.3 Partnership Major Decisions. No act shall be
taken or funds expended or obligation incurred by (i) the Partnership, (ii) any
Partner acting on behalf of the Partnership, or (iii) any members of the
Management Committee, with respect to a matter within the scope of any
"Partnership Major Decision," as defined in the following sentence, unless the
Partnership Major Decision is approved (x) unanimously by the members of the
Management
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Committee in advance, in writing, or (y) unanimously by recorded vote at a
meeting of the entire Management Committee. A "Partnership Major Decision"
shall mean any of the following:
(a) the adoption of any business plan or budget for any
fiscal period;
(b) the making of capital expenditures, except to the extent
provided for in any business plan previously adopted by the Management
Committee or in the SBPAP Agreement;
(c) the sale, lease or exchange of any assets of the
Partnership other than in the ordinary course of business or in accordance with
the terms of the SBPAP Agreement or the making of any Distributions by the
Partnership other than those required by the provisions of this Agreement or
the SBPAP Agreement;
(d) the merger or consolidation of the Partnership with or
into any other entity;
(e) entering into any license agreement;
(f) the admission of additional Partners or issuance of
additional interests in the Partnership;
(g) any transactions or payments between the Partnership and
any Partner, Affiliate or partner of a Partner or the Partnership except for
transactions and payments contemplated by (i) this Agreement or the SBPAP
Agreement or (ii) any budget or business plan approved pursuant to Section
6.3(a);
(h) entering into, amending or terminating any employee
benefit plan or contract of employment to which the Partnership is a party;
(i) making any investments other than in the ordinary course
of business or in accordance with the terms of the SBPAP Agreement;
(j) with regard to any federal, state or local tax matter,
except as otherwise provided in Section 8.5:
(i) extending of the statute of limitations on
behalf of the Partnership;
(ii) determining whether or not to appeal or
otherwise contest by administrative or judicial proceedings
by administrative or judicial determination, except as
otherwise provided in Section 8.5; or
(iii) entering into any settlement agreement with a
taxing authority;
(k) entering into any business other than ownership of the
partnership interest in SBPAP;
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(l) the leasing of property by the Partnership;
(m) except as provided by the provisions of the SBPAP
Agreement or as contemplated thereby:
(i) the borrowing or lending of money by the
Partnership (other than trade obligations incurred in the
ordinary course of business);
(ii) the mortgaging, pledging or hypothecation of any
assets of the Partnership; or
(iii) the assumption of any loan or obligation or the
guaranteeing of any loan or obligation of any party other
than the Partnership except as contemplated by the SBPAP
Agreement;
(n) the institution of legal proceedings by the Partnership,
other than routine proceedings for the collection of trade debt;
(o) the settlement of any legal proceedings against the
Partnership, other than routine collection matters brought by or against the
Partnership;
(p) the selection and replacement of attorneys and
accountants for the Partnership;
(q) making any political or charitable contributions;
(r) casting any vote by the members of SBPAP's Executive
Committee appointed by the Partnership (provided, however, that if the
Management Committee shall not approve any such vote relating to the annual
operating budget of SBPAP prior to the date that such vote is required to be
taken pursuant to the SBPAP Agreement, the respective members of SBPAP's
Executive Committee representing the Partnership shall each be entitled to vote
on such budget as he or she sees fit);
(s) subject to Section 6.3(r) and Section 6.4 hereof, taking
any action or making any decision required or permitted to be taken by the
Partnership in its capacity as a partner of SBPAP, whether pursuant to the
SBPAP Agreement or otherwise;
(t) amending, modifying, waiving or terminating any
(u) except as provided by Article X hereof, dissolving or
liquidating the Partnership, or filing any petition under any bankruptcy or
insolvency law with respect to the Partnership;
(v) causing or attempting to cause SBPAP to refinance the
Charlotte Loan with a Replacement Loan having a maturity date later than April
1, 2004; and
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(w) making any other decision or taking any other action
which either (i) effects a change in the business strategy of the Partnership
or (ii) by any provision of this Agreement is required to be approved by the
Management Committee or the Partnership, or which could reasonably be expected
to have a material effect on any other Partnership Major Decision.
Section 6.4 Appointment of Members of SBPAP Executive
Committee. Each of Sony and CAC shall be entitled, individually, to appoint
(and replace from time to time in accordance with the provisions of the SBPAP
Agreement) one of the Partnership's two (2) representatives to SBPAP's
Executive Committee.
Section 6.5 Indemnification.
(a) To the full extent permitted under the Act, the
Partnership shall indemnify any Person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Partnership) by reason of the fact
that he is or was a general partner, Management Committee member or officer of
the Partnership, or is or was serving at the request of the Management
Committee of the Partnership as a director, management committee member or
officer (or in any capacity equivalent to any of the foregoing) of another
corporation, partnership, joint venture, trust or other enterprise (all of the
foregoing being herein collectively referred to as "Covered Capacities"),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Partnership, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or plea
of nolo contendre or its equivalent, shall not of itself create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in and not opposed to the best interests of the Partnership, and
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) To the full extent permitted under the Act, the
Partnership shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action or suit by
or in the right of the Partnership to procure a judgment in its favor by reason
of the fact that he is or was serving in any of the Covered Capacities, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Partnership and except that no indemnification shall be made in respect to
any claim, issue or matter as to which such action or suit alleges misconduct
in the performance of his duty to the Partnership unless and then only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, and in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to be indemnified for such expenses which the court shall deem proper.
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(c) Anything in Sections 6.5(a) or (b) to the contrary
notwithstanding, to the extent that any Person referred to therein has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to therein or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under Sections 6.5(a) or (b) (unless
ordered by a court) shall be made by the Partnership only as authorized in the
specific case upon a determination that indemnification is proper in the
circumstances because the indemnitee has met the applicable standard of conduct
set forth in Sections 6.5(a) or (b).
(e) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Partnership in advance of the
final disposition of such action, suit or proceeding, as authorized by the
Management Committee in the specific case upon receipt of any, undertaking by
or on behalf of the indemnitee to repay such amount unless it shall ultimately
be determined that he is entitled to be indemnified by the Partnership.
(f) The indemnification provided by this Section 6.5 shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any statute, agreement, or otherwise, and
shall continue as to a person who has ceased to serve in a Covered Capacity and
shall inure to the benefit of his successors in interest, including but not
limited to his heirs, executors, and administrators.
(g) The Partnership shall have power to purchase and maintain
insurance on behalf of any person who is or was serving in any of the Covered
Capacities and incurred by him in any such capacity or arising out of his
status as such, whether or not the Partnership would have the power to
indemnify him against such liability under the provisions of this Section 6.5.
(h) Each Person who is or was an employee or agent of the
Partnership or an employee or agent of a general partner, or who is or was
serving at the request of the Management Committee of the Partnership as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise may be indemnified (or covered by insurance), in the manner
and to the extent provided in this Section 6.5 for persons acting in Covered
Capacities, at the discretion of the Management Committee.
(i) The Partnership shall have the right to assume the
defense of any action, suit or proceeding in connection with which any Person
is entitled to indemnification under this Section 6.5 and to select counsel for
such purpose. No Person entitled to indemnification hereunder shall consent to
entry of any judgment or enter into any settlement in connection with any such
action, suit or proceeding without the consent of the Partnership, and the
Partnership shall not, without the consent of each such Person that is entitled
to indemnification, consent to entry of any judgment or enter into any
settlement in connection with such action, suit or proceeding which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Person of a release from all liability in respect to such
claim or litigation.
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(j) Indemnification under this Section 6.5 shall not be
available to any Person in the case of any action, suit or proceeding brought
(i) against the Partnership by such Person or (ii) against such Person by or on
behalf of the Partnership.
(k) The indemnification obligations set forth in this Section
6.5 shall be recourse to the assets of the Partnership only and no Partner
shall be personally liable in respect thereof.
Section 6.6 Partnership Professional Services. Subject to
Section 13.3 hereof, if the Partnership requires any legal, accounting or other
professional services during the term of the Partnership, the expenses of such
professional services will be borne by the Partnership.
ARTICLE VII
Section 7.1 Noncompetition.
(a) For so long as the Partnership is bound by Sections 12.1
and 12.3 of the SBPAP Agreement, each Partner agrees that it will, and will
cause each of the Sony/Block Related Parties affiliated with it to, comply with
the provisions thereof. At such time, if any, as the Partners or their
Affiliates determine to enter into any new business as contemplated by the last
sentence of Section 2.3 hereof, the Partners agree that such Persons shall be
obligated to discuss in good faith whether specific noncompetition or
exclusivity restrictions relating to such new businesses and binding the
Partners are appropriate and, if the Partners agree that such restrictions are
appropriate, they shall use their good faith best efforts to promptly negotiate
and agree upon the terms thereof and such restrictions, as so negotiated and
agreed upon, shall be reflected in an amendment to this Agreement.
(b) Upon breach of any provision of this Section 7.1, the
Partnership will be entitled to injunctive relief, since the remedy at law
would be inadequate and insufficient. In addition, the Partnership and
Non-Defaulting Partner will be entitled to the rights and remedies set forth in
Article XVI. If any provision of this Section 7.1, as applied to any party or
to any circumstances, is adjudged by a court to be invalid or unenforceable,
the same will in no way affect any other provision of this Section or any other
part of this Agreement, the application of such provision in any other
circumstances or the validity or enforceability of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination will have the power to reduce the duration
and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form such provision will then be enforceable and will be
enforced.
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ARTICLE VIII
Section 8.1 Fiscal Year. The fiscal year of the Partnership
for financial and book accounting purposes and for federal, state and local
income and other tax purposes shall begin on November 1 and end on October 31
of each year during the term of the Partnership, except that the Partnership's
initial fiscal year for all purposes shall begin on the Existing Facility
Closing Date.
Section 8.2 Books and Records. The Management Committee shall
establish, maintain and keep accurate, full and complete books of account and
records (the "Partnership Books") showing the assets and liabilities, revenues
and expenditures, and all other aspects of the operations, transactions and
financial condition of the Partnership including changes in the respective
Capital Accounts of the Partners. The Partnership Books shall be maintained at
the principal office of the Partnership or at such other place reasonably
designated by the Management Committee and each Partner shall have access to
the Partnership Books during ordinary business hours upon reasonable prior
notice.
Section 8.3 Financial Reports. The Management Committee shall
cause to be submitted to each Partner, within thirty (30) working days after
the end of each month and within one hundred twenty (120) days after the end of
each fiscal year, internal unaudited financial statements for that month or
fiscal year, respectively, showing the revenues and expenditures, and the
assets and liabilities, for that period of each of the entities in which the
Partnership holds an equity interest. At the request of a Partner and at such
Partner's expense, the Management Committee shall have any of such financial
statements for a full fiscal year audited by a qualified independent public
accounting firm which may be the accounting firm retained by either of the
Partners for its individual auditing needs, or the accounting firm retained by
either of the Partners' Affiliates.
Section 8.4 Bank Accounts. All receipts, funds and income of
the Partnership shall be deposited in an account or accounts in the name of the
Partnership.
Section 8.5 Tax Matters Partner.
(a) CAC is hereby appointed the initial "Tax Matters Partner"
of the Partnership for all purposes pursuant to Sections 6221 through 6231 of
the Code (the "Tax Matters Partner"). With respect to the Partnership's fifth
fiscal year, Sony shall serve as the Tax Matters Partner. Thereafter, CAC and
Sony shall rotate as the Tax Matters Partner every five years. The Tax Matters
Partner will (i) furnish to each Partner or Assignee affected by an audit of
the Partnership income tax returns a copy of each notice or other communication
received from the Internal Revenue service or applicable state authority, (ii)
keep each such Partner and Assignee informed of any administrative or judicial
proceeding, as required by Section 6623(g) of the Code, and (iii) allow each
such Partner and Assignee an opportunity to participate in all such
administrative and judicial proceedings.
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(b) The Tax Matters Partner has the authority to do all or
any of the following:
(i) file a petition as contemplated in Sections
6226(a) or 6228 of the
Code;
(ii) intervene in any action as contemplated in
Sections 6226(b) of the Code;
(iii) file any request contemplated in sections
6227(b) of the Code; and
(iv) enter into an agreement extending the period of
limitations as contemplated in Section 6229(b) (1) (B) of the
Code.
(c) The Partnership is not obligated to pay any fees or other
compensation to the Tax Matters Partner in its capacity as such. However, the
Partnership will reimburse the Tax Matters Partner for any and all
out-of-pocket costs and expenses (including reasonable attorneys' and other
professional fees, including any applicable tax preparation fees) incurred by
it in its capacity as Tax Matters Partner. Each Partner who elects to
participate in Partnership administrative tax proceedings will be responsible
for its own expenses incurred in connection with such participation. In
addition, the cost of any adjustments to a Partner and the cost of any
resulting audits or adjustments of a Partner's tax return will be borne solely
by the affected Partner.
(d) The Partnership will indemnify, defend and hold the Tax
Matters Partner harmless from and against any loss, liability, damage, cost or
expense (including reasonable attorneys' and other professional fees) sustained
or incurred as a result of any act or decision concerning Partnership tax
matters and within the scope of such Partner's responsibilities as Tax Matters
Partner, so long as such act or decision was not made fraudulently or in bad
faith and did not constitute willful or wanton misconduct or gross negligence.
The Partnership shall have the right to assume the defense of any action, suit
or proceeding in connection with which the Tax Matters Partner is entitled to
indemnification pursuant to this Section 8.5(d) and to select counsel for such
purpose. The Tax Matters Partner shall not consent to entry of any judgment or
enter into any settlement in connection with any such action, suit or
proceeding without the consent of the Partnership, and the Partnership shall
not, without the consent of the Tax Matters Partner, consent to entry of any
judgment or enter into any settlement in connection with such action, suit or
proceeding which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Person of a release from all liability in
respect to such claim or litigation.
ARTICLE IX
Section 9.1 Assignments by Partners and Assignees. Except as
permitted by and in compliance with Article XV of the SBPAP Agreement, during
the term of this Agreement no Partner may, directly or indirectly sell,
transfer, assign, give, pledge, encumber, alienate or otherwise dispose of
(voluntarily or involuntarily, by operation of law or otherwise) all or any
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part of its interest in the Partnership or any of its rights or obligations
under this Agreement, without the prior unanimous consent of the Management
Committee, except that any Partner may transfer all or any portion of its
interest in the Partnership to a corporation, partnership or other entity which
is directly or indirectly wholly owned by, or which directly or indirectly
wholly owns, such Partner, or which directly or indirectly acquires all of the
stock or substantially all of the assets and assumes substantially all of the
liabilities of such Partner's parent corporation (including the Partner's
obligations under this Agreement). Such transfer of a Partner's interest shall
be permitted only upon the condition that the transferor unconditionally and
irrevocably guarantees the payment and performance of the transferee's
obligations under this Agreement and complies with the applicable provisions of
the SBPAP Agreement. In the event of any such transfer, it is the Partner's
intention that this Partnership shall continue in existence without termination
following such transfer. Moreover, notwithstanding the foregoing, no transfer
otherwise permitted by this Section 9.1 shall be made if it would cause a
termination of the Partnership or SBPAP for Federal income tax purposes
pursuant to Section 708(b) of the Code and such termination would result in
materially adverse tax consequences to the other Partners or the Partnership
(or adverse tax consequences to Pace, to the extent indemnification for the
consequences of such a termination is required to be provided to Pace pursuant
to the SBPAP Agreement), for which such other Partners are not indemnified to
their reasonable satisfaction (or Pace is not indemnified to the extent
required by the SBPAP Agreement) by or on behalf of the transferring Partner.
Nothing herein contained shall be deemed to prohibit a public offering of
securities of any direct or indirect parent corporation of any Partner.
Section 9.2 Buy/Sell Notice. Subject to the provisions of
this Agreement, (i) Sony shall have the right to deliver a Buy/Sell Notice to
WAC and CAC, and (ii) WAC and CAC shall have the right to deliver a Buy/Sell
Notice to Sony. A Buy/Sell Notice may be given only after the second
anniversary of the Existing Facility Closing Date. For purposes of this Section
9.2, the following terms shall have the meanings set forth below:
"Buy/Sell Notice" shall mean a written notice delivered
pursuant to this Section 9.2 in which the Delivering Partner unconditionally
offers to (i) purchase all of the Deciding Partner's Partnership Interest at a
cash purchase price ("Buy Price") designated in such notice or (ii) sell all of
the Delivering Partner's Partnership Interest to the Deciding Partner at a cash
purchase price ("Sell Price") designated in such notice.
"Deciding Partner" means (x) Sony, if the Delivering Partner
is WAC or CAC, and (y) CAC, if the Delivering Partner is Sony.
"Delivering Partner" means the Person delivering the Buy/Sell
Notice pursuant to this Section 9.2.
Any Buy/Sell Notice delivered by Sony pursuant to this Section 9.2 shall offer
to purchase the Partnership Interests of WAC and CAC and allocate the Buy Price
between WAC and CAC based upon their respective Allocation Percentages. Any
Buy/Sell Notice delivered by CAC pursuant to this Section 9.2 shall offer to
sell the Partnership Interests of WAC and CAC and allocate the Sell Price
between WAC and CAC based upon their respective Allocation
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Percentages. In order for a Buy/Sell Notice to be validly given pursuant to
this Article IX, the Buy Price designated therein must be at least five percent
(5%) greater than the Sell Price designated therein. Notwithstanding the
foregoing provisions of this Section 9.2, a Partner shall not have the right to
give a Buy/Sell Notice (a) if such Partner is then a Defaulting Partner, or (b)
on more than one (1) occasion during any Fiscal Year. In the event of a
transfer pursuant to a Buy/Sell Notice, it is the intention of the Partners
that, so long as there is more than one Partner in the Partnership upon the
Closing described in Section 9.5 hereof, the Partnership shall continue in
existence without termination following such transfer.
Section 9.3 Deciding Partner Elects to Sell or Buy; Appraisal
by Deciding Partner. Within one hundred twenty (120) days after the date of
receipt of a Buy/Sell Notice, the Deciding Partner shall deliver written notice
to the Delivering Partner stating whether the Deciding Partner agrees to accept
(i) the Delivering Partner's offer to sell all of its Partnership Interest to
the Deciding Partner for the Sell Price or (ii) the Delivering Partner's offer
to purchase all of the Deciding Partner's Partnership Interest for the Buy
Price. If the Deciding Partner fails to deliver such notice within one hundred
twenty (120) days after receipt of the Buy/Sell Notice, then the Deciding
Partner shall be deemed to have accepted the Delivering Partner's offer to
purchase all of the Deciding Partner's Partnership Interest for the Buy Price.
Notwithstanding the foregoing, in the event that the Deciding Partner delivers
to the Delivering Partner within one hundred ten (110) days following the
Deciding Partner's receipt of the Buy/Sell Notice a written appraisal of an
appraiser selected by the Deciding Partner who is experienced in the appraisal
of entertainment related businesses (provided, however, that so long as the
Partnership continues to hold its interest in SBPAP, such appraiser shall also
be experienced in the appraisal of real estate), which appraisal states that
the fair market value of the Deciding Partner's Partnership Interest is an
amount equal to or greater than 110% of the Buy Price, then the Buy Price shall
be equal to the fair market value of the Deciding Partner's Partnership
Interest set forth in the appraisal; provided, however, that (i) in order to
exercise the right to obtain an appraisal the Deciding Partner shall notify the
Delivering Partner within forty-five (45) days after the giving of the Buy/Sell
Notice that the Deciding Partner desires to obtain an appraisal of the fair
market value of its Partnership Interest, and (ii) upon receipt of such
appraisal which provides for an increased Buy Price (ie., over 110%), the
Delivering Partner shall have the option, exercisable by giving notice to the
Deciding Partner within ten (10) days following its receipt of the appraisal to
rescind the Buy/Sell Notice. Upon the election by the Delivering Partner to
rescind the Buy/Sell Notice as provided in the preceding sentence, the
obligations of the Partners with respect to such Buy/Sell Notice shall
terminate.
Section 9.4 Release or Indemnification from SBPAP
Obligations. In the event that a Partner sells its Partnership Interest
pursuant to the provisions of Section 9.3, then the Acquiring Partner shall
cause the selling Partner (the "Selling Partner") and the Selling Partner's
Affiliates to be released from or be indemnified for any and all liability or
obligation (including, without limitation, in respect of existing guaranties of
SBPAP debt to third party lenders and the unpaid balance, if any, of the
Sony/Block Notes, and obligations to make new capital contributions, loans or
advances to SBPAP or guarantees for the benefit of SBPAP) pursuant to the SBPAP
Agreement. Any such indemnity shall be guaranteed in accordance with the
provisions of Section 13.17 hereof and shall be secured by a first priority
security interest in
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and to all of the Acquiring Partner's right, title and interest in the
Partnership, SBPAP and their respective assets. Such guaranty and security
agreement shall be in form and substance reasonably satisfactory to the Selling
Partner.
Section 9.5 Closing of the Sale. The sale of all of a
Partner's Partnership Interest required to be sold pursuant to an offer and an
acceptance made pursuant to this Article IX shall close on the date which is
one hundred eighty (180) days after the date on which the Buy/Sell Notice is
received by the Deciding Partner (the "Closing"). The Closing shall occur at
such place in Ft. Lauderdale, Florida or New York, New York as may be
designated by the Deciding Partner. At the Closing, the following obligations
shall apply:
(a) The Acquiring Partner shall deliver the Buy Price or the
Sell Price, as appropriate in immediately available funds to the Selling
Partner;
(b) The Selling Partner shall be obligated to execute such
instruments of assignment as may be reasonably required by the Acquiring
Partner containing warranties that such Partnership Interest is being conveyed
to the Acquiring Partner or its designee free and clear of all liens, claims,
charges and encumbrances; and
(c) The Acquiring Partner shall execute (and shall cause its
parent corporation named in Section 13.17 hereof to execute) such instruments
as may be reasonably required by the Selling Partner in which the Acquiring
Partner indemnifies and holds harmless the Selling Partner from all loss, cost
or claim associated with or arising out of any of the Partnership's then
existing liabilities and obligations, other than any liabilities and
obligations incurred by the Selling Partner on behalf of the Partnership in
violation of this Agreement.
Section 9.6 Interests in SMP Partnership. For purposes of
this Article IX, all references to Sony's Partnership Interest shall be deemed
to include all of Sony's and its Affiliates' right, title and interest in and
to the SMP Partnership, a general partnership formed under the laws of the
State of New York between Sony (or an Affiliate thereof) and SM/Pace, Inc. on
the Existing Facility Closing Date ("Sony's SMP Interest"). Sony shall not (I)
sell, assign or otherwise transfer Sony's SMP Interest (other than to an
Affiliate), or (II) mortgage, pledge or otherwise encumber Sony's SMP Interest,
in either case without the prior written consent of CAC. If Sony is the Selling
Partner and Sony is not the holder of Sony's SMP Interest, Sony shall cause its
Affiliate that is the holder thereof to take all such action and execute all
such instruments as may be reasonably required to transfer Sony's SMP Interest
to Blockbuster or its designees at the Closing in accordance with this Article
IX.
ARTICLE X
Section 10.1 Dissolution of the Partnership. The Partnership
shall be dissolved upon the happening of any of the following events or
otherwise as provided by the Act:
(a) expiration of the term of the Partnership set forth in
Section 2.6;
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(b) the unanimous action of the Management Committee to
terminate the Partnership;
(c) the occurrence of an Event of Withdrawal with respect to
a Partner and the failure by a designee of the Non-Withdrawing Partner to
purchase the Partnership Interest of the withdrawing Partner as provided in
Section 10.2 below; or
(d) as provided in item (i) of Section 11.2(e) below.
For purposes of this Article X, whenever an Event of Withdrawal shall occur
with respect to either WAC or CAC, WAC and CAC, jointly, shall be deemed to be
the "Withdrawing Partner" and Sony shall be deemed to be the "Non-Withdrawing
Partner."
Section 10.2 Option to Purchase Partnership Interest of
Withdrawing Partner. Upon the occurrence of an Event of Withdrawal with respect
to Sony or Blockbuster, the Non-Withdrawing Partner shall have the option of
nominating a designee of its choice to purchase the entire Partnership Interest
of the Withdrawing Partner, which option shall be exercisable by the giving of
written notice to the Withdrawing Partner or its legal representatives within
one hundred twenty (120) days after the Non-Withdrawing Partner first has
actual knowledge of the Event of Withdrawal. The purchase price for the
Partnership Interest of the Withdrawing Partner and the manner of payment
thereof, and the procedures for a closing of such purchase, shall be the same
as if the Withdrawing Partner were a Defaulting Partner and its Partnership
Interest was being purchased pursuant to the provisions of Section 11.2(d)
hereof (except that the closing shall occur on that date designated by the
designee of the Non-Withdrawing Partner which is within forty-five (45) days
from the exercise of such option). The option set forth in this Section 10.2 is
being provided in view of the fact that the prospects for the Partnership and
the Partnership Interest of the Non-Withdrawing Partner will be placed in
jeopardy upon the occurrence of an Event of withdrawal, all with potential
damages to the Non Withdrawing Partner and the Partnership which cannot be
foreseen. So long as, following the exercise of such option, there are at least
two Partners, it is the intention of the Partners that the Partnership shall
continue in existence without termination following such exercise.
Section 10.3 Dissolution in the Event Option is Not
Exercised. Upon the occurrence of an Event of Withdrawal and the failure by the
designee of the Non-Withdrawing Partner to exercise the option to purchase the
Partnership Interest of the Withdrawing Partner as provided in Section 10.2
above, the provisions of paragraphs (a) through (d) below shall control such
dissolution notwithstanding anything to the contrary contained herein,
including without limitation, in Section 10.5 below.
(a) The Withdrawing Partner shall thereafter be deemed to be
an assignee of a Partner's Interest (and accorded only the limited rights
provided pursuant to the Partnership Act to such an assignee) and shall have no
voting, consent or approval rights under Section 6.3 or any other provision of
this Agreement, and the Non-Withdrawing Partner may send such notice or other
advice of the dissolution to each such Person as the Non-Withdrawing Partner
may deem appropriate and necessary under the circumstances.
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(b) The Non-Withdrawing Partner shall settle the business of
the Partnership as expeditiously as the nature of such business will permit.
(c) The Non-Withdrawing Partner shall be entitled to, but
shall not be obligated to seek or obtain administration of the assets of the
Partnership by a receiver. referee trustee or court of bankruptcy.
(d) In the event of a liquidation and distribution pursuant
to this Article X as a result of the occurrence of an Event of Withdrawal, the
Withdrawing Partner shall have no power or authority to bind the Partnership or
the Partners but shall cooperate with and, to the extent requested, assist the
Non-Withdrawing Partner in the dissolution and winding up of the Partnership
and the distribution of the assets thereof.
Upon the occurrence of an Event of Withdrawal, whether or not
the option referred to in Section 10.2 hereof is exercised, if the Event of
Withdrawal shall result in indemnification of Pace being required pursuant to
Section 13.9 of the SBPAP Agreement, the Withdrawing Partner shall provide such
indemnity to Pace (and indemnify the Non-Withdrawing Partner on the same terms
as it so indemnifies Pace pursuant to said Section 13.9).
Section 10.4 Final Accounting. Upon dissolution of the
Partnership, an accounting shall be made of the accounts of each Partner and of
the Partnership's assets, liabilities and operations, from the date of the last
previous accounting to the date of dissolution.
Section 10.5 Liquidation; Distribution. In the event of the
dissolution of the Partnership, the affairs of the Partnership shall be wound
up in an orderly manner and the assets of the Partnership shall be distributed
in accordance with a liquidation plan, which shall provide for the distribution
of such assets in the following order of priority:
(a) first, to the repayment of the debts and liabilities of
the Partnership (other than loans or advances from Partners);
(b) second, to the establishment of any reserves for any
contingent or unforeseen liabilities or obligations of the Partnership, as
provided in the liquidation plan;
(c) third, to the repayment of the outstanding principal and
interest on any loans or advances that may have been made by any of the
Partners to the Partnership, but if the amount available for repayment of such
loans or advances shall be insufficient, then to the Partners on account
thereof in proportion to their respective advances; and
(d) fourth, to the Partners in accordance with and to the
extent of their positive Capital Account balances, after taking into account
all Capital Account adjustments for the taxable year during which the
liquidation occurs.
Section 10.6 Approval of Liquidation Plan. In instances in
which liquidation of the Partnership is the result of a dissolution pursuant to
Section 10.1(a) or (b) the liquidation
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plan shall require the approval of the Partners. In instances in which the
liquidation of the Partnership is the result of a dissolution pursuant to
Section 10.1(c), then the liquidation plan shall be approved by the
Non-Withdrawing Partner; provided that such plan conforms to the requirements
of Sections 10.5(a) - (d) above; and provided further that the appraised value,
as determined by a nationally recognized investment banking or appraisal firm,
of the assets other than cash distributed to each Partner shall bear
substantially the same proportion to the appraised value of all assets so
distributed to the Partners, as such Partner's positive Capital Account balance
bears to the aggregate of the positive Capital Account balances of all
Partners.
ARTICLE XI
Section 11.1 Default. If any Partner (the "Defaulting
Partner") fails to perform any of its material obligations contained in this
Agreement, or materially violates the terms of this Agreement, then the
Non-Defaulting Partner shall have the right to give the Defaulting Partner a
notice (the "Default Notice") specifically setting forth the nature of such
failure or violation and stating that such Defaulting Partner shall have a
period of ten (10) days to pay any sums of money specified therein as due and
owing to the Partnership or to any Partner or, if the failure or violation is a
nonmonetary default and is capable of being cured, thirty (30) days to cure
such default specified therein. If the monies specified in the Default Notice
are not paid within such ten (10) day period, or if such non-monetary failures
or violations are not capable of being cured or, if capable of being cured,
such Defaulting Partner has not cured such nonmonetary failures or violations
within such thirty (30) day period, then a "Partner Default" shall be deemed to
have occurred with respect to such Partner. If a Defaulting Partner cures in
all material respects all of its failures or violations which are capable of
being cured within the aforesaid notice and cure periods, then such defaults
shall be deemed no longer to exist and provided that no failure or violation
exists which is not capable of being cured, such Partner shall be deemed no
longer to constitute a Defaulting Partner. For purposes of this Article XI, WAC
shall be deemed to be a Defaulting Partner at such time as CAC is a Defaulting
Partner and CAC shall be deemed to be a Defaulting Partner at such time as WAC
is a Defaulting Partner. For purposes of this Agreement, "Non-Defaulting
Partner" means (x) Sony if the Defaulting Partner is either WAC or CAC, and (y)
CAC if the Defaulting Partner is Sony.
Section 11.2 Rights and Remedies. Upon the occurrence of a
Partner Default, the Non-Defaulting Partner and the Partnership shall each have
the following rights, options and remedies which shall be cumulative and may be
exercised concurrently or singly in the sole and absolute discretion of the
Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of
Partnership or the Non-Defaulting Partner in order to recover the amounts owed,
if any, and any incidental or consequential damages arising from such default
(including, without limitation, reasonable attorneys fees and disbursements
incurred by the Partnership or the Non-Defaulting Partner, as the case may be,
in prosecuting any such action).
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(b) The right to bring any proceeding in the nature of
injunction, specific performance or other equitable remedy, it being
acknowledged by each of the Partners that damages at law may be an inadequate
remedy for such default.
(c) If a sum of money is owed to the Partnership (whether a
capital contribution or a loan), the Non-Defaulting Partner may advance the sum
of money owed to the Partnership by the Defaulting Partner with the following
results:
(i) the sum thus advanced shall be deemed to be a loan
from the Non-Defaulting Partner to the Defaulting Partner;
(ii) the principal balance of such deemed loan shall
be due and payable in whole upon written demand from the
Non-Defaulting Partner to the Defaulting Partner;
(iii) the principal balance of such deemed loan shall
bear interest at an interest rate equal to the lesser of (1)
six percent (6%) per annum, over the prime rate of interest
per annum announced, from time to time, by major money center
banks in the United States and as published in The Wall
Street Journal, compounded monthly or (2) the maximum
nonusurious interest rate permitted by applicable law from
time to time in effect; and
(iv) all distributions from the Partnership that would
otherwise be made to the Defaulting Partner (whether before
or after dissolution of the Partnership) shall, instead, be
paid to the Non-Defaulting Partner until such loan and all
interest accrued thereon has been repaid in full.
(d) If, as a result of the nature of the default, failure,
breach or omission which gave rise to such Partner Default, the damages
suffered or incurred as a result thereof by the Non-Defaulting Partner are
difficult or impossible to ascertain, then the Non-Defaulting Partner shall
have, as liquidated damages and not as a penalty, the right and option to
purchase all, but not a portion of, the Partnership Interest of the Defaulting
Partner at a purchase price equal to seventy five (75%) percent of the then
balance in the Defaulting Partner's Capital Account, which shall be payable in
ten (10) equal annual installments of principal, together with interest at a
variable rate equal to the Short Term Rate, with the first installment due on
the first anniversary following the closing hereinafter referred to; provided
that where either WAC or CAC is the Defaulting Partner, Sony may only elect to
purchase the Partnership Interests of both such Persons. The option to purchase
the interest of the Defaulting Partner shall be exercisable on or before the
ninetieth (90) day following the expiration of the period of time in which the
Defaulting Partner could have cured such default (or if such default is not
capable of being cured, on or before the ninetieth (90) day following the
giving of the Default Notice) by the giving of written notice to the Defaulting
Partner. The closing of any such purchase shall take place on a date and at a
place designated by the Non-Defaulting Partner (but the date designated for
such closing shall in any event be a date which is not later than (30) days
from the exercise of such option). At the closing, the Non-Defaulting Partner
shall deliver to the Defaulting Partner the
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required consideration in exchange for an instrument or instruments (and such
other documents as counsel to the Non-Defaulting Partner may reasonably
request) validly assigning the interest of the Defaulting Partner to the
Non-Defaulting Partner free and clear of all liens, claims and , encumbrances.
The obligation to pay the purchase price to the Defaulting Partner shall be an
obligation of the Non-Defaulting Partner alone and, in any event, shall not be
an obligation included within the provisions of Section 13.17 hereof. Any
Defaulting Partner whose Partnership Interest is purchased under the provisions
of this clause (d) shall remain liable for its Percentage Interest of the
Partnership's liabilities in existence at the time of closing of such purchase.
The Non-Defaulting Partner may, at its sole option, designate any third party
of its choosing to exercise the option granted to it in this clause (d).
(e) If, in connection with a Division of Responsibility,
indemnification of Pace shall be required pursuant to Section 13.9 of the SBPAP
Agreement, then at the option of the Non-Defaulting Partner, the Defaulting
Partner shall either (i) provide such indemnity to Pace (and indemnify the
Non-Defaulting Partner on the same terms as it so indemnifies Pace pursuant to
said Section 13.9), in which case the Partnership shall dissolve pursuant to
Article X hereof, or (ii) fully cooperate with Pace and the Non-Defaulting
Partner in order to restructure the Division of Responsibility so as to achieve
as nearly as possible the results contemplated by Section 17.3 of the SBPAP
Agreement without causing a termination of SBPAP under Section 708(b) of the
Code in which case the Partnership shall not dissolve pursuant to Article X
hereof. Each Partner hereby, irrevocably constitutes and appoints the other
Partners, and each officer of the other Partners, and their respective
successors, acting singly, as its true and lawful attorney-in-fact, with full
right of substitution, in its name, place and stead, to take all action, and to
make, execute, acknowledge, swear to and file any document, instrument,
agreement or amendment, in each case that may be required to effectuate the
restructuring referred to in the preceding sentence.
ARTICLE XII
Section 12.1 Indemnification.
(a) Each Partner (the "Indemnifying Party") agrees to
indemnify and hold harmless the other Partners and the Partnership (the
"Indemnified Parties") from and against any and all claims, demands, actions,
losses, damages, assessments, charges, costs, expenses (including, without
limitation, interest, penalties and reasonable attorneys' fees), or judgments
against the Indemnified Parties (hereafter, "Compensable Damage"), resulting
from or arising out of:
(i) any breach of the Indemnifying Party's
obligations under this Agreement;
(ii) any action or conduct by the Indemnifying Party
relating to the Partnership or this Agreement outside the
scope of the authority of such Indemnifying Party; and
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(iii) any grossly negligent or intentional wrongful
action or omission of the Indemnifying Party or any employee,
agent or representative of the indemnifying Party relating to
the Partnership or this Agreement.
(b) If any claim relating to the matters indemnified pursuant
to this Section 12.1 is asserted against an Indemnified Party which may result
in any Compensable Damage, then the Indemnified Party shall give notice to the
Indemnifying Party as provided by this Agreement within thirty (30) days of the
Indemnified Party's knowledge of such claim. Upon receipt of such notice, the
Indemnifying Party shall have the right to undertake, by counsel or
representatives of its own choosing, the good faith defense, compromise or
settlement of the claim, such defense, compromise or settlement to be
undertaken on behalf of and for the account and risk of the Indemnified Party.
The Indemnified Party shall cooperate with the Indemnifying Party in such
defense at the Indemnifying Party's expense and provide the Indemnifying Party
with all information and assistance reasonably necessary to permit the
Indemnifying Party to settle and/or defend any such claim. No settlement of any
claim shall be effected without the consent of both the Indemnifying Party and
the Indemnified Party, which consent shall not be unreasonably withheld,
conditioned or delayed.
(c) Except as otherwise explicitly herein provided
(including, without limitation, pursuant to Sections 3.1, 3.4 and 12.1 hereof),
as among the Partners, no Partner shall be liable or bear responsibility for
more than its proportionate share (based on its Allocation Percentage) of each
and all of the liabilities and obligations of the Partnership. Except as
otherwise explicitly herein provided (including, without limitation, pursuant
to Sections 3.1, 3.4 and 12.1 hereof), in the event that (whether before or
following any dissolution of the Partnership) any Partner shall be required to
pay, discharge or otherwise bear responsibility for any amount of any liability
or obligation of the Partnership in excess of such Partner's proportionate
share thereof (determined as provided above), each other Partner hereby agrees
to indemnify, hold harmless and reimburse (directly or through the Partnership)
such Partner upon demand against and for such other Partner's proportionate
share of such excess. It is the intention of this contribution clause that,
except for any Partner's liability arising explicitly hereunder (including,
without limitation, pursuant to Sections 3.1, 3.4 and 12.1 hereof), following
the operation of this clause and without relieving any former Partner of any
responsibility or obligation it may have, each Partner will have borne exactly
its proportionate share of the liability or obligation of the Partnership at
issue determined with reference to such Partner's Allocation Percentage.
ARTICLE XIII
Section 13.1 Survival. In the event of any termination of
this Agreement, all provisions of Section 13.4 below and of Section 12.1 above
shall survive such termination and remain in full force and effect.
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Section 13.2 Further Assurances. Each Partner agrees that it
will do any and all things and take any and all actions reasonably requested by
any other Partner to fulfill the purposes of this Agreement.
Section 13.3 Expenses. Each Partner will pay all of its
expenses incurred in connection with the negotiation of this Agreement and the
SBPAP Agreement, the performance of its obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby.
Section 13.4 Confidentiality. The Partners acknowledge that
they and their respective Affiliates are now and may in the future be engaged
in a number of businesses related to and/or competitive with each others'
businesses and, accordingly, no Partner wishes to receive from any other
Partner any proprietary, confidential or nonpublic information relating to such
other Partner's or its Affiliates' businesses. Each Partner will, and will
cause its Affiliates to, use reasonable safeguards to prevent the disclosure to
the Partnership or the other Partners and their Affiliates of any of its
proprietary, confidential or non-public information. Each Partner agrees not to
disclose, or permit or suffer any of its Affiliates to disclose, any
proprietary, confidential or non-public information of the Partnership or the
other Partners except for disclosures to such Partner's or its Affiliate's
directors, officers, employees, agents and representatives who need to know
such information and who shall be under similar obligations not to use or
disclose the information. It is not anticipated that any of the information
covered by this Section 13.4 will constitute technical proprietary or
confidential information. Notwithstanding the foregoing, information shall not
be deemed proprietary, confidential or non-public if such information (a) was
or is publicly disclosed or otherwise made widely available other than through
the fault of the receiving Partner or its Affiliate, (b) was or is obtained by
such Partner from sources other than the Partnership or independently developed
by such Partner without the use of any information, property or personnel of
the Partnership or (c) was required by law to be disclosed; provided, that
prior to disclosing information pursuant to (c) above, a Partner shall, if
permitted by law, provide to the Partnership and each other Partner reasonable
notice and an opportunity to challenge the disclosure before appropriate
authorities; and further provided that to the extent that disclosure pursuant
to (c) above is required under the Securities Act of 1933, as amended, or any
rule or regulation thereunder ("1933 Act") , or the Securities Exchange Act of
1934, as amended, or any rule or regulation thereunder ("1934 Act"), the
Partner or Affiliate responsible for such disclosure, if requested by the other
Partner, shall use its best efforts to obtain confidential treatment thereof
pursuant to Rule 406 of the 1933 Act, or any successor rule, or Rule 24b-2 of
the 1934 Act, or any successor rule, as appropriate.
Section 13.5 Binding Effect. This Agreement constitutes a
valid and binding obligation of each Partner, enforceable in accordance with
its terms.
Section 13.6 Other Activities. Each of the Partners
acknowledges that it and each of its Affiliates is engaged and may in the
future be engaged in a number of businesses related to the business of the
Partnership and (i) except as specifically provided in Section 7.1 hereof,
nothing in this Agreement is intended to prohibit any Partner or any of its
Affiliates from owning, managing, operating, investing and participating in
their current businesses and
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investment interests or from owning, managing, operating, investing and
participating in additional businesses and investment interests, whether or not
any such business or activity is competitive with the business of the
Partnership and (ii) neither the Partnership nor any other Partner shall have
any rights in or to any such businesses or investments of such Partner or its
Affiliates or any income or profits derived therefrom.
Section 13.7 Transactions with Partners. No contract,
agreement, license or other instrument or transaction between the Partnership
and a Partner, any officer, director, shareholder or partner of a Partner, or
any two or more such persons or entities, or between the Partnership and any
other corporation, partnership, association or other organization in which any
one or more of the aforementioned persons is a director or officer, or has a
financial interest, which is approved by the vote of the entire Management
Committee, shall be void or voidable solely because of said relationship.
Section 13.8 Inspection. Each Partner or its authorized
representative may examine the Partnership Books or other financial records of
the Partnership as provided in Section 8.2 of this Agreement, and may examine
or inspect any of the property or assets owned or used by the Partnership
during ordinary business hours upon prior reasonable notice.
Section 13.9 Notices. All notices, offers, approvals,
elections, consents, acceptances, waivers, reports, requests and other
communications required or permitted to be given hereunder (all of the
foregoing hereinafter collectively referred to as "Communications") shall be in
writing and shall be deemed to have been duly given if delivered personally
with receipt acknowledged or sent by registered or certified mail or
equivalent, if available, return receipt requested, or by facsimile, telex or
cablegram (which shall be confirmed by a writing sent by registered or
certified mail or equivalent on the same day that such facsimile, telex or
cablegram is sent) , or by recognized overnight courier for next day delivery,
addressed or sent to the parties at the following addresses and facsimile
numbers or to such other or additional address or facsimile number as any
Partner shall hereafter specify by Communication to the other Partner:
If to SBAC, WAC or CAC:
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301-1860
Fax: (305) 833-3929
Attention: Thomas W. Hawkins, Esq.
- 40 -
<PAGE>
If to Sony:
YM Corp.
% Sony Corporation of America
9 West 57th Street
New York, NY 10019
Fax: (212) 418-9434
Attention: Marinus N. Henny
Senior Vice President
with a copy to:
Sony Music Entertainment, Inc.
550 Madison Avenue
New York, New York 10022-3211
Fax: (212) 833-8083
Attention: David H. Johnson, Esq.
Senior Vice President, General Counsel
Notice of change of address shall be deemed given when actually received or
upon refusal to accept delivery thereof; all other Communications shall be
deemed to have been given, received and dated on the earlier of: (i) when
actually received or upon refusal to accept delivery thereof; or (ii) on the
date when delivered personally, one (1) day after being sent by facsimile,
cable, telex or overnight courier and four (4) business days after mailing, as
aforesaid.
Section 13.10 No Partition. The parties hereto expressly
waive any rights they may have to retire, withdraw or resign from the
Partnership, dissolve the Partnership, terminate the Partnership or seek
partition of Partnership's assets between the Partners by any court; provided,
however, that such waiver shall not affect the operation of Section 17.3 of the
SBPAP Agreement or Article IX or XI of this Agreement.
Section 13.11 Severability. If any part of any provision of
this Agreement or any other agreement, document or writing given pursuant to or
in connection with this Agreement shall be invalid or unenforceable under
applicable law, said part shall be ineffective to the extent of such invalidity
or unenforceability only, without in any way affecting the remaining provisions
of said agreement, but only if and to the extent that removal of such provision
and enforcement of the remainder of the Agreement or any other agreement would
not materially and adversely frustrate the parties' essential objectives.
Section 13.12 Waiver of Default. No delay or failure on the
part of any party to this Agreement in exercising any right, power or privilege
under this Agreement shall impair any such right, power or privilege or be
construed as a waiver of any default or acquiescence therein.
- 41 -
<PAGE>
Section 13.13 Benefits and Obligations. The covenants and
agreements contained in this Agreement shall inure to the benefit of, and be
binding upon, the Partners and their respective legal successors. Any persons
succeeding to the interest of a Partner shall succeed to all of such Partner's
rights, interests and obligations under this Agreement, subject to and with the
benefit of all terms and conditions of this Agreement.
Section 13.14 Amendment. This Agreement shall not be amended,
altered, or modified except by an instrument in writing and signed by the
Partners.
Section 13.15 Entire Agreement. This Agreement constitutes
the entire agreement between the Partners with respect to the transactions
described in this Agreement and supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters in this
Agreement.
Section 13.16 Governing Law. This Agreement, the rights and
obligations hereunder, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed therein.
Section 13.17 Joinder. On or before the Existing Facility
Closing Date, Sony shall cause Sony Music Entertainment Inc. to execute a
letter addressed to SBAC, WAC and CAC, in form reasonably acceptable to SBAC,
WAC and CAC, guarantying Sony's obligations hereunder. On or before the
Existing Facility Closing Date, SBAC, WAC and CAC shall cause Blockbuster
Entertainment Corporation to execute a letter addressed to Sony, in form
reasonably acceptable to Sony, guarantying SBAC's, WAC's and CAC's obligations
hereunder. Notwithstanding the foregoing, no such guaranty shall guaranty any
obligation hereunder (i) pursuant to Section 3.4 or (ii) arising out of an
obligation of the Partnership under the SBPAP Agreement which is excluded from
the guarantees provided for in Section 18.11 of the SBPAP Agreement.
Section 13.18 Press Releases; Names. All press releases which
are issued by the Partnership or any Partner or any Affiliate of any Partner
concerning the subject matter of this Agreement shall first be approved by both
Partners before the release thereof. Prior to the use by the Partnership of the
name "Sony," "Blockbuster" or any combination, abbreviation or other derivative
of such names for any reason, there shall have been obtained the written
approval of Sony or Blockbuster, as applicable, to the proposed use of such
name, which approval may be withheld for any reason or no reason. In the event
Sony or Blockbuster ceases for any reason to be a Partner in the Partnership,
the Partnership shall immediately cease to use such Partner's and its
Affiliates' name and any derivative thereof.
Section 13.19 No Third Party Beneficiaries. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
to any person or entity, other than the parties hereto and their respective
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.
- 42 -
<PAGE>
Section 13.20 Certain Representations. Each Partner
represents and warrants to the other that (i) it has taken or caused to be
taken all necessary action to authorized the execution, delivery and
performance of this Agreement and the transactions contemplated hereby, (ii)
this Agreement constitutes its legal, valid and binding obligation of such
Partner, enforceable against it in accordance with its terms and (iii) neither
the execution and delivery of this Agreement by it nor compliance by it with
any of the provisions hereof will violate any law or regulation, or any order,
writ or decree of any court or governmental instrumentality or its certificate
of incorporation or bylaws.
Section 13.21 Amendment of Amended and Restated Partnership
Agreement. This Agreement amends, restates and supersedes in its entirety the
Amended and Restated Partnership Agreement for Amphitheater Entertainment
Partnership dated as of February 18, 1994 among the Partners.
* * * * *
- 43 -
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
THE WESTSIDE AMPHITHEATRE
CORPORATION
By:
-----------------------------------
Its: President
CHARLOTTE AMPHITHEATER CORPORATION
By:
-----------------------------------
Its: Vice President
SAN BERNARDINO AMPHITHEATER
CORPORATION
By:
-----------------------------------
Its: Vice President
YM CORP.
By:
-----------------------------------
Its: Vice President
- 44 -
<PAGE>
ANNEX A
(UNWIND EXAMPLES)
I. Example #1
A. Assumptions
Defined Term Amount
Sony/Pace Properties Benefit $60
Pace Properties Benefit 60
Blockbuster Properties Benefit 0
Sony/Pace Joint Benefit Amount $10
Pace Separate Benefit Amount 40
Blockbuster Benefit Amount $0
Pace Benefit Amount 50
(Sony is the Benefitting Partner)
(Pace owes Clause G&K Sum)
Sony/Block Net Benefit Amount ($10)
Blockbuster Unwind Contribution Amount 0
Blockbuster Unwind Credit Amount 30
Sony Unwind Credit Amount 20
Make-Up Amount 10
Clause G&K Sum 50
B. Capital Contributions to Sony/Block by Sony and Blockbuster
Sony contributes $10 to the Partnership pursuant to item (x) of Section 3.1(i)
of the Agreement.
C. Capital Contributions to Sony/Block/Pace by Sony/Block
None.
D. Payments to Sony/Block by Pace
Pace pays $50 to Sony/Block pursuant to Section 9.4 (k) of the SBPAP Agreement.
E Distributions from Sony/Block
Sony/Block distributes $10 to CAC pursuant to Section 5.5(c) of the Agreement.
<PAGE>
Upon receipt of Clause G&K Sum from Pace, Sony/Block distributes $20 to Sony
and $30 to CAC pursuant to Section 5.5(d) of the Agreement.
F. Net Results (Benefit-Contributions/Pmts+Distributions)
Blockbuster - 0-0+40=40
Pace - 90-50+0=40
Sony - 30-10+20=40
<PAGE>
II. Example #2
A. Assumptions
Defined Term Amount
Sony/Pace Properties Benefit $60
Pace Properties Benefit 0
Blockbuster Properties Benefit 90
Sony/Pace Joint Benefit Amount $10
Pace Separate Benefit Amount 0
Blockbuster Benefit Amount $30
Pace Benefit Amount 10
(Blockbuster is the Benefitting Partner)
(Sony/Block owes Clause G&K Sum)
Sony/Block Net Benefit Amount $20
Blockbuster Unwind Contribution Amount 20
Blockbuster Unwind credit Amount 0
Sony Unwind Credit Amount 0
Make-Up Amount 20
Clause G&K Sum 20
B. Capital Contributions to Sony/Block by Sony and Blockbuster
CAC contributes $20 to the Partnership pursuant to item (x) of Section 3.1(i)
of the Agreement.
CAC contributes $20 to the Partnership pursuant to item (y) of Section 3.1(i)
of the Agreement.
C. Capital Contributions to Sony/Block/Pace bv Sony/Block
Sony/Block contributes $20 to Sony/Block/Pace pursuant to Section 9.4(k) of the
SBPAP Agreement.
D. Payments to Sony/Block by Pace
None.
E. Distributions from Sony/Block
Sony/Block distributes $20 to Sony pursuant to Section 5.5(c) of the Agreement.
<PAGE>
F. Net Results (Benefit-Contributions/Pmts+Distributions)
Blockbuster - 90-40+0=50
Pace - 30-0+20=50
Sony - 30-0+20=50
<PAGE>
II. Example #2
A. Assumptions
Defined Term Amount
Sony/Pace Properties Benefit $60
Pace Properties Benefit 60
Blockbuster Properties Benefit 15
Sony/Pace Joint Benefit Amount $10
Pace Separate Benefit Amount 40
Blockbuster Benefit Amount $5
Pace Benefit Amount 50
(Sony is the Benefitting Partner)
(Pace owes Clause G&K Sum)
Sony/Block Net Benefit Amount ($5)
Blockbuster Unwind Contribution Amount 0
Blockbuster Unwind Credit Amount 25
Sony Unwind Credit Amount 20
Make-Up Amount 5
Clause G&K Sum 5
B. Capital-Contributions to Sony/Block by Sony and Blockbuster
Sony contributes $5 to the Partnership pursuant to item (x) of Section 3.1(j)
of the Agreement.
C. Capital Contributions to Sony/Block/Pace by Sony/Block
None.
D. Payments to Sony/Block by Pace
Pace pays $45 to Sony/Block pursuant to Section 9.4(k) of the SBPAP Agreement.
E. Distributions from Sony/Block
Sony/Block distributes $5 to CAC pursuant to Section 5.5(c) of the Agreement.
Upon receipt of Clause G&K Sum from Pace, Sony/Block distributes $20 to Sony
and $25 to CAC pursuant to Section 5.5(d) of the Agreement.
<PAGE>
F. Net Results (Benefit-Contributions/Pmts+Distributions)
Blockbuster - 15-0+30=45
Pace - 90-45+0=45
Sony - 30-5+20=45
<PAGE>
Sony/Block distributes $12.50 to Sony pursuant to Section 5.5(d) of the
Agreement.
F. Net Results (Benefit-Contributions/Pmts+Distributions)
Blockbuster - 90-47.50+0+=42.50
Pace - 37.50-0+5=42.50
Sony - 0-0+42.50=42.50
<PAGE>
Certificate of Incorporation
of
Ant Theatrical Productions, Inc.
Under Section 402 of the Business Corporation Law
The undersigned, being a natural person of at least 18 years
of age and acting as the incorporator of the corporation hereby being formed
under the Business Corporation Law, (the "Corporation"), certifies that:
FIRST: The name of the Corporation is: Ant Theatrical
Productions, Inc.
SECOND: The Corporation is formed for the following purposes:
(1) To engage in any lawful act or activity for
which corporations may be organized under Article 4 of the Business Corporation
Law of the State of New York (the "BCL"), but not to engage in any act or
activities requiring the consent or approval of any State official, department,
board, agency or other body without such consent or approval first being
obtained.
(2) To have, in furtherance of the corporate
purposes, all of the powers conferred upon corporations organized under the
BCL, subject to any limitations thereof contained in this Certificate of
Incorporation or in the laws of the State of New York.
THIRD: The office of the Corporation is to be located in the
County of New York and State of New York.
FOURTH: The Corporation shall have authority to issue two
hundred (200) shares of common stock without par value, all of which shall be
of the same class.
FIFTH: The Secretary of State is designated as the agent of
the Corporation upon whom process against the Corporation may be served. A copy
of any process against the Corporation served upon the Secretary of State shall
be mailed by him to the Corporation, c/o Frankfurt, Garbus, Klein & Selz, P.C.,
488 Madison Avenue, New York, New York 10022, Attn:
Seth D. Gelblum, Esq.
SIXTH: The Corporation shall, to the fullest extent permitted
by Article 7 of the BCL, as the same may be amended and supplemented from time
to time, indemnify any and all persons whom it shall have power to indemnify
thereunder from and against any and all
1
<PAGE>
of the expenses, liabilities, or other matters referred to therein or covered
thereby. The indemnification provided for herein shall not be deemed exclusive
of any other rights to which any person may be entitled under any by-law,
resolution of shareholders, resolution of directors, agreement or otherwise, as
permitted by Article 7 of the BCL, as to action in any capacity in which such
person served at the request of the Corporation.
SEVENTH: The personal liability of the directors of the
Corporation is eliminated to the fullest extent permitted by the provisions of
paragraph (b) of Section 402 of the BCL, as the same may be amended and
supplemented from time to time.
IN WITNESS WHEREOF, I hereby sign this certificate this 30th
day of October, 1996, and affirm that the statements made herein are true under
the penalties of perjury.
/s/ Seth D. Gelblum
---------------------------------------------
Seth D. Gelblum, Sole Incorporator
FRANKFURT, GARBUS, KLEIN & SELZ, P.C.
488 Madison Avenue
New York, New York 10022
(212) 980-0120
2
<PAGE>
BY-LAWS
of
ANT THEATRICAL PRODUCTIONS, INC.
(A New York Corporation)
ARTICLE I
SHARE HOLDERS
1.01. Annual Meeting. The annual meeting of the shareholders
shall be held on the date fixed, from time to time, by the directors, provided,
that the first annual meeting shall be held on a date within thirteen months
after the formation of the Corporation, and each successive annual meeting
shall be held on a date within thirteen months after the date of the preceding
annual meeting.
1.02. Special Meetings. Special meetings may be called by the
directors or by the president or secretary, and shall be called by the
directors upon the written request of the holders of a majority of the
outstanding shares of the Corporation entitled to vote at the meeting requested
to be called.
1.03. Place of Meetings. Both annual meetings and special
meetings of the shareholders shall be held at such place, within or without the
State of New York, as the directors may, from time to time, fix. Whenever the
directors shall not fix such place, or whenever shareholders entitled to call a
special meeting shall call the same, the meeting shall be held at the office of
the Corporation in the State of New York.
1.04. Notice of Meetings. The notice of any meeting of the
shareholders shall be in writing, shall state the place, date, and hour of the
meeting, and, unless it is the annual meeting, shall state the name and
capacity of the person issuing the same and shall otherwise conform to the
provisions of section 605 of the New York Business Corporation Law (the "BCL").
1.05. Waiver of Notice. Notice of a meeting need not be given
to any shareholder who submits a signed waiver of notice in person or by proxy
before or after the meeting. The attendance of a shareholder at a meeting
without postponing prior to the conclusion of the meeting the lack of notice of
such meeting shall constitute a waiver of notice by him.
1.06. Conduct of Meetings. Meetings of the shareholders shall
be, conducted in conformity with the provisions of the BCL and, where not
precluded by law or otherwise inapplicable, with the rules of parliamentary
procedure.
<PAGE>
1.07. Proxies. Every shareholder entitled to vote at a
meeting of shareholders or to express consent or dissent without a meeting may
authorize another person or persons to act for him by proxy. Every proxy must
be signed by the shareholder or his attorney-in-fact. No proxy shall be valid
after the expiration of eleven months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except as otherwise provided by the BCL.
1.08. Quorum. The holders of a majority of the shares
entitled to vote at a meeting of shareholders for the transaction of any
business shall constitute a quorum thereat. When a quorum is once present to
organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders, or by adjournment(s) of such meeting.
1.09. Voting. Each share shall entitle the holder thereof to
one vote. In the election of directors, a plurality of the votes cast shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the BCL prescribes a different proportion of votes.
1.10. Action Without Meetings. Whenever shareholders, are
required or permitted to take any action by vote, such action may be taken
without a meeting on written consent setting forth the action so taken, signed
in person or by proxy by the holders of all outstanding shares entitled to vote
thereon.
1.13. Fixing Record Date. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders,
or any adjournments thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividend or the allotment of any rights, or
for the purpose of any other action, the board of directors may fix, in
advance, a date as the record date for any such determination of shareholders.
Such date shall not be more than fifty nor less than ten days before the date
of such meeting, nor more than fifty days prior to any other action. When a
determination of shareholders of record entitled to notice of or to vote at any
meeting of shareholder has been made as provided in this section, such
determination shall apply to any adjournment thereof, unless the board of
directors fixes a new record date for the adjourned meeting.
ARTICLE IX
BOARD OF DIRECTORS
2.01. Power. The business of the Corporation shall be managed
by the board of directors.
2.02. Qualifications and Number. Each director shall be at
least eighteen years of age. A director need not be a shareholder, a citizen of
the United States, or a resident of the State of New York. The initial Board of
Directors shall consist of one (1) person. Thereafter, the number of directors
constituting the entire board shall be at least three, except that, where all
the shares are
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<PAGE>
owned beneficially and of record by less than three shareholders, the number of
directors may be less than three but not less than the number of such
shareholders. Subject to the foregoing limitation and except for the first
Board of Directors, such number may be fixed from time to time by action of the
shareholders or of the directors under the specific provisions of a by-law
adopted by the shareholders. The number of directors may be increased or
decreased by action of shareholders or of the directors, provided that any
action of the directors to effect such increase or decrease shall require the
vote of a majority of the entire Board. No decreases shall shorten the term of
any incumbent, director.
2.03. Election. The board of directors shall be appointed
initially by the incorporators and subsequently from time to time by the
shareholders, and shall hold office in accordance with the provisions of
Section 703 of the BCL and in accordance with these By-Laws. In the interim
between annual meetings of shareholders or of special meetings of shareholders
called for the election of directors, newly created directorships and any
vacancies in the board of directors, including vacancies resulting from the
removal of director for cause or without cause, may be filled by the vote of a
majority of the remaining directors then in office, although less than a quorum
exists, such directors to serve until the next annual meeting of shareholders.
2.04. Meetings of Directors. Meetings shall be held at such
time and at such place within or without the State of New York as shall be
fixed by the board. Any one or more members of the board or any committee
thereof may participate in a meeting by means of a conference telephone or
similar communications equipment allowing all persons in a meeting to hear each
other at the same time. Such participation shall constitute presence in person
at a meeting.
2.05. Special Meetings. Special meetings may be called by or
at the direction of the Chairman of the board, if any, or the president, or by
any two directors in office.
2.06. Notice of Meetings. No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral,
telephonic or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. The notice of any meeting need not specify the purpose of
the meeting.
2.07. Waiver of Notice. Any requirement of furnishing a
notice shall be waived by any director who signs a waiver of notice before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him.
2.08. Quorum and Action. A majority of the entire board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided such majority shall constitute at least one-third of the entire board.
Except as otherwise provided in the BCL the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the board. When a quorum is once present to organize a meeting, it
is not broken by the subsequent withdrawal of any directors or any
adjournment(s) of such meeting.
-3-
<PAGE>
2.09. Removal of Directors. Any or all of the directors may
be removed for cause or without cause by the shareholders, one or more of the
directors may be removed for cause by the board of directors.
2.10. Committees. By resolution adopted by a majority of the
entire board of directors, the directors may designate from their number
directors to constitute an executive committee and other committees, all of
which committees shall each consist of three or more directors, each of which
committees, to the extent provided in the resolution designating it, shall have
the authority of the board of directors with the exception of any authority the
delegation of which is prohibited by Section 712 of the BCL.
2.11. Action Without A Meeting. Any action required or
permitted to be taken by the board or any committee thereof may be taken
without a meeting if all members of the board or the committee consent in
writing to the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the board or committee shall
be filed with the minutes of the proceedings of the board or committee.
2.12. Additional Powers. In addition to the powers and
authorities by these By-Laws expressly conferred upon it, the board of
directors (and any committee thereof) may exercise all of such powers of the
Corporation and do all such lawful acts and things The statutory control over
which is not vested exclusively in the shareholders or in the incorporators, or
which are not by the certificate of incorporation or by these By-Laws reserved
to the shareholders.
ARTICLE III
OFFICERS
3.01. Designation. The directors may elect or appoint a
chairman of the board of directors, a president, one or more vice-presidents, a
secretary; one or more assistant secretaries, a treasurer, one or more
assistant treasurers, and such other officers as they may determine. Any two or
more offices may be held by the same person except the offices of president and
secretary. When all of the issued and outstanding stock of the Corporation is
owned by one person, such person may hold all or any combination of offices.
3.02. Term. Unless otherwise provided in the resolution of
election or appointment, each officer shall hold office until the meeting of
the board of directors following the next annual meeting of shareholders and
until his successor has been elected and qualified.
3.03. Powers. Officers shall have such powers and duties as
may be prescribed by the board, and to the extent not so prescribed, they shall
have such powers and duties, subject to the control of the board, as generally
pertain to their respective offices.
-4-
<PAGE>
3.04. Voting of Shares in Other Corporations. Unless
otherwise determined by the board of directors, shares in other corporations
which are held by the Corporation may be represented and voted by the president
of the Corporation or by proxy or proxies appointed by said president.
3.05. Removal. The board of directors may remove any officer
for cause or without cause and may fill the vacancies resulting for the
unexpired term.
ARTICLE IV
FORMS OF CERTIFICATES AND LOSS
AND TRANSFER OF SHARES
4.01. Form. Certificates representing shares shall set forth
thereon the statements prescribed by applicable sections of the BCL and any
other applicable provision of law, and shall otherwise be in such form as may
be prescribed by the board of directors consistent with the Certificate of
Incorporation and these By-Laws.
4.02. Issue of Certificates. Consideration for the issue of
shares shall consist of money or other property, tangible or intangible, or
labor or services actually received by or performed for the Corporation or for
its benefit or in its formation or reorganization, or a combination thereof. A
certificate or other evidence of ownership of shares as may be determined
suitable by the board of directors, consistent with the provisions of law,
shall not be issued until the full amount of consideration therefore has been
paid, except as paragraphs (e) and (f) of Section 505 of the BCL may otherwise
permit.
4-03. Lost Certificates. The Corporation may issue a new
certificate for shares in place of any certificate alleged to have been lost or
destroyed, and the board may in its discretion require the owner of the lost or
destroyed certificate to give the Corporation a bond or other security
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate or the issuance of any such new certificate.
4.04. Transfers. Shares of the Corporation shall he
transferable on the record of shareholders upon presentment to the Corporation,
or a transfer agent designated by the Corporation, of a certificate or
certificates or other suitable evidence of ownership, representing the shares
requested to be transferred, with proper endorsements on the certificate or
certificates or other suitable evidence of ownership, or on a separate
accompanying document, together with such evidence of the payment of transfer
taxes and compliance with other provisions of law as the corporation or its
transfer agent may require.
4.05. Other Relations. The board of directors shall have
power and authority to make all such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the capital stock of the corporation.
-5-
<PAGE>
ARTICLE V
CORPORATE MANAGEMENT
5.01 Books and Records. All proper and necessary books of
account and other books requisite to a full and complete record of the business
transactions of the Corporation shall be kept in such manner as is usual in
like corporations or as shall be directed by the board of directors.
5.02. Corporate Seal. The corporate seal shall be in such
form as the board of directors shall prescribe.
5.03. Fiscal Year. The fiscal year of the corporation shall
be the calendar year, unless otherwise determined by the board of directors:
5.04. Indemnity. Except as precluded or prohibited by the
provisions of Article 7 of the BCL, any person made a party to any action, suit
or proceeding by reason of the fact that he, his testator or intestate, is or
was a director, officer or employee of the corporation, or any corporation
which he served as such at the request of the corporation, shall be indemnified
by the Corporation to the fullest protection provided by law against the
reasonable expenses, including attorney's fees, actually and necessarily
incurred by him in connection with the defense of such action, suit or
proceeding, or in connection with any appeal therein.
ARTICLE VI
CONTROL OVER BY-LAWS
The shareholders entitled to vote in the election of
directors, or the directors upon compliance with any statutory requisite, may
amend or repeal the By-Laws and may adopt new by-laws, except that the
directors may not amend or repeal any by-law or adopt any new by-law, the
statutory control over which is vested exclusively in the shareholders or in
the incorporators. Any by-law adopted by the incorporators or directors may be
amended or repealed by the shareholders.
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<PAGE>
STATE OF CALIFORNIA, OFFICE OF THE SECRETARY OF STATE, CORPORATION
DIVISION
I, MARCH FONG EU, Secretary of State of the State of California,
hereby certify:
That the annexed transcript has been compared with the corporate
record on file in this office, of which it purports to be a copy, and that same
is full, true and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of the
State of California this
MARCH 21, 1991
/S/ March Fong Eu
Secretary of State
<PAGE>
STATE OF CALIFORNIA, OFFICE OF THE SECRETARY OF STATE, CORPORATION
DIVISION
I, MARCH FONG EU, Secretary of State of the State of California,
hereby certify:
That the annexed transcript has been compared with the corporate
record on file in this office, of which it purports to be a copy, and that same
is full, true and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of the
State of California this
December 28, 1990
/s/ March Fong Eu
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
B MEADOWS, INC.
I
The name of this Corporation is B MEADOWS, INC.
II
The purpose of this Corporation is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Laws of the State of California, other than the banking business,
the trust company business, or the practice of a profession permitted to be
incorporated by the California Corporations Code. The name and address of the
person appointed to act as initial agent for service of process in this State
is:
RICHARD M. ROSENTHAL
6345 BALBOA BOULEVARD, SUITE 330
ENCINO, CALIFORNIA 91316 IV
This Corporation is authorized to issue only one class of
shares of stock and the number of shares this Corporation is authorized to
issue is 50,000.
IN WITNESS WHEREOF, I, the undersigned have executed these Articles of
Incorporation on December 26, 1990, at Encino, California.
/s/ Robert E. Geddes
- -----------------------------------------------
Robert E. Geddes
<PAGE>
STATE OF CALIFORNIA, OFFICE OF THE SECRETARY OF STATE,
CORPORATION DIVISION
I, MARCH FONG EU, Secretary of State of the State of California,
hereby certify:
That the annexed transcript has been compared with the corporate
record on file in this office, of which it purports to be a copy, and that same
is full, true and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of the
State of California this
MARCH 21, 1991
/S/ March Fong Eu
Secretary of State
<PAGE>
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION
OF
B MEADOWS, INC.
A CALIFORNIA CORPORATION
ROBERT E. GEDDES certifies that:
1. He holds the Offices of President and Secretary of B
MEADOWS, INC., a California Corporation.
2. Article I of the Articles of Incorporation of this
Corporation is amended to read as follows:
" THE NAME OF THIS CORPORATION IS AUDREY & JANE, INC."
3. The foregoing Amendment of Articles of Incorporation has
been duly approved by the Board of Directors.
4. The foregoing Amendment of Articles of Incorporation has
been duly approved by the required vote of Shareholders in accordance with
Section 902 of the Corporations Code. The total number of outstanding shares of
the Corporation is 2,500 shares. The number of shares voting in favor of the
Amendment equaled or exceeded the vote required.
The percentage vote required was more than 50%.
/s/ Robert E. Geddes
- -----------------------------------------------
ROBERT E. GEDDES, President and Secretary
The undersigned declares under penalty and perjury that the matters
set forth in the foregoing Certificate are true of his own knowledge.
Executed at Los Angeles, California on March 6,1991
/s/ Robert E. Geddes
- -----------------------------------------------
ROBERT E. GEDDES, President and Secretary
<PAGE>
BYLAWS
OF
B MEADOWS, INC.
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE.
The principal office for the transaction of business of the Corporation
is hereby fixed and located at 17835 Ventura Boulevard, Suite 206, Encino,
California 91316, City of Encino, County of Los Angeles, State of California.
The location may be changed by approval of a majority of the authorized
Directors, and additional offices may be established and maintained at such
other place or places, either within or without California, as the Board of
Directors may from time to time designate.
SECTION 2. OTHER OFFICES.
Branch or subordinate offices may at any time be established by the Board of
Directors at any place or places where the Corporation is qualified to do
business.
ARTICLE II
DIRECTORS MANAGEMENT
SECTION 1. RESPONSIBILITY OF BOARD OF DIRECTORS.
Subject to the provisions of the General Corporation Law and to any
limitations in the Articles of Incorporation of the Corporation relating to
action required to be approved by the Shareholders, as that term is defined in
Section 153 of the California Corporations Code, or by the outstanding shares,
as that term is defined in Section 152 of the code, the business and affairs of
the Corporation shall be managed and all corporate powers shall be exercised by
or under the direction of the Board of Directors. The Board may delegate the
management of the day-to-day operation of the business of the Corporation to a
management company or other person, provided
<PAGE>
that the business and affairs of the Corporation shall be managed and all
corporate powers shall be exercised under the ultimate direction of the Board.
SECTION 2. STANDARD OF CARE.
Each Director shall perform the duties of a Director, including the
duties as a member of any committee of the Board upon which the Director may
serve, in good faith, in a manner such Director believes to be in the best
interests of the Corporation, and with such care, including reasonable inquiry,
as any ordinary prudent person in a like position would use under similar
circumstances. (Sec. 109)
SECTION 3. EXCEPTION FOR CLOSE CORPORATION.
Notwithstanding the provisions of Section 1, in the event that this
Corporation shall elect to become a close. corporation as defined in Sec. 158,
its Shareholders may enter into a Shareholders' Agreement as defined in Sec.
186. Said agreement may provide for the exercise of corporate powers and the
management of the business and affairs of this corporation by the shareholders,
provided, however, such agreement shall, to the extent and so long as the
discretion or the powers of the Board in its management of corporate affairs is
controlled by such agreement, impose upon each Shareholder who is a party
thereof, liability for managerial acts performed or omitted by such person
pursuant thereto otherwise imposed upon directors as provided in Sec. 300 (d);
and the Directors shall be relieved to that extent from such liability.
SECTION 4. NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors shall be one (1) until changed by a
duly adopted amendment to the Articles of Incorporation or by an amendment to
this Bylaw adopted by the vote or written consent of holders of a majority of
the outstanding shares entitled to vote, as provided in Sec. 212.
SECTION 5. ELECTION AND TERM OF OFFICE OF DIRECTORS.
Directors shall be elected at each annual meeting of the shareholders
to hold office until the next annual meeting. Each Director, including a
director elected to fill a vacancy, shall hold office until the expiration of
the term for which elected and until a successor has been elected and qualified.
<PAGE>
SECTION 6. VACANCIES.
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining Director,
except that a vacancy created by the removal of a Director by the vote or
written consent of the shareholder or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of a majority of
the outstanding shares entitled to vote. Each Director so elected shall hold
office until the next annual meeting of the shareholders and until a successor
has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in the event of the death, resignation, or removal of any Director, or if
the Board of Directors by resolution declares vacant the office of a Director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of Directors is increased, or if the
Shareholders fail, at any meeting of Shareholders at which any Director or
Directors are elected, to elect the number of directors to be voted for at that
meeting.
The Shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the
Chairman of the Board, the President, the Secretary, or the Board of Directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a Director is effective at a future time, the
Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any Director before that Director's term of office expires.
SECTION 7. REMOVAL OF DIRECTORS.
The entire Board of Directors or any individual director may be removed
from office as provided by Secs. 302, 303 and 304 of the Corporations Code of
the State of California. In such case, the remaining Board members may elect a
successor Director to fill such vacancy for the remaining unexpired term of the
Director so removed.
<PAGE>
SECTION 8. NOTICE, PLACE AND MANNER OF MEETINGS.
Meetings of the Board of Directors may be called by the Chairman of the
Board, or the President, or any Vice President, or the Secretary, or any two (2)
Directors and shall be held at the principal executive office of the
Corporation, unless some other place is designated in the notice of the meeting.
Members of the Board may participate in a meeting through use of a conference
telephone or similar communications equipment so long as all members
participating in such a meeting can hear one another. Accurate minutes of any
meeting of the Board or any committee thereof, shall be maintained as required
by Sec. 1500 of the Code by the Secretary or other Officer designed for that
purpose.
SECTION 9. ORGANIZATION MEETINGS.
The organization meetings of the Board of Directors shall be held
immediately following the adjournment of the annual meetings of the
Shareholders.
SECTION 10. OTHER REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at the
corporate offices, or such other place as may be designated by the Board of
Directors, as follows:
Time of Regular Meeting: 10: 00 a.m.
Date of Regular Meeting: June 1st
If said day shall fall upon a holiday, such meetings shall be held on
the next succeeding business day thereafter. No notice need be given of such
regular meetings.
SECTION 11. SPECIAL MEETINGS-NOTICES-WAIVERS.
Special meetings of the Board may be called at any time by the
President or, if he or she is absent or unable or refused to act, by any Vice
President or the Secretary or by any two (2) directors, or by one (1) Director
if only one is provided.
At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the directors or personally
communicated to them by a corporate Officer by telephone or telegraph. If the
notice is sent to a Director by letter, it shall be addressed to him or her at
his or her address as it is shown upon the records of the corporation, or if it
is not so shown on such records or is not readily ascertainable, at the place in
which the meeting of the Directors are regularly held. In case such notice is
mailed, it shall be deposited in the United
<PAGE>
States mail, postage prepaid, in the place in which the principal executive
office of the Corporation is located at least four (4) days prior to the time of
the holding of the meeting. Such mailing, telegraphing, telephoning or delivery
as above provided shall be due, legal and personal notice to such Director.
When all of the Directors are present at any Directors' meeting,
however called or noticed, and either (i) sign a written consent thereto on the
records of such meeting, or, (ii) if a majority of the Directors are present and
if those not present sign a waiver of notice of such meeting or a consent to
holding the meeting or an approval of the minutes thereof, whether prior to or
after the holding of such meeting, which said waiver, consent or approval shall
be filed with the Secretary of the Corporation, or, (iii) if a Director attends
a meeting without notice but without protesting, prior thereto or at its
commencement, the lack of notice, then the transactions thereof are as valid as
if had at a meeting regularly called and noticed.
SECTION 12. SOLE DIRECTOR PROVIDED BY ARTICLE OF INCORPORATION OR
BYLAWS.
In the event only one (1) Director is required by the Bylaws or
Articles of Incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the Directors
shall be deemed to refer to such notice, waiver, etc., by such sole Director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to a Board of Directors.
SECTION 13. DIRECTORS ACTION BY UNANIMOUS WRITTEN CONSENT.
Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting and with the same force and effect as if taken by
a unanimous vote of Directors, if authorized by a writing signed individually or
collectively by all members of the Board. Such consent shall be filed with the
regular minutes of the Board.
SECTION 14. QUORUM.
A majority of the number of Directors as fixed by the Articles of
Incorporation or Bylaws shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the Directors present
at any meeting at which there is a quorum, when duly
<PAGE>
assembled, is valid as a corporation act; provided that a minority of the
Directors, in the absence of a quorum, may adjourn from time to time, but may
not transact any business. A meeting at which a quorum is initially present may
continue to transact business, notwithstanding the withdrawal of directors, if
any action taken is approved by a majority of the required quorum for such
meeting.
SECTION 15. NOTICE OF ADJOURNMENT.
Notice of the time and place of holding an adjourned meeting need not
be given to absent Directors if the time and place be fixed at the meeting
adjourned and held within twenty-four (24) hours, but if adjourned more than
twenty-four (24) hours, notice shall be given to all Directors not present at
the time of the adjournment.
SECTION 16. COMPENSATION OF DIRECTORS.
Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board a fixed sum and expense of attendance,
if any, may be allowed for attendance at each regular and special meeting of the
Board; provided that nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 17. COMMITTEES.
Committees of the Board may be appointed by resolution passed by a
majority of the whole Board. committees shall be composed of two (2) or more
members of the Board, and shall have such powers of the Board as may be
expressly delegated to it by resolution of the Board of Directors, except those
powers expressly made non-delegable by Sec. 311.
SECTION 18. ADVISORY DIRECTORS.
The Board of Directors from time to time may elect one or more persons
to be Advisory Directors who shall not by such appointment be members of the
Board of Directors. Advisory Directors shall be available from time to time to
perform special assignments specified by the President, to attend meetings of
the Board of Directors upon invitation and to furnish consultation to the Board.
The period during which the title shall be held may be prescribed by the Board
of Directors. If no period is prescribed, the title shall be held at the
pleasure of the Board.
<PAGE>
SECTION 19. RESIGNATIONS.
Any Director may resign effective upon giving written notice to the
Chairman of the Board, the President, the Secretary or the Board of Directors of
the Corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes effective.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS.
The officers of the Corporation shall be a President, a Secretary, and
a Chief Financial Officer. The Corporation may also have, at the discretion of
the Board of Directors, a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other Officers as may be appointed in accordance with the provisions of Section
3 of this Article III. Any number of offices may be held by the same person.
SECTION 2. ELECTION.
The Officers of the Corporation, except such Officers as may be
appointed in accordance with the provisions of Section 3 or Section 5 of this
Article, shall be chosen annually by the Board of Directors, and each shall hold
office until he or she shall resign or shall be removed or otherwise
disqualified to serve, or a successor shall be elected and qualified.
SECTION 3. SUBORDINATE OFFICERS, ETC.
The Board of Directors may appoint such other Officers as the business
of the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the Bylaws or as
the Board of Directors may from time to time determine.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an Officer under any contract of
employment, any Officer may be removed, either with or without cause, by the
Board of Directors, at any regular or special
<PAGE>
meeting of the Board, or, except in case of an Officer chosen by the Board of
Directors, by any Officer upon whom such power of removal may be conferred by
the Board of Directors.
Any Officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Officer is a
party.
SECTION 5. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the Bylaws for regular appointments to that office.
SECTION 6. CHAIRMAN OF THE BOARD.
The Chairman of the Board, if such an Officer be elected, shall, if
present, preside at meetings of the Board of Directors and exercise and perform
such other powers and duties as may be from time to time assigned by the Board
of directors or prescribed by the Bylaws. If there is no President, the Chairman
of the Board shall in addition be the Chief Executive Officer of the corporation
and shall have the powers and duties prescribed in Section 7 of this Article
III.
SECTION 7. PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there be such an Officer,
the President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and Officers of the Corporation. He or she
shall preside at all meetings of the Shareholders and in the absence of the
Chairman of the Board, or if there be none, at all meetings of the Board of
Directors. The President shall be ex officio, a member of all the standing
committees, including the Executive Committee, if any, and shall have the
general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the Bylaws.
<PAGE>
SECTION 8. VICE PRESIDENT.
In the absence or disability of the President, the Vice Presidents, if
any, in order of their rank as fixed by the Board of Directors, or if not
ranked, the Vice President designated by the Board of Directors, shall perform
all the duties of the President, and when so acting shall have all the powers
of, and be subject to, all the restrictions upon, the President. The Vice
President shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board of Directors
or by the Bylaws.
SECTION 9. SECRETARY.
The Secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of Directors and Shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at Directors' meetings, the number of shares
present or represented at Shareholders' meetings and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office
or at the office of the Corporation's transfer agent, a share register, or
duplicate share register, showing the names of the Shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or issue cause to be given, a notice of all
the meetings of the Shareholders and of the Board of Directors required by the
Bylaws or by law to be given. He or she shall keep the seal of the Corporation
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by the Bylaws.
SECTION 10. CHIEF FINANCIAL OFFICER.
The Chief Financial Officer shall keep and maintain, or cause to be
kept and maintained in accordance with generally accepted accounting principles,
adequate and correct accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, earnings (or surplus) and shares. The
books of account shall at all reasonable times be open to inspection by any
Director.
<PAGE>
This Officer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositories as may be designated
by the Board of Directors. He or she shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, and shall render to the President
and Directors, whenever they request it, an account of all his or her
transactions and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Director or the Bylaws.
ARTICLE IV
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS.
All meetings of the Shareholders shall be held at the principal
executive office of the Corporation unless some other appropriate and convenient
location be designated for that purpose from time to time by the Board of
Directors.
SECTION 2. ANNUAL MEETINGS.
The annual meetings of the shareholders shall be held, each year, at
the time and on the day following:
Time of Meeting: 10:00 a.m.
Date of Meeting: June 1st
If this day shall be a legal holiday, then the meeting shall be held on
the next succeeding business day, at the same hour. At the annual meeting, the
Shareholder shall elect a Board of Directors, consider reports of the affairs of
the corporation and transact such other business as may be properly brought
before the meeting.
SECTION 3. SPECIAL MEETINGS.
Special meetings of the Shareholders may be called at any time by the
Board of Directors, the Chairman of the Board, the President, a Vice President,
the Secretary, or by one or more Shareholders holding not less than one-tenth
(1/10) of the voting power of the Corporation. Except as next provided, notice
shall be given as for the annual meeting.
Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board)
<PAGE>
entitled to call a special meeting of Shareholders, such Officer shall cause
notice to be given, to the Shareholders entitled to vote, that meeting will be
held at a time requested by the person or persons calling the meeting, not less
than thirty-five (35) nor more than sixty (60) days after the receipt of such
request. If such notice is not given within twenty (20) days after receipt of
such request, the persons calling the meeting may give notice thereof in the
manner provided by these Bylaws or apply to the Superior Court as provided in
Sec. 305 (c).
SECTION 4. NOTICE OF MEETING-REPORTS.
Notice of meetings, annual or special, shall be given in writing not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to Shareholders entitled to vote thereat. Such notice shall be given by the
Secretary or the Assistant Secretary, or if there be no such Officer, or in the
case of his or her neglect or refusal, by any Director or Shareholder.
Such notices or any reports shall be given personally or by mail or
other means of written communication as provided in Sec. 601 of the Code and
shall be sent to the Shareholder's address appearing on the books of the
Corporation, or supplied by him or her to the Corporation for the purpose of
notice, and in the absence thereof, as provided in Sec. 601 of the Code.
Notice of any meeting of Shareholders shall specify the place, the day
and the hour of meeting, and (1) in case of a special meeting, the general
nature of the business to be transacted and no other business may be transacted,
or (2) in the case of an annual meeting, those matters which the Board at date
of mailing, intends to present for action by the Shareholders. At any meetings
where Directors are to be elected, notice shall include the names of the
nominees, if any, intended at date of notice to be presented by management for
election.
If a Shareholder supplies no address, notice shall be deemed to have
been given if mailed to the place where the principal executive office of the
Corporation, in California, is situated, or published at least once in some
newspaper of general circulation in the county of said principal office.
Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
Officer giving such motive or report shall prepare and file an affidavit or
declaration thereof.
<PAGE>
When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which such adjournment is taken.
SECTION 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
The transaction of any meeting of Shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting each of the Shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting. Attendance shall constitute a waiver of
notice, unless objection shall be made as provided in Sec.
601 (e).
SECTION 6. SHAREHOLDERS ACTING WITHOUT A MEETING -DIRECTORS.
Any action which may be taken at a meeting of the Shareholders, may be
taken without or notice of meeting if authorized by a writing signed by all of
the Shareholders entitled to vote at a meeting for such purpose, and filed with
the Secretary of the Corporation, provided, further, that while ordinary
directors can only be elected by unanimous written consent under Sec. 603 (d),
if the Directors fail to fill a vacancy, then a Director to fill that vacancy
may be elected by the written consent of person holding a majority of shares
entitled to vote for the election of Directors.
SECTION 7. OTHER ACTIONS WITHOUT A MEETING.
Unless otherwise provided in the GCL or the Articles, any action which
may be taken at any annual or special meeting of Shareholders may be taken
without a meeting and without prior notice, if a consent in writing, setting
forth the action so taken, signed by the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to
<PAGE>
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted.
Unless the consents of all Shareholders entitled to vote have been
solicited in writing,
(1) Notice of any Shareholder approval pursuant to Secs. 310,
317, 1201 or 2007 without a meeting by less than unanimous written consent shall
be given at least ten (10) days before the consummation of the action authorized
by such approval, and
(2) Prompt notice shall be given of the taking of any other
corporate action approved by Shareholders without a meeting by less than
unanimous written consent, to each of those Shareholders entitled to vote who
have not consented in writing.
Any Shareholders giving written consent, or the Shareholder's proxy
holders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxy holders, may revoke the consent by a
writing received by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the Corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the Corporation.
SECTION 8. QUORUM.
The holders of a majority of the shares entitled to vote thereat,
present in person, or represented by proxy, shall constitute a quorum at all
meetings of the Shareholders for the transaction of business except as otherwise
provided by law, by the Articles of Incorporation, or by these Bylaws. If,
however, such majority shall not be present or represented at any meeting of the
Shareholders, the Shareholders entitled to vote thereat, present in person, or
by proxy, shall have the power to adjourn the meeting from time to time, until
the requisite amount of voting shares shall be present. At such adjourned
meeting at which the requisite amount of voting share shall be represented, any
business may be transacted which might have been transacted at a meeting as
originally notified.
If a quorum be initially present, the Shareholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, of any action taken is approved by a
majority of the Shareholders required to initially constitute a quorum.
<PAGE>
SECTION 9. VOTING.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the day of any meeting of Shareholders, unless
other day be fixed by the Board of Directors for the determination of
Shareholders of record, and then on such other day, shall be entitled to vote at
such meeting provided the candidate's name has been placed in nomination prior
to the voting and one or more Shareholders has given notice at the meeting prior
to the voting of the Shareholder's intent to cumulate the Shareholder's votes,
every Shareholder entitled to vote at any election for directors of any
corporation for profit may cumulate their votes and give one candidate a number
of votes equal to the number of Directors to be elected multiplied by the number
of votes to which his or her shares are entitled, or distribute his or her votes
on the same principle among as many candidates as he or she thinks fit.
The candidates receiving the highest number of votes up to the number
of directors to be elected are elected.
The Board of Directors may fix a time in the future not exceeding
thirty (30) days preceding the date of any meeting of Shareholders or the date
fixed for the payment of any dividend or distribution, or for the allotment of
rights, or when any change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the Shareholders entitled to
notice of and to vote at any such meeting, or entitled to receive any such
dividend or distribution, or any allotment of rights, or to exercise the rights
in respect to any such change, conversion or exchange of shares. In such case
only Shareholders of record on the date so fixed shall be entitled to notice of
and to vote at such meeting, or to receive such dividends, distribution or
allotment of rights, or to exercise such rights, as the case may be
notwithstanding any transfer of any share on the books of the Corporation
against transfers of shares during the whole or any part of such period.
SECTION 10. PROXIES.
Every Shareholder entitled to vote, or to execute consents, may do so,
either in person or by written proxy, executed in accordance with the provisions
of Secs. 604 and 705 of the Code and filed with the Secretary of the
Corporation.
<PAGE>
SECTION 11. ORGANIZATION.
The President, or in the absence of the President, any Vice President,
shall call the meeting of the Shareholders to order, and shall act as Chairman
of the meeting. In the absence of the President and all of the Vice Presidents,
Shareholders shall appoint a chairman for such meeting. The Secretary of the
Corporation shall act as Secretary of all meetings of the Shareholders, but in
the absence of the Secretary at any meeting of the Shareholders, the presiding
Officer may appoint any person to act as Secretary of the meeting.
SECTION 12. INSPECTORS OF ELECTION.
In advance of any meeting of Shareholders the Board of directors may,
if they so elect, appoint inspectors of election to act at such meeting or any
adjournment thereof. If inspectors of election be not so appointed, or if any
persons so appointed fall to appear or refuse to act, the chairman of any such
meeting may, and on the request of any Shareholders or his or her proxy shall,
make such appointment at the meeting in which case the number of inspectors
shall be either one (1) or three (3) as determined by a majority of the
Shareholders represented at the meeting.
SECTION 13. (A) SHAREHOLDERS' AGREEMENTS.
Notwithstanding the above provisions, in the event this Corporation elects to
become a close corporation, an agreement between two (2) or more Shareholders
thereof, if in writing and signed by the parties thereof, may provide that in
exercising any voting rights the shares held by them shall be voted as provided
therein or in Sec. 706, and may otherwise modify these provisions as to
Shareholders' meetings and actions.
(B) EFFECT OF SHAREHOLDERS' AGREEMENTS.
Any Shareholders' Agreement authorized by Sec. 300 (b), shall only be
effective to modify the terms of these Bylaws if this Corporation elects to
become a close corporation with appropriate filing of or amendment to its
Articles as required by Sec. 202 and shall terminate when this Corporation
ceases to be a close corporation. Such an agreement cannot waive or alter Sees.
158, (defining close corporations), 202 (requirements of Articles of
Incorporation), 500 and 501 relative to distributions, 111 (merger), 1201 (e)
(reorganization) or Chapters 15 (Records and Reports), 16 (rights of
Inspection), 18 (Involuntary dissolution) or 22 (Crimes and Penalties).
<PAGE>
Any other provisions of the Codes or these Bylaws may be altered or waived
thereby, but to the extent they are not so altered or waived, these Bylaws shall
be applicable.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
SECTION 1. CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the Board
of Directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a statement of the rights, privileges, preferences and
restrictions, if any; a statement as to the redemption or conversion, if any; a
statement of liens or restrictions upon transfer or voting, if any; if the
shares be assessable or, if assessments are collectible by personal action, a
plain statement of such facts.
All certificates shall be signed in the name of the Corporation by the
Chairman of the Board or Vice Chairman of the Board or the President or Vice
President and by the Chief Financial Officer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
class or series of shares owned by the Shareholders.
Any or all of the signatures on the certificate may be facsimile. In
case any Officer, transfer agent, or register who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the Corporation with the same effect as if that person were an Officer,
transfer agent, or registrar at the date of issue.
SECTION 2. TRANSFER ON THE BOOKS.
Upon surrender to the Secretary or transfer agent of the Corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 3. LOST OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation of that fact and shall, if the directors
so require, give the Corporation a bond of
<PAGE>
indemnity, in form and with one more sureties satisfactory to the Board, in at
least double the value of the stock represented by said certificate, whereupon a
new certificate may be issued in the same tenor and for the same number of
shares as the one alleged to be lost or destroyed.
SECTION 4. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint one or more agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company, either domestic or foreign, who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the Board of
Directors may designate.
SECTION 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE.
In order that the Corporation may determine the Shareholders entitled
to notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days prior to the date of such meeting nor more than sixty (60) days
prior to any other action.
If no record date is fixed; the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of business on the business day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held. The record
date for determining Shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board is necessary,
shall be the day on which the first written consent is given.
The record date for determining Shareholders for any other purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
SECTION 6. LEGEND CONDITION.
In the event any shares of this corporation are issued pursuant to a
permit or exemption therefrom requiring the imposition of a legend condition,
the person or persons issuing or transferring said shares shall make sure said
legend appears on the certificate and shall not be
<PAGE>
required to transfer any shares free of such legend unless an amendment to such
permit or new permit be first issued so authorizing such a deletion.
SECTION 7. CLOSE CORPORATION CERTIFICATES.
All certificates representing shares of this Corporation, in the event
it shall elect to become a close corporation, shall contain the legend required
by Sec. 418 (c).
SECTION 8. PLEDGED OR HYPOTHECATED SHARES.
Any shareholders desiring to borrow money on or hypothecate any or all
of the shares of stock held by such shareholder shall first mail notice in
writing to the Secretary of this Corporation of his or her intention to do so.
Said notice shall specify the number of shares to be pledged or 0, the amount to
be borrowed per share, the terms, rate of interest, and other provisions upon
which each shareholder intends to make such loan or hypothecation. The secretary
shall, within five (5) days thereafter, mail or deliver a copy of said notice to
each of the other Shareholders of record of this Corporation. Such notice may be
delivered to such Shareholder personally, or may be mailed to the last known
addresses of such Shareholders as the same may appear on the books of this
Corporation. Within fifteen (15) days after the mailing or delivering of said
notice to said Shareholders, any such Shareholder or Shareholders desiring to
lend any part or all of the amount sought to be borrowed, as set forth in said
notice, at the terms therein specified, shall deliver by mail, or otherwise, to
the Secretary of this Corporation a written offer or offers to lend a certain
amount of money for the term, at the rate of interest, and upon other provisions
specified in said notice.
If the total amount of money subscribed in such offers exceeds the
amount sought to be borrowed, specified in said notice, each offering
Shareholder shall be entitled to lend such proportion of the amount sought to be
borrowed, as set forth in said notice, as the number of shares which he or she
holds bears to the total number of shares held by all such Shareholders desiring
to lend all or part of the amount specified in said notice.
If the entire amount of monies sought to be borrowed, as specified in
said notice, is not subscribed as set forth in the preceding paragraphs, each
Shareholder desiring to lend an amount in excess of his or her proportionate
share, as specified in the preceding paragraph, shall be entitled to lend such
proportion of the subscribed amount as the total number of shares held by
<PAGE>
all of the Shareholders desiring to lend an amount in excess of that to which
they are entitled under such apportionment. If there be but one Shareholder so
desiring to lend, such Shareholder shall be entitled to lend up to the full
amount sought to be borrowed.
If none, or only a part of the amount sought to be borrowed, as
specified in said notice, is subscribed as aforesaid, in accordance with offers
made within said fifteen (15) day period, the Shareholder desiring to borrow may
borrow from any person or persons he or she may so desire as to any or all
shares of stock held by him or her which have not been covered by lending
Shareholders; provided, however, that said Shareholders shall not borrow any
lesser amount, or any amount on term less favorable to the borrower, than those
specified in said notice to the Secretary.
Any pledge or hypothecation, or other purported transfer as security
for a loan of the shares of this Corporation, shall be null and void unless the
terms, conditions and provisions of these Bylaws are strictly observed and
followed.
ARTICLE VI
RECORDS - REPORTS - INSPECTION
SECTION 1. RECORDS.
The Corporation shall maintain, in accordance with generally accepted
accounting principles, adequate and correct accounts, books and records of its
business and properties. All of such books, records and accounts shall be kept
at its principal executive office in the State of California, as fixed by the
Board Directors from time to time.
SECTION 2. INSPECTION OF BOOKS AND RECORDS.
All books and records provided for in Sec. 1500 shall be open to
inspection of the Directors and Shareholders from time to time and in the manner
provided in said Sec. 1600 - 1602.
SECTION 3. CERTIFICATION AND INSPECTION OF BYLAWS.
The original or a copy of these Bylaws, as amended or otherwise altered
to date, certified by the Secretary, shall be kept at the Corporation's
principal executive office and shall be open to
<PAGE>
inspection by the Shareholders of the Corporation at all reasonable times
during office hours, as provided in Sec. 213 of the Corporations Code.
SECTION 4. CHECKS, DRAFTS, ETC.
All checks, drafts, or other orders for payment of money, notes or
other evidence of indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as shall be determined from time to time by resolution of the Board of
Directors.
SECTION 5. CONTRACTS, ETC. - HOW EXECUTED.
Me Board of Directors, except as in the Bylaws otherwise provided, may
authorize any Officer or Officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no Officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or agreement, or to pledge its
credit, or to render it liable for any purpose or to any amount, except as
provided in Sec. 313 of the Corporation Code.
ARTICLE VII
ANNUAL REPORTS
SECTION 1. REPORTS TO SHAREHOLDERS, DUE DATE.
The Board of directors shall cause an annual report to be sent to the
Shareholders not later than one hundred twenty (120) days after the close of the
fiscal or calendar year by the Corporation. This report shall be sent at least
fifteen (15) days before the annual meeting of Shareholders to be held during
the next fiscal year and in the manner specified in Section 4 of Article IV of
these Bylaws for giving notice to Shareholders of the Corporation. The annual
report shall contain a balance sheet as of the end of the fiscal year and an
income statement and statement of changes in financial position for the fiscal
year, accompanied by any report of independent accountants or, if there is no
such report, the certificate of an authorized Officer of the Corporation that
the statements were prepared without audit from the books and records of the
Corporation.
<PAGE>
SECTION 2. WAIVER.
The annual report to Shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with so long as this
Corporation shall have less than one hundred (100) Shareholders. However,
nothing herein shall be interpreted as prohibiting the Board of Directors from
issuing annual or other periodic reports to the Shareholders of the Corporation
as they consider appropriate.
ARTICLE VIII
AMENDMENTS TO BYLAWS
SECTION 1. AMENDMENTS BY SHAREHOLDERS.
New Bylaws may be adopted or these Bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the Corporation set forth the number of authorized Directors of the Corporation,
the authorized number of Directors may be changed only be an amendment of the
Articles of Incorporation.
SECTION 2. POWERS OF DIRECTORS.
Subject to the right of the Shareholders to adopt, amend or repeal
Bylaws, as provided in Section 1 of this Article VIII, and the limitations of
Sec. 204 (a) (5) and Sec. 212, the Board of Directors may adopt, amend or repeal
any of these Bylaws other than a Bylaws or amendment thereof changing the
authorized number of Directors.
SECTION 3. RECORD OF AMENDMENTS.
Whenever an amendment or new Bylaw is adopted, it shall be copied in
the book of Bylaws with the original Bylaws, in the appropriate place. If any
Bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.
<PAGE>
ARTICLE IX
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of its incorporation, and the word
" California."
ARTICLE X
MISCELLANEOUS
SECTION 1. REFERENCES TO CODE SECTIONS.
"Sec." references herein refer to the equivalent Sections of the
General Corporation Law effective January 1, 1977, as amended.
SECTION 2. REPRESENTATION OF SHARES IN OTHER CORPORATIONS.
Shares of other corporations standing in the name of this Corporation
may be voted or represented and all incidents thereto may be exercised on behalf
of the Corporation by the Chairman of the Board, the President or any Vice
President and the Secretary or an Assistant Secretary.
SECTION 3. SUBSIDIARY CORPORATIONS.
Shares of this Corporation owned by a subsidiary shall not be entitled
to vote on any matter. A subsidiary for there purposes is defined as a
corporation, the shares of which possessing more than 25% of the total combined
voting power of all classes of shares entitled to vote, are owned directly or
indirectly through one (1) or more subsidiaries.
SECTION 4. INDEMNITY.
The Corporation may indemnify agents of the corporation (as defined in
Cal. Corp. Code Sec. 317(a)), for breach of duty to the Corporation and its
Shareholders where the approval required in Cal. Corp. Code Sec. 317 (e) has
been secured. However, an agent may not in any circumstance be indemnified for
acts or omissions that constitute intentional misconduct, the knowing and
culpable violation of the law, the absence of good faith, the receipt of an
improper personal benefit, a reckless disregard or unexcused inattention to the
agent's duty to act in the best interests of the Corporation and its
Shareholders. An agent also may not be indemnified for
<PAGE>
any act or omission which falls under Cal. Corp. Code Secs. 3 10 or 316, or
where indemnification is expressly prohibited under Cal. Corp. Sec. 317.
SECTION 5. ACCOUNTING YEAR.
The accounting year of the Corporation shall be fixed by resolution of
the Board of Directors.
CERTIFICATE OF ADOPTION OF BYLAWS
ADOPTION BY INCORPORATOR OR FIRST DIRECTOR,
The undersigned person named in the Articles of Incorporation as the
Incorporator or First Director of the above named Corporation hereby adopt the
same as the Bylaws of said Corporation.
Executed this 1st day of January, 1991.
/s/ Robert E. Geddes
--------------------
ROBERT E. GEDDES
CERTIFICATE BY SECRETARY
I DO HEREBY CERTIFY AS FOLLOWS:
That I am the duly elected, qualified and acting Secretary of the
above-named Corporation, that the foregoing Bylaws were adopted as the Bylaws of
said Corporation on the date set forth above by the person named in the Articles
of Incorporation as the Incorporator or First Director of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal this 1st day of January, 1991.
/s/ Robert E. Geddes
--------------------
ROBERT E. GEDDES
Secretary
CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE.
<PAGE>
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of the above
named Corporation and that the above and foregoing code of Bylaws was submitted
to the Shareholders at their first meeting and recorded in the minutes thereof,
was ratified by the vote of the Shareholders entitled to exercise the majority
of the voting power of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of
January, 1991.
/s/ Robert E. Geddes
--------------------
ROBERT E. GEDDES
Secretary
<PAGE>
CERTIFICATE OF INCORPORATION
OF
AVALON ACQUISITION CORP.
(Pursuant to Section. 101 and 102 of the
General Corporation Law of the State of Delaware)
The undersigned, in order to form a corporation pursuant to
Sections 101 and 102 of the General Corporation Law of the State of Delaware,
does hereby certify as follows:
FIRST: The name of the corporation (the "Corporation") is
Avalon Acquisition, Corp.
SECOND: The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, New
Castle County, Wilmington, Delaware 19801. The name of the registered agent of
the Corporation in the State of Delaware at such address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have the authority to issue is 1,000 shares of common stock,
par value $0.01 per share.
FIFTH: The name and mailing address of the sole incorporator
is as follows:
NAME ADDRESS
Rishi A. Varma c/o Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022-2585
SIXTH: The board of directors of the Corporation shall have
the power to adopt, amend and repeal the bylaws or the Corporation.
SEVENTH: Election of directors need not be by written ballot.
<PAGE>
EIGHTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that nothing in this Article
EIGHTH shall eliminate or limit the liability of any director (i) for breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. Neither the amendment nor repeal of this
Article EIGHTH, nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this Article EIGHTH shall eliminate or reduce
the effect of this Article EIGHTH in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article EIGHTH, would accrue
or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
NINTH: The Corporation shall, to the fullest extent permitted
by the provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may by amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all expenses, liabilities, or other matters referred to in or
covered by said section, and the indemnification provided for herein shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his original capacity and as to
action in another capacity while holding such office, and shall continue as to
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
IN WITNESS WHEREOF, I have hereunto signed my name and affirm,
under penalty of perjury, that this Certificate is my act and deed and that the
facts stated herein are true this 29th day of April 1998.
----------------------------------
Rishi A. Varma
Sole Incorporator
- 2 -
<PAGE>
BY-LAWS
of
Avalon Acquisition Corp.
Article 1
Stockholders
Section 1.01 Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held annually at such place within or without the State of
Delaware, at such time and on such date, as may from time to time be designated
by the Board of Directors, for the election of directors and for the transaction
of any other proper business.
Section 1.02 Special Meetings. Special meetings of the stockholders of the
Corporation may be called at any time and from, time to time by the Chairman or
by a majority of the directors then in office, and shall be called by the
Secretary upon the written request of stockholders holding of record at least a
majority in number of the issued and outstanding shares of the Corporation
entitled to vote at such meeting. Special meetings shall be held at such place
within or without the State of Delaware, at such time and on such date as shall
be specified in the call thereof.
Section 1.03 Notice of Meetings. Written notice of each meeting of the
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting, the purpose or purposes for which it is called, shall be given,
not less than ten nor more than sixty days before the date of such meeting (or
at such other time as may be required by statute), to each stockholder entitled
to vote at such meeting. If mailed, such notice is given when deposited in the
United States mail, postage prepaid, directed to each stockholder at his or her
address as it appears on the records of the Corporation.
Section 1.04 Waiver of Notice. Whenever notice is required to be given of any
annual or special meeting of the stockholders, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated in
such notice, shall be deemed equivalent to notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice. Attendance of a
person at a meeting of the stockholders shall constitute a waiver of notice of
such meeting, except when the person attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Section 1.05 Adjournment. When any meeting of the stockholders is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken. At the adjourned meeting any business may be
transacted which might have been transacted at the original meeting. If the
adjournment is for more than 30 days, or if after such adjournment the
<PAGE>
Board of Directors shall fix a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at such meeting.
Section 1.06 Quorum. At any meeting of the stockholders the presence, in person
or by proxy, of the holders of a majority of the issued and outstanding shares
of the Corporation entitled to vote at such meeting shall be necessary in order
to constitute a quorum for the, transaction of any business. If there shall not
be a quorum at any meeting of the stockholders, the holders of a majority of the
shares entitled to vote present at such meeting, in person or by proxy, may
adjourn such meeting from time to time, without further notice to the
stockholders other than an announcement at such meeting, until holders of the
amount of shares required to constitute a quorum shall be present in person or
by proxy.
Section 1.07 Voting. Each stockholder shall be entitled to one vote for each
share of capital stock held by such stockholder. Voting need not be by ballot,
except that all election of directors shall be by written ballot unless
otherwise provided in the Certificate of Incorporation. Whenever any Corporate
action is to be taken by vote of the stockholders, it shall, except as otherwise
required by law or by the Certificate of Incorporation, be authorized by a
majority of the votes cast at a meeting of stockholders of the holders of shares
entitled to vote thereon, except that all elections shall be decided by a
plurality of the votes cast.
Section 1.08 Action Without a Meeting. Any action required or permitted to be
taken at any annual or special meeting of stockholders may be taken without a
meeting thereof, without prior notice and without a vote, if a consent in
writing setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
such corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Section 1.09 Record Date. The Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of any meeting of stockholders, nor more than sixty days prior to any other
action, as the record date for the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of the stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action.
Section 1.10 Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy
2
<PAGE>
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
Article 2
Directors
Section 2.01 Number: Qualifications. The Board of Directors shall consist of one
or more members. The number of directors shall be fixed by the Board of
Directors, but shall not be more than nine or less than three. If at any time
there are less than three stockholders, there may be the same number of
directors as there are stockholders, Directors need not be stockholders of the
Corporation.
Section 2.02 Term of Office. Each director shall hold office until his or her
successor is elected and qualified or until his or her earlier death,
resignation or removal.
Section 2.03 Meetings. A meeting of the Board of Directors shall be held for the
election of officers and for the transaction of such other business as may come
before such meeting as soon as practicable after the annual meeting of the
stockholders. Other regular meetings of the Board of Directors may be held at
such times as the Board of Directors of the Corporation may from time to time
determine. Special meetings of the Board of Directors may be called at any time
by the Chairman of the Corporation or by a majority of the directors then in
office. Meetings of the Board of Directors may be held within or without the
State of Delaware.
Section 2.04 Notice of Meetings; Waiver of Notice; Adjournment. No notice need
be given of the first meeting of the Board of Directors after the annual meeting
of stockholders or of any other regular meeting of the Board of Directors.
Notice of a special meeting of the Board of Directors, specifying the place,
date and hour thereof, shall be delivered personally, mailed or faxed to each
director at his or her address as such address appears on the books of the
Corporation at least two business days (Saturdays, Sundays and legal holidays
not being considered business days for the purpose of these By-Laws) before the
date of such meeting. Whenever notice is required to be given under any
provision of the Certificate of Incorporation or these By-Laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
director at a special meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, the directors or any committee of directors need be specified in
any written waiver of notice unless so required by the Certificate of
Incorporation or these By-Laws. A majority of the directors present whether or
not a quorum is present, way adjourn any meeting to another time and place.
Notice need not be given of the adjourned meeting if the time and place to which
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the meeting is adjourned are announced at the meeting at which the adjournment
is taken, and at the adjourned meeting any business may be transacted that might
have been transacted at the original meeting.
Section 2.05 Quorum; Voting. A majority of the total number of directors shall
constitute a quorum for the transaction of business. The vote of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 2.06 Participation by Telephone. Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting by such means shall constitute
presence in person at such meeting.
Section 2.07 Action Without a Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board of Directors or such
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceeding of the Board of Directors or
of such committee.
Section 2.08 Committees. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors, Any such committee, to the extent
provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed by the officers on all papers which may
require it, but no such committee shall have the power or authority in reference
to (a) amending the Certificate of Incorporation (except that a committee may,
to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of the assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation, or fix the number of shares of any
series of stock or authorize the increase or decrease of the shares of any
series) and, unless the resolution expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock; (b) adopting an agreement of merger or consolidation; (c)
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets; (d) recommending to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution; or (e) amending these By-Laws. The Board of Directors may designate
one or more directors as alternate members of any such committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not
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constituting a quorum, may unanimously appoint another director to act at the
meeting in the place of such absent or disqualified member.
Section 2.09 Removal; Resignation. Any director or the entire Board of Directors
may be removed with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors. Any director may resign at
any time, upon written notice to the Corporation.
Section 2.10 Vacancies. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of directors then in office, although less than a quorum, or by a sole remaining
director. When one or more directors shall resign from the Board of Directors,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies. the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as
provided above in the filling of other vacancies. A director elected to fill a
vacancy shall hold office for the unexpired term of his or her predecessor.
Section 2.11 Compensation. The Board of Directors may fix the compensation of
directors.
Article 3
Officers
Section 3.01 Election; Qualifications. At the first meeting of the Board of
Directors and as soon as practicable after each annual meeting of stockholders,
the Board of Directors shall elect or appoint a Chairman, President, one or more
Vice-Presidents, a Secretary and a Treasurer, and may elect or appoint at such
time or from time to time such additional officers, with such titles as the
Board of Directors shall designate by resolution, as the Board of Directors
deems advisable. No officer need be a director of the Corporation. Any number of
offices may be held by the same person.
Section 3.02 Term of Office; Vacancies. Each officer shall hold office until the
election and qualification of his or her successor or until his or her earlier
death, resignation or removal. Any vacancy occurring in any office. whether
became of death. resignation or removal, with or without cause, or otherwise,
shall be filled by the Board of Directors.
Section 3.03 Removal; Resignation. Any officer may be removed from office at any
time with or without cause by the Board of Directors. Any officer may resign his
or her office at any time upon written notice to the Corporation.
Section 3.04 Powers and Duties of the Chairman. The Chairman shall be the chief
executive officer of the Corporation and shall have general charge and
supervision of its business, affairs,
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administration and operations. The Chairman shall from time to time make such
reports concerning the Corporation as the Board of Directors of the Corporation
may require. The Chairman shall preside at all meetings of the stockholders and
the Board of Directors. The Chairman shall have such other powers and shall
perform such other duties as may from time to time be assigned to him or her by
the Board of Directors.
Section 3.05 Powers and Duties of the President. President shall have such
powers and perform such duties as may from time to time be assigned to him or
her by the Board of Directors.
Section 3.06 Powers and Duties of the Vice-Presidents. Each of the
Vice-Presidents shall be given such titles and designations and shall have such
powers and perform such duties as may from time to time be assigned to him or
her by the Board of Directors.
Section 3.07 Powers and Duties of the Secretary. The Secretary shall record and
keep the minutes of all meetings of the stockholders and of the Board of
Directors in a book to be kept for that purpose. The Secretary shall attend to
the giving and serving of all notices by the Corporation. The Secretary shall be
the custodian of, and shall make or cause to be made the proper entries in, the
minute book of the Corporation and such other books and records as the Board of
Directors may direct. The Secretary shall be the custodian of the corporate seal
of the Corporation and shall affix or cause to be affixed such seal to such
contracts and other instruments as the Board of Directors may direct. The
Secretary shall have such other powers and shall perform such other duties as
may from time to time be assigned to him or her by the Board of Directors.
Section 3.08 Powers and Duties of the Treasurer. The Treasurer shall be the
custodian of all funds and securities of the Corporation. Whenever required by
the Board of Directors, the Treasurer shall render a statement of the
Corporation's cash and other accounts, and shall cause to be entered regularly
in the proper books and records of the Corporation to be kept for such purpose
full and accurate accounts of the Corporation's receipts and disbursements. The
Treasurer shall at all reasonable times exhibit the Corporation's books and
accounts to any director of the Corporation upon application at the principal
office of the Corporation during business hours. The Treasurer shall have such
other powers and shall perform such other duties as may from time to time be
assigned to him or her by the Board of Directors.
Section 3.09 Delegation. In the event of the absence of any officer of the
Corporation or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may at any time or from time to time delegate
all or any part of the powers or duties of any officer to any other officer or
officers or to any director or directors.
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Article 4
Stock
The shares of the Corporation shall be represented by
certificates signed by the Chairman or the President or any Vice-President and
by the Treasurer, an Assistant Treasurer, Secretary or an Assistant Secretary.
Any of or all the signatures on the certificate may be a facsimile.
Article 5
Execution of Documents
All contracts, agreements, instruments, bills payable, notes,
checks, drafts, warrants or other obligations of the Corporation shall be made
in the name of the Corporation shall be signed by such officer or officers as
the Board of Directors may from time to time designate.
Article 6
Seal
The seal of the Corporation shall contain the name of the
Corporation, the words "Corporate Seal", the year of its organization and the
word "Delaware."
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Article 7
Fiscal Year
The fiscal year of the Corporation shall end on such date of
each year as the Board of Directors may proscribe.
Article 8
Indemnification
The Corporation shall indemnify all persons to the full extent permitted, and in
the manner provided, by the Delaware General Corporation Law, as the same now
exists or may hereafter be amended.
Article 9
Amendment of By-Laws
These By-Laws may be amended or repealed, and any new By-Law may be adopted, by
the stockholders entitled to vote or by the Board of Directors.
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ASSIGNMENT
ASSIGNMENT, dated as of May 13, 1998, made by Peach Street Partners, a
California limited partnership ("Assignor") in favor of Avalon Acquisition
Corp., Delaware corporation ("Assignee").
Assignor is the holder of a 1 % interest (the "Interest") as a general
partner in Irvine Meadows Amphitheater, a California general partnership.
Assignor, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, for itself and its successors and
assigns, hereby transfers and assigns to Assignee, free and clear of any lien,
claim, charge or other encumbrance, all of its right, title and interest in and
to the Interest.
Assignor hereby covenants that no assignment, sale, agreement or
encumbrance has been or will be made or entered into which would conflict with
this Assignment.
Assignor, for itself, its successors and assigns, further covenants and
agrees that, any time and from time to time forthwith upon the written request
of the Assignee, Assignor will, at Assignee's expense, do, execute, acknowledge
and deliver or cause to be done, executed, acknowledged or delivered, all and
every such further acts, assignments and transfers reasonably required or
requested by the Assignee in order to assign, transfer, set over, convey,
release, assure and confirm unto, and vest in, Assignee, its successors and
assigns, all of the Interest.
Assignor further covenants and agrees that the covenants herein
contained shall be binding upon its successors and assigns and shall inure to
the benefit of Assignee and its successors and assigns.
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed
and to be effective on May 13, 1998.
PEACH STREET PARTNERS, LTD.
by: (illegible)
/s/ Paul C. Heguess
---------------------------
Name: Paul C. Heguess
Title: President
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 10/05/1998
981383906 - 2952264
CERTIFICATE OF INCORPORATION
OF BGP DENVER, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware
Code and the acts amendatory thereof and supplemental thereto, and known,
identified, and referred to as the "General Corporation Law of the State of
Delaware"), hereby certifies that:
FIRST: The name of the Corporation (Hereinafter Called the
"Corporation") is BGP DENVER, INC.
SECOND: The address, including street, number, city and
county, of the registered office of the corporation in the State of Delaware is
1013 Centre Road, City of Wilmington 19805, County of New Castle, and the name
of the registered agent of the corporation in the State of Delaware at such
address is Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one thousand. The par value of
each of such shares is one cent. All such shares are of one class and are
shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator
is as follows:
NAME MAILING ADDRESS
Deborah Goldman-Levi 650 Madison Avenue, 16th Floor
New York, NY 10022
<PAGE>
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in
a summary way of this corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this corporation
under ss. 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for this corporation
under ss. 279 of Title 8 of the Delaware Code order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
this corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this corporation as consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
EIGHTH: For the management of the business and for the
conduct of the affairs of the corporation, and in further definition,
limitation, and regulation of the powers of the corporation and of its
directors and of its stockholders or any class thereof, as the case may be, it
is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of
Directors. The number of directors, which shall constitute
the whole Board of Directors shall be fixed by, or in the
manner provided in the Bylaws. The phrase "whole Board" and
the phrase "total number of directors" shall be deemed to
have the same meaning, to wit, the total number of directors
which the corporation would have if there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in
accordance with the provisions of ss.109 of the General
Corporation Law of the State of Delaware, and, after the
corporation has received any payment for any of its stock,
the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered
terms pursuant to the provisions of subsections (d) of ss.141
of the General Corporation Law of the State of Delaware shall
be set forth in an initial Bylaw or in a Bylaw adopted by the
stockholders entitled to vote of the corporation unless
provisions for such classification shall be set forth in this
certificate of incorporation.
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3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the
holder thereof to notice of, and the right to vote at, any
meeting of stockholders. Whenever the corporation shall be
authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied
voting power under the provisions of the certificate of
incorporation shall entitle the holder thereof to the right
to vote at any meeting of stockholders except as the
provisions of paragraph (2) of subsection (b) of ss.242 of
the General Corporation Law of the State of Delaware shall
otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the
holder thereof to vote upon the increase to decrease in the
number of authorized shares of said class.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of ss.102 of the General
Corporation Law of the State of Delaware, as the same may be amended and
supplemented.
TENTH: The corporation shall, to the fullest extent permitted
by the provisions of ss.145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation
by this certificate of incorporation are granted subject to the provisions of
this Article ELEVENTH.
Signed on October 5, 1998
/s/ Deborah Goldman-Levi
------------------------------------------
Deborah Goldman-Levi, Incorporator
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BY-LAWS
OF
BGP DENVER, INC.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be
established and maintained at and shall be the registered agent of the
Corporation in charge hereof.
1.2 Other Offices: The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require, provided, however, that the corporation's books and
records shall be maintained at such place within the continental United States
as the Board of Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the
stockholders of the corporation shall be held at such place or places, within
or outside the State of Delaware as may be fixed by the Board of Directors from
time to time or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An
annual meeting of stockholders shall be held each year within five months after
the close of the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called
by the President or by the Chairman of the Board of Directors, or at the
request in writing by stockholders of record owning at least fifty (50%)
percent of the issued and outstanding voting shares of common stock of the
corporation.
2.5 Notice of Meetings of Stockholders: Except as otherwise
expressly required or permitted by law, not less than ten days nor more than
sixty days before the date of every stockholders' meeting the Secretary shall
give to each stockholder of record entitled to vote at such meeting, written
notice, served personally by mail or by telegram, stating the place, date and
hour
<PAGE>
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Such notice, if mailed shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to
the stockholder at his address for notices to such stockholder as it appears on
the records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by
the Certificate of Incorporation or by law, at any meeting of the stockholders,
the presence in person or by proxy of stockholders entitled to cast a majority
of the votes thereat shall constitute a quorum. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum
shall be present, a majority of voting stockholders, present in person or by
proxy, may adjourn the meeting from time to time without notice other than
announcement at the meeting. In the absence of a quorum, the officer presiding
thereat shall have power to adjourn the meeting from time to time until a
quorum shall be present. Notice of any adjourned meeting, other than
announcement at the meeting, shall not be required to be given except as
provided in paragraph (d) below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting originally called but only those stockholders entitled to vote at the
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.7 Chairman and Secretary of Meetings: The President, shall
preside at meetings of the stockholders. The Secretary shall act as secretary
of the meeting or if he is not present, then the presiding officer may appoint
a person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise
provided by the Certificate of Incorporation or these by-laws, at every meeting
of the stockholders each stockholder shall be entitled to one vote for each
share of voting stock standing in his name on the books of the corporation on
the record date for the meeting. Except as otherwise provided by these by-laws,
all elections and questions shall be decided by the vote of a majority in
interest of the stockholders present in person or represented by proxy and
entitled to vote at the meeting.
2.9 Proxies: Any stockholder entitled to vote at any meeting
of stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, scaled, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote
by ballot at any meeting of the stockholders shall be supervised by at least
two inspectors. Such inspectors may be appointed by the presiding officer
before or at the meeting; or if one or both inspectors so appointed
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shall refuse to serve or shall not be present, such appointment shall be made
by the officer presiding at the meeting.
2.11 List of Stockholders: (a) At least ten days before every
meeting of stockholders, the Secretary shall prepare and make a complete list
of the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) During ordinary business hours, for a period of at least
ten days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting
is to be held.
(c) The list shall also be produced and kept at the time and
place of the meeting during the whole time of the meeting, and it may be
inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list required by
this Section 2.11 or the books of the corporation, or to vote in person or by
proxy at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise
provided by these by-laws or any resolutions adopted by the stockholders or
Board of Directors, the order of business and all other matters of procedure at
every meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken
at any annual or special meeting of stockholders, or any action which may be
taken at any annual or special meeting, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs
of the corporation shall be managed by its Board of Directors which may
exercise all the powers of the corporation except such as are by the law of the
State of Delaware or the Certificate of Incorporation or these by-laws required
to be exercised or done by the stockholders.
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3.2 Number, Method of Election, Terms of Office of Directors:
The number of directors which shall constitute the Board of Directors shall be
( ) unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not
be stockholders.
3.3 Vacancies on Board of Directors: Removal: (a) Any
director may resign his office at any time by delivering his resignation in
writing to the Chairman of the Board or to the President. It will take effect
at the time specified therein or, if no time is specified, it will be effective
at the time of its receipt by the corporation. The acceptance of a resignation
shall not be necessary to make it effective, unless expressly so provided in
the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any
time by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of
Directors may hold their meetings, both regular and special, either within or
outside the State of Delaware.
(b) Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be determined by resolution of
the Board of Directors. No notice of such regular meetings shall be required.
If the date designated for any regular meeting be a legal holiday, then the
meeting shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of
Directors shall be held immediately following the annual meeting of the
stockholders for the election of officers and the transaction of such other
business as may come before it. If such meeting is held at the place of the
stockholders' meeting, no notice thereof shall be required.
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or
at the written request of any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, or delivering the same
not later than the date before the meeting.
Unless required by law, such notice need not include a
statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board of
Directors. No notice of any adjourned meeting need be given. No notice to or
waiver by any director shall be required with respect to any meeting at which
the director is present.
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3.5 Quorum and Action: Unless provided otherwise by law or by
the Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall
be less than a quorum at any meeting of the Board, a majority of those present
may adjourn the meeting from time to time. The vote of a majority of the
Directors present at any meeting at which a quorum is present shall be
necessary to constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The
President, or, in his absence a member of the Board of Directors selected by
the members present, shall preside at meetings of the Board. The Secretary
shall act as secretary of the meeting, but in his absence the presiding officer
may appoint a secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of
Directors, or any committee designated by such board, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution
or resolutions passed by a majority of Directors designate one or more
committees, each of such conunittees to consist of one or more Directors of the
Corporation, for such purposes as the Board shall determine. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such
reasonable compensation for their service on the Board of Directors or any
committees thereof, whether in the form of salary or a fixed fee for attendance
at mectings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected
officers of the corporation shall be a President, a Treasurer and a Secretary,
and such other officers as the Board of Directors shall deem advisable. The
officers shall be elected by the Board of Directors at its annual meeting
following the annual meeting of the stockholders, to serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election and until their successors are elected and qualified.
5
<PAGE>
(b) The Board of Directors may elect or appoint at any time,
and from time to time, additional officers or agents with such duties as it may
deem necessary or desirable. Such additional officers shall serve at the
pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time
specified therein or, if no time has been specified, at the time of its receipt
by the corporation. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be
fixed by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be
removed at any time, either with or without cause, by resolution adopted at any
regular or special meeting of the Board of Directors by a majority of the
Directors then in office.
4.3 Duties: (a) President: The President shall be the
principal executive officer of the corporation and, subject to the control of
the Board of Directors, shall supervise and control all the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the stockholders and of the Board of Directors. He shall see that all orders
and resolutions of the Board of Directors are carried into effect (unless any
such order or resolution shall provide otherwise), and in general shall perform
all duties incident to the office of president and such other duties as may be
prescribed by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and
custody of and be responsible for all funds and securities of the Corporation;
(2) receive and give receipts for moneys due and payable to the corporation
from any source whatsoever; (3) deposit all such moneys in the name of the
corporation in such banks, trust companies, or other depositories as shall be
selected by resolution of the Board of Directors; and (4) in general perform
all duties incident to the office of treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors. He shall, if required by the Board of Directors, give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties
as the Board of Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the minutes of
the meetings of the stockholders, the Board of Directors, and all committees,
if any, of which a secretary shall not have been appointed, in one or more
books provided for that purpose; (2) see that all notices are duly given in
accordance with the provisions of these by-laws and as required by law; (3) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation wider its seal, is duly authorized; (4) keep
a register of the post office address of each stockholder which shall be
furnished
6
<PAGE>
to the Secretary by such stockholder; (5) have general charge of stock transfer
books of the Corporation; and (6) in general perform all duties incident to the
office of secretary and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President and by the Treasurer or the Secretary,
certifying the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the
holder of such certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the corporation's books. The corporation
shall be entitled to treat the holder of any share of stock as the holder in
fact thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be
made on the books of the corporation only by direction of the person named in
the certificate or his attorney, lawfully constituted in writing, and only upon
the surrender of the certificate therefor and a written assessment of the
shares evidenced thereby. Whenever any transfer of stock shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
7
<PAGE>
5.4 Lost, Stolen or Destroyed Certificates: Certificates
representing shares of the stock of the corporation shall be issued in place of
any certificate alleged to have been lost, stolen or destroyed in such manner
and on such terms and conditions as the Board of Directors from time to time
may authorize.
5.5 Transfer Agent: Registrar: Rules Respecting Certificates:
The corporation may maintain one or more transfer offices or agencies where
stock of the corporation shall be transferable. The corporation may also
maintain one or more registry offices where such stock shall be registered. The
Board of Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of
Record: The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of the stockholders or any adjournment thereof, or the
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock, or to express consent to
corporate action in writing without a meeting, or in order to make a
determination of the stockholders for the purpose of any other lawful action.
Such record date in any case shall be not more than sixty days nor less than
ten days before the date of a meeting of the stockholders, nor more than sixty
days prior to any other action requiring such determination of the
stockholders. A determination of stockholders of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise
order, the President, the Secretary or the Treasurer shall have full power and
authority, on behalf of the corporation, to attend, act and vote at any meeting
of the stockholders of any corporation in which the corporation may hold stock,
and at such meeting to exercise any or all rights and powers incident to the
ownership of such stock, and to execute on behalf of the corporation a proxy or
proxies empowering another or others to act as aforesaid. The Board of
Directors from time to time may confer like powers upon any other person or
persons.
8
<PAGE>
6.2 General Authorization to Transfer Securities Held By the
Corporation: (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase
warrants, evidence of indebtedness, or other securities now or hereafter
standing in the name of or owned by the corporation, and to make, execute and
deliver, under the seal of the corporation, any and all written instruments of
assignment and transfer necessary or proper to effectuate the authority hereby
conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting
forth the names of persons who are then officers of the corporation, then all
persons to whom such instrument and annexed certificate shall thereafter come,
shall be entitled, without further inquiry or investigation and regardless of
the date of such certificate, to assume and to act in reliance upon the
assumption that the shares of stock or other securities named in such
instrument were theretofore duly and properly transferred, endorsed, sold,
assigned, set over and delivered by the corporation, and that with respect to
such securities the authority of these provisions of the by-laws and of such
officers is still in full force and effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form
and shall have such content as the Board of Directors shall from time to time
determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the
time, place or purpose of any meeting of the stockholders, directors or a
committee is required to be given under the law of the State of Delaware, the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or
after the holding thereof, or actual attendance at the meeting in person or, in
the case of any stockholder, by his attorney-in-fact, shall be deemed
equivalent to the giving of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors,
officers and employees to the fullest extent allowed by law, provided, however,
that it shall be within the discretion of the Board of Directors whether to
advance any funds in advance of disposition of any action, suit or proceeding,
and provided further that nothing in this section 7.4 shall be deemed to
obviate the necessity of the Board of Directors to make any determination that
indemnification of
9
<PAGE>
the director, officer or employee is proper under the circumstances because he
has met the applicable standard of conduct set forth in subsections (a) and (b)
of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise
determined by the Board of Directors, the fiscal year of the corporation shall
end on .
10
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
ARTICLE 1
Boston Playhouse Realty, Inc.
ARTICLE II
To acquire and own real estate and to own and operate a theatre for public and
private performances.
To carry on any other business, transaction or activity which may be lawfully
carried on by a corporation organized under Massachusetts General Laws, Ch.
156B, as amended.
<PAGE>
ARTICLE III
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
- ---------------------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common: 200,000 Common: -0- -0-
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Preferred: -0- Preferred: -0- -0-
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
ARTICLE IV
None
ARTICLE V
None
ARTICLE VI
See Continuation Sheet 2B.
<PAGE>
CONTINUATION SHEET 2B
Article VI Continuation
The other lawful provisions for the conduct and regulation of business
and affairs of the corporation, for its voluntary dissolution, or for limiting,
defining or regulating the powers of the corporation, or of its directors or
stockholders, or any class of stockholders, are set forth in this Article VI.
a. By-laws. The By-laws may provide that the directors may make, amend
or repeal the By-laws in whole or in part, except with respect to any provision
thereof which by law or the Bylaws requires action by the stockholders.
b. Meetings. meetings of the stockholders of the corporation may be
held anywhere in the United States.
c. Acting as Partner. The corporation may be a general or limited
partner in any business enterprise it would have power to conduct by itself.
d. Indemnification. The corporation may provide, either in the
corporation's By-laws or by contract, for the indemnification of directors,
officers, employees and agents, by whomever elected or appointed, to the full
extent presently permitted by law; provided, however, that if applicable law is
hereafter modified to permit indemnification in situations where it was not
theretofore permitted, then such indemnification may be permitted to the full
extent permitted by such law as amended.
e. Transactions with Interested Persons. The By-laws may contain
provisions providing that no contract or transaction of the corporation shall be
void or voidable by reason of the fact that any officer, director or stockholder
of the corporation may have held an interest therein.
f. Vote Required for Certain Transactions. The vote of a majority of
the outstanding shares of each class of stock outstanding and entitled to vote
thereon shall be sufficient to approve any agreement of merger or consolidation
of the corporation with or into another Corporation or of another corporation
into the corporation, or to approve any sale, lease or exchange of substantially
all of the assets of the corporation, notwithstanding any provision of law that
would otherwise require a greater vote in the absence of this provision of
Article VI.
g. Elimination of Directors' Personal Liability. No director shall be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director notwithstanding any provision of law
imposing such liability; provided, however, that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section sixty-one or sixty-two of Chapter
156B of the Massachusetts General Laws, or (iv) for
<PAGE>
any transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this paragraph shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to the
date of such amendment or repeal.
<PAGE>
ARTICLE VIII
Address of principal office
120 Boylston Street, Suite 502
Boston, MA 02116
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
NAME ADDRESS POST OFFICE ADDRESS
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- --------------------------------------------------------------------------------------------------
Treasurer: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- --------------------------------------------------------------------------------------------------
Clerk: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- --------------------------------------------------------------------------------------------------
Director: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- --------------------------------------------------------------------------------------------------
</TABLE>
Fiscal Year shall end last day of month of December
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY ON 10TH OF JULY, 1995.
/s/ Carl R. Newman
- ------------------
Carol R. Newman
<PAGE>
BY - LAWS
OF
BOSTON PLAYHOUSE REALTY, INC.
Date Adopted: July 10, 1995 /s/ Jon B. Platt
-------------------
Jon B. Platt, Clerk
<PAGE>
BY-LAWS
OF
BOSTON PLAYHOUSE REALTY, INC.
(A Massachusetts Corporation)
ARTICLE I.
Stockholders
Section 1.1. Annual Meeting. The annual meeting of the stockholders of
the corporation shall be held on the second Tuesday in the month of February of
each year. The annual meeting shall be held at such place within the United
States as may be designated in the notice of meeting. If the day fixed for the
annual meeting shall fall on a legal holiday, the meeting shall be held on the
next succeeding day not a legal holiday. In the event that no date for the
annual meeting is established, a special meeting may be held in place thereof,
and any business transacted at such special meeting in lieu of annual meeting
shall have the same effect as if transacted or held at the annual meeting.
Section 1.2. Special Meetings. Special meetings of the stockholders may
be called at any time by the president or by the board of directors and shall be
called by the clerk upon written application of one or more stockholders who
hold shares representing at least ten percent (10%) of the capital stock
entitled to vote at such meeting. Special meetings of the stockholders shall be
held at such time, date and place within or without the United States as may be
designated in the notice of such meeting.
Section 1.3. Notice of Meeting. A written notice stating the place,
date, and hour of each meeting of the stockholders, and, in the case of a
special meeting, the purposes for which the meeting is called, shall be given to
each stockholder entitled to vote at such meeting, and to each stockholder who,
under the Articles of Organization or these By-laws, is entitled to such notice,
by delivering such notice to such person or leaving it at their residence or
usual place of business, or by mailing it, postage prepaid, and addressed to
such stockholder at his address as it appears upon the books of the corporation,
at least seven (7) days and not more than sixty (60) before the meeting. Such
notice shall be given by the clerk, an assistant clerk, or any other officer or
person designated either by the clerk or by the person or persons calling the
meeting.
The requirement of notice to any stockholder may be waived by a written
waiver of notice, executed before or after the meeting by the stockholder or his
attorney thereunto duly authorized, and filed with the records of the meeting,
or if communication with such stockholder is unlawful, or by attendance at the
meeting without protesting prior thereto or at its commencement the lack of
notice. Except as otherwise provided herein, the notice to the stockholders need
not specify the purposes of the meeting.
<PAGE>
If a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place are announced at the
meeting at which the adjournment is taken, except that if the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 1.4. Quorum. The holders of a majority in interest of all stock
issued, outstanding and entitled to vote at a meeting shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority of the votes
properly cast upon the question, whether or not a quorum is present.
Section 1.5. Voting and Proxies. Each stockholder shall have one vote
for each share of stock entitled to vote owned by such stockholder of record
according to the books of the corporation, unless otherwise provided by law or
by the Articles of Organization. Stockholders may vote either in person or by
written proxy. No proxy dated more than six months prior to the date of the
meeting shall be valid although, unless otherwise limited therein, proxies shall
entitle the persons authorized thereby to vote at any adjournment of such
meeting. Proxies shall be filed with the clerk of the meeting, or of any
adjournment thereof. A proxy purporting to be executed by or on behalf of a
stockholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger. A proxy with
respect to stock held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of the proxy the
corporation receives a specific written notice to the contrary from any one of
them.
Section 1.6. Action at Meeting. When a quorum is present at any
meeting, a plurality of the votes properly cast for election to any office shall
elect to such office, and a majority of the votes properly cast upon any
question other than election to an office shall decide such question, except
where a larger vote is required by law, the Articles of Organization or these
by-laws. No ballot shall be required for any election unless requested by a
stockholder present or represented at the meeting and entitled to vote in the
election.
Section 1.7. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the stockholders may be taken without a meeting if
all stockholders entitled to vote on the matter consent to the action in writing
and the consent shall be treated for all purposes as a vote at a meeting.
Section 1.8. Voting of Shares of Certain Holders. Shares of stock of
the corporation standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine.
Shares of stock of the corporation standing in the name of a deceased
person, a minor ward or an incompetent person, may be voted by his
administrator, executor, court-appointed guardian or conservator without a
transfer of such shares into the name of such administrator, executor, court
-2-
<PAGE>
appointed guardian or conservator. Shares of capital stock of the corporation
standing in the name of a trustee may be voted by him.
Shares of stock of the corporation standing in the name of a receiver
may be voted by such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer thereof into his
name if authority so to do be contained in an appropriate order of the court by
which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by the corporation in a fiduciary capacity may be voted
and shall be counted in determining the total number of outstanding shares.
ARTICLE II.
Board of Directors
Section 2.1. Powers. Except as reserved to the stockholders by law, by
the Articles of organization or by these By-laws, the business of the
corporation shall be managed under the direction of the board of directors, who
shall have and may exercise all of the powers of the corporation. In particular,
and without limiting the foregoing, the board of directors shall have the power
to issue or reserve for issuance from time to time the whole or any part of the
capital stock of the corporation which may be authorized from time to time to
such person, for such consideration and upon such terms and conditions as they
shall determine, including the granting of options, warrants or conversion or
other rights to stock.
Section 2.2. Number of Directors; Qualifications. The board of
directors shall consist of such number of directors (which shall not be less
than three or less than the number of stockholders, if less than three) as shall
be fixed initially by the incorporator(s) and thereafter by the stockholders.
No director need be a stockholder.
Section 2.3. Nomination of Directors.
(a) Nominations for the election of directors may be made by the board
of directors or by any stockholder entitled to vote for the election of
directors. Nominations by stockholders shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
clerk of the corporation not less than 14 days nor more than 50 days prior to
any meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as
-3-
<PAGE>
prescribed, to the clerk of the corporation not later than the close of the
seventh day following the day on which notice of the meeting was mailed to
stockholders.
(b) Each notice under subsection (a) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of stock of the corporation which are
beneficially owned by each such nominee.
(c) The chairman of the meeting of stockholders may, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
Section 2.4. Election of Directors. The initial board of directors
shall be elected by the incorporator(s) at the first meeting thereof and
thereafter by the stockholders at their annual meeting or at any special meeting
the notice of which specifies the election of directors as an item of business
for such meeting.
Section 2.5. Vacancies; Reduction of the Board. Any vacancy in the
board of directors, however occurring, including a vacancy resulting from the
enlargement of the board of directors, may be filled by the stockholders or by
the directors then in office or by a sole remaining director. In lieu of filling
any such vacancy the stockholders or board of directors may reduce the number of
directors, but not to a number less than the minimum number required by Section
2.2. When one or more directors shall resign from the board of directors,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective.
Section 2.6. Enlargement of the Board. The board of directors may be
enlarged by the stockholders at any meeting or by vote of a majority of the
directors then in office.
Section 2.7. Tenure and Resignation. Except as otherwise provided by
law, by the Articles of Organization or by these Bylaws, directors shall hold
office until the next annual meeting of stockholders and thereafter until their
successors are chosen and qualified. Any director may resign by delivering or
mailing postage prepaid a written resignation to the corporation at its
principal office or to the president, clerk or assistant clerk, if any. Such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
Section 2.8. Removal. A director, whether elected by the stockholders
or directors, may be removed from office with or without cause at any annual or
special meeting of stockholders by vote of a majority of the stockholders
entitled to vote in the election of such director, or for cause by a vote of a
majority of the directors then in office; provided, however, that a director may
be removed
-4-
<PAGE>
for cause only after reasonable notice and opportunity to be heard before the
body proposing to remove him.
Section 2.9. Meetings. Regular meetings of the board of directors may
be held without call or notice at such times and such places within or without
the Commonwealth of Massachusetts as the board may, from time to time,
determine, provided that notice of the first regular meeting following any such
determination shall be given to directors absent from such determination. A
regular meeting of the board of directors shall be held without notice
immediately after, and at the same place as, the annual meeting of the
stockholders or the special meeting of the stockholders held in place of such
annual meeting, unless a quorum of the directors is not then present. Special
meetings of the board of directors may be held at any time and at any place
designated in the call of the meeting when called by the president, treasurer,
or one or more directors. Members of the board of directors or any committee
elected thereby may participate in a meeting of such board or committee by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same time,
and participation by such means shall constitute presence in person at the
meeting.
Section 2.10. Notice of Meeting. It shall be sufficient notice to a
director to send notice by mail at least seventy-two (72) hours before the
meeting addressed to such person at his usual or last known business or
residence address or to give notice to such person in person or by telephone at
least twenty-four (24) hours before the meeting. Notice shall be given by the
clerk, assistant clerk, if any, or by the officer or directors calling the
meeting. The requirement of notice to any director may be waived by a written
waiver of notice, executed by such person before or after the meeting or
meetings, and filed with the records of the meeting, or by attendance at the
meeting without protesting prior thereto or at its commencement the lack of
notice. A notice or waiver of notice of a directors' meeting need not specify
the purposes of the meeting.
Section 2.11. Agenda. Any lawful business may be transacted at a
meeting of the board of directors, notwithstanding the fact that the nature of
the business may not have been specified in the notice or waiver of notice of
the meeting.
Section 2.12. Quorum. At any meeting of the board of directors, a
majority of the directors then in office shall constitute a quorum for the
transaction of business. Any meeting may be adjourned by a majority of the votes
cast upon the question, whether or not a quorum is present, and the meeting may
be held as adjourned without further notice.
Section 2.13. Action at Meeting. Any motion adopted by vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the board of directors, except where a different vote is
required by law, by the Articles of Organization or by these By-laws. The assent
in writing of any director to any vote or action of the directors taken at any
meeting, whether or not a quorum was present and whether or not the director had
or waived notice of the meeting, shall have the same effect as if the director
so assenting was present at such meeting and voted in favor of such vote or
action.
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Section 2.14. Action Without Meeting Any action by the directors may be
taken without a meeting if all of the directors consent to the action in writing
and the consents are filed with the records of the directors, meetings. Such
consent shall be treated for all purposes as a vote of the directors at a
meeting.
Section 2.15. Committees. The board of directors may, by the
affirmative vote of a majority of the directors then in office, appoint an
executive committee or other committees consisting of one or more directors and
may by vote delegate to any such committee some or all of their powers except
those which by law, the Articles of Organization or these By-laws they may not
delegate. Unless the board of directors shall otherwise provide, any such
committee may make rules for the conduct of its business, but unless otherwise
provided by the board of directors or such rules, its meetings shall be called,
notice given or waived, its business conducted or its action taken as nearly as
may be in the same manner as is provided in these By-laws with respect to
meetings or for the conduct of business or the taking of actions by the board of
directors. The board of directors shall have power at any time to fill vacancies
in, change the membership of, or discharge any such committee at any time. The
board of directors shall have power to rescind any action of any committee, but
no such rescission shall have retroactive effect.
ARTICLE III.
Officers
Section 3.1. Enumeration. The officers shall consist of a president, a
treasurer, a clerk and such other officers and agents (including one or more
vice-presidents, assistant treasurers, assistant clerks, secretaries and
assistant secretaries), with such duties and powers, as the board of directors
may, in their discretion, determine.
Section 3.2. Election. The president, treasurer and clerk shall be
elected annually by the directors at their first meeting following the annual
meeting of the stockholders. Other officers may be chosen by the directors at
such meeting or at any other meeting.
Section 3.3. Qualification. An officer may, but need not, be a director
or stockholder and no officer shall be a director solely by virtue of being an
officer. Any two or more off ices may be held by the same person. The clerk
shall be a resident of Massachusetts unless the corporation has a resident agent
appointed for the purpose of service of process. Any officer may be required by
the directors to give bond for the faithful performance of his duties to the
corporation in such amount and with such sureties as the directors may
determine. The premiums for such bonds may be paid by the corporation.
Section 3.4. Tenure. Except as otherwise provided by the Articles of
Organization or these By-laws, the term of office of each officer shall be for
one year or until his successor is elected and qualified or until his earlier
resignation or removal.
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Section 3.5. Removal. Any officer may be removed from office, with or
without cause, by the affirmative vote of a majority of the directors then in
office; provided, however, that an officer may be removed for cause only after
reasonable notice and opportunity to be heard by the board of directors prior to
action thereon.
Section 3.6. Resignation. Any officer may resign by delivering or
mailing postage prepaid a written resignation to the corporation at its
principal office or to the president, clerk, or assistant clerk, if any, and
such resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some event.
Section 3.7. Vacancies. A vacancy in any office arising from any cause
may be filled for the unexpired portion of the term by the board of directors.
Section 3.8. President. The president shall be the chief executive
officer of the corporation. Except as otherwise voted by the board or directors,
the president shall preside at all meetings of the stockholders and of the board
of directors at which present. The president shall have such duties and powers
as are commonly incident to the office and such duties and powers as the board
of directors shall from time to time designate.
Section 3.9. Vice-Presidents. Vice-presidents, if any, shall have such
powers and perform such duties as the board of directors may from time to time
determine.
Section 3.10. Treasurer and Assistant Treasurers. The treasurer,
subject to the direction and under the supervision and control of the board of
directors, shall have general charge of the financial affairs of the
corporation. The treasurer shall have custody of all funds, securities and
valuable papers of the corporation, except as the board of directors may
otherwise provide. The treasurer shall keep or cause to be kept full and
accurate records of account which shall be the property of the corporation, and
which shall be always open to the inspection of each elected officer and
director of the corporation. The treasurer shall deposit or cause to be
deposited all funds of the corporation in such depository or depositories as may
be authorized by the board of directors. The treasurer shall have the power to
endorse for deposit or collection all notes, checks, drafts, and other
negotiable instruments payable to the corporation. The treasurer shall have the
power to borrow money and enter into and execute arrangements as to advances,
loans and credits to the corporation. The treasurer shall perform such other
duties as are incidental to the office, and such other duties as may be assigned
by the board of directors. Assistant treasurers, if any, shall have such powers
and perform such duties as the board of directors may from time to time
determine.
Section 3.11. Clerk and Assistant Clerks. The clerk shall record, or
cause to be recorded, all proceedings of the meetings of the stockholders and
directors (including committees thereof) in the book of records of this
corporation. The record books shall be open at reasonable times to the
inspection of any stockholder, director, or officer. The clerk shall notify the
stockholders and directors, when required by law or by these By-laws, of their
respective meetings, and shall perform such other duties as the directors and
stockholders may from time to time prescribe. The clerk shall have the custody
and charge of the corporate seal, and shall affix the seal of the corporation to
all instruments requiring such seal, and shall certify under the corporate seal
the proceedings of the directors and of the stockholders, when required. In the
absence of the clerk at any such meeting, a temporary clerk shall be chosen who
shall record the proceedings of the meeting in the aforesaid books.
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Assistant clerk, if any, shall have such powers and perform such duties
as the board of directors may from time to time designate.
Section 3.12. Other Powers and Duties. Subject to these Bylaws and to
such limitations as the board of directors may from time to time prescribe, the
officers of the corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the board of directors.
ARTICLE IV.
Capital Stock
Section 4.1. Stock Certificates. Each stockholder shall be entitled to
a certificate representing the number of shares of the capital stock of the
corporation owned by such person in such form as shall, in conformity to law, be
prescribed from time to time by the board of directors. Each certificate shall
be signed by the president or vice-president and treasurer or assistant
treasurer or such other officers designated by the board of directors from time
to time as permitted by law, shall bear the seal of the corporation, and shall
express on its face its number, date of issue, class, the number of shares for
which, and the name of the person to whom, it is issued. The corporate seal and
any or all of the signatures of corporation officers may be facsimile if the
stock certificate is manually counter-signed by an authorized person on behalf
of a transfer agent or registrar other than the corporation or its employee.
If an officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed on, a certificate shall have ceased to be
such before the certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at the
time of its issue.
Section 4.2. Transfer of Shares. Title to a certificate of stock and to
the shares represented thereby shall be transferred only on the books of the
corporation by delivery to the corporation or its transfer agent of the
certificate properly endorsed, or by delivery of the certificate accompanied by
a written assignment of the same, or a properly executed written power of
attorney to sell, assign or transfer the same or the shares represented thereby.
Upon surrender of a certificate for the shares being transferred, a new
certificate or certificates shall be issued according to the interests of the
parties.
Section 4.3. Record Holders. Except as otherwise may be required by
law, by the Articles of organization or by these Bylaws, the corporation shall
be entitled to treat the record holder of stock as shown on its books as the
owner of such stock for all purposes, including the payment of dividends and the
right to vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the corporation in accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the corporation of
his post office address.
Section 4.4. Record Date. In order that the corporation may determine
the stockholders entitled to receive notice of or to vote at any meeting of
stockholders or any adjournments thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in
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respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days prior to any other action. In such
case only stockholders of record on such record date shall be so entitled,
notwithstanding any transfer of stock on the books of the corporation after the
record date.
If no record date is fixed: (i) the record date for determining
stockholders entitled to receive notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (ii) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is necessary, shall be the day on which the first written consent is
expressed; and (iii) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 4.5. Transfer Agent and Registrar for Shares of Corporation.
The board of directors may appoint a transfer agent and a registrar of the
certificates of stock of the corporation. Any transfer agent so appointed shall
maintain, among other records, a stockholders' ledger, setting forth the names
and addresses of the holders of all issued shares of stock of the corporation,
the number of shares held by each, the certificate numbers representing such
shares, and the date of issue of the certificates representing such shares. Any
registrar so appointed shall maintain, among other records, a share register,
setting forth the total number of shares of each class of shares which the
corporation is authorized to issue and the total number of shares actually
issued. The stockholders' ledger and the share register are hereby identified as
the stock transfer books of the corporation; but as between the stockholders'
ledger and the share register, the names and addresses of stockholders, as they
appear on the stockholders' ledger maintained by the transfer agent shall be the
official list of stockholders of record of the corporation. The name and address
of each stockholder of record, as they appear upon the stockholders, ledger,
shall be conclusive evidence of who are the stockholders entitled to receive
notice of the meetings of stockholders, to vote at such meetings, to examine a
complete list of the stockholders entitled to vote at meetings, and to own,
enjoy and exercise any other property or rights deriving from such shares
against the corporation. Stockholders, but not the corporation, its directors,
officers, agents or attorneys, shall be responsible for notifying the transfer
agent, in writing, of any changes in their names or addresses from time to time,
and failure to do so will relieve the corporation, its other stockholders,
directors, officers, agents and attorneys, and its transfer agent and registrar,
of liability for failure to direct notices or other documents, or pay over or
transfer dividends or other property or rights, to a name or address other than
the name and address appearing in the stockholders' ledger maintained by the
transfer agent.
Section 4.6. Loss of Certificates. In case of the loss, destruction or
mutilation of a certificate of stock, a replacement certificate may be issued in
place thereof upon such terms as the board of directors may prescribe,
including, in the discretion of the board of directors, a requirement of bond
and indemnity to the corporation.
Section 4.7. Restrictions on Transfer. Every certificate for shares of
stock which are subject to any restriction on transfer, whether pursuant to the
Articles of Organization, the By-laws or any agreement to which the corporation
is a party, shall have the fact of the restriction noted conspicuously on the
certificate and shall also set forth on the face or back either the full text of
the restriction or a statement that the corporation will furnish a copy to the
holder of such certificate upon written request and without charge.
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Section 4.8. Multiple Classes of Stock. The amount and classes of the
capital stock and the par value, if any, of the shares, shall be as fixed in the
Articles of Organization. At all times when there are two or more classes of
stock, the several classes of stock shall conform to the description and the
terms and have the respective preferences, voting powers, restrictions and
qualifications set forth in the Articles of Organization and these By-laws.
Every certificate issued when the corporation is authorized to issue more than
one class or series of stock shall set forth on its face or back either (i) the
full text of the preferences, voting powers, qualifications and special and
relative rights of the shares of each class and series authorized to be issued,
or (ii) a statement of the existence of such preferences, powers, qualifications
and rights, and a statement that the corporation will furnish a copy thereof to
the holder of such certificate upon written request and without charge.
ARTICLE V.
Dividends
Section 5.1. Declaration of Dividends. Except as otherwise required by
law or by the Articles of Organization the board of directors may, in its
discretion, declare what, if any, dividends shall be paid by the corporation.
Dividends may be paid in cash, in property, in shares of the corporation's
stock, or in any combination thereof. Dividends shall be payable upon such dates
as the board of directors may designate.
Section 5.2. Reserves. Before the payment of any dividend and before
making any distribution of profits, the board of directors, from time to time
and in its absolute discretion, shall have power to set aside out of the surplus
or net profits of the corporation such sum or sums as the board of directors
deems proper and sufficient as a reserve fund to meet contingencies or for such
other purpose as the board of directors shall deem to be in the best interests
of the corporation, and the board of directors may modify or abolish any such
reserve.
ARTICLE VI.
Powers of Officers to Contract
With the Corporation
Any and all of the directors and officers of the corporation,
notwithstanding their official relations to it, may enter into and perform any
contract or agreement of any nature between the corporation and themselves, or
any and all of the individuals from time to time constituting the board of
directors of the corporation, or any firm or corporation in which any such
director may be interested, directly or indirectly, whether such individual,
firm or corporation thus contracting with the corporation shall thereby derive
personal or corporate profits or benefits or otherwise; provided, that (i) the
material facts of such interest are disclosed or are known to the board of
directors or committee thereof which authorizes such contract or agreement; (ii)
if the material facts as to such person's relationship or interest are disclosed
or are known to the stockholders entitled to vote thereon, and the contract is
specifically approved in good faith by a vote of the stockholders; or (iii) the
contract or agreement is fair as to the corporation as of the time it is
authorized, approved or ratified by the board of directors, a committee thereof,
or the stockholders. Any director of the corporation who is interested in any
transaction as aforesaid may nevertheless be counted in determining the
existence of a quorum at any meeting of the board of directors which shall
authorize
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or ratify any such transaction. This Article shall not be construed to
invalidate any contract or other transaction which would otherwise be valid
under the common or statutory law applicable thereto.
ARTICLE VII.
Indemnification
Section 7.1. Definitions. For purposes of this Article VII the
following terms shall have the meanings indicated:
"Corporate Status" describes the status of a person who is or was a
director, officer, employee, agent, trustee or fiduciary of the corporation or
of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the express
written request of the corporation.
"Court" means the court in which the Proceeding in respect of which
indemnification is sought by a Covered Person shall have been brought or is
pending, or another court having subject matter jurisdiction and personal
jurisdiction over the parties.
"Covered Person" means a person who is a present or former director or
officer of the corporation and shall include such person's legal
representatives, heirs, executors and administrators.
"Disinterested" describes any individual, whether or not that
individual is a director, officer, employee or agent of the corporation, who is
not and was not and is not threatened to be made a party to the Proceeding in
respect of which indemnification, advancement of Expenses or other action is
sought by a Covered Person.
"Expenses" shall include, without limitation, all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating or being or preparing to be a
witness in a Proceeding.
"Good Faith" shall mean a Covered Person having acted in good faith and
in a manner such Covered Person reasonably believed to be in to the best
interests of the corporation or, in the case of an employee benefit plan, the
best interests of the participants or beneficiaries of said plan, as the case
may be, and, with respect to any Proceeding which is criminal in nature, having
had no reasonable cause to believe such Covered Person's conduct was unlawful.
"Improper Personal Benefit" shall include, but not be limited to, the
personal gain in fact by reason of a person's Corporate Status of a financial
profit, monies or other advantage not also accruing to the corporation or to the
stockholders generally and which is unrelated to his usual compensation
including, but not limited to, (i) in exchange for the exercise of influence
over the corporation's affairs, (ii) as a result of the diversion of corporate
opportunity, or (iii) pursuant to the use or communication of confidential or
inside information for the purpose of generating a profit from trading in the
corporation's securities. Notwithstanding the foregoing, "Improper Personal
Benefit" shall not include any benefit, directly or indirectly, related to
actions taken in order to evaluate, discourage, resist, prevent or negotiate any
transaction with or proposal from any person or entity seeking control of, or a
controlling interest in, the corporation.
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"Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and may include law firms or
members thereof that are regularly retained by the corporation but not by any
other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the standards of professional conduct then
prevailing and applicable to such counsel, would have a conflict of interest in
representing either the corporation or Covered Person in an action to determine
the Covered Person's rights under this Article.
"Officer" means the president, vice presidents, treasurer, assistant
treasurer(s), secretary, assistant secretary and such other executive officers
as are appointed by the board of directors of the corporation and explicitly
entitled to indemnification hereunder.
"Proceeding" includes any actual, threatened or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation (including
any internal corporate investigation), administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, other than
one initiated by the Covered Person, but including one initiated by a Covered
Person for the purpose of enforcing such Covered Person's rights under this
Article to the extent provided in Section 7.14 of this Article. "Proceeding"
shall not include any counterclaim brought by any Covered Person other than one
arising out of the same transaction or occurrence that is the subject matter of
the underlying claim.
Section 7.2. Right to Indemnification in General.
(a) Covered Persons. The corporation may indemnify, and may advance
Expenses, to each Covered Person who is, was or is threatened to be made a party
or otherwise involved in any Pro ceeding, as provided in this Article and to the
fullest extent permitted by applicable law in effect on the date hereof and to
such greater extent as applicable law may hereafter from time to time permit.
The indemnification provisions in this Article shall be deemed to be a
contract between the corporation and each Covered Person who serves in any
Corporate Status at any time while these provisions as well as the relevant
provisions of the Massachusetts Business Corporation Law are in effect, and any
repeal or modification thereof shall not affect any right or obligation then
existing with respect to any state of facts then or previously existing or any
Proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a contract right may not be modified
retroactively without the consent of such Covered Person.
(b) Employees and Accents. The corporation may, to the extent
authorized from time to time by the board of directors, grant indemnification
and the advancement of Expenses to any employee or agent of the corporation to
the fullest extent of the provisions of this Article with respect to the
indemnification and advancement of Expenses of Covered Persons.
(c) Adverse Adjudication. Notwithstanding any provision of this Article
to the contrary, no indemnification shall be provided for any Covered Person
with respect to any matter as to which he shall have been adjudicated in any
Proceeding not to have acted in Good Faith.
Section 7.3. Proceedings Other Than Proceedings by or in the Right of
the Corporation. Each Covered Person may be entitled to the rights of
indemnification provided in this Section 7.3 if, by reason of such Covered
Person's Corporate Status, such Covered Person is, was or is threatened to be
made, a party to or is otherwise involved in any Proceeding, other than a
Proceeding by or in the
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right of the corporation. Each Covered Person may be indemnified against
Expenses, judgments, penalties, fines and amounts paid in settlements, actually
and reasonably incurred by such Covered Person or on such Covered Person's
behalf in connection with such Proceeding or any claim, issue or matter therein,
if such Covered Person acted in Good Faith and such Covered Person has not been
adjudged during the course of such proceeding to have derived an Improper
Personal Benefit from the transaction or occurrence forming the basis of such
Proceeding.
Section 7.4. Proceedings by or in the Right of the Corporation. Each
Covered Person may be entitled to the rights of indemnification provided in this
Section 7.4 if, by reason of such Covered Person's Corporate Status, such
Covered Person is, or is threatened to be made, a party to or is otherwise
involved in any Proceeding brought by or in the right of the corporation to
procure a judgment in its favor. Such Covered Person may be indemnified against
Expenses, judgments, penalties, and amounts paid in settlement, actually and
reasonably incurred by such Covered Person or on such Covered Person's behalf in
connection with such Proceeding if such Covered Person acted in Good Faith and
such Covered Person has not been adjudged during the course of such proceeding
to have derived an Improper Personal Benefit from the transaction or occurrence
forming the basis of such Proceeding. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any claim, issue or matter in such
Proceeding as to which such Covered Person shall have been adjudged to be liable
to the corporation if applicable law prohibits such indemnification; provided,
however, that, if applicable law so permits, indemnification shall nevertheless
be made by the corporation in such event if and only to the extent that the
Court which is considering the matter shall so determine.
Section 7.5. Indemnification of a Party Who is Wholly or Partly
Successful. Notwithstanding any provision of this Article to the contrary, to
the extent that a Covered Person is, by reason of such Covered Person's
Corporate Status, a party to or is otherwise involved in and is successful, on
the merits or otherwise, in any Proceeding, such Covered Person may be
indemnified to the maximum extent permitted by law, against all Expenses,
judgments, penalties, fines, and amounts paid in settlement, actually and
reasonably incurred by such Covered Person or on such Covered Person's behalf in
connection therewith. If such Covered Person is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the corporation may
indemnify such Covered Person to the maximum extent permitted by law, against
all Expenses, judgments, penalties, fines, and amounts paid in settlement,
actually and reasonably incurred by such Covered Person or on such Covered
Person's behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 7.5 and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
Section 7.6. Indemnification for Expenses of a Witness. Notwithstanding
any provision of this Article to the contrary, to the extent that a Covered
Person is, by reason of such Covered Person's Corporate Status, a witness in any
Proceeding, such Covered Person shall be indemnified against all Expenses
actually and reasonably incurred by such Covered Person or on such Covered
Person's behalf in connection therewith.
Section 7.7. Advancement of Expenses. Notwithstanding any provision of
this Article to the contrary, the corporation may advance all reasonable
Expenses which, by reason of a Covered Person's Corporate Status, were incurred
by or on behalf of such Covered Person in connection with any Proceeding, within
thirty (30) days after the receipt by the corporation of a statement or
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statements from such Covered Person requesting such advance or advances, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by the Covered Person
and shall include or be preceded or accompanied by an undertaking by or on
behalf of the Covered Person to repay any Expenses if such Covered Person shall
be adjudged to be not entitled to be indemnified against such Expenses. Any
advance and undertaking to repay pursuant to this Section 7.7 shall be
interest-free and made without reference to the financial ability of the Covered
Person to make such repayment, as the corporation sees fit. Advancement of
Expenses pursuant to this Section 7.7 shall not require approval of the board of
directors or the stockholders of the corporation, or of any other person or
body. The secretary of the corporation shall promptly advise the Board in
writing of the request for advancement of Expenses, of the amount and other
details of the request and of the undertaking to make repayment provided
pursuant to this Section 7.7.
Section 7.8. Notification and Defense of Claim. Promptly after receipt
by a Covered person of notice of the commencement of any Proceeding, such
Covered Person shall, if a claim is to be made against the corporation under
this Article, notify the corporation of the commencement of the Proceeding. The
failure to notify the corporation will not relieve the corporation from any
liability which it may have to such Covered Person otherwise than under this
Article. With respect to any such Proceedings to which such Covered Person
notifies the corporation:
(a) The corporation will be entitled to participate in the defense at
its own expense.
(b) Except as otherwise provided below in this subparagraph (b), the
corporation (jointly with any other indemnifying party similarly notified) will
be entitled to assume the defense with counsel reasonably satisfactory to the
Covered Person. After notice from the corporation to the Covered Person of its
election to assume the defense of a suit, the corporation will not be liable to
the Covered Person under this Article for any legal or other expenses
subsequently incurred by the Covered Person in connection with the defense of
the Proceeding other than reasonable costs of investigation or as otherwise
provided below in this subparagraph (b). The Covered Person shall have the right
to employ his own counsel in such Proceeding but the fees and expenses of such
counsel incurred after notice from the corporation of its assumption of the
defense shall be at the expense of the Covered Person except as provided in this
paragraph. The fees and expenses of counsel shall be at the expense of the
corporation if (i) the employment of counsel by the Covered Person has been
authorized by the corporation, (ii) the Covered Person shall have concluded
reasonably that there may be a conflict of interest between the corporation and
the Covered Person in the conduct of the defense of such action and such
conclusion is confirmed in writing by the corporation's outside counsel
regularly employed by it in connection with corporate matters, or (iii) the
corporation shall not in fact have employed counsel to assume the defense of
such Proceeding. The corporation shall be entitled to participate in, but shall
not be entitled to assume the defense of any Proceeding brought by or in the
right of the corporation or as to which the Covered Person shall have made the
conclusion provided for in (ii) above and such conclusion shall have been so
confirmed by the corporation's said outside counsel.
(c) Notwithstanding any provision of this Article to the contrary, the
corporation shall not be obligated to indemnify the Covered Person under this
Article for any amounts paid in settlement of any Proceeding effected without
its written consent. The corporation shall not settle any Proceeding or claim in
any manner which would impose any penalty, limitation or disqualification of the
Covered Person for any purpose without such Covered Person's written consent.
Neither the
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corporation nor the Covered Person will unreasonably withhold their consent to
any proposed settlement.
(d) If it is determined that the Covered Person is entitled to
indemnification other than as afforded under subparagraph (b) above, payment to
the Covered Person of the additional amounts for which he is to be indemnified
shall be made within ten (10) days after such determination.
Section 7.9. Procedures.
(a) Method of Determination. A determination (as provided for by this
Article or if required by applicable law in the specific case) with respect to a
Covered Person's entitlement to indemnification shall be made either (a) by the
board of directors by a majority vote of a quorum consisting of Disinterested
directors, or (b) in the event that a quorum of the board of directors
consisting of Disinterested directors is not obtainable or, even if obtainable,
such quorum of Disinterested directors so directs, by Independent Counsel in a
written determination to the board of directors, a copy of which shall be
delivered to the Covered Person seeking indemnification, or (c) by the vote of
the holders of a majority of the corporation's capital stock outstanding at the
time entitled to vote thereon.
(b) Initiating Request. A Covered Person who seeks indemnification
under this Article shall submit a Request for Indemnification, including such
documentation and information as is reasonably available to such Covered Person
and is reasonably necessary to determine whether and to what extent such Covered
Person is entitled to indemnification.
(c) Presumptions. In making a determination with respect to entitlement
to indemnification hereunder, the person or persons or entity making such
determination shall not presume that the Covered Person is or is not entitled to
indemnification under this Article.
(d) Burden of Proof. Each Covered Person shall bear the burden of going
forward and demonstrating sufficient facts to support his claim for entitlement
to indemnification under this Article. That burden shall be deemed satisfied by
the submission of an initial Request for Indemnification pursuant to Section
7.9(b) above.
(e) Effect of Other Proceedings. The termination of any Proceeding or
of any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of guilty or of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Article) of itself
adversely affect the right of a Covered Person to indemnification or create a
presumption that a Covered Person did not act in Good Faith.
Section 7.10. Action by the Corporation. Any action, payment, advance
determination other than a determination made pursuant to Section 7.9 (a) above,
authorization, requirement, grant of indemnification or other action taken by
the Corporation pursuant to this Article shall be effected exclusively through
any Disinterested person so authorized by the board of directors of the
Corporation, including the president or any vice president of the corporation.
Section 7.11. Non- Exclusivity. The rights of indemnification and to
receive advancement of Expenses as provided by this Article shall not be deemed
exclusive of any other rights to which a Covered Person may at any time be
entitled under applicable law, the Articles of Organization, these By-Laws, any
agreement, a vote of stockholders or a resolution of the board of directors, or
-15-
<PAGE>
otherwise. No amendment, alteration, rescission or replacement of this Article
or any provision hereof shall be effective as to an Covered Person with respect
to any action taken or omitted by such Covered Person in such Covered Person's
Corporate Status or with respect to any state of facts then or previously
existing or any Proceeding previously or thereafter brought or threatened based
in whole or to the extent based in part upon any such state of facts existing
prior to such amendment, alteration, rescission or replacement.
Section 7.12. Insurance. The corporation may maintain, at its expense,
an insurance policy or policies to protect itself and any Covered Person,
officer, employee or agent of the corporation or another enterprise against
liability arising out of this Article or otherwise, whether or not the
corporation would have the power to indemnify any such person against such
liability under the Massachusetts Business Corporation Law.
Section 7.13. No Duplicative Payment. The corporation shall not be
liable under this Article to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that a Covered Person has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise.
Section 7.14. Expenses of Adjudication. In the event that any Covered
Person seeks a judicial adjudication, or an award in arbitration, to enforce
such Covered Person's rights under, or to recover damages for breach of, this
Article, such Covered Person shall be entitled to recover from the corporation,
and shall be indemnified by the corporation against, any and all expenses (of
the types described in the definition of Expenses in Section 7.1 of this
Article) actually and reasonably incurred by such Covered Person in seeking such
adjudication or arbitration, but only if such Covered Person prevails therein.
If it shall be determined in such adjudication or arbitration that the Covered
Person is entitled to receive part but not all of the indemnification of
expenses sought, the expenses incurred by such Covered Person in connection with
such adjudication or arbitration shall be appropriately prorated.
Section 7.15. Severability. If any provision or provisions of this
Article shall be held to be invalid, illegal or unenforceable for any reason
whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Article (including without limitation, each portion of any
Section of this Article containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this Article
(including, without limitation, each portion of any Section of this Article
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
ARTICLE VIII.
Miscellaneous Provisions
Section 8.1. Articles of Organization. All references in these By-laws
to the Articles of organization shall be deemed to refer to the Articles of
Organization of the corporation, as amended and in effect from time to time.
-16-
<PAGE>
Section 8.2. Fiscal Year. Except as from time to time otherwise
provided by the board of directors, the fiscal year of the corporation shall end
on the last day of December of each year.
Section 8.3. Corporate Seal. The board of directors shall have the
power to adopt and alter the seal of the corporation.
ARTICLE IX.
Amendments
Section 9.1. Amendment by Stockholders. Prior to the issuance of stock,
these By-laws may be amended, altered or repealed by the incorporator(s) by
majority vote. After stock has been issued, these By-laws may be amended,
altered or repealed by the stockholders at any annual or special meeting by vote
of a majority of all shares outstanding and entitled to vote, except that where
the effect of the amendment would be to reduce any voting requirement otherwise
required by law, the Articles of organization or these By-laws, such amendment
shall require the vote that would have been required by such other provision.
Notice and a copy of any proposal to amend these By-laws must be included in the
notice of meeting of stockholders at which action is taken upon such amendment.
Section 9.2. Amendment by Board of Directors.
(a) These By-laws may be amended, altered or repealed by the board of
directors at a meeting duly called for the purpose by majority vote of the
directors then in office, except that directors shall not amend the By-laws in a
manner which:
(i) changes the stockholder voting requirements for any action;
(ii) alters or abolishes any preferential right or right of redemption
applicable to a class or series of stock with shares already outstanding;
(iii) alters the provisions of Articles VII or IX hereof; or
(iv) permits the board of directors to take any action which under law,
the Articles of Organization or these By-laws is required to be taken by the
stockholders.
(b) If the By-laws are amended or altered by the board of directors,
notice of the amendment, alteration or repeal shall be given to all stockholders
entitled to vote not later than the time of giving notice of the next meeting of
stockholders following such amendment, alteration or repeal.
(c) Any amendment of these By-laws by the board of directors may be
altered or repealed by the stockholders at any annual or special meeting of
stockholders.
-17-
<PAGE>
ARTICLES OF ORGANIZATION (Under G.L. Ch. 156B)
ARTICLE I.
The name of the corporation is:
Boylston Street Theatre Corp.
ARTICLE II.
The purpose of the corporation is to engage in the following
business activities:
To erect, equip, rent, lease, operate and manage public halls,
theaters, opera houses and places of amusement, and to produce, exhibit and
exploit therein attractions of various kinds and natures, including dramatic,
operatic and musical performances, concerts, motion pictures, intellectual and
instructive entertainments, and in general to carry on the business of
theatrical proprietors and producers for public entertainment and amusement;
To purchase, lease or otherwise acquire, to own, control, book, manage,
promote, produce and conduct any and all manner of amusement and theatrical
enterprises;
To purchase or otherwise acquire, hold, own, maintain, improve,
operate, mortgage, sell, convey, lease, sublease or otherwise deal in and
dispose of real and personal property of every kind, character and description
whatsoever in connection with the foregoing; and to carry on any other business
permitted by the laws of the Commonwealth of Massachusetts to a corporation
organized under Chapter 156B of said laws.
<PAGE>
ARTICLE III.
The type and classes of stock and the total number of shares and par value, if
any, of each type and class of stock which the corporation is authorized to
issue is as follows:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
<S> <C> <C> <C>
- --------------------------------- ------------------------------------------
TYPE Number of Shares TYPE Number of Shares Par Value
- --------------------------------- ------------------------------------------
Common: 200,000 Common: None
- --------------------------------- ------------------------------------------
Preferred: None Preferred: None
- --------------------------------- ------------------------------------------
</TABLE>
ARTICLE IV.
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class, if
shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special or
relative rights or privileges of that class and of each other class of which
shares are outstanding and of each series then established with any class.
None
ARTICLE V.
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are as follows:
See 5A
ARTICLE VI.
Other lawful provisions, if any, for the conduct and regulation of business and
affairs of the corporation, for its voluntary dissolution, or for limiting,
defining, or regulating the powers of the corporation, or of its directors or
stockholders, or of any class of stockholders: (if them are no provisions state
"None".)
See 6A
Note: The Preceding six (6) articles are considered to be permanent and may ONLY
be changed by filing appropriate Articles of Amendment.
2
<PAGE>
3
<PAGE>
-5A-
Any stockholder, including the heirs, assigns, executors or
administrators of a deceased stockholder, desiring to sell or transfer any
shares of common stock of this Corporation owned by him or them shall first
offer said shares to the Corporation through the Board of Directors in the
manner following:
He shall notify the Directors of his desire to sell or transfer by
notice in writing, which notice shall contain the price at which he is willing
to sell or transfer and the name of one arbitrator The Directors may at any time
within thirty days after receipt of the offer by notice in writing accept or
reject the offer or elect to have a price determined by three arbitrators.
Failure by the Directors within said period of thirty days to either accept or
reject said offer or to elect to have a price determined by arbitrators shall be
deemed to be a rejection of the offer by the Directors.
If the Directors elect to accept the offer, the Corporation shall
purchase the shares within thirty days after the date of the notice of such
election.
If the Directors elect to have a price determined by arbitrators, the
notice shall name a second arbitrator. The two arbitrators so named shall name a
third arbitrator. It shall then be the duty of the arbitrators to determine the
value of the stock. If any arbitrator shall neglect or refuse to appear at any
meeting called and noticed by the arbitrators, a majority may act in the absence
of such arbitrator. After the report of the arbitrators as to the value of the
stock the Directors shall have a period of thirty days in which to purchase the
same at such valuation.
If the Directors (a) elect to accept the offer and the Corporation
fails to purchase the shares within thirty days after such election; or (b)
elect to have a price determined by arbitrators and the Corporation fails to
purchase such shares within thirty days after such determination; or (c) reject
the offer, expressly or by reason of their failure to either accept or reject
the offer or to elect to have a price determined by arbitrators within thirty
days after receipt of the offer, the owner of the stock may at any time during
the period of sixty days thereafter dispose of the stock in any manner he may
see fit.
4
<PAGE>
No shares of stock shall be sold or transferred on the books of the
Corporation until these provisions have been complied with, but the Board of
Directors may in any particular instance or instances waive these provisions
with respect to any present or future sale or transfer including, without
limiting the generality of the foregoing, a sale or transfer at a future date or
upon the happening of a future event. In the event of any such waiver by the
Board of Directors, the owner of the stock may, at any time during the sixty
days following the date of such waiver, if such waiver be with respect to a
present sale or transfer, or during the sixty days following the date of the
future event or the happening of the future event, if such waiver be with
respect to a future sale or transfer, dispose of the stock in accordance with
said waiver.
-6A-
Meetings of the stockholders of the Corporation may be held anywhere in
the United States.
The Directors may make, amend, or repeal the By-Laws in whole or in
part except with respect to any provision thereof which by law or the By-Laws
requires action by the stockholders.
The Corporation may be a general or limited partner in any business
enterprise which the Corporation would have power to conduct by itself,
including general and limited partnerships.
The rights of a stockholder shall not be considered adversely affected
by an amendment of the Articles of Organization of the Corporation which creates
or alters any restrictions on transfers of stock, and any such amendment is
hereby expressly permitted.
No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section sixty-one or sixty-two of chapter
156B, or (iv) for any transaction from which the director derived an improper
personal benefit.
5
<PAGE>
ARTICLE VII.
The effective date of organization of the corporation shall be the date approved
and filed by the Secretary of the Commonwealth. If a later effective date is
desired, specify such date which shall not be more than thirty days after the
date of filing.
The information contained in ARTICLE VIII is NOT a PERMANENT part of the
Articles of Organization and maybe changed ONLY by filing the appropriate form
provided therefor.
ARTICLE VIII.
A. The post office address of the corporation IN MASSACHUSETTS
is:
1011 Beacon Street, Brookline, MA 02146
B. The name, residence and post office address (if different) of
the directors and officers of the corporation are as follows:
<TABLE>
<CAPTION>
POST OFFICE
NAME RESIDENCE ADDRESS
<S> <C> <C> <C>
President Jon B. Platt 1011 Beacon Street (same)
Brookline, MA 02146
Treasurer Jon B. Platt 1011 Beacon Street (same)
Brookline, MA 02146
Clerk Jon B. Platt 1011 Beacon Street (same)
Brookline, MA 02146
Directors Jon B. Platt 1011 Beacon Street (same)
Brookline, MA 02146
</TABLE>
C. The fiscal year of the corporation shall end on the last day
of the month of:
December
D. The name and BUSINESS address of the RESIDENT AGENT of the
corporation, if any, is: None
6
<PAGE>
ARTICLE IX.
By-laws of the corporation have been duly adopted and the president, treasurer,
clerk and directors whose names are set forth above, have been duly elected.
IN WITNESS WHEREOF and under the pains and penalties of perjury, I/WE, whose
signature(s) appear below as incorporator(s) and whose names and business or
residential address(es) ARE CLEARLY TYPED OR PRINTED beneath each signature do
hereby associate with the intention of forming this corporation under the
provisions of General Laws Chapter 156B and do hereby sign these Articles of
Organization as incorporator(s) this 5th day of September 1990.
/s/ George W. Tuttle
- ------------------------------------------------------------------------
George W. Tuttle, Sole Incorporator
c/o Widett, Slater & Goldman; 60 State Street, Boston, MA 02109
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
NOTE: If an already-existing corporation is acting as incorporator, type in
the exact name of the corporation, the state or other jurisdiction
where it was incorporated, the name of the person signing on behalf of
said corporation and the title he/she holds or other authority by which
such action is taken.
7
<PAGE>
BY-LAWS
of
BOYLSTON STREET THEATRE CORP.
ARTICLE I.
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders shall be
held on the fourth Friday in April in each year, except that, when that day
falls on a legal holiday, the meeting shall be held on the next succeeding
business day, at ten o'clock in the forenoon, unless a different hour is fixed
by the Directors or the President and stated in the notice of the meeting.
Purposes for which an annual meeting is to be held in addition to those
prescribed by law, by the Articles of organization or by these By-Laws may be
specified by the Directors or by a writing signed by the President and filed
with the Clerk. In the event an annual meeting has not been held on the date
fixed herein, a special meeting in lieu of annual meeting may be held with all
the force and effect of an annual meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called by the President or by the Directors, and shall be called by the Clerk,
or in case of the death, absence, incapacity or refusal of the Clerk, by any
other officer, upon written application of one or more stockholders who hold at
least one-tenth part in interest of the capital stock entitled to vote thereat.
Such call shall state the place, date, hour and purposes of the meeting.
Section 3. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the corporation or at such other place within,
or to the extent permitted by the Articles of organization, without the
Commonwealth of Massachusetts, as may be fixed by the Directors or by the
President and stated in the notice of the meeting.
Section 4. Notice of Meetings. A written notice of the place, date,
hour and purposes of all meetings of the stockholders shall be given by the
Clerk or an Assistant Clerk or, in case of the
<PAGE>
death, absence, incapacity or refusal of the Clerk and of the Assistant Clerk,
by any other officer or by a person designated either by the Clerk or by the
person or persons calling the meeting, or by the Directors, or by any other
person empowered to do so by law, at least seven days before the meeting or such
greater period as may be prescribed by law, to each stockholder entitled to vote
thereat and to each stockholder who, by law, by the Articles of organization or
by these By-Laws, is entitled to such notice, by leaving such notice with him or
at his residence or usual place of business, or by mailing it, postage prepaid,
and addressed to such stockholder at his address as it appears in the records of
the corporation. A written waiver of notice of a meeting executed before or
after the meeting by such stockholder or his attorney thereunto authorized and
filed with the records of the meeting, shall be deemed equivalent to such
notice.
Section 5. Quorum. A majority in interest of all stock issued,
outstanding and entitled to vote at a meeting shall constitute a quorum for such
meeting, but a lesser interest may by majority vote adjourn the meeting from
time to time and the meeting may be held as adjourned without further notice.
Section 6. Voting. Stockholders entitled to vote shall have one vote
for each share of stock owned by them and a proportionate vote for a fractional
share.
Section 7. Proxies. Stockholders may vote in person or by proxy.
Proxies shall be filed with the Clerk of the meeting before being voted. No
proxy dated more than six months before the meeting named therein shall be valid
and no proxy shall be valid after the final adjournment of such meeting. A proxy
with respect to stock held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
corporation receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a stockholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger.
Section 8. Action at meeting. When a quorum is present at any meeting,
the vote or concurrence of a majority in interest of the stock present or
represented and entitled to vote thereat shall be required to decide any matter
or take any action, except to the extent that a greater proportion is required
by law, or the Articles of Organization or these By-Laws.
-2-
<PAGE>
Section 9. Action without Meeting. Any action required or permitted to
be taken at any meeting of the stockholders may be taken without a meeting if
all stockholders entitled to vote on the matter consent to the action in writing
and the written consents are filed with the records of the meetings of
stockholders. Such consents shall be treated for all purposes as a vote at a
meeting.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Powers. The business of the corporation shall be managed by
a Board of Directors who may exercise all the powers of the corporation except
such as by law, by the Articles of Organization or by the By-Laws of the
corporation are conferred upon or reserved to the stockholders. The Board of
Directors may at any time, and from time to time, offer for sale, sell and issue
the whole or any part of the unissued capital stock of the corporation
authorized by the Articles of organization of the corporation or by any
amendment thereof to such person or persons, trusts, corporations or other legal
entities, for such cash or other lawful consideration for which stock may be
issued and on such terms as said Board may determine and, subject to the
applicable provisions of law, may allocate any such consideration between the
capital and surplus of the corporation in such proportions as said Board may
determine.
Section 2. Number. There shall be not less than three Directors, except
that whenever there shall be only two stockholders the number of Directors shall
be not less than two and whenever there shall be only one stockholder the number
of Directors shall be not less than one. Subject to the provi sions of the
foregoing sentence, the number of Directors for each corporate year shall be
fixed by vote at the meeting at which they are elected, but the stockholders may
at any special meeting held for the purpose during any such year increase or
decrease the number of Directors thus fixed and elect new Directors to complete
the number so fixed or remove Directors to reduce the number of Directors to the
number so fixed. No Director need be a stockholder.
Section 3. Election. The Directors shall be elected at the annual
meeting of the stockholders or the special meeting in lieu of said annual
meeting by such stockholders as have the right to vote
-3-
<PAGE>
thereon. Elections of Directors shall be by ballot if so requested by any
stockholder entitled to vote thereon.
Section 4. Tenure. Subject to law, to the Articles of Organization and
to the other provisions of these By-Laws, each Director shall hold office until
the next annual meeting of the stockholders and until his successor is chosen
and qualified. Any Director may resign by delivering his written resignation to
the corporation at its principal office or to the President or Clerk. Such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
Section 5. Regular Meetings. Regular meetings of the Directors may be
held without call or notice at such place and at such times as the Directors may
from time to time determine. A regular meeting of the Directors following the
annual meeting of the stockholders or the special meeting. in lieu of such
meeting may be held without call or notice immediately after and at the same
place as the meeting of the stockholders.
Section 6. Special Meetings. Special meetings of the Directors may be
held at any time and at any place when called by the President, the Treasurer,
or one or more Directors.
Section 7. Notice of Meetings. A written notice of the place, date and
hour of all special meetings of the Directors shall be given by the Clerk or an
Assistant Clerk or by the officer or the Director or Directors calling the
meeting, to each Director by mail or telegram addressed to such Director at his
usual or last known business or residence address, or at such other address as
said Director may from time to time designate in writing, or by leaving such
notice with him or at his usual or last known business or residence address, or
at such other address as said Director may from time to time designate in
writing. Notice also may be given by telephone. Notice sent by mail shall be
mailed at least forty-eight hours before the meeting. Notice sent by telegram or
given by telephone or by leaving such notice as aforesaid shall be sent or
given, as the case may be, at least twenty-four hours before the meeting. Notice
of a meeting need not be given to any Director if a waiver of notice, executed
by him before or after the meeting, is filed with the records of the meeting, or
to any Director who attends the meeting without protesting prior thereto, or at
its commencement, the lack of notice to him.
-4-
<PAGE>
Section 8. Quorum. A majority of the number of Directors constituting
the full Board of Directors as fixed by the stockholders shall constitute a
quorum for a meeting but a lesser number may by majority vote adjourn the
meeting from time to time and the meeting may be held as adjourned without
further notice.
Section 9. Action at Meeting. When a quorum is present at any meeting,
the vote or concurrence of a majority of the number of Directors present shall
be required to decide any matter or take any action except to the extent that a
greater proportion is required by law, or the Articles of Organization or these
By-Laws.
Section 10. Action without Meeting. Any action required or permitted to
be taken at any meeting of the Directors may be taken without a meeting if all
the Directors consent to the action in writing and the written consents are
filed with the records of the meetings of Directors. Such consents shall be
treated for all purposes as a vote at a meeting.
Section 11. Committees. The Directors may elect from their number an
executive committee or other committees and may delegate thereto some or all of
their powers except those which by law, the Articles of organization or these
By-Laws they are prohibited from delegating. Except as the Directors may
otherwise determine, any such committee may make the rules for the conduct of
its business, but, unless otherwise provided by the Directors or in such rules,
its business shall be conducted as nearly as may be in the same manner as is
provided by these By-Laws for the Directors.
Section 12. Telephonic Meetings. A quorum of Directors may participate
in a meeting by means of a conference telephone call or use of similar
communications equipment, provided that all Directors participating in such a
meeting can hear each other. Such participation shall constitute presence in
person at a meeting. All of the provisions of these By-Laws pertaining to
meeting procedure shall apply to such meetings.
ARTICLE III.
OFFICERS
-5-
<PAGE>
Section 1. Designation. The officers shall be a President, a Treasurer,
a Clerk and such other officers, including one or more Vice Presidents,
Assistant Treasurers, Assistant Clerks and secretary, as the Directors may
determine. No officer need be a stockholder.
Section 2. Election. The President, Treasurer and Clerk shall be
elected by the Directors at their first meeting following the annual meeting of
the stockholders. Other officers may be chosen by the Directors at such meeting
or at any other meeting.
Section 3. Qualification. The President may, but need not, be a
Director. The Clerk shall be a resident of the Commonwealth of Massachusetts
unless the Corporation has a resident agent appointed for the purpose of service
of process. So far as is permitted by law, any two or more offices may be held
by the same person.
Section 4. Tenure. Subject to law, to the Articles of Organization and
to the other provisions of these By-Laws, the President, Treasurer and Clerk
shall each hold office until the first meeting of the Directors following the
annual meeting of the stockholders and thereafter until his successor is chosen
and qualified. All other officers shall each hold office until the first meeting
of the Directors following the annual meeting of the stockholders and thereafter
until his successor is chosen and qualified unless a shorter term is specified
in the vote choosing or appointing him.
Subject to law, to the Articles of Organization and to these By-Laws,
each officer shall have in addition to the duties and powers herein set forth
such duties and powers as are commonly incident to his office and such duties
and powers as the Directors may from time to time designate. Any officer may
resign by delivering his written resignation to the corporation at its principal
office or to the President or Clerk and such resignation shall be effective upon
receipt unless it is specified to be effective at some other time or upon the
happening of some other event.
Section 5. President and Vice Presidents. The President shall be the
chief executive officer of the corporation and shall, subject to the direction
of the Directors, have general supervision and control of its business. Unless
otherwise provided by the Directors, he shall preside, when present, at all
meetings of stockholders and of the Directors. The President shall have the
custody of the Treasurer's bond if such a bond is required by the Directors. Any
Vice President shall have such duties and powers as the Directors may from time
to time designate.
-6-
<PAGE>
Section 6. Treasurer and Assistant Treasurers. The Treasurer shall,
subject to the direction of the Directors, have general charge of the financial
affairs of the corporation and shall cause to be kept accurate books of account.
He shall have care and custody of all funds, securities and valuable documents
of the corporation except as the Directors may otherwise provide. If required by
the Directors, he shall give bond for the faithful performance of his duties in
such form and with such sureties as the Directors may determine. Any Assistant
Treasurer shall have such duties and powers as the Directors may from time to
time designate.
Section 7. Clerk and Assistant Clerks. The Clerk shall keep the
original or attested copies of the Articles of organization, these By-Laws,
records of all meetings of Incorporators, all meetings and consents in lieu of
meetings of stockholders and, unless a transfer agent is appointed, the stock
and transfer records which shall contain the names of all stockholders and the
record address and amount of stock held by each. Such copies and records shall
be kept in this Commonwealth and shall be open at all reasonable times for
inspection by the stockholders of the corporation at the principal office of the
corporation or at an office of its transfer agent or its Clerk or its resident
agent. Said copies and records need not be kept in the same office. In case a
Secretary is not elected, the Clerk shall also keep records of all meetings and
consents in lieu of meetings of the Directors. The Assistant Clerk, if any,
shall record the proceedings of any meeting of stockholders and, if a Secretary
is not elected, of any meeting of the Directors at which the Clerk is not
present, and shall have such additional powers and duties as the Directors may
designate. In the absence of the Clerk and the Assistant Clerk, if any, from any
meeting of stockholders or from any meeting of the Directors, if a Secretary is
not elected, a Temporary Clerk shall be chosen who shall perform the duties of
the Clerk.
Section 8. Secretary. If a Secretary is elected, he shall keep a record
of the meetings of the Directors. In the absence of such Secretary from any
meeting of the Directors, a Temporary Secretary shall be chosen who shall
perform the duties of the Secretary.
-7-
<PAGE>
ARTICLE IV.
REMOVALS
Directors may be removed from office with or without cause by the
stockholders. Officers elected or appointed by the Directors may be removed from
their respective offices with or without cause by the Directors. Any Director
may be removed from office for cause by the Directors. A Director or officer may
be removed for cause only after a reasonable notice and opportunity to be heard
before the body proposing to remove him. The Directors may terminate the
authority of any agent.
ARTICLE V.
VACANCIES
If the office of any Director becomes vacant for any reason, a
successor or successors may be elected by the stockholders or, except in the
case of a vacancy resulting from the enlargement of the Board of Directors, by
the Directors. In the case of a vacancy in the office of Director resulting from
the enlargement of the Board of Directors, a new Director may be elected by the
stockholders only. In the case of a vacancy in any other office for any reason,
the Directors may elect or appoint a successor or successors. Each such
successor elected by the stockholders or elected or appointed by the Directors,
as the case may be, shall hold office for the unexpired term, subject to the
provisions of ARTICLE IV of these By-Laws.
ARTICLE VI.
COMPENSATION OF DIRECTORS AND OFFICERS
By vote of the Board of Directors, each Director may be paid for
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a stated salary as Director or a fixed sum for attendance at each
meeting of the Board of Directors, or both. No such payment shall preclude any
Director from serving the corporation in any other capacity and receiving
compensation
-8-
<PAGE>
therefor. The salaries of officers shall be fixed from time to time by the Board
of Directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the corporation.
ARTICLE VII.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Any person threatened with or made a party to any action, suit or other
proceeding by reason of the fact that he, his testator or intestate, is or was a
Director, officer, employee or other agent of the corporation or is or was a
Director, officer, employee or other agent of another organization in which the
corporation directly or indirectly owns or owned shares or of which the
corporation is or was a creditor and in which he, his testator or intestate,
served at the request of the corporation, shall be indemnified by the
corporation against all liabilities and expenses, including counsel fees
reasonably incurred by him in connection therewith, except that no
indemnification shall be provided for any person with respect to any matter as
to which he shall have been adjudicated in any proceeding not to have acted in
good faith in the reasonable belief that his action was in the best interests of
the corporation; provided, however, as to matters disposed of by a compromise
payment by such person, pursuant to a consent decree or otherwise, no
reimbursement, either for said payment or for any other expenses in connection
with the matter so disposed of, shall be provided unless such compromise shall
be approved
(a) by a disinterested majority of the Directors then in office,
or
(b) if a majority of the Directors are interested, by a majority
of the disinterested Directors then in office, provided that
there has been obtained an opinion in writing of independent
legal counsel to the effect that such Director or officer does
not appear not to have acted in good faith in the reasonable
belief that his action was in the best interests of the
corporation, or
(c) by the holders of a majority of the outstanding stock at the
time entitled to vote for Directors, not counting as
outstanding any stock owned by any interested person.
-9-
<PAGE>
The Board of Directors may from time to time authorize the payment by the
corporation of expenses incurred by any such person in defending any such
action, suit or other proceeding in advance of the final disposition of such
action, suit or other proceeding, upon receipt of an undertaking from such
person to repay such payment if he shall be adjudicated to be not entitled to
indemnification under this ARTICLE VII or if the matter involved shall be
disposed of by a compromise payment with respect to which he shall not be
entitled to indemnification under this ARTICLE VII.
ARTICLE VIII.
POWERS OF DIRECTORS AND OFFICERS
TO CONTRACT WITH THE CORPORATION
No contract or transaction between the corporation and one or more of
its Directors or officers, or between the corporation and any other corporation,
firm, association or other entity in which one or more of its Directors or
officers are Directors or officers or are financially interested, shall be
either void or voidable for this reason alone provided that such common
directorship, officership or financial interest, if material, is disclosed or
known to each of the Directors voting or concurring on the matter of the
approval of such contract or transaction. Common or interested Directors may be
counted in determining the presence of a quorum at such meeting, and such common
or interested Directors may vote on the matter of the approval of such contract
or transaction, provided that any such vote shall require the affirmative vote
of a majority of the Directors who have no interest in such contract or
transaction, even though the disinterested Directors be less than a quorum.
ARTICLE IX.
CAPITAL STOCK
Section 1. Certificates of Stock. Each stockholder shall be entitled to
a certificate stating the number and the class and the designation of the
series, if any, of the shares, including a fractional share, if any, held by
him, in such form as shall in conformity to law be prescribed from time to time
by the Directors. Such certificate shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer and sealed with the
corporate seal. Such signatures or the seal
-10-
<PAGE>
of the corporation, or either or both the signatures and such seal, may be
facsimiles if the certificate is signed by a transfer agent or by a registrar
other than a Director, officer or employee of the corporation. It shall be the
duty of each stockholder to notify the corporation of his post office address.
Section 2. Transfers. Subject to the restrictions, if any, in the
Articles of Organization, transfers of shares of the corporation shall be made
only on the stock record books of the corporation by the holder of record
thereof or by his legal representative who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Clerk of the corporation and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
Section 3. Record Date. The Directors may fix in advance a time of not
more than sixty (60) days preceding the date of any meeting of stockholders or
the date for the payment of any dividend or the making of any distribution to
stockholders, or the last day on which the consent or dissent of stockholders
may be effectively expressed for any purpose, as the record date for determining
the stockholders having the right to notice of and to vote at such meeting, and
any adjournment thereof, or the right to receive such dividend or distribution
or the right to give such consent or dissent. In such case, only stockholders of
record on such record date shall have such right, notwithstanding any transfer
of stock on the books of the corporation after the record date. Without fixing
such record date, the Directors may for any such purposes close the transfer
books for all or any part of such period. If no record date is fixed and the
transfer books are not closed, the record date for determining stockholders
having the right to notice of or to vote at a meeting of the stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, and the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
acts with respect thereto.
Section 4. Replacement of Certificate. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof upon such terms and conditions as the Directors may
prescribe in conformity to law.
ARTICLE X.
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<PAGE>
SEAL
The seal of the corporation shall, subject to alteration by the
Directors, consist of a flat-faced circular die with the name of the
corporation, the word "Massachusetts" and the year of its incorporation.
ARTICLE XI.
EXECUTION OF INSTRUMENTS
Except as the Directors may generally or in particular cases authorize
the execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the corporation, shall be signed by the President or the Treasurer.
ARTICLE XII.
VOTING OF SECURITIES
Except as the Directors may otherwise designate, the President or the
Treasurer may waive notice of, and attend and vote at, any meeting of
stockholders or shareholders of any other corporation or organization in which
this corporation holds stock or shares and may consent in writing to any action
of the stockholders or shareholders of any such corporation or organization, and
may appoint any person or persons to act as proxy or attorney-in-fact for this
corporation, with or without power of substitution, to do any of such acts.
ARTICLE XIII.
FISCAL YEAR
Except as from time to time otherwise determined by the Directors, the
fiscal year of the corporation shall end on the thirty-first day of December in
each year.
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<PAGE>
ARTICLE XIV.
AMENDMENTS
These By-Laws may be altered, amended or repealed at any meeting of the
stockholders. If so authorized by the Articles of Organization, the Directors
may make, amend, or repeal these By-Laws in whole or in part, except that no
amendment may be made by the Directors which alters the provisions of these
By-Laws with respect to removal of Directors or the election of committees by
Directors and delegation of powers thereto, or amendment of these By-Laws, or
with respect to any provision thereof which by law, the Articles of organization
or these By-Laws requires action by the stockholders. Not later than the time of
giving notice of the meeting of stockholders next following the making, amending
or repealing by the Directors of any By-Law, notice thereof stating the
substance of such change shall be given to all stockholders entitled to vote on
amending By-Laws. Any By-Law adopted by the Directors may be amended or repealed
by the stockholders.
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<PAGE>
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
BROADWAY SERIES ASSOCIATES, INC.
I, SUE ANNE GILROY, Secretary of State of Indiana, hereby certify that Articles
of Incorporation of the above corporation have been presented to me at my office
accompanied by the fees prescribed by law; that I have found such Articles
conform to law; all as prescribed by the provisions of the Indiana Business
Corporation law, as amended.
NOW, THEREFORE, I hereby issue to such corporation this Certificate of
Incorporation, and further certify that its corporate existence will begin
February 19, 1996.
In Witness Whereof, I have hereunto
set my hand and affixed the seal of
the State of Indiana, at the City of
Indianapolis, this Nineteenth day of
February , 1996.
/s/ Sue Ann Gilroy
-----------------------------------
SUE ANNE GILROY, Secretary of State
1
<PAGE>
ARTICLES OF INCORPORATION
Name of Corporation
BROADWAY SERIES ASSOCIATES, INC.
Name of Registered Agent
ALAN MEREDITH, ESQ.
Address of Registered Office
821 Mount Tabor Road, Suite 304
New Albany, Indiana 47150
Principal Address of Corporation
611 West Main Street
Louisville, KY 40202
Number of shares - 100
- -------------------------------------------------------------------------------
Name Address City State Zip
- -------------------------------------------------------------------------------
BRADLEY L. BROECKER 611 WEST MAIN STREET LOUISVILLE KY 40202
- -------------------------------------------------------------------------------
16th February, 1996
/s/ Bradley L. Broecker
- -----------------------
Bradley L. Broecker
Amy Broecker Kessler, Esq.
611 West Main Street, Louisville, KY 40202
2
<PAGE>
REGULATIONS
OF
BROADWAY SERIES ASSOCIATES, INC.
Article I
Shareholders
Section 1. Annual Meeting. Than annual meeting of shareholders shall be held
in the fourth month following the close of each fiscal year of the corporation
on such date as the board of directors may from time to time determine.
Section 2. Place of Meeting. All meetings of shareholders shall be held at
the principal office of the corporation or at such other place within or without
the State of Indiana as may be designated in the notice of the meeting.
Section 3. Quorum. At all meetings of shareholders, a majority of the shares
issued and outstanding and entitled to vote, the holders of which are present in
person or represented by proxy, shall constitute a quorum.
Article II
Board of Directors
Section 1. Number. The board of directors shall consist of such number as
shall be fixed from time to time at any meeting of shareholders called for the
purpose of electing directors.
Section 2. Meetings. An organizational meeting of the board of directors may
be held, without notice, immediately after the annual meeting of shareholders
for the purpose of electing officers and attending to such other business as
properly may come before the meeting. Additional meetings may be held at such
times as may be determined from time to time by the board of directors.
Section 3. Committees. The board of directors may create an executive
committee or any other committee of the directors to consist of not less than
two directors and may delegate to any such committee any of the authority of the
board, however conferred, other than that of filling vacancies among the
directors or in any committee of the board.
<PAGE>
Article III
Officers
Section 1. Number and title. The officers of the corporation shall consist of
a president, such number of vice presidents as the board of directors may from
time to time determine, a secretary, a treasurer and such other officers and
assistant officers as the board of directors may from time to time determine.
Section 2. Authority and Duties. Subject to such limitations as the board of
directors may from time to time prescribe, the officers shall each have such
powers and perform such duties as generally pertain to their respective offices
and such further powers and duties as my be conferred from time to time by the
board of directors or, in the case of any officers other than the president by
the president.
Section 3. Term. Each officer shall hold office for one year and until his or
her successor is duly elected and qualified.
Article IV
Indemnification
The corporation shall, to the full extent permitted by the General
Corporation Law of Indiana as amended from time to time, indemnify all persons
whom it may indemnify pursuant thereto.
Article V
Certificates for Shares
If any certificate for shares of the corporation is lost, stolen or
destroyed, a new certificate may be issued upon such terms or under such rules
as the board of directors may from time to time determine or adopt.
Article VI
Seal
The board of directors may provide for a corporate seal if they so lect, but
such seal shall not be required.
Article VII
Fiscal Year
The fiscal year of the corporation shall end on December 31 st or such other
date as the board of directors may from time to time determine.
-2-
<PAGE>
ARTICLES OF INCORPORATION
OF
BROADWAY SERIES MANAGEMENT GROUP, INC.
The undersigned, desiring to form a corporation for profit under the
General Corporation Law of Ohio, does hereby certify:
FIRST: The name of the corporation is Broadway Series Management Group,
Inc.
SECOND: The place in Ohio where the principal office of the corporation
is to be located is Cincinnati, Hamilton County, Ohio.
THIRD: The purpose for which the corporation is formed is to engage in
any lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The number of shares which the corporation is authorized to
have outstanding is 200, all of which shall be common shares without par value.
FIFTH: The corporation by action of its board of directors may purchase
its own shares at any time and from time to time to the extent permitted by law.
IN WITNESS WHEREOF, the undersigned porator has signed these Articles
of Incorporation on this 9th day of May, 1988.
/s/ F.E.G.
---------------------
Fern E. Goldman, Esq.
Incorporator
<PAGE>
REGULATIONS
OF
BROADWAY SERIES MANAGEMENT GROUP, INC.
ARTICLE I
Shareholders
Section 1. Annual Meeting. The annual meeting of shareholders shall be
held in the fourth month following the close of each fiscal year of the
corporation on such date as the board of directors may from time to time
determine.
Section 2. Place of Meeting. All meetings of shareholders shall be held
at the principal office of the corporation or at such other place within or
without the State of Ohio as may be designated in the notice of the meeting.
Section 3. Quorum. At all meetings of shareholders, a majority of the
shares issued and outstanding and entitled to vote, the holders of which are
present in person or represented by proxy, shall constitute a quorum.
ARTICLE II
Board of Directors
Section 1. Number. The board of directors shall consist of such number
as shall be fixed from time to time at any meeting of shareholders called for
the purpose of electing directors.
Section 2. Meetings. An organizational meeting of the board of
directors may be held, without notice, immediately after the annual meeting of
shareholders for the purpose of electing officers and attending to such other
business as properly may come before the meeting. Additional meetings may be
held at such times as may be determined from time to time by the board of
directors.
Section 3. Committees. The board of directors may create an executive
committee or any other committee of the directors to consist of not less than
two directors and may delegate to any such committee any of the authority of the
board, however conferred, other than that of filling vacancies among the
directors or in any committee of the board.
ARTICLE III
Officers
Section 1. Number and Title. The officers of the corporation shall
consist of a president, such number of vice presidents as the board of directors
may from time to time determine, a
<PAGE>
secretary, a treasurer and such other officers and assistant officers as the
board of directors may from time to time determine.
Section 2. Authority and Duties. Subject to such limitations as the
board of directors may from time to time prescribe, the officers shall each have
such powers and perform such duties as generally pertain to their respective
offices and such further powers and duties as may be conferred from time to time
by the board of directors or, in the case of any officer other than the
president, by the president.
Section 3. Term. Each officer shall hold office for one year and until
his or her successor is duly elected and qualified.
ARTICLE IV
Indemnification
The corporation shall, to the full extent permitted by the General
Corporation Law of Ohio as amended from time to time, indemnify all persons whom
it may indemnify pursuant thereto.
ARTICLE V
Certificates for Shares
If any certificate for shares of the corporation is lost, stolen or
destroyed, a new certificate may be issued upon such terms or under such rules
as the board of directors may from time to time determine or adopt.
ARTICLE VI
Seal
The board of directors may provide for a corporate seal if they so
elect, but such seal shall not be required.
ARTICLE VII
Fiscal Year
The fiscal year of the corporation shall end on December 31st or such
other date as the board of directors may from time to time determine.
<PAGE>
STATE OF CALIFORNIA, SECRETARY OF STATE - CORPORATION DIVISION
I, BILL JONES, Secretary of State of the State of California, hereby
certify: That the annexed transcript has been compared with the corporate record
on file in this office, of which it purports to be a copy, and that same is
full, true and correct.
IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal
of the State of California this
JUL 13 1995
/s/ Bill Jones
<PAGE>
ARTICLES OF INCORPORATION
OF
CAMARILLO AMPHITHEATER MANAGING PARTNERS, INC.
I
The name of this Corporation is CAMARILLO AMPHITHEATER MANAGING
PARTNERS, INC.
II
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Laws of the State of California, other than the banking business, the trust
company business, or the practice of a profession permitted to be incorporated
by the California Corporations Code.
III
The name and address of the person appointed to act as initial agent
for service of process in this State is:
RICHARD M. ROSENTHAL
6345 BALBOA BOULEVARD, SUITE 330
ENCINO, CALIFORNIA 91316
IV
This Corporation is authorized to issue only one class of shares of
stock and the number of shares this Corporation is authorized to issue is one
hundred thousand (100,000).
IN WITNESS THEREOF, I, the undersigned have executed these Articles of
incorporation on July 10, 1995, at Encino, California.
/s/ R.E.G.
- ------------------------------
ROBERT E. GEDDES, Incorporator
<PAGE>
BYLAWS
OF
CAMARILLO AMPHITHEATER MANAGING PARTNERS, INC.,
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE.
The principal office for the transaction of business of the Corporation
is hereby fixed and located at 6345 Balboa Boulevard, in Encino, California. The
location may be changed by approval of a majority of the authorized Directors,
and additional offices may be established and maintained at such other place or
places, either within or without California, as the Board of Directors may from
time to time designate.
SECTION 2. OTHER OFFICES.
Branch or subordinate offices may at any time be established by the
Board of Directors at any place or places where the Corporation is qualified to
do business.
ARTICLE II
DIRECTORS-MANAGEMENT
SECTION 1. RESPONSIBILITY OF BOARD OF DIRECTORS.
Subject to the provisions of the General Corporation Law and to any
limitations in the Articles of Incorporation of the Corporation relating to
action required to be approved by the Shareholders, as that term is defined in
Section 153 of the California Corporations Code, or by the outstanding shares,
as that term is defined in Section 152 of the Code, the business and affairs of
the Corporation shall be managed and all corporate powers shall be exercised by
or under the direction of the Board of Directors. The Board may delegate the
management of the day-to-day operation of the business of the Corporation to a
management company or other person, provided that the business and affairs of
the Corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board.
SECTION 2. STANDARD OF CARE.
Each Director shall perform the duties of a Director, including the
duties as a member of any committee of the Board upon which the Director may
serve, in good faith, in a manner such Director believes to be in the best
interests of the Corporation, and with such care, including reasonable inquiry,
as any ordinary prudent person in a like position would use under similar
circumstances.
(Sec. 309)
SECTION 3. EXCEPTION FOR CLOSE CORPORATION.
Notwithstanding the provisions of Section 1, in the event that this
Corporation shall elect to become a close corporation as defined in Sec. 158,
its Shareholders may enter into a Shareholders' Agreement as defined in Sec.
186. Said agreement may provide for the exercise of corporate powers
<PAGE>
and the management of the business and affairs of the this Corporation by the
Shareholders; provided, however, that such agreement shall, to the extent and so
long as the discretion or the powers of the Board in its management of corporate
affairs is controlled by such agreement, impose upon each Shareholder who is a
party thereof, liability for managerial acts performed or omitted by such person
pursuant thereto otherwise imposed upon directors as provided in Sec. 300(d);
and the Directors shall be relieved to that extent from such liability.
SECTION 4. NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors shall be one (1) until changed by a
duly adopted amendment to the Articles of Incorporation or by an amendment to
this Bylaw adopted by the vote or written consent of holders of a majority of
the outstanding shares entitled to vote, as provided in Sec. 212
SECTION 5. ELECTION AND TERM OF OFFICE OF DIRECTORS.
Directors shall be elected at each annual meeting of the shareholders
to hold office until the next annual meeting. Each Director, including a
director elected to fill a vacancy, shall hold office until the expiration of
the term for which elected and until a successor has been elected and qualified.
SECTION 6. VACANCIES.
Vacancies in the Board of Directors may be filled by a majority of the
remaining Directors, though less than a quorum, or by a sole remaining Director,
except that a vacancy created by the removal of a Director by the vote or
written consent of the Shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of a majority of
the outstanding shares entitled to vote. Each Director so elected shall hold
office until the next annual meeting of the shareholders and until a successor
has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in the event of the death, resignation, or removal of any Director, or if
the Board of Directors by resolution declares vacant the office of a Director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of Directors is increased, or if the
Shareholders fail, at any meeting of Shareholders at which any Director or
Directors are elected, to elect the number of directors to be voted for at that
meeting.
The Shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the
Chairman of the Board, the President, the Secretary, or the Board of Directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a Director is effective at a future time, the
Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any Director before that Director's term of office expires.
-2-
<PAGE>
SECTION 7. REMOVAL OF DIRECTORS.
The entire Board of Directors or any individual director may be removed
from office as provided by Secs. 302, 303, and 304 of the Corporations Code of
the State of California. In such case, the remaining Board members may elect a
successor Director to fill such vacancy for the remaining unexpired term of the
Director so removed.
SECTION 8. NOTICE, PLACE AND MANNER OF MEETINGS.
Meetings of the Board of Directors may be called by the Chairman of the
Board, the President, any Vice President, the Secretary or any two (2) Directors
and shall be held at the principal executive office of the Corporation, unless
some other place is designated in the notice of the meeting. Members of the
Board may participate in a meeting through use of a conference telephone or
similar communications equipment so long as all members participating in such a
meeting can hear one another. Accurate minutes of any meeting of the Board, or
any committee thereof, shall be maintained as required by Sec. 1500 of the Code
by the Secretary or other Officer designed for that purpose.
SECTION 9. ANNUAL MEETINGS.
The annual meetings of the Board of Directors shall be held immediately
following the adjournment of the annual meetings of the Shareholders.
SECTION 10. OTHER REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at the
corporate offices, or such other place as may be designated by the Board of
Directors, as follows:
Time of Regular Meeting: NONE
Date of Regular Meeting: NONE
If said day shall fall upon a holiday, such meetings shall be held on
the next succeeding business day thereafter. No notice need be given of such
regular meetings.
SECTION 11. SPECIAL MEETINGS.
(a) Authority to Call. Special meetings of the Board may be called at
any time by the President or, if he or she is absent or unable or refuses to
act, by any Vice President, the Secretary, or any two (2) Directors, or by one
(1) Director if only one is provided.
(b) Notice.
(i) Manner of Giving Notice. Notice of the time and place of
special meetings shall be given or sent to each Director (to the address and/or
telephone number as shown on the records of the Corporation) by one of the
following methods:
[A] By personal delivery of written notice;
[B] By first-class mail, postage pre-paid;
[C] By telephone, either directly to the Director or to a
person at the Director's office who would resonably be expected to communicate
that notice promptly to the Director; or
[D] By telegram, charges prepaid
-3-
<PAGE>
(ii) Time Requirements. Notices sent by first-class mail shall
be deposited in the United Stated mails at least four (4) days before the time
set for the meeting. Notices given by personal delivery, telephone or telegraph
shall be delivered, telephoned or given to the telegraph company at least
fourty-eight (48) hours before the time set for the meeting.
(iii) Notice Contents. The notice shall state the time of the
meeting, as well as the place of the meeting, if the place is other than the
principal office of the Corporation. It need not specify the purpose of the
meeting.
(iv) Waiver of Notice. The transactions of a meeting of the
Board are as valid as if had at a meeting regularly called and noticed when (1)
all of the Directors are present at any Directors' meeting, however called or
noticed, and sign a written consent thereto on the records of such meeting, (2)
a majority of the Directors are present, and those not present sign a waiver of
notice of such meeting or a consent to holding the meeting or an appoval of the
minutes thereof, whether prior to or after the holding of suh meeting, which
said waiver, consent or approval shall be filed with the Secretary of the
Corporation, or (3) a Director attends a meeting wihtout notice but without
protesting, prior thereto or at its commencement, the lack of notice.
SECTION 12. SOLE DIRECTOR PROVIDED BY ARTICLE OF INCORPORATION
OR BYLAWS.
In the event only one (1) Director is required by the Bylaws or
Articles of Incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the Directors
shall be deemed to refer to such notice, waiver, etc., by such sole Director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to a Board of Directors.
SECTION 13. DIRECTORS' ACTION BY UNANIMOUS WRITTEN CONSENT.
Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting and with the same force and effect as if taken by
a unanimous vote of Directors, if authorized by a writing signed individually or
collectively by all members of the Board. Such consent shall be filed with the
regular minutes of the Board.
SECTION 14. QUORUM.
A majority of the number of Directors as fixed by the Articles of
Incorporation or Bylaws shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the Directors present
at any meeting at which there is a quorum, when duly assembled, is valid as a
corporation act; provided that a minority of the Directors, in the absence of a
quorum, may adjourn from time to time, but may not transact any business. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of directors, if any action taken is
approved by a majority of the required quorum for such meeting.
SECTION 15. ADJOURNMENT.
A majority of the Directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the time
and place of holding an adjourned meeting need not be given to absent Directors
if the time and place be fixed at the meeting adjourned and
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held within twenty-four (24) hours, but if adjourned more than twenty-four (24)
hours, notice shall be given to all Directors not present at the time of the
adjournment.
SECTION 16. COMPENSATION OF DIRECTORS.
Directors, as such, shall not receive any stated salary for their
services but, by resolution of the Board, a fixed sum and expense of attendance,
if any, may be allowed for attendance at each regular and special meeting of the
Board; provided that nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 17. COMMITTEES.
Committees of the Board may be appointed by resolution passed by a
majority of the whole Board. Committees shall be composed of two (2) or more
members of the Board and shall have such powers of the Board as may be expressly
delegated to it by resolution of the Board of Directors, except those powers
expressly made non-delegable by Sec. 311.
SECTION 18. ADVISORY DIRECTORS.
The Board of Directors from time to time may elect one or more persons
to be Advisory Directors who shall not by such appointment be members of the
Board of Directors. Advisory Directors shall be available from time to time to
perform special assignments specified by the President, to attend meetings of
the Board of Directors upon invitation and to furnish consultation to the Board.
The period during which the title shall be held may be prescribed by the Board
of Directors. If no period is prescribed, the title shall be held at the
pleasure of the Board.
SECTION 19. RESIGNATIONS.
Any Director may resign effective upon giving written notice to the
Chairman of the Board, the President, the Secretary or the Board of Directors of
the Corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes effective.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS.
The Officers of the Corporation shall be a President, a Secretary, and
a Chief Financial Officer. The Corporation may also have, at the discretion of
the Board of Directors, a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other Officers as may be appointed in accordance with the provisions of Section
3 of this Article III. Any number of offices may be held by the same person.
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SECTION 2. ELECTION.
Except as to such Officers as may be appointed in accordance with the
provisions of Sections 3 or 5 of this Article, the Officers of the Corporation
shall be chosen annually by the Board of Directors, and each shall hold office
until he or she shall resign or shall be removed or otherwise disqualified to
serve, or replaced with an elected and qualified successor.
SECTION 3. SUBORDINATE OFFICERS.
The Board of Directors may appoint such other Officers as the business
of the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the Bylaws or as
the Board of Directors may from time to time determine.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an Officer under any contract of
employment, any Officer may be removed, either with or without cause, by the
Board of Directors at any regular or special meeting of the Board or, except in
case of an Officer chosen by the Board of Directors, by any Officer upon whom
such power of removal may be conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the Officer is a
party.
SECTION 5. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the Bylaws for regular appointments to that office.
SECTION 6. RESPONSIBILITIES OF OFFICERS.
(a) Chairman of the Board. The Chairman of the Board, if such an
Officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of directors or prescribed by the Bylaws. If
there is no President, the Chairman of the Board shall also be the Chief
Executive Officer of the Corporation, having the powers and duties prescribed in
Section 6(b) of this Article III.
(b) President. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, if there be such
an Officer, the President shall be the Chief Executive Officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and Officers of the
Corporation. He or she shall preside at all meetings of the Shareholders and, in
the absence of the Chairman of the Board, or if there be none, at all meetings
of the Board of Directors. The President shall be ex officio a member of all the
standing committees, including the Executive Committee, if any, and shall have
the general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the Bylaws.
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(c) Vice President. In the absence or disability of the President, the
Vice Presidents, if any, in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice President shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or by the Bylaws.
(d) Secretary.
(i) Book of Minutes and Share Register. The Secretary shall
keep, or cause to be kept:
[A] At the principal office, or such other place as
the Board of Directors may order, a book of minutes of all meetings and actions
of Directors and Shareholders, with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present at Directors' meetings, the number of shares present
or represented at Shareholders' meetings and the proceedings thereof,
[B] At the principal office in the State of
California, a copy of the Articles of Incorporation and Bylaws, as amended to
date. If the corporation is one having members, the Secretary shall also
maintain a complete and accurate record of the membership of the corporation, as
well as a record of the proceedings of all meetings of the membership; and
[C] At the principal office or at the office of the
Corporation's transfer agent, a share register, or duplicate share register,
showing the names of the Shareholders and their addresses; the number and
classes of shares held by each; the number and date of certificates issued for
the same; and the number and date of cancellation of every certificate
surrendered for cancellation.
(ii) Notices. Seal and other Duties. The Secretary shall give,
or issue cause to be given, a notice of all the meetings of the Shareholders and
of the Board of Directors required by the Bylaws or by law to be given. He or
she shall keep the seal of the Corporation in safe custody and shall have such
other powers and perform such other duties as may be prescribed by the Board of
Directors or by the Bylaws.
(e) Chief Financial Officer. The Chief Financial Officer shall:
(i) Keep and maintain, or cause to be kept and maintained in
accordance with generally accepted accounting principles, adequate and correct
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, earnings (or surplus) and shares. The books of account shall at
all reasonable times be open to inspection by any Director.
(ii) Deposit all moneys and other valuables in the name and to
the credit of the Corporation with such depositories as may be designated by the
Board of Directors. He or she shall disburse the funds of the corporation as may
be ordered by the Board of Directors; shall render to the President and
Directors, whenever requested, an account of all his or her transactions and of
the financial condition of the Corporation; and shall have such other powers and
perform such other duties as may be prescribed by the Board of Director or the
Bylaws.
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ARTICLE IV
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS.
All meetings of the Shareholders shall be held at the principal
executive office of the Corporation unless some other appropriate and convenient
location be designated for that purpose from time to time by the Board of
Directors.
SECTION 2. ANNUAL MEETINGS.
The annual meetings of the Shareholders shall be held, each year, at
the time and on the day following:
Time of Meeting: 10:00 a.m.
Date of Meeting: October 1
If this day shall be a legal holiday, then the meeting shall be held on the next
succeeding business day, at the same hour. At the annual meeting, the
Shareholder shall elect a Board of Directors, consider reports of the affairs of
the Corporation and transact such other business as may be properly brought
before the meeting.
SECTION 3. SPECIAL MEETINGS.
Special meetings of the Shareholders may be called at any time by the
Board of Directors, the Chairman of the Board, the President, a Vice President,
the Secretary, or by one or more Shareholders holding not less than one-tenth
(1/10) of the voting power of the Corporation. Except as next provided, notice
shall be given as for the annual meeting.
Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board) entitled to call a special meeting of
Shareholders, such Officer shall cause notice to be given to the Shareholders
entitled to vote that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than thirty-five (35), nor more than
sixty (60), days after the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the manner provided by these Bylaws or apply
to the Superior Court as provided in Sec. 305(c).
SECTION 4. NOTICE OF MEETING - REPORTS.
Notice of meetings, annual or special, shall be given in writing not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to Shareholders entitled to vote thereat. Such notice shall be given by the
Secretary or the Assistant Secretary, or if there be no such Officer, or in the
case of his or her neglect or refusal, by any Director or Shareholder.
Such notices or any reports shall be given personally or by mail or
other means of written communication as provided in Sec. 601 of the Code and
shall be sent to the Shareholder's address appearing on the books of the
Corporation, or supplied by him or her to the Corporation for the purpose of
notice, and in the absence thereof, as provided in Sec. 601 of the Code.
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Notice of any meeting of Shareholders shall specify the place, the day
and the hour of meeting, and (1) in case of a special meeting, the general
nature of the business to be transacted and no other business may be transacted,
or (2) in the case of an annual meeting, those matters which the Board at date
of mailing, intends to present for action by the Shareholders. At any meetings
where Directors are to be elected, notice shall include the names of the
nominees, if any, intended at date of notice to be presented by management for
election.
If a Shareholder supplies no address, notice shall be deemed to have
been given if mailed to the place where the principal executive office of the
Corporation in California is situated, or published at least once in some
newspaper of general circulation in the county of said principal office.
Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
Officer giving such notice or report shall prepare and file an affidavit or
declaration thereof.
When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which such adjournment is taken.
SECTION 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS
The transaction of any meeting of Shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting each of the Shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting. Attendance shall constitute a waiver of
notice, unless objection shall be made as provided in Sec. 601(e).
SECTION 6. ACTIONS WITHOUT A MEETING - DIRECTORS.
Any action which may be taken at a meeting of the Shareholders, may be
taken without notice of meeting if authorized by a writing signed by all of the
Shareholders entitled to vote at a meeting for such purpose and filed with the
Secretary of the Corporation, provided, further, that while ordinary directors
can only be elected by unanimous written consent under Sec. 603(d), if the
Directors fail to fill a vacancy, then a Director to fill that vacancy may be
elected by the written consent of person holding a majority of shares entitled
to vote for the election of Directors.
SECTION 7. OTHER ACTIONS WITHOUT A MEETING.
Unless otherwise provided in the California Corporations Code or the
Articles, any action which may be taken at any annual or special meeting of
Shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
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Unless the consents of all Shareholders entitled to vote have been
solicited in writing:
(1) Notice of any Shareholder approval pursuant to Secs. 310,
317, 1201 or 2007 without a meeting by less than unanimous written consent shall
be given at least ten (10) days before the consummation of the action authorized
by such approval, and
(2) Prompt notice shall be given of the taking of any other
corporate action approved by Shareholders without a meeting by less than
unanimous written consent, to each of those Shareholders entitled to vote who
have not consented in writing.
Any Shareholders giving written consent, or the Shareholder's proxy
holders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxy holders, may revoke the consent by a
writing received by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the Corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the Corporation.
SECTION 8. QUORUM.
The holders of a majority of the shares entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the Shareholders for the transaction of business, except as
otherwise provided by law, the Articles of Incorporation, or these Bylaws. If,
however, such majority shall not be present or represented at any meeting of the
Shareholders, the Shareholders entitled to vote thereat, present in person or by
proxy, shall have the power to adjourn the meeting from time to time, until the
requisite amount of voting shares shall be present. At such adjourned meeting at
which the requisite amount of voting share shall be represented, any business
may be transacted which might have been transacted at a meeting as originally
notified.
If a quorum be initially present, the Shareholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken is approved by a
majority of the Shareholders required to initially constitute a quorum.
SECTION 9. VOTING.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the day of any meeting of Shareholders, unless
other day be fixed by the Board of Directors for the determination of
Shareholders of record, and then on such other day, shall be entitled to vote at
such meeting.
Provided the candidate's name has been placed in nomination prior to
the voting and one or more Shareholders has given notice at the meeting prior to
the voting of the Shareholder's intent to cumulate the Shareholder's votes,
every Shareholder entitled to vote at any election for directors of any
corporation for profit may cumulate their votes and give one candidate a number
of votes equal to the number of Directors to be elected multiplied by the number
of votes to which his or her shares are entitled, or distribute his or her votes
on the same principle among as many candidates as he or she thinks fit.
The candidates receiving the highest number of votes up to the number
of directors to be elected are elected.
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The Board of Directors may fix a time in the future not exceeding
thirty (30) days preceding the date of any meeting of Shareholders or the date
fixed for the payment of any dividend or distribution, or for the allotment of
rights, or when any change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the Shareholders entitled to
notice of and to vote at any such meeting, or entitled to receive any such
dividend or distribution, or any allotment of rights, or to exercise the rights
in respect to any such change, conversion or exchange of shares. In such case
only Shareholders of record on the date so fixed shall be entitled to notice of
and to vote at such meeting, or to receive such dividends, distribution or
allotment of rights, or to exercise such rights, as the case may be
notwithstanding any transfer of any share on the books of the Corporation
against transfers of shares during the whole or any part of such period.
SECTION 10. PROXIES.
Every Shareholder entitled to vote or execute consents may do so,
either in person or by written proxy, executed in accordance with the provisions
of Secs. 604 and 705 of the Code and filed with the Secretary of the
Corporation.
SECTION 11. ORGANIZATION.
The President, or in the absence of the President, any Vice President,
shall call the meeting of the Shareholders to order, and shall act as Chairman
of the meeting. In the absence of the President and all of the Vice Presidents,
Shareholders shall appoint a chairman for such meeting, The Secretary of the
Corporation shall act as Secretary of all meetings of the Shareholders, but in
the absence of the Secretary at any meeting of the Shareholders, the presiding
Officer may appoint any person to act as Secretary of the meeting.
SECTION 12. INSPECTORS OF ELECTION.
In advance of any meeting of Shareholders the Board of Directors may,
if they so elect, appoint inspectors of election to act at such meeting or any
adjournment thereof. If inspectors of election be not so appointed, or if any
persons so appointed fall to appear or refuse to act, the chairman of any such
meeting may, and on the request of any Shareholders or his or her proxy shall,
make such appointment at the meeting in which case the number of inspectors
shall be either one (1) or three(3) as determined by a majority of the
Shareholders represented at the meeting.
SECTION 13. SHAREHOLDERS' AGREEMENTS
(a) In General. Notwithstanding the above provisions, in the event this
Corporation elects to become a close corporation, an agreement between two (2)
or more Shareholders thereof, if in writing and signed by the parties thereof,
may provide that in exercising any voting rights the shares held by them shall
be voted as provided therein or in See. 706, and may otherwise modify these
provisions as to Shareholders' meetings and actions.
(b) Effect of Shareholders' Agreements. Any Shareholders' Agreement
authorized by Sec. 300(b), shall only be effective to modify the terms of these
Bylaws if this Corporation elects to become a close corporation with appropriate
filing of or amendment to its Articles as required by Sec. 202 and shall
terminate when this Corporation ceases to be a close corporation. Such an
agreement cannot waive or alter Secs. 158, (defining close corporations), 202
(requirements of
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Articles of Incorporation), 500 and 501 (relative to distributions), 111
(merger), 1201(e) (reorganization) or Chapters 15 (records and reports), 16
(rights of inspection), 18 (involuntary dissolution) or 22 (crimes and
penalties). Any other provisions of the Codes or these Bylaws may be altered or
waived thereby, but to the extent they are not so altered or waived, these
Bylaws shall be applicable.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
SECTION 1. CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the Board
of Directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a statement of the rights, privileges, preferences and
restrictions, if any; a statement as to the redemption or conversion, if any; a
statement of liens or restrictions upon transfer or voting, if any; if the
shares be assessable or, if assessments are collectible by personal action, a
plain statement of such facts.
All certificates shall be signed in the name of the Corporation by the
Chairman of the Board or Vice Chairman of the Board or the President or Vice
President and by the Chief Financial Officer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
class or series of shares owned by the Shareholders.
Any or all of the signatures on the certificate may be facsimile. In
case any Officer, transfer agent, or register who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the Corporation with the same effect as if that person were an Officer,
transfer agent, or registrar at the date of issue.
SECTION 2. TRANSFER ON THE BOOKS.
Upon surrender to the Secretary or transfer agent of the Corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 3. LOST OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation of that fact and shall, if the directors
so require, give the Corporation a bond of indemnity, in form and with one or
more sureties satisfactory to the Board, in at least double the value of the
stock represented by said certificate, whereupon a new certificate may be issued
in the same tenor and for the same number of shares as the one alleged to be
lost or destroyed.
SECTION 4. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint one or more agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company, either domestic or foreign, who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the Board of
Directors may designate.
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SECTION 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE.
In order that the Corporation may determine the Shareholders entitled
to notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days prior to the date of such meeting nor more than sixty (60) days
prior to any other action.
If no record date is fixed, the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of business on the business day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held. The record
date for determining Shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board is necessary,
shall be the day on which the first written consent is given.
The record date for determining Shareholders for any other purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
SECTION 6. LEGEND CONDITION.
In the event any shares of this Corporation are issued pursuant to a
permit or exemption therefrom requiring the imposition of a legend condition
thereon, the person or persons issuing or transferring said shares shall make
sure said legend appears on the certificate and shall not be required to
transfer any shares free of such legend unless an amendment to such permit or
new permit be first issued so authorizing such a deletion.
SECTION 7. CLOSE CORPORATION CERTIFICATES.
All certificates representing shares of this Corporation, in the event
it shall elect to become a close corporation, shall contain the legend required
by Sec. 418(c).
SECTION 8. PLEDGED OR HYPOTHECATED SHARES.
Any Shareholders desiring to borrow money on or hypothecate any or all
of the shares of stock held by such Shareholder shall first mail notice in
writing to the Secretary of this Corporation of his or her intention to do so.
Said notice shall specify the number of shares to be pledged or hypothecated,
the amount to be borrowed per share, the terms, rate of interest, and other
provisions upon which each Shareholder intends to make such loan or
hypothecation. The Secretary shall, within five (5) days thereafter, mail or
deliver, a copy of said notice to each of the other Shareholders of record of
this Corporation. Such notice may be delivered to such Shareholder personally,
or may be mailed to the last known addresses of such Shareholders as the same
may appear on the books of this Corporation. Within fifteen (15) days after the
mailing or delivering of said notice to said Shareholders, any such Shareholder
or Shareholders desiring to lend any part or all of the amount sought to be
borrowed, as set forth in said notice, at the terms therein specified, shall
deliver by mail, or otherwise, to the Secretary of this Corporation a written
offer or offers to lend a certain amount of money for the term, at the rate of
interest, and upon other provisions specified in said notice.
If the total amount of money subscribed in such offers exceeds the
amount sought to be borrowed, specified in said notice, each offering
Shareholder shall be entitled to lend such proportion of the amount sought to be
borrowed, as set forth in said notice, as the number of shares which he
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or she holds bears to the total number of shares held by all such Shareholders
desiring to lend all or part of the amount specified in said notice.
If the entire amount of monies sought to be borrowed, as specified in
said notice, is not subscribed as set forth in the preceding paragraphs, each
Shareholder desiring to lend an amount in excess of his or her proportionate
share, as specified in the preceding paragraph, shall be entitled to lend such
proportion of the subscribed amount as the total number of shares held by all of
the Shareholders desiring to lend an amount in excess of that to which they are
entitled under such apportionment. If there be but one Shareholder so desiring
to lend, such Shareholder shall be entitled to lend up to the full amount sought
to be borrowed.
If none, or only a part of the amount sought to be borrowed, as
specified in said notice, is subscribed as aforesaid, in accordance with offers
made within said fifteen (15) day period, the Shareholder desiring to borrow may
borrow from any person or persons he or she may so desire as to any or all
shares of stock held by him or her which have not been covered by lending
Shareholders; provided, however, that said Shareholders shall not borrow any
lesser amount, or any amount on term less favorable to the borrower, than those
specified in said notice to the Secretary.
Any pledge or hypothecation, or other purported transfer as security
for a loan of the shares of this Corporation, shall be null and void unless the
terms, conditions and provisions of these Bylaws are strictly observed and
followed.
ARTICLE VI
RECORDS - REPORTS - INSPECTION
SECTION 1. RECORDS.
The Corporation shall maintain, in accordance with generally accepted
accounting principles, adequate and correct accounts, books and records of its
business and properties. All of such books, records and accounts shall be kept
at its principal executive office in the State of California, as fixed by the
Board Directors from time to time.
SECTION 2. INSPECTION OF BOOKS AND RECORDS.
All books and records provided for in Sec. 1500 shall be open to
inspection of the Directors and Shareholders from time to time and in the manner
provided in said Secs. 1600 to 1602.
SECTION 3. CERTIFICATION AND INSPECTION OF BYLAWS.
The original or a copy of these Bylaws, as amended or otherwise altered
to date, certified by the Secretary, shall be kept at the Corporation's
principal executive office and shall be open to inspection by the Shareholders
of the Corporation at all reasonable times during office hours, as provided in
Sec. 213 of the Corporations Code.
SECTION 4. CHECKS, DRAFTS, ETC.
All checks, drafts, or other orders for payment of money, notes or
other evidence of indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as shall be determined from time to time by resolution of the Board of
Directors.
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SECTION 5. CONTRACTS, ETC. - HOW EXECUTED.
The Board of Directors, except as in the Bylaws otherwise provided, may
authorize any Officer or Officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no Officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or agreement, or to pledge its
credit, or to render it liable for any purpose or to any amount, except as
provided in Sec. 313 of the Corporations Code.
ARTICLE VII
ANNUAL REPORTS
SECTION 1. REPORTS TO SHAREHOLDERS, DUE DATE.
The Board of Directors shall cause an annual report to be sent to the
Shareholders not later than one hundred twenty (120) days after the close of the
fiscal or calendar year by the Corporation. This report shall be sent at least
fifteen (15) days before the annual meeting of Shareholders to be held during
the next fiscal year and in the manner specified in Section 4 of Article IV of
these Bylaws for giving notice to Shareholders of the Corporation. The annual
report shall contain a balance sheet as of the end of the fiscal year and an
income statement and statement of changes in financial position for the fiscal
year, accompanied by any report of independent accountants or, if there is no
such report, the certificate of an authorized Officer of the Corporation that
the statements were prepared without audit from the books and records of the
Corporation.
SECTION 2. WAIVER.
The annual report to Shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with so long as this
Corporation shall have less than one hundred (100) Shareholders. However,
nothing herein shall be interpreted as prohibiting the Board of Directors from
issuing annual or other periodic reports to the Shareholders of the Corporation
as they consider appropriate.
ARTICLE VIII
AMENDMENTS TO BYLAWS
SECTION 1. AMENDMENTS BY SHAREHOLDERS.
New Bylaws may be adopted or these Bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the Corporation set forth the number of authorized Directors of the Corporation,
the authorized number of Directors may be changed only by an amendment of the
Articles of Incorporation.
SECTION 2. POWERS OF DIRECTORS.
Subject to the right of the Shareholders to adopt, amend or repeal
Bylaws, as provided in Section I of this Article VIII and the limitations of
Sec. 204(a)(5) and Sec. 212, the Board of
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Directors may adopt, amend or repeal any of these Bylaws other than a Bylaw or
amendment thereof changing the authorized number of Directors.
SECTION 3. RECORD OF AMENDMENTS.
Whenever an amendment or new Bylaw is adopted, it shall be copied in
the book of Bylaws with the original Bylaws, in the appropriate place. If any
Bylaw is repeated, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of its incorporation, and the word
"California".
ARTICLE X
MISCELLANEOUS
SECTION 1. REFERENCES TO CODE SECTIONS.
The term "Section" or "Sec." referenced herein shall refer to the
equivalent sections of the California Corporations Code effective January 1,
1977, as amended.
SECTION 2. REPRESENTATION OF SHARES IN OTHER CORPORATIONS.
Shares of other corporations standing in the name of this Corporation
may be voted or represented, and all incidents thereto may be exercised on
behalf of the Corporation, by the Chairman of the Board, the President or any
Vice President, or the Secretary or an Assistant Secretary.
SECTION 3. SUBSIDIARY CORPORATIONS.
Shares of this Corporation owned by a subsidiary shall not be entitled
to vote on any matter. A subsidiary for these purposes is defined as a
corporation, the shares of which possessing more than twenty-five percent (25%)
of the total combined voting power of all classes of shares entitled to vote,
are owned directly or indirectly through one (1) or more subsidiaries.
SECTION 4. INDEMNITY.
(a) Right of Indemnity. To the full extent permitted by law, this
Corporation shall indemnify its Directors, officers, employees and other persons
described in Sec. 317(a), including persons formerly occupying any such
position, against all expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any "proceeding", as that
term is used in such Section and including an action by or in the right of the
Corporation, by reason of the fact that such person is or was a person described
by such Section.
(i) An agent may not, in any circumstance, be indemnified for
acts or omissions that constitute intentional misconduct, the knowing and
culpable violation of the law, the absence
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of good faith, the receipt of an improper personal benefit, a reckless disregard
or unexcused inattention to the agent's duty to act in the best interests of the
Corporation and its Shareholders. In addition, an agent also may not be
indemnified for any act or omission which falls under Sec. 310 or Sec. 316, or
where indemnification is expressly prohibited under Sec. 317.
(ii) "Expenses", as used in these Bylaws, shall have the same
meaning as in Sec. 317(a).
(b) Approval of Indemnity. Upon written request to the Board by any
person seeking indemnification under Sec. 317(b) or (c), the Board shall
promptly determine, in accordance with Sec. 317(e), whether the applicable
standard of conduct set forth in Sec. 317(b) or Sec. 317(c) has been met and, if
so, the Board shall authorize indemnification. If the Board cannot authorize
indemnification because the number of Directors who are parties to the
proceeding with respect to which indemnification is sought is such as to prevent
the formation of a quorum of Directors who are not parties to such proceeding,
the Board or the attorney or other person rendering services in connection with
the defense shall apply to the court in which such proceeding is or was pending
to determine whether the applicable standard of conduct set forth in Sec. 317(b)
or Sec. 317(c) has been met.
(c) Advancement of Expenses. To the full extent permitted by law and
except as is otherwise determined by the Board in a specific instance, expenses
incurred by a person seeking indemnification under these Bylaws in defending any
proceeding covered by these Bylaws shall be advanced by the Corporation prior to
the final disposition of the proceeding upon receipt by the Corporation of an
undertaking by or on behalf of such person that the advance will be repaid
unless it is ultimately determined that such person is entitled to be
indemnified by the Corporation therefor.
(d) Insurance. The Corporation shall have the right to purchase and
maintain insurance to the full extent permitted by law on behalf of its
officers, Directors, employees and other agents of the Corporation, against any
liability asserted against or incurred by an officer, Director, employee or
agent in such capacity or arising out of the officer's, Director's, employee's
or agent's status as such.
SECTION 5. ACCOUNTING YEAR.
The accounting year of the Corporation shall be fixed by resolution of
the Board of Directors.
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CERTIFICATE OF ADOPTION OF BYLAWS BY INCORPORATOR(S)
The undersigned, named in the Articles of Incorporation as the
Incorporator(s) of the above-named Corporation, hereby adopt the same as the
Bylaws of said Corporation.
Executed this 12th day of July, 1995.
/s/ R. E. G.
------------------------------
ROBERT E. GEDDES, Incorporator
CERTIFICATE BY SECRETARY OF ADOPTION BY FIRST DIRECTORS
THIS IS TO CERTIFY THAT:
That I am the duly elected, qualified and acting Secretary of the
above-named Corporation, that the foregoing Bylaws were adopted as the Bylaws of
said Corporation on the date set forth above by the person named in the Articles
of Incorporation as the Incorporator or first Directors of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of July,
1995.
/s/ R. E. G.
----------------------------
ROBERT E. GEDDES, Secretary
CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE
THIS IS TO CERTIFY THAT:
I am the duly elected, qualified and acting Secretary of the
above-named Corporation, and the above and foregoing code of Bylaws is a true
and correct copy of the Bylaws which were submitted to the Shareholders at the
first meeting and recorded in the minutes thereof, was ratified by the vote of
the Shareholders entitled to exercise the majority of the voting power of the
Corporation.
IN WHEREOF, I have hereunto set my hand this 12th day of July, 1995.
/s/ R. E. G.
---------------------------
ROBERT E. GEDDES, Secretary
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[NIKO INTERNATIONAL LETTERHEAD]
January 28, 1998
Mr. Lee Marshall
MagicWorks Entertainment
RE: EVITA
Dear Lee:
The following shall set forth the terms of our understanding in regard to
Magic's participation in EVITA:
o Magic shall contribute 35% of the total capital required to mount the
production which is currently estimated to be $2.45M (exclusive of
'Bonds & Deposits'), for which Magic shall receive a proportionate
share of 100% of the producer share of profits.
o Magic shall be afforded the opportunity to invest up to an additional
35% of capitalization for which Magic shall receive a proportionate
share of 50% of 100% of the producer share of the profits.
o Magic shall receive second (2nd) position producer billing above the
title of the play.
o Magic shall receive one (1%) percent producer royalty of the weekly
NAGBOR or Company Share as the case may be.
Once we proceed closer to production, we shall forward a more formal agreement
incorporating the aforementioned terms.
Thank you for your continued support and friendship and I look forward to a
highly successful production with you.
Personal best,
/s/ Manny Kladitis
- ------------------
Manny Kladitis
Agreed:
MagicWorks Entertainment
By: /s/ Lee Marshall
-------------------
Lee Marshall
<PAGE>
CONNECTICUT PERFORMING ARTS PARTNERS
JOINT VENTURE AGREEMENT
AGREEMENT made as of the 15th day of October, 1993, by and
between Connecticut Amphitheater Development Corporation ("CADCo"), a
Connecticut corporation, and Nederlander of Connecticut, Inc. ("NOC"), a
Connecticut corporation.
WITNESSETH:
WHEREAS, CADCo and NOC jointly desire to acquire, design,
construct, develop, lease and/or operate a live entertainment and performing
arts facility in the greater metropolitan area of Hartford, Connecticut (the
"Project"); and
WHEREAS, in pursuit of such goal, CADCo and NOC desire to
create a joint venture with the intent of (a) acquiring and/or entering into a
long-term ground lease of the land underlying such facility in Hartford,
Connecticut (the "Ground Lease"),including, without limitation, the acquisition
and/or leasing of parking areas to service such facility and the premises
referred to as the "Conrail Site", and (b) obtaining financing from the State of
Connecticut Development Authority for the construction and development of such
facility (the "Project Financing"), which Project Financing is anticipated to
consist of (x) a "Tax Increment" bond issue in the approximate aggregate
principal amount of $10,400,000, and (y) a bond issue and/or bank loan supported
by a mortgage guarantee program of the State of Connecticut in the approximate
aggregate principal amount of $8,600,000; and
WHEREAS, in contemplation of consummating such joint project,
CADCo and NOC desire to establish mutually satisfactory arrangements for doing
so, including without limitation arrangements with other Persons, firms and
entities, such as Affiliates of MC, the City Hartford and others, all on the
terms and conditions set forth below;
<PAGE>
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have
the meanings set forth below:
"Additional Required Funds" has the meaning set forth in
Section 6.2 hereof.
"Affiliate" means, with respect to any Person, any other
Person who controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means authority, whether or
not exercised, to control a Person's business and affairs, which authority shall
be conclusively presumed to exist upon possession of the beneficial ownership or
power to direct the vote of more than fifty percent (50%) of the votes entitled
to be cast on a board or other body which governs any such Person.
"Agreement" means this Joint Venture Agreement, as amended
from time to time.
"Ancillary Revenues" shall mean all Gross Revenues (as
hereinafter defined) other than Ticket Revenues (as hereinafter defined),
including, without limitation, any revenues relating to food, beverage and
merchandise concessions, parking revenues ticket surcharges, season ticket
differentials, club income, sponsorship income or any other similar ancillary
income.
"Available Cash" means the cash of the Joint Venture not
needed to cover day-to-day operating expenses of the Joint Venture and not
needed to cover reserves established
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by the Joint Venturers from time to time, including cash attributable to Booking
Fees and Management Fees.
"Backstage" means all matters relating to performances of
artists, staging, stage management, production, lighting, sound amplification,
equipment rental, limousine, backstage security, backstage hiring, runners, and
performer and crew catering.
"Booking and Management Fees" shall mean the amounts listed on
Annex D hereto.
"Budget" has the meaning set forth in Section 8.5
"Business Days" shall mean all days other than Saturdays,
Sundays and days observed in the State of Connecticut as legal holidays.
"CADCo Key Man" means James Koplik.
"Capital Account" means, with respect to either Joint
Venturer, the Capital Account maintained for such Joint Venturer in accordance
with the following provisions:
(a) To each Joint Venture's Capital Account there shall be
credited such Joint Venturer's Capital Contributions and such Joint
Venturer's allocable share of Profits;
(b) To each Joint Venturer's Capital Account there shall be
debited the amount of cash distributed to such Joint Venturer pursuant
to any provision of this Agreement and such Joint Venturer's allocable
share of Losses; provided, that notwithstanding the foregoing, for all
purposes of this Agreement, the initial Capital Accounts in respect of
all contributions under this Agreement on or prior to the date hereof
shall be deemed to be the Joint Venturers' respective Initial Capital
Contributions.
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(c) In the event any interest in the Joint Venture is
transferred in accordance with the terms of this Agreement, the
Transferee shall succeed to the Capital Account of the Transferor.
"Capital Contributions" means, with respect to any joint
Venturer, the amount of money contributed to the Joint Venture with respect to
the Joint Venture Interest held by such Joint Venturer pursuant to the terms of
this Agreement.
"CDA" has the meaning set forth in the preamble hereto.
"Contract" means any contract, commitment, undertaking, lease,
license, agreement or other arrangement providing for the Joint Venture to have
the right to acquire, develop, design, construct, lease operate and/or book
events at the Facility, inclusive of the Ground Lease.
"Defaulting Venturer" has the meaning set Section 6.3 hereof.
"Facility" means the structure and improvements comprising the
production and live entertainment and performing arts-facility located within
the greater metropolitan area of Hartford, Connecticut, as generally described
on Annex B hereto, to be acquired, designed, constructed, developed and operated
and/or leased by the Joint Venture.
"Fiscal Period" means the period commencing on the Start Date
and shall continue through the next succeeding December 31. Thereafter, each
Fiscal Period of the Joint Venture shall commence on each January 1 and shall
continue through December 31 (or, in the event of the dissolution and
liquidation of the Joint Venture, through the date of such dissolution and
liquidation).
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<PAGE>
"Food & Beverage" means management and supervision leasing and
concessionaires.
"Front of Stage," means all matters relating to house
management, ingress and egress, gate sales, first aid, front stage hiring,
repairs and maintenance, automobile parking, supplies and buildings and grounds.
"Gross Revenues" means all cash, receipts, gains, revenues,
fees and income received by the Joint Venture in connection with the ownership,
operation and management of the Facility, including without limitation, all
cash, receipts, gains, revenues, fees and income received by any Joint Venturer
from (i) booking of events at the Facility, (ii) media, promotion, advertising
or sponsorship, (iii) food and beverage or other concessions, (iv) parking
revenues, and (v) such other revenue common to promoting concerts less any state
or local taxes imposed or levied against any of the foregoing.
"Ground Lease" has the meaning set forth in the preamble
hereto.
"Guaranty" means that certain guaranty of completion to be
delivered in connection with the Project Financing (as hereinafter defined).
"Holding Period" shall have the meaning set forth in Section
11.1 hereof.
"Initial Budget" has the meaning set forth in Section 8.5
hereof.
"Initial Capital Contributions" has the meaning forth in
Section 6.1 hereof.
"Initial Period" has the meaning set forth in Section 8.5
hereof.
"Interest Rate" has the meaning set forth in Section 6.3
hereof.
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<PAGE>
"Joint Venture" means Connecticut Performing Arts Partners,
the joint venture formed pursuant to this Agreement.
"Joint Venture Business" is defined in Article IV, and shall
include, without limitation, the acquisition, leasing, financing, development,
design, construction and/or other operation of the Facility.
"Joint Venture Interest" means the individual interest of each
Joint Venturer in the Joint Venture under this Agreement.
"Joint Venturers" means CADCo and NOC, initially, and their
respective permitted Transferees hereunder.
"Koplik" means Mr. James Koplik.
"Letter of Credit" means the Letter of Credit in the amount or
$8.6 million to be issued pursuant to the Guaranty allowing accordance draws to
be made by the CDA and an Affiliate of NOC in accordance with the terms and
conditions of the Guaranty.
"Live Production" means the production and offering or live
entertainment and performing arts events and all activities incident or related
thereto, including, without limitation, management, booking and rental on a
"four-wall" basis.
"Loan Documents" has the meaning set forth in Section 6.5
hereof.
"Losses" has the meaning described under "Profits" below.
"Manager" has the meaning set forth in Section 8.4 hereof.
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<PAGE>
"Net Ticket Revenues" shall mean an amount equal to (x) all
revenues generated from the sale of tickets to an event held at the Facility,
less (y) all applicable state and local taxes and other charges, if any, levied
against ticket revenues; provided, however, in no event shall Ticket Revenues
include any Ancillary Revenues.
"Operating Account" shall have the meaning set forth in
Section 8.10 below.
"Operating Expenses" means all costs and expenses incurred by
the Joint Venture in connection with the ownership, operation, management and
booking of events at the Facility including, without limitation:
(i) payroll and related disbursements, including, without
limitation, salaries, wages, fees, benefits, taxes, union or other dues, and all
other amounts regularly or occasionally paid to or on behalf of Facility
personnel;
(ii) the cost of operating equipment and inventories;
(iii) the cost of all insurance maintained by the Joint
Venture, including, without, limitation, all property, liability, workmen's
compensation, host liquor liability insurance and the cost of all fidelity bonds
purchased for onsite employees;
(iv) the cost of all oil, gas, electricity, water, telephone
and other utilities (including, without limitation, payment for normal,
recurring services, deposits and special assessments);
(v) the cost of advertising, publicity, promotion, marketing
and related services to the extent provided in an approved Budget;
(vi) all commissions, fees, costs and expenses relating to
transactions with credit organizations (including, without limitation,
organizations issuing credit cards);
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(vii) costs incurred in connection with the maintenance and
repair of the Facility;
(viii) fees payable under any licenses, permits, easements or
other agreements affecting the ownership, operation or management of the
Facility;
(ix) all costs (including, without limitation, all fees and
disbursements) of all accountants, auditors, attorneys or other professionals or
advisors engaged by the Joint Venture in connection with the Facility;
(x) all state and local taxes on real and personal property or
payments in lieu thereof;
(xi) rent or other lease payments for real and personal
property, including without limitation all Payments under the Sublease;
(xii) all debt service and other payments (inclusive of fees
and charges) due in connection with the Project Financing and paid by the Joint
Venture and any mortgages or other indebtedness incurred by the Joint Venture
(xiii) all deposits into any reserves for capital replacements
established by the Joint Venture, including, without limitation, any replacement
reserves for furniture, fixtures and equipment; and
(xiv) the Booking and Management Fees provided however, that
notwithstanding any of the foregoing, a Joint Venturer shall only be entitled to
seek reimbursement for expenses individually incurred by such Joint Venturer in
connection with the Facility, including, without limitation, expenses incurred
by a Joint Venturer in connection with booking of events and/or management of
the facility by such Joint Venture partner and/or in
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<PAGE>
connection with travel to or from the Facility, to the extent such expenses are
contemplated by, and are set forth in, a Budget approved by the Joint Venturers
in accordance with this Agreement. Any such expenses not specifically set forth
in a Budget approved by the Joint Venturers in accordance with this Agreement
shall not be deemed an Operating Expense.
"Partnership Act" means the Uniform Partnership Act, 134-39 et
seq. of the General Statutes of the State of Connecticut, as amended from time
to time.
"Percentage Interest" means, with respect to either Joint
Venturer, the percentage interest set forth opposite such Joint Venturer's name
on Annex A attached hereto, as the same may be amended from time to time. If any
Joint Venture Interest is transferred in accordance with the provisions of this
Agreement, the Transferee of such Interest shall succeed to the Percentage
Interest of its Transferor.
"Person" means any individual, corporation, limited liability
company, partnership, sole proprietorship, trust, firm, unincorporated business
association or other entity.
"Prime Rate" means the "prime", "base" or "reference" rate of
interest as publicly announced from time to time in Hartford, Connecticut by
Fleet Bank N.A. or such other bank as may designated from time to time in
writing by the Joint Venturers.
"Profits" and "Losses" means, for each Fiscal Period or other
period, the profit or loss of the Joint Venture as determined in accordance with
generally accepted accounting principles consistently applied.
"Project Financing" has the meaning set forth in the preamble
hereto.
"Revised Percentage" with respect to any Defaulting Venturer
means, as of a given date, a fraction, expressed as a percentage, the numerator
of which is such Defaulting
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<PAGE>
Venturer's aggregate Capital Contributions minus the aggregate amount of any
Venturer Loan made by a non-defaulting Joint Venturer, together with any
interest accrued thereon as hereinafter provided, which has been outstanding for
one (1) year and is attributable to a default by such Defaulting Venturer in
making any required Capital Contribution and the denominator of which is total
capital Contributions of all Joint Venturers. The amounts to be included in the
numerator and denominator of the Revised Percentage shall be determined as of
the close of business on the day on which such computations are made.
"Season" means the Summer Season or the Winter Season.
"Sponsorship" means all marketing efforts and obtaining and
making all arrangements with sponsors.
"Start Date" means the first date on which each and every one
of the following conditions has been satisfied (or waived by the Joint
Venturers): (i) the Joint Venture or the sublessor under the sublease shall have
received or obtained all required approvals, consents and certifications of all
federal, state, local or other governments and governmental agencies, boards,
commissions or authorities and all third parties relating to the commencement of
construction of the Facility, including without limitation all zoning, building,
health, environmental, public safety, department of transportation or other
similar approvals; (ii) acquisition of the Conrail Site and execution and
delivery and/or acquisition of all parking facilities; (iii) execution and
delivery of the Ground Lease on terms and conditions mutually satisfactory to
the Joint Venturers the commencement of the term thereunder and the assignment
and assumption thereof by the sublessor under the Sublease; and (iv) execution
and delivery of all documentation required in connection with the Project
Financing and the satisfaction of all conditions precedent to the first advance
under the bond issues and/or bank loans thereunder.
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<PAGE>
"Sublease" means the sublease from an Affiliate of NOC (that
has posted the Letter of Credit and obtained the Project Financing) to the Joint
Venture of the premises subject to the Ground Lease and the Facility.
"Summer Season" means the period from May 1 through and
including September 30 of any Fiscal Period.
"Transfer" (and, with correlative meanings, the terms
"Transferee" or "Transferor") means any sale, transfer, pledge, assignment,
encumbrance or other disposition of a Percentage Interest or of the rights of a
Joint Venturer under this Agreement (including, without limitation, an
assignment of rights to receive any distribution or other payments hereunder).
"Transferred Interest" means all (but not less than all) of
the Joint Venture Interest of any Joint Venturer, together with all of the
rights of such Joint Venturer under this Agreement, as the result of any event
in which such Joint Venturer's Joint Venture Interest and rights become subject
to a Transfer pursuant to Article XI hereof.
"Triggering Event" means any of the following events as they
may occur from time to time: (i) the CADCo Key Man shall for any reason
whatsoever not be actively engaged in the Joint Venture business, except that
the foregoing shall not constitute a Triggering Event if (w) construction of the
Facility has been completed and (x) no further draws on the Letter of Credit may
be made and (y) CADCo has satisfied and discharged in full its entire obligation
to pay a portion of the rent under the Sublease as described in Section 9.7
below (the "CADCo Rent "Obligation") and (z) NOC has received distributions from
the Joint Venture (from additional Capital Contribution made by CADCo and or
Available Cash as provided in Section 6.5) equal to 50% of the aggregate draws
on the Letter of Credit (plus interest as provided in Section 6.5) or (ii) the
desire, expressed in writing, of one Joint Venturer to sell or otherwise dispose
of the Facility without the consent of the other Joint Venturer at any time
after the expiration of the Holding Period.
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<PAGE>
"Venturer Loan" shall have the meaning set forth in section
6.3 or this Agreement.
"Winter Season" means the period from October 1 through and
including April 30 of any Fiscal Period.
ARTICLE II
FORMATION, NAME AND COMMENCEMENT
2.1 Formation. The Joint Venturers do hereby form, and confirm
the formation of, a general partnership pursuant to the Partnership Act. Except
as otherwise set forth in this Agreement, the rights and liabilities of the
Joint Venturers shall be as set forth in the Partnership Act.
2.2 Name. The business of the Joint Venture shall be conducted
under the name of "Connecticut Performing Arts Partners". "The Connecticut
Center for the Performing Arts" or such other name or variations thereof as may,
from time to time, be selected by the Joint Venturers or as may be necessary to
comply with laws, rules or regulations applicable to the business of the Joint
Venture. The Joint Venturers shall execute and file such certificates, if any,
as may from time to time be required by the provisions of any assumed name
statute or similar requirement in any jurisdiction in which the Joint Venture
conducts business in order properly to reflect the Joint Venture's conduct of
business under such name.
2.3 The principal place of business of the Joint Venture in
the State of Connecticut shall be at the Facility.
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<PAGE>
ARTICLE III
TERM
The term of the Joint Venture shall begin on the date hereof
and shall continue until the 60th anniversary of the date hereof (and for such
further period, if any, as the Venturers may determine to be necessary to wind
up the affairs of the Joint Venture), unless sooner terminated in accordance
with this Agreement.
ARTICLE IV
PURPOSE
4.1 General Purpose. The business of the Joint Venture shall
be to acquire, own, finance, develop, design, construct, lease and/or generally
operate and conduct events at the Facility.
4.2 Additional Purposes and Limitations. In addition to the
activities generally referred to in Section 4.1 above, and all activities
reasonably incident thereto, the Joint Venture shall have authority to take all
actions and to engage in all activities approved by the Joint Venturers, either
specifically or by type. Except as set forth in Section 4.1 or approved pursuant
to the preceding sentence, the Joint Venture shall not be authorized to engage
in any other activities.
4.3 Joint Venture Powers. In connection with carrying out the
business of the Joint Venture, the Joint Venture is empowered, among other
things: to borrow money; to issue and execute promissory notes and other
negotiable or non-negotiable instruments or evidences of indebtedness and to
secure the same by granting security interests encumbering assets of the Joint
Venture or otherwise; enter into leases of real and personal property; enter
into agreements with respect to the marketing, media promotion and/or
sponsorship of the Facility; to arrange
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<PAGE>
financing; to expend Joint Venture funds in furtherance of the purposes of the
Joint Venture; to incur obligations for and on behalf of the Joint Venture,
including guarantees of the obligations of other persons, in connection with its
business; and to open and maintain, in the name of the Joint Venture, accounts
with one or more financial institutions, including, without limitation, the
Operating Account, in which the funds of the Joint Venture shall be deposited,
provided that withdrawals from such accounts may be made only upon the signature
of persons duly authorized by the Joint Venturers to make withdrawals.
ARTICLE V
ALLOCATIONS
5.1 Profits. Profits for any Fiscal Period shall be allocated
among the Joint Venturers in proportion to their Percentage Interests.
5.2 Losses. Losses for any Fiscal Period shall be allocated
among the Joint Venturers in proportion to their Percentage Interests.
5.3 General. (a) Unless otherwise agreed by the Joint
Venturers, all Gross Revenues shall constitute income of the Joint Venture.
Except as otherwise expressly provided in this Agreement, all items of Joint
Venture income, gain, loss, deduction, credit and any other allocations not
otherwise provided for shall be divided among the Joint Venturers in the same
proportions as they share Profits or Losses, as the case may be, for the
applicable Fiscal Period.
(b) The Joint Venturers are aware of the income tax
consequences of the allocations made by this Article V and hereby agree to be
bound by the provisions of this Article V in reporting their shares of Joint
Venture income, gain, loss, deduction and credit for income tax purposes.
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5.4 SPECIAL. [TO BE ADDED]
ARTICLE VI
CAPITAL CONTRIBUTIONS
6.1 Initial Capital Contributions. The Joint Venturers have
estimated that the total cost of acquiring, leasing, constructing and/or opening
the Facility, inclusive of capitalized interest during the construction period
and all preopening expenses, will be approximately $27,000,000. Each of CADCo
and NOC shall, on or before the commencement of the construction of the
Facility, contribute an amount equal to TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000) to the capital of the Joint Venture (the "Initial Capital
Contributions") receipt of which is hereby acknowledged.
6.2 Shortfalls. In the event that any funds in excess of the
Initial Capital Contributions are required to complete the acquisition, leasing,
construction or development of the Facility, or for working capital or any other
purpose during any Fiscal Period (any such funds are hereinafter referred to as
the "Additional Required Funds"), the Additional Required Funds shall be
provided as follows:
(a) First, any accrued Booking and Management Fees
not yet paid to either Joint Venturer during such Fiscal Period shall be
retained by the Joint Venture and used as Additional Required Funds;
(b) Second, to the extent that Additional Required
Funds are necessary after giving effect to the application of clause (a) above,
the Joint Venture shall use its reasonable efforts to borrow money, arrange
financing or otherwise obtain credit from third parties on satisfactory terms
and, in connection with any such action, each of the Joint Venturers shall, if
required by any such third party creditor, pledge its Joint Venture Interests as
collateral security therefor; and
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(c) Finally, to the extent that Additional Required
Funds are necessary after giving effect to the application of clauses (a) and
(b) above, each of the Joint Venturers shall provide such Additional Required
Funds as and when required by means of additional Capital Contributions in
accordance with their Percentage Interests.
6.3 Venturer Loans. If either Joint Venturer shall fail to
make its Initial Capital Contribution or any additional Capital Contributions
when due as provided herein (any such Joint Venturer is hereinafter referred to
as the "Defaulting Venturer"), the other Joint Venturer shall have the right
(but not the obligation), in addition to any other available remedies, to lend
to the Joint Venture (a "Venturer Loan") the portion of the additional Capital
Contributions that the Defaulting Venturer failed to contribute to the Joint
Venture. Any such Venturer Loan shall bear interest, at a rate per annum that is
400 basis points over the Prime Rate (the "Interest Rate") from the date of the
advance of such additional Capital Contributions by such Non-Defaulting Venturer
until repayment in full. Each Venturer Loan, if any, shall (i) have a term of
one year commencing on the date such Venturer Loan was made to the Joint Venture
and (ii) require equal quarterly payments of principal and interest. The Joint
Venturers may mutually agree to any other provisions as they deem appropriate.
Notwithstanding anything contained in this Agreement to the contrary, the Joint
Venture shall make no distributions to any Defaulting Venturer for so long as
any Venturer Loans shall remain outstanding, and all Available Cash otherwise
payable to the Defaulting Venturer shall instead be applied to repay first
accrued and unpaid interest and next to outstanding principal on such Venturer
Loans until repaid in full. In the event that there shall at any time be
outstanding Venturer Loans owing by the Joint Venture to both Joint Venturers,
all repayments of such Venturer Loans shall be made proportionately in
accordance with the principal balances thereof.
6.4 Additional Consequences of Default in Capital
Contributions.
(a) If any Venturer Loan shall remain unpaid and
outstanding on the later of (x) the first anniversary of the initial making of
such Venturer Loan or (y) the end of the next full Summer Season, then, subject
to any restrictions contained in the Loan Documents, the
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Joint Venture Interest of the Defaulting Venturer whose default gave rise to
such Venturer Loan shall be reduced to its Revised Percentage, which shall
become such Joint Venturer's Percentage Interest for all purposes hereof.
(b) For as long as any Venturer Loan remains
outstanding and unpaid, such Defaulting Venturer shall lose its management
rights in the Joint Venture expressed in Article VIII hereof. If a Defaulting
Venturer fails to pay the aggregate amount of principal and interest of such
Venturer Loan as and when due at maturity (i.e., on the first anniversary of the
making of such Venturer Loan), then such Defaulting Venturer shall permanently
lose its management rights in the Joint Venture expressed in Article VIII hereof
for the remainder of the term of the Joint Venture. Any such loss of management
rights, whether temporary or permanent, shall not affect either such Joint
Venturer's obligation to provide Additional Required Funds as provided in
Section 6.2 hereof or the deduction of such Joint Venturer's Revised Percentage
as provided in Section 6.4 hereof.
6.5 Letter of Credit. (a) The Joint Venturers hereby
acknowledge that NOC and its affiliates have arranged for the Letter of Credit
to be issued for the account of a subsidiary of NOC as part of obtaining the
Project Financing which benefits the Joint Venture. The Joint Venturers further
hereby acknowledge and agree that any dollar amount drawn under such Letter of
Credit is intended to, and shall be deemed to be, a loan from NOC to the Joint
Venture. Under the terms of the Guaranty, the Joint Venture or an Affiliate of
NOC will be entitled to request that the Letter of Credit be drawn upon in order
to fund costs incurred in connection with the construction of the Project up to
an amount equal to $3,600,000 (a "Construction Draw Request"). Notwithstanding
anything to the contrary in the Guaranty or any other documents entered into by
the Joint Venture in connection with the Project Financing (collectively, the
"Loan Documents"), CADCo hereby agrees that NOC shall be solely entitled to
submit any Construction Draw Request on behalf of the Joint Venture (to the
extent that such a draw request is permitted by the Guaranty). In the event any
draw is made on the Letter of Credit either by or on behalf of the CDA pursuant
to the Loan Documents or pursuant to any Construction Draw
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Request, then upon the making of such draw CADCo shall immediately be required
to contribute to the Joint Venture, additional Capital Contribution the sole
purpose of funding the payment to NOC described below in this Section 6.5, an
amount, in cash, equal to 50% of the amount of such draw (together with interest
thereon at the Interest Rate from the date of such draw until the date the full
amount so drawn has been contributed by CADCo to the Joint Venture and
distributed by the Joint Venture to NOC as provided below in this Section). Upon
the Joint Venture's receipt of any such additional Capital Contribution from
CADCo, the Joint Venture shall, notwithstanding any other provision hereof to
the contrary, immediately distribute the full amount of such additional Capital
Contribution by CADCo to NOC, in cash. In the event that CADCo fails to make
such required additional Capital Contributions within five days after receiving
notice of a draw on the Letter of Credit, NOC shall be entitled to receive all
Available Cash of the Joint Venture otherwise distribute or payable to CADCo
(prior to any payment to the Joint Ventures of Booking Management Fees (or the
making of any reserve therefor) out of Available Cash) until the aggregate
amount of such distributions of Available Cash to NOC (as a Joint Venturer)
equal the aggregate amount of such additional Capital Contributions required
from, but not contributed by, CADCo together with interest thereon at the
Interest Rate from the date of such draw, provided, that such a failure by CADCo
shall entitle NOC to exercise the rights and remedies provided in the Agreement
upon the failure of a Joint Venturer to repay a Venturer Loan. Each Joint
Venturer hereby further confirms that it has obtained (in favor of NOC or its
Affiliate that is the account party on the Letter of Credit) the guaranty of its
principal ultimate shareholder (being Koplik, in the case of CADCo, and Robert
E. Nederlander, Sr., in the case of NOC) of payment to NOC of up to $500,000
(i.e., $500,000 for each of Messrs. Koplik and Nederlander, Sr.) of the first
$1,000,000 in draws against the Letter of Credit, which guarantees shall be paid
on an equal, pari passu basis.
(b) The Joint Venture shall pay on demand all
reasonable costs and expenses incurred by NOC and its Affiliates in connection
with the preparation, issuance, delivery, recording and administration of the
Letter of Credit including, without limitations the reasonable fees and
out-of-pocket expenses of legal counsel and all costs and expenses in
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connection with any drawing against (including wire transfer or fees),
maintenance, renewal, or cancellation of the Letter of Credit.
ARTICLE VII
DISTRIBUTIONS
7.1 Periodic Distributions. Subject to the provisions of
Article VI hereof, the Joint Venturers shall cause the Joint Venture to (x) pay
all Booking and Management Fees to the Joint Venturers on an annual basis within
sixty (60) days following the end of each Fiscal Period, and (y) make
distributions of available cash to the Joint Venturers in proportion to their
respective Percentage Interests as and when determined by the Joint Venturers
(but in no event less frequently than annually).
7.2 No Violations. Notwithstanding any provision of this
Agreement to the contrary, the Joint Venture shall make no distribution that
would result in any violation of (i) the provisions of the Project Financing or
any other mortgages, loan agreements or other agreements or instruments binding
on the Joint Venture, or (ii) any state or federal lava regulations applicable
to the Joint Venture.
7.3 Sale, Assignment or Transfer. If any Joint Venture
Interest is sold, assigned or transferred during any Fiscal Period, Profits,
Losses, each item thereof and all other items attributable to such Interest for
such Period shall be divided and allocated between the transferor and the
transferee by taking into account their varying interests during such Period,
using any conventions permitted by law and selected by the Joint Venturers. All
distributions on or before the date of such transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.
Upon any transfer permitted by the terms of this Agreement, the Joint Venturer
shall use its reasonable efforts to make an equitable distribution of Available
Cash to the transferor Joint Venturer as of the effective date of the transfer.
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ARTICLE VIII
MANAGEMENT
8.1 Generally. Subject to Sections 6.4(b) and 11.3(a), the
control of the business and affairs of the Joint Venture shall be jointly vested
in the Joint Venturers to be exercised exclusively in the manner set forth in
this Article VIII and in Article IX hereof; provided, however, that
notwithstanding the foregoing, such control shall be vested in NBC in the event
(a) of the CADCo Key Man's death, physical or mental disability or (b) that the
CADCo Key Man no longer owns more than 50% of the outstanding capital stock of
CADCo or is no longer involved in the day to day operations of CADCo's business.
8.2 Meetings. Regular Joint Venture meetings shall normally be
held on a calendar quarter basis unless the Joint Venturers otherwise agree.
Additional Joint Venture meetings shall be held at such other times as may be
specified by either Joint Venturer upon not less than five (5) business days
prior written notice to the other Joint Venturer, which notice shall specify the
time and place of the meeting and shall include an specify agenda for such
meeting. The agenda for each Joint Venture meeting shall be established through
consultation among the Joint Venturers and the Manager (as such term is
hereinafter defined), with each Joint Venturer having the right to place matters
on the agenda. Either Joint Venturer may participate in a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation by such
means shall constitute presence in person at such meeting.
8.3 Actions Without A Meeting. Any action required or
permitted to be taken at any meeting of the Joint Venture may be taken without a
meeting if both Joint Venturers consent to such action in writing (which shall
include telex or telecopier consents), and any such writing or writings are
filed with the books and records of the Joint Venture.
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8.4 Appointment of Manager. Prior to the completion of the
construction of the Facility, the Joint Venturers shall mutually select and
retain the initial managing operator (the "Manager") of the Facility. If the
initial Manager resigns or is terminated with the mutual agreement of the Joint
Venturers, then the Joint Venturers shall mutually select and retain a
replacement manager. Each successor manager shall be selected and retained upon
the consent of both Joint Venturers. The Manager shall have the duties specified
in Section 9.2 hereof.
8.5 Budgets. Prior to the completion of the construction of
the Facility, the Joint Venturers shall mutually develop, prepare and agree upon
an operating budget in respect of the initial Season of operations at the
Facility (the "Initial Period"). Such operating budget (the "Initial Budget")
shall set forth in such detail as the Joint Venturers shall agree the estimated
receipts and expenditures of the Joint Venture for the Initial Period. For each
Fiscal Period next succeeding the Initial Period, the Joint Venturers shall
jointly develop and prepare each operating budget (a "Budget") which shall be,
unless the Joint Venturers otherwise agree, in substantially the same format as
the Initial Budget. The Joint Venturers may amend a previously approved Budget
at any time. If the Joint Venturers cannot agree upon a Budget in respect of any
Fiscal Period following the Initial Period, the Budget for such Fiscal Period
shall equal the annualized Budget for the immediately preceding Fiscal Period as
the same may have been previously amended by the Joint Venturers; provided,
however (a) appropriate adjustments to the prior approved Budget shall be
automatically made to reflect actual increases in real property taxes, insurance
premiums, utility charges, and similar costs and charges over which the Joint
Venture has no control, and (b) each other line item of expense in such prior
approved Budget shall be increased by an amount equal to 5%.
8.6 Financial Statements, Books and Records. Within 45 days
after the end of each calendar quarter, and within 90-days after the end of each
Fiscal Period, the Joint Venturers shall jointly select an independent auditor
and cause such auditor to prepare and submit to the Joint Venturers for their
acceptance and issuance preliminary statements of income (loss) and a balance
sheet for the Joint Venture for the prior calendar quarter or Fiscal Period, as
the case may
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be. The Joint Venturers shall each have the right, at any time during reasonable
business hours, to inspect, copy or make extracts from any and all Joint Venture
books and records.
8.7 Joint Venture Resolutions. Any Joint Venture decisions
reached by the Joint Venturers at Joint Venture meetings may be evidenced by
resolutions setting forth such decisions and signed by the Joint Venturers to
evidence such decisions on behalf of the Joint Venture.
8.8 Transactions with Related Parties. Except for transactions
specifically contemplated by the terms of this Agreement (including, without
limitation, Section 9.6 hereof), any transactions between the Joint Venture and
any Joint Venturer or any Affiliate of any Joint Venturer shall require the
approval of the other Joint Venturer in writing, and prior to seeking any such
approval, the Joint Venturer affiliated with any such transaction shall first
describe in reasonable detail the terms of any such transaction to the other
Joint Venturer.
8.9 Actions for Joint Venture. No Joint Venturer shall take
any action on behalf of the Joint Venture or cause the Joint Venture to take any
action without the approval of the other Joint Venturer, except as otherwise
provided in Article IX.
8.10 Operating Account and Payment of Operating Expenses. All
Gross Revenues derived from the operation of the Facility, whether received by
either Joint Venturer or the Manager on behalf of the Joint Venture, shall be
deposited in an account (the "Operating Account") in the name of the Joint
Venture in such bank as may be designated by the Joint Venturers. The Operating
Account shall at all times be subject to the joint control of the Joint
Venturers. All authorized signatories for the Operating Account shall be
designated jointly by the Joint Venturers and checks or other instruments to
withdraw funds from the Operating Account shall be signed only by such
designees. If authorized by the Joint Venturers, the Manager shall be entitled
to withdraw funds from the Operating Account in order to pay Operating Expenses
in accordance with the terms of the Initial Budget or any subsequent Budget
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(including, without, limitation, payment of any Booking and Management Fees to
the Joint Venturers). The expenses set forth on Schedule I hereto incurred in
connection with the development and financing of the Project are hereby approved
by the Joint Venturers and shall be reimbursed to the Joint Venturers indicated
on such schedule out of Available Cash. Any interest on or income from any
amounts deposited in the Operating Account shall be deemed Gross Revenues.
Subject to the terms and conditions of this Agreement, including without
limitation, the provisions of Section 6.2 hereof, CADCo shall be entitled to
receive forty (40%) percent and NOC shall be entitled to receive sixty (60%)
percent of all Booking and Management Fees generated during each Fiscal Period
of the operation of the Facility which Booking and Management Fees shall be
simultaneously paid to each of the Joint Venturers within sixty (60) days
following the end of each Fiscal Period.
ARTICLE IX
CONSTRUCTION/FACILITY MANAGEMENT BOOKINGS
9.1 Construction of the Facility. The Joint Venturers shall
participate jointly in the negotiation of the terms and conditions of (i) the
Ground Lease, (ii), the Project Financing, and (iii) any agreements relating to
the acquisition of the Conrail Site or any parking facilities to be leased or
acquired by the Joint Venture. Neither the Ground Lease, the Project Financing
loan documents or any other such agreements, instruments or documents required
in connection with the Ground Lease or the Project Financing shall be executed
and/or delivered unless and until each Joint Venturer shall have approved the
terms and conditions thereof in the exercise of such Joint Venturer's reasonable
judgment. All decisions and all agreements (collectively, the "Construction
Agreements") with any contractors, architects, structural or other engineers,
environmental or other consultants or other professionals (collectively, the
"Construction Professionals") to be engaged on behalf of the Joint Venture with
respect to the construction of' the Facility shall be jointly approved and
negotiated by the Joint Venturers. The Joint Venturers shall jointly supervise
the construction of the Facility and the performance by the Construction
Professionals of their services and the Joint Venturers shall jointly make any
decisions or
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determinations under the Construction Agreements. To the extent that either
Joint Venturer shall become aware of any issues or problems associated with the
construction of the Facility, such Joint Venturer shall notify the other so as
to keep both Joint Venturers currently apprised of the status of the
construction of the Facility.
9.2 Facility Management. The Manager shall be responsible for
the day-to-day operation of the Facility, including without limitation:
(a) hiring and firing all employees of the Facility;
(b) management of all day-to-day operations of the
Facility in accordance with the approved Initial Budget or any
subsequent approved Budget, as the case may be, including,
without limitation, responsibility for supervision and
operation of the Backstage, Front of Stage, public safety and
security (which shall include arrangements for police, fire,
ambulance and private security teams and for crowd control,
whether backstage, front stage or otherwise), Food & Beverage,
physical plant (which shall include all repair and maintenance
operations, janitorial and refuse service, purchase and
replacement of fixtures, furnishings and equipment and similar
items relating to any Facility, all in addition to such items
as may be included in Backstage or Front of Stage);
(c) compliance with all regulatory matters (which
shall include compliance with all federal, state and local
laws, rules and regulations, including without limitation
zoning, building and permitting issues and noise ordinances,
and all sales, admissions and other operating taxes (as
distinct from income and similar taxes), supervision of all
media/promotion (which shall include all matters relating to
media, promotion, advertising and public relations functions
for any Facility); and
(d) such further actions as may be necessary to carry
out the day-to-day operations of the facility as may be
directed by the Joint Venturers
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which are consistent with the approved Initial Budget or any
subsequent approved Budget, as the case may be.
9.3 CADCo Key-Man. All of the actions of the Manager and the
authority of the Manager to act in the manner referred to above shall be subject
to the joint control and direction of the Joint Venturers; provided, however,
the Manager shall be at the sole direction and control of NOC in the event (i)
of the CADCo's Key Man's death, physical or mental disability or (ii) that the
CADCo Key Man no longer owns more than 50% of the outstanding capital stock of
CADCo or is no longer involved in the day to day operations of CADCo's business.
9.4 Limitations. Each Joint Venturer is expressly prohibited
from taking any of the following actions on behalf of the Joint Venture without
the prior consent of the other Joint Venturer as evidenced either specifically
in writing or by approval of the Initial Budget or any subsequent Budget, as the
case may be:
(a) changing the Joint Venture's business from that
described in Article IV;
(b) engaging in Joint Ventures or partnerships;
(c) making loans to or guarantying the obligations of
any other Person;
(d) borrowing money, (other than accounts payable
incurred in the ordinary course of business);
(e) selling assets outside the ordinary course of
business;
(f) acquiring assets outside the ordinary course of
the business;
(g) acquiring any new businesses;
(h) obligating the Joint Venture to any contract the
term of which is longer than one year, or which is anticipated
to generate more than $50,000 in gross annual revenue, or
requires more than $25,000 of expenditures;
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(i) except as provided in Section 8.5, modifying the
Initial Budget or any subsequent Budget, as the case may be,
in any material respect;
(j) hiring any employee whose total annual
compensation (including any bonuses) would exceed $50,000,
(k) entering into any written employment agreements
except to the extent specifically provided for in the Initial
Budget or any subsequent Budget, as the case may be; or
(l) adopting any bonus, profit-sharing, pension or
other employee benefit plan, practice, policy or program.
9.5 Bookings. Subject to the provisions of this Section 9.5,
the Joint Venturers shall have joint responsibility for booking events at the
Facility. In connection therewith, the Joint Venturers shall mutually establish
"booking guidelines" with respect to the duties and responsibilities of each of
the Joint Venturers relating to the booking of events at the Facility. The
"booking guidelines" shall include appropriate procedures and allocations of
responsibility with respect to: (i) the pursuit of particular artists or events
to be booked at the Facility during the next succeeding Season, (ii)
establishment and maintenance of relationships with booking agencies, (iii)
maintenance of booking calendars, (iv) coordination of booking activities, and
(v) other similar matters relating to the booking of events at the Facility. The
Joint Venturers shall periodically review the "booking guidelines" and shall, no
less frequently than annually, meet in order to establish appropriate "booking
guidelines" for the next succeeding Season. The Joint Venturers joint authority
to book events at the Facility shall be subject to the "booking guidelines" and
the provisions of subsections (a) and (b) below:
(a) Except as otherwise provided in clause (b) below,
(i) the written consent of all Joint Venturers shall be required to make or
accept any offer to book a proposed event, (ii) all booking agreements for a
proposed event must be in writing and be executed by each Joint Venturer, and
(iii) all events meeting the preceding two requirements shall be designated as
promoted by the Joint Venture on behalf of the Joint Venturers jointly. If
either
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Joint Venturer proposes to book any event at the Facility, and the other Joint
Venturer does not respond within two Business Days of receiving written notice
of such proposal, such other Joint Venturer shall be deemed to have approved of,
and to have consented to, the booking of such event.
(b) Either Joint Venturer may withhold its consent to
the booking at the Facility of any event proposed by the other Joint Venturer
for any reason or for no reason. In such event, the non-consenting Joint
Venturer shall so notify the proposing Joint Venturer in writing, and such
proposed event shall not be booked by the Joint Venture, subject to the balance
of this subsection. Each Joint Venturer shall be entitled to give two such
notifications per Season without objection from the other Joint Venturer and
such other Joint Venturer shall not have the option to rent the Facility for any
such proposed event. With respect to any subsequent such notification during any
season, the proposing Joint Venturer may, within 30 days after receiving such a
notice from the non-consenting Joint Venturer, elect to rent the Facility on a
"four-wall" basis from the Joint Venture at a rental fee equal to 17.5% of the
Net Ticket Revenues derived from any such proposed event against a minimum
guarantee of $25,000 per show (such minimum guarantee to increase according to
such formula or standard as the Venturers may agree consistent with similar
rates or guarantees at similar facilities owned or sponsored by any municipal or
other governmental agency or authority). The rental agreement between the Joint
Venture and the proposing Joint Venturer shall provide for all costs and
expenses of the type described on Annex C hereto and attributable to the
operation of the Facility during any such proposed event to be borne by the
proposing Joint Venturer. In case of such a rental, the proposing Joint Venturer
may promote the event on its own behalf, and without reference to the other
Joint Venturer, subject only to the terms of the proposing Joint Venturer's
rental agreement with the Joint Venture. The scheduling of events approved by
both Joint Venturers shall have priority in all respects over events to be
presented by one Joint Venturer in accordance with this subsection.
9.6 Relationships With Certain NOC Affiliates. (a) The Joint
Venture may engage Trafalgar Productions, Inc., an Affiliate of NOC, to seek
commercial sponsors for the
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Facility, for a commission of 10% of the revenues generated for the Joint
Venture from such sponsors.
(b) It is contemplated that the Joint Venture will
enter into the Ground Lease, but immediately assign the Ground Lease to an
Affiliate of NOC, which will post the Letter of Credit and obtain the Project
Financing, and which will immediately enter into the sublease with the Joint
Venture. The terms of the Sublease shall be mutually satisfactory to CADCo and
NOC provided, that (x) CADCo. (and not NOC either directly or through the Joint
Venture) shall be directly and primarily obligated to pay Special Additional
Rent under the Sublease and (y) in the event that CADCo's share of Available
Cash (prior to any payment to the Joint Venturers of Booking and Management Fees
(or the making of any reserve therefor) out of Available Cash) is not sufficient
to cover payment of Special Additional Rent as and when due under the Sublease,
then CADCo shall immediately, upon demand of NOC, contribute to the Joint
Venture such amounts as are required to enable the Joint Venture to so pay
Special Additional Rent as and when due under the Sublease, and any failure by
CADCo to do so shall, without limiting its other rights and remedies, entitle
NOC to have and to exercise any and all of the rights and remedies available to
it as if CADCo were a Defaulting Venturer with respect to a Venturer Loan.
(c) The terms and conditions of any engagement by the
Joint Venture of any other Affiliate of NOC shall be determined by mutual
negotiation between CADCo, on behalf of the Joint Venture, and such Affiliate,
in each case based upon the needs of the Joint Venture and giving due regard to
the terms being offered by comparable firms rendering comparable services.
9.7 Payroll; Corporate Overhead. The Joint Venture shall
maintain a separate payroll for the Facility (i.e., separate from each other and
from any payroll of each of the Joint Venturers), which payroll shall consist
solely of employees performing on-site services at the
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Facility. Neither Joint Venturer shall have the right to charge to the Joint
Venture any allocated overhead or off-site expenses of any kind of such Joint
Venturer or any of its Affiliates.
ARTICLE X
ADDITIONAL MATTERS
10.1 Tax Matters. NOC shall be the tax matters partner. Prior
to the filing of any tax return or report or settling any tax claim or issue in
respect of the Joint Venture with any governmental authority, the tax matters
partner shall present such return, report or proposed settlement to the other
Joint Venturer for its approval.
10.2 Other Ventures. The Joint Venturers acknowledge that both
CADCo and NOC and their respective Affiliates presently engage, and will
continue to engage, in various business activities at facilities throughout the
United States (including the State of Connecticut) which could be considered in
competition with the Facility, including but not limited to management and
booking services. Nothing contained in this Agreement shall be construed to
prohibit or limit such activities on behalf of either Joint Venturer or its
Affiliates.
10.3 Confidentiality. Each Venturer shall act in good faith to
cause its direct and indirect owners and its and their officers, employees and
authorized representatives to refrain from disclosing any non-public information
received by such person in connection with the activities contemplated herein
to: (a) any third Person except as deemed reasonably necessary by such Person in
connection with the normal business operations of the Joint Venture; and (b) any
governmental authority or agency or to any newspaper, magazine, or other print
or electronic media except as otherwise required by law, including, without
limitation, state or federal securities, antitrust or tax laws; provided,
however, that with respect to any disclosure or public announcement not required
by law and not in the ordinary course of business, such Joint Venturer shall not
make such disclosure or public announcement without the consent or the other
Joint Venturer unless the Joint Venturer making such announcement or disclosure
has used
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reasonable efforts to provide to the other Joint Venturer advance notice of such
disclosure or public announcement. In connection with any disclosure required by
law, the Joint Venturer making such disclosure shall use its best efforts to
obtain, to the extent available, confidential treatment with respect to
information concerning the transaction contemplated herein. Without limiting the
foregoing, neither Joint Venturer (nor any of its Affiliates), shall disparage
or otherwise comment on the other businesses, activities or affairs of the other
Joint Venturer (or any of its Affiliates), regardless of the context or
circumstances. Anything in this Agreement to the contrary notwithstanding, in no
event shall any violation of the provisions of this Section 10.3 be deemed a
"material breach" of this Agreement and the sole remedy of any Joint Venturer in
connection with a breach of the provisions of this Section shall be to commence
an action seeking compensatory damages arising from the violation of the
provisions of this Section 10.3.
10.4 Withdrawal. (a) No Joint Venturer shall withdraw any of
its Capital Contributions without the approval of the other Joint Venturer.
Under circumstances requiring a return of Capital Contributions, no Joint
Venturer shall have the right to receive property other than cash except as may
be specifically provided herein. No Joint Venturer shall receive any interest,
salary or draw with respect to its Capital Contributions or its Capital Account
or for services rendered on behalf of the Joint Venture or otherwise in its
capacity as Joint Venturer, except as otherwise provided in this Agreement or
approved by the other Joint Venturer.
(b) No Joint Venturer shall have the right to resign
or withdraw from the Joint Venture, except in connection with a Transfer
permitted under Article XI. Upon the occurrence of any Transfer by any Joint
Venturer in accordance with Article XI hereof, such Person shall cease to be a
Joint Venturer and have no further liability to the Joint Venture or any Joint
Venturer from and after the date of the Transfer. In the event that, pursuant to
the preceding sentence, any Person ceases to be a partner, such Person shall not
have any right: (i) to have the property of the Joint Venture applied to
discharge its liabilities; or (ii) to receive any payment or distribution from
the Joint Venture as a result thereof or in connection therewith.
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(c) If any Person resigns or withdraws from the Joint
Venture or causes the dissolution of the Joint Venturer where such resignation,
withdrawal or dissolution is in violation of the terms of this Agreement (a
"Breaching Venturer"), then, unless the non-breaching Joint Venturer elects to
liquidate the Joint Venture (which shall not act as a waiver of any rights or
remedies that such non-breaching Joint Venturer may have against the Breaching
Venturer), such Breaching Venturer shall be deemed to have irrevocably offered
to such other Joint Venturer the option for it (or its designee) to acquire the
Breaching Venturer's Joint Venture Interest for a price equal to the net book
value of the Joint Venture's assets multiplied by a factor equal to 75% of the
Breaching Venturer's Percentage Interest, 10% of which price shall be payable in
cash at the closing of such acquisition and the balance of which shall be
payable in ten equal annual installments, commencing on the first anniversary of
such closing, with interest at an annual rate equal to the Prime Rate plus 100
basis points. Calculation of such price shall be made as of the date of the
action resulting in such resignation, withdrawal or dissolution, with the
closing of any such sale and purchase to occur not later than 90 days
thereafter. Any dispute as to the price to be paid shall be subject to
arbitration as provided herein, but no such arbitration shall affect or delay
the transfer of Joint Venture Interest, contemplated hereby. The Joint Venturers
have agreed to this severe penalty for dissolving or resigning or withdrawing
from the Joint Venture in violation of the terms of this Agreement in order to
enforce the preference and intent of the Joint Venturers that disagreements
between the Joint Venturers be resolved exclusively through the arbitration
provisions of Section 13.1 or the provisions of Article XI.
ARTICLE XI
TRANSFERS
11.1 Generally. Except as specifically set forth in this
Sections 11.2 or 11.3, or as hereafter agreed between the Joint Venturers,
neither Joint Venturer shall offer to sell, engage in or cause or permit any
Transfer of all or any portion of its Joint Venture Interest or its rights with
respect thereto or under this Agreement: (x) at any time during the period
commencing on
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the date hereof and expiring on the tenth anniversary of the first public event
held at the Facility (the "Holding Period"), or (y) at any time during the term
of the Joint Venture if such Transfer would result in a violation of any of the
terms and conditions of the Project Financing, any other mortgages or
indebtedness binding upon the Joint Venture, the Ground Lease or any other
agreements or leases binding upon the Joint Venture. Notwithstanding the
foregoing, subject to compliance with the provisions of subdivision (y) of the
immediately preceding sentence, each of the Joint Venturers may transfer all or
any portion of such Joint Venturer's Interest or its rights with respect thereto
or under this Agreement as follows: (a) as to CADCo, to an entity wholly owned
by Koplik or controlled by Koplik (i.e. more than 50% of the equity interest
being owned directly or indirectly, by Koplik), (b) as to NOC, to an entity
wholly owned or controlled (i.e., ownership of more ,than 50% of the equity
interest, being owned directly or indirectly) by (i) any one or more of Robert
E. Nederlander, Sr., and/or James M. Nederlander or Harry J. Nederlander and/or
any of their respective relatives (collectively, the "Nederlanders") or (ii) the
Nederlanders (or any one or more of them) and, any designee(s) and/or
Affiliate(s) of the Nederlanders active and experienced in the concert business
for facilities similar in type to the Joint Venture Facility contemplated hereby
or (c) as permitted by Sections 11.2 and 11.3 below. Any breach of this Section
shall be deemed a withdrawal in violation of this Agreement pursuant to Section
10.4.
11.2 Right of First Refusal. Subject to compliance with the
terms and conditions of the Loan Documents, in the event that, at any time after
the expiration of the Holding Period, any Joint Venturer receives a bona fide
written offer (an "Offer") from a Person unaffiliated with such Joint Venturer
(the "Offeror") to acquire all of such Joint Venturer's Joint Venture Interest
for consideration consisting solely of cash, which such Joint Venturer desires
to accept, such Joint Venturer (a "Seller") may do so subject to the provisions
of this section 11.2, in which case the following procedure shall be followed:
(a) Seller shall first deliver to the other Joint
Venturer a written notice (a "Notice of Offer") specifying: (i) the name and
address of the Offeror and, if the Offeror is not a natural Person, its equity
owners and Affiliates; (ii) the proposed cash purchase price contained
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in the Offer; (iii) all other terms and conditions of the Offer; and (iv) a true
and correct copy of Seller's acceptance of the Offer and the related agreement
of sale between such Seller and the Offeror (the "Agreement of Sale"), if any.
The Notice of Offer shall constitute an irrevocable offer (the "First Refusal
Offer") by Seller to sell to the other Joint Venturer (or its designee),
Seller's entire Joint Venture Interest upon such terms and conditions and for
such cash purchase price as are specified in the Notice of Offer and the
Agreement of Sale, if any.
(b) Within sixty (60) days after receipt of a Notice
of Offer (the "First Refusal Period"), the other Joint Venturer shall have the
right to accept the First Refusal Offer, which it may do by delivering to Seller
a written notice of acceptance (a "Notice of Acceptance). The Notice of
Acceptance shall constitute an irrevocable commitment by such other Joint
Venturer ("Buyer") to purchase from Seller its entire Joint Venture Interest for
such cash purchase price and on the terms and conditions set forth in the Notice
of Offer.
(c) If the other Joint Venturer does not deliver to
Seller a Notice of Acceptance within the First Refusal Period, then Seller may
sell its entire Joint Venture Interest to the Offeror pursuant to the Agreement
of Sale or otherwise as reflected in the Notice of Offer; provided, that such
sale is consummated within sixty (60) additional days after the expiration of
the First Refusal Period and on the terms and conditions specified in the Notice
of Offer and any Agreement of Sale or on other terms and conditions no less
favorable to such seller; and provided, further, that any Offeror that actually
purchases Seller's Joint Venture Interest in accordance with this Section 11.2
shall be bound by all the terms, conditions and provisions of this Agreements,
including, without limitations, with regard to any subsequent Transfers, and
shall execute and deliver an agreement confirming that the Offeror is so bound.
If the Transfer to the Offeror is not completed within such additional 60-day
period, then any subsequent Transfer (to such Offeror or otherwise must again
comply with all the requirements of this Section 11.2).
(d) In the event that either Joint Venturer delivers
a Notice of Offer in accordance with this section, the other Joint Venturer
shall not be entitled to give its own Notice
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of Offer or to initiate a Buy-Sell under Section 11.3 until the Transfer to the
other Joint Venturer or the Offeror is consummated or the two 60-day periods
required by this Section 11.2 have both expired.
(e) In the event that a Joint Venturer shall elect
not to accept any First Refusal Offer and an Offeror shall purchase the selling
Joint Venturer's Interest, then from and after the Transfer of the Interest of
the selling Joint Venturer to the Offerors, the control of the business and
affairs of the Joint Venture shall be vested exclusively in the non-selling
Joint Venturer and the Offeror shall not participate in the management of the
Joint Venture business.
11.3 Buy-Sell. Subject to compliance with the terms and
conditions of the Loan Documents, at any time from and after the occurrence of a
Triggering Event, NOC, in the case of a Triggering Event described in clause (i)
or clause (ii) of the definition thereof, or CADCo, in the case of a Triggering
Event described in clause (ii) of the definition thereof, as the case may be
(such Joint Venturer being hereinafter referred to as the "Initiating Joint
Venturer"), shall have the right to initiate a buy-sell by making an irrevocable
offer (a "Buy-Sell Offer") to the other Joint Venturer (the "Recipient"), which
offer shall contain the following provisions:
(a) An offer to purchase all (but not less than all)
of the Joint Venture Interest then owned by the Recipient, at a purchase price
determined by the Initiating Joint Venturer and set forth in the Buy-Sell Offer
(the "Initiating Joint Venturer Price"), which price shall be payable in full in
cash at the closing of the purchase and sale to be effected thereunder (the
"Closing");
(b) The Buy-Sell Offer shall be delivered to the
Recipient by the Initiating Joint Venturer via United States mail certified with
return receipt requested, and shall be effective as of the date of posting in
the mail;
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(c) The Buy-Sell Offer shall provide for a period of
sixty (60) days (the "Acceptance Period") for acceptance of the offer to
purchase therein contained, and shall stipulate a date (the "Closing Date") for
Closing which shall not be less than ten (10) days nor more than thirty (30)
days after the expiration of the Acceptance Period.
(d) During the Acceptance Period, the Recipient shall
elect, by notice in writing to the Initiating (the "Acceptance Notice"), to
accept the offer to purchase all of the Recipient's Joint Venture Interest
contained in the Buy-Sell Offer (i) at the Initiating Joint Venturer Price or
(ii) at a purchase price determined by the Recipient and set forth in the
Acceptance Notice (the "Recipient Price"). If an Acceptance Notice contains a
Recipient Price, then the purchase price to be paid by the Initiating Joint
Venturer shall be determined pursuant to clause (e) below. If an Acceptance
Notice is not so delivered, the Recipient will be deemed to have accepted the
offer to purchase contained in the Buy-Sell Offer at the Initiating Joint
Venturer Price; that is to say, the Initiating Joint Venturer shall purchase and
the Recipient shall sell all of the Joint Venture Interest then held by the
Recipient on the Closing Date at the Initiating Joint Venturer Price.
(e) Anything herein to the contrary notwithstanding,
if an Acceptance Notice sets forth a Recipient Price, the Initiating Joint
Venturer and the Recipient shall immediately enter into expedited negotiations
with respect to the purchase price of the Joint Venture Interest of the
Recipient. Each of the Joint Venturers shall negotiate in good faith to resolve
their dispute as to the purchase price of the Joint Venture Interest of the
Recipient. If the Joint Venturers shall fail to mutually agree upon an
acceptable purchase price within 15 business days after the Acceptance Notice is
received by the Initiating Joint Venturer, then the purchase price of the Joint
Venture Interest of the Recipient shall be determined as provided herein. The
Initiating Joint Venturer shall submit the Initiating Joint Venturer Price, and
the Recipient shall-submit the Recipient Price, to the Arbitration Panel (as
such term is defined in Section 13.1(b) hereof) within three (3) business days
of the cessation of negotiations. The Arbitration Panel, in accordance with the
provisions of Section 13.1 hereof, shall then select either the
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Initiating Joint Venturer Price or the Recipient Price, and no other purchase
price, as the proper purchase price of the Joint Venture Interest of the
Recipient, which selection shall be final and conclusive for all purposes
hereof, except that if the price so selected by the Arbitration Panel exceeds
125% of the Initiating Venturer Price, the Initiating Venturer shall have the
right, but not the obligation, to consummate the purchase of the Recipient's
Joint Venture Interest the price selected by the Arbitration Panel.
(f) The Recipient shall execute and deliver such
assignments and other documents as shall be necessary to transfer and convey the
Joint Venture Interest to the Initiating Joint Venturer.
(g) The Buy-Sell provisions contained herein may not
be invoked during any period after a Notice of Offer has been given and until it
is either accepted, rejected or expires pursuant to Section 11.2 hereof.
(h) In the event either Joint Venturer initiates a
Buy-Sell hereunder, the Joint Venturer receiving notice of such action shall not
be entitled to give a Notice of Offer under Section 11.2 of its intent to sell
to a third party or to initiate a Buy-Sell hereunder until the transactions
contemplated herein are consummated or terminated pursuant to this Section 11.3.
(i) If a Triggering Event occurs and the Initiating
Joint Venturer elects not to initiate a Buy-Sell Offer, then from and after the
determination of the Initiating Joint Venturer not to initiate the Buy-Sell
Offer, the control of the business and affairs of the Joint Venture shall be
vested exclusively in the Initiating Joint Venturer and the Recipient shall not
participate in the management of the Joint Venture business.
11.4 Ultimate Ownership. From and after the date hereof
(except as the result of a Transfer permitted under this Agreement), no Joint
Venturer shall cause or permit the Joint Venture Interest attributable to it to
be controlled directly or indirectly (by stock or partnership
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ownership or otherwise) by any Person other than (i) with respect to the Joint
Venture Interest of CADCo, Koplik or an entity wholly owned by Koplik or
controlled by Koplik (i.e. more than 50% of the equity interest being owned
directly or indirectly by Koplik), (ii) with respect to the Joint Venture
Interest of NOC, an entity wholly owned or controlled (i.e. more than 50% of the
equity interest being owned directly indirectly) by (x) one or more of the
Nederlanders or their respective relatives or (y) the Nederlanders (or any of
them) and any designee(s) and/or Affiliate(s) of the Nederlanders active and
experienced in the entertainment booking business for facilities similar in type
to the facilities contemplated hereby, or (iii) the other Joint Venturer or any
Affiliate of the other Joint Venturer. If control of a Joint Venturer should
change to a Person other than as permitted pursuant to this section, such Joint
Venturer shall be considered in material breach of this Agreement irrespective
of whether such Joint Venturer voluntarily caused or permitted such change of
control.
11.5 Material Breach. In the event that any Joint Venturer is
in material breach of any of its obligations set forth in Articles X of XI
hereof, or willfully breaches any fiduciary duty which it owes to any other
Joint Venturer or the Joint Venture and, in either case, fails to remedy any
breach within thirty (30) days after written notice from the other Joint
Venturer provided however, in the event such default is not a monetary default
and such default is not susceptible of cure within thirty (30) days,
notwithstanding the exercise of due diligence by the defaulting party, then such
thirty (30) day period shall be deemed extended for such additional period of
time as may be necessary to cure such default provided the defaulting party
shall commence the curing thereof within said thirty (30) day period and shall
thereafter prosecute such cure with diligence, the non-breaching Joint Venturer
may terminate the Joint Venture by notice to the Joint Venture and may otherwise
exercise any remedy available to it at law or in equity, in which event the
breaching Joint Venturer shall be deemed to have withdrawn from the Joint
Venture in violation of the terms of this Agreement, and the provisions of
section 10.4 shall apply. Any claim that by one Joint Venturer that the other
has committed a breach as described in this provision shall be subject to
arbitration as provided in this Agreement.
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ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution. The Joint Venture shall be dissolved upon
the earliest of:
(a) The expiration of its term as provided in this
Agreement;
(b) the written consent of all Joint Venturers;
(c) the resignation or withdrawal of either Joint
Venturer (whether in compliance herewith or otherwise), which
Joint Venturer shall be deemed to have caused such dissolution
wrongfully, with all attendant consequences under the
Partnership Act; or
(d) entry of a decree of judicial dissolution.
12.2 Certificates. Upon dissolution, all certificates or
notices thereof required by law shall be filed and the Joint Venture business
shall be concluded as hereinafter provided.
12.3 Liquidation and Winding Up. (a) Upon dissolution of the
Joint Venture (other than wrongful dissolution as provided in the Joint Venture
Act), either the Facility or the joint Venture Interests of the Joint Venturers
(whichever commands the higher price) shall be sold or otherwise converted into
cash (or transferred in satisfaction of Joint Venture debts), and such cash of
the Joint Venture after such sale, conversion or transfer shall be applied or
distributed as provided in Section 1.2.3(c) below.
(b) During the period of the winding up of the
affairs of the Joint Venture, the rights and obligations of the Joint Venturers
with respect to the management of the Joint Venture shall continue, except as to
a Joint Venturer that has wrongfully caused the dissolution, which shall have
forfeited all such rights.
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(c) Upon dissolution of the Joint Venture as
described in Section 12.3(a) above, the assets of the Joint Venture shall be
applied or distributed in the following order:
(i) To creditors, including Joint
Venturers who are creditors to the
extent permitted by law, in
satisfaction of liabilities of the
Joint Venture other than liabilities
for distributions to Joint
Venturers;
(ii) To the Joint Venturers in
satisfaction of liabilities, if any,
for distributions; and
(iii) To the Joint Venturers in accordance
with Article VII hereof.
(d) The Joint Venture shall be liquidated in the same
calendar year in which the Facility is sold or otherwise disposed of.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Arbitration. Any claim or controversy between the Joint
Venture and a Joint Venturer or between the Joint Venturers which is either (x)
expressly provided to be resolved by arbitration pursuant to this Agreement, or
(y) relates to any dispute as to the management, operation, booking and/or
control of the Joint Venture, in the case of any deadlock between the Joint
Venturers, shall be submitted to arbitration pursuant to the provisions of this
Article. Anything in this Agreement to the contrary notwithstanding, no dispute
or claim involving an asserted breach of fiduciary duty or any other claim which
could result in a termination of a Joint Venturer's interest shall be resolved
by arbitration.
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(a) Either Joint Venturer may initiate the
arbitration procedure by filing a Demand for Arbitration with the American
Arbitration Association at its offices in New York, New York. The party filing
such Demand for Arbitration shall send copies of such notice to the other Joint
Venturer.
(b) Unless otherwise set forth herein, the
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The arbitration shall be
conducted by a panel of three arbitrators selected pursuant to the procedures
set forth in the Commercial Arbitration Rules of the American Arbitration
Association.
(c) The Arbitration Panel will be selected within
thirty (30) days and the arbitration will be conducted within sixty (60) days
thereafter. A written decision of the Arbitration Panel will be requested as
soon as possible, but shall be delivered no later than thirty (30) days after
conclusion of the arbitration hearing. The Arbitration Panel may allocate the
costs of the arbitration among the parties as they determine proper, however
each party will bear its own attorney's fees and related expenses incurred in
connection with the arbitration.
(d) All decisions of a majority of the Arbitration
Panel shall be binding upon the parties and shall not be subject to collateral
attack for any reason whatsoever, and judgment upon any award rendered by the
Arbitration Panel may be entered in any court having jurisdiction thereof. All
arbitrations shall take place in New York, New York, unless all parties to the
arbitration unanimously agree otherwise.
13.2 Notices. All notices or offers required or permitted
pursuant to this Agreement shall be in writing and shall be deemed to be
sufficiently given or served for all purposes when presented personally or sent
by certified mail, return receipt requested, to the Joint Venture or either
Joint Venturer at the following addresses, or to such other address or addresses
as the Joint Venturers may hereafter specify by notice to the Joint Venturers:
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If to CADCo:
c/o Metropolitan Entertainment, Inc.
7 North Mountain Avenue
Montclair, New Jersey 07042
Attn: Mr. James Koplik
With a copy to:
Sandler & Daniells, P.C.
One Hartford Square West
Hartford, Connecticut 06106
Attn: James P. Sandler, Esq.
If to NOC:
c/o The Nederlander Organization
810 Seventh Avenue
21st Floor
New York, New York 10019
Attn: Mr. Robert E. Nederlander, Sr.
With copies to:
c/o The Nederlander Organization
22 W. Monroe, Suite 704
Chicago, IL 60603
Attn: Mr. Louis F. Raizin
-and-
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Attn: Kanneth S. Hilton, Esq.
13.3 Joint Venturers' Representations. Each Joint Venturer
hereby represents and warrants to the other and to the Joint Venture that: (a)
such Joint Venturer is duly organized, validly existing and in good standing
under the laws of the State of Connecticut; (b) such Joint Venturer owns its
Joint Venture Interest free and clear of any lien, claim, encumbrance, security
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interest, pledge, hypothecation, restriction or limitation of any kind or nature
whatsoever in favor of any party other than the other Joint Venturer; (c) such
Joint Venturer has full corporate power and authority to execute and deliver,
and to perform its obligations under, this Agreement; (d) such Joint Venturer's
execution and delivery of, and performance of its obligations under, this
Agreement do not and will not (i) require any consent of any other person, firm
or entity that has not, on or prior to the date hereof, been obtained (other
than those to be obtained from any government or governmental agency or
authority as contemplated in the definition of Start Date) or (ii) violate or
conflict with any provision of the articles or certificate of incorporation, the
bylaws or other organizational documents of such Joint Venturer documents, any
agreement, instrument or other document to which such Joint Venturer is a party
(or by which its assets are bound or affected), any judgment order, writ,
injunction, decree or demand of any court, governmental body or arbitrator by
which such Joint Venturer (or its assets) is bound or affected or any statute,
rule, regulation or other provision of law applicable to such Joint Venturer;
and (e) this Agreement constitutes a legal, valid and binding obligation of such
Joint Venturer enforceable against such Joint Venturer in accordance with the
terms hereof. In addition, CADCo represents and warrants to NOC that no person
other than the individuals described in the application for the Project
Financing, inclusive of Koplik, owns or has any right to acquire or be issued
any capital stock or other securities of CADCo.
13.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Connecticut
without regard to the principles of conflicts of law.
13.5 Further Acts. The joint Venturers will execute and
deliver such further instruments and do such further acts and things as may be
required to carry out the purpose and intent of this Agreement.
13.6 Disclaimer of Benefit. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any creditors of the
Joint Venture.
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<PAGE>
13.7 Successors. Except as otherwise herein provided, this
Agreement shall be binding upon and inure to the benefit of the Joint Venturers
and their permitted successors, personal representatives, heirs and assigns.
13.8 Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
constitute one agreement, binding on all the Joint Venturers, notwithstanding
that all Joint Venturers are not signatories to the same counterpart. All
references herein to this Agreement are deemed to refer to all such
counterparts.
13.9 Captions. All captions are for convenience only and shall
not limit or define the text hereof.
13.10 Interpretation. Each Joint Venturer and its counsel have
participated in the drafting and negotiation of the terms and provisions of this
Agreement, and no party hereto shall be deemed as the drafter for purposes of
any principle of law requiring a provision hereof to be construed strictly
against the drafter. Whenever the singular number is used in this Agreement and
when required by contest, the same shall include the plural, and the masculine
gender shall include feminine and neuter genders.
[END OF TEXT]
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<PAGE>
[EXECUTION PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Joint
Venture Agreement to be executed as of the 15th day of October, 1993.
CONNECTICUT AMPHITHEATER
DEVELOPMENT CORPORATION
By:/s/ James [illegible]
Title:President
NEDERLANDER OF CONNECTICUT, INC.
By:/s/ [illegible]
Title:President
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List of Attachments
to Connecticut Performing Arts Partners Joint Venture Agreement
Dated as of October 15, 1993
Annexes
A Capital Accounts
B Description of the Facility
C Certain Costs and Expenses
D Booking and Management Fees
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<PAGE>
ANNEX A
TO
Connecticut Performing Arts Partners
Joint Venture Agreement
Dated as of October 15, 1993
Joint Venturer Percentage Interest
CADCo 40%
NOC 60%
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<PAGE>
SCHEDULE I
TO
Connecticut Performing Arts Partners
Joint Venture Agreement
Dated as of October 15, 1993
Approved Development and Financing Expenses
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<PAGE>
GENERAL PARTNERSHIP
THIS AGREEMENT OF GENERAL PARTNERSHIP entered into as of January 5,
1995, by and among Northeast Ticketing Company and Southeast Ticketing Company
(hereinafter collectively referred to as "Partners" and individually as
"Partner").
1. Name and purpose. The Partnership shall be carried on under the name
of Conn Ticketing Company. The Partnership has been formed for the purpose of
engaging in the computerized ticketing business in the State of Connecticut. The
Partnership may engage in any and all other activities as may be necessary,
incidental or convenient to carry out the business of the Partnership as
contemplated by this Agreement.
2. Place of business. The principal office of the Partnership shall be
located at 92 Weston Street, Suite 30, Hartford, Connecticut 06120, or at such
other place as shall be agreed upon by the Partners from time to time.
3. Partners. The name and address of each of the Partners are as
follows:
Northeast Ticketing Company 92 Weston Street, Suite 30
Hartford, Connecticut 06120
Southeast Ticketing Company 92 Weston Street, Suite 30
Hartford, Connecticut 06120
4. Term. The Partnership shall commence on January 1, 1995, and shall
continue until terminated as provided in this Agreement.
<PAGE>
5. Capital contributions. Each of the Partners has contributed to the
capital of the Partnership, in cash, the amount set forth opposite his name:
Partner Contribution
Northeast Ticketing Company $ 1,000
Southeast Ticketing Company $ 1,000
An individual capital account shall be established and maintained for
each Partner, who shall receive an interest in the Partnership and shall be
credited with the amounts of its capital contributions to the Partnership from
time to time. A Partner shall not be entitled to interest on its capital
contribution, or to withdraw any part of its capital account, or to receive any
distribution from the Partnership, except as specifically provided herein.
6. Net profits, net losses and cash flow. (a) Profits and losses. Each
partner shares equally in the net profits and surplus remaining after all
liabilities, including those to Partners are satisfied; and must contribute
toward the losses, whether of capital or otherwise, sustained by the Partnership
according to its share in the profits.
The terms "net profits" and "net losses" shall mean the net profits and
losses of the Partnership as determined for federal income tax purposes by the
certified public accountant servicing the partnership account.
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<PAGE>
(b) Cash flow. The cash flow of the Partnership shall be determined
separately for each fiscal year and not cumulatively and, as so determined,
shall be distributed in the same proportion as profits and losses are shared in
accordance with paragraph 6(a). The cash flow shall be distributed at the
discretion of the Partners, but at least semiannually.
(c) Income accounts. A separate income account shall be maintained for
each Partner. Partnership profits and losses shall be charged or credited to the
separate income account of each Partner. If a Partner has no credit balance in
his income account, losses shall be charged to his capital account.
7. Rights and duties of Partners in relationship to Partnership. (a)
Each Partner has equal rights in the management and conduct of the Partnership
business and shall provide such services to the operation of the Partnership
business as it shall deem proper and necessary, including keeping all Partners
informed of all letters, accounts, writings and other information which shall
come to a Partner's attention concerning the business of the Partnership.
Partners shall render true and full information of all things affecting the
Partnership to the other Partner or its legal representative.
(b) The Partnership must indemnify every Partner in respect of payments
made and personal liabilities reasonably incurred by it in the ordinary and
proper conduct of Partnership business, or for the preservation of Partnership
business or property.
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<PAGE>
(c) Each Partner must account to the Partnership for any benefit and
hold as trustee for it any profits derived by it without the consent of the
other Partner from any transaction connected with the formation, conduct, or
liquidation of the Partnership or from any use by it of Partnership property.
(d) The Partnership shall keep or cause to be kept full records of each
transaction of the Partnership and shall maintain such records at the principal
office of the Partnership or at the principal office of the partnership's
accounting firm. Said records shall be open for inspection and examination by
all Partners, or their duly authorized representative, at all reasonable times.
The fiscal year of the Partnership shall end on December 31.
(e) Either Partner shall not be liable to the Partnership or to any
Partner for any mistake or error in judgment or for any act or omission believed
in good faith to be within the scope of authority conferred by this Agreement.
(f) No Partner is entitled to remuneration for acting in the
Partnership business.
8. Voting. Each Partner shall vote in proportion to his capital
interest in the Partnership from time to time. Each Partner may exercise his
vote by written or oral notification to the other Partner, in each of those
instances hereinafter stated.
9. Amendments. Amendments to this Agreement shall become effective only
if in writing, signed by all the Partners.
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<PAGE>
10. Withdrawal from Partnership.
(a) Partial or complete withdrawal. Each Partner shall have the right
to withdraw either partially or completely from the Partnership at the end of
any fiscal year or at the end of the second quarter of any fiscal year. Written
notice of intention to withdraw shall be served on the remaining Partner by the
withdrawing Partner at least 45 days before the end of such fiscal year or
quarter. The partial or complete withdrawal of a Partner shall have no effect on
the continuance of the partnership business.
(b) Distribution. The distribution for the withdrawn Partnership Units
shall be the fair market value thereof, as of the close of business on the
effective date of the withdrawal (the end of the fiscal year or the end of the
second quarter of the fiscal year). The fair market value of each Unit shall be
determined by substituting the fair market value as of such date, in place of
the book value, of all asset value, as redetermined, all liabilities of the
Partnership as of such date, and dividing the resulting figure (representing the
net fair market value of all Units of the partnership) by the total number of
Partnership Units being withdrawn.
To the extent possible, the determination of the fair market value of
the Partnership Unit shall be made by the certified public accountant who is
then servicing the Partnership.
In making the adjustment for the fair market value of any asset without
a readily ascertainable value and with respect to which the fair market value
cannot be agreed upon by the Partnership and withdrawing Partner, the
Partnership shall apply and rely upon the written appraisal of a qualified
appraiser of such asset, selected by the Partnership for that purpose at the
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<PAGE>
expense of the Partnership. All such determinations of fair market value shall
be made within 60 days after the effective date of the withdrawal of a
Partnership Unit.
(c) Payment. Payment from the Partnership for the Units withdrawn by a
Partner pursuant to this paragraph shall be made within 120 days after the
determination of the value of the partnership Units.
11. Transfer of partnership interest.
(a) Permitted transfers. Subject to paragraph 11(b) below, a Partner's
interest is assignable in whole or in part. A Partner ceases to be a Partner
upon assignment of all its Partnership interest.
A conveyance by a Partner of its interest in the Partnership does not
of itself dissolve the partnership, nor, as against the other Partners in the
absence of agreement, entitle the assignee, during the continuance of the
Partnership, to interfere in the management or administration of the partnership
business or affairs, or to require any information or account of partnership
transactions, or to inspect Partnership books; but it merely entitles the
assignee to receive in accordance with its contract the profits to which the
assigning Partner would have otherwise been entitled.
(b) Prohibited transfers. A Partner shall not pledge, cause a lien to
be placed against, or encumber, its partnership interest in any way. Unless
authorized by the other Partners, a Partner has no authority to assign the
Partnership property in trust for creditors or on the
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<PAGE>
assignee's promise to pay the debts of the Partnership; dispose of the good will
of the business; do any other act which would make it impossible to carry on the
ordinary business of the Partnership; confess a judgment, submit a Partnership
claim or liability to arbitration or reference.
A Partner shall not sell or in any other way transfer its Partnership
interest without first offering such interest for sale to the Partnership in a
writing addressed and delivered to the principal office of the Partnership. Said
notice shall set forth the proposed sale price and terms of sale. Thereupon, the
Partnership shall have a period of 30 days to notify the selling Partner of its
intention to purchase the interest offered for sale pursuant of the terms of
that offer. If the Partnership shall timely elect to purchase the selling
Partner's interest, then within 45 days after receipt by the Partnership of such
offer to sell, the partnership shall purchase said interest at the price and on
the terms at which said interest is offered for sale. If the interest is not
purchased by the Partnership within said 45-day period, then during the
six-month period thereafter the offering Partner may sell his Partnership
interest so offered for sale to any person whomsoever. Provided, however, that
said interest shall not be sold at a lower price or on more favorable terms that
than the price and terms set forth in the notice sent by the Partner in
accordance with this paragraph 11(b). And provided further, however, that if the
offering Partner does not sell his Partnership interest within the said
six-month period, then thereafter he shall not sell or in any other way transfer
such interest without first reoffering such interest for sale to the
Partnership, in the manner set forth in this paragraph 11(b).
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<PAGE>
12. Notices. All notices, consents and other instruments hereunder
shall be in writing and mailed by certified mail, return receipt requested,
postage prepaid, and shall be directed to the parties hereto at the addresses
hereinabove set forth or at the last addresses of the parties furnished by them
in writing.
13. Binding effect
This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective administrators, executors, legal
representatives, successors and permitted assigns.
In witness whereof the parties hereto have executed two copies of this
Agreement on the day and year first above written.
NORTHEAST TICKETING COMPANY SOUTHEAST TICKETING COMPANY
By: /s/ [illegible] By: /s/ James [Illegible]
------------------ -----------------------
Its President Its President
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Room 308, NORTH OFFICE BUILDING
HARRISBURG, PENNSYLVANIA 17120
APRIL 04, 1990
DICESARE-ENGLER, INC.
THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND SIGNATURE OF THE SECRETARY OF THE COMMONWEALTH. THE
CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU FOR DOING
BUSINESS IN PENNSYLVANIA.
ENTITY NUMBER: 0801966
MICROFILM NUMBER: 09015
1390-1391
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
1. Name of Corporation: Cross Country Entertainment, Inc.
2. Location in Commonwealth: 4423 Bigelow Boulevard, Pittsburgh, PA 15213
3. Statute under which incorporated: The business Corporation Law of the
Commonwealth of Pennsylvania, as approved
May 5, 1933, P.L. 364, as amended.
4. Date of incorporation: July 2, 1984
5. Omitted
6. a. Outstanding shares: 1,000 shares
b. Shares entitled to vote: 1,000 shares
7. a. Shares voted in favor of amendment: 1,000 shares
8. Amendment adopted:
RESOLVED, that Paragraph 1 of the Articles of incorporation of Cross
Country Entertainment, Inc., is hereby amended to read as follows:
"The name of the corporation is DiCesare-Engler, Inc."
Cross Country Entertainment, Inc.
- ---------------- ---------------------------------
(name of corporation)
Attest: By: /s/ Patrick J. DiCesare
- ------- ---------------------------------
Patrick J. DiCesare
/s/ Richard A. Engler President
- ---------------------------------
Richard A. Engler
Secretary
2
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CERTIFICATE OF INCORPORATION
Office of the Secretary of the Commonwealth
To all to Whom These Presents Shall Come, Greeting:
WHEREAS, Under the provisions of the Laws of the Commonwealth,
the Secretary of the Commonwealth is authorized and required to issue a
"Certificate of Incorporation" evidencing the incorporation of an entity;
WHEREAS, The Stipulations and conditions of the Law have been
fully complied with;
CROSS COUNTRY ENTERTAINMENT, INC.
THEREFORE, KNOW YE, That subject to the constitution of this
Commonwealth, and under the authority of the laws thereof, I do by these
presents, which I have caused to be sealed with the Great Seal of the
Commonwealth, declare and certify the creation, erection and incorporation of
the above in deed and in law by the name chosen hereinbefore specified.
Such corporation shall have and enjoy and shall be subject to
all the powers, duties, requirements, and restrictions, specified and enjoined
in and by the applicable laws of this Commonwealth.
Given under my Hand and the
Great Seal of the
Commonwealth, at the City
of Harrisburg, this ____
and day of _______ in the
year of our Lord one
thousand nine hundred and
eighty-four and of the
Commonwealth the two
hundred eighth.
/s/ William R. Davis
-----------------------------
Secretary of the Commonwealth
3
<PAGE>
1. Cross Country Entertainment, Inc.
2. Address: 4423 Bigelow Boulevard
Pittsburgh, PA 15213
3. Purpose of corporation:
To have unlimited power to engage in and to do any lawful act
concerning any or all lawful business for which corporations
may be incorporated under the Business Corporation Law, Act of
May 5, 1933, P.L. 364, as amended, under which Act this
corporation is incorporated, and for these other purposes to
have, possess and enjoy all the rights, benefits and
privileges of said Act (???) Assembly.
4. Term: Perpetual
5. Shares: 100,000 Shares Common Stock
Par Value: $1.00 share
6. Name and address of incorporator:
Gregory T. Nichols 1 Share Common
35 West Pittsburgh St.
Greensburg, PA 15601
......Signed June 28, 1984
/s/ Gregory T. Nichols
--------------------------
Gregory T. Nichols
4
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Room 308, NORTH OFFICE BUILDING
HARRISBURG, PENNSYLVANIA 17120
APRIL 04, 1990
DICESARE-ENGLER, INC.
THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED
DOCUMENT. PLEASE NOTE THE FILE DATE AND SIGNATURE OF THE SECRETARY OF THE
COMMONWEALTH. THE CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU
FOR DOING BUSINESS IN PENNSYLVANIA.
ENTITY NUMBER: 0801966
MICROFILM NUMBER: 09015
1390-1391
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
1. Name of Corporation: Cross Country Entertainment, Inc.
2. Location in Commonwealth: 4423 Bigelow Boulevard, Pittsburgh,
PA 15213
3. Statute under which incorporated: The business Corporation Law of the
Commonwealth of Pennsylvania, as
approved May 5, 1933, P.L. 364, as
amended.
4. Date of incorporation: July 2, 1984
5. Omitted
6. a. Outstanding shares: 1,000 shares
b. Shares entitled to vote: 1,000 shares
7. a. Shares voted in favor of amendment: 1,000 shares
8. Amendment adopted:
RESOLVED, that Paragraph 1 of the Articles of incorporation of
Cross Country Entertainment, Inc., is hereby amended to read
as follows:
"The name of the corporation is DiCesare-Engler, Inc."
Cross Country Entertainment, Inc.
(name of corporation)
Attest: By: /s/ Patrick J. DiCesare
-------------------------
Patrick J. DiCesare
/s/ Richard A. Engler President
- ------------------------------
Richard A. Engler
Secretary
2
<PAGE>
DiCESARE-ENGLER, INC.
*****************************
BYLAWS
*****************************
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 2825 Penn
Avenue, Pittsburgh, in the County of Allegheny, Commonwealth of Pennsylvania.
Section 2. The Corporation may also have offices at such other
places as the Board of Directors may from time to time determine or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of the shareholders shall be held at the
office of the Corporation at 2825 Penn Avenue, Pittsburgh, PA 15222 or at such
other place or places, either within or without the Commonwealth of Pennsylvania
as may from time to time be fixed or determined by the Board of Directors.
Section 2. The annual meeting of the shareholders shall be
held each year on such date within three (3) months following the close of the
fiscal year as shall be determined from time to time by the Board of Directors
and shall be held at a time and place determined by a resolution of the Board of
Directors. At such annual meeting, the shareholders shall elect the Board of
Directors, review reports of the affairs of the Corporation and transact any
other business which is within the powers of the shareholders.
Section 3. Notice of the annual meeting specifying the place,
date and hour of the meeting shall be given at least ten (10) days prior to the
meeting, to each shareholder entitled to vote thereat, being on record on the
date fixed as a record date, or, if no record date be fixed, then of record
thirty days next preceding the date of the meeting.
Section 4. Special meetings of the shareholders, for any
purpose or purposes, other than those regulated by statute or by the Articles of
Incorporation, may be called at any time by the President or by a majority of
the Board of Directors or by the holders of not less than twenty (20%) percent
of all shares issued and outstanding and entitled to vote at the particular
<PAGE>
meeting which are provided with such right under the Pennsylvania Business
Corporation Law, upon written request delivered to the Secretary of the
Corporation. Such request shall state the purpose or purposes of the proposed
meeting. Upon receipt of any such request it shall be the duty of the Secretary
to call a special meeting of the shareholders to be held at such time, not less
than ten nor more than sixty (60) days thereafter, as the Secretary may fix. If
the Secretary shall neglect to issue such a call, the person or persons making
the request may issue the call.
Section 5. Notice of any special meeting of shareholders shall
be given by, or at the direction of, the Secretary or other authorized person,
stating the place, the date and hour and the general nature of the business to
be transacted thereat, shall be given to each shareholder entitled to vote
thereat at least ten (10) days prior to the date named for a meeting called to
consider a fundamental change or five (5) days prior to the day named for the
meeting and other case. If the Secretary or other authorized person neglects or
refuses to give notice of a meeting, the person or persons calling the meeting
may do so. In the case of a special meeting of shareholders, the notice shall
specify the general nature of the business to be transacted.
Section 6. Business transacted at all special meetings shall
be confined to the purposes stated in the call and matters germane thereto
unless all shareholders entitled to vote consent to the consideration of
additional business.
Section 7. The presence, in person or by proxy, of the holders
of a majority of the outstanding shares entitled to vote shall constitute a
quorum for the transaction of business at all meetings of the shareholders,
except as otherwise provided by law, by the Articles of Incorporation or by
these Bylaws. The shareholders present at a duly organized meeting can continue
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum to conduct business which might have
been transacted at the meeting as originally notified provided notification of
the meeting states that those shareholders who attended the adjourned meeting
shall constitute a quorum for the purpose of acting upon the matter. If,
however, any meeting of the shareholders cannot be organized because a quorum
has not attended, the shareholders entitled to vote thereat, present in person
or by proxy, shall have power, except as otherwise provided by statute, to
adjourn the meeting to such time and place as they may determine, but in the
case of any meeting called for the election of Directors, such meeting may be
adjourned only from day to day, or for such longer periods not exceeding fifteen
days each as the holders of a majority of the shares present in person or by
proxy shall direct, and those who attend the second of such adjourned meetings,
although less than a quorum, shall nevertheless constitute a quorum for the
purpose of electing Directors. At any adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified provided notification is given
of such quorum.
Section 8. When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having voting power,
present in person or represented by proxy, shall decide any question brought
before such meeting, unless the question is one upon
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<PAGE>
which, by express provision of the statutes or of the Articles of Incorporation
or by these Bylaws, a different vote is required in which case such express
provision shall govern and control the decision of such question.
Section 9. At each shareholders' meeting, every shareholder
entitled to vote shall have the right of one vote for every share having voting
power standing in his or her name on the books of the Corporation. Unless a
record date shall have been fixed for the determination of the shareholders
entitled to vote at a shareholders' meeting, transferees of the shares which are
next preceding the date of such meeting shall not be entitled to vote at such
meeting. Unless demanded by a shareholder of the Corporation present in person
or by proxy at any meeting of the shareholders and entitled to vote thereat or
so directed by the Chairman of such meeting or required by law, the vote thereat
on any question need not be by written ballot. On a vote by written ballot, each
ballot shall be signed by the shareholder voting or in his or her name by his or
her proxy, if there be such a proxy, and shall state the number of shares voted
by him or her and the number of votes to which each share is entitled.
Section 10. Every shareholder entitled to vote may vote either
in person or by proxy. Every proxy shall be executed in writing by the
shareholder or by his or her duly authorized attorney in fact and filed with the
Secretary of the Corporation. A proxy, unless coupled with an interest, shall be
revocable at will, notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the Secretary of the Corporation. An
unrevoked proxy shall not be valid after three years from the date of its
execution unless a longer time is expressly provided for. A proxy shall not be
revoked by the death or incapacity of the maker unless, before the vote is
counted or the authority is exercised, written notice of such death or
incapacity is given to the Secretary of the Corporation.
Section 11. The officer or agent having charge of the transfer
books for shares of the Corporation shall make a complete list of the
shareholders entitled to vote at any meeting of shareholders, arranged in
alphabetical order, with the address of and number of shares held by each, which
list shall be kept on file at the registered office of the Corporation and shall
be subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting.
Section 12. Except for the action required by state law to be
taken at a meeting of the shareholders held after proper notice, any action
required to be taken at a meeting of the shareholders or a class of shareholders
may be taken without a meeting if, a consent in writing setting forth the action
so taken shall be signed by all of the shareholders who would be entitled to
vote at a meeting for such purpose and shall be filed with the Secretary of the
Corporation.
Section 13. One or more persons may participate in a meeting
of the shareholders of a business corporation by means of conference telephone
or similar communications
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<PAGE>
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this section shall constitute
presence in person at the meeting.
Section 14. Shares of the Corporation standing in the name of
a trustee or other fiduciary and shares held by an assignee for the benefit of
creditors or by a receiver may be voted by the trustee, fiduciary, assignee or
receiver. A shareholder whose shares are pledged shall be entitled to vote the
shares until the shares have been transferred into the name of the pledgee, or a
nominee of the pledgee, but nothing herein shall affect the validity of a proxy
given to a pledgee or nominee.
Section 15. Where shares of the Corporation are held jointly
or as tenants in common by two or more persons, as fiduciaries or otherwise: (1)
if only one or more of such persons is present in person or by proxy, all of the
shares standing in the names of such persons shall be deemed to be represented
for the purpose of determining a quorum and the Corporation shall accept as the
vote of all the shares the vote cast by him or her or a majority of them; and
(2) if the persons are equally divided upon whether the shares held by them
shall be voted or upon the manner of voting the shares, the voting of the shares
shall be divided equally among the persons without prejudice to the rights of
the joint owners or the beneficial owners thereof among themselves. If there has
been filed with the Secretary of the Corporation a copy, certified by an
attorney at law to be correct, of the relevant portions of the agreement under
which the shares are held or the instrument by which the trust or estate was
created or the order of court appointing them or of an order of court directing
the voting of the shares, the person specified as having such voting power in
the latest document so filed, and only those persons, shall be entitled to vote
the shares but only in accordance therewith.
Section 16. At every meeting of the shareholders, the
president, or, in the president's absence, the officer designated by a majority
in interest of the shareholders of the Corporation present in person or by proxy
and entitled to vote, shall act as chairman. The secretary of the Corporation
shall act as secretary of all meetings of the shareholders and in the absence of
the secretary, the chairman of the meeting may appoint another person to so act
as secretary of the meeting.
ARTICLE III
DIRECTORS
Section 1. The number of Directors shall consist of one or
more members as shall be determined from time to time by the Board of Directors.
Directors shall be a natural person of full age who, need not be a resident of
this Commonwealth or a shareholder of the Corporation. Except as hereinafter
provided in the case of vacancies, Directors, other than those constituting the
first Board of Directors, shall be elected by the shareholders, and each
Director shall be elected to serve for the term of one year and until his or her
successor shall be elected and
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<PAGE>
qualified or until his or her earlier death, resignation or removal. Any
Director may resign at anytime upon written notice to the Corporation. The
resignation shall be effective upon receipt thereof by the Corporation or at
such subsequent time as shall be specified in the notice of resignation. A
decrease in the number of Directors shall not have the effect of shortening the
term of any incumbent Director.
Section 2. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of Directors, may be filled
by a majority vote of the remaining members of the Board though less than a
quorum, or by the sole remaining Director, and each person so elected shall be a
Director until his or her successor is elected by the shareholders at an
election at the next annual meeting of the shareholders or any special meeting
duly called for that purpose and held prior thereto.
When one or more Directors resign from the Board effective at
a future date, the Directors then in office, including those who have so
resigned, shall have power by the applicable vote to fill the vacancies, the
vote thereon to take effect when the resignations become effective.
Section 3. The business and affairs of the Corporation shall
be managed by its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these Bylaws directed or required to be
exercised and done by the shareholders.
Section 4. The meetings of the Board of Directors may be held
at such place within or without this Commonwealth as the Board of Directors may
from time to time appoint or as may be designated in the notice of the meeting.
Written notice of every meeting of the Board of Directors shall be given to each
Director at least five days before the day named for the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board need be specified in the notice of the meeting.
Section 5. The first meeting of each newly elected Board may
be held at such time and place as shall be fixed by the shareholders at the
meeting at which such Directors were elected and no notice shall be necessary to
the newly elected Directors in order legally to constitute the meeting, provided
a majority of the whole Board shall be present; or it may convene at such time
and place as may be fixed by the consent in writing of all the Directors.
Section 6. Regular meetings of the Board may be held at such
time and place as shall be determined from time to time, by Resolution of at
least a majority of the Board at a duly convened meeting, or by unanimous
written consent. Notice of regular meetings of the Board shall be given to each
Director at least five days before each meeting.
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<PAGE>
Section 7. Special meetings of the Board may be called by the
President on one day's notice to each Director. Special Meetings may be called
on the written request of two Directors.
Section 8. At all meetings of the Board, the presence of a
majority of the Directors in office shall be necessary to constitute a quorum
for the transaction of business and the acts of a majority of the Directors
present and voting at a meeting at which a quorum is present shall be the acts
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Articles of Incorporation or by these Bylaws. If a quorum
shall not be present at any meeting of the Directors, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Any action required or permitted to be taken at a
meeting of the Directors may be taken without a meeting if, prior or subsequent
to the action, a consent or consents thereto by all of the Directors in office
is filed with the Secretary of the Corporation.
Section 10. One or more Directors may participate in a meeting
of the Board of Directors of the Corporation by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other. Participation in a meeting pursuant to this
Section shall constitute presence in person at the meeting.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 11. The Board of Directors may, by resolution adopted
by a majority of the Directors in office, establish an Executive Committee to
consist of one or more Directors of the Corporation. The Executive Committee, to
the extent provided in the resolution of the Board of Directors, shall have and
may exercise all of the powers and authority of the Board of Directors except
that the Executive Committee shall not have the power or authority as to the
following:
(1) The submission to shareholders of any action requiring
approval of shareholders under this subpart.
(2) The creation or filling of vacancies in the Board of
Directors.
(3) The adoption, amendment or repeal of the Bylaws.
(4) The amendment or repeal of any resolution of the Board
that by its terms is amendable or repealable only by the
Board.
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<PAGE>
(5) Action on matters committed by the Bylaws or resolution of
the Board of Directors to another committee of the Board.
The Board may designate one or more Directors as alternate
members of the Executive Committee who may replace any absent or disqualified
member at any meeting of the Executive Committee or for the purposes of written
action by the Executive Committee. In the absence or disqualification of a
member, an alternate member or members of the Executive Committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of the absent or disqualified
member. The Executive Committee of the Board shall serve for a term at the
pleasure of the Board.
The Board of Directors may, by resolution adopted by a
majority of the Directors in office, establish such other committees as the
Board of Directors may deem fit; provided, however, that no such committee shall
have any power or authority as to the matters set forth in subparagraphs 1
through and including 5 above.
COMPENSATION OF DIRECTORS
Section 12. Directors may be compensated for their services by
Resolution of the Board and a fixed sum, and expenses of attendance if any, may
be allowed for attendance at each regular or special meeting of the Board or at
meetings of the committees, provided, that nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
LIABILITY AND INDEMNIFICATION
Section 13. Except for responsibility or liability of a
Director pursuant to any criminal statute or for payment of taxes pursuant to
local, state or Federal law, a Director of the Corporation shall not be
personally liable for monetary damages for any action taken or any failure to
take any action unless (a) such director has breached or failed to perform his
or her fiduciary duties as provided herein and (b) the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness.
Section 14. (A) A Director of the Corporation shall stand in a
fiduciary relation to the Corporation and shall perform his or her duties as a
Director, including his or her duties as a member of any committee of the Board
upon which he or she may serve, in good faith, in a manner he or she reasonably
believes to be in the best interests of the Corporation and with such care,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. In performing his or her duties,
a Director shall be entitled to rely in good faith on information, opinions,
reports or statements, including financial statements and other financial data,
in each case prepared or presented by any of the following:
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<PAGE>
(1) One or more officers or employees of the Corporation whom
the Director reasonably believes to be reliable and competent
in the matters presented.
(2) Counsel, public accountants or other persons as to matters
which the Director reasonably believed to be within the
professional or expert competence of such person.
(3) A committee of the Board upon which he or she does not
serve, duly designated in accordance with law, as to matter
within its designated authority, which committee the Director
reasonably believes to merit confidence.
A Director shall not be considered to be acting in good faith
if he or she has knowledge concerning the matter in question that would cause
his or her reliance to be unwarranted.
(B) In discharging the duties of their respective positions,
the Board of Directors, committees of the Board and individual Directors may, in
considering the best interest of the Corporation, consider the effects of any
action upon employees, upon suppliers and customers of the Corporation and upon
communities in which offices or other establishments of the Corporation are
located, and all other pertinent factors. The consideration of those factors
shall not constitute a violation of Subsection A.
(C) Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a Director or any failure to take any action
shall be presumed to be in the best interest of the Corporation.
The standard of care recited herein shall comply with the
requirements of the Directors' Liability Act, 42 Pa. C.S.A. 8361, et seq., and
the Associations Code, 15 Pa.C.S.A. 1721, as the same may be amended from time
to time.
Section 15. The Corporation shall indemnify each person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he or she is or was a representative of the Corporation,
or is or was serving at the request of the Corporation as a representative of
another domestic or foreign corporation for-profit, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the action or proceeding if
he or she acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interest of the Corporation and, with respect
to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action or proceeding by judgment,
order, settlement or conviction, or upon the plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not act
in
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good faith and in a manner that he or she reasonably believed to be in, or not
opposed to, the best interest of the Corporation and, with respect to any
criminal proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
Section 16. The Corporation shall indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he or she is or was a representative of
the Corporation is or was serving at the request of the Corporation as a
representative of another domestic or foreign corporation for profit or
not-for-profit, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys, fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of the action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Corporation. Indemnification shall not be made under this section in respect of
any claim, issue or matter as to which the person has been adjudged to be liable
to the Corporation unless and only to the extent that the court of common pleas
of the judicial district embracing the county in which the registered office of
the Corporation is located or the court in which the action was brought
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for the expenses that the court of common pleas or other
court deems proper.
Section 17. To the extent that a Director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 15 and 16
above, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by or imposed upon him or her in connection therewith.
Section 18. Unless ordered by a Court, any indemnification
under Sections 15 or 16 above shall be made by the Corporation only as
authorized in the specific case upon a determination that the indemnification of
the Director, officer, employee or agent is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in those
sections. Such determination shall be made:
(1) By the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to the action or
proceeding;
(2) If such quorum is not obtainable, or if obtainable and a
majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in written opinion; or
(3) By the shareholders.
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Section 19. Expenses (including attorneys' fees) incurred by a
Director, officer, employee or agent in defending any action or proceeding
referred to in Sections 15 or 16 above may be paid by the Corporation in advance
of the final disposition of the action or proceeding upon receipt of an
undertaking by or on behalf of the Director, officer, employee or agent to repay
the amount if it is ultimately determined that he or she is not entitled to be
indemnified by the Corporation as authorized in this Article.
Section 20. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article, shall not be deemed exclusive
of any other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding that office.
Indemnification pursuant to this paragraph shall not be made in any case where
the act or failure to act giving rise to the claim from indemnification is
determined by a Court to have constituted willful misconduct or recklessness.
Section 21. No amendment or repeal of this Article shall
adversely affect any right or protection extended to a Director Officer,
employee or agent hereunder for an act or failure to act occurring prior to the
time of such amendment or repeal. Each Director, officer, employee and agent
shall be deemed to act in such capacity in reliance upon the rights of
indemnification and advancement of expenses hereunder shall continue as to a
person who has ceased to be a Director, Officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
Section 22. The Corporation may create a fund of any nature,
which may, but need not be, under the control of a trustee, or otherwise secure
or insure in any manner its indemnification obligations, whether arising under
or pursuant to this section or otherwise. The Corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a representative of another domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity, or arising out of his or her status
as such, whether or not the Corporation would have the power to indemnify him or
her against such liability under the provisions of this article or otherwise.
Section 23. No contract or transaction between the Corporation
and one or more of its Directors or officers or between the Corporation and any
other corporation, partnership, association or other organization in which one
or more of its Directors or Officers are Directors or Officers or have a
financial interest, shall be void or voidable solely for such reason, or solely
because the Director or Officer is present at or participates in the meeting of
the Board of Directors which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if: (a) the
material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors and the Board
in
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good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested Directors even though the disinterested Directors
are less than a quorum; (b) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, if any, and the contract or transaction
is specifically approved in good faith by vote of such Stockholders; or (c) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors or the Stockholders.
Common or interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board which authorizes a contract or transaction
specified above.
Section 24. Any payments made to an officer or employee of the
Corporation, such as salary, commission, bonus, interest or rent or
entertainment or travel expense, which shall be disallowed to the Corporation in
whole or in part as a deductible expense by the Internal Revenue Service shall
be reimbursed by such officer or employee to the Corporation to the full extent
of such disallowance. It shall be the duty of the Board of Directors, as a
Board, to enforce payment of each such amount disallowed.
Section 25. Anything set forth in these Bylaws to the contrary
notwithstanding, it is the intent that the indemnification provisions hereof
shall be to the full extent permitted by the Associations Code (effective
generally October 1, 1989), 15 Pa.C.S. ss.1741, et seq. To the extent that the
indemnification provisions set forth in these Bylaws does not go to the length
permitted by said Associations Code, said indemnification provisions are hereby
deemed to be incorporated by reference.
ARTICLE IV
OFFICERS
Section 1. The Officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, Secretary and Treasurer. The
Board of Directors may also choose a Chairman or one or more Vice Presidents.
The Officers of the Corporation need not be Directors.
Section 2. The President and Secretary shall be natural
persons of full age. The Treasurer may be a Corporation, but if a natural person
shall be of full age. Any number of offices may be held by the same person.
Section 3. The Board of Directors may also choose such other
officers and Assistant officers and agents as the needs of the Corporation may
require, who shall hold their officers for such terms and shall have such
authority and shall perform such duties as from time to time shall be determined
by Resolution of the Board.
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Section 4. The salaries of all Officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 5. The Officers of the Corporation shall hold office
until their successors are chosen and have qualified. Any Officer or agent of
the Corporation may be removed by the Board of Directors with or without cause.
The removal shall be without prejudice to the contract rights, if any, of any
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
THE PRESIDENT
Section 6. The President shall be the chief executive officer
of the Corporation. He or she shall preside at all meetings of the shareholders
and Directors, shall be ex officio a member of the Executive Committee, if any.
He or she shall also have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board are
carried into effect.
Section 7. The President shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the Corporation, if any,
except where required or permitted by law to be otherwise signed and executed,
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other Officer or agent of the Corporation.
THE VICE-PRESIDENT
Section 8. The Vice-President shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as shall from time to time be
imposed by the Board of Directors.
THE SECRETARY
Section 9. The Secretary shall attend all sessions of the
Board and all meetings of the shareholders and record all the votes of the
Corporation and the minutes of all its transactions in a book to be kept for
that purpose; and shall perform like duties for the Executive Committee of the
Board of Directors when required. The Secretary, if any, shall give, or cause to
be given, notice of all meetings of the shareholders and of special meetings of
the Board of Directors, and shall perform such other duties as may be prescribed
by the Board of Directors or President, under whose supervision he or she shall
be. The Secretary shall keep in safe custody the corporate seal of the
Corporation, and when authorized by the Board, shall affix the same to any
instrument requiring it, and, when so affixed, it shall be attested by his or
her signature or by the signature of the Treasurer or an Assistant Secretary.
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THE TREASURER
Section 10. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation in such
depositories as shall be designated by the Board of Directors.
Section 11. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President and Directors, at the regular
meetings of the Board, or whenever they require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation.
Section 12. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond in such sum, and with such surety or
sureties as may be satisfactory to the Board of Directors for the faithful
discharge of the duties of his or her office, and for the restoration of the
Corporation, in case of his or her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his or her control belonging to the
Corporation.
STANDARD OF CARE
Section 13. An officer shall perform his or her duties as an
officer in good faith, in a manner he or she reasonably believes to be in the
best interest of the Corporation and with such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence would use under
similar circumstances. A person who so performs his or her duties shall not be
liable by reason of having been an officer of the Corporation.
ARTICLE V
CERTIFICATES OF SHARES
Section 1. The certificate of shares of the Corporation shall
be numbered and registered in a share register of the Corporation as they are
issued. They shall exhibit the name of the registered holder and the number and
class of shares and the series, if any, represented thereby and the par value of
each share or a statement that such shares are without par value, as the case
may be.
Section 2. Every share certificate shall be signed by the
President or Vice-President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, but where such certificate is signed by a
transfer agent or by a transfer clerk of the Corporation and a registrar, the
signature of any corporate officer upon such certificate may be a facsimile,
engraved or printed. In case any Officer who has signed or whose facsimile
signature
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has been placed upon any share certificate shall have ceased to be such Officer
because of death, resignation, or otherwise, before such certificate is issued,
it may be issued by the Corporation with the same effect as if the Officer had
not ceased to be such at the date of its issue.
Section 3. Neither shares nor certificates representing such
shares may be issued by the Corporation until the full amount of the
consideration has been paid. The consideration for the issuance of the shares
may be paid, in whole or in part, in money, obligations (including an obligation
of a shareholder, services performed whether or not contracted for, contracts
for services to be performed or other tangible or intangible property). Neither
promissory notes nor future services shall constitute payment, or part payment,
for the shares of the Corporation.
Section 4. The Corporation may issue one (1) or more classes
or series of shares, or both, any of which classes or series may be with par
value or without par value, and with such other designations, preferences,
qualifications, privileges, limitations, options, conversion rights and such
other special or relative rights as are stated in the Articles of Incorporation
or resolution of the Board of Directors. All shares of any one class shall have
the same conversion, redemption and other rights, preferences, qualifications,
limitations and restrictions. If the Corporation is authorized to issue shares
of more than one class, the certificate shall set forth a full summary or
statement or designations, preferences, limitations and relative rights of the
shares of each class authorized to be issued.
TRANSFER OF SHARES
Section 5. Upon surrender to the Corporation or its transfer
agent of a share certificate duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, a new certificate shall be
issued to the person entitled thereto and the old certificate cancelled and the
transaction recorded upon the books of the Corporation.
FIXING RECORD DATE
Section 6. The Board of Directors may fix a time, not more
than one hundred twenty (120) days, prior to the date of any meeting of
shareholders or the date fixed for payment of any dividend or distribution or
the date for the allotment of rights or the date when any change or conversion
or exchange of shares will be made or go into effect, as a record date for the
determination of the shareholders entitled to notice of and to vote at any such
meeting or entitled to receive payment of any such dividend or distribution or
to receive any such allotment of rights or to exercise the rights in respect to
any such change, conversion or exchange of shares. In such case, only such
shareholders as shall be shareholders of record on the date so fixed shall be
entitled to notice of and to vote at such meeting or to receive payment of such
dividend or to receive such allotment or to exercise such rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
Corporation after any record date so fixed. The Board of Directors may close the
books of the Corporation against transfer of shares during the whole or any part
of such period and in such case, written or printed notice shall be mailed at
least ten days
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before the closing thereof to each shareholder of record at the address
appearing on the records of the Corporation or supplied by him or her to the
Corporation for the purpose of this notice.
REGISTERED SHAREHOLDERS
Section 7. The Corporation shall be entitled to treat the
holder of record of any share or shares as the holders in fact thereof, and
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, and shall not be liable
for any registration or transfer of shares which are registered or to be
registered in the name of the fiduciary or the nominee of a fiduciary unless
made with actual knowledge that a fiduciary or nominee of a fiduciary is
committing a breach of trust in requesting such registration or transfer, or
with knowledge of such facts that its participation therein amounts to bad
faith.
LOST CERTIFICATE
Section 8. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost or destroyed,
upon the making of an Affidavit of that fact by the person claiming the share
certificate to be lost or destroyed. When authorizing such issuance of a new
certificate or certificates, the Board of Directors may in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his or her legal representative, to
advertise the same in such manner as it shall require and/or give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost or destroyed.
ARTICLE VI
GENERAL PROVISIONS
CHECKS AND NOTES
Section 1. All checks and demands for money and notes of the
Corporation shall be signed by such Officer or Officers as the Board of
Directors may from time to time designate.
FISCAL YEAR
Section 2. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
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SEAL
Section 3. The corporate seal, if any, shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Pennsylvania". Said seal may be used by causing it or a
facsimile thereof to be impressed or fixed or in any manner reproduced. The
affixation of the corporate seal shall not be necessary to the valid execution,
assignment or endorsement by the Corporation of any instrument or other
document.
NOTICES
Section 4. Whenever written notice is required to be given to
any person under the provisions of these Bylaws, it may be given to the person
either personally or by sending a copy thereof by first class or express mail,
postage prepaid, or by telegram (with messenger service specified), telex or TWX
(with answer back received) or courier service, charges prepaid, or by
telecopier to his or her address (or to his or her telex), TWX, telecopier or
telephone number, appearing on the books of the Corporation or, in the case of
Directors, supplied by him or her to the Corporation for the purpose of notice,
if the notice is sent by mail, telegraph or courier service, it shall be deemed
to have been given to the person entitled thereto when deposited in the United
States mail or with a telegraph office or courier service for delivery to that
person or, in the case of telex or TWX, when dispatched.
Section 5. Any notice required to be given to any person may
be waived in writing signed by the person entitled to such notice whether before
or after the time stated therein. Attendance of any person entitled to notice,
either in person or by proxy, at any meeting shall constitute a waiver of notice
of such meeting, except where any person attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened.
CORPORATE RECORDS
Section 6. The Corporation shall keep complete and accurate
books and records of account, minutes of the proceedings of the incorporators,
shareholders and directors and a share register giving the names and addresses
of all shareholders and the number and class of shares held by each. The share
register shall be kept at either the registered office of the Corporation in
this Commonwealth or at its principal place of business wherever situated or at
the office of its registrar or transfer agent. Any books, minutes or other
records may be in written form or any other form capable of being converted into
written form within a reasonable time.
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RIGHT OF INSPECTION
Section 7. Every shareholder shall, upon written verified
demand stating the purpose thereof, have a right to examine, in person or by
agent or attorney, during the usual hours for business for any proper purpose,
the share register, books and records of account, and records of the proceedings
of the incorporators, shareholders and directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the shareholder. The demand shall
be directed to the Corporation at its registered office in this Commonwealth or
at its principal place of business wherever situated.
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Except as provided in Section 1504 of the
Associations Code, 15 Pa.C.S.A. ss.1504, amendments to these Bylaws may be made
by a vote of the members of the Board of Directors at any regular meeting of the
Board, or at any special meeting of the Board if notice of the proposed
amendment be contained in the notice of such meeting, or by a unanimous consent
in writing of the members of the Board of Directors; subject, however, to the
power of the shareholders to change such action.
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Name of Corporation: DiCesare-Engler Promotions, Inc.
Address of registered office in Pennsylvania: 4423 Bigelow Boulevard,
Pittsburgh, Allegheny, Pennsylvania 15213
Explain the purpose or purposes of the corporation:
To have unlimited power to engage in and to do any lawful act concerning any and
all lawful business for which a corporation may be incorporated under the Act of
May 5, 1933, P.L. 364 as amended, under which Act this corporation is
incorporated.
Aggregate Number of Shares, Classes of Shares and Par Value of Shares Which the
Corporation Shall have Authority to Issue:
10,000 Shares, Common Stock, $1.00, $10,000.00, Perpetual
Name and Address of Each Incorporator, and the Number and Class of Shares
Subscribed to by each Incorporator:
Spencer D. Hirshberg, 2000 The Frick Bldg., Pittsburgh, Pennsylvania 15219,
1 Share Common Stock
18th day of July 1985
/s/ Spencer D. Hirschberg
-------------------------
Spencer D. Hirshberg
<PAGE>
Name of Corporation: DiCesare-Engler Promotions, Inc.
Address of registered office in Pennsylvania: 4423 Bigelow Boulevard,
Pittsburgh, Allegheny, Pennsylvania 15213
Explain the purpose or purposes of the corporation:
To have unlimited power to engage in and to do any lawful act concerning any
and all lawful business for which a corporation may be incorporated under the
Act of May 5, 1933, P.L. 364 as amended, under which Act this corporation is
incorporated.
Aggregate Number of Shares, Classes of Shares and Par Value of Shares Which the
Corporation Shall have Authority to Issue:
10,000 Shares, Common Stock, $1.00, $10,000.00, Perpetual
Name and Address of Each Incorporator, and the Number and Class of Shares
Subscribed to by each Incorporator:
Spencer D. Hirshberg, 2000 The Frick Bldg., Pittsburgh, Pennsylvania 15219, 1
Share Common Stock
18th day of July 1985
/s/ Spencer D. Hirschberg
------------------------------
Spencer D. Hirshberg
<PAGE>
BY-LAWS
OF
DiCESARE-ENGLER PROMOTIONS, INC.
------------------------------
Incorporated under the Laws of the
Commonwealth of Pennsylvania
------------------------------
Adopted as of July 19, 1985
<PAGE>
TABLE OF CONTENTS DELETED
<PAGE>
BY-LAWS
OF
DiCESARE-ENGLER PROMOTIONS, INC.
ARTICLE I
OFFICES
The registered office of the Corporation in the Commonwealth
of Pennsylvania shall be located in the City of Pittsburgh, County of Allegheny.
The Corporation may establish or discontinue, from time to time, such other
offices within or without the Commonwealth of Pennsylvania as may be deemed
proper for the conduct of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of stockholders
shall be held at such place or places, within or without the Commonwealth of
Pennsylvania, as may from time to time be fixed by the Board of Directors, or as
shall be specified in the respective notices, or waivers of notice, thereof.
Section 2. Annual Meeting. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled to vote shall elect
a Board of Directors and may transact such other proper business as may come
before the meeting.
Section 3. Special Meetings. A special meeting of the
stockholders, or of any class hereof entitled to vote, for any purpose or
purposes, may be called at any time by order of the Board of Directors and shall
be called by the President or the Secretary upon the written request of
stockholders holding of record at least 50% of the outstanding shares of stock
of the Corporation entitled to vote at such meeting. Such written request shall
state the purpose or purposes for which such meeting is to be called.
<PAGE>
Section 4. Notice of Meetings. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days before the date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivering a notice thereof to him personally
or by mailing such notice in a postage prepaid envelope directed to his at his
address as it appears on the records of the Corporation, unless he shall have
filed with the Secretary of the Corporation a written request that notices
intended for him be directed to another address, in which case such notice shall
be directed to him at the address designated in such request. Notice shall not
be required to be given to any stockholder who shall waive such notice in
writing, whether prior to or after such meeting, or who shall attend such
meeting in person or by proxy unless such attendance is for the express purpose
of objecting, at the beginning of such meeting, to the transactions of any
business because the meeting is not lawfully called or convened. Every notice of
a special meeting of the stockholders, besides the time and place of the
meeting, shall state briefly the objects or purposes thereof.
Section 5. List of Stockholders. It shall be the duty of the
Secretary or other officer of the corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, either at a place within the city where the meeting is
to be held, which place shall be kept and produced at the time and place of the
meeting during the whole time thereof and subject to the inspection of any
stockholder who may be present. The original or duplicate stock ledger shall be
the only evidence as to who are the stockholders entitled to examine such list
or the books of the Corporation or to vote in person or by proxy at such
meeting.
Section 6. Quorum. At each meeting of the stockholders the
holders record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law the Articles of Incorporation or these By-Laws. In the
absence of a quorum, any officer entitled to preside at, or act as Secretary of,
such meeting shall have the power to adjourn the meeting from time to time until
a quorum shall be constituted.
Section 7. Voting. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock hold by him on the record date; except, however, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing is this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as
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otherwise required by law or the Articles of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
Section 8. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
Section 9. Action without a Meeting. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
Section 2. Election and Term. Directors shall be elected at
the annual meeting of stockholders and shall hold office until the next annual
meeting of stockholders and until their successors are elected and qualify, or
until they sooner die, resign or are removed. At each annual meeting of
stockholders, at which a quorum is present, the persons receiving a plurality of
the votes cast shall be the Directors. Acceptance of the office of Director may
be expressed orally or in writing, and attendance at the organization meeting
shall constitute such acceptance.
Section 3. Number. The number of Directors shall be such
number as determined from time to time by the Board of Directors but shall not
be less than ____ or more than ____. The initial Board of Directors shall
consist of _____ members, but shall be increased to ____ members if the number
of shareholders is increased to ______. Should the Shareholders be increased to
three or more, there shall be at least members.
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Section 4. Quorum and Manner of Acting. Unless otherwise
provided by law, the presence of a majority of the whole Board of Directors
shall be necessary to constitute a quorum for the transaction of business. In
the absence of a quorum a majority of the Directors present may adjourn the
meeting from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given. At all meetings of Directors, a quorum
being present, all matters shall be decided by the affirmative vote of a
majority of the Directors present, except as otherwise required by law. The
Board of Directors may hold its meetings at such place or places within or
without the Commonwealth of Pennsylvania as the Board of Directors may from time
to time determine or as shall be specified in the respective notices, or waivers
of notice, thereof.
Section 5. Organization Meeting. Immediately after each annual
meeting of stockholders for the election of Directors, the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors may be held at such time and place, within or without the Commonwealth
of Pennsylvania, as shall from time to time be determined by the Board of
Directors. After there has been such determination, and notice thereof has been
once given to each member of the Board of Directors as hereinafter provided for
special meetings, regular meetings may be held without further notice being
given.
Section 7. Special Meetings; Notice. Special meetings of the
Board of Directors shall be held whenever called by a majority of the Directors.
Notice of each such meeting shall be mailed to each Director, addressed to him
at his residence or usual place of business, at least five days before the date
on which the meeting is to be held, or shall be sent to him at such place by
telegraph, cable, radio or wireless, or be delivered personally or by telephone,
not later than the day before the day on which such meeting is to be held. Each
such notice shall state the time and place of the meeting and, as may be
required, the purposes thereof Notice of any meeting of the Board of Directors
need not be given to any Director if he shall sign a written waiver thereof
either before of after the time stated therein for such meeting, or if he shall
be present at the meeting. Unless limited by law, the Articles of Incorporation,
these By-Laws or the terms of the notice thereof, any and all business may be
transacted at any meeting without the notice thereof having specifically
identified the matters to be acted upon.
Section 8. Removal of Directors. Any Director or the entire
Board of Directors may be removed with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the
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Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
Section 9. Resignations. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President or the Secretary of the Corporation. The resignation of any
Director shall take effect upon receipt of notice thereof or at such later time
as shall be specified in such notice; and, unless otherwise specified therein
the acceptance of such resignation shall not be necessary to make it effective.
Section 10. Vacancies. Subject to the terms of the aforesaid
Agreement regarding the representation of Shareholders on the Board, which terms
are hereby incorporated in the By-Laws by reference, any newly created
directorships and vacancies occurring in the Board by reason of death,
resignation, retirement, disqualification or removal, with or without cause, may
be filled by the action of the holders of record of the majority of the issued
and outstanding stock of the Corporation (a) present in person or by proxy at a
meeting of holders of such stock and entitled to vote thereon or (b) by a
consent in writing in the manner contemplated in Section 9 of Article II. The
Directors so chosen, whether selected to fill a vacancy or elected to a new
directorship, shall hold office until the next meeting of stockholders at which
the election of directors is in the regular order of business and until his
successor has been elected and qualifies, or until he sooner dies resigns or is
removed.
Section 11. Compensation of Directors. Directors, as such,
shall not receive any stated salary for their services, but by resolution of the
Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; provided however
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
Section 12. Action without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
Section 13. Telephonic Participation in Meetings. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communication equipment by means of which all
persons participating can hear each other, and such participation shall
constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
Section 1. Principal Officers. The Board of Directors shall
elect a President, a secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board, if any, and the Vice Presidents, if any, being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
Section 2. Election and Term of Office. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
Section 3. Other Officers. In addition, the Board may elect
such other officers as they deem fit. Any such other officers so elected by the
Board of Directors shall be subordinate officers and shall hold office for such
period, have such authority and perform such duties as the Board of Directors
may from time to time determine.
Section 4. Removal. Any officer may be removed by resolution
adopted by the Board of Directors at any regular meeting of the Board, or at any
special meeting of the Board called for that purpose, at which a quorum is
present.
Section 5. Resignations. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall be
necessary to make it effective.
Section 6. Vacancies. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
Section 7. Chairman of the Board. The Chairman of the Board of
Directors if one be elected, shall preside, if present, at all meetings of the
Board of Directors and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
Section 8. President. The President shall have such powers and
duties of management of the Corporation and supervision of its business as shall
be from time to time assigned to him by the Board of Directors.
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Section 9. Vice President. Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him by the Board of
Directors.
Section 10. Treasurer. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Board of
Directors. The Treasurer shall give such bond, if any, for the faithful
discharge of his duties as the Board of Directors may require.
Section 11. Secretary. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the Board of Directors.
Section 12. Salaries. The salaries of the officers of the
Company shall be fixed from time to time by the Board of Directors, either by
employment agreement or by resolution.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 1. Certificate for Stock. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
Section 2. Stock Certificate Signature. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President and the
Secretary or Treasurer of the Corporation and its seal shall be affixed thereto.
If such certificate is countersigned (1) by a transfer agent other than the
Corporation or its employee, or, (2) by a registrar other than the Corporation
or its employee, the signatures of such officers of the Corporation may be
facsimiles. In case any officer of the Corporation who has signed, or whose
facsimile signature has been placed upon, any such
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certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
Section 3. Stock Ledger. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
Section 4. Cancellation. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be cancelled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until, subject to Section 7 of this Article V, such existing
certificate shall have been so cancelled, except in cases provided for by
applicable law.
Section 5. Registrations of Transfers of Stock. Registrations
of transfers of shares of the capital stock of the Corporation shall be made on
the books of the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article V provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; provided, however, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer; both the transferor and the transferee request the
Corporation to do so.
Section 6. Regulations. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By-Laws concerning the issue, transfer and
registration of certificates for shares of the stock of the Corporation. It may
appoint, or authorize any principal officer or officers to appoint, one or more
transfer clerks or one or more transfer agents and one or more registrars, and
may require all certificates of stock to bear the signature or signatures of any
of them.
Section 7. Lost, Stolen, Destroyed or Mutilated Certificates.
Before any certificate for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
Section 8. Record Dates. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record
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date for any such determination of stockholders. Such record date shall not be
more than sixty or less than ten days before the date of such meeting, or more
than sixty days prior to any other action.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 1. Corporate Seal. The Board of Directors shall
provide a corporate seal, which shall be in the form of a circle and shall bear
the name of the Corporation and words and figures showing that it was
incorporated in the Commonwealth of Pennsylvania in the year 1985. The Secretary
shall be the custodian of the seal. The Board of Directors may authorize a
duplicate seal to be kept and used by any other officer.
Section 2. Voting of Stocks Owned by the Corporation. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
Section 3. Dividends. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VII
AMENDMENTS
These By-Laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (a) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (b) by a consent in writing in the manner contemplated in Section 9
of Article II, provided, however, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-Laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VII above
provided.
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ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify each person who is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise to the full extent permitted or allowed
by Section 410 of the Business Corporation Law of the Commonwealth of
Pennsylvania.
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CERTIFICATE OF INCORPORATION
OF
DLC ACQUISITION CORP.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the Corporation (Hereinafter Called the
"Corporation") Is DLC Acquisition Corp.
SECOND: The address, including street number, city and county,
of the registered office of the corporation in the State of Delaware is 1013
Centre Road, City of Wilmington 19805, County of New Castle; and the name of the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one thousand. The par value of each
of such shares is one cent. All such shares are of one class and are shares of
Common Stock.
FIFTH: The name and the mailing address of the incorporator is
as follows:
NAME MAILING ADDRESS
Deborah Goldman-Levi 650 Madison Avenue, l6th Floor
New York, NY 10022
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholder
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thereof or on the application of any receiver or receivers appointed for this
corporation under ss.291, of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
corporation under ss. 279 of Title 8 of the Delaware Code order a meeting, of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct
of the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholder or any class thereof as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of
Directors. The number of directors which shall constitute the
whole Board of Directors shall be fixed by, or in the manner
provided in, the Bylaws. The phrase "whole Board" and the
phrase"total number of directors" shall be deemed to have the
same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election
of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in
accordance with the provisions of ss. 109 of the General
Corporation Law of the State of Delaware, and, after the
corporation has received any payment for any of its stock, the
power to adopt, amend, or repeal the Bylaws of the corporation
may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification
of directors of the corporation for staggered terms pursuant
to the provisions of subsections (d) of ss. 141 of the General
Corporation Law of the State of Delaware shall be set forth in
an initial Bylaw or in a Bylaw adopted by the stockholders
entitled to vote of the corporation unless provisions for such
classification shall be set forth in this certificate of
incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the
holder thereof to notice of, and the right to vote at, any
meeting of stockholders. Whenever the corporation shall be
authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting
power under the provisions of the certificate of incorporation
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shall entitle the holder thereof to the right to vote at any
meeting of stockholders except as the provisions of paragraph
(2) of subsection (b) of ss.242 of the General Corporation Law
of the State of Delaware shall otherwise require; provided,
that no share of any such class which is otherwise denied
voting power shall entitle the holder thereof to vote upon the
increase to decrease in the number of authorized shares of
said class.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of ss. 102 of the General
Corporation Law of the State of Delaware, as the same may be amended and
supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and against any and
all of the expenses, liabilities, or other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provision of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on April 28, 1998
/s/ Deborah Goldman-Levi
----------------------------------
Deborah Goldman-Levi, Incorporator
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State of Delaware
Office Of the Secretary Of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF AMENDMENT OF "DLC ACQUISITION CORP." CHANGING ITS
NAME FROM "DLC ACQUISITION CORP." TO "DLC CORP.", FILED IN THIS OFFICE
ON THE TENTH DAY OF AUGUST, A.D. 1998, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel Edward J. Freel, Secretary of State
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DLC ACQUISITION CORP.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the "Corporation")
is DLC Acquisition Corp. The date of incorporation is April 28, 1998.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FIRST thereof and by substituting in lieu of
said Article the following new Article.
"FIRST": The name of the corporation (hereinafter called the
"corporation") is DLC Corp.
3. The amendment of the Certificate of Incorporation herein certified
has been duly adopted AND WRITTEN CONSENT HAS BEEN GIVEN in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by Richard A. Liese, its Vice President on this 10th day of August, 1998.
By: /s/ Richard A. Liese
-----------------
Richard A. Liese
Vice President
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BY-LAWS
OF
DLC ACQUISITION CORP.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be
established and maintained at and shall be the registered agent of the
Corporation in charge hereof.
1.2 Other Offices: The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require, provided, however, that the corporation's books and
records shall be maintained at such place within the continental United States
as the Board of Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the
stockholders of the corporation shall be held at such place or places, within or
outside the State of Delaware as may be fixed by the Board of Directors from
time to time or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An
annual meeting of stockholders shall be held each year within five months after
the close of the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
<PAGE>
2.5 Notice of Meetings of Stockholders: Except as otherwise
expressly required or permitted by law, not less than ten days nor more than
sixty days before the date of every stockholders' meeting the Secretary shall
give to each stockholder of record entitled to vote at such meeting, written
notice, served personally by mail or by telegram, stating the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Such notice, if mailed shall be deemed
to be given when deposited in the United States mail, postage prepaid, directed
to the stockholder at his address for notices to such stockholder as it appears
on the records of the corporation.
2.6 Quorum of Stockholders: (a) Unless other-wise provided by
the Certificate of Incorporation or by law, at any meeting of the stockholders,
the presence in person or by proxy of stockholders entitled to cast a majority
of the votes thereat shall constitute a quorum. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a
quorum shall be present, a majority of voting stockholders, present in person or
by proxy, may adjourn the meeting from time to time without notice other than
announcement at the meeting. In the absence of a quorum, the officer presiding
thereat shall have power to adjourn the meeting from time to time until a quorum
shall be present. Notice of any adjourned meeting, other than ,announcement at
the meeting, shall not be required to be given except as provided in paragraph
(d) below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting originally called but only those stockholders entitled to vote at
the meeting as originally noticed shall be entitled to vote at any adjournment
or adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.7 Chairman and Secretary of Meeting: The President, shall
preside at meetings of the stockholders. The Secretary shall act as secretary of
the meeting or if he is not present, then the presiding officer may appoint a
person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise
provided by the Certificate of Incorporation or these by-laws, at every meeting
of the stockholders each stockholder shall be entitled to one vote for each
share of voting stock standing in his name on the books of the corporation on
the record date for the meeting. Except as otherwise provided by these by-laws,
all elections and questions shall be decided by the vote of a majority in
interest of the stockholders present in person or represented by proxy and
entitled to vote at the meeting.
By-Laws - 2
<PAGE>
2.9 Proxies: Any stockholder entitled to vote at any meeting
of stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, sealed, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote
by ballot at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed shall refuse to serve
or shall not be present, such appointment shall be made by the officer presiding
at the meeting.
2.11 List of Stockholders: (a) At least ten days before every
meeting of stockholders, the Secretary shall prepare and make a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) During ordinary business hours, for a period of
at least ten days prior to the meeting, such list shall be open to examination
by any stockholder for any purpose germane to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held.
(c) The list shall also be produced and kept at the
time and place of the meeting during the whole time of the meeting, and it may
be inspected by any stockholder who is present,
(d) The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this Section 2.11 or the books of the corporation, or to vote in person or by
proxy at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise
provided by these by-laws or any resolutions adopted by the stockholders or
Board of Directors, the order of business and all other matters of procedure at
every meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
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ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of
the corporation shall be managed by its Board of Directors which may exercise
all the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election. Terms of Office of Directors:
The number of directors which shall constitute the Board of Directors shall be
(________) unless and until otherwise determined by a vote of a majority of the
entire Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors: Removal: (a) Any director
may resign his office at any time by delivering his resignation in writing to
the Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors
may be filled by majority vote of the stockholders and any director so chosen
shall hold office until the next annual election of directors by the
stockholders and until his successor is duly elected and qualified or until his
earlier resignation or removal.
(c) Any director may be removed with or without cause
at any time by the majority vote of the stockholders given at a special meeting
of the stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of
Directors may hold their meetings, both regular and special, either within or
outside the State of Delaware.
(b) Regular meetings of the Board of Directors may be
held at such time and place as shall from time to time be determined by
resolution of the Board of Directors. No notice of such regular meetings shall
be required. If the date designated for any regular meeting be a legal holiday,
then the meeting shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of
Directors shall be held immediately following the annual meeting of the
stockholders for the election of officers and the transaction of such other
business as may come before it. If such meeting is held at the place of the
stockholders' meeting, no notice thereof shall be required.
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(d) Special meetings of the Board of Directors shall
be held whenever called by direction of the Chairman of the Board or the
President or at the written request of any one director.
(e) The Secretary shall give notice to each director
of any special meeting of the Board of Directors by mailing the same at least
three days before the meeting or by telegraphing, telexing, or delivering the
same not later than the date before the meeting.
Unless required by law, such notice need not include
a statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board of
Directors. No notice of any adjourned meeting need be given. No notice to or
waiver by any director shall be required with respect to any meeting at which
the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by
the Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall be
less than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The
President, or, in his absence a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board. The Secretary shall act
as secretary of the meeting, but in his absence the presiding officer may
appoint a secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of
Directors, or any committee designated by such board, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can bear each other, and participation in such a meeting shall
constitute presence in person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such committees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee.
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3.10 Compensation of Directors: Directors shall receive such
reasonable compensation for their service on the Board of Directors or any
committees thereof, whether in the form of salary or a fixed fee for attendance
at meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected
officers of the corporation shall be a President, a Treasurer and a Secretary,
and such other officers as the Board of Directors shall deem advisable. The
officers shall be elected by the Board of Directors at its annual meeting
following the annual meeting of the stockholders, to serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election and until their successors are elected and qualified.
(b) The Board of Directors may elect or appoint at
any time, and from time to time, additional officers or agents with such duties
as it may deem necessary or desirable. Such additional officers shall serve at
the pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein or, if no time has been specified, at the time of its receipt
by the corporation. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation
shall be fixed by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be
removed at any time, either with or without cause, by resolution adopted at any
regular or special meeting of the Board of Directors by a majority of the
Directors then in office.
4.3 Duties: (a) President: The President shall be the
principal executive officer of the corporation and, subject to the control of
the Board of Directors, shall supervise and control all the business and affairs
of the corporation. He shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect (unless any such
order or resolution shall provide otherwise), and
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in general shall perform all duties incident to the office of president and such
other duties as may be prescribed by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (2) receive and give receipts for moneys due and payable to the
corporation from any source whatsoever; (3) deposit all such moneys in the name
of the corporation in such banks, trust companies, or other depositories as
shall be selected by resolution of the Board of Directors; and (4) in general
perform all duties incident to the office of treasurer and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors. He shall, if required by the Board of Directors, give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the
minutes of the meetings of the stockholders, the Board of Directors, and all
committees, if any, of which a secretary shall not have been appointed, in one
or more books provided for that purpose; (2) see that all notices are duly given
in accordance with the provisions of these by-laws and as required by law; (3)
be custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal, is duly authorized; (4) keep
a register of the post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (5) have general charge of stock
transfer books of the Corporation; and (6) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President and by the Treasurer or the Secretary,
certifying the number of shares owned by him.
(b) If such certificate is countersigned by a
transfer agent other than the corporation or its employee, or by a registrar
other than the corporation or its employee, the signatures of the officers of
the corporation may be facsimiles, and, if permitted by law, any other signature
may be a facsimile.
(c) In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.
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(d) Certificates of stock shall be issued in such
form not inconsistent with the Certificate of Incorporation as shall be approved
by the Board of Directors, and shall be numbered and registered in the order in
which they were issued.
(e) All certificates surrendered to the corporation
shall be canceled with the date of cancellation, and shall be retained by the
Secretary, together with the powers of attorney to transfer and the assignments
of the shares represented by such certificates, for such period of time as shall
be prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the
holder of such certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the corporation's books. The corporation
shall be entitled to treat the holder of any share of stock as the holder in
fact thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person, whether
or not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be
made on the books of the corporation only by direction of the person named in
the certificate or his attorney, lawfully constituted in writing, and only upon
the surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates
representing shares of the stock of the corporation shall be issued in place of
any certificate alleged to have been lost, stolen or destroyed in such manner
and on such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent; Registrar; Rules Respecting Certificates:
The corporation may maintain one or more transfer offices or agencies where
stock of the corporation shall be transferable. The corporation may also
maintain one or more registry offices where such stock shall be registered. The
Board of Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of
Record: The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of the stockholders or any adjournment thereof, or the
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting
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of the stockholders, nor more than sixty days prior to any other action
requiring such determination of the stockholders. A determination of
stockholders of record entitled to notice or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise
order, the President, the Secretary or the Treasurer shall have full power and
authority, on behalf of the corporation, to attend, act and vote at any meeting
of the stockholders of any corporation in which the corporation may hold stock,
and at such meeting to exercise any or all rights and powers incident to the
ownership of such stock, and to execute on behalf of the corporation a proxy or
proxies empowering another or others to act as aforesaid. The Board of Directors
from time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument
of assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth. The provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and
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properly transferred, endorsed, sold, assigned, set over and delivered by the
corporation, and that with respect to such securities the authority of these
provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form
and shall have such content as the Board of Directors shall from time to time
determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the
time, place or purpose of any meeting of the stockholders, directors or a
committee is required to be given under the law of the State of Delaware, the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the holding thereof, or actual attendance at the meeting in person or, in the
case of any stockholder, by his attorney-in-fact, shall be deemed equivalent to
the giving of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors,
officers and employees to the fullest extent allowed by law, provided, however,
that it shall be within the discretion of the Board of Directors whether to
advance any funds in advance of disposition of any action, suit or proceeding,
and provided further that nothing in this section 7.4 shall be deemed to obviate
the necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise
determined by the Board of Directors, the fiscal year of the corporation shall
end on _______________.
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CERTIFICATE OF INCORPORATION
OF
DLC FUNDING CORP.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the Corporation (Hereinafter Called the
"Corporation") is DLC FUNDING CORP.
SECOND: The address, including street, number, city and
county, of the registered office of the corporation in the State of Delaware is
1013 Centre Road, City of Wilmington 19805, County of New Castle; and the name
of the registered agent of the corporation in the State of Delaware at such
address is Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one thousand. The par value of each
of such shares is one cent. All such shares are of one class and are shares of
Common Stock.
FIFTH: The name and the mailing address of the incorporator is
as follows:
NAME MAILING ADDRESS
Deborah Goldman-Levi 650 Madison Avenue, 16th Floor
New York, NY 10022
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this corporation
under
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<PAGE>
ss.291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
ss.279 of Title 8 of the Delaware Code order a meeting of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
organization shall, if sanctioned by the court to which the said application has
been made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this corporation, as the case may
be, and also on this corporation.
EIGHTH: For the management of the business and for the conduct
of the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors. The number
of directors which shall constitute the whole Board of Directors shall be fixed
by, or in the manner provided in, the Bylaws. The phrase "whole Board" and the
phrase "total number of directors" shall be deemed to have the same meaning, to
wit, the total number of directors which the corporation would have if there
were no vacancies. No election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance with the
provisions of ss.109 of the General Corporation Law of the State of Delaware,
and, after the corporation has received any payment for any of its stock, the
power to adopt, amend, or repeal the Bylaws of the corporation may be exercised
by the Board of Directors of the corporation: provided, however, that any
provision for the classification of directors of the corporation for staggered
terms pursuant to the provisions of subsections (d) of ss.141 of the General
Corporation Law of the State of Delaware shall be set forth in an initial Bylaw
or in a Bylaw adopted by the stockholders entitled to vote of the corporation
unless provisions for such classification shall be set forth in this certificate
of incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever the
corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under the
provisions of the certificate of incorporation shall entitle the holder thereof
to the right to vote at any meeting of stockholder except as the provisions of
paragraph (2) of subsection (b) of ss.242 of the General Corporation Law of the
State of Delaware shall otherwise require; provided, that no share of any such
class which is otherwise denied voting power shall entitle the holder thereof
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to vote upon the increase to decrease in the number of authorized shares of
said class.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) ss.102 of the General Corporation
Law of the State of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted
by the provisions of ss.145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on October 1, 1998
/s/ Deborah Goldman-Levi
Deborah Goldman-Levi, Incorporator
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BY-LAWS
OF
DLC FUNDING CORP.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be
established and maintained at and shall be the registered agent of the
Corporation in charge hereof.
1.2 Other Offices: The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require, provided, however, that the corporation's books and
records shall be maintained at such place within the continental United States
as the Board of Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the
stockholders of the corporation shall be held at such place or places, within or
outside the State of Delaware as may be fixed by the Board of Directors from
time to time or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An
annual meeting of stockholders shall be held each year within five months after
the close of the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
2.5 Notice of Meetings of Stockholders: Except as otherwise
expressly required or permitted by law, not less than ten days nor more than
sixty days before the date of every stockholders' meeting the Secretary shall
give to each stockholder of record entitled to vote at such meeting, written
notice, served personally by mail or by telegram, stating the place, date and
hour
<PAGE>
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Such notice, if mailed shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by
the Certificate of Incorporation or by law, at any meeting of the stockholders,
the presence in person or by proxy of stockholders entitled to cast a majority
of the votes thereat shall constitute a quorum. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall
be present, a majority of voting stockholders, present in person or by proxy,
may adjourn the meeting from time to time without notice other than announcement
at the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting originally called but only those stockholders entitled to vote at the
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.7 Chairman and Secretary of Meetings: The President, shall
preside at meetings of the stockholders. The Secretary shall act as secretary of
the meeting or if he is not present, then the presiding officer may appoint a
person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise
provided by the Certificate of Incorporation or these by-laws, at every meeting
of the stockholders each stockholder shall be entitled to one vote for each
share of voting stock standing in his name on the books of the corporation on
the record date for the meeting. Except as otherwise provided by these by-laws,
all elections and questions shall be decided by the vote of a majority in
interest of the stockholders present in person or represented by proxy and
entitled to vote at the meeting.
2.9 Proxies: Any stockholder entitled to vote at any meeting
of stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, scaled, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote
by ballot at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed
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shall refuse to serve or shall not be present, such appointment shall be made by
the officer presiding at the meeting.
2.11 List of Stockholders: (a) At least ten days before every
meeting of stockholders, the Secretary shall prepare and make a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) During ordinary business hours, for a period of at least
ten days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held.
(c) The list shall also be produced and kept at the time and
place of the meeting during the whole time of the meeting, and it may be
inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise
provided by these by-laws or any resolutions adopted by the stockholders or
Board of Directors, the order of business and all other matters of procedure at
every meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of
the corporation shall be managed by its Board of Directors which may exercise
all the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
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3.2 Number, Method of Election, Terms of Office of Directors:
The number of directors which shall constitute the Board of Directors shall be (
) unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors: Removal: (a) Any director
may resign his office at any time by delivering his resignation in writing to
the Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any
time by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of
Directors may hold their meetings, both regular and special, either within or
outside the State of Delaware.
(b) Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be determined by resolution of
the Board of Directors. No notice of such regular meetings shall be required. If
the date designated for any regular meeting be a legal holiday, then the meeting
shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting, no
notice thereof shall be required.
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or at
the written request of any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a
statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board of
Directors. No notice of any adjourned meeting need be given. No notice to or
waiver by any director shall be required with respect to any meeting at which
the director is present.
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3.5 Quorum and Action: Unless provided otherwise by law or by
the Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall be
less than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The
President, or, in his absence a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board. The Secretary shall act
as secretary of the meeting, but in his absence the presiding officer may
appoint a secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of
Directors, or any committee designated by such board, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such conunittees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such
reasonable compensation for their service on the Board of Directors or any
committees thereof, whether in the form of salary or a fixed fee for attendance
at mectings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected
officers of the corporation shall be a President, a Treasurer and a Secretary,
and such other officers as the Board of Directors shall deem advisable. The
officers shall be elected by the Board of Directors at its annual meeting
following the annual meeting of the stockholders, to serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election and until their successors are elected and qualified.
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(b) The Board of Directors may elect or appoint at any time,
and from time to time, additional officers or agents with such duties as it may
deem necessary or desirable. Such additional officers shall serve at the
pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be
fixed by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be
removed at any time, either with or without cause, by resolution adopted at any
regular or special meeting of the Board of Directors by a majority of the
Directors then in office.
4.3 Duties: (a) President: The President shall be the
principal executive officer of the corporation and, subject to the control of
the Board of Directors, shall supervise and control all the business and affairs
of the corporation. He shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect (unless any such
order or resolution shall provide otherwise), and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody
of and be responsible for all funds and securities of the Corporation; (2)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever; (3) deposit all such moneys in the name of the corporation in
such banks, trust companies, or other depositories as shall be selected by
resolution of the Board of Directors; and (4) in general perform all duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors. He shall,
if required by the Board of Directors, give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly given in accordance
with the provisions of these by-laws and as required by law; (3) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents, the execution of which on behalf
of the corporation wider its seal, is duly authorized; (4) keep a register of
the post office address of each stockholder which shall be furnished
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to the Secretary by such stockholder; (5) have general charge of stock transfer
books of the Corporation; and (6) in general perform all duties incident to the
office of secretary and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President and by the Treasurer or the Secretary,
certifying the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the
holder of such certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the corporation's books. The corporation
shall be entitled to treat the holder of any share of stock as the holder in
fact thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person, whether
or not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be
made on the books of the corporation only by direction of the person named in
the certificate or his attorney, lawfully constituted in writing, and only upon
the surrender of the certificate therefor and a written assessment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
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5.4 Lost, Stolen or Destroyed Certificates: Certificates
representing shares of the stock of the corporation shall be issued in place of
any certificate alleged to have been lost, stolen or destroyed in such manner
and on such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent: Registrar: Rules Respecting Certificates:
The corporation may maintain one or more transfer offices or agencies where
stock of the corporation shall be transferable. The corporation may also
maintain one or more registry offices where such stock shall be registered. The
Board of Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of
Record: The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of the stockholders or any adjournment thereof, or the
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting of the stockholders, nor more than sixty days prior to any other
action requiring such determination of the stockholders. A determination of
stockholders of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise
order, the President, the Secretary or the Treasurer shall have full power and
authority, on behalf of the corporation, to attend, act and vote at any meeting
of the stockholders of any corporation in which the corporation may hold stock,
and at such meeting to exercise any or all rights and powers incident to the
ownership of such stock, and to execute on behalf of the corporation a proxy or
proxies empowering another or others to act as aforesaid. The Board of Directors
from time to time may confer like powers upon any other person or persons.
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6.2 General Authorization to Transfer Securities Held By the
Corporation: (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly transferred, endorsed, sold, assigned, set over and delivered
by the corporation, and that with respect to such securities the authority of
these provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form
and shall have such content as the Board of Directors shall from time to time
determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the
time, place or purpose of any meeting of the stockholders, directors or a
committee is required to be given under the law of the State of Delaware, the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the holding thereof, or actual attendance at the meeting in person or, in the
case of any stockholder, by his attorney-in-fact, shall be deemed equivalent to
the giving of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors,
officers and employees to the fullest extent allowed by law, provided, however,
that it shall be within the discretion of the Board of Directors whether to
advance any funds in advance of disposition of any action, suit or proceeding,
and provided further that nothing in this section 7.4 shall be deemed to obviate
the necessity of the Board of Directors to make any determination that
indemnification of
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the director, officer or employee is proper under the circumstances because he
has met the applicable standard of conduct set forth in subsections (a) and (b)
of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise
determined by the Board of Directors, the fiscal year of the corporation shall
end on .
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ARTICLES OF AMALGAMATION
Name of corporation is:
EAGLE EYE ENTERTAINMENT INC.
Address:
1220 Yonge Street, Suite 300
Toronto, Ontario M5K1N2
Number of Directors:
Minimum 1 - Maximum 10
The Directors are:
- ----------------------------------------------------------------------------
Name Residence Resident Canadian State
- ----------------------------------------------------------------------------
Ronald D. Andrew 37 St. Andrews Gardens Yes
Toronto, Ontario
M5A 2N4
- ----------------------------------------------------------------------------
David Mirvish 266 King Street West Yes
Toronto, Ontario
M5V 1H9
- ----------------------------------------------------------------------------
5. (A) The amalgamation agreement has been duly adopted by the
shareholders of each of the amalgamating corporations as required by
subsection 176(4) of the Business Corporations Act on the date set out
below. (stop)
and are more particularly set out in these articles.
- ------------------------------------------------------------------------------
Names of amalgamating corporations Corporation Number Date
- ------------------------------------------------------------------------------
EAGLE EYE ENTERTAINMENT INC. 1180418 JUNE 30, 1998
1182992 ONTARIO LIMITED 1182992 JUNE 30, 1998
1177322 ONTARIO INC. 1177322 JUNE 30, 1998
6. Restrictions
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None
7. The classes and any maximum number of shares that the corporation is
authorized to issue:
an unlimited number of Class "A" Shares and 40 Class "B" Shares
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7. Rights, privileges, restrictions and conditions attaching to each class of
shares and directors authority with respect to any class of shares which may be
issued in series:
A. The Class "A" shares, shall have attached thereto, as a class, the
following rights, privileges, restrictions and conditions:
(1) The holders of the Class "A" shares shall be entitled to 1
vote per Class "A" share at all meetings of shareholders of
the Corporation, other than meetings of holders of a class of
shares other than the Class "A" shares.
(2) The holders of the Class "A" shares shall be entitled to
receive and the Corporation shall pay thereon, as and when
declared by the directors of the Corporation out of moneys of
the Corporation properly applicable to the payment of
dividends, such non-cumulative dividends as the directors may
from time to time declare. The Class "A" shares need not
participate equally as to dividends with any other class of
shares in the capital of the Corporation and, for greater
certainty, it is hereby declared that the directors may
declare and pay dividends in any financial year or years on
one or more classes of shares in the capital of the
Corporation without declaring or paying any dividends on the
Class "A" shares of the Corporation.
(3) In the event of any distribution of assets of the Corporation
among its shareholders for the purpose of winding up its
affairs the holders of the Class "A" shares and the holders of
the Class "B" shares shall be entitled to share all remaining
property and assets share for share without preference or
distinction.
B. The Class "B" shares shall have attached thereto, as a class, the
following rights, privileges, restrictions and conditions:
(1) Subject to applicable law, the holders of the Class "B" shares
shall not be entitled as such to receive notice of or to
attend any meeting of the shareholders of the Corporation and
shall not be entitled to vote at any meeting, except that the
holders of Class "B" shares shall be entitled to notice of any
meeting of shareholders called for the purpose of authorizing
the dissolution of the Corporation or the sale, lease or
exchange of all or substantially all the property of the
Corporation other than in the ordinary course of business of
the Corporation.
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(2) The holders of the Class "B" shares shall be entitled to
receive and the Corporation shall pay thereon, as and when
declared by the directors of the Corporation out of moneys of
the Corporation properly applicable to the payment of
dividends, such non-cumulative dividends as the directors may
from time to time declare. The Class "B" shares need not
participate equally as to dividends with any other class of
shares in the capital of the Corporation and, for greater
certainty, it is hereby declared that the directors may
declare and pay dividends in any financial year or years on
one or more classes of shares in the capital of the
Corporation without declaring or paying any dividends on the
Class "B" shares of the Corporation.
(3) In the event of any distribution of assets of the Corporation
among its shareholders for the purpose of winding up its
affairs the holders of the Class "B" shares and the holders of
the Class "A" shares shall be entitled to share all remaining
property and assets share for share without preference or
distinction.
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9. The issue, transfer or ownership of shares:
The right to transfer shares of the Corporation is restricted in that no share
shall be transferred except with the consent of the Board of Directors of the
Corporation, to be expressed either by a resolution passed at a meeting of the
Board of Directors or by an instrument or instruments in writing signed by a
majority of the directors.
10. Other provisions:
(a) The number of shareholders of the Corporation, exclusive of
persons who are in its employment and exclusive of persons
who, having been formerly in the employment of the
Corporation, were, while in that employment, and have
continued after the termination of that employment to be,
shareholders of the Corporation, is limited to not more than
fifty, two or more persons who are the joint registered owners
of one or more shares being counted as one shareholder,
(b) any invitation to the public to subscribe for securities of
the Corporation is prohibited.
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EAGLE EYE ENTERTAINMENT INC.
by /s/ Ronald D. Andrew
---------------------
Ronald D. Andrew,
President
1182992 ONTARIO LIMITED
by /s/ David Mirvish
---------------------
David Mirvish,
President
1177322 ONTARIO INC.
by /s/ Ronald D. Andrew
---------------------
Ronald D. Andrew
President
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BY-LAW NO. I
a by-law relating generally to
the transaction of
the business and
affairs of
EAGLE EYE ENTERTAINMENT INC.
(the "Corporation")
RESOLVED as a by-law of the Corporation that:
1. INTERPRETATION
1.1 DEFINITIONS. In this By-law and all other by-laws and resolutions of
the Corporation, unless the context otherwise requires:
(a) the following terms shall have the meanings specified:
(i) "Act" means the Business Corporations Act (Ontario), or any
statute that may be substituted therefor, including the
regulations made thereunder, as amended from time to time;
(ii) "Articles" means the Articles of Incorporation of the
Corporation as amended or restated from time to time;
(iii) "Board" means the board of directors of the Corporation;
(iv) "Chairman of the Board" means the Director appointed by the
Board from time to time to hold that office;
(v) "Corporation" means Eagle Eye Entertainment Inc.;
(vi) "Director" means a member of the Board;
(vii) "meeting of shareholders" means an annual meeting of
shareholders or a special meeting of shareholders, or both,
and includes a meeting of any class or series of any class of
shareholders;
(viii) "Officer" means an officer of the Corporation;
(b) terms that are defined in the Act are used in this By-law with the same
meaning; and
(c) words importing the singular number shall include the plural number and
vice versa, and words importing the masculine gender shall include the
feminine and neuter genders.
<PAGE>
2. DIRECTORS AND OFFICERS
2.1 NUMBER OF DIRECTORS. The minimum and maximum number of Directors of the
Corporation shall be such as are from time to time set forth in the Articles.
The number of Directors within such range shall be determined from time to time
by special resolution or, subject to the provisions of the Act, by the Board if
so empowered by special resolution.
2.2 ELECTION AND TERM. The Directors shall be elected at each annual meeting of
shareholders to hold office until the next annual meeting or until their
respective successors are elected or appointed. At any annual meeting every
retiring Director shall, if qualified, be eligible for re-election.
2.3 QUORUM. A majority of the number of Directors from time to time shall
constitute a quorum for the transaction of business at any meeting of the Board.
If it is necessary to determine the number of Directors constituting a quorum at
a time when one or more vacancies exist on the Board, such a determination shall
be made as if such vacancies did not exist. Notwithstanding the foregoing,
should the number of directors of the Corporation be fewer than three (3), all
directors of the Corporation must be present at any meeting to constitute a
quorum.
2.4 CALLING OF MEETINGS. A meeting of the Board may be held at any time upon
call by the Board, the Chairman of the Board, the President or any other Officer
so empowered by the Board.
2.5 PLACE OF MEETINGS. Each meeting of the Board shall be held at such place
within or outside Ontario as may be determined by the person calling the
meeting. Notwithstanding the provisions of the Act, the Corporation shall not be
required to hold a majority of the meetings of the board of directors at a place
within Canada in any financial year.
2.6 NOTICE. Subject as hereinafter provided, notice of every meeting of the
Board shall be given to each Director at least 48 hours prior to the meeting.
Notwithstanding the foregoing:
(a) no notice need be given of the first meeting of the Board subsequent to
a meeting of shareholders at which Directors are elected if such Board
meeting is held immediately following the meeting of shareholders; and
(b) the Board may appoint a day or days in any month or months for regular
meetings at a place and hour to be named.
A copy of any resolution by the Board fixing the time and place of regular
meetings of the Board shall be sent to each Director forthwith after being
passed, but no other notice shall be required for any such regular meeting. The
accidental failure to give notice of a meeting of the Board to a Director or any
error in such notice not affecting the substance thereof shall not invalidate
any action taken at the meeting.
-2-
<PAGE>
2.7 VOTES TO GOVERN. Every question at a meeting of the Board shall be decided
by a majority of the votes cast on the question. In the event of an equality of
votes on any question at a meeting of the Board, the Chairman of the Board shall
be entitled to a second or casting vote.
2.8 AUDIT, EXECUTIVE AND OTHER COMMITTEES. Subject to the provisions of the Act,
the Board may appoint annually from among its members an Audit Committee and one
or more other committees of Directors, including a committee designated as an
Executive Committee, and delegate to such committee or committees any of the
powers of the Board except those powers which, under the Act, a committee of
Directors has no authority to exercise.
Unless otherwise determined by the Board, each committee appointed by the Board
shall have the power to fix the quorum for its meetings at not less than a
majority of its members, to elect its presiding officer and to fix its rules of
procedure.
2.9 APPOINTMENT OF OFFICERS. The Board may from time to time appoint Officers,
specify their duties and delegate to them such powers as the Board deems
advisable and which are permitted by the Act to be so delegated. The Board may
also from time to time appoint persons to serve the Corporation in such
positions other than as Officers, with such titles and such powers and duties
and for such terms of service, as the Board deems advisable. One person may hold
or discharge the functions of more than one officer or other position.
2.10 REMUNERATION AND EXPENSES. Each Director shall be remunerated for his
services as a Director at such rate as the Board may from time to time
determine. In addition, each Director shall be paid such sums in respect of the
out-of-pocket expenses incurred by him in attending meetings of the Board,
meetings of any committee of the Board of which he is a member, or meetings of
shareholders, or otherwise incurred by him in connection with the performance of
his duties as a Director, as the Board may from time to time determine. Nothing
herein contained shall preclude any Director from receiving remuneration for
serving the Corporation as an Officer or employee or in any other capacity.
2.11 INDEMNITY. Without limit to the right of the Corporation to indemnify any
person to the full extent permitted by law, the Corporation shall indemnify a
Director or Officer, a former Director or Officer, or a person who acts or acted
at the Corporation's request as a director or officer of a body corporate of
which the Corporation is or was a shareholder or creditor, and his heirs and
legal representatives, against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
him in respect of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of being or having been a Director or
Officer, or director or officer of such body corporate, if
(a) he acted honestly and in good faith with a view to the best interests
of the Corporation; and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
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3. SHAREHOLDERS
3.1 ANNUAL AND SPECIAL MEETINGS. The Board shall call an annual meeting of
shareholders not later than 15 months after the holding of the last preceding
annual meeting and may at any time call a special meeting of shareholders.
3.2 PLACE OF MEETINGS. Each meeting of shareholders shall be held at such place
within or outside Ontario as the Board determines.
3.3 NOTICE OF MEETINGS. Notice of each meeting of shareholders shall be sent not
less than 10 days nor more than 50 days before the meeting to each shareholder
entitled to vote at the meeting, to each Director, to the auditor of the
Corporation and to any other persons who, although not entitled to vote at the
meeting, are entitled or required under any provision of the Act, the Articles
or any by-law of the Corporation to attend the meeting. The accidental failure
to give notice of a meeting of shareholders to any person entitled to notice
thereof or any error in such notice not affecting the substance thereof shall
not invalidate any action taken at the meeting.
3.4 PERSONS ENTITLED TO BE PRESENT. The only persons entitled to attend a
meeting of shareholders shall be those persons entitled to vote thereat, the
Directors, Officers and auditor of the Corporation and any other persons who,
although not entitled to vote at the meeting, are entitled or required under any
provision of the Act, the Articles or any by-law of the Corporation to attend
the meeting. Any other person may be admitted to the meeting only on the
invitation of the chairman of the meeting or with the consent of the meeting.
3.5 QUORUM. At any meeting of shareholders, the holders of a majority of the
shares entitled to vote at a meeting of shareholders whether present in person
or represented by proxy, shall constitute a quorum for the transaction of
business.
3.6 VOTING.
(a) Voting at any meeting of shareholders shall be by a show of
hands except where, either before or after a vote by show of
hands, a ballot is required by the chairman of the meeting or
is demanded by any person present and entitled to vote at the
meeting. On a show of hands, each person present at the
meeting and entitled to vote thereat shall, subject to the
Act, have one vote. On a ballot, each person present at the
meeting and entitled to vote thereat shall, subject to the Act
and the Articles, have one vote for each share in respect of
which such person is entitled to vote. A ballot so required or
demanded shall be taken in such manner as the chairman of the
meeting directs.
(b) Unless otherwise required by the Act or the Articles, every
question at a meeting of shareholders shall be decided by a
majority of the votes cast on the question. In the event of an
equality of votes on any question at a meeting of shareholders
either upon
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a show of hands or upon a ballot, the chairman of the meeting
shall not be entitled to a second or casting vote.
(c) Subject to the Act and the Articles, where, after the date on
which a list of shareholders entitled to receive notice of a
meeting is prepared in accordance with the Act, a shareholder
named in such list transfers any of his shares, the transferee
of such shares shall be entitled to vote such shares at the
meeting if, at any time before the meeting, the transferee
(i) produces properly endorsed share certificates, or
(ii) otherwise establishes that he owns such shares.
3.7 REPRESENTATIVES. Upon filing proof of his appointment reasonably sufficient
to the chairman of a meeting of shareholders,
(a) a person who holds shares as a personal representative,
(b) an individual who has been duly authorized to represent at the
meeting a shareholder which is a body corporate or an
association, or
(c) a proxyholder or alternate proxyholder of a personal
representative, body corporate or association,
shall be entitled to vote at the meeting in respect of the shares in respect of
which such person has been appointed.
3.8 JOINT SHAREHOLDERS. Where two or more persons are registered jointly as the
holders of shares of the Corporation,
(a) any notice, cheque or other document directed to such
persons shall be sent to them at their address as
recorded in the Corporation's share register or, if
there be more than one address recorded for them in
that register, at the first such address;
(b) any one of such persons may give a receipt on behalf
of them for a share certificate that is issued in
respect of their shares, or for any dividend that is
paid in respect of their shares, or for any warrant
or other evidence of a right to subscribe for
securities of the Corporation that is issued in
respect of their shares, or for any evidence of the
rights in respect of any conversion, exchange or
other change in the share capital of the Corporation
that is issued in respect of their shares; and
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(c) any one of such persons present in person or
represented by proxy at a meeting of shareholders and
entitled to vote thereat may, in the absence of the
other or others, vote their shares as if he were
solely entitled thereto, but, if more than one of
such persons is so present or represented, they shall
vote as one the shares jointly held by them.'
For the purposes of this section, several personal representatives of a
shareholder in whose names shares of the Corporation are registered shall be
deemed to hold such shares jointly.
3.9 PRESIDING OFFICER. The Chairman of the Board or, a Director designated by
him, or failing such designation, a Director designated by the Board, shall
preside at a meeting of shareholders. If neither the Chairman of the Board nor
any Director is present within thirty minutes after the time appointed for the
holding of a meeting of shareholders, the shareholders present shall choose a
shareholder then present to be chairman of the meeting.
3.10 SCRUTINEERS. At any meeting of shareholders, the chairman of the meeting
may appoint one or more persons, who may but need not be shareholders, to serve
as scrutineers at the meeting.
3.11 DIVIDENDS. A dividend payable to any shareholder
(a) in cash may be paid by cheque payable to the order of the
shareholder, or
(b) in shares may be paid by a share certificate in the name of
the shareholder,
and shall be mailed to such shareholder by prepaid ordinary or air mail in a
sealed envelope addressed (unless he has directed otherwise) to him at his
address as shown in the Corporation's share register. The mailing of such cheque
or share certificate, as the case may be, unless in the case of a cheque it is
not paid on due presentation, shall discharge the Corporation's liability for
the dividend to the extent of the sum or number of shares represented thereby
plus the amount of any tax which the Corporation has properly withheld. In the
event of the non-receipt of any such dividend cheque or share certificate, the
Corporation shall issue to the shareholder a replacement cheque or share
certificate, as the case may be, for the same amount or number of shares on such
reasonable terms as to indemnity and evidence of nonreceipt as the Board, or any
Officer or agent designated by the Board, may require.
4. EXECUTION OF DOCUMENTS
4.1 The Board may from time to time determine the Officers or other persons by
whom certificates, contracts or other documents of the Corporation shall be
executed and the manner of execution thereof, including the use of printed or
facsimile reproductions of any or all signatures and the use of a corporate seal
or a printed or facsimile reproduction thereof.
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5. BORROWING
5.1 The Board may from time to time, in such amounts and on such terms as
it deems expedient, without authorization of the shareholders:
(a) borrow money upon the credit of the Corporation;
(b) issue, reissue, sell or pledge debt obligations of the
Corporation;
(c) except as limited by law, give a guarantee on behalf of the
Corporation to secure performance of an obligation of any
person; and,
(d) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any property of the Corporation, owned or
subsequently acquired, to secure any obligation of the
Corporation.
A resolution making By-law No. 1 of the Corporation was passed by all
of the directors of the Corporation pursuant to the Business Corporations Act
(Ontario), effective the 30th day of June, 1998, which directors' resolution
also approved the repeal of all prior by-laws of the Corporation.
The foregoing resolution making By-law No. 1 of the Corporation is
confirmed without variation by the sole shareholder of the Corporation pursuant
to the Business Corporations Act (Ontario).
DATED as of the 30th day of June, 1998.
PACE THEATRICAL GROUP, INC.
By:
-----------------------
Name:
Title:
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<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF 'EAGLE EYE ENTERTAINMENT USA INC.', FILED IN THIS OFFICE ON THE
TWENTY-SECOND DAY OF OCTOBER A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
<PAGE>
CERTIFICATE OF INCORPORATION
OF
EAGLE EYE ENTERTAINMENT USA INC.
-----------------------------
FIRST. The name of this corporation shall be:
EAGLE EYE ENTERTAINMENT USA INC.
SECOND. Its registered office in the State of Delaware is to be located
at 1013 Centre Road, in the City of Wilmington, County of New Castle and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Thousand Five Hundred (1,500) shares without par value.
FIFTH. The name and address of the incorporator is as follows:
Kathleen Crowley
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No
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<PAGE>
amendment to or repeal of this Article Seventh shall apply to or have any effect
on the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this certificate of
incorporation this twenty-second day of October, A.D., 1997.
/s/ Kathleen Crowley
Kathleen Crowley
Incorporator
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<PAGE>
BYLAWS
OF
EAGLE EYE ENTERTAINMENT USA INC.
(A DELAWARE CORPORATION)
<PAGE>
[TABLE OF CONTENTS DELETED]
<PAGE>
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Dover, County of Kent, State of Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other place or places, both within and without the State of
Delaware, as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meeting. All meetings of the
stockholders for the election of directors shall be held at such time and place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
meeting the stockholders shall elect by a plurality vote a Board of Directors
and transact such other business as may properly be brought before the
[___________].
Section 3. Notice of Annual Meetings. Written notice of the
annual meeting, stating the place, date, and hour of the meeting, shall be given
to each stockholder of record entitled to vote at such meeting not less than 10
or more than 60 days before the date of the meeting.
Section 4. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by statute
or by the Certificate of Incorporation, may be called at any time by order of
the Board of Directors and shall be called by the Chairman of the Board, the
President, or the Secretary at the request in writing of the holders of not less
than ten percent (10%) of the voting power represented by all the shares issued,
outstanding and entitled to be voted at the proposed special meeting, unless the
Certificate of Incorporation provides for a different percentage, in which event
such provision of the Certificate of Incorporation shall govern. Such request
shall state the purpose or purposes of the proposed special meeting. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 5. Notice of Special Meeting. Written notice of a
special meeting, stating the place, date, and hour of the meeting and the
purpose or purposes for which the meeting is called,
<PAGE>
shall be given to each stockholder of record entitled to vote at such meeting
not less than 10 or more than 60 days before the date of the meeting.
Section 6. Quorum. Except as otherwise provided by statute or
the Certificate of Incorporation, the holders of stock having a majority of the
voting power of the stock entitled to be voted thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at all meetings of the stockholders. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time without notice (other than
announcement at the meeting at which the adjournment is taken of the time and
place of the adjourned meeting) until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 7. Organization. At each meeting of the stockholders,
the Chairman of the Board or the President, determined as provided in Article V
of these Bylaws, or if those officers shall be absent therefrom, another officer
of the Corporation chosen as chairman present in person or by proxy and entitled
to vote thereat, or if all the officers of the Corporation shall be absent
therefrom, a stockholder holding of record shares of stock of the Corporation so
chosen, shall act as chairman of the meeting and preside thereat. The Secretary,
or if he shall be absent from such meeting or shall be required pursuant to the
provisions of this Section 7 to act as chairman of such meeting, the person (who
shall be an Assistant Secretary, if an Assistant Secretary shall be present
thereat) whom the chairman of such meeting shall appoint, shall act as secretary
of such meeting and keep the minutes thereof.
Section 8. Voting. Except as otherwise provided in the
Certificate of Incorporation, each stockholder shall, at each meeting of the
stockholders, be entitled to one vote in person or by proxy for each share of
stock of the Corporation held by him and registered in his name on the books of
the Corporation on the date fixed pursuant to the provisions of Section 5 of
Article VII of these Bylaws as the record date for the determination of
stockholders who shall be entitled to notice of and to vote at such meeting.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held directly or indirectly by the Corporation, shall
not be entitled to vote. Any vote by stock of the Corporation may be given at
any meeting of the stockholders by the stockholder entitled thereto, in person
or by his proxy appointed by an instrument in writing subscribed by such
stockholder or by his attorney thereunto duly authorized and delivered to the
Secretary of the Corporation or to the secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from its
date, unless said proxy shall provide for a longer period. Each proxy shall be
revocable unless expressly provided therein to be irrevocable and unless
otherwise made irrevocable by law. At all meetings of the stockholders all
matters, except where other provision is made by law, the Certificate of
Incorporation, or these Bylaws, shall be decided by the
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vote of a majority of the votes cast by the stockholders present in person or by
proxy and entitled to vote thereat, a quorum being present. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat, or so directed by the chairman of
the meeting, the vote thereat on any question other than the election or removal
of directors need not be by written ballot. Upon a demand of any such
stockholder for a vote by written ballot on any question or at the direction of
such chairman that a vote by written ballot be taken on any question, such vote
shall be taken by written ballot. On a vote by written ballot, each ballot shall
be signed by the stockholder voting, or by his proxy, if there be such proxy,
and shall state the number of shares voted.
Section 9. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its stock
ledger, either directly or through another officer of the Corporation designated
by him or through a transfer agent appointed by the Board of Directors, to
prepare and make, at least 10 days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days before said
meeting, either at a place within the city where said meeting is to be held,
which place shall be specified in the notice of said meeting, or, if not so
specified, at the place where said meeting is to be held. The list shall also be
produced and kept at the time and place of said meeting during the whole time
thereof, and may be inspected by any stockholder of record who shall be present
thereat. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, such list or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 10. Inspectors of Votes. At each meeting of the
stockholders, the chairman of such meeting may appoint two Inspectors of Votes
to act thereat, unless the Board of Directors shall have theretofore made such
appointments. Each Inspector of Votes so appointed shall first subscribe an oath
or affirmation faithfully to execute the duties of an Inspector of Votes at such
meeting with strict impartiality and according to the best of his ability. Such
Inspectors of Votes, if any, shall take charge of the ballots, if any, at such
meeting and, after the balloting thereat on any question, shall count the
ballots cast thereon and shall make a report in writing to the secretary of such
meeting of the results thereof. An Inspector of Votes need not be a stockholder
of the Corporation, and any officer of the Corporation may be an Inspector of
Votes on any question other than a vote for or against his election to any
position with the Corporation or on any other question in which he may be
directly interested.
Section 11. Actions Without a Meeting. Any action required to
be taken at any annual or special meeting of stockholders of the Corporation, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice, and without a vote if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereat
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were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors, which shall have and may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute, the Certificate of Incorporation, or these Bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Number, Qualification, and Term of Office. The
number of directors which shall constitute the whole Board of Directors shall
not be less than one (1). Within the limits above specified, the number of
directors which shall constitute the whole Board of Directors shall be
determined by resolution of the Board of Directors or by the stockholders at any
annual or special meeting or otherwise pursuant to action of the stockholders.
Directors need not be stockholders. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Sections 4 and 5 of this
Article III, and each director elected shall hold office until the annual
meeting next after his election and until his successor is duly elected and
qualified, or until his death or retirement or until he resigns or is removed in
the manner hereinafter provided. Directors shall be elected by a plurality of
the votes of the shares present in person or represented by proxy and entitled
to vote on the election of directors at any annual or special meeting of
stockholders. Such election shall be by written ballot.
Section 3. Resignation. Any director may resign at any time by
giving written notice of his resignation to the Corporation. Any such
resignation shall take effect at the time specified therein, or if the time when
it shall become effective shall not be specified therein, then it shall take
effect immediately upon its receipt by the Secretary. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 4. Removal of Directors. Any director may be removed,
either with or without cause, at any time, by the affirmative vote by written
ballot of a majority in voting interest of the stockholders of record of the
Corporation entitled to vote, given at an annual meeting or at a special meeting
of the stockholders called for that purpose. The vacancy in the Board of
Directors caused by any such removal shall be filled by the stockholders at such
meeting or, if not so filled, by the Board of Directors as provided in Section 5
of this Article III.
Section 5. Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the annual meeting next after their election and until their
successors are elected and
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qualified, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. Place of Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 7. Annual Meetings. The first meeting of each newly
elected Board of Directors shall be held immediately following the annual
meeting of stockholders, and no notice of such meeting to the newly elected
directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of stockholders, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as shall
be specified in a written waiver signed by all of the directors.
Section 8. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
Section 9. Special Meetings: Notice. Special meetings of the
Board of Directors may be called by the Chairman of the Board, the President, or
the Secretary on 24 hours' notice to each director, either personally or by
telephone or by mail, telegraph, telex, cable, wireless, or other form of
recorded communication; special meetings shall be called by the Chairman of the
Board, the President, or the Secretary in like manner and on like notice on the
written request of two directors. Notice of any such meeting need not be given
to any director, however, if waived by him in writing or by telegraph, telex,
cable, wireless, or other form of recorded communication, or if he shall be
present at such meeting.
Section 10. Quorum and Manner of Acting. At all meetings of
the Board of Directors, a majority of the directors at the time in office (but
not less than one-third of the whole Board of Directors) shall constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which a quorum is present shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 11. Remuneration. Unless otherwise expressly provided
by resolution adopted by the Board of Directors, none of the directors shall, as
such, receive any stated remuneration for his services; but the Board of
Directors may at any time and from time to time by resolution provide that a
specified sum shall be paid to any director of the Corporation, either as his
annual remuneration as such director or member of any committee of the Board of
Directors or as
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remuneration for his attendance at each meeting of the Board of Directors or any
such committee. The Board of Directors may also likewise provide that the
Corporation shall reimburse each director for any expenses paid by him on
account of his attendance at any meeting. Nothing in this Section 11 shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving remuneration therefor.
COMMITTEES OF DIRECTORS
Section 12. Executive Committee: How Constituted and Powers.
The Board of Directors may in its discretion, by resolution passed by a majority
of the whole Board of Directors, designate an Executive Committee consisting of
one or more of the directors of the Corporation. Subject to the provisions of
Section 141 of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation, and these Bylaws, the Executive Committee shall
have and may exercise, when the Board of Directors is not in session, all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and shall have the power to authorize the seal
of the Corporation to be affixed to all papers which may require it; but the
Executive Committee shall not have the power to fill vacancies in the Board of
Directors, the Executive Committee, or any other committee of directors or to
elect or approve officers of the Corporation. The Executive Committee shall have
the power and authority to authorize the issuance of common stock and grant and
authorize options and other rights with respect to such issuance. The Board of
Directors shall have the power at any time, by resolution passed by a majority
of the whole Board of Directors, to change the membership of the Executive
Committee, to fill all vacancies in it, or to dissolve it, either with or
without cause.
Section 13. Organization. The Chairman of the Executive
Committee, to be selected by the Board of Directors, shall act as chairman at
all meetings of the Executive Committee and the Secretary shall act as secretary
thereof. In case of the absence from any meeting of the Executive Committee of
the Chairman of the Executive Committee or the Secretary, the Executive
Committee may appoint a chairman or secretary, as the case may be, of the
meeting.
Section 14. Meetings. Regular meetings of the Executive
Committee, of which no notice shall be necessary, may be held on such days and
at such places, within or without the State of Delaware, as shall be fixed by
resolution adopted by a majority of the Executive Committee and communicated in
writing to all its members. Special meetings of the Executive Committee shall be
held whenever called by the Chairman of the Executive Committee or a majority of
the members of the Executive Committee then in office. Notice of each special
meeting of the Executive Committee shall be given by mail, telegraph, telex,
cable, wireless, or other form of recorded communication or be delivered
personally or by telephone to each member of the Executive Committee not later
than the day before the day on which such meeting is to be held. Notice of any
such meeting need not be given to any member of the Executive Committee,
however, if waived by him in writing or by telegraph, telex, cable, wireless, or
other form of recorded communication, or if he shall be present at such meeting;
and any meeting of the Executive Committee shall be a legal meeting without any
notice thereof having been given, if all the members of the Executive Committee
shall be present
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thereat. Subject to the provisions of this Article III, the Executive Committee,
by resolution adopted by a majority of the whole Executive Committee, shall fix
its own rules of procedure.
Section 15. Quorum and Manner of Acting. A majority of the
Executive Committee shall constitute a quorum for the transaction of business,
and the act of a majority of those present at a meeting thereof at which a
quorum is present shall be the act of the Executive Committee.
Section 16. Other Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors,
designate one or more other committees consisting of one or more directors of
the Corporation, which, to the extent provided in said resolution or
resolutions, shall have and may exercise, subject to the provisions of Section
141 of the Delaware General Corporation Law, and the Certificate of
Incorporation and these Bylaws, the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
shall have the power to authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have the power to
fill vacancies in the Board of Directors, the Executive Committee, or any other
committee or in their respective membership, to appoint or remove officers of
the Corporation, or to authorize the issuance of shares of the capital stock of
the Corporation, except that such a committee may, to the extent provided in
said resolutions, grant and authorize options and other rights with respect to
the common stock of the Corporation pursuant to and in accordance with any plan
approved by the Board of Directors. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. A majority of all the members of any such committee may
determine its action and fix the time and place of its meetings and specify what
notice thereof, if any, shall be given, unless the Board of Directors shall
otherwise provide. The Board of Directors shall have power to change the members
of any such committee at any time to fill vacancies, and to discharge any such
committee, either with or without cause, at any time.
Section 17. Alternate Members of Committees. The Board of
Directors may designate one or more directors as alternate members of the
Executive Committee or any other committee, who may replace any absent or
disqualified member at any meeting of the committee, or if none be so appointed,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Section 18. Minutes of Committees. Each committee shall keep
regular minutes of its meetings and proceedings and report the same to the Board
of Directors at the next meeting thereof.
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GENERAL
Section 19. Actions Without a Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board of Directors or committee, as the case may be, consent thereto in writing
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or the committee.
Section 20. Presence at Meetings by Means of Communications
Equipment. Members of the Board of Directors, or of any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors
or such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting conducted pursuant to this Section 20
shall constitute presence in person at such meeting.
ARTICLE IV
NOTICES
Section 1. Type of Notice. Whenever, under the provisions of
any applicable statute, the Certificate of Incorporation, or these Bylaws,
notice is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, in
person or by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given in
any manner permitted by Article III hereof and shall be deemed to be given at
the time when first transmitted by the method of communication so permitted.
Section 2. Waiver of Notice. Whenever any notice is required
to be given under the provisions of any applicable statute, the Certificate of
Incorporation, or these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto, and transmission of a waiver
of notice by a director or stockholder by mail, telegraph, telex, cable,
wireless, or other form of recorded communication may constitute such a waiver.
Section 3. When Notice Unnecessary. Whenever, under the
provisions of the Delaware General Corporation Law, the Certificate of
Incorporation or these Bylaws, any notice is required to be given to any
stockholder, such notice need not be given to the stockholder if:
(a) notice of two consecutive annual meetings and all
notices of meetings held during the period between
those annual meetings, if any, or
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(b) all (but in no event less than two) payments (if sent
by first class mail) of distributions or interest on
securities during a 12-month period,
have been mailed to that person, addressed at his address as shown on the
records of the Corporation, and have been returned undeliverable. Any action or
meeting taken or held without notice to such a person shall have the same force
and effect as if the notice had been duly given. If such a person delivers to
the Corporation a written notice setting forth his then current address, the
requirement that notice be given to that person shall be reinstated.
ARTICLE V
OFFICERS
Section 1. General. The elected officers of the Corporation
shall be a President and a Secretary. The Board of Directors may also elect or
appoint a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer, one
or more Assistant Treasurers, a Controller, one or more Assistant Controllers,
and such other officers and agents as may be deemed necessary or advisable from
time to time, all of whom shall also be officers. Two or more offices may be
held by the same person.
Section 2. Election or Appointment. The Board of Directors at
its annual meeting shall elect or appoint, as the case may be, the officers to
fill the positions designated in or pursuant to Section 1 of this Article V.
Officers of the Corporation may also be elected or appointed, as the case may
be, at any other time.
Section 3. Salaries of Elected Officers. The salaries of all
elected officers of the Corporation shall be fixed by the Board of Directors.
Section 4. Term. Each officer of the Corporation shall hold
his office until his successor is duly elected or appointed and qualified or
until his earlier resignation or removal. Any officer may resign at any time
upon written notice to the Corporation. Any officer elected or appointed by the
Board of Directors or the Executive Committee may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. Any vacancy
occurring in any office of the Corporation by death, resignation, removal, or
otherwise may be filled by the Board of Directors or the appropriate committee
thereof.
Section 5. Chairman of the Board. The Chairman of the Board,
if one be elected, shall be the chief executive officer of the Corporation and
shall preside when present at all meetings of the Board of Directors and, with
the approval of the President, may preside at meetings of the stockholders. He
shall advise and counsel the President and other officers of the Corporation,
and shall exercise such powers and perform such duties as shall be assigned to
or required of him from time to time by the Board of Directors.
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Section 6. President. In the absence of a Chairman of the
Board, the President shall be the ranking and chief executive officer of the
Corporation and shall have the duties and responsibilities, and the authority
and power, of the Chairman of the Board. The President shall be the chief
operating officer of the Corporation and, subject to the provisions of these
Bylaws, shall have general supervision of the affairs of the Corporation and
shall have general and active control of all its business. He shall preside,
when present, at all meetings of stockholders, except when the Chairman of the
Board presides with the approval of the President and as may otherwise be
provided by statute, and, in the absence of any other person designated thereto
by these Bylaws, at all meetings of the Board of Directors. He shall see that
all orders and resolutions of the Board of Directors and the stockholders are
carried into effect. He shall have general authority to execute bonds, deeds,
and contracts in the name of the Corporation and affix the corporate seal
thereto; to sign stock certificates; to cause the employment or appointment of
such employees and agents of the Corporation as the proper conduct of operations
may require, and to fix their compensation, subject to the provisions of these
Bylaws; to remove or suspend any employee or agent who shall have been employed
or appointed under his authority or under authority of an officer subordinate to
him; to suspend for cause, pending final action by the authority which shall
have elected or appointed him, any officer subordinate to the President; and, in
general, to exercise all the powers and authority usually appertaining to the
chief operating officer of a corporation, except as otherwise provided in these
Bylaws.
Section 7. Vice President. In the absence of the President or
in the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors or the President may from time to time
prescribe.
Section 8. Assistant Vice Presidents. In the absence of a Vice
President or in the event of his inability or refusal to act, the Assistant Vice
President (or in the event there shall be more than one, the Assistant Vice
Presidents in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their appointment) shall perform the
duties and exercise the powers of that Vice President, and shall perform such
other duties and have such other powers as the Board of Directors, the
President, or the Vice President under whose supervision he is appointed may
from time to time prescribe.
Section 9. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of the Corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
Executive Committee or other standing committees when required. He shall give,
or cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or the President, under whose
supervision he shall be. He shall have custody of the corporate seal of the
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Corporation, and he, or an Assistant Secretary, shall have authority to affix
the same to any instrument requiring it, and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his signature. The Secretary shall
keep and account for all books, documents, papers, and records of the
Corporation, except those for which some other officer or agent is properly
accountable. He shall have authority to sign stock certificates and shall
generally perform all the duties usually appertaining to the office of the
secretary of a corporation.
Section 10. Assistant Secretaries. In the absence of the
Secretary or in the event of his inability or refusal to act, the Assistant
Secretary (or, if there shall be more than one, the Assistant Secretaries in the
order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Secretary and shall perform such other duties and
have such other powers as the Board of Directors, the President, or the
Secretary may from time to time prescribe.
Section 11. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by the
Board of Directors, he shall give the Corporation a bond (which shall be renewed
every six years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in his possession or under
his control belonging to the Corporation. The Treasurer shall be under the
supervision of the Vice President in charge of finance, if one is so designated,
and he shall perform such other duties as may be prescribed by the Board of
Directors, the President, or any such Vice President in charge of finance.
Section 12. Assistant Treasurers. The Assistant Treasurer or
Assistant Treasurers shall assist the Treasurer, and in the absence of the
Treasurer or in the event of his inability or refusal to act, the Assistant
Treasurer (or in the event there shall be more than one, the Assistant
Treasurers in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their appointment) shall perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors, the President, or
the Treasurer may from time to time prescribe.
Section 13. Controller. The Controller, if one is appointed,
shall have supervision of the accounting practices of the Corporation and shall
prescribe the duties and powers of any other
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accounting personnel of the Corporation. He shall cause to be maintained an
adequate system of financial control through a program of budgets and
interpretive reports. He shall initiate and enforce measures and procedures
whereby the business of the Corporation shall be conducted with the maximum
efficiency and economy. If required, he shall prepare a monthly report covering
the operating results of the Corporation. The Controller shall be under the
supervision of the Vice President in charge of finance, if one is so designated,
and he shall perform such other duties as may be prescribed by the Board of
Directors, the President, or any such Vice President in charge of finance.
Section 14. Assistant Controllers. The Assistant Controller or
Assistant Controllers shall assist the Controller, and in the absence of the
Controller or in the event of his inability or refusal to act, the Assistant
Controller (or, if there shall be more than one, the Assistant Controllers in
the order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Controller and perform such other duties and have
such other powers as the Board of Directors, the President, or the Controller
may from time to time prescribe.
ARTICLE VI
INDEMNIFICATION
Section 1. Actions Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director, officer, employee, or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise (all of such persons being hereafter
referred to in this Article as a "Corporate Functionary"), against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. the termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a Corporate Functionary against expenses (including
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attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable to the Corporation, unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Determination of Right to Indemnification. Any
indemnification under Sections 1 or 2 of this Article VI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the Corporate Functionary is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article VI. Such determination shall be made
(i) by the Board of Directors by a majority vote of the directors who are not
parties to such action, suit, or proceeding, even though less than a quorum, or
(ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders.
Section 4. Right to Indemnification. Notwithstanding the other
provisions of this Article VI, to the extent that a Corporate Functionary has
been successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to in Sections 1 or 2 of this Article VI (including the
dismissal of a proceeding without prejudice or the settlement of a proceeding
without admission of liability), or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 5. Prepaid Expenses. Expenses incurred by a Corporate
Functionary in defending a civil, criminal, administrative, or investigative
action, suit, or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the Corporate Functionary to repay such amount if
it shall ultimately be determined he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
Section 6. Right to Indemnification upon Application;
Procedure upon Application. Any indemnification of a Corporate Functionary under
Sections 2, 3 and 4, or any advance under Section 5, of this Article VI shall be
made promptly upon, and in any event within 60 days after, the written request
of the Corporate Functionary, unless with respect to applications under Sections
2, 3 or 5 of this Article VI, a determination is reasonably and promptly made by
the Board of Directors by majority vote of the directors who are not parties to
such action, suit, or proceeding, even though less than a quorum, that such
Corporate Functionary acted in a manner set forth in such Sections as to justify
the Corporation in not indemnifying or making an advance of expenses to the
Corporate Functionary. If there are no directors who are not parties to such
action, suit, or proceeding, the Board of Directors shall promptly direct that
independent legal counsel shall decide whether the
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Corporate Functionary acted in a manner set forth in such Sections as to justify
the Corporation's not indemnifying or making an advance of expenses to the
Corporate Functionary. The right to indemnification or advance of expenses
granted by this Article VI shall be enforceable by the Corporate Functionary in
any court of competent jurisdiction if the Board of Directors or independent
legal counsel denies his claim, in whole or in part, or if no disposition of
such claim is made within 60 days. The expenses of the Corporate Functionary
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.
Section 7. Other Rights and Remedies. The indemnification and
advancement of expenses provided by or granted pursuant to this Article VI shall
not be deemed exclusive of any other rights to which any person seeking
indemnification and for advancement of expenses or may be entitled under the
Bylaws, or any agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
Corporate Functionary and shall inure to the benefit of the heirs, executors,
and administrators of such a person. Any repeal or modification of these Bylaws
or relevant provisions of the Delaware General Corporation Law and other
applicable law, if any, shall not affect any then existing rights of a Corporate
Functionary to indemnification or advancement of expenses.
Section 8. Insurance. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article VI or the Delaware General Corporation Law.
Section 9. Mergers. For purposes of this Article VI,
references to "the Corporation" shall include, in addition to the resulting or
surviving corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, or agents, so that any person who is or was a
director, officer, employee, or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise shall stand in the same position under the provisions
of this Article VI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
Section 10. Savings Provision. If this Article VI or any
portion hereof shall be invalidated on any ground by a court of competent
jurisdiction, the Corporation shall nevertheless indemnify each Corporate
Functionary as to expenses (including attorneys' fees), judgments, fines,
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and amounts paid in settlement with respect to any action, suit, proceeding, or
investigation, whether civil, criminal, or administrative, including a grand
jury proceeding or action or suit brought by or in the right of the Corporation,
to the full extent permitted by any applicable portion of this Article VI that
shall not have been invalidated.
ARTICLE VII
CERTIFICATES REPRESENTING STOCK
Section 1. Right to Certificate. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President, or a Vice
President and by the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences, and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations, or restrictions of
such preferences or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock; provided, that, except as otherwise provided in
Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences, and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences or rights.
Section 2. Facsimile Signatures. Any of or all the signatures
on the certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
Section 3. New Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been
lost, stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen, or destroyed
or the issuance of such new certificate.
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Section 4. Transfer. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation, or authority to
transfer, it shall be the duty of the Corporation, subject to any proper
restrictions on transfer, to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
Section 5. Record Date. The Board of Directors may fix in
advance a date, not preceding the date on which the resolution fixing the record
date is adopted, and
(i) not more than 60 days nor less than 10 days preceding
the date of any meeting of stockholders, as a record
date for the determination of the stockholders
entitled to notice of, and to vote at, any such
meeting and any adjournment thereof,
(ii) not more than 10 days after the date on which the
resolution fixing the record date is adopted, as a
record date in connection with obtaining a consent of
the stockholders in writing to corporate action
without a meeting, or
(iii) not more than 60 days before the date for payment of
any dividend or distribution, or the date for the
allotment of rights, or the date when any change, or
conversion or exchange of capital stock shall go into
effect, or the date on which any other lawful action
shall be taken, as the record date for determining
the stockholders entitled to receive payment of any
such dividend or distribution, or to receive any such
allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of
capital stock or other lawful action of the
Corporation,
and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, any such meeting and any adjournment thereof (provided, however,
that the Board of Directors may fix a new record date for an adjourned meeting),
or to give such consent, or to receive payment of such dividend or distribution,
or to receive such allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 6. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not provided by the laws of the State of Delaware.
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ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, if any, subject to the provisions of the Certificate of
Incorporation, may be declared by the Board of Directors (but not any committee
thereof) at any regular meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, thinks proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall
present at each annual meeting, and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear statement of the
business and condition of the Corporation.
Section 4. Checks. All checks or demands for money and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
prescribe.
Section 5. Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 6. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization, and
the word "Delaware." The seal may be used by causing it or a facsimile thereof
to be impressed, affixed, reproduced, or otherwise.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended, or repealed or new
Bylaws may be adopted by the stockholders or by the Board of Directors at any
regular meeting of the stockholders or the Board of Directors or at any special
meeting of the stockholders or the Board of Directors if notice of such
alteration, amendment, repeal, or adoption of new Bylaws be contained in the
notice of such special meeting.
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<PAGE>
CERTIFICATION
I, Jeffry B. Lewis, Secretary of the Corporation, hereby
certify that the foregoing is a true, accurate and complete copy of the Bylaws
of Eagle Eye Entertainment USA Inc. adopted by its Board of Directors as of the
30th day of June, 1998.
/s/ Jeffry B. Lewis
Jeffry B. Lewis, Secretary
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<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS k TRUE AND CORRECT COPY
OF THE CERTIFICATE OF INCORPORATION OF "EMI ACQUISITION SUB, INC.",
FILED. IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF APRIL, A.D. 1998, AT
4:30 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
<PAGE>
CERTIFICATE OF INCORPORATION
OF
EMI ACQUISITION SUB, INC.
FIRST The name of the Corporation is EMI Acquisition Sub, Inc,
(the "Corporation").
SECOND: The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle, The name of its registered agent at
that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL")
FOURTH. The aggregate number of shares of all classes of stock
which the Corporation shall have authority to issue is 5,000, consisting of
shares of Common Stock, without par value (the "Common Stock").
Each share of Common Stock shall be entitled to one vote on
all matters submitted to a vote of the stockholders of the Corporation.
FIFTH: The name and mailing address of the Incorporator is as
follows:
John W. Kaufmann
c/o Winston & Strawn
200 Park Avenue
New York, New York 10166-4193
SIXTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(i) The business and affairs of the Corporation shall
be managed by or under the direction of the Board of
Directors.
(ii) The directors shall have concurrent power with
the stockholders to make, alter, amend, change or add to or
repeal the By laws of the Corporation.
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(iii) The number of directors of the Corporation
shall be as from time to time fixed by, or in the manner
provided in, the By-laws of the Corporation. Election of
directors need not be by written ballot unless the By-laws so
provide.
(iv) In addition to the powers and authority
hereinbefore or by statute expressly conferred upon them, the
directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
GCL, this Certificate of Incorporation, and any By-laws
adopted by the stockholders; provided, however, that no
By-laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if
such By-laws had not been adopted.
SEVENTH. Meetings of stockholders may be held within or
without the State of Delaware, as the By-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-laws of the Corporation.
EIGHTH. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
NINTH. A. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any transaction
from which the director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended. Any repeal or modification of the provisions of this Article NINTH by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
B. The Corporation shall indemnify any person who was or is a
party or witness, or is threatened to be made a party or witness, to any
threatened, pending or completed action, suit or proceeding by or in the right
of the Corporation, whether civil, criminal, administrative or investigative
(including a grand jury proceeding) by reason of the fact that he or she is or
was a director or officer of the Corporation, is or was serving at the request
of the
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
EMI ACQUISITION SUB, INC.
FIRST The name of the Corporation is EMI Acquisition Sub, Inc,
(the "Corporation").
SECOND: The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle, The name of its registered agent at
that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL")
FOURTH. The aggregate number of shares of all classes of stock
which the Corporation shall have authority to issue is 5,000, consisting of
shares of Common Stock, without par value (the "Common Stock").
Each share of Common Stock shall be entitled to one vote on
all matters submitted to a vote of the stockholders of the Corporation.
FIFTH: The name and mailing address of the Incorporator is as
follows:
John W. Kaufmann
c/o Winston & Strawn
200 Park Avenue
New York, New York 10166-4193
SIXTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(i) The business and affairs of the Corporation shall
be managed by or under the direction of the Board of
Directors.
(ii) The directors shall have concurrent power with
the stockholders to make, alter, amend, change or add to or
repeal the By laws of the Corporation.
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(iii) The number of directors of the Corporation
shall be as from time to time fixed by, or in the manner
provided in, the By-laws of the Corporation. Election of
directors need not be by written ballot unless the By-laws so
provide.
(iv) In addition to the powers and authority
hereinbefore or by statute expressly conferred upon them, the
directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
GCL, this Certificate of Incorporation, and any By-laws
adopted by the stockholders; provided, however, that no
By-laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if
such By-laws had not been adopted.
SEVENTH. Meetings of stockholders may be held within or
without the State of Delaware, as the By-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-laws of the Corporation.
EIGHTH. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
NINTH. A. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any transaction
from which the director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended. Any repeal or modification of the provisions of this Article NINTH by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
B. The Corporation shall indemnify any person who was or is a
party or witness, or is threatened to be made a party or witness, to any
threatened, pending or completed action, suit or proceeding by or in the right
of the Corporation, whether civil, criminal, administrative or investigative
(including a grand jury proceeding) by reason of the fact that he or she is or
was a director or officer of the Corporation, is or was serving at the request
of the
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Corporation as a director, officer, employee, agent, partner or trustee (or in
any similar position) of another corporation, partnership, joint venture, trust
, employee benefit plan or other enterprise, to the fullest extent authorized or
permitted by the General Corporation Law of the State of Delaware and any other
applicable law, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding, or in connection with any appeal thereof, provided however, that,
except as provided in Section C of this Article NINTH with respect to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such person in connection with an action, suit or proceeding (or
part thereof) initiated by such person only if the initiation of such action,
suit or proceeding (or part thereof) was authorized by the Board of Directors.
Such right to indemnification shall include the right to payment by the
Corporation of expenses incurred in connection with any such action, suit or
proceeding in advance of its final disposition; provided, however that the
payment of such expenses incurred by a director or officer in advance of the
final disposition of such action, suit or proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this Article or otherwise.
C. Any indemnification or advancement of expenses required
under this Article shall be made promptly, and in any event within sixty (60)
days, upon the written request of the person entitled thereto. If a
determination by the Corporation that the person is entitled to indemnification
pursuant to this Article is required, and the Corporation fails to respond
within sixty (60) days to a written request for indemnity or advancement of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within sixty (60) days, the rights to indemnification and advancement
of expenses shall be enforceable by such person in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action or proceeding shall also be indemnified by the
Corporation. It shall be a defense to any such action other than an action
brought to enforce a claim for advancement of expenses pursuant to this Article
where the required undertaking has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in the General
Corporation Law of the State of Delaware, but the burden of proving such defense
shall be on the Corporation. Neither the failure, of the Corporation (including
the Board of Directors, independent legal counsel or the stockholders) to have
made a determination of the claimant is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor the fact that there has been an
actual determination by the Corporation (including the Board of Directors,
independent legal counsel or the stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
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<PAGE>
D. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Any repeal or modification of the provisions of this Article NINTH shall
not affect any obligations of the Corporation or any rights regarding
indemnification and advancement of expenses of a director, officer, employee or
agent with respect to any threatened, pending or completed action, suit or
proceeding for which indemnification or the advancement of expenses is
requested, in which the alleged cause of action accrued at any time prior to
such repeal or modification.
E. The Corporation may purchase and maintain insurance, at its
expense. to protect itself and any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against liability asserted against him or her in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under the provisions of
this Article, the General Corporation Law of the State of Delaware or otherwise.
F. If this Article NINTH or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director and officer of the
Corporation as to expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including, without
limitation, a grand jury proceeding and an action, suit or proceeding by or in
the right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated, by the General
Corporation Law of the State of Delaware or by any other applicable law.
I, THE UNDERSIGNED, being the Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the GCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly, have hereunto set my hand
this 27th day of April, 1998.
/s/ John W. Kaufmann
John W. Kaufmann
Incorporator
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<PAGE>
BY-LAWS
OF
EMI ACQUISITION SUB, INC.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be
established and maintained at and shall be the registered agent of the
Corporation in charge hereof.
1.2 Other Offices: The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require, provided, however, that the corporation's books and
records shall be maintained at such place within the continental United States
as the Board of Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the
stockholders of the corporation shall be held at such place or places, within or
outside the State of Delaware as may be fixed by the Board of Directors from
time to time or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An
annual meeting of stockholders shall be held each year within five months after
the close of the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
2.5 Notice of Meetings of Stockholders: Except as otherwise
expressly required or permitted by law, not less than ten days nor more than
sixty days before the date of every stockholders' meeting the Secretary shall
give to each stockholder of record entitled to vote at such meeting, written
notice, served personally by mail or by telegram, stating the place, date and
hour
<PAGE>
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Such notice, if mailed shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by
the Certificate of Incorporation or by law, at any meeting of the stockholders,
the presence in person or by proxy of stockholders entitled to cast a majority
of the votes thereat shall constitute a quorum. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall
be present, a majority of voting stockholders, present in person or by proxy,
may adjourn the meeting from time to time without notice other than announcement
at the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting originally called but only those stockholders entitled to vote at the
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.7 Chairman and Secretary of Meetings: The President, shall
preside at meetings of the stockholders. The Secretary shall act as secretary of
the meeting or if he is not present, then the presiding officer may appoint a
person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise
provided by the Certificate of Incorporation or these by-laws, at every meeting
of the stockholders each stockholder shall be entitled to one vote for each
share of voting stock standing in his name on the books of the corporation on
the record date for the meeting. Except as otherwise provided by these by-laws,
all elections and questions shall be decided by the vote of a majority in
interest of the stockholders present in person or represented by proxy and
entitled to vote at the meeting.
2.9 Proxies: Any stockholder entitled to vote at any meeting
of stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, scaled, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote
by ballot at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed
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shall refuse to serve or shall not be present, such appointment shall be made by
the officer presiding at the meeting.
2.11 List of Stockholders: (a) At least ten days before every
meeting of stockholders, the Secretary shall prepare and make a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) During ordinary business hours, for a period of at least
ten days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held.
(c) The list shall also be produced and kept at the time and
place of the meeting during the whole time of the meeting, and it may be
inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise
provided by these by-laws or any resolutions adopted by the stockholders or
Board of Directors, the order of business and all other matters of procedure at
every meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of
the corporation shall be managed by its Board of Directors which may exercise
all the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
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3.2 Number, Method of Election, Terms of Office of Directors:
The number of directors which shall constitute the Board of Directors shall be (
) unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors: Removal: (a) Any director
may resign his office at any time by delivering his resignation in writing to
the Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any
time by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of
Directors may hold their meetings, both regular and special, either within or
outside the State of Delaware.
(b) Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be determined by resolution of
the Board of Directors. No notice of such regular meetings shall be required. If
the date designated for any regular meeting be a legal holiday, then the meeting
shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting, no
notice thereof shall be required.
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or at
the written request of any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a
statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board of
Directors. No notice of any adjourned meeting need be given. No notice to
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or waiver by any director shall be required with respect to any meeting at which
the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by
the Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall be
less than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The
President, or, in his absence a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board. The Secretary shall act
as secretary of the meeting, but in his absence the presiding officer may
appoint a secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of
Directors, or any committee designated by such board, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such conunittees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such
reasonable compensation for their service on the Board of Directors or any
committees thereof, whether in the form of salary or a fixed fee for attendance
at mectings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected
officers of the corporation shall be a President, a Treasurer and a Secretary,
and such other officers as the Board of Directors shall deem advisable. The
officers shall be elected by the Board of Directors at its annual meeting
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<PAGE>
following the annual meeting of the stockholders, to serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election and until their successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time,
and from time to time, additional officers or agents with such duties as it may
deem necessary or desirable. Such additional officers shall serve at the
pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be
fixed by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be
removed at any time, either with or without cause, by resolution adopted at any
regular or special meeting of the Board of Directors by a majority of the
Directors then in office.
4.3 Duties: (a) President: The President shall be the
principal executive officer of the corporation and, subject to the control of
the Board of Directors, shall supervise and control all the business and affairs
of the corporation. He shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect (unless any such
order or resolution shall provide otherwise), and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody
of and be responsible for all funds and securities of the Corporation; (2)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever; (3) deposit all such moneys in the name of the corporation in
such banks, trust companies, or other depositories as shall be selected by
resolution of the Board of Directors; and (4) in general perform all duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors. He shall,
if required by the Board of Directors, give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly
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given in accordance with the provisions of these by-laws and as required by law;
(3) be custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all documents, the execution
of which on behalf of the corporation wider its seal, is duly authorized; (4)
keep a register of the post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (5) have general charge of stock
transfer books of the Corporation; and (6) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President and by the Treasurer or the Secretary,
certifying the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the
holder of such certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the corporation's books. The corporation
shall be entitled to treat the holder of any share of stock as the holder in
fact thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person, whether
or not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be
made on the books of the corporation only by direction of the person named in
the certificate or his attorney, lawfully constituted in writing, and only upon
the surrender of the certificate therefor and a written assessment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for
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collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates
representing shares of the stock of the corporation shall be issued in place of
any certificate alleged to have been lost, stolen or destroyed in such manner
and on such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent: Registrar: Rules Respecting Certificates:
The corporation may maintain one or more transfer offices or agencies where
stock of the corporation shall be transferable. The corporation may also
maintain one or more registry offices where such stock shall be registered. The
Board of Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of
Record: The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of the stockholders or any adjournment thereof, or the
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting of the stockholders, nor more than sixty days prior to any other
action requiring such determination of the stockholders. A determination of
stockholders of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise
order, the President, the Secretary or the Treasurer shall have full power and
authority, on behalf of the corporation, to attend, act and vote at any meeting
of the stockholders of any corporation in which the corporation may hold stock,
and at such meeting to exercise any or all rights and powers incident to the
ownership of such stock, and to execute on behalf of the corporation a proxy or
proxies empowering
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another or others to act as aforesaid. The Board of Directors from time to time
may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held By the
Corporation: (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly transferred, endorsed, sold, assigned, set over and delivered
by the corporation, and that with respect to such securities the authority of
these provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form
and shall have such content as the Board of Directors shall from time to time
determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the
time, place or purpose of any meeting of the stockholders, directors or a
committee is required to be given under the law of the State of Delaware, the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the holding thereof, or actual attendance at the meeting in person or, in the
case of any stockholder, by his attorney-in-fact, shall be deemed equivalent to
the giving of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors,
officers and employees to the fullest extent allowed by law, provided, however,
that it shall be within the
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discretion of the Board of Directors whether to advance any funds in advance of
disposition of any action, suit or proceeding, and provided further that nothing
in this section 7.4 shall be deemed to obviate the necessity of the Board of
Directors to make any determination that indemnification of the director,
officer or employee is proper under the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of Section
145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise
determined by the Board of Directors, the fiscal year of the corporation shall
end on .
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ARTICLES OF INCORPORATION
OF
EVENT MERCHANDISING INC.
I.
The name of this corporation is EVENT MERCHANDISING INC.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business,
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
The name and address of the corporation's initial agent for service of
process is:
Howard Kaufman
1649 Stradella Road
Los Angeles, CA 90077
IV.
The total number of shares which the corporation is authorized to issue
is five thousand (5,000), all of which shall be one class.
V.
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law. The
corporation shall indemnify any agent of the corporation as defined in and to
the fullest extent permitted by Section 317 of the Corporations Code.
<PAGE>
DATED:May 16, 1990 /s/ D. A. R.
--------------------- -----------------------------
DENNIS A. ROACH, Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
EVENT MERCHANDISING INC.,
a California corporation
The undersigned certify that:
a. They are the president and secretary, respectively, of Event Merchandising
Inc., a California corporation.
b. Article IV of the Articles of Incorporation of this corporation is hereby
amended to read as follows:
i. Classes of Stock. The authorized capital of this
corporation is divided into two classes, as follows:
(a) 5,000 shares of common stock, without par value (the
"Common Stock"); and
(b) 42,500 shares of preferred stock, without par value, which
shall be designated as Series A Preferred Stock (the "Preferred
Stock"). The rights, privileges, conditions and restrictions granted to
and imposed upon the Preferred Stock are set forth below.
ii. Preferred Stock Dividends.
(1) General Dividend Obligation. When, as and if declared by
the Board of Directors of the Corporation, the Corporation shall pay to
the holders of record of the Preferred Stock, out of the assets of the
Corporation available for the payment of dividends under the General
Corporation Law of the State of California, preferential dividends at
the times and in the amounts provided for in this Section 2.
(2) Payments of Dividends. When declared by the Board of
Directors of the Corporation, and out of monies legally available
therefore, dividends on the Preferred Stock shall be payable on each
Dividend Payment Date (capitalized terms not otherwise defined that are
being used herein shall have the definitions set forth in Section 10)
to the holders of Preferred Stock on the record date determined by the
Board of Directors of the Corporation in accordance with the by-laws of
the Corporation. Dividends shall be paid by the Corporation by wire
transfer, pursuant to the holders' instructions from time to time, of
immediately available funds so as to be received by such holder on the
due date of such dividend,
<PAGE>
(3) Calculation of Dividends. Dividends on each share of
Preferred Stock shall be calculated cumulatively at the rate and in the
manner prescribed herein from and including the date of issuance of
such share of Preferred Stock, whether or not such dividends shall have
been declared and whether or not there shall be (at the time such
dividends are calculated or become payable or at any other time) funds
or assets of the Corporation legally available for the payment of
dividends. For purposes of this Section 2.3, the date on which the
Corporation shall initially issue any share of Preferred Stock shall be
deemed to be its "date of issuance" regardless of the number of times
transfer of such share of Preferred Stock shall be made on the stock
register maintained by or for the Corporation and regardless of the
number of certificates which may be issued to evidence such share of
Preferred Stock (whether by reason of transfer of such share or for any
other reason).
(4) Dividend Rates. (a) On each Dividend Payment Date,
dividends in an aggregate amount equal to eighty percent (80%) of the
Corporation's Adjusted EBDA, for the full fiscal quarter preceding such
Dividend Payment Date (prorated for any partial fiscal quarter
preceding the first Dividend Payment Date), shall accrue on the
Outstanding shares of Preferred Stock as a class. To the extent any
accrued dividend is not paid on a Dividend Payment Date, all such
unpaid dividends accrued on shares of Preferred Stock Outstanding
during the period from and including the preceding Dividend Payment
Date (or from and including the original date of issuance of such share
in the case of the initial Dividend Payment Date after the date of
issuance) shall be included in the Liquidation Value of such shares and
shall remain a part thereof until such dividends are paid.
(b) As used herein, "Adjusted EBDA" means the sum of (i) the
net income of the Corporation before depreciation and amortization,
deterrnined in accordance with GAAP consistently applied. In
calculating Adjusted EBDA: (i) expenses shall only be allowable if
reasonable and charged on an arms-length basis; (ii) there shall be no
deduction, for purposes of this calculation, for "Consultation Fees" of
the type reflected in previous financial statements of the Company;
(iii) there shall be no deduction for corporate overhead or interest
charges or fees or other expenses of Affiliates that are not direct
expenses of the Company; and (iv) all fees and other compensation paid
under the Management Services Agreement, to the extent taken into
account as expenses in determining net income of the Corporation shall
be added back. For purposes of this Agreement, the term "Affiliate"
with respect to any Person means (i) any Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under
common control with such Person; or (ii) any officer, director, partner
or direct or indirect beneficial or legal owner of any 10% or greater
equity or voting interest of such Person. "Person" shall mean a natural
person or any legal, commercial or governmental entity, such as, but
not limited to, a business association, corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, or any person acting in a representative capacity.
<PAGE>
(5) Distribution of Dividend Payments. All dividends accrued
on the Preferred Stock shall be payable pro rata so that an equal
amount shall be paid with respect to each share of Preferred Stock then
Outstanding. If at any time the Corporation shall pay a dividend to the
holders of Preferred Stock in an amount which is less than the total
amount of dividends then accrued on such Preferred Stock, such payment
shall be distributed among the holders of Preferred Stock so that an
equal amount shall be paid with respect to each share of Preferred
Stock then Outstanding.
iii. Liquidation Preferences.
Upon any liquidation (complete or partial), dissolution or
winding up of the Corporation, or any similar distribution of its
assets to its shareholders which results in a return of capital,
whether voluntary or involuntary, the holders of the Preferred Stock
shall be entitled, before any distribution or payment is made upon any
Junior Securities of the Corporation, to be paid out of the assets of
the Corporation available for distribution to its shareholders (whether
from capital, surplus or earnings) an amount in cash equal to the
aggregate Liquidation Value of all shares of Preferred Stock then
Outstanding, and shall not be entitled to any further payment. Written
notice of such liquidation, dissolution, winding up or other
distribution of assets, stating a payment date, the amount of the
payment and the place where the amounts distributable shall be payable,
shall be mailed by certified or registered mail, return receipt
requested, not less than sixty (60) days prior to the payment date
stated therein, to each record holder of any share of Preferred Stock
entitled thereto at the address for such record holder shown on the
Corporation's records. Neither the consolidation nor merger of the
Corporation into or with any other corporation or corporations, nor the
sale or transfer by the Corporation of all or any part of its assets,
nor the reduction of the capital stock of the Corporation, shall be
deemed to be a liquidation, dissolution, winding up or similar
distribution of the Corporation within the meaning of any of the
provisions of this Section 3.
iv. Redemptions of Preferred Stock.
(1) Redemption Price. For each share of Preferred Stock which
is to be redeemed by the Corporation at any time and for any reason in
a redemption pursuant to this Section 4, the Corporation shall be
obligated on the Redemption Date, regardless of whether the Corporation
shall be able or legally permitted to make such payment on the
Redemption Date, to pay to the holder thereof (upon surrender by such
holder at the Corporation's principal office of the certificate
representing such share of Preferred Stock duly endorsed in blank or
accompanied by an appropriate form of assignment) the Redemption Price
for such share of Preferred Stock, in cash.
(2) Redeemed or Otherwise Acquired Shares Not to be Reissued.
Any shares of Preferred Stock redeemed pursuant to this Section 4 or
otherwise acquired by the Corporation shall not be reissued, sold or
transferred by the Corporation and shall be
<PAGE>
retired.
(3) Determination of Number of Each Holder's Shares to be
Redeemed. The number of shares of Preferred Stock to be redeemed from
each holder thereof in each redemption under this Section 4 shall be
determined by multiplying the total number of shares of Preferred Stock
to be redeemed times a fraction, the numerator of which shall be the
total number of shares of Preferred Stock then held by such holder and
the denominator of which shall be the total number of shares of
Preferred Stock then Outstanding, rounded if the result is fractional
to the nearest whole number of shares.
(4) Scheduled Redemption of Preferred Stock. On any
termination of the Management Services Agreement, the Corporation shall
purchase and redeem all of the shares of Preferred Stock then
Outstanding.
(5) Other Mandatory Redemptions. (a) In the event any
Corporate Change is to occur, any holder of shares of Preferred Stock
may require the Corporation to redeem all or any portion of the
Preferred Stock owned by such holder immediately prior to the
consummation of such Corporate Change. Written notice of any impending
Corporate Change, and the substance and intended date of consummation
thereof, shall be mailed by certified or registered mail, return
receipt requested, not more than sixty (60) nor less than ten (10) days
prior to the date of consummation thereof, to each record holder of
shares of Preferred Stock at the address for such record holder shown
on the Corporation's records. Each such holder shall have twenty (20)
days from the date of receipt of such notice to request (by written
notice to the Corporation) redemption of all or any portion of the
Preferred Stock owned by such holder. Immediately prior to the
consummation of such Corporate Change, the Corporation shall redeem all
Preferred Stock as to which requests under this Section 4.5(a) have
been made.
(b) "Corporate Change" means (i) a public offering of the
Corporation's securities registered under the Securities Act of 1933,
as amended, (ii) the sale, exchange or transfer of all or substantially
all of the Corporation's assets, or (iii) a sale, exchange or other
transfer of capital stock of the Corporation, including in connection
with a merger or consolidation, in one transaction or a series of
related transactions, as a result of which one or more persons (other
than a shareholder on the date of the original issuance of Preferred
Stock, or an affiliate of such a shareholder) acquire ownership of or
control over capital stock of the Corporation (or its successor by
merger or consolidation) having the power to elect fifty percent (50%)
or more of the Corporation's (or such successor's) Board of Directors.
(6) Notice of Redemption. Except as otherwise expressly
provided herein, notice of any redemption of Preferred Stock,
specifying the time and place of redemption, the Redemption Price and
the Section and paragraph pursuant to which such redemption is being
made, shall be mailed by certified or registered mail, return receipt
requested, to
<PAGE>
each holder of record of shares of Preferred Stock to be redeemed, at
the address for such holder shown on the Corporation's records, not
more than ninety (90) nor less than sixty (60) days (ten (10) days, in
the case of a redemption pursuant to Section 4.5) prior to the date on
which such redemption is to be made. The notice shall also specify the
number of shares of Preferred Stock and the certificate numbers thereof
which are to be redeemed. In case less than all the shares of Preferred
Stock represented by any certificate are redeemed, a new certificate
representing the unredeemed shares of Preferred Stock shall be issued
to the holder thereof without cost to such holder.
(7) Rights After Redemption Date. Provided that the Redemption
Price is paid in full on the applicable Redemption Date, no share of
Preferred Stock shall be entitled to any dividends accrued after its
Redemption Date, and on such Redemption Date, except as otherwise
provided herein or by law, all rights of the holder of such share of
Preferred Stock as a shareholder of the Corporation, by reason of the
ownership of such share, shall cease, except the right to receive the
Redemption Price of such share upon presentation and surrender of the
certificate representing such share, and such share shall not after
such Redemption Date be deemed to be Outstanding.
(8) Other Redemptions. The Corporation shall neither redeem
nor otherwise acquire any shares of Preferred Stock except (i) as
expressly authorized in these Articles of Incorporation, or (ii)
pursuant to any offer of redemption made to the holders of Preferred
Stock pro rata according to the shares held by them.
v. Voting Rights of Preferred Stock.
Except as otherwise provided by law, by agreement among the
shareholders, or as otherwise provided in these Articles of
Incorporation, Preferred Stock shall entitle the holders thereof to no
voting rights.
vi. Registration of Transfer.
The Corporation shall keep at its principal office (or such
other place as the Corporation reasonably designates) a register for
the registration of shares of Preferred Stock. Upon the surrender of
any certificate representing Preferred Stock at such place, the
Corporation shall, at the request of the registered holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing the
aggregate number of shares represented by the surrendered certificate,
subject to the requirements of applicable securities laws. Each such
new certificate shall be registered in such name and shall represent
such number of shares as shall be requested by the holder of the
surrendered certificate, shall be substantially identical in form to
the surrendered certificate, and the holders of the shares represented
by such new certificate shall be entitled to receive all theretofore
payable but unpaid dividends on the shares represented by the
surrendered certificate.
<PAGE>
vii. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of the
Preferred Stock and, in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the registered holder is an institutional
investor its own agreement of indemnity, without bond, shall be
satisfactory), or, in the case of any such mutilation, upon surrender
of such certificate, the Corporation shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind
representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate, and the shares represented by such
new certificate shall be entitled, among other things, to receive all
theretofore payable but unpaid dividends on the shares represented by
the lost, stolen, destroyed or mutilated certificate.
viii. Restrictions on Corporate Action.
In addition to any other approvals or consents required by
law, without the prior affirmative vote or written consent of the
holders of at least a majority of all shares of the Preferred Stock
Outstanding at the time:
(i) The Corporation shall not authorize, create or issue any
shares, or securities convertible into such shares, of any class of
stock having preference over, or being on a parity with, the Preferred
Stock with respect to either the payment of dividends or rights upon
dissolution, liquidation, winding up or similar distribution of the
Corporation or distribution of assets to its shareholders by way of
return of capital, whether voluntary or involuntary.
(ii) Subject to the provisions of applicable law, the
Corporation shall not liquidate, dissolve or wind up its affairs.
(iii) The Corporation shall not sell, lease, or convey all or
substantially all of the property or business of the Corporation, or
effect a merger or consolidation of or with any other corporation,
partnership, limited liability company or other entity or entities.
(iv) The Corporation shall not amend, alter or repeat Sections
2 through 11 of Article IV of the Articles of Incorporaiion, nor shall
it amend, alter or repeal any of the other provisions of the Articles
of Incorporation or the by-laws of the Corporation in any manner which
adversely affects the preferences and rights and the qualifications,
limitations or restrictions of the Preferred Stock or the holders
thereof nor shall the Corporation increase the number of shares of the
Preferred Stock which the Corporation is authorized to issue.
<PAGE>
(v) The Corporation shall not enter into any agreement which
would by its terms prohibit or in any way restrict the Corporation from
declaring or paying dividends on the Preferred Stock or from performing
any other obligation to the holders of Preferred Stock imposed on the
Corporation by these Articles of Incorporation.
(vi) The Corporation shall not declare or pay any dividend or
make any other distribution on any Junior Securities, other than
dividends or distributions payable solely in Junior Securities, or
purchase, redeem, or otherwise acquire for any consideration, or set
aside as a sinking fund or other fund for the redemption or repurchase
of any Junior Securities or any warrants, rights or options to purchase
the same.
ix. Closing Books.
The Corporation will not close its books against the transfer
of any share of Preferred Stock.
x. Definitions.
As used in these Articles of Incorporation, the following
terms shall have the following meanings, which meanings shall be
equally applicable to the singular and plural forms of such terms:
"Business Day" means any day which is not a Saturday or a
Sunday or a day on which banks are permitted to close in New York, New
York.
"Common Stock" means the common stock, without par value, of
the Corporation, and any capital stock of any class of the Corporation
hereafter authorized which shall not be limited to a fixed sum or
percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of
assets upon any liquidation, dissolution, winding up or similar
distribution of the Corporation.
"Dividend Pavment Date" means, with respect to Preferred
Stock, the fifteenth (15th) day of January, April, July and October in
each year (or if any such day is not a Business Day the immediately
preceding Business Day).
"GAAP" means generally-accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board.
"Junior Security" means the Corporation's Common Stock and any
other equity security of any kind which the Corporation or any
Subsidiary shall at any time issue or be authorized to issue other than
Preferred Stock.
<PAGE>
"Liquidation Value" of any share of Preferred Stock as of any
particular date means an amount equal to the accrued and unpaid
dividends on such share of Preferred Stock.
"Management Services Agreement" means the Management Services
Agreement dated as of June, 1998 between the Corporation and EMI
Management Services Corporation (the "Manager"), as from time to time
amended, modified or supplemented.
"Outstanding" when used with reference to shares of Preferred
Stock as of any particular time shall mean shares thereof issued and
outstanding at such time and shall not include any shares of Preferred
Stock represented by any certificate in lieu of which a new certificate
has been executed and delivered by the Corporation in accordance with
Section 6 or Section 7, but shall include only those shares represented
by such new certificate.
"Person" means and includes an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization
and a government or any department or agency thereof.
"Redemption Date" as to any share of Preferred Stock means the
date specified in the notice of redemption delivered pursuant to
Section 4.6; provided that for purposes of Section 4.7, the Redemption
Date shall be the date on which the applicable Redemption Price is
actually paid to the holder of such share of Preferred Stock.
"Redemption Price" as to any share of Preferred Stock means
the Liquidation Value of such share.
"Subsidiary" means any corporation at least 50% of the Voting
Stock of every class of which is, at the time as of which any
determination is being made, owned by the Corporation either directly
or through one or more Subsidiaries.
"Voting Stock" means any shares of stock having general voting
power in electing the board of directors (irrespective of whether or
not at the time stock of any other class or classes has or might have
voting power by reason of the happening of any contingency).
xi. Miscellaneous.
(i) The unenforceability or invalidity of any provision or
provisions of these Articles of Incorporation shall not render invalid
or unenforceable any other provision or provisions herein contained.
(ii) Section and paragraph headings herein are for convenience
only and shall not be construed as a part of these Articles of
Incorporation.
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(iii) All notices to holders of Preferred Stock required or
permitted hereunder shall be sent by overnight courier service,
prepaid, addressed to each such holder at the address for such holder
shown on the books of the Corporation.
******
c. The foregoing amendment of the Articles of Incorporation has been duly
approved by the board of directors.
d. The foregoing amendment of the Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902,
California Corporations Code. The total number of outstanding shares of the
corporation is 3333 1/3. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Dated: June 16, 1998
/s/ H. K.
Howard Kaufman, President
/s/ S. K.
Sherry Kaufman, Secretary
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<PAGE>
Exhibit D
BYLAWS OF
EVENT MERCHANDISING INC.
(A California corporation)
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The board of directors shall fix
the location of the principal executive office of the corporation at any place
within or without the state of California. If the principal executive office is
located outside this state, and the corporation has one or more business offices
in this state, the board of directors shall fix and designate a principal
business office in the State of California.
Section 2. OTHER OFFICES. The board of directors may at any time
establish branch or subordinate offices at any place or places where the
corporation is qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at
any place within or without the State of California designated by the board of
directors. In the absence of any such designation, shareholder's meetings shall
be held at the principal executive office of the corporation.
Section 2. ANNUAL MEETING. The annual meeting of shareholders shall be
held on the last day of each fiscal year at 9:00 o'clock a.m. However, if this
day falls on a legal holiday, then the meeting shall be held at the same time
and place on the preceding full business day. At this meeting, directors shall
be elected, and any other proper business may be transacted.
Section 3. SPECIAL MEETING. A special meeting of the shareholders may
be called at any time by the board of directors, or by the chairman of the
board, or by the president, or by one or more shareholders holding shares in the
aggregate entitled to cast not less than one tenth (1/10) of the votes at that
meeting. If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president, any
vice president, or the secretary of the corporation.
Section 4. NOTICE OF SHAREHOLDERS' MEETINGS. Notices of meetings of
shareholders shall be sent or otherwise given in accordance with Section 5 of
this Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting. if a special meeting is
<PAGE>
called by any person or persons other than the board of directors, the officer
receiving the request shall cause notice to be promptly given to the
shareholders entitled to vote, in accordance with the provisions of Section 5 of
this Article II, that a meeting will be held at the time requested by the person
or persons calling the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of the request. If the notice is not given
within twenty (20) days after receipt of the request, the person or persons
requesting the meeting may give the notice.
The notice shall specify the place, date and hour of the meeting, and
(i) in the case of a special meeting, the general nature of the business to be
transacted, or (ii) in the case of the annual meeting, those matters which the
board of directors, at the time of giving the notice, intends to present for
action by the shareholders. The notice of any meeting at which directors are to
be elected shall include the name of any nominee or nominees whom, at the time
of the notice, management intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the articles of incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. METHOD OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally, or by sending a copy
thereof by first-class mail or telegraphic or other written communication,
charges prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent addressed to that shareholder by first-class mail or telegraphic or other
written communication to the corporation's principal executive office, or if
published at least once in a newspaper of general circulation in the county
where the principal executive office is located. Notice shall be deemed to have
been given at the time when delivered personally or deposited in the mail or
sent by telegram or other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, all future notices or reports shall be deemed to have been duly
given without further mailing if these notices shall be available to the
shareholder on written demand of the shareholder at the principal executive
office of the corporation for a period of one year from the date of the giving
of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting in accordance with this Section 5 of this Article II shall
be executed by the secretary, assistant secretary, or any transfer agent of the
corporation giving the notice, and shall be filed and maintained in the minute
book of the corporation.
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When any meeting of the shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place of such adjourned meeting are announced at a
meeting at which the adjournment is taken; provided, that if a new record date
for the adjourned meeting is fixed after the adjournment, or the adjournment is
for more than forty-five (45) days from the date set for the original meeting,
the board of directors shall set a new record date. Notice of any such adjourned
meeting shall be given to each shareholder of record entitled to vote at the
adjourned meeting in accordance with the provisions of Section 4 and this
Section 5 of this Article II. Subject to Section 7 of this Article II, at any
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting.
Section 6. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, or who, though
present, objects at the beginning of the meeting to the meeting as not properly
called or convened or who object at the meeting to consideration of matters not
included in the notice of the meeting, signs a written waiver of notice or a
consent to a holding of the meeting, or an approval of the minutes. The waiver
of notice or consent need not specify either the business to be transacted or
the purpose of any annual or special meeting of shareholders, except that if
action is taken or proposed to be taken for approval of any of those matters
specified in the third paragraph of Section 4 of this Article II, the waiver of
notice or consent shall state the general nature of the proposal. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 7. QUORUM. The presence in person or by proxy of a majority of
the shares entitled to vote at any meeting of shareholders shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
Section 8. ADJOURNED MEETING. Any shareholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy, but in the absence of a quorum, no other business nay be
transacted at that meeting, except as provided in Section 7 of this Article II.
Section 9. VOTING. Except as otherwise provided in these bylaws and
subject to the provisions of Sections 702 through 704 of the Corporations Code
of California, the shareholders entitled to vote at any meeting of shareholders
shall be determined in accordance with the provisions of section 11 of this
Article II. The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder before the voting has begun. On any matter other than elections of
directors, any shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining shares or vote them against the proposal,
but, if the shareholder fails to specify the number of shares which the
shareholder fails
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to specify the number of shares which the shareholder is voting affirmatively,
it will be conclusively presumed that the shareholders' approving vote is with
respect to all shares that the shareholder is entitled to vote. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on any matter (other than the election of
directors) shall be the act of the shareholders, unless the vote of a greater
number or voting by classes is required by Corporations Code of California or by
the articles of incorporation.
At the shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to cumulate votes or to cast for any one or more
candidates a number of votes greater than the number of the shareholder's shares
unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among any or all of the candidates, as
the shareholder thinks fit. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected.
Except as otherwise provided in this Section 9 of this Article II or
the articles of incorporation of this corporation, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to
vote of the shareholders.
Section 10. SHAREHOLDER ACTION WITHOUT A MEETING. Unless otherwise
provided in the articles of incorporation of this corporation, any action which
may be taken at any annual or special meeting of shareholders may be taken
without a meeting and without prior notice, if a consent in writing, setting
forth the action so taken, is signed by the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to authorize
or take that action at a meeting at which all shares entitled to vote on that
action were present and voted. In the case of election of directors, such a
consent shall be effective only if signed by the holders of all outstanding
shares entitled to vote for the election of directors; provided, however, that a
director may be elected at any time to fill a vacancy on the board of directors
that has not been filled by the directors, by the written consent of the holders
of a majority of the outstanding shares entitled to vote for the election of
directors. All such consents shall be filed with the secretary of the
corporation and shall be maintained in the corporate records. Any shareholder
giving a written consent, or the shareholder's proxy holders, or a transferee of
the shares or a personal representative of the shareholder or their respective
proxy holders, may revoke the consent by a writing received by the secretary of
the corporation before written consents of the number of shares required to
authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
This notice shall be given in the manner specified in section 5 of Article II.
In the case of approval of (i) contracts or transactions in which a director has
a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (ii) indemnification of agents of the
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corporation, pursuant to Section 317 of that Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (iv) a distribution in
dissolution other than in accordance with the rights of outstanding preferred
shares, pursuant to Section 2007 of that Code, the notice shall be given at
least ten (10) days before the consummation of any action authorized by that
approval.
Section 11. RECORD DATE. For purposes of determining the shareholders
entitled to notice of any meeting or to vote or entitled to give consent to
corporate action without a meeting, the board of directors may fix, in advance,
a record date, which shall not be more than sixty (60) days nor less than ten
(10) days before the date of any such meeting not more than sixty (60) days
before any such action without a meeting, and in this event only shareholders of
record on the date so fixed are entitled to notice and to vote or to give
consents, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after the record date, except as otherwise provided in
the Corporations Code of California.
If the board of directors does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
(b) The record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the board has been taken, shall
be at the close of business on the day on which the board adopts the resolution
relating to that action, or the sixtieth (60th) day before the date of such
other action, whichever is later.
Section 12. PROXIES. Every person entitled to vote on any matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic
transmission, or otherwise) by the shareholder or the shareholder's attorney in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it,
before the vote pursuant to that proxy, by a writing delivered to the
corporation stating that the proxy is revoked, or by a proxy executed on a
subsequent date by, or attendance at the meeting and voting in person by, the
person executing the proxy; or (ii) written notice of the death or incapacity of
the maker of that proxy is received by the corporation before the vote pursuant
to that proxy is counted; provided, however, that no proxy shall be valid after
the expiration of eleven (11) months from the date of the proxy, unless
otherwise provided in the proxy. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of sections
705(e) and 705(f) of the Corporations Code of California.
ARTICLE III
DIRECTORS
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Section 1. POWERS. Subject to the provisions of the Corporations Code
of California and any limitations in the articles of incorporation and these
bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
board of directors.
Section 2. NUMBER AND QUALIFICATION. The authorized number of directors
shall be three (3) until changed by a duly adopted amendment to the articles of
incorporation or by an amendment to this bylaw adopted by the vote or written
consent of holders of a majority of the outstanding shares entitled to vote;
provided, however, that an amendment reducing the number of directors to a
number less than five (5) cannot be adopted if the votes cast against its
adoption at a meeting, or the shares not consenting in the case of action by
written consent, are equal to more than 16-2/3% of the outstanding shares
entitled to vote.
Section 3. ELECTION AND TERM. Directors shall be elected at the annual
meeting of the shareholders to hold office until the next annual meeting. Each
director, including a director elected to fill a vacancy, shall hold office
until the expiration of the term for which elected and until a successor has
been elected and qualified.
Section 4. VACANCIES. Vacancies in the board of directors may be filled
by a majority of the remaining directors, though less than a quorum, or by a
sole remaining director with the exception that a vacancy created by the removal
of a director by the note or written consent of the shareholders or by court
order may be filled only by the vote of a majority of the shares entitled to
vote represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of a majority of the outstanding shares entitled to
vote. Each director so elected shall hold office until the next annual meeting
of the shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist in case of the death, resignation, or removal of any director, or if the
board of directors by resolution declares vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the authorized number of directors is increased, or if the shareholders
fail, at any meeting of shareholders at which any director or directors are
elected, to elect the number of directors to be voted for at that meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary, or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any director before the expiration of his term of office.
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Section 5. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. Regular
meetings of the board of directors may be held at any place within or without
the State of California that has been designated from time to time by resolution
of the board. In the absence of such a designation, regular meetings shall be
held at the principal executive office of the corporation. Special meetings of
the board shall be held at any place within or without the State of California
that has been designated in the notice of the meeting or, if not stated in the
notice or there is no notice, at the principal executive office of the
corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 6. ANNUAL MEETING. Immediately following each annual meeting of
shareholders, the board of directors shall hold a regular meeting for the
purpose of organization, any desired election of officers, and the transaction
of other business. Notice of this meeting shall not be required.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board
of directors shall be held without call at such time as shall from time to time
be fixed by the board of directors. Such regular meetings may be held without
notice.
Section 8. SPECIAL MEETINGS. Special meetings of the board of directors
for any purpose or purposes may be called at any time by the chairman of the
board or the president or any vice president or the secretary or any two
directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered.
personally, or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the-meeting is to be held at the
principal executive office of the corporation.
Section 9. QUORUM. A majority of the authorized number of directors
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 11 of this Article III. Every act or decision done or made
by a majority of the directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the board of directors, subject to
the provisions of Sections 310, 311, and 317(e) of the Corporations Code of
California. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
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Section 10. WAIVER OF NOTICE. The transactions of any meeting of the
board of directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum is present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, a consent to holding the
meeting or an approval of the minutes. The waiver of notice or consent need not
specify the purpose of the meeting. All such waivers, consents, and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting. Notice of a meeting shall also be deemed given to any director who
attends the meeting without protesting before or at its commencement, the lack
of notice to that director.
Section 11. ADJOURNMENT. A majority of the directors present, whether
or not constituting a quorum, may adjourn any meeting at another time and place.
Section 12. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given, unless the meeting is adjourned
for more than twenty-four (24) hours, in which case notice of the time and place
shall be given before the time of the adjourned meeting, in the manner specified
in Section 8 of this Article III, to the directors who were not present at the
time of the adjournment.
Section 13. ACTION WITHOUT A MEETING. If all members of the board shall
individually or collectively consent in writing to any action required or
permitted to be taken by the board of directors, such action may be taken
without a meeting. Such action by written consent shall have the same force and
effect as a unanimous vote of the board of directors. Such written consent or
consents shall be filed with the minutes of the proceedings of the board.
Section 14. FEES AND COMPENSATION. Directors may receive such
compensation, if any, for their services, and such reimbursement of expenses, as
may be fixed or determined by resolution of the board of directors. This Section
14 shall not be construed to preclude any director from serving the corporation
in any other capacity as an officer, agent, employees, or otherwise, and
receiving compensation for those services.
ARTICLE IV
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a
president, a secretary, and a chief financial officer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasures, and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article IV. Any number of offices may
be held by the same person.
Section 2. ELECTION. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article IV, shall be chosen by the board of directors, and
each shall serve at the pleasure of the board, subject to the rights, if any of
an officer under any contract of employment.
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Section 3. SUBORDINATE OFFICERS. The board of directors may appoint,
and may empower the president to appoint, such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the board of directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights,
if any, of any officer under any contract of employment, any officer may be
removed, either with or without cause, by the board of directors, at any regular
or special meeting of the board, or, except in case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these bylaws for regular appointments to that
office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there
is such an officer shall, if present, preside at meetings of the board of
directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article IV.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the board of directors to the chairman of the board, if there is
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction, and control of the business and the officers of
the corporation. He shall preside at all meetings of the shareholders and, in
the absence of the chairman of the board, or if there be none, at all meetings
of the board of directors. He shall have the general powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the board of directors
or the bylaws.
Section 8. VICE PRESIDENTS. In the absence or disability of the
president, the vice presidents, if any, in order of their rank as fixed by the
board of directors or, if not ranked, a vice president designated by the board
of directors, shall perform all the duties of the president, and when so acting
shall have the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors or the bylaws, and the president or the chairman of the
board.
Section 9. SECRETARY. The secretary shall keep or cause to be kept, at
the principal executive office or such other place as the board of directors may
direct, a book of minutes of all
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meetings and actions of directors, committees of directors, and shareholders,
with the time and place of holding, whether regular or special, and, if special,
how authorized, the notice given, the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number of classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation if one be
adopted, in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER. The chief financial officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings, and shares. The books
of account shall at all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all his transactions as chief all of his transactions as chief financial officer
and of the financial condition of the corporation, and shall have other powers
and perform such other duties as may be prescribed by the board of directors or
the bylaws.
Section 11. ASSISTANTS. Any assistant secretary or assistant treasurer,
respectively, may exercise any of the powers of secretary or chief financial
officer, respectively, as provided in these bylaws or as directed by the board
of directors, and shall perform such other duties that are imposed upon them by
the bylaws or the board of directors.
Section 12. COMPENSATION. The officers of this corporation shall
receive such compensation as shall be fixed from time to time by the board of
directors, except that the board of directors may delegate to any officer or
officers the power to fix the compensation of any other officer or officers. No
officer shall be prevented from receiving compensation by reason of the fact
that the officer is also a director of the corporation.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
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The corporation shall, to the maximum extent permitted by the
Corporations Code of California, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact any such person
is or was an agent of the corporation. For purposes of this Section, an "agent"
of the corporation includes any person who is or was a director, officer,
employee, or other agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
ARTICLE VI
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. The
corporation shall keep at its principal executive office, or at the office of
its transfer agent or registrar, if either be appointed and as determined by
resolution of the board of the board of directors, a record of its shareholders,
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may either in person or by agent (i) inspect and copy the records of
shareholders' names and addresses and shareholdings during usual business hours
on five days prior written demand on the corporation, and (ii) obtain from the
transfer agent of the corporation, on written demand and on the tender of such
transfer agent's usual charges for such list, a list of the shareholders' names
and addresses, who are entitled to vote for the election of directors, and their
shareholdings, as of the 'most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
This list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or the date
specified in the demand as the date as of which the list is to be compiled. The
record of shareholders shall also be open to inspection on the written demand of
any shareholder or holder of a voting trust certificate, at any time during
usual business hours, for a purpose reasonably related to the holder's interests
as a shareholder or as the holder of a voting trust certificate. Any inspection
and copying under this Section I may be made in person or by an agent or
attorney of the shareholder or holder of a voting trust certificate making the
demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall
keep at its principal executive office, or if its principal executive office is
not in the State of California, at its principal business office in this state,
the original or a copy of the bylaws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is outside the State of
California and the corporation has no principal business office in this state,
the Secretary shall, upon the written request of any shareholder, furnish to
that shareholder a copy of the bylaws as amended to date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the shareholders and
the board of directors shall be kept at such place or places designated by the
board of directors, or,
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in the absence of such designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form or in any other form capable of
being converted into written form. The minutes and accounting books and records
shall be open to inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. The inspection may be made in person or by
an agent or attorney, and shall include the right to copy and make extracts.
These rights of inspection shall extend to the records of each subsidiary
corporation of the corporation.
Section 4. INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the corporation and each
of its subsidiary corporation. This inspection by a director may be made in
person or by an agent or attorney, and shall include the right to copy and make
extracts of documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 1501 of the Corporations Code of California
is expressly dispensed with, but nothing herein shall be interpreted as
prohibiting the board of directors from issuing annual or other periodic reports
to the shareholders of the corporation as they consider appropriate.
Section 6. FINANCIAL STATEMENTS. A copy of any annual financial
statement and any income statement of the corporation for each quarterly period
of each fiscal year, and any accompanying balance sheet of the corporation as of
the end of each such period, that has been prepared by the corporation shall be
kept on file in the principal executive office of the corporation for twelve
(12) months and each such statement shall be exhibited at all reasonable times
to any shareholder demanding an examination of any such statement or a copy
shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation for an income
statement of the corporation for the three-month, six-month, or nine-month
period of the then current fiscal year ended more than thirty (30) days before
the date of the request, and a balance sheet of the corporation as of the end of
that period, the chief financial officer shall cause that statement to be
prepared, if not already prepared, and shall deliver personally or mail that
statement or statements to the person making the request within thirty (30) days
after the receipt of the request. If the corporation has not sent to the
shareholder its annual report for the last fiscal year, this report shall
likewise be delivered or mailed to the shareholder or shareholders within thirty
(30) days after the request.
The corporation shall also, on the written request of any shareholder,
mail to the shareholder a copy of the last annual, semi-annual, or quarterly
income statement which it has prepared, and a balance sheet as of the end of
that period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or the
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certificate of an authorized officer of the corporation that the financial
statements were prepared without audit from the books and records of the
corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION. The corporation
shall, during each year, file with the Secretary of State of the State of
California, on the prescribed form, a statement setting forth the authorized
number of directors, the names and complete business or residence addresses of
all incumbent directors, the names and complete business or residence addresses
of the chief executive officer, secretary, and chief financial officer, the
street address of its principal executive office or principal business office in
this state, and the general type of business constituting the principal business
activity of the corporation, together with a designation of the agent of the
corporation, together with a designation of the agent of the corporation for the
purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
ARTICLE VII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action (other than action by
shareholders by written consent without a meeting), the board of directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution, or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the corporations Code of California.
If the board of directors does not so fix a record date, the record
date for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks,
drafts, or other orders for payment of money, notes, or other evidences of
indebtedness, issued in the name of or payable to the corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the board of directors.
Section 3. EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS. The board
of directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and this authority
may be general or confined to specific instances; and, unless so authorized,
empowered, or ratified by the board of directors or within the agency power of
an officer, no officer, agent, or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
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Section 4. CERTIFICATES FOR SHARES. Certificates for shares shall be of
such form and device as the board of directors may designate and shall state the
name of the record holder of the shares represented thereby its number; date of
issuance; the number of shares for which it is issued; a statement of the right,
privileges, preferences and restrictions, if any; a statement as to the
redemption or conversion, if any; a statement of liens or restrictions upon
transfer or voting, if any; if the shares be assessable, or, if assessments are
collectible by personal action, a plain statement of such facts.
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the board of directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairmen
of the board or vice chairman of the board or the president or vice president
and by the chief financial officer or an assistant treasurer or the secretary or
any assistant secretary, certifying the number of shares and the class or series
of shares owned by the shareholder. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on a certificate
shall have ceased to be that officer, transfer agent, or registrar before that
certificate is issued, it may be issued by the corporation with the same effect
as if that person were an officer, transfer agent, or registrar at the date of
issue.
Section 5. LOST CERTIFICATES. Except as provided in this Section 5, no
new certificates for shares shall be issued to replace an old certificate unless
the latter is surrendered to the corporation and cancelled at the same time. The
board of directors may, in case any share certificate or certificate for any
other security is lost, stolen, or destroyed, authorize the issuance of a
replacement certificate on such terms and conditions as the board may require,
including provision for indemnification of the corporation secured by a bond or
other adequate security sufficient to protect the corporation against any claim
that may be made against it, including any expense or liability, on account of
the alleged loss, theft, or destruction of the certificate or the issuance of
the replacement certificate.
Section 6. TRANSFER ON THE BOOKS. Upon surrender to the secretary or
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanies by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 7. TRANSFER AGENTS AND REGISTRARS. The board of directors may
appoint one or more transfer agents or transfer clerks, and one or more
registrars, which shall be an incorporated bank or trust company, either
domestic or foreign, who shall be appointed at such times and places as the
requirements of the corporation may necessitate and the board of directors may
designate.
Section 8. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman
of the board, the president, or any vice president, or any other person
authorized by resolution of the board of directors or by any of the foregoing
designated officers, is authorized to
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vote on behalf of the corporation any and all shares of any other corporation or
corporations, foreign or domestic, standing in the name of the corporation. The
authority granted to these officers to vote or represent on behalf of the
corporation any and all shares held by the corporation in any other corporation
or corporations may be exercised by any of these officers in person or by any
person authorized to do so by a proxy duly executed by these officers.
Section 9. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
corporations Code of California shall govern the construction of these bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
Section 10. TRANSFER OF SHARES. in no event while this corporation is
operating under its Subchapter "S" status will any transfer of shares of this
corporation be recognized which are impermissable for Subchapter "S" purposes.
ARTICLE VIII
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the articles of incorporation of the corporation set forth the
number of authorized directors of the corporation, the authorized number of
directors may be changed only by an amendment of the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders as provided in Section I of this Article VIII, bylaws, other than a
bylaw or an amendment of a bylaw changing the authorized number of directors,
may be adopted, amended, or repealed by the board of directors.
Section 3. RECORD OF AMENDMENTS. Whenever an amendment of a new bylaw
is adopted, it shall be from the book of bylaws and copies shall be placed with
the original bylaws, in the appropriate place. If any bylaw is repealed, the
fact of repeal with the date of the meeting at which the repeal was enacted or
written assent was filed shall be stated in said book.
THIS IS TO CERTIFY:
That I am the duly elected and qualified Secretary of EVENT
MERCHANDISING INC., a California corporation, and that the above and foregoing
Bylaws were adopted by said Corporation on the 16th day of May, 1990, by Howard
Kaufman, the person appointed to act as the first director of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of May,
1990.
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/s/ Howard Kaufman
HOWARD KAUFMAN
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AMENDMENT TO BYLAWS OF
EVENT MERCHANDISING INC.,
a California corporation
This Amendment to the Bylaws of Event Merchandising Inc., a California
corporation (the "Company") is effective as of May 1, 1998. Capitalized terms
used herein without definition shall have the same meaning as in the Bylaws of
the Company.
1. As of the date hereof, Section 10 of Article VII of the Bylaws of
the Company prohibiting transfers of shares of the Company which are
impermissible for Subchapter "S" purposes is deleted.
2. Except as modified hereby, the Bylaws remain unmodified in full
force and effect.
This Amendment was approved by all of the shareholders of the Company.
IN WITNESS WHEREOF, the undersigned has executed this Amendment on May
1, 1998.
/s/ Sherry Kaufman
Sherry Kaufman, Secretary
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CERTIFICATE OF INCORPORATION
OF
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
1. The name of the corporation is Falk Associates Management Enterprises,
Inc.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the city of
Wilmington, County of New Castle. The name of its registered agent at
such address is the Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is;
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of
Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1, 000); all of such shares shall
be without par value.
At all elections of directors of the corporation, each stockholder
shall be entitled to as many votes as shall equal the number of votes
which (except for such provision as to cumulative voting) he would be
entitled to cast for the election of directors with respect to his
shares of stock multiplied by the number of directors to be elected by
him, and he may cast all of such votes for a single director or may
distribute them among the number to be voted for, or for any two or
more of them as he may see fit.
The holders of stock shall, upon the issuance or sale of shares of
stock of any class (whether now or hereafter authorized) or any
securities convertible into such stock, have the right, during such
period of time and on such conditions as the Board of Directors shall
prescribe, to subscribe to and purchase such shares or securities in
proportion to their respective holdings of stock, at such price or
prices as the board of directors may from time to time fix and as may
be permitted by law.
5. The name and mailing address of each incorporator is as follows:
1
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Name Mailing Address
- ---- ---------------
Alan H. Pollack 111 E. Wacker Drive
Suite 2700
Chicago, IL 60601
6. The corporation is to have perpetual existence.
7. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
Meetings of stockholders may be hold within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may
be kept (subject to any provision contained in the statute) outside the
State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the
corporation.
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of then, any court of
equitable jurisdiction within the State or Delaware may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of
Title 8 of the Delaware Code or on the application of trustees under
the provisions of Section 279 of Title 8 of the Delaware Code order a
meeting of the creditors or class of creditors, and/or of the
stockholder or in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of
this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, it sanctioned by the
court to which the said application has been made, be binding on all
the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of this corporation, as the case may be, and
also on this corporation.
8. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
9. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional
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misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General corporation law, or (iv) for any transaction from which the
director derived any improper personal benefit.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and that facts herein stated are true, and
accordingly have hereunto set my hand this 5th day of February, 1992.
/s/ Alan H. Pollack
Alan H. Pollack
3
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BY-LAWS
OF
FALK ASSOCIATES MANAGEMENT ENTERPRISES, INC.
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of the
corporation shall be maintained in the city of Wilmington of New Castle County,
State of Delaware, and the registered agent in charge thereof is Corporation
Trust Center.
Section 2. OTHER OFFICES. The corporation may also have an
office in such other places as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. All meetings of the
stockholders, whether annual or special, shall be held at the offices of the
corporation in Arlington, Virginia, or at such other place as may be fixed from
time to time by the Board of Directors.
Section 2. ANNUAL MEETINGS. An annual meeting of the
stockholders, commencing with the year 1993, shall be held on the second
Wednesday in February in each year, but if a legal holiday then on the next
secular day following, at which they shall elect a Board of Directors, and
transact such other business as may properly be brought before the meeting.
Section 3. NOTICE OF ANNUAL MEETINGS. Written notice of the
annual meeting stating the place, date and hour of the meeting, shall be given
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.
Section 4. STOCKHOLDERS' LIST. At least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered
<PAGE>
in the name of each stockholder, shall be prepared by the Secretary. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 5. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, nay be called by the Chairman of
the Board or by the President and shall be called by the Secretary at the
request of a majority of the Board of Directors, or at the request in writing of
stockholders owning at least two-thirds of the number of shares of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Section 6. NOTICE OF SPECIAL MEETINGS. Written notice of a
special meeting, stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called, shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the corporation.
Section 7. QUORUM. The holders of a majority of the shares
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as otherwise
provided by statute, by the Certificate of incorporation or by these By-Laws.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have the power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, of the place,
date and hour of the adjourned meeting, until a quorum shall again be present or
represented by proxy. At the adjourned meeting at which a quorum shall be
present or represented by proxy, the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for theadjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. VOTING. When a quorum is present at any meeting,
and subject to the provisions of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation or these By-Laws in respect of the
vote that shall be required for a specified action, the vote of the holders of a
majority of the shares having voting power, present in person or represented by
proxy, shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes or of the
Certificate of Incorporation or of these By-Laws, a different vote is required
in which case such express provision shall govern and control the decision of
such question. Each stockholder shall have one vote for each share of stock
having voting power
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<PAGE>
registered in his name on the books of the corporation, except as otherwise
provided in the Certificate of Incorporation.
Section 9. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 10. CONSENT. Unless otherwise provided in the
Certificate of incorporation, any action required by the General Corporation Law
of the State of Delaware to be taken at any meeting of stockholders, or any
action which may be taken at any meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or the Secretary. Delivery made to
a corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required by this section to the
corporation, written consents signed by a sufficient number of holders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or the Secretary.
Delivery made to a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided in the General Corporation Law of
the State of Delaware or the Certificate of Incorporation. Directors need not be
stockholders unless required in the Certificate of Incorporation.
Section 2. NUMBER OF DIRECTORS. The number of directors which
shall constitute the whole Board shall be one (I). The directors shall be
elected at the annual meeting of the stockholders, and each director shall hold
office until his successor is elected and qualified or until his earlier
resignation or removal.
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<PAGE>
Section 3. RESIGNATION. A director may resign at any time upon
written notice to the corporation.
Section 4. VACANCIES. If the office of any director or
directors becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, or a new directorship is
created, the holders of a majority of shares issued and outstanding and entitled
to vote in elections of directors, shall choose a successor or successors, or a
director to fill the newly created directorship, who shall hold office for the
unexpired term or until the next election of directors.
Section 5. PLACE OF MEETINGS. The Board of Directors may hold
its meetings outside of the State of Delaware, at the office of the corporation
or at such other places as they nay from time to time determine, or as shall be
fixed in the respective notices or waivers of notice of such meetings.
Section 6. COMMITTEES OF DIRECTORS. The Board of Directors
may, by resolution or resolutions passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more of
the directors of the corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation, if any, to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amendment to
the By-Laws, of the corporation; and, unless the resolution, By-Laws, or
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the Board of
Directors when required.
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Section 7. COMPENSATION OF DIRECTORS. Directors, as such, may
receive such stated salary for their services and/or such fixed sums and
expenses of attendance for attendance at each regular or special meeting of the
Board of Directors as may be established by resolution of the Board; provided
that nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees nay be allowed like
compensation for attending committee meetings.
Section 8. ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held within ten days after the annual meeting of the
stockholders in each year. Notice of such meeting, unless waived, shall be given
by mail or telegram to each director elected at such annual meeting, at his
address as the same may appear on the records of the corporation, or in the
absence of such address, at his residence or usual place of business, at least
three days before the day on which such meeting is to be held. Said meeting may
be held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof.
Section 9. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time on the call of the Chairman of the Board, the
President, or at the request in writing of any one (1) director. Notice of any
such meeting, unless waived, shall be given by mail or telegram to each director
at his address as the same appears on the records of the corporation not less
than one day prior to the day on which such meeting is to be held if such notice
is by telegram, and not less than two days prior to the day on which the meeting
is to be held if such notice is by mail. If the Secretary shall fail or refuse
to give such notice, then the notice may be given by the officer or any one of
the directors making the call. Any such meeting may be held at such place as the
Board may fix from time to time or as may be specified or fixed in such notice
or waiver thereof. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given, if all the directors shall
be present thereat, and no notice of a meeting shall be required to be given to
any director who shall attend such meeting.
Section 10. ACTION WITHOUT MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors.
Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board, may participate in a meeting of the Board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.
Section 11. QUORUM AND MANNER OF ACTING. Except as otherwise
provided in the Certificate of Incorporation or these By-Laws, a majority of the
total number of directors as
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at the time specified by the By-Laws shall constitute a quorum at any regular or
special meeting of the Board of Directors. Except as otherwise provided by
statute, by the Certificate of Incorporation or by these By-Laws, the vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum, a
majority of the directors present may adjourn the meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting need not be
given, except that notice shall be given to all directors if the adjournment is
for more than thirty days.
ARTICLE IV
OFFICERS
Section 1. EXECUTIVE OFFICERS. The executive officers of the
corporation shall be a Chairman of the Board, a President, such number of Vice
Presidents, if any, as the Board of Directors may determine and a Secretary, and
a Treasurer, if any. one person may hold any number of said offices.
Section 2. ELECTION, TERM OF OFFICE AND ELIGIBILITY. The
executive officers of the corporation shall be elected annually by the Board of
Directors at its annual meeting; provided that new or additional officers may be
elected at any meeting of the Board. Each officer, except such officers as may
be appointed in accordance with the provisions of Section 3, shall hold office
until his successor is elected and qualified or until his earlier resignation or
removal. The Chairman of the Board shall be and remain a member of the Board of
Directors. None of the other officers need be members of the Board.
Section 3. SUBORDINATE OFFICERS. The Board of Directors may
appoint such Assistant secretaries, Assistant Treasurers, Controller and other
officers, and such agents as the Board may determine, to hold office for such
period and with such authority and to perform such duties as the Board may from
time to time determine. The Board may, by specific resolution, empower the chief
executive officer of the corporation or the Executive Committee to appoint any
such subordinate officers or agents.
Section 4. RESIGNATION AND REMOVAL. Any officer may resign at
any time upon written notice to the corporation. The Chairman of the Board, the
President, any Vice President, the Secretary and/or the Treasurer may be removed
at any time, either with or without cause, but only by the affirmative vote of
the majority of the total number of directors as at the time specified by the
By-Laws. Any subordinate officer appointed pursuant to Section 3 may be removed
at any time, either with or without cause, by the majority vote of the directors
present at any meeting of the Board or by any committee or officer empowered to
appoint such subordinate officers.
Section 5. THE CHAIRMAN OF THE BOARD. The Chairman of the
Board shall preside at all regular and special meetings of stockholders and
directors, shall advise and counsel
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with the President and shall assume such other duties as from time to time may
be assigned to him by the Board of Directors.
Section 6. THE PRESIDENT. The President shall be the chief
executive officer of the corporation. He shall have executive authority to see
that all orders and resolutions of the Board of Directors are carried into
effect, and, subject to the control vested in the Board of Directors by statute,
by the Certificate of Incorporation or by these By-Laws, shall administer and be
responsible for the management of the business and affairs of the corporation.
In the absence of the Chairman of the Board, he shall preside at all meetings of
the stockholders and the Board of Directors. In general he shall perform all
duties incident to the office of the President and such other duties as from
time to time may be assigned to him by the Board of Directors.
Section 7. THE VICE PRESIDENTS. In the event of the absence or
disability of the President, each Vice President, in the order designated, or in
the absence of any designation, then in the order of their election, shall
perform the duties of the President. The Vice Presidents shall also perform such
other duties as from time to time may be assigned to them by the Board of
Directors or by the chief executive officer of the corporation.
Section 8. THE SECRETARY. The Secretary shall:
(a) keep the minutes of the meetings of the stockholders and
of the Board of Directors;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(c) be custodian of the records and of the seal of the
corporation, if any, and, if a seal is adopted, see that the seal or a facsimile
or equivalent thereof is affixed to or reproduced on all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized;
(d) have charge of the stock record books of the corporation;
and
(e) in general, perform all duties incident to the office of
secretary, and such other duties as are provided by these By-Laws and as from
time to time are assigned to him by the Board of Directors or by the chief
executive officer of the corporation.
Section 9. THE ASSISTANT SECRETARIES. If one or more Assistant
Secretaries shall be appointed pursuant to the provisions of Section 3
respecting subordinate officers, then, at the request of the Secretary, or in
his absence or disability, the Assistant Secretary designated by the Secretary
(or in the absence of such designations, then any one of such Assistant
Secretaries) shall perform the duties of the Secretary and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the
Secretary.
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Section 10. THE TREASURER. The Treasurer, if any, shall:
(a) receive and be responsible for all funds of and securities
owned or held by the corporation and, in connection therewith, among other
things: keep or cause to be kept full and accurate records and accounts for the
corporation; deposit or cause to be deposited to the credit of the corporation
all monies, funds and securities so received in such bank or other depositary as
the Board of Directors or an officer designated by the Board may from time to
time establish; and disburse or supervise the disbursement of the funds of the
corporation as may be properly authorized;
(b) render to the Board of Directors at any meeting thereof,
or from time to time whenever the Board of Directors or the chief executive
officer of the corporation may require, financial and other appropriate reports
on the condition of the corporation; and
(c) in general, perform all the duties incident to the office
of Treasurer and such other duties as from time to time may be assigned to him
by the Board of Directors or by the chief executive officer of the corporation.
If no Treasurer shall be elected, the duties of the Treasurer shall be performed
by the Secretary.
Section 11. THE ASSISTANT TREASURERS. If one or more Assistant
Treasurers shall be appointed pursuant to the provisions of section 3 respecting
subordinate officers, then, at the request of the Treasurer, or in his absence
or disability, the Assistant Treasurer designated by the Treasurer (or in the
absence of such designation, then any one of such Assistant Treasurers) shall
perform all the duties of the Treasurer and when so acting shall have all the
powers of and be subject to all the restrictions upon, the Treasurer.
Section 12. SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the corporation.
Section 13. BONDS. If the Board of Directors or the chief
executive officer shall so require, any officer or agent of the corporation
shall give bond to the corporation in such amount and with such surety as the
Board of Directors or the chief executive officer, as the case may be, may deem
sufficient, conditioned upon the faithful performance of their respective duties
and offices.
Section 14. DELEGATION OF DUTIES. In case of the absence of
any officer of the corporation or for any other reason which may seem sufficient
to the Board of Directors, the Board of Directors may, for the time being,
delegate his powers and duties, or any of them, to any other officer or to any
director.
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ARTICLE V
SHARES OF STOCK
Section 1. REGULATION. Subject to the terms of any contract of
the corporation, the Board of Directors may make such rules and regulations as
it may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the corporation, including the issue of
new certificates for lost, stolen or destroyed certificates, and including
appointment of transfer agents and registrars.
Section 2. STOCK CERTIFICATES. Certificates for shares of the
stock of the corporation shall be respectively numbered serially for each class
of stock, or series thereof, as they are issued, shall, if a seal is adopted, be
impressed with the corporate seal or a facsimile thereof, and shall be signed by
the Chairman of the Board, or the President or a Vice President, and by the
Secretary or Treasurer, or an Assistant Secretary or an Assistant Treasurer,
provided that such signatures may be facsimiles on any certificate countersigned
by a transfer agent other than the corporation or its employee. Each certificate
shall exhibit the name of the corporation, the class (or series of any class)
and number of shares represented thereby, and the name of the holder. Each
certificate shall be otherwise in such form as may be prescribed by the Board of
Directors.
Section 3. RESTRICTION ON TRANSFER OF SECURITIES. A
restriction on the transfer or registration of transfer of securities of the
corporation may be imposed either by the Certificate of Incorporation or by
these By-Laws or by an agreement among any number of security holders or among
such holders and the corporation. No restriction so imposed shall be binding
with respect to securities issued prior to the adoption of the restriction
unless the holders of the securities are parties to an agreement or voted in
favor of the restriction. A restriction on the transfer of securities of the
corporation is permitted by this section if it:
(a) obligates the holder of the restricted securities to offer
to the corporation or to any other holders of securities of the corporation or
to any other person or to any combination of the foregoing, a prior opportunity,
to be exercised within a reasonable time, to acquire the restricted securities;
or
(b) obligates the corporation or any holder of securities of
the corporation or any other person or any combination of the foregoing, to
purchase the securities which are the subject of an agreement respecting the
purchase and sale of the restricted securities; or
(c) requires the corporation or the holders of any class of
securities of the corporation to consent to any proposed transfer of the
restricted securities or to approve the proposed transferee of the restricted
securities; or
(d) prohibits the transfer of the restricted securities to
designated persons or classes of persons; and such designation is not manifestly
unreasonable; or
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(e) restricts transfer or registration of transfer in any
other lawful manner.
Unless noted conspicuously on the security, a restriction,
even though permitted by this section, is ineffective except against a person
with actual knowledge of the restriction.
Section 4. TRANSFER OF SHARES. Subject to the restrictions
permitted by Section 3, shares of the capital stock of the corporation shall be
transferable on the books of the corporation by the holder thereof in person or
by his duly authorized attorney, upon the surrender or cancellation of a
certificate or certificates for a like number of shares. As against the
corporation, a transfer of shares can be made only on the books of the
corporation and in the manner hereinabove provided, and the corporation shall be
entitled to treat the registered holder of any share as the owner thereof and
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the statutes of the State
of Delaware.
Section 5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF
RECORD.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date is fixed, the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or the Secretary. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by the General Corporation Law of
the State of Delaware, the record date for determining stockholders entitled to
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consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 6. LOST CERTIFICATES. Any stockholder claiming that a
certificate representing shares of stock has been lost, stolen or destroyed may
make an affidavit or affirmation of the fact and, if the Board of Directors so
requires, advertise the same in a manner designated by the Board, and give the
corporation a bond of indemnity in form and with security for an amount
satisfactory to the Board (or an officer or officers designated by the Board),
whereupon a new certificate may be issued of the same tenor and representing the
same number, class and/or series of shares as were represented by the
certificate alleged to have been lost, stolen or destroyed.
ARTICLE VI
BOOKS AND RECORDS
Section 1. LOCATION. The books, accounts and records of the
corporation may be kept at such place or places within or without the State of
Delaware as the Board of Directors may from time to time determine.
Section 2. INSPECTION. The books, accounts, and records of the
corporation shall be open to inspection by any member of the Board of Directors
at all times; and open to inspection by the stockholders at such times, and
subject to such regulations as the Board of Directors may prescribe, except as
otherwise provided by statute.
Section 3. CORPORATE SEAL. The corporation may provide a
corporate seal which shall contain two concentric circles between which shall be
the name of the corporation and the word "Delaware" and in the center shall be
inscribed the words "Corporate Seal" and which may be used, but is not required
to be used, by officers of the corporation.
ARTICLE VII
DIVIDENDS AND RESERVES
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Section 1. DIVIDENDS. The Board of Directors of the
corporation, subject to any restrictions contained in the Certificate of
Incorporation and other lawful commitments of the corporation, may declare and
pay dividends upon the shares of its capital stock either out of the surplus of
the corporation, as defined in and computed in accordance with the General
Corporation Law of the State of Delaware, or in case there shall be no such
surplus, out of the net profits of the corporation for the fiscal year in which
the dividend is declared and/or the preceding fiscal year. If the capital of the
corporation, computed in accordance with the General Corporation Law of the
State of Delaware, shall have been diminished by depreciation in the value of
its property, or by losses, or otherwise, to an amount less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, the Board of
Directors of the corporation shall not declare and pay out of such net profits
any dividends upon any shares of any classes of its capital stock until the
deficiency in the amount of capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets shall
have been repaired.
Section 2. RESERVES. The Board of Directors of the corporation
may set apart, out of any of the funds of the corporation available for
dividends, a reserve or reserves for any proper purpose and may abolish any such
reserve.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. FISCAL YEAR. The fiscal year of the corporation
shall end on the 31st day of December of each year.
Section 2. DEPOSITORIES. The Board of Directors or an officer
designated by the Board shall appoint banks, trust companies, or other
depositories in which shall be deposited from time to time the money or
securities of the corporation.
Section 3. CHECKS, DRAFTS AND NOTES. All checks, drafts, or
other orders for the payment of money and all notes or other evidences of
indebtedness issued in the name of the corporation shall be signed by such
officer or officers or agent or agents as shall from time to time be designated
by resolution of the Board of Directors or by an officer appointed by the Board.
Section 4. CONTRACTS AND OTHER INSTRUMENTS. The Board of
Directors may authorize any officer, agent or agents to enter into any contract
or execute and deliver any instrument in the name and on behalf of the
corporation and such authority may be general or confined to specific instances.
Section 5. NOTICES. Unless otherwise provided in these
By-Laws, whenever under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws notice is required to be given to any director
or stockholder, it shall not be construed to mean personal notice,
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but such notice may be given in writing, by mail, by depositing the same in a
post office or letter box, in a postpaid sealed wrapper, or by delivery to a
telegraph company, addressed to such director or stockholder at such address as
appears on the records of the corporation, or, in default of other address, to
such director or stockholder at the General Post Office in the City of Dover,
Delaware, and such notice shall be deemed to be given at the time when the same
shall be thus mailed or delivered to a telegraph company.
Section 6. WAIVERS OF NOTICE. Whenever any notice is required
to be given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors or
members of a committee of directors need be specified in any written waiver of
notice, unless so required by the Certificate of Incorporation or these By-Laws.
Section 7. STOCK IN OTHER CORPORATIONS. Any shares of stock in
any other corporation which may from time to time be held by this corporation
may be represented and voted at any meeting of shareholders of such corporation
by the Chairman of the Board, or the President or a Vice President, or by any
other person or persons thereunto authorized by the Board of Directors, or by
any proxy designated by written instrument of appointment executed in the name
of this corporation by its Chairman of the Board, President or a Vice President.
Shares of stock belonging to the corporation need not stand in the name of the
corporation, but may be held for the benefit of the corporation in the
individual name of the Treasurer or of any other nominee designated for the
purpose by the Board of Directors. Certificates for shares so held for the
benefit of the corporation shall be endorsed in blank or have proper stock
powers attached so that said certificates are at all times in due form for
transfer, and shall be held for safekeeping in such manner as shall be
determined from time to time by the Board of Directors.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Section 1. AUTHORIZATION FOR INDEMNIFICATION.
(a) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
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attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reasons of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses with the Court of Chancery or
such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 2. AUTHORIZATION BY DIRECTORS, LEGAL COUNSEL OR
STOCKHOLDERS. Any indemnification under subsections (a) and (b) of Section 1 of
this article (unless ordered by a court) shall be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) and
(b) of Section 1 of this article. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 3. REPAYMENT. Expenses (including attorneys' fees)
incurred by an officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding
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may be paid by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
Section 4. NOT EXCLUSIVE OF OTHER RIGHTS. The indemnification
and advancement of expenses provided by, or granted pursuant to, the other
sections of this article shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 5. INSURANCE. The corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this article.
Section 6. DEFINITIONS.
(a) For purposes of this article, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this article with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had, continued.
(b) For purposes of this article, references to
"other-enterprise" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an
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employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this article.
Section 7. CONTINUATION OF INDEMNIFICATION. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this article shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administration
of such a person.
ARTICLE X
AMENDMENTS
These By-Laws may be altered, amended or repealed or new
By-Laws may be adopted by the stockholders, or by the Board of Directors when
such power is conferred upon the Board of Directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
By-Laws was contained in the notice of such special meeting.
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CERTIFICATE OF INCORPORATION
OF
FINANCIAL ADVISORY MANAGEMENT ENTERPRISES, INC.
1. The name of the corporation is Financial Advisory Management Enterprises,
Inc.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
the Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which
corporations may be organized under the General Corporation
Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000); all of such shares shall be
without par value.
At all elections of directors of the corporation, each stockholder shall
be entitled to as many votes as shall equal the number of votes which
(except for such provision as to cumulative voting) he would be entitled
to cast for the election of directors with respect to his shares of stock
multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among
the number to be voted for, or for any two or more of them as he may see
fit.
The holders of stock shall, upon the issuance or sale of shares of stock
of any class (whether now or hereafter authorized) or any securities
convertible into such stock, have the right, during such period of time
and on such conditions as the Board of Directors shall prescribe, to
subscribe to and purchase such shares or securities in proportion to their
respective holdings of stock, at such price or prices as the board of
directors may from time to time fix and as may be permitted by law.
5. The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Steven H. Lavin 111 E. Wacker Drive
Suite 2700
Chicago, IL 60601
6. The corporation is to have perpetual existence.
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7. Elections of directors need not be by written ballot unless the by-laws of
the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the
State of Delaware at such place or places as may be designated from time
to time by the board of directors or in the by-laws of the corporation.
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and
its stockholders or any class of them, any court of equitable jurisdiction
within the State of Delaware may, on the application in a summary way of
this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on
the application of trustees under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of this corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the directors or class of
creditors, and/or on all the stockholders or class of stockholders, of
this corporation, as the case may be, and also on this corporation.
8. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
9. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation law, or (iv) for any transaction from which
the director derived any improper personal benefit.
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I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 25th, day of March, 1992.
/s/ Steven H. Lavin
-------------------
Steven H. Lavin
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BY-LAWS
OF
FINANCIAL ADVISORY MANAGEMENT ENTERPRISES, INC.
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of the corporation
shall be maintained in the City of Wilmington of New Castle County, State of
Delaware, and the registered agent in charge thereof is Corporation Trust
Center.
Section 2. OTHER OFFICES. The corporation may also have an office in such
other places as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. All meetings of the stockholders, whether
annual or special, shall be held at the offices of the corporation in
Arlington, Virginia, or at such other place as may be fixed from time to time
by the Board of Directors.
Section 2. ANNUAL MEETINGS. An annual meeting of the stockholders,
commencing with the year 1993, shall be held on the second Wednesday in
February in each year, but if a legal holiday then on the next secular day
following, at which they shall elect
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a Board of Directors, and transact such other business as may properly be
brought before the meeting.
Section 3. NOTICE OF ANNUAL MEETINGS. Written notice of the annual meeting
stating the place, date and hour of the meeting, shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the corporation.
Section 4. STOCKHOLDERS' LIST. At least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder, shall be prepared by the Secretary. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present.
Section 5. SPECIAL MEETINGS. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or by
the President and shall be called by the Secretary at the request of a majority
of the Board of Directors, or at the request in writing of stockholders owning
at least two-thirds of the number of shares of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting, stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the corporation.
Section 7. QUORUM. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute, by the Certificate of Incorporation or by these By-Laws, If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, of the place, date
and hour of the adjourned meeting, until a quorum shall again be present or
represented by proxy. At the adjourned meeting at which a quorum shall be
present or represented by proxy, the corporation may transact any business
which might have been transacted at the original
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meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 8. VOTING. When a quorum is present at any meeting, and subject to
the provisions of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation or these By-Laws in respect of the vote that shall
be required for a specified action, the vote of the holders of a majority of
the shares having voting power, present in person or represented by proxy,
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of the statutes or of the Certificate of
Incorporation or of these By-Laws, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Each stockholder shall have one vote for each share of stock having voting
power registered in his name on the books of the corporation, except as
otherwise provided in the Certificate of Incorporation.
Section 9. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 10. CONSENT. Unless otherwise provided in the Certificate of
Incorporation, any action required by the General Corporation Law of the State
of Delaware to be taken at any meeting of stockholders, or any action which may
be taken at any meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or the Secretary. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered in the manner required by this section to the
corporation, written consents signed by a sufficient number of holders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or the Secretary.
Delivery made to a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
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DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors, except as
may be otherwise provided in the General Corporation Law of the State of
Delaware or the Certificate of Incorporation. Directors need not be
stockholders unless required in the Certificate of Incorporation.
Section 2. NUMBER OF DIRECTORS. The number of directors which shall
constitute the whole Board shall be four (4). The directors shall be elected at
the annual meeting of the stockholders, and each director shall hold office
until his successor is elected and qualified or until his earlier resignation
or removal.
Section 3. RESIGNATION. A director may resign at any time upon written
notice to the corporation.
Section 4. VACANCIES. If the office of any director or directors becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office, or otherwise, or a new directorship is created, the holders of a
majority of shares issued and outstanding and entitled to vote in elections of
directors, shall choose a successor or successors, or a director to fill the
newly created directorship, who shall hold office for the unexpired term or
until the next election of directors.
Section 5. PLACE OF MEETINGS. The Board of Directors may hold its meetings
outside of the State of Delaware, at the office of the corporation or at such
other places as they may from time to time determine, or as shall be fixed in
the respective notices or waivers of notice of such meetings.
Section 6. COMMITTEES OF DIRECTORS. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more of the
directors of the corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation, if any, to be affixed to all papers
which may require it; but no such committee shall have the power or authority
in reference to amending the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of
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the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amendment
to the By-Laws, of the corporation; and, unless the resolution, By-Laws, or
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the Board of
Directors when required.
Section 7. COMPENSATION OF DIRECTORS. Directors, as such, may receive such
stated salary for their services and/or such fixed sums and expenses of
attendance for attendance at each regular or special meeting of the Board of
Directors as may be established by resolution of the Board; provided that
nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 8. ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held within ten days after the annual meeting of the stockholders in
each year. Notice of such meeting, unless waived, shall be given by mail or
telegram to each director elected at such annual meeting, at his address as the
same may appear on the records of the corporation, or in the absence of such
address, at his residence or usual place of business, at least three days
before the day on which such meeting is to b, held. Said meeting may be held at
such place as the Board may fix from time to time or as may be specified or
fixed in such notice or waiver thereof.
Section 9. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held at any time on the call of the Chairman of the Board, the
President, or at the request in writing of any one (1) director. Notice of any
such meeting, unless waived, shall be given by mail or telegram to each
director at his address as the same appears on the records of the corporation
not less than one day prior to the day on which such meeting is to be held if
such notice is by telegram, and not less than two days prior to the day on
which the meeting is to be held if such notice is by nail. If the Secretary
shall fail or refuse to give such notice, then the notice may be given by the
officer or any one of the directors making the call. Any such meeting may be
held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof. Any meeting of the Board
of Directors shall be a legal meeting without any notice thereof having been
given, if all the directors shall be present thereat, and no notice of a
meeting shall be required to be given to any director who shall attend such
meeting.
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Section 10. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if a written consent to such action is signed
by all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board of
Directors.
Unless otherwise restricted by the Certificate of Incorporation or these
By-Laws, members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 11. QUORUM AND MANNER OF ACTING. Except as otherwise provided in
the Certificate of Incorporation or these By-Laws, a majority of the total
number of directors as at the time specified by the By-Laws shall constitute a
quorum at any regular or special meeting of the Board of Directors. Except as
otherwise provided by statute, by the Certificate of Incorporation or by these
By-Laws, the vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors. In the
absence of a quorum, a majority of the directors present may adjourn the
meeting from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given, except that notice shall be given to all
directors if the adjournment is for more than thirty days.
ARTICLE IV
OFFICERS
Section 1. EXECUTIVE OFFICERS. The executive officers of the corporation
shall be a Chairman of the Board, a President, such number of Vice Presidents,
if any, as the Board of Directors may determine and a Secretary, and a
Treasurer, if any, one person may hold any number of said offices.
Section 2. ELECTION, TERM OF OFFICE AND ELIGIBILITY. The executive
officers of the corporation shall be elected annually by the Board of Directors
at its annual meeting; provided that new or additional officers may be elected
at any meeting of the Board. Each officer, except such officers as may be
appointed in accordance with the provisions of Section 3, shall hold office
until his successor is elected and qualified or until his earlier resignation
or removal. The Chairman of the Board shall be and remain a member of the Board
of Directors. None of the other officers need be members of the Board.
Section 3. SUBORDINATE OFFICERS. The Board of Directors may appoint such
Assistant Secretaries, Assistant Treasurers, Controller and other officers, and
such
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agents as the Board may determine, to hold office for such period and with such
authority and to perform such duties as the Board may from time to time
determine. The Board may, by specific resolution, empower the chief executive
officer of the corporation or the Executive Committee to appoint any such
subordinate officers or agents.
Section 4. RESIGNATION AND REMOVAL. Any officer may resign at any time
upon written notice to the corporation. The Chairman of the Board, the
President, any Vice President, the Secretary and/or the Treasurer may be
removed at any time, either with or without cause, but only by the affirmative
vote of the majority of the total number of directors as at the time specified
by the By-Laws. Any subordinate officer appointed pursuant to Section 3 may be
removed at any time, either with or without cause, by the majority vote of the
directors present at any meeting of the Board or by any committee or officer
empowered to appoint such subordinate officers.
Section 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all regular and special meetings of stockholders and directors,
shall advise and counsel with the President and shall assume such other duties
as from time to time may be assigned to him by the Board of Directors.
Section 6. THE PRESIDENT. The President shall be the chief executive
officer of the corporation. He shall have executive authority to see that all
orders and resolutions of the Board of Directors are carried into effect, and,
subject to the control vested in the Board of Directors by statute, by the
Certificate of Incorporation or by these By-Laws, shall administer and be
responsible for the management of the business and affairs of the corporation.
In the absence of the Chairman of the Board, he shall preside at all meetings
of the stockholders and the Board of Directors. In general he shall perform all
duties incident to the office of the President and such other duties as from
time to time may be assigned to him by the Board of Directors.
Section 7. THE VICE PRESIDENTS. In the event of the absence or disability
of the President, each Vice President, in the order designated, or in the
absence of any designation, then in the order of their election, shall perform
the duties of the President. The Vice Presidents shall also perform such other
duties as from time to time may be assigned to them by the Board of Directors
or by the chief executive officer of the corporation.
Section 8. THE SECRETARY. The Secretary shall:
(a) keep the minutes of the meetings of the stockholders and of the
Board of Directors;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
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(c) be custodian of the records and of the seal of the corporation,
if any, and, if a seal is adopted, see that the seal or a facsimile or
equivalent thereof is affixed to or reproduced on all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized;
(d) have charge of the stock record books of the corporation; and
(e) in general, perform all duties incident to the office of
Secretary, and such other duties as are provided by these By-Laws and as
from time to time are assigned to him by the Board of Directors or by the
chief executive officer of the corporation.
Section 9. THE ASSISTANT SECRETARIES. If one or more Assistant Secretaries
shall be appointed pursuant to the provisions of Section 3 respecting
subordinate officers, then, at the request of the Secretary, or in his absence
or disability, the Assistant Secretary designated by the Secretary (or in the
absence of such designations, then any one of such Assistant Secretaries) shall
perform the duties of the Secretary and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the Secretary.
Section 10. THE TREASURER. The Treasurer, if any, shall:
(a) receive and be responsible for all funds of and securities owned
or held by the corporation and, in connection therewith, among other
things: keep or cause to be kept full and accurate records and accounts
for the corporation; deposit or cause to be deposited to the credit of the
corporation all monies, funds and securities so received in such bank or
other depositary as the Board of Directors or an officer designated by the
Board may from time to time establish; and disburse or supervise the
disbursement of the funds of the corporation as may be properly
authorized;
(b) render to the Board of Directors at any meeting thereof, or from
time to time whenever the Board of Directors or the chief executive
officer of the corporation may require, financial and other appropriate
reports on the condition of the corporation; and
(c) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to
him by the Board of Directors or by the chief executive officer of the
corporation.
If no Treasurer shall be elected, the duties of the Treasurer shall be
performed by the Secretary.
Section 11. THE ASSISTANT TREASURERS. If one or more Assistant Treasurers
shall be appointed pursuant to the provisions of Section 3 respecting
subordinate officers, then, at the request of the Treasurer, or in his absence
or disability, the Assistant Treasurer designated by the Treasurer (or in the
absence of such designation, then any one of such Assistant
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Treasurers) shall perform all the duties of the Treasurer and when so acting
shall have all the powers of and be subject to all the restrictions upon, the
Treasurer.
Section 12. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
Section 13. BONDS. If the Board of Directors or the chief executive
officer shall so require, any officer or agent of the corporation shall give
bond to the corporation in such amount and with such surety as the Board of
Directors or the chief executive officer, as the case may be, may deem
sufficient, conditioned upon the faithful performance of their respective
duties and offices.
Section 14. DELEGATION OF DUTIES. In case of the absence of any officer of
the corporation or for any other reason which may seem sufficient to the Board
of Directors, the Board of Directors may, for the time being, delegate his
powers and duties, or any of them, to any other officer or to any director.
ARTICLE V
SHARES OF STOCK
Section 1. REGULATION. Subject to the terms of any contract of the
corporation, the Board of Directors may make such rules and regulations as it
may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the corporation, including the issue of
new certificates for lost, stolen or destroyed certificates, and including
appointment of transfer agents and registrars.
Section 2. STOCK CERTIFICATES. Certificates for shares of the stock of the
corporation shall be respectively numbered serially for each class of stock, or
series thereof, as they are issued, shall, if a seal is adopted, be impressed
with the corporate seal or a facsimile thereof, and shall be signed by the
Chairman of the Board, or the President or a Vice President, and by the
Secretary or Treasurer, or an Assistant Secretary or an Assistant Treasurer,
provided that such signatures may be facsimiles on any certificate
countersigned by a transfer agent other than the corporation or its employee.
Each certificate shall exhibit the name of the corporation, the class (or
series of any class) and number of shares represented thereby, and the name of
the holder. Each certificate shall be otherwise in such form as may be
prescribed by the Board of Directors.
Section 3. RESTRICTION ON TRANSFER OF SECURITIES. A -restriction on the
transfer or registration of transfer of securities of the corporation may be
imposed either by the Certificate of Incorporation or by these By-Laws or by an
agreement among any number of security holders or among such holders and the
corporation. No restriction so imposed shall be binding with respect to
securities issued prior to the adoption of the restriction unless the
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holders of the securities are parties to an agreement or voted in favor of the
restriction. A restriction on the transfer of securities of the corporation is
permitted by this Section if it:
(a) obligates the holder of the restricted securities to offer to the
corporation or to any other holders of securities of the corporation or to
any other person or to any combina tion of the foregoing, a prior
opportunity, to be exercised within a reasonable time, to acquire the
restricted securities; or
(b) obligates the corporation or any holder of securities of the
corporation or any other person or any combination of the foregoing, to
purchase the securities which are the subject of an agreement respecting
the purchase and sale of the restricted securities; or
(c) requires the corporation or the holders of any class of
securities of the corporation to consent to any proposed transfer of the
restricted securities or to approve the proposed transferee of the
restricted securities; or
(d) prohibits the transfer of the restricted securities to designated
persons or classes of persons; and such designation is not manifestly
unreasonable; or
(e) restricts transfer or registration of transfer in any other
lawful manner.
Unless noted conspicuously on the security, a restriction, even though
permitted by this section, is ineffective except against a person with actual
knowledge of the restriction.
Section 4. TRANSFER OF SHARES. Subject to the restrictions permitted by
Section 3, shares of the capital stock of the corporation shall be transferable
on the books of the corporation by the holder thereof in person or by his duly
authorized attorney, upon the surrender or cancellation of a certificate or
certificates for a like number of shares. As against the corporation, a
transfer of shares can be made only on the books of the corporation and in the
manner hereinabove provided, and the corporation shall be entitled to treat the
registered holder of any share as the owner thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shal1 have express or other notice
thereof, save as expressly provided by the statutes of the State of Delaware.
Section 5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
(a) In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not be more than
sixty nor less than ten days before the date of such meeting. If no record date
is fixed, the record date for
10
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determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date is fixed, the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board of Directors is necessary, shall
be the day on which the first written consent is setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
the Secretary. Delivery made to the corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested. If no record
date has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law of the State of Delaware,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action.
(c) In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not be more than
sixty days prior to such action. If no record date is fixed, the record date
for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
Section 6. LOST CERTIFICATES. Any stockholder claiming that a certificate
representing shares of stock has been lost, stolen or destroyed may make an
affidavit or affirmation of the fact and, if the Board of Directors so
requires, advertise the same in a manner designated by the Board, and give the
corporation a bond of indemnity in form and with security for an amount
satisfactory to the Board (or an officer or officers designated by the Board),
whereupon a new certificate may be issued of the same tenor and representing
the same number, class and/or series of shares as were represented by the
certificate alleged to have been lost, stolen or destroyed.
11
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ARTICLE VI
BOOKS AND RECORDS
Section 1. LOCATION. The books, accounts and records of the corporation
may be kept at such place or places within or without the State of Delaware as
the Board of Directors may from time to time determine.
Section 2. INSPECTION. The books, accounts, and records of the corporation
shall be open to inspection by any member of the Board of Directors at all
times; and open to inspection by the stockholders at such times, and subject to
such regulations as the Board of Directors may prescribe, except as otherwise
provided by statute.
Section 3. CORPORATE SEAL. The corporation may provide a corporate seal
which shall contain two concentric circles between which shall be the name of
the corporation and the word "Delaware" and in the center shall be inscribed
the words "Corporate Seal" and which may be used, but is not required to be
used, by officers of the corporation.
ARTICLE VII
DIVIDENDS AND RESERVES
Section 1. DIVIDENDS. The Board of Directors of the corporation, subject
to any restrictions contained in the Certificate of Incorporation and other
lawful commitments of the corporation, may declare and pay dividends upon the
shares of its capital stock either out of the surplus of the corporation, as
defined in and computed in accordance with the General Corporation Law of the
State of Delaware, or in case there shall be no such surplus, out of the net
profits of the corporation for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. If the capital of the corporation,
computed in accordance with the General Corporation Law of the State of
Delaware, shall have been diminished by depreciation in the value of its
property, or by losses, or otherwise, to an amount less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, the Board of
Directors of the corporation shall not declare and pay out of such net profits
any dividends upon any shares of any classes of its capital stock until the
deficiency in the amount of capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets shall
have been repaired.
Section 2. RESERVES. The Board of Directors of the corporation may set
apart, out of any of the funds of the corporation available for dividends, a
reserve or reserves for any proper purpose and may abolish any such reserve.
12
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. FISCAL YEAR. The fiscal year of the corporation shall end on
the 31st day of December of each year.
Section 2. DEPOSITORIES. The Board of Directors or an officer designated
by the Board shall appoint banks, trust companies, or other depositories in
which shall be deposited from time to time the money or securities of the
corporation.
Section 3. CHECKS, DRAFTS AND NOTES. All checks, drafts, or other orders
for the payment of money and all notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers or agent or agents as shall from time to time be designated by
resolution of the Board of Directors or by an officer appointed by the Board.
Section 4. CONTRACTS AND OTHER INSTRUMENTS. The Board of Directors may
authorize any officer, agent or agents to enter into any contract or execute
and deliver any instrument in the name and on behalf of the corporation and
such authority may be general or confined to specific instances.
Section 5. NOTICES. Unless otherwise provided in these By-Laws, whenever
under the provisions of the statutes or of the Certificate of Incorporation or
of these By-Laws notice is required to be given to any director or stockholder,
it shall not be construed to mean personal notice, but such notice may be given
in writing, by mail, by depositing the same in a post office or letter box, in
a postpaid sealed wrapper, or by delivery to a telegraph company, addressed to
such director or stockholder at such address as appears on the records of the
corporation, or, in default of other address, to such director or stockholder
at the General Post Office in the City of Dover, Delaware, and such notice
shall be deemed to be given at the time when the same shall be thus mailed or
delivered to a telegraph company.
Section 6. WAIVERS OF NOTICE. Whenever any notice is required to be given
under the provisions of the statutes or of the Certificate of Incorporation or
of these By-Laws, a waiver thereof in writing signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice,
unless so required by the Certificate of Incorporation or these By-Laws.
13
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Section 7. STOCK IN OTHER CORPORATIONS. Any shares of stock in any other
corporation which may from time to time be held by this corporation may be
represented and voted at any meeting of shareholders of such corporation by the
Chairman of the Board, or the President or a Vice President, or by any other
person or persons thereunto authorized by the Board of Directors, or by any
proxy designated by written instrument of appointment executed in the name of
this corporation by its Chairman of the Board, President or a Vice President.
Shares of stock belonging to the corporation need not stand in the name of the
corporation, but may be held for the benefit of the corporation in the
individual name of the Treasurer or of any other nominee designated for the
purpose by the Board of Directors. Certificates for shares so held for the
benefit of the corporation shall be endorsed in blank or have proper stock
powers attached so that said certificates are at all times in due form for
transfer, and shall be held for safekeeping in such manner as shall be
determined from time to time by the Board of Directors.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Section 1. AUTHORIZATION FOR INDEMNIFICATION.
(a) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reasons of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys, fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
14
<PAGE>
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses with the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 2. AUTHORIZATION BY DIRECTORS, LEGAL COUNSEL OR STOCKHOLDERS. Any
indemnification under subsections (a) and (b) of Section 1 of this article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of
Section 1 of this article. Such determination shall be made (1) by the board of
directors by a 'majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 3. REPAYMENT. Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative, or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 4. NOT EXCLUSIVE OF OTHER RIGHTS. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other sections
of this article shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 5. INSURANCE. The corporation s~all have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
15
<PAGE>
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under the provisions of this
article.
Section 6. DEFINITIONS.
(a) For purposes of this article, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this article with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(b) For purposes of this article, references to "other-enterprise" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
article.
Section 7. CONTINUATION OF INDEMNIFICATION. The indemnification and
advancement of expenses provided by, or granted pursuant to, this article
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administration of such a
person.
ARTICLE X
AMENDMENTS
These By-Laws may be altered, amended or repealed or new By-Laws may be
adopted by the stockholders, or by the Board of Directors when such power is
conferred upon the Board of Directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new By-Laws was contained in
the notice of such special meeting.
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Page 1 of letter to Lee Marshall
May 7, 1997
NIKO INTERNATIONAL ENTERTAINMENT CORP.
100 Lincoln Road
Miami Beach. Florida 33139
May 7.1997
Mr. Lee Marshall
Magicworks Entertainment, Inc.
199 East Garfield Road
Aurora Ohio 44202
RE: THE GERSHWINS' FASCINATING RHYTHM
Dear Lee:
This letter confirms the agreement between Niko International Entertainment
Corp. ("Niko" or "we") and Magicworks Entertainment, Inc. ("you") regarding
investment in THE GERSHWINS' FASCINATING RHYTHM (the "Play"). The Play is being
developed and initially presented at Hartford Stage Company, a LORT theatre,
and presently is scheduled to commence performances on or about May 10th, 1997.
1. Niko intends to form a joint venture with its producing partners to produce
a first-class production of the Play subsequent to the Play's run at Hartford
Stage. As a joint venturer, we are required to provide one-half (1/2) of the
capitalization of the Play. Our total share is anticipated to be about One
Million Dollars ($1.000,000). In return for this investment in the joint
venture, we will receive reimbursement out of first proceeds (pro-rata with the
other venturers) and thereafter Fifty Percent (50%) of the joint venture's net
profits. Our initial investment contribution is $132,500 plus miscellaneous
expenses, such as office, lawyer, phones, ("Initial Investment") to be used
immediately in the Hartford production.
2. (a) You agree to furnish us all the funds for the Initial Investment
described above. Upon furnishing the Initial Investment, you will then have the
option to fund our remaining investment in the joint venture, provided that the
venturers, in their sole discretion, decide to continue capitalizing the
production subsequent to the Hartford production.
(b) In return for funding Niko's investment, you shall be entitled to
reimbursement of your funding pursuant to the same first proceeds reimbursement
as Niko. In addition, you shall be entitled to receive net profits of Fifty
Percent (50%) of the share of Niko's net profits proportional
<PAGE>
Page 2 of letter to Lee Marshall
May 7, 1997
to your funding of Niko's total investment. By way of example only, if you fund
$132,500 and our investment is $1,325,000, your share of Niko's net profits
would be 5% (or 50% of 10%); or if you fund $1,000,000 and Niko's total
investment is $1,000,000, your share of Niko's net profits will be 50% (or 50%
of 100%).
3. You shall furnish funds for the Initial Investment within three (3) days
after we request that you make payment, although Niko will endeavor to give you
as much notice as possible. Subsequent to the Hartford production if we notify
you that we require additional funding for our capital contribution, you will
have three days to indicate your willingness to furnish said additional
funding, and three more days to furnish the funds.
4. Niko shall retain full force and effect in all its rights and privileges as
a producer of the Play.
Please indicate your consent of the above terms by counter-signing this letter
below.
Sincerely,
NIKO INTERNATIONAL ENTERTAINMENT CORP.
By: /s/Manny Kladitis
-----------------------------
Manny Kladitis, President
AGREED AND ACCEPTED:
MAGICWORKS ENTERTAINMENT, INC.
By: /s/Lee D. Marshall
-------------------------------
Lee Marshall, President
<PAGE>
ARTICLE OF INCORPORATION
OF
GRAND SLAM SPORTS MARKETING, INC.
ARTICLE I
NAME
The name of this Corporation shall be GRAND SLAM SPORTS MARKETING, INC.
ARTICLE II
DURATION
This Corporation shall be perpetual commencing as of the date of
Incorporation.
ARTICLE III
PURPOSE
This Corporation is organized for the purpose of transacting any or all
lawful business, including but not limited to:
(a) The promotion of sporting tournaments.
(b) Pursue its purposes and business in any and all locations, foreign or
domestic.
(c) Acquire, own, hold, develop, deal in and with, maintain and operate,
unlimitedly, such real and personal property of every kind and description
within and without the State of Florida.
(d) Buy and sell real and personal property of any nature whatsoever.
(e) Convey, sell, assign, transfer, lease, mortgage, pledge, exchange or
otherwise deal with any property.
(f) Import and export wares, goods and merchandise of any nature
whatsoever.
<PAGE>
(g) Carry on all or any of the business of manufacturers, producers,
fabricators, processors, distributors, purchasers and sellers of products and
supplies of every kind, character and nature.
(h) Purchase, hold, sell, transfer or deal in any manner with or in
stocks, bonds, obligations, securities or interests of its own or of any other
person, firm or Corporation.
(i) Pay cash or issue capital stock debentures, bonds, mortgages, or other
obligations of the Corporation for any acquisition by the Corporation and for
any other lawful purpose.
(j) Engage in the acquisition, ownership, sale, distribution and licensing
of patents, improvements and franchises, trademarks and trade names, and to
operate thereunder.
(k) Enter into, make and perform contracts of every kind and description
with any person, firm or association, Corporation and body politic conducive to
the attainment of any of the objects or purposes of the Corporation.
(1) Enter into any and all types of agreements relating to financing,
factoring and guarantees, and to guarantee or secure, in any way, the debts or
obligations of any other persons, firms and/or Corporations.
(m) Guarantee performance by any other person and/or entity.
In general, this Corporation may, without restriction, perform any and all
acts and functions permitted by law.
ARTICLE IV
CAPITAL STOCK
This Corporation is authorized to issue one thousand (1000) shares of one
Dollar ($1.00) par value common stock.
ARTICLE V
INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of this Corporation is
16211 N.E. 18th Avenue, North Miami Beach, Florida 33162, and the name of the
initial Registered Agent of this Corporation, at that address, is JERRY LEADER.
- 2 -
<PAGE>
ARTICLE VI
INITIAL BOARD OF DIRECTORS
This Corporation shall have three (3) Directors initially. The number of
Directors may be either increased or diminished from time to time by the
by-laws, but shall never be less than one (1) . The names and addresses of the
initial Directors of this Corporation are:
JERRY LEADER FREDERICK STOLLE
16211 N.E. 18th Avenue 16211 N.E. 18th Avenue
North Miami Beach, Florida 33162 North Miami Beach, Florida 33162
JOHN LEHMANN
16211 N.E. 18th Avenue
North Miami Beach, Florida 33162
ARTICLE VII
INCORPORATOR
The name and address of the person signing these Articles, is:
JERRY LEADER
16211 N.E. 18th Avenue
North Miami Beach, Florida 33162
ARTICLE VIII
AMENDMENT
This Corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation, or any amendment hereto, and any
right conferred upon the shareholders subject to this reservation.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the undersigned subscriber has executed these Articles
of Incorporation, this 3rd day of June, 1991.
I hereby am familiar with
and accept the duties and
responsibilities as Registered
Agent for said Corporation.
REGISTERED AGENT:
/s/ Jerry Leader
- ---------------------
JERRY LEADER
SUBSCRIBER
/s/ Jerry Leader
---------------------
JERRY LEADER
STATE OF FLORIDA )
) ss.:
COUNTY OF DADE )
BEFORE ME, a Notary Public authorized to take acknowledgments in the State
and County as aforesaid, personally appeared JERRY LEADER, known to me and
known by me to be the person who executed the foregoing Articles of
Incorporation, and he acknowledged before me that he executed those Articles of
Incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, in the State and County aforesaid, this day 3 day of June, 1991.
/s/ [illegible]
--------------------
NOTARY PUBLIC
My Commission Expires:
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<PAGE>
CERTIFICATE DESIGNATING THE ADDRESS
AND AN AGENT UPON WHOM PROCESS MAY BE SERVED
W I T N E S S E T H:
That GRAND SLAM SPORTS MARKETING, INC., desiring to organize under the
laws of the State of Florida has named JERRY LEADER, 16211 N.E. 18th Avenue,
North Miami Beach, Florida 33162, as its Agent to accept service of process
within this State.
ACKNOWLEDGMENT:
Having been named to accept service of process for the above stated
Corporation, at the place designated in this Certificate, I hereby agree to act
in this capacity, and I further agree to comply with the provisions of all
statutes relative to the proper and complete performance of my duties, and I
accept the duties and obligations of Sections 607.034 and 607.325, Florida
Statutes.
DATED this 3rd day of June, 1991.
/s/ Jerry Leader
-------------------------
JERRY LEADER - Agent
- 5 -
<PAGE>
By-Laws of
Grandslam Sports Marketing, Inc.
a Florida corporation
ARTICLE I - OFFICES
The principal office of the corporation shall be established and
maintained at 16211 N.E. 18 Avenue, North Miami Beach, Florida 33162 or at such
places within or without the State of Florida as the Board of Directors may
from time to time establish.
The registered office of the corporation, required by the Florida
Corporation Laws to be maintained in the State of Florida may be, but need not
be, identical with the principal office in the State of Florida, and the
address of the registered office may be changed from time to time by the board
of directors.
ARTICLE II - STOCKHOLDERS
1. Place of Meetings. Meetings of Stockholders shall be held at the
principal office of the Corporation or at such place within or without the
State of Florida as the Board of Directors shall authorize.
2. Annual Meetings. The annual meeting of the stockholders shall be held
during the month of December on a date and time selected by the Board of
Directors in each year. At the annual meeting, the stockholders shall elect a
board of directors and transact such other business as may properly come before
the meeting.
3. Special Meetings. Special meetings of the stockholders may be called by
the directors or by the president or at the written request of stockholders
owning a majority of the stock entitled to vote at such meeting. A meeting
requested by stockholders shall be called for a date not less than ten (10) nor
more than sixty (60) days after the request is made. The secretary shall cause
a notice of such meeting to be mailed to all stockholders at their addresses as
they appear in the records of the Corporation at least ten (10) days but not
more than sixty (60) days before the scheduled date of such meeting. Such
notice shall state the date, time, place and purpose of the meeting and by whom
called. Any stockholder may waive notice of any meeting either before, during
or after the meeting.
No other business but that specified in the notice may be transacted at
such special meeting without the unanimous consent of all present at such
meeting.
4. Fixing Record Date. For the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of any other action, the board of
directors shall fix, in advance, a date as the record date for any such
determination
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<PAGE>
of stockholders. Such date shall not be more than seventy (70) nor less than
ten (10) days before any such meeting, nor more than seventy (70) days prior to
any other action.
5. Voting. Every stockholder shall be entitled at each meeting and upon
each proposal presented at each meeting to one vote for each share of voting
stock recorded in his name on the books of the Corporation on the record date
as fixed by the board of directors and if no record date was fixed, on the date
of the meeting. The books of records of stockholders shall be produced at the
meeting upon the request of any stockholder. Upon the demand of any
stockholder, the vote for directors and the vote upon any question before the
meeting, shall be by ballot. All elections for directors shall be decided by
plurality vote; all other questions shall be decided by majority vote.
6. Quorum. The presence, in person or by proxy, of stockholders holding a
majority of the stock of the Corporation entitled to vote shall constitute a
quorum at all meetings of the stockholders. In case a quorum shall not be
present at any meeting, a majority in interest of the stockholders entitled to
vote thereat present in person or by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until the requisite amount of stock entitled to vote shall be present.
At any such adjourned meeting at which the requisite amount of stock entitled
to vote shall be represented, any business may be transacted which might have
been transacted at the meeting as originally noticed; but only those
stockholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.
7. Proxies. Every stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the stockholder or his attorney- in-fact. No
proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the stockholder executing it, except as otherwise provided
by law.
8. Order of Business. At all meetings of stockholders, the order of
business shall be, as far as practical, as follows: (a) Organization; then (b)
Proof of Notice of Meeting; then (c) Reading of list of stockholders; then (d)
Reading of minutes of the preceding meeting; then (e) Unfinished business; and
then (f) New business.
9. Action Without A Meeting. Any action of the stockholders may be taken
without a meeting if consent in writing, setting forth the action so taken,
shall be signed by the stockholders holding a majority of shares of stock in
the Corporation who would be entitled to vote on such action at a meeting and
filed with the secretary of the Corporation as part of the proceedings of the
stockholders, provided that dissenting stockholders shall receive timely notice
of the action taken.
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ARTICLE III - DIRECTORS
1. Board of Directors. The affairs and business of the Corporation shall
be managed and its corporate powers exercised by a board of three (3)
directors, who shall be of full age. It shall not be necessary for a director
to be a stockholder. The Board of Directors shall hereinafter be referred to as
the "board".
2. Election and Term of Directors. At each annual meeting of stockholders
the stockholders shall elect directors to hold office until the next annual
meeting. Each director shall hold office until the expiration of the term for
which he was elected and until his successor has been elected and shall have
qualified, or until his prior resignation or removal.
3. Vacancies. If the office of any director, member of a committee or
other officer becomes vacant, the remaining directors in office, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office for the unexpired term and until his successor shall be duly chosen.
4. Removal of Directors. Any or all of the directors may be removed with
or without cause by vote of a majority of all the stock outstanding and
entitled to vote at a special meeting of stockholders called for that purpose.
5. Newly Created Directorship. The number of directors may be increased by
amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be
chosen at such meeting to hold office until the next annual election and until
their successors are elected and qualify.
6. Resignation. A director may resign at any time by giving written notice
to the board, the president or the secretary of the Corporation. Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the board or such officer, and the acceptance of the
resignation shall not be necessary to make it effective.
7. Quorum of Directors. A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the board there
shall be less than a quorum present, a majority of those present may adjourn
the meeting from time to time until a quorum is obtained, and no further notice
thereof need be given other than by announcement at the meeting which shall be
so adjourned.
8. Place and Time of Board Meetings. The board may hold its meetings at
the office of the Corporation or at such other places, either within or without
the State of Florida as it may from time to time determine.
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9. Regular Annual Meetings. A regular annual meeting of the board shall be
held immediately following the annual meeting of stockholders at the place of
such annual meeting of stockholders.
10. Notice of Meetings of the Board. Regular meetings of the board may be
held without notice at such time and place as it shall from time to time
determine. Special meetings of the board shall be held upon notice to the
directors and may be called by the president upon three days notice to each
director either personally or by mail or by wire; special meetings shall be
called by the president or by the secretary in a like manner on written request
of two directors. Notice of a meeting need not be given to any director who
submits a waiver of notice whether before or after the meeting or who attends
the meeting without protesting prior thereto or at its commencement, the lack
of notice to him.
11. Voting. At every meeting of the directors each director shall be
entitled to vote in person, or by proxy duly appointed by instrument in writing
which is subscribed by such director and which bears a date not more than
eleven (11) months prior to such meeting, unless such instrument provides for a
longer period. Each director of the Corporation shall be entitled to one (1)
vote. Except as otherwise provided in these By-Laws, all elections shall be had
and all questions decided by a majority vote of the directors present in person
or by proxy.
12. Action Without A Meeting. Any action of the directors may be taken
without a meeting if consent in writing, setting forth the action so taken,
shall be signed by all the directors who would be entitled to vote on such
action at a meeting. The Written Consent shall be filed with the secretary of
the Corporation as part of the proceedings of directors.
13. Executive and other Committees. The board, by resolution, may
designate two or more of their number to one or more committees, which, to the
extent provided in said resolution or these By-Laws may exercise the powers of
the board in the management of the business of the Corporation.
14. Compensation. The stockholders, by unanimous agreement, shall fix the
compensation to be paid to directors, for their services. By resolution of the
board, a reimbursement of actual expenses for attendance at each regular or
special meeting of the board may be authorized. Nothing herein contained shall
be construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV - OFFICERS
1. Officers, Election and Term. The board may elect or appoint a
president, one or more vice-presidents, a secretary and a treasurer, and such
other officers as it may determine, who shall have such duties and powers as
hereinafter provided. All officers shall be elected or appointed to hold office
until the meeting of the board following the next annual meeting of
stockholders and until their successors have been elected or appointed and
qualified.
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2. Removal, Resignation, Etc.
a) Any officer elected or appointed by the board may be removed by
the board with or without cause.
b) In the event of the death, resignation or removal of an officer,
the board in its discretion may elect or appoint a successor to fill the
unexpired term.
c) Any two or more offices may be held by the same person.
d) The salaries of all officers shall be fixed by the board.
e) The directors may require any officer to give security for the
faithful performance of his duties.
3. President. The president shall be the chief executive officer of the
Corporation and shall have the general powers and duties of supervision and
management usually vested in the office of president of a corporation. He shall
preside at all meetings of the stockholders if present thereat, and at all
meetings of the board, and shall have general supervision, direction and
control of the business of the Corporation. Except as the board shall authorize
the execution thereof in some other manner, he shall cause the seal to be
affixed to any instrument requiring it and when so affixed, the seal shall be
attested by the signature of the secretary or the treasurer.
4. Vice-President. During the absence or disability of the president, the
vice-president or if there are more than one, the executive vice-president,
shall have all the powers and functions of the president. Each vice-president
shall perform such other duties as the board shall prescribe.
5. Secretary. The secretary shall attend all meetings of the board, record
all votes and minutes of all proceedings in a book to be kept for that purpose,
give or cause to be given notice of all meetings or special meetings of the
board, keep in safe custody the seal of the Corporation and affix it to any
instrument when authorized by the board, keep all the documents and records of
the Corporation as required by law or otherwise in a proper and safe manner,
and perform such other duties as may be prescribed by the board, or assigned to
him by the president.
6. Treasurer. The treasurer shall have the custody of the corporate funds
and securities, keep full and accurate accounts of receipts and disbursements
in the corporate books, deposit all money and other valuables in the name and
to the credit of the Corporation in such depositories as may be designated by
the board, disburse the funds of the Corporation as may be ordered or
authorized by the board and preserve proper vouchers for such disbursements,
render to the president and board at the regular meetings of the board, or
whenever they require it, an account of all his transactions as treasurer and
of the financial condition of the Corporation render a full financial report at
the annual meeting of the directors if so requested, be furnished
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by all corporate officers and agents at his request with such reports and
statements as he may require as to all financial transactions of the
Corporation, and perform such other duties as are given to him by these By-Laws
or as from time to time are assigned to him by the board or the president.
7. Sureties and Bonds. In case the board shall so require, any officer or
agent of the Corporation shall execute to the Corporation a bond in such sum
and with such surety or sureties as the board may direct, conditioned upon the
faithful performance of his duties to the Corporation and including the
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. Certificates. The shares of the Corporation shall be represented by
certificates. They shall be numbered and entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name and the
number of shares and shall be signed by the president or vice-president and the
treasurer or the secretary and shall bear the corporate seal. When such
certificates are signed by a transfer agent or an assistant transfer agent or
by a transfer clerk acting on behalf of the Corporation and a registrar, the
signatures of such officers my be facsimiles.
2. Lost or Destroyed Certificates. The board may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation, alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the board may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
Corporation a bond in such sum and with such surety or sureties as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
3. Transfers of Shares. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, and cancel the old certificate; every such
transfer shall be entered on the transfer book of the Corporation which shall
be kept at its principal office. Whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer. No transfer shall be made within ten (10) days next preceding
the annual meeting of the stockholders.
4. Closing Transfer Books. The board shall have the power to close the
share transfer books of the Corporation for a period of not more than ten (10)
days during the thirty
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(30) day period immediately preceding: (a) any stockholder's meeting; or (b)
any date upon which stockholders shall be called upon to have a right to take
action without a meeting; or (c) any date fixed for the payment of a dividend
or any other form of distribution. only those stockholders of record at the
time the transfer books are closed shall be recognized as such for the purpose
of: (a) receiving notice of or voting at such meeting; or (b) allowing them to
take appropriate action; or (c) entitling them to receive any dividend or other
form of distribution.
ARTICLE VI - DIVIDENDS
The board may out of funds legally available therefor at any regular or
special meeting, declare dividends upon the capital stock of the Corporation as
and when it deems expedient. Before declaring any dividend there may be set
apart out of any funds of the Corporation available for dividends, such sum or
sums as the board from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
of for such other purposes as the board shall deem conducive to the interests
of the Corporation.
ARTICLE VII - CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear the name of
the Corporation, the year of its organization and the words "CORPORATE SEAL,
FLORIDA." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation shall be
signed by such officer or officers' agent or agents of the Corporation, and in
such manner as shall be determined from time to time by resolution of the
board.
ARTICLE IX - FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
ARTICLE X - NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these By-Laws to be given, personal
notice is not meant unless expressly so stated, and any notice so required
shall be deemed to be sufficient if
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given by depositing the same in a post office box in a sealed post-paid
wrapper, addressed to the person entitled thereto at his last know post office
address, and such notice shall be deemed to have been given on the day of such
mailing.
Whenever any notice is required to be given under the provisions of any
law, or under the provisions of the Certificate of Incorporation of the
Corporation or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE XI - CONSTRUCTION
Whenever a conflict arises between the language of these By-Laws and the
Certificate of Incorporation, the Certificate of Incorporation shall govern.
ARTICLE XII - AMENDMENTS
Except as otherwise provided herein, the Articles of Incorporation and
these By-Laws may be amended at any annual meeting of the stockholders or
directors or at any special meeting thereof if notice of the proposed amendment
to be made be contained in the notice of such special meeting, by the unanimous
vote of the full board of directors or stockholders, as the case may be. For
purposes of this Article, the term "amendment" shall include the repeal of a
provision.
ARTICLE XIII - INDEMNIFICATION
To the extent permitted by law, the Corporation shall indemnify and hold
harmless each person serving as a director of the Corporation, from and against
any and all claims and liabilities to which such person shall become subject by
reason of his or her being a director of the Corporation, or by reason of any
action alleged to have been taken or omitted by him or her as a director.
The Corporation shall reimburse each person for all costs, legal and other
expenses reasonably incurred by him or her in connection with any claim or
liability as to which it shall be adjudged that such director is liable to the
extent permitted by law.
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The rights accruing to any persons under the foregoing provisions shall
not exclude any other right to which he or she may be lawfully entitled, nor
shall anything therein contained restrict the right of the Corporation to
indemnify or reimburse such person in any proper case even though not
specifically provided for herein.
ADOPTED AND APPROVED effective as of June 6, 1991.
Grand Slam Sports Marketing, Inc.
By: /s/ Jerry Leader
---------------------------
Jerry Leader,
Director
By: /s/ Frederick Stolle
----------------------------
Frederick Stolle,
Director
By: /s/ John Lehmann
---------------------------
John Lehmann,
Director
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PARTNERSHIP AGREEMENT
FOR GSAC PARTNERS
This Partnership Agreement ("Agreement") is being executed this 18th
day of November, 1996, but made effective as of the 31st day of May, 1996, by
and between PAVILION PARTNERS, a Delaware general partnership, and EXIT 116
REVISITED, INC., a New Jersey corporation. For and in consideration of the
mutual covenants herein contained, the parties to this Agreement hereby form and
create a general partnership, under and pursuant to the Partnership Act for the
purposes and upon the terms, provisions, and conditions as hereinafter set
forth:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the
respective meanings indicated:
Affiliate: With respect to any Person, any other Person that directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Person specified. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and under "common control with") when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly , whether through the ownership of voting
securities, by contract or otherwise. The provisions of Section 13.05 hereof
supplement and amend this definition.
Amphitheater: The existing outdoor entertainment facility located in
Holmdel, New Jersey and commonly known as the Garden State Arts Center.
Amphitheater Fiscal Year: The fiscal year of the Partnership for
financial accounting purposes. The first Amphitheater Fiscal Year shall end on
October 31, 1996. Subsequent Amphitheater Fiscal Years shall end on each
subsequent October 31st thereafter.
Amphitheater Season: The portion of each calendar year which is
included between the period of time from May 1 to September 30 of such calendar
year, being the contemplated portion of each calendar year during which the
Amphitheater will be open for the presentation of events, performances and
shows. The first Amphitheater Season for purposes of this Agreement shall
commence May 1, 1996 and end on September 30, 1996.
Ardee: Exit 116 Revisited, Inc., a New Jersey corporation.
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Artist Agreement: Any agreement or contract (written or oral) between
the Partnership and an artist, entertainer or performer by which such artist,
entertainer or performer agrees to appear and perform at a live concert or other
performance at the Amphitheater.
Available Cash: After payment of any and all outstanding Deficit Loans,
the remaining cash (if any) held by the Partnership at the end of any
Amphitheater Season which, in the reasonable judgment of the Managing Partner,
is not required or reasonably expected to be required for the payment of
Operating Expenses between the end of such Amphitheater Season and the
commencement of the next succeeding Amphitheater Season.
Capital Account: The tax capital account maintained by the Partnership
for each Partner in accordance with and as required by the provisions of Section
8.05 of this Agreement.
Club Show: Any live entertainment event presented in an enclosed venue
with a maximum capacity for 3500 people or less.
Code: The Internal Revenue Code of 1986, as amended.
CPI Index: Consumer Price Index for All Urban Consumers (all U.S.
cities), 1982 -84 equals 100 Base, published monthly by the U.S. Department of
Labor's Bureau of Labor Statistics, or any successor publication.
Defensive NY Amphitheater: Any Fully Restricted Facility which is being
proposed for development or construction in the Restricted NY Area which meets
both of the following criteria:
(a) the proposal to develop or construct such Fully Restricted
Facility is made by a third party ("Developer"), including a
governmental authority issuing a request for proposal, who is not
affiliated with or related to either Partner or any Affiliate of either
Partner; and
(b) neither Partner (nor any of its Affiliates) at any time
after the date hereof encouraged, supported, instigated or assisted in
any manner the Developer's decision to announce the proposal to (i)
construct or develop such Fully Restricted Facility or (ii) seek bids
from third parties for the construction, development or management of
such Fully Restricted Facility.
Deficit Loan: A loan extended by the Partners to the Partnership
pursuant to the provisions of Section 6.02 hereof.
Development Costs: All costs and other expenses incurred by the
Partnership, or by the Partners before formation of the Partnership, in
connection with the design, planning, preparation, commencement, carrying out
and completion of the Renovation Work, including each and all of the following:
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(a) All costs directly associated with or attributable to the
actual construction work related to the Renovation Work including (i)
all costs associated with obtaining materials and services related to
the Renovation Work and (ii) all fees and other sums payable to any
contractor or construction manager relating to or in connection with
the Renovation Work.
(b) All costs which are directly associated with or
attributable to the research, development or design of the Renovation
Work such as (i) predevelopment costs incurred in connection with the
Renovation Work, (ii) all fees and payments made to architects, land
planners, engineers and other consultants which are directly
attributable to the design of the Renovation Work, (iii) all attorneys'
fees and other consultants' fees incurred in connection with and
directly attributable to the planning, developing, and designing of the
Renovation Work and (iv) all fees, costs and expenses paid or incurred
in connection with the obtaining of all necessary development,
construction and use permits.
(c) The reasonable and necessary costs incurred in connection
with responding to NJHA's Request for Proposal related to the
privatization of the Amphitheater such as (i) travel and lodging
expenses for personnel involved in the negotiation of the Lease
Agreement and the Memorandum of Understanding and (ii) legal expenses
incurred in connection with the negotiation of the Lease Agreement and
Memorandum of Understanding.
(d) The types and categories of costs included in the
construction budget attached hereto as Exhibit "B".
Notwithstanding any provision of the Lease Agreement to the contrary, for
purposes of this Agreement, the term "Development Costs" shall include, subject
to the provisions of Section 12.11 hereof, costs related to the negotiation,
documentation and finalization of the contractual and business arrangement
between the Partnership and NJHA as finally culminated in the Lease Agreement
(including, without limitation, legal fees and travel and lodging, costs).
Development Cost Amount: The total amount of Development Costs actually
paid, incurred or expended.
Development Cost Notice: Shall have the meaning assigned to such term
pursuant to Section 5.02(a) hereof.
Downing Stadium: The entertainment facility located on Randall's Island
under the Triborough Bridge and commonly called Downing Stadium, in its current
condition and configuration.
Final Budgeted Amount for Construction: The final budgeted amount for
the Development Cost Amount which the Managing Partner determines (and provides
notice of to Ardee) pursuant
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to the provisions of Section 12.11 hereof, as such final budgeted amount may be
revised as a result of an agreement with NJHA to revise or modify the design for
the Renovation Work as contemplated in Section 12.11(b)(ii) hereof.
Fully Restricted Facility: Any amphitheater, bowl, greenfield or other
outdoor or open-air venue primarily designed for the presentation of live
entertainment events other than sports stadiums with a capacity for 45,000
persons or more.
Lease Agreement: That certain Lease Agreement to be hereafter executed
as contemplated by the provisions of the Memorandum of Understanding, and by
which NJHA, as landlord, shall lease and demise to the Partnership, as tenant,
the Amphitheater, as such Lease Agreement may be amended from time to time.
Major Actions: Any acts taken, sums expended or obligations incurred on
behalf of the Partnership for any of the following activities:
(a) incurring any indebtedness or borrowing any sums of money
on behalf of the Partnership other than (i) Deficit Loans and (ii)
trade payables; and other accounts payable incurred in the ordinary
course of the business of the Partnership and consistent with the then
effective Operating Budget;
(b) acquiring, on behalf of the Partnership, any of the
following:
(i) any interest in real property other than the
leasehold estate created by the Lease Agreement; and
(ii) any personal property which is either (i) not
related to the ownership, use, operation or maintenance of the
Amphitheater or (ii) not capable of being purchased or leased
in a manner consistent with expenditures contemplated in the
then effective Operating Budget.
(c) agreeing, to modify, alter or otherwise amend any of the
provisions of the Lease Agreement or any Major Operational Agreement,
other than waivers or modifications made in the ordinary course of
business;
(d) executing or delivering a Mortgage;
(e) expending any funds of the Partnership for Operating
Expenses in amounts which exceed the amounts permitted to be expended
in the Partnership's then effective Operating Budget; provided,
however, Ardee's consent shall not be unreasonably withheld to any
request made by the Managing Partner for the expending of funds of the
Partnership for Operating Expenses in amounts which exceed the amounts
permitted to be expended in the Partnership's then effective Operating
Budget;
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(f) executing or otherwise entering into any Major Operational
Agreement;
(g) executing a construction contract for any part of the
Renovation Work; provided, however, (i) if Ardee fails to provide
comments to, or reasons for refusing, its approval of, any proposed
construction contract presented to it by the Managing Partner within
five (5) business days, then Ardee shall be deemed to have approved
such construction contract and (ii) Ardee shall not unreasonably
withhold its consent to any proposed construction contract presented to
it by the Managing Partner;
(h) subject to the provisions of Section 12.04 hereof,
adopting or modifying an Annual Operating Budget for any Amphitheater
Fiscal Year;
(i) selling, or agreeing to sell, the Amphitheater or any
material portion thereof;
(j) entering into any contractual or business arrangement with
a Partner or the Affiliate of any Partner; and
(k) engaging in any other business venture or entrepreneurial
activity other than that directly related to the Partnership Purposes.
Major Operational Action: Any Major Action which involves day-to-day
decisions affecting the use, operation and maintenance of the Amphitheater
including, without limitation, (i) executing, entering into or amending any
Major Operational Agreement, (ii) expending funds of the Partnership for
Operating Expenses in amounts which exceed amounts permitted to be expended in
the Partnership's then effective Operating Budget, (iii) executing a
construction contract for any part of the Renovation Work, and (iv) adopting or
modifying any Annual Operating Budget for any Amphitheater Fiscal Year.
Managing Operational Agreement: Any material agreement relating to the
operation, use or maintenance of the Amphitheater such as, by way of example,
(i) food and beverage concession agreements, (ii) merchandise concession
agreements, (iii) sponsorship agreements, (iv) Artist Agreements, (v) employment
agreements with any of the Amphitheater's personnel and (vi) material service
contracts such as agreements for the provision of security services at the
Amphitheater or operation of the parking lots.
Managing Partner: Pavilion.
Memorandum of Understanding: That certain Agreement Concerning Outdoor
Entertainment Facility dated 1995 and entered into by and among, (i) Delsener
Slater Enterprises, Ltd., an Affiliate of Ardee, (ii) Pavilion and (iii) NJHA.
Mortgage: Any mortgage, deed of trust or other instrument creating a
lien on the Partnership's interest in the Amphitheater as security for repayment
of any liability or indebtedness.
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Most Favorable Offer: Shall have the meaning assigned to such term
pursuant to the provisions of Section 12.02(c)(1) hereof.
NJHA: New Jersey Highway Authority, a body corporate and politic
created and existing under and by virtue of the New Jersey Highway Authority
Act, as amended.
Non-Artist Operating Agreements: All Major Operational Agreements other
than Artist Agreements.
Non-Expanded Amphitheater Season: Any Amphitheater Season which ends
prior to substantial completion of the Renovation Work.
Offensive NY Amphitheater: Any Fully Restricted Facility which is being
proposed for construction or development in the Restricted NY Area other than
Defensive NY Amphitheaters.
Operating Budget: The budget of Operating Expenses of the Partnership
to be prepared each year in accordance with and pursuant to the provisions of
Section 12.04 hereof.
Operating Expenses: The overhead and operating, expenses of the
Partnership which relate to the day-to-day operation of the Amphitheater such as
salaries for employees and staff for the Amphitheater, rent and other payments
due to NJHA or others pursuant to the Lease Agreement, utility costs for the
Amphitheater, insurance costs relating to the maintenance of casualty and
liability insurance for the Amphitheater, interest and required principal
amortization on the Partnership's indebtedness, costs relating to maintenance,
repair and upkeep of the Amphitheater and the personal property and equipment
used in connection with the operation of the Amphitheater and costs for the
purchase of office supplies and equipment. Notwithstanding anything to the
contrary implied by the immediately preceding sentence, none of the following
types of expenditures or expenses shall be "Operating Expenses" for purposes of
this Agreement:
(a) the costs directly attributable to or associated with the
booking, production, presentation or promotion of any performance or
event at the Amphitheater such as artist costs, advertising costs and
costs of staging; and
(b) costs or expenses which must be incurred as the result of
any emergency, casualty or other unforeseeable occurrence at the
Amphitheater.
Partially Restricted Facility: Any arena, auditorium, building, hall,
stadium or other venue primarily designed for the presentation of live
entertainment events other than Fully Restricted Facilities.
Partners: Pavilion and Ardee. The term "Partners" shall not include any
assignee of a Partner's Partnership Interest, unless (i) the other Partner
agrees to admit such assignee to the
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Partnership or (ii) such assignee acquired such Partnership Interest in
accordance with, pursuant to and in compliance with the provisions of Sections
18.04 or 18.05 hereof.
Partnership: The Partnership created by this Agreement.
Partnership Act: The Delaware Uniform Partnership Act, Title VI,
Chapter 15 of the Delaware Code (1974 revision), as amended from time to time.
Partnership Interest: All of the interest of any Partner in the
Partnership, including its (i) right to a distributive share of the profits and
losses of the Partnership, (ii) right to a distributive share of the assets of
the Partnership, and (iii) right to participate in the management of the affairs
of the Partnership.
Partnership Purposes: The purposes for which the Partnership is formed
as set forth in Section 3.01 of this Agreement.
Pavilion: Pavilion Partners, a Delaware general partnership whose sole
general partners are SM/PACE, Inc. and Amphitheater Entertainment Partnership.
Percentage Interest: The respective Partnership Interest of each
Partner in the Partnership expressed as a percentage of the Partnership
Interests owned by all Partners. The Percentage Interest of Pavilion is
sixty-six and two-thirds percent (66-2/3%) and the Percentage Interest of Ardee
is thirty-three and one-third percent (33-1/3%).
Permitted Rate: The lesser of (a) two percent (2%) per annum over the
Prime Rate or (b) the maximum non-usurious interest rate permitted by applicable
law from time to time in effect.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other form of entity.
Prime Rate: The prime rate of interest per annum announced, from time
to time, by major U.S. money center banks as published daily in the "Money
Rates" column of The Wall Street Journal; provided, however, that if The Wall
Street Journal should ever cease, for any reason, to publish such rate on a
daily basis, then the Prime Rate shall be the rate of interest designated, and
in effect from time to time, by Citibank, N.A., in New York, New York as its
prime rate or base rate charged on commercial loans.
Qualified Liabilities: Shall have the meaning assigned to such term
pursuant to Section 6.01(c) hereof.
Qualified Operational Shortfall: Shall have the meaning assigned to
such term pursuant to Section 6.01(b) hereof.
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Qualified Shortfall Notice: Shall have the meaning assigned to such
term pursuant to Section 6.01(a) hereof.
Renovation Work: Such renovation, rehabilitation, construction and
upgrade activities at the Amphitheater necessary to increase the Arnphitheater's
covered seating capacity to approximately 7,000 and lawn seating capacity to
approximately 10,500 and to otherwise upgrade the Amphitheater's concession
plazas and the Parking Facilities as more fully described on Exhibit "C"
attached hereto.
Restricted Area: The geographical area encompassed by the Restricted NJ
Area and the Restricted NY Area.
Restricted NJ Area: The geographical area located in the State of New
Jersey described on Exhibit "A-1" attached hereto.
Restricted NY Area: The geographical area located in the State of New
York described on Exhibit "A-2" attached hereto. The Partners hereby acknowledge
that Jones Beach Amphitheater is not located in the Restricted NY Area.
Restricted Facility: Any Partially Restricted Facility or Fully
Restricted Facility.
Tax Year: The fiscal year of the Partnership for federal income tax
purposes.
Upfront Advances: All concessionaire grants or advances received or
receivable by the Partnership prior to the first event, performance or
presentation held at the Amphitheater after completion of the Renovation Work.
Any amounts received from a concessionaire which are properly attributable to
operations during any Non-Expanded Amphitheater Season shall not be included as
a part of Upfront Advances but shall instead be included in the Partnership's
income from operations during such Non-Expanded Amphitheater Season.
Waterloo: The premises located in Stanhope, New Jersey at which live
concerts and other entertainment events are presented from time to time and
which is commonly referred to as "Waterloo Village".
ARTICLE II
Name of Business: Offices
2.01 Partnership Name. The name of the Partnership shall be GSAC
Partners. In addition to the foregoing name, the activities and business of the
Partnership may be conducted in the Managing Partner's discretion, under such
other names as may be designated from time to time by the Managing Partner;
provided, however the Managing Partner may not use, without the prior
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consent of Ardee, any assumed name for the Partnership which includes within it
the name of Ardee, Pavilion, the partners of Pavilion or any of their respective
Affiliates. The Partners shall execute and file such certificates, if any, as
are required by the provisions of any assumed name law or statute in any
jurisdiction in which the Partnership conducts business, as may be required to
reflect the Partnership's operation under such names.
2.02 Partnership Offices. The principal place of business of the
Partnership shall be at 515 Post Oak Blvd., Suite 300, Houston, Texas 77027. The
Partnership shall also maintain an office at the Amphitheater during the
Amphitheater Season which will be staffed by the employees of the Partnership
who will manage, operate and maintain the Amphitheater.
ARTICLE III
Purpose and Power of the Partnership
3.01 Purposes. The character and purposes of the specific business to
be conducted by the Partnership are (i) to lease, operate, use and maintain the
Amphitheater (including the booking, promotion, production and presentation of
live entertainment events at the Amphitheater), (ii) to perform and fulfill all
obligations and duties of the "Tenant" under the terms and provisions to be
contained in the Lease Agreement and (iii) to take any and all other actions
which may be incidental to or otherwise reasonably related to the foregoing
business and purposes.
3.02 Powers. The Partnership shall have the power, in fulfilling the
purposes set forth in Section 3.01, to conduct any business or take any action
which is lawful and which is not prohibited by the Partnership Act.
ARTICLE IV
Term of Partnership
The Partnership shall begin on the date first set forth above and shall
continue for a term of twenty-two (22) years from such date unless sooner
dissolved pursuant to Section 17.01 hereof or by operation of law.
Notwithstanding the foregoing, if the term of the Lease Agreement should be
extended, for any reason whatsoever, beyond the twenty-two (22) year term
referred to in the immediately preceding sentence, then the term of the
Partnership shall be automatically extended to expire upon such extended term of
the Lease Agreement.
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ARTICLE V
Initial Contributions and Contributions for Development Costs
5.01 Initial Contribution.
(a) Upon execution of this Agreement, Pavilion shall convey,
and does hereby convey, to the Partnership all of its rights, titles
and interests in, under or created by the Memorandum of Understanding.
(b) Upon execution of this Agreement, Ardee shall convey, and
does hereby convey, or shall cause Delsener Slater Enterprises, Ltd. to
convey, to the Partnership, all of Delsener Slater Enterprises, Ltd.'s
rights, titles and interests in, under or created by the Memorandum of
Understanding.
(c) It is hereby specifically agreed by and between the
Partners that the fair market value of the assets being conveyed to the
Partnership pursuant to Section 5.01 is equal to $0.00. As a result,
the initial balance of the Capital Account of Pavilion and Ardee,
following completion of the initial contribution required pursuant to
the provisions of this Section 5.01 shall each be $0.00.
5.02 Development Costs. Except as otherwise provided herein, Pavilion
and Ardee shall be obligated from time to time to contribute to the capital of
the Partnership, in proportion to their respective Percentage Interests, a
sufficient amount of funds to provide to the Partnership enough cash to pay and
discharge all Development Costs as and when payable. In furtherance of the
foregoing, the following provisions shall apply:
(a) If the Partnership does not have adequate funds available
to it to pay any Development Costs when due, then the Managing Partner
shall deliver a notice ("Development Cost Notice") to the Partners
specifying the amount of funds needed to pay such Development Costs and
stating that each Partner is obligated to contribute to the Partnership
its Percentage Interest of the amount of funds needed to pay such
Development Costs.
(b) Following delivery of a Development Cost Notice to the
Partners by the Managing Partner, each Partner shall be obligated to
contribute to the capital of the Partnership, within fifteen (15) days
following receipt of such Development Cost Notice, its respective
Percentage Interest of the total amount of Development Costs identified
in such Development Cost Notice.
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Without the prior consent of both Partners, no construction contract for the
Renovation Work may be executed on behalf of the Partnership which does not
satisfy the criteria specified in clause (g) of the definition of "Major Action"
in Article I hereof.
5.03 Upfront Advances. The Partnership shall use any and all Upfront
Advances exclusively for the payment of Development Costs. To the extent that
any of the Upfront Advances have not been used to pay Development Costs after
all Development Costs have been fully paid and discharged, then, notwithstanding
the provisions of Article VII hereof, that remaining portion of the Upfront
Advances shall be. distributed to the Partners in proportion to their respective
Percentage Interests.
5.04 Prior Development Costs.
(a) Pavilion hereby represents and warrants to Ardee that
attached hereto as Exhibit "D- 1" is a true, correct, complete and
accurate schedule of all Development Costs paid by Pavilion through
September 30, 1996. Ardee hereby represents and warrants to Pavilion
that attached hereto as Exhibit "D-2" is a true, correct, complete and
accurate schedule of all Development Costs which have been paid by
Ardee through September 30, 1996.
(b) All amounts paid for Development Costs prior to the
execution hereof shall be deemed to have been contributed to the
capital of the Partnership by the Partner that paid such amounts and
shall be added to the balance of such Partner's Capital Account.
(c) In order that the Partners, contributions for Development
Costs paid prior to the execution of this Agreement will be in
proportion to their respective Percentage Interests, the. following
provisions shall apply:
(1) Upon execution hereof, but subject to the
provisions of clause (d) of this Section 5.04, Ardee shall
contribute to the capital of the Partnership immediately
available funds in the amount by which one-half of the
Development Costs paid by Pavilion through September 30, 1996
(as reflected on Exhibit "D-1 attached hereto) exceeds all of
the Development Costs paid by Ardee through September 30, 1996
(as reflected on Exhibit "D-2" attached hereto).
(2) Upon final determination by the Partners of the
amount of Development Costs paid by each between September 30,
1996 and the execution of this Agreement ("Pending Costs"),
Ardee shall contribute to the capital of the Partnership
immediately available funds in the amount by which one-half of
Pavilion's Pending Costs exceeds all of Ardee's Pending Costs.
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Amounts contributed to the capital of the Partnership by Ardee pursuant to this
Section 5.04(c) shall be fully utilized by the Partnership to pay and discharge
Development Costs before any Development Cost Notice is provided pursuant to
Section 5.02(a) hereof.
(d) Each Partner shall have the right to review the books,
records, invoices and other supporting documentation relating, to the
Development Costs paid by the other Partner through September 30, 1996
for a period of ninety (90) days following the execution of this
Agreement (such ninety (90) day period being herein called the "Review
Period"). If, as a result of the review of such books, records,
invoices and other documentation during, the Review Period, one of the
Partners disputes the other Partner's determination of the amount of
Development Costs paid by the other Partner through September 30, 1996,
then such Partner shall have the right to require that such dispute be
settled in accordance with the provisions of Article XVI hereof so long
as notice of such dispute is provided to the other Partner prior to the
expiration of the Review Period. If the amount of Development Costs
actually paid by either of the Partners through September 30, 1996
should be changed as a result of any such dispute, then upon final
settlement of such dispute, the amount of the capital contribution
required to be made by Ardee pursuant to Section 5.04(c)(1) hereof
shall be appropriately increased or decreased with a distribution to,
or contribution by, Ardee, as necessary. If neither Partner provides
notice of a dispute pursuant to this Section 504(d) prior to the
expiration of the Review Period, then such Partner shall be deemed to
have accepted the amounts specified in Exhibits "D-1" and "D-2"
attached hereto as the amount of Development Costs paid by each Partner
through September 30, 1996.
5.05 Development Cost Draw Requests. Copies of each draw request from
the Partnership's contractor for the Renovation Work, together with all back-up
information and written comments or approvals from the Partnership's architect,
shall be provided to Ardee immediately upon receipt by the Managing Partner.
Ardee shall have the right to review and comment upon each such draw request and
require the Managing Partner to assert or reserve any claims, on behalf of the
Partnership, which Ardee believes are available as a result of its review of any
such draw request and other support documentation. However, none of the
provisions contained in this Section 5.05 shall be read to negate, limit, lessen
or otherwise affect either Partner's obligation to make all capital
contributions otherwise required to be made pursuant to the provisions of this
Article V.
5.06 Security for Ardee's Development Cost Contribution Obligation. As
security for the performance of its obligations to make contributions to the
Partnership required by the provisions of Section 5.02 of this Agreement, Ardee
does hereby grant to the Partnership a security interest (the "Security
Interest") in the Pledged Account (as hereinafter defined). As used herein, the
term "Pledged Account" shall mean Merrill Lynch Pierce Fenner & Smith
Incorporated Account No. 546-07B79 (formerly Account No. 546-07A11) maintained
in the name of Ardee, as well as the Cash Securities Account and any other
account of Ardee maintained with respect thereto. The following provisions shall
apply with respect to the Security Interest:
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(a) Attached hereto as Exhibit "E" is (i) a true, correct and
complete copy of the most recent Account Statement received by Ardee
with respect to the Pledged Account and (ii) a letter issued by Merrill
Lynch confirming the assets held in the Pledged Account as of November
12, 1996 (such Account Statement and letter being herein collectively
called the "Merrill Lynch Statement"). The securities listed in the
Merrill Lynch Statement continue to be held in the Pledged Account as
of the date hereof and none of such securities have been removed from
the Pledged Account since November 12, 1996 (except as required to fund
the payment required to be made to the Partnership pursuant to the
provisions of Section 5.04(c)(1) hereof). Ardee agrees that, for so
long as this Agreement shall remain in effect, the Pledged Account will
contain nothing but cash or obligations backed by the full faith and
credit of the government of the United States of America.
Notwithstanding anything to the contrary contained herein, Ardee may
withdraw from the Pledged Account (i) interest received from time to
time on account of the assets held in the Pledged Account and (ii) such
funds as may be required to fund directly to the Partnership capital
contributions to be made by Ardee pursuant to the provisions of
Sections 5.02 or 5.04 hereof.
(b) Upon execution of this Agreement, Ardee shall (i) execute
and deliver to the Managing Partner one or more counterparts of a UCC-1
describing the Pledged Account in a form reasonably acceptable to the
Managing Partner and (ii) execute and cause Merrill Lynch Pierce Fenner
& Smith Incorporated to execute and deliver to the Managing Partner a
Pledged Collateral Account Agreement pertaining to the Pledged Account
in a form reasonably acceptable to the Managing Partner.
(c) Upon full and final satisfaction and discharge of Ardee's
obligations to make contributions to the Partnership required by the
provisions of Section 5.02 of this Agreement, the Partnership shall
release the Security Interest by executing a UCC-3 and simultaneously
authorizing Merrill Lynch Pierce Fenner & Smith Incorporated to release
to Ardee, the funds then remaining in the Pledged Account.
(d) If Ardee discharges all or any portion of its obligations
required by the provisions of Section 5.02 of this Agreement by
applying thereto funds other than those included in the Pledged
Account, then the Partnership shall release from the Security Interest
a portion of the amount deposited in the Pledged Account in an amount
not more than the amount so discharged by Ardee with funds not included
in the Pledged Account.
(e) Notwithstanding the provisions of Section 19.02 hereof or
any other provision to the contrary herein, THE LAW OF THE STATE OF
TEXAS SHALL GOVERN AND CONTROL THE CREATION, PERFECTION AND ENFORCEMENT
OF THE SECURITY INTEREST AND THE OTHER PROVISIONS CONTAINED IN THIS
SECTION 5.06.
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ARTICLE VI
Operational Cash Shortfalls and Deficit Loans
6.01 Operational Shortfalls. Subject to the provisions of Section 6.02
hereof, the following provisions shall apply:
(a) If a Qualified Operational Shortfall occurs at any time,
then the Managing Partner shall deliver a notice ("Qualified Shortfall
Notice") to the Partners specifying the amount of funds needed to cover
such Qualified Operational Shortfall and stating, that each Partner is
obligated to contribute to the capital of the Partnership its
Percentage Interest of the amount of funds needed to cover such
Qualified Operational Shortfall. Following delivery of a Qualified
Shortfall Notice to the Partners by the Managing Partner, each Partner
shall be obligated to contribute to the capital of the Partnership,
within fifteen (15) days following receipt of such Qualified Shortfall
Notice, its respective Percentage Interest of the amount of funds
needed to cover the Qualified Operational Shortfall as set forth in
such Qualified Shortfall Notice.
(b) As used herein, the term "Qualified Operational Shortfall"
shall mean the occurrence or happening, at any time, in the Managing
Partner's reasonable discretion, of the circumstance of the Partnership
having an insufficient amount of cash to pay or cover the Qualified
Liabilities (herein defined) of the Partnership as they become due.
(c) As used herein, the term "Qualified Liabilities" shall
mean any and all debts, liabilities, expenses, charges or other
obligations of the Partnership other than Development Costs. The term
"Qualified Liabilities" shall include, without limitation, costs
associated with the engagement of performers at the Amphitheater,
advertising costs, promotion costs, employee costs and rental
obligations under the Lease.
6.02 Deficit Loan for the Non-Expanded Amphitheater Seasons.
(a) Obligation During the Non-Expanded Amphitheater Seasons
Only. Notwithstanding the provisions of Section 6.01 hereof, if a
Qualified Operational Shortfall occurs at any time during any
Non-Expanded Amphitheater Season, then Pavilion and Ardee shall each
extend a loan ("Deficit Loan") to the Partnership in an amount equal to
fifty percent (50%) of such cash deficit within fifteen (15) days
following receipt of written notice of the existence of such cash
deficit from the Managing Partner.
(b) Deficit Loan Terms. No distributions shall be made to the
Partners pursuant to Article VII hereof at any time during which any
Deficit Loan remains unpaid and outstanding. Each Deficit Loan shall
bear interest at a variable rate of interest per annum equal to the
Permitted Rate and shall be repayable as soon as the Partnership has
funds
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available therefor. Each payment made by the Partnership on the Deficit
Loans shall be applied and apportioned between the Deficit Loans in
proportion to the principal balance of each Deficit Loan.
ARTICLE VII
Cash Distributions
7.01 Distribution of Available Cash. Except as provided in Section 7.02
or Section 7.03 hereof, all Available Cash shall be distributed by the
Partnership within 60 days after the end of each Amphitheater Season to the
Partners in proportion to their respective Percentage Interests.
7.02 Distribution for Non-Expanded Amphitheater Seasons Only.
Notwithstanding the provisions of Section 7.01 hereof, with respect to each
Non-Expanded Amphitheater Season only, cash in an amount equal to the net income
from operations of the Partnership (as determined pursuant to generally accepted
accounting principles) during the Amphitheater Fiscal Year in which such
Non-Expanded Amphitheater Season occurs shall be distributed by the Partnership,
within sixty (60) days after the end of such Non-Expanded Amphitheater Season,
to the Partners, fifty percent (50%) to Pavilion and fifty percent (50%) to
Ardee.
7.03 Distributions Following Sale of Amphitheater. Following a sale or
other disposition of all or substantially all of the Partnership's interest in
the Amphitheater, no further distributions shall be made pursuant to Sections
7.01 or 7.02 hereof. Instead, all distributions thereafter shall be governed by
the provisions of Section 17.03 hereof.
7.04 Non-Cash Receipts. All non-cash goods, benefits or services
received in kind by the Partnership as a result of the operation and
exploitation of the Amphitheater shall be Partnership assets to be either (i)
used by the Partnership for valid business purposes consistent with the then
effective Annual Operating Budget or (ii) distributed to the Partners pursuant
to the provisions of this Agreement in the same manner as if such non-cash
goods, benefits or services were cash in an amount equal to their respective
fair market values. The determination of the fair market value of any such
non-cash item shall be made jointly by the Partners prior to the distribution of
such item to the Partners.
ARTICLE VIII
Tax Allocations
8.01 General Provisions. Except as provided to the contrary elsewhere
in this Article VIII, all of the Partnership's income, gains, losses and
deductions for each Tax Year shall be allocated between the Partners in
accordance with the following provisions:
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(a) Until each Partner has been allocated an amount of the
Partnership's income pursuant to this Section 8.01 (a), net of any
losses or deductions allocated pursuant to this Section 8.01(a), in an
amount equal to the aggregate cash distributions made to such Partner
pursuant to Section 7.02 hereof with respect to the Non-Expanded
Amphitheater Seasons, the Partnership's income, gains, losses and
deductions shall be allocated fifty percent (50%) to Pavilion and fifty
percent (50%) to Ardee.
(b) All income, gains, losses and deductions of the
Partnership not allocated pursuant to Section 8.01(a) hereof, shall be
allocated between the Partners in proportion to their respective
Percentage Interests.
8.02 Gain or Loss Upon Sale of the Amphitheater. Notwithstanding the
provisions of Section 8.01 hereof, but subject to the provisions of Section 8.03
of this Agreement, the following provisions shall apply:
(a) The gain, if any, recognized by the Partnership upon any
disposition of all or substantially all of the Partnership's interest
in the Amphitheater shall be allocated as follows:
(1) First, to the Partners whose Capital Accounts
have a negative balance, in proportion to and to the extent of
such negative balances;
(2) Second, to the Partners in the minimum amounts
necessary to cause the balances of their respective Capital
Accounts to be in the ratios of their respective Percentage
Interests; and
(3) Any remaining gains shall be allocated between
the Partners in proportion to their respective Percentage
Interests.
(b) The loss, if any, recognized by the Partnership, upon the
disposition of all or substantially all of its interest in the
Amphitheater shall be allocated as follows:
(1) First, to the Partners in the minimum amounts
necessary to cause the balances in their respective Capital
Accounts to be in the ratios of their respective Percentage
Interests.
(2) Second, any remaining amount shall be allocated
between the Partners in proportion to their respective
Percentage Interests.
(c) The allocation of any gain or loss from the disposition of
all or substantially all of the Partnership's interest in the
Amphitheater pursuant to this Section 8.02 shall be made after the
allocations required to be made pursuant to Section 8.01 hereof for the
Tax Year in which such disposition occurred.
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8.03 Section 704(c) Allocations. Income, gain, loss and deduction with
respect to any item of property contributed to the Partnership shall, solely for
federal income tax purposes, be allocated between the Partners so as to take
into account any difference between the fair market value of such item of
property and its adjusted basis for federal income tax purposes on the date of
such contribution, in accordance with the requirements of Section 704(c) of the
Code. All allocations under this Section 8.03 shall be made in such a manner as
the Managing Partner shall determine reasonably reflects the requirements of
Section 704(c) of the Code. No allocations pursuant to this Section 8.03 shall
be reflected as an adjustment to any Partner's Capital Account.
8.04 Transferor/Transferee Allocations. If a Partnership Interest is
transferred during any Tax Year, the income, gains, losses and deductions
allocable in respect of that Partnership Interest shall be prorated between the
Transferor and the Transferee on the basis of the number of days in the year
that each was the holder of that Partnership Interest without regard to the
results of the Partnership operations during the period before and after the
transfer, unless either the transferor or the transferee elects to use an
allocation based on the results as of the record date of transfer, to the extent
permitted by the Code, and agrees to reimburse the Partnership for the cost of
making and recording such allocation. A transferee of a Partnership Interest
shall succeed to the Capital Account of the transferor.
8.05 Capital Accounts. The Partnership shall maintain a capital account
for each Partner, the initial balance of each of which shall be zero. Each
Partner's capital account shall be increased (i) by any income and gains
allocated to that Partner for federal income tax purposes pursuant to Article
VIII hereof, and (ii) by the amount of cash and the fair market value of any
property contributed to the Partnership by that Partner (net of liabilities
secured by such contributed property that the Partnership is considered to
assume or take subject to under Section 752 of the Code). Each Partner's capital
account shall be decreased (i) by any deductions and losses allocated to that
Partner for federal income tax purposes pursuant to Article VIII hereof, and
(ii) by the amount of cash and the fair market, value of any property
distributed by the Partnership to that Partner (net of liabilities secured by
such distributed property that such Partner is considered to assume or take
subject to under Section 752 of the Code). The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with the U.S. Treasury Regulations issued
pursuant to Section 704(b) of the Code, and shall be interpreted and applied in
a manner consistent with such regulations. If a Partner's Capital Account has a
deficit balance following liquidation (as defined in Section
1.704-1(b)(2)(ii)(g) of the U.S. Treasury Regulations promulgated under Section
704 of the Code) of the Partner's interest in the Partnership (after taking into
account all Capital Account adjustments for the Tax Year in which liquidation
occurs), such Partner shall, by the end of such Tax Year (or, if later, within
ninety (90) days after the date of such liquidation), contribute to the
Partnership an amount necessary to increase the balance in its Capital Account
to $0.00.
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ARTICLE IX
Ownership of Partnership Property
All real or personal property acquired by the Partnership shall be
owned by the Partnership, such ownership being, subject to the other terms and
provisions of this Agreement. Each Partner hereby expressly waives the right to
require partition of any Partnership property or any part thereof.
ARTICLE X
Voluntary Withdrawal
No Partner shall have the right to, and each Partner agrees that it
will not, withdraw voluntarily from the Partnership. In the event any Partner
withdraws from the Partnership in contravention of this Agreement, such
withdrawing Partner shall be liable to the other Partner for all damages
attributable to its breach of this Agreement. The withdrawal of a Partner in
contravention of this Article X shall not cause the Partnership to be dissolved,
and such withdrawing Partner shall be deemed to be an assignee of a Partner's
Partnership Interest and shall have only the rights provided a Partner's
assignee under the provisions of the Partnership Act.
ARTICLE XI
Fiscal Matters
11.01 Fiscal Year. The fiscal year of the Partnership for federal
income tax purposes shall end on October 31 of each calendar year or such other
fiscal year as may be required pursuant to the application of the provisions of
the Code or the U.S. Treasury Regulations promulgated thereunder. The fiscal
year of the Partnership for financial accounting purposes shall end on October
31 of each calendar year or such other fiscal year as may be selected by the
Managing Partner from time to time.
11.02 Books and Records. Proper books and records shall be kept by the
Managing Partner with reference to all Partnership transactions, and each
Partner shall at all reasonable times during business hours have access thereto.
All items of income and deductions recognized during a Tax Year shall be
allocated as of the end of each Tax Year, based on the facts and circumstances
existing as of the end of that year. Interim reports may be based on the facts
and circumstances existing at the time of these reports subject to year-end
adjustments. Monthly reports of operating expenses and income shall be prepared,
or cause to be prepared, by the Managing Partner as of the end of each calendar
month and a copy thereof provided to the Partners within thirty (30) days after
the end of each such calendar month. Year end financial statements shall be
prepared, or caused to be prepared, by the Managing Partner as of the end of
each financial fiscal year of the Partnership and a copy thereof provided to the
Partners within 120 days after the end of each such financial fiscal year.
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11.03 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at a national or
state bank. Checks shall be drawn upon the Partnership and may be signed by such
persons as may be designated from time to time by the Managing Partner;
provided, however, any single check (other than amounts payable in connection
with the settlement of a show) in an amount greater than $10,000 may not be
signed or issued on behalf of the Partnership by the Managing Partner unless and
until Ardee has provided written approval by facsimile, which approval may not
be unreasonably withheld. In furtherance of the foregoing, the Managing Partner
shall promulgate a one page "check request approval form" for purposes of
describing any check which requires the approval of Ardee which will describe
the payee and the purpose of the check and provide a signature line for an
authorized representative of Ardee to provide approval.
11.04 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for federal income tax purposes, each of the Partners
hereby recognizes that the Partnership will be subject to all provisions of
Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the
filing, of U.S. Partnership Returns of Income shall not be construed to extend
the purposes of the Partnership or expand the obligations or liabilities of the
Partners. The Managing Partner shall be the "tax matters partner" for all
purposes related to federal, state and local income tax laws.
11.05 Tax Returns. The Managing Partner shall cause to be prepared and
filed all tax returns and statements, if any, which must be filed on behalf of
the Partnership with any taxing authority, and shall submit copies of all such
returns and statements to the Partners. All fees, charges and other expenses
payable to third party professionals such as attorneys or accountants relating
to the preparation and filing of tax returns and statements or otherwise
reporting of financial results of the Partnership, shall be properly chargeable
as expenses of the Partnership.
11.06 Deduction of Expenses. The Partnership shall treat as an expense
for federal income tax purposes all amounts which may be considered as ordinary
and necessary business expenses deductible under applicable rules of the Code
and the regulations promulgated thereunder. Notwithstanding the foregoing, the
Managing Partner may, from time to time, elect on behalf of the Partnership to
capitalize certain expenditures which might otherwise be considered ordinary and
necessary business expenses for federal income tax purposes, and such elections
shall be binding on all Partners.
11.07 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership shall file an election
under Section 754 of the Code in accordance with the procedures set forth in the
applicable Treasury Regulation upon the request of any Partner if such
requesting Partner agrees to pay all costs incurred by the Partnership in
connection with the making of such an election.
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11.08 Reimbursement of Expenses. Provided that any such costs and
expenses are within the limits contained in the then effective Operating Budget,
the Partnership shall be obligated to reimburse the Partners and their
respective Affiliates and employees for any and all out-of-pocket costs and
expenses for items such as delivery charges, travel costs, long distance
telephone and fax charges and postage expenses to the extent that such costs and
expenses relate to the business of the Partnership. Notwithstanding the
foregoing, it is specifically understood and acknowledged that nothing contained
in this Section 11.08 shall obligate the Partnership to reimburse any Partner or
any of its Affiliates for any salaries or overhead expenses.
ARTICLE XII
Management of Partnership Affairs
12.01 Major Actions.
(a) Except as provided in clause (b) of this Section 12.01, no Major
Action may be taken by the Partnership or by any Partner on behalf of the
Partnership without first obtaining prior written approval from both of the
Partners. The terms and conditions to be contained in the Lease Agreement must
also be mutually approved by the Partners.
(b) Notwithstanding the provisions of clause (a) of this Section 12.01,
capital expenditures paid or incurred to satisfy any legal requirements
(including requirements imposed pursuant to the provisions of the Lease
Agreement) or which may be necessary to cure or correct any health or safety
danger to patrons or employees of the Amphitheater may be authorized by the
Managing Partner without the consent and approval of Ardee.
12.02 Management Vested in the Managing Partner.
(a) All responsibility and authority relating to the operations,
business and management of the Partnership, except for the taking of Major
Actions, shall be exclusively vested in the Managing Partner. The Managing
Partner is hereby exclusively authorized to take any and all actions reasonably
necessary or required to carry out the Partnership Purposes, including, without
limitation, the hiring and retaining of such employees and other personnel
(subject to the provisions of clause (c) of this Section 12.02) as may be
reasonably necessary, in the discretion of the Managing Partner, to efficiently
and effectively use, operate and maintain the Amphitheater and otherwise fulfill
the Partnership Purposes. Notwithstanding the foregoing, the Managing Partner
agrees to generally consult with Ardee, and reasonably consider any comments
provided by Ardee, in connection with the management of the business of the
Partnership in a reasonable manner and at reasonable times upon the request of
Ardee.
(b) The following provisions shall apply with respect to Non-Artist
Operating Agreements:
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(1) If there are two or more competing offers for any
Non-Artist Operating Agreement and Pavilion and Ardee cannot mutually
agree upon which of such offers shall be accepted, then the offer
("Most Favorable Offer") containing the most favorable economic and
financial terms, considered as a whole, to the Partnership shall be
selected by the Partnership.
(2) If Pavilion proposes that the Partnership accept an offer
for a specific Non-Artist Operating Agreement for which there is not a
competing, offer and Ardee has not, within thirty (30) days after
formal written notice of the proposal to accept such offer on behalf of
the Partnership, either (i) approved such offer for such Non-Artist
Operating Agreement or (ii) procured a competing offer for such
Non-Artist Operating Agreement, then Pavilion shall have the authority
to execute and enter into the originally proposed Non-Artist Operating
Agreement with no further action or approval from Ardee.
(c) Notwithstanding the provisions of Section 12.02(a) hereof, it is
understood and agreed that decisions related to the filling of the following
positions shall require approval of both Partners: the general manager, the
marketing, director, the head of security (if any) and the controller; provided,
however, Ardee agrees not to unreasonably withhold its consent to individuals
proposed to be hired in those positions by the Managing Partner.
(d) Pavilion shall not be entitled to (i) any fee for its services to
be rendered pursuant to this Section 12.02 or (ii) allocate or otherwise charge
to the Partnership any of its general and administrative expenses or other
internal overhead costs.
12.03 Booking and Promotional Responsibility.
(a) Ardee shall be primarily responsible for the activities
related to (i) booking (or otherwise engaging) talent for appearance at
the Amphitheater and (ii) advertising, marketing and promoting concerts
and performances at the Amphitheater.
(b) Ardee hereby agrees to provide the necessary time and
services as may be required to cause (i) the Amphitheater to be
properly and adequately booked and engaged consistent with past
practices at the Amphitheater and (ii) each event or performance at the
Amphitheater to be appropriately advertised, promoted and marketed
consistent with past practices at the Amphitheater.
(c) For purposes of clause (b), it is hereby expressly
acknowledged and agreed that the phrase "consistent with past
practices" shall not refer to or mean that (i) the total number of
performances booked at the Amphitheater will, in all years, be equal to
or in excess of the number of performances booked in prior years, since
the total number of performances booked is often subject to the total
number of performers on tour during any particular Amphitheater Season
or (ii) the quality of performers booked at the Amphitheater will, in
all years, be comparable to the quality of performers booked in prior
years, since the
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quality of performances booked is often subject to the quality of the
performers on tour during any particular Amphitheater Season.
(d) Ardee shall not be entitled to (i) any fees for its
services to be rendered pursuant to this Section 12.03 or (ii) allocate
or otherwise charge to the Partnership any of its general and
administrative expenses or other internal overhead costs.
(e) An advertising or marketing budget for each event to be
presented at the Amphitheater shall be proposed by Ardee and subject to
the approval of the Managing Partner. Upon adoption of such marketing
or advertising budget for each such event, Ardee may thereafter
implement all decisions in connection with the marketing and promotion
of such event subject to the restrictions contained in the mutually
approved budget.
(f) So long as Ardee, or any Affiliate of Ardee, is involved
in the booking or promotion of live entertainment events at Jones Beach
Amphitheater, Ardee hereby covenants and agrees with Pavilion and the
Partnership as follows:
(1) Ardee shall provide oral notice to Pavilion of
each offer made to performers for appearance at the Jones
Beach Amphitheater promptly following the making of each such
offer.
(2) Pavilion shall have the right, upon the
conclusion of each Amphitheater Season, to review and inspect
at Ardee's offices all artist contracts and other related
documentation for the performances presented at the Jones
Beach Amphitheater during such Amphitheater Season.
Pavilion covenants and agrees that it will not make use of any of the
information provided to it by Ardee pursuant to the provisions of this
Section 12.03(f) in connection with decisions related to the making of
booking offers at facilities (other than the Amphitheater) which are
under the control of Pavilion or any of its Affiliates.
12.04 Annual Operating Budgets. On or before November 30 of each
calendar year during the existence of the Partnership, commencing on November
30, 1996, the Managing Partner shall provide to Ardee (i) a proposed Operating
Budget for the next Amphitheater Fiscal Year setting forth in reasonable detail
the various categories of Operating Expenses and the budgeted amounts for each
such category to be incurred by the Partnership during such Amphitheater Fiscal
Year and (ii) such reasonable information and materials related to the proposed
Operating Budget as may be reasonably requested by Ardee. If a final Operating
Budget for any Amphitheater Fiscal Year is not adopted by mutual agreement
between the Partners within thirty (30) days after submission by the Managing
Partner of a proposed Operating Budget for such Amphitheater Fiscal Year, then,
so long as no such final Operating Budget has been mutually approved, the
Operating Budget for such Amphitheater Fiscal Year shall be deemed to include
all line items as to which unanimous agreement between the Partners has been
reached and, with respect to each other line item, the Operating Budget for such
Amphitheater Fiscal Year shall be deemed to be the greater of (i) the smallest
amount for such line
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item approved by the Partners, (ii) the amount for the same line items specified
in the Operating Budget for the immediately preceding Amphitheater Fiscal Year
with such line item increased in the same proportion and amount by which the CPI
Index most recently reported prior to the first day of such Amphitheater Fiscal
Year exceeds the CPI Index most recently reported prior to the first day of the
immediately preceding Amphitheater Fiscal Year or (iii) if such Operating Budget
relates to the first Amphitheater Fiscal Year following the last Non-Expanded
Amphitheater Season, the amount for the same line item specified in the
Operating Budget for the immediately preceding Amphitheater Fiscal Year with
such line item increased in such amount as is necessary to address increased
operational or logistical requirements attributable to the expansion of the
Amphitheater's capacity as a result of the Renovation Work. For purposes hereof,
the Operating Budget for the first Amphitheater Fiscal Year shall be deemed to
be a budget of Operating Expenses containing the actual amount of Operating
Expenses paid and incurred by the Partnership during the first Amphitheater
Fiscal Year.
12.05 Responsibilities of the Partners. Subject to the other provisions
of this Agreement, the following provisions shall govern the services to be
rendered by each Partner pursuant to the terms of this Agreement:
(a) The Managing Partner shall manage, or cause to be managed,
the affairs of the Partnership in a prudent and businesslike manner.
The Managing Partner shall act as a fiduciary hereunder and in good
faith in the performance of its obligations hereunder, but shall have
no liability or obligation to the Partners or the Partnership for any
decision made or action taken in connection with the discharge of its
duties hereunder if such decision or action is (i) not a direct
violation of, or in excess of the authority granted by, the provisions
of this Agreement and (ii) made or taken in good faith and in the best
interests of the Partnership, irrespective of whether the same may be
reasonably prudent or whether bad judgment or negligence (excluding
gross negligence) was exercised or involved in connection therewith.
(b) Ardee shall fulfill its obligations specified in Section
12.03 hereof in a prudent and businesslike manner. Ardee shall act as a
fiduciary hereunder and in good faith in the performance of its
obligations hereunder, but shall have no liability or obligation to the
Partners or the Partnership for any decision made or action taken in
connection with the discharge of its duties hereunder if such decision
is (i) not a direct violation of, or in excess of the authority granted
by, the provisions of this Agreement and (ii) made or taken in good
faith and in the best interests of the Partnership, irrespective of
whether the same may be reasonably prudent or whether bad judgment or
negligence (excluding gross negligence) was exercised or involved in
connection therewith.
12.06 Indemnification. Each Partner and all of such Partner's partners,
agents, employees, officers, directors, shareholders and other representatives
shall be indemnified and held harmless by the Partnership, to the extent of the
assets of the Partnership, from and against any and all claims, demands,
liabilities, costs (including, without limitation, the cost of litigation and
reasonable
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attorneys' fees), damages and causes of action of any nature whatsoever arising
out of a claim asserted by any third party and relating to the management of the
affairs of the Partnership, except where the claim at issue is based upon (i)
the proven gross negligence or willful misconduct of the indemnified party or
(ii) an action taken by the indemnified party in direct violation of, or in
excess of the authority granted by, the provisions of this Agreement. The
indemnification rights herein contained shall be cumulative of, and in addition
to, any and all rights, remedies and recourses to which the indemnified parties
described herein shall be entitled, whether pursuant to some other provision of
this Agreement, at law or in equity.
12.07 Artist Agreements. Subject to the right of a Partner to require
that competitive bids be made on behalf of the Partnership for the booking of
certain live concerts at the Amphitheater in accordance with, and pursuant to,
the provisions of Section 13.02(b)(2)(B)(ii)(y) hereof or Section
13.02(d)(3)(ii) hereof, the entering into of any Artist Agreement, as with other
Major Actions, shall be subject to the unanimous approval of the Partners. If
either Partner refuses to approve the engagement of a particular performer or
show at the Amphitheater on behalf of the Partnership which the other Partner
("Promoting Partner") desires to engage for performance at the Amphitheater,
then the Promoting Partner shall have the light, subject to availability of the
Amphitheater, to rent the Amphitheater from the Partnership on a Cost Only Basis
(herein defined) for purposes of presenting such performer or show for its own
account. As used herein, the term "Cost Only Basis" shall mean, with respect to
any concert or event, the right to rent the Amphitheater from the Partnership
(subject to the Partnership's right to operate, through its concessionaires, all
concession operations at the Amphitheater) in exchange for reimbursing to the
Partnership (i) all of the Partnership's night of show expenses and (ii) the
portion of the Partnership's annual overhead costs which are appropriately
allocable to such concert or event (including rental obligations to NJHA,
insurance costs, utility costs and house staff costs).
12.08 Action Without Meeting. Any action required by the Partnership
Act or by this Agreement to be taken at a meeting of the Partners, or any action
which may be taken at a meeting of the Partners, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the Partners entitled to participate in the management of the Partnership
pursuant to the terms of the Partnership Act and such consent shall have the
same force and effect as a vote of the Partners.
12.09 Transactions with Partners and Affiliates of Partners. Except as
may be expressly contemplated or permitted by the provisions of this Agreement,
the Partnership shall not enter into any contracts, agreements or other business
relationships with either of the Partners or any of the Affiliates of either of
the Partners unless and except (i) all of the terms, provisions and conditions
of such contract, agreement or business arrangement have been fully described
and revealed to the other Partner and (ii) the other Partner has expressly
consented in writing to such contract, agreement or other business relationship.
To the extent that either of the Partners or any of the Affiliates of either of
the Partners should hereafter enter into any contract, agreement or other
business arrangement with the Partnership which satisfies the provisions of the
immediately preceding sentence, all rights accruing to such Partner or such
Affiliate under such contract, agreement or other
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business arrangement shall be the sole and exclusive property of such
contracting party and neither the Partnership nor the other Partner or its
Affiliates shall have any participation rights therein or thereto.
12.10 Loaned Employees. Notwithstanding the provisions of Section 12.09
hereof, but subject to the provisions hereof relating to the Partnership's
Operating Budget, the Managing Partner shall have the express right and
authority to fill the staffing needs of the Partnership by causing employees of
(i) the Managing Partner, (ii) the partners of the Managing Partner, (iii)
Affiliates of the partners of the Managing Partner, (iv) Ardee or (v) Affiliates
of Ardee to provide services to the Partnership on a full- or part-time basis.
Each such employee who is so loaned to the Partnership shall have all or such
appropriate portion of his or her salary and benefit costs reimbursed by the
Partnership to the actual employer of such employee. The Managing Partner shall
include in the proposed Operating Budget submitted pursuant to the provisions of
Section 12.04 hereof for each Amphitheater Fiscal Year a list identifying each
employee that is then being loan to the Partnership pursuant to the provisions
of this Section 12.10 and the details as to the portion of his or her salary and
benefit costs being reimbursed by the Partnership to the actual employer of such
employee.
12.11 Employee/Travel Related Development Costs. To the extent that any
Development Costs consist of (i) the wages, benefits or other related costs of
an employee of either Partner (or the Affiliate of either Partner) performing
duties related to the designing, planning or construction of the Renovation Work
or (ii) the travel and lodging expenses of any such employee incurred in
connection with the designing, planning or construction of the Renovation Work,
it is expressly stipulated, agreed and acknowledged that only that portion of
such wages, benefits, costs and expenses which are appropriately and properly
allocable to the planning, designing and construction of the Renovation Work
shall be included as Development Costs for purposes of this Agreement.
12.12 Special Provisions for Termination of Lease for Excess Artist
Share. Reference is made to the fact that it is currently anticipated that the
Lease will contain provisions creating in favor of the Partnership a right
("Economic Termination Option") to terminate the Lease in the event that (i)
artist costs at the Amphitheater exceed a specified percentage of gross ticket
revenues at the Amphitheater and (ii) the Partnership and NJHA are unable to
mutually agree to modifications to the rental obligations under the Lease. The
following provisions shall apply with respect to the Economic Termination
Option:
(A) Within forty-five (45) days following the conclusion of
each Applicable Time Period (herein defined), the Managing Partner
shall provide to Ardee the Managing Partner's calculation of the Artist
Share (as such term is defined in the Lease Agreement) for such
Applicable Time Period. As used herein, the term "Applicable Time
Period" shall mean any one or more relevant periods of time during
which the Artist Share is to be measured pursuant to the provisions of
the Lease for purposes of determining whether the Economic Termination
Option is available for exercise by the Partnership.
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(B) If one of the Partners ("Terminating Partner") should
desire to exercise the Economic Termination Option at a time when it is
available for exercise, such Partner must provide written notice
thereof at least thirty (30) days prior to the deadline for the
exercise of the Economic Termination Option. If, at any time after
delivery of a notice pursuant to the provisions of the immediately
preceding sentence by a Terminating Partner, NJHA and the Partnership
should mutually agree to modifications to the rental obligations under
the Lease to the satisfaction of both Partners, then such notice shall
automatically, and with no further action required by any party, be
revoked and of no further force or effect.
(C) If the other Partner ("Non-Termination Partner") does not
wish to terminate the Lease pursuant to the Economic Termination
Option, then the Non-Terminating, Partner must provide written notice
thereof to the Terminating Partner and agree to purchase the
Terminating Partner's interest in the Partnership for an amount equal
to (i) the Terminating Partner's Percentage Interest multiplied by (ii)
the Partnership's then unamortized Development Costs (with the express
understanding that the Partnership's Development Costs shall be
amortized for these purposes on a straight-line basis over 240 months
commencing on the first public performance at the Facility following
completion of the Renovation Work).
(D) If the Non-Terminating Partner fails to provide notice of
its decision to purchase the Terminating Partner's interest in the
Partnership on or before the date which is ten (10) days before the
deadline to exercise the Economic Termination Option, then the Managing
Partner shall be obligated to exercise, on behalf of the Partnership,
the Economic Termination Option in a timely manner.
ARTICLE XIII
Other Activities
13.01 Generally. Subject to the provisions of Section 13.02 hereof,
this Agreement shall not preclude or limit in any respect the right of any
Partner to engage or invest in any business activity of any nature or
description, including, those which may be similar to the business of the
Partnership. Neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or any relationships created hereby in or to such other
ventures or activities or to the income or proceeds derived therefrom.
13.02 Restrictions on Competition. Notwithstanding any of the other
provisions contained in this Agreement, the Partners hereby agree, stipulate and
acknowledge as follows:
(a) Fully Restricted Facilities in the Restricted NJ Area.
Subject to the specific exceptions contained in this Section 13.02, the
relationship created by this Agreement shall be an exclusive
arrangement between the Partners (and their Affiliates) for the
booking,
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production, presentation and promotion of live concerts featuring
musical or comedic entertainers at Fully Restricted Facilities in the
Restricted NJ Area. Accordingly, each Partner hereby covenants and
agrees with the Partnership that neither it nor any of its Affiliates
shall, directly or indirectly, become engaged or involved in any manner
whatsoever with respect to the booking, production, presentation or
promotion of any live musical or comedic concert (other than concerts
presented at the Amphitheater) to be presented at a Fully Restricted
Facility in the Restricted NJ Area.
(b) Limited Exception for Waterloo. Notwithstanding the
provisions of clause (a) of this Section 13.02, each Partner (and its
respective Affiliates) shall have a limited right to book, present,
promote and produce live concerts featuring musical or comedic
entertainers at Waterloo which satisfy any one or more of the following
conditions:
(1) an identical live concert featuring the same
musical or comedic entertainers will also be presented at the
Amphitheater during, the same Amphitheater Season;
(2) such live concert (A) cannot be booked for
presentation at the Amphitheater, despite the best efforts of
such Partner to so book such live concert at the Amphitheater,
because the featured musical or comedic entertainers are not
willing to perform at the Amphitheater and (B) such Partner
shall have (i) provided notice to the other Partner that,
notwithstanding the exercise of its best efforts to the
contrary, such Partner has been unable to book such live
concert for appearance at the Amphitheater and that such
Partner (or its Affiliate) intends to attempt to book such
live concert at Waterloo and (ii) agreed to (x) notify the
other Partner of the terms of any offer made for the booking
of such live concert at Waterloo simultaneously with the
making of such offer and (y) make competitive bids on behalf
of the Partnership for the booking, of such live concert at
the Amphitheater as may be directed by the other Partner; or
(3) such live concert cannot be booked for
presentation at the Amphitheater, despite the best efforts of
such Partner to so book such live concert at the Amphitheater,
because there is no available date on the Amphitheater's
calendar which reasonably coincides with the touring schedule
of the musical or comedic entertainers featured in such live
concert.
If either Partner (or any of its Affiliates) intends to book, present, promote
or produce any live concert at Waterloo pursuant to the provisions of this
Section 13.02(b), then such Partner shall be required, as a condition precedent
to the rights created in this Section 13.02, to provide written notice thereof
to the other Partner with a specific description of the concert involved and the
reasons for the provisions of Section 13.02(b) apply to such concert. If
Waterloo should, at any time during the term of this Partnership, be
significantly, materially or substantially improved or upgraded in any manner
which would cause Waterloo to be a facility more comparable to the Amphitheater,
then
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either Partner may, by written notice to the other, terminate the provisions
contained in this Section 13.02(b).
(c) Limited Exception for Downing Stadium. Notwithstanding the
provisions of clause (d) of this Section 13.02, each Partner (and its
respective Affiliates) shall have a limited right to book, present,
promote and produce live concerts featuring, musical or comedic
entertainers at Downing Stadium without being required to comply with
the requirements set forth in clauses (1) through (3) of Section
13.02(d) hereof. If Downing Stadium should, at any time during the term
of this Partnership, be significantly, substantially or materially
improved or upgraded in any manner, then either partner may, by written
notice to the other, terminate the provisions contained in this Section
13.02(c).
(d) Partially Restricted Facilities in the Restricted NJ Area
and Fully Restricted Facilities in the Restricted NY Area. Each Partner
hereby covenants and agrees with the Partnership that neither it nor
any of its Affiliates shall, directly or indirectly, become engaged or
involved in any manner whatsoever with respect to the booking,
production, presentation or promotion of any live musical or comedic
concert (other than Club Shows) to be presented during any Amphitheater
Season in a Partially Restricted Facility in the Restricted NJ Area or
in a Fully Restricted Facility in the Restricted NY Area unless and
except such Partner has first complied with all of the following
requirements:
(1) such Partner shall have exercised its best
efforts to book such live concert for presentation at the
Amphitheater,
(2) such Partner shall have provided notice to the
other Partner that, notwithstanding the exercise of its best
efforts to the contrary, such Partner has been unable to book
such live concert for appearance at the Amphitheater and that
such Partner (or its Affiliate) intends to attempt to book
such live concert at a Partially Restricted Facility in the
Restricted NJ Area or at a Fully Restricted Facility in the
Restricted NY Area; and
(3) such Partner shall have agreed to (i) notify the
other Partner of the terms of any offer made for the booking
of such live concert at any Partially Restricted Facility in
the Restricted NJ Area or at any Fully Restricted Facility in
the Restricted NY Area simultaneously with the making, of such
offer and (ii) make competitive bids on behalf of the
Partnership for the booking of such live concert at the
Amphitheater as may be directed by the other Partner.
(e) Venue Ownership in New Jersey. The relationship created by
this Agreement shall be an exclusive arrangement between the Partners
(and their Affiliates) for the ownership and management of Restricted
Facilities in the NJ Area. Accordingly, each of the Partners (and all
of their respective Affiliates) shall be precluded from being involved
and
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hereby covenants not to become involved in any manner whatsoever,
directly or indirectly, in the ownership or management of any
Restricted Facility in the Restricted NJ Area.
(f) Venue Ownership in New York. Each Partner hereby covenants
and agrees with the Partnership as follows:
(1) Neither Partner (nor its Affiliates) shall become
involved in any manner whatsoever, directly or indirectly, in
the ownership or management of any Defensive NY Amphitheater
unless (i) such ownership or management interest is owned
through a partnership with the other Partner on mutually
agreeable terms or (ii) the other Partner has elected to
refrain from participating in the ownership or management of
such Defensive NY Amphitheater.
(2) Neither Partner (nor its Affiliates) shall become
involved in any manner whatsoever, directly or indirectly, in
the ownership or management of any Offensive NY Amphitheater
unless (A) such Partner (or its Affiliate) shall have complied
with the provisions of Section 13.04 hereof with respect to
such Partner's (or its Affiliate's) interest in such Offensive
NY Amphitheater and (B) either (i) the other Partner
voluntarily agrees that such Offensive NY Amphitheater will
not have a negative impact on the profitability of the
operation and ownership of the Amphitheater or (ii) an
arbitration proceeding conducted in accordance with the
provisions of Section 13.02(g) hereof results in a final
decision that such Offensive NY Amphitheater will not have a
negative impact on the profitability of the ownership and
operation of the Amphitheater.
If either Partner or any of its Affiliates shall acquire any ownership or
management interest with respect to a Defensive NY Amphitheater or an Offensive
NY Amphitheater pursuant to the foregoing provisions, then, so long as such
Partner (or its Affiliate) continues to be involved in the ownership or
management thereof, the restrictions contained in Section 13.02(a) hereof shall
not apply with respect to such Defensive NY Amphitheater or Offensive NY
Amphitheater, as applicable.
(g) Arbitration Proceeding for an Offensive NY Amphitheater.
If either Partner (or any of its Affiliates) proposes to become
involved in the ownership or management of any Offensive NY
Amphitheater, then such Partner shall have the right to commence an
arbitration proceeding pursuant to the provisions of this Section
13.02(g) for the sole purpose of determining whether such Offensive NY
Amphitheater will have a negative impact on the profitability of the
ownership and operation of the Amphitheater. The following provisions
shall govern the commencement and conduct of any such arbitration
proceeding:
(1) The Partner ("Requesting Partner") initiating
such arbitration proceeding shall provide written notice
("Notice Request") to the other Partner of the Requesting
Partner's desire to commence such arbitration proceeding. The
Notice Request shall include a description of the location,
seating capacity (both fixed and
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lawn) and general design of the proposed Offensive NY
Amphitheater which will be the subject of such arbitration
proceeding.
(2) If the parties are unable to mutually select and
designate a person to serve as the arbitrator in such
arbitration proceeding within thirty (30) days after delivery
of the Request Notice, then the American Arbitration
Association will select the person who will serve as the
arbitrator. If possible, the arbitrator will be a person
involved in the live entertainment business, either as a
promoter or facility operator.
(3) Once the arbitrator has been selected, each
Partner shall have forty-five (45) days to prepare and present
to the arbitrator and the other Partner a written statement
("Position Paper") supporting, its position as to whether or
not the Offensive NY Amphitheater in question will have a
negative impact on the profitability of the ownership and
operation of the Amphitheater. In addition, each Partner shall
have fifteen (15) days following receipt of the other
Partner's Position Paper to prepare and present to the
arbitrator and the other Partner a written statement
("Response Paper") responding to the other Partner's Position
Paper.
(4) As soon as reasonably practicable following the
deadline for the provision of each Partner's Position Paper
and Response Paper, the arbitrator will arrange for a meeting
("Final Hearing") with both Partners at which each Partner
will be given the opportunity to present an oral presentation
in the presence of the other Partner and the arbitrator in
support of its position. The arbitrator will set the rules for
the conducting of the Final Hearing.
(5) Within fifteen (15) days of the Final Hearing,
the arbitrator will provide notice to each Partner of his
determination as to whether the Offensive NY Amphitheater in
question will have a negative impact on the profitability of
the ownership and operation of the Amphitheater. The
determination of the arbitrator will be final and binding on
both parties for all purposes hereof.
(6) For all purposes of this Section 13.02, an
Offensive NY Amphitheater will only be deemed to "have a
negative impact on the profitability of the ownership and
operation of the Amphitheater" if the construction,
development and subsequent use and operation of such Offensive
NY Amphitheater is more likely than not to result in, all else
being equal, a seven and one-half percent (7-1/2%) or more
reduction in the gross revenues derived by the Partnership
from the use and operation of the Amphitheater.
(7) The Partners acknowledge that the mere
designation and creation of the Restricted NY Area in this
Agreement shall not constitute an admission by either Partner
that the construction of a Fully Restricted Facility in the
Restricted NY Area
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will automatically result in a negative impact on the
profitability of the ownership and operation of the
Amphitheater.
(h) Effect of Affiliate Violation. If an Affiliate of either
Partner should engage in any activity prohibited by, or otherwise
violate the restrictions contained in, this Section 13.02, then, as
between the Partners, such Partner shall be deemed to have violated the
provisions of this Section 13.02.
(i) Covenant as to Use of Certain Information. Each Partner
covenants and agrees with the other that it will not make use of any of
the Applicable Booking Information in connection with decisions related
to the making, of booking offers at facilities (other than the
Amphitheater) in which such Partner or any of the Affiliates of such
Partner have any financial or ownership interest. As used in the
immediately preceding sentence, the term "Applicable Booking
Information" shall mean information provided by one Partner to the
other Partner concerning the terms of any offer made for the booking of
a live concert at a facility other than the Amphitheater pursuant to
the provisions contained in Section 13.02(b)(2)(B)(ii)(x) hereof or
Section 13.02(d)(3)(i) hereof.
13.03 Remedies and Enforceability. If the provisions of Section 13.02
should be held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration or area or all of them, and such provisions shall
then be applicable in such modified form. Since a violation of the provisions of
Section 13.02 will result in irreparable harm, the non-defaulting party shall be
entitled to an injunction restraining the commission or continuation of any
violation of the provisions of Section 13.02 or any other appropriate decree of
specific performance. Such remedies shall not be exclusive and shall be in
addition to any other remedy expressly provided for under the terms of this
Agreement or permitted at law or in equity.
13.04 Terms of Offer. If either Partner (or any of its Affiliates)
("Developing Partner") desires to become involved in any manner whatsoever,
directly or indirectly, in the ownership or management of any Offensive NY
Amphitheater, then the Developing Partner shall extend an offer to the Other
Partner ("Passive Partner") to acquire one-third (1/3rd) of the Developing
Partner's interest in such Offensive NY Amphitheater in accordance with the
following terms, provisions and requirements:
(a) The Developing Partner shall provide prompt written notice
to the Passive Partner upon the commencement of negotiation concerning
the Developing Partner's involvement in any proposed Offensive NY
Amphitheater.
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(b) Upon request of the Passive Partner at any time following
the notice given pursuant to clause (a), the Developing Partner shall
provide an oral report as to the current status of the proposed
development of such Offensive NY Amphitheater.
(c) The Developing Partner shall provide to the Passive
Partner copies of all written drafts, letters, budgets or other
documentation pertaining to the development of such proposed Offensive
NY Amphitheater.
(d) Within five (5) days following, the execution of a binding
agreement ("Development Agreement") pursuant to which the Developing
Partner agrees to become involved in any manner whatsoever, directly or
indirectly, in the ownership or management of such proposed Offensive
NY Amphitheater, the Developing Partner shall provide a true, correct,
complete and accurate copy thereof to the Passive Partner.
(e) Following, receipt of such Development Agreement, the
Passive Partner shall have the right and option ("Qualified Option"),
exercisable in its sole discretion, to acquire one-third of the
Developing Partner's interest in and to such proposed Offensive NY
Amphitheater under and pursuant to the terms of the Development
Agreement in exchange for the payment by the Passive Partner to the
Developing Partner of one-third of its costs incurred to date, and the
assumption of one-third of the Developing Partner's ongoing financial
obligations, in connection with such proposed Offensive NY
Amphitheater.
(f) The Qualified Option may be exercised by the Passive
Partner at any time within thirty (30) days after receipt of such
Development Agreement by providing written notice thereof to the
Developing, Partner.
(g) If, at any time after delivery of such Development
Agreement to the Passive Partner, whether before or after the deadline
for the Passive Partner's decision to exercise the Qualified Option,
(i) any of the terms or provisions contained in the Development
Agreement should be modified or (ii) the design, size or scope of such
proposed Offensive NY Amphitheater should be materially, significantly
or substantially modified, then the Developing Partner shall provide
prompt written notice of such modification to the Passive Partner, and
the Qualified Option shall be extended until the date which is thirty
(30) days after the provision of such notice.
13.05 Modification of Affiliate Definition. For all purposes of this
Agreement, the following provisions shall supplement and amend the definition of
the term "Affiliate":
(a) Irrespective of whether Ron Delsener owns any capital
stock of Ardee, Ron Delsener shall be deemed to be an Affiliate of
Ardee for all purposes hereof until the date which is five (5) years
after completion of a transfer by sale of a controlling ownership
interest in Ardee to a third party purchaser that is not related to or
affiliated with Ron Delsener or Mitch Slater or, if later, the date on
which Ron Delsener's employment with
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Ardee and all of its Affiliates is terminated. Notwithstanding the
foregoing, for purposes of Section 12.03(f) only, Ron Delsener shall
not be deemed to be an Affiliate of Ardee at any time after the
completion of a transfer by sale of a controlling, ownership interest
in Ardee to a third party purchaser that is not related to or
affiliated with Ron Delsener or Mitch Slater or, if later, the date on
which Ron Delsener's employment with Ardee and all of its Affiliates is
terminated.
(b) At all times during the term of this Partnership, Brian
Becker shall be an Affiliate of Pavilion. The provisions of this clause
(b) shall apply irrespective of whether Brian Becker controls Pavilion.
(c) Irrespective of whether Mitch Slater owns any capital
stock of Ardee, Mitch Slater shall be deemed to be an Affiliate of
Ardee for all purposes hereof until the date which is five (5) years
after completion of a transfer by sale of a controlling ownership
interest in Ardee to a third party purchaser that is not related to or
affiliated with Ron Delsener or Mitch Slater or, if later, the date on
which Mitch Slater's employment with Ardee and all of its Affiliates is
terminated. Notwithstanding the foregoing, for purposes of Section
12.03(f) only, Mitch Slater shall not be deemed to be an Affiliate of
Ardee at any time after the date on which Mitch Slater's employment
with Ardee and all of its Affiliates is terminated.
(d) Irrespective of whether Louis Messina owns any capital
stock of PACE Entertainment Corporation ("PACE"), Louis Messina shall
be deemed to be an Affiliate of Pavilion for all purposes hereof until
the date which is three (3) years after the date on which Louis
Messina's employment with PACE and all of its Affiliates is terminated.
ARTICLE XIV
[Intentionally Left Blank]
ARTICLE XV
Defaults and Remedies
15.01 Default by Partner. If any Partner ("Defaulting Partner") fails
to timely perform any of its obligations contained in this Agreement, or
materially violates the terms of this Agreement, then the other Partner
("Non-Defaulting Partner") shall have the right to give the Defaulting Partner a
notice ("Default Notice") specifically setting forth the nature of such failure
or violation and stating that the Defaulting Partner shall have a period of ten
(10) days to pay any sums of money specified therein as due and owing, to the
Partnership or to any Partner or, if the failure or violation is a non-monetary
default and is capable of being cured, thirty (30) days to cure such default
specified therein. If the monies specified in the Default Notice are not paid
within such ten (10) day period, or if such non-monetary failures or violations
are not capable of being cured or, if capable of being cured, such Defaulting
Partner has not cured such non-monetary failures or violations within such
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thirty (30) day period (if such non-monetary default is not capable of being
cured within thirty (30) days and if efforts to cure such non-monetary default
have commenced and are continuing, then within a ninety (90) day period), then a
"Partner Default" shall be deemed to have occurred with respect to such
Defaulting Partner. If a Defaulting Partner cures in all material respects all
of its failures or violations which are capable of being cured within the
aforesaid notice and cure periods, then such defaults shall be deemed no longer
to exist and such Partner shall be deemed no longer to constitute a Defaulting
Partner.
15.02 Rights and Remedies. Upon the occurrence of a Partner Default,
the Non-Defaulting Partner and the Partnership shall each have the following
rights, options and remedies which shall be cumulative and may be exercised
concurrently or independently in the sole and absolute discretion of the
Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of the
Partnership or the Non-Defaulting Partner in order to recover the
amounts owed, if any, and any incidental or consequential damages
arising from such default (including, without limitation, reasonable
attorneys' fees and disbursements incurred by the Partnership or the
Non-Defaulting Partner, as the case may be, in prosecuting any such
action).
(b) The right to bring any proceeding in the nature of
injunction, specific performance or other equitable remedy, it being
acknowledged by each of the Partners that damages at law may be an
inadequate remedy for such default.
(c) If a sum of money is owed to the Partnership, the
Non-Defaulting, Partner may advance the sum of money owed to the
Partnership by the Defaulting Partner with the following results:
(i) The sum thus advanced shall be deemed to be a
loan from the Non- Defaulting Partner to the Defaulting
Partner;
(ii) The principal balance of such deemed loan shall
be due and payable in whole upon written demand from the
Non-Defaulting Partner to the Defaulting Partner;
(iii) The principal balance of such deemed loan shall
bear interest at the Permitted Rate compounded monthly; and
(iv) All distributions from the Partnership that
would otherwise be made to the Defaulting, Partner (whether
before or after dissolution of the Partnership) shall,
instead, be paid to the Non-Defaulting, Partner until such
loan and all interest accrued thereon has been repaid in full.
(d) If a sum of money is owed to the Non-Defaulting Partner,
the Non-Defaulting Partner may require that all distributions that
would otherwise be made to the Defaulting
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Partner (whether before or after dissolution of the Partnership) shall,
instead, be paid to the Non-Defaulting, Partner until all such amounts
owed have been repaid in full.
(e) If a Partner Default should occur with respect to Pavilion
by reason of a failure to perform or fulfill any monetary obligation
created pursuant to the terms of this Agreement, and if Ardee has
advanced the sum of money necessary to cure such failure, then Ardee,
as the Non-Defaulting Partner, shall have the express right and
authority, by notice to Pavilion, to remove Pavilion as the Managing
Partner and substitute Ardee as the Managing Partner for all purposes
under this Agreement in consideration for a reasonable fee to be
thereafter paid by the Partnership.
(f) If a Partner Default should occur with respect to Ardee,
then Pavilion shall have the right, as the Non-Defaulting, Partner, by
notice to Ardee, to (i) terminate Ardee as the party primarily
responsible for booking or otherwise engaging talent for appearance at
the Amphitheater as specified in Section 12.03 hereof and (ii) either
(A) assume the responsibility for the activities related to booking or
otherwise engaging talent for appearance at the Amphitheater in
consideration for a reasonable fee to be thereafter paid by the
Partnership or (B) engage a third party to perform and fulfill the
responsibility related to booking or otherwise engaging talent for
appearance at the Amphitheater upon terms reasonably acceptable to
Pavilion.
ARTICLE XVI
Dispute Resolution and Confidentiality
16.01 Generally. Except for disagreements involving, the taking of a
proposed Major Operational Action, which shall be governed by the provisions of
Section 12.07 hereof, in the event of any dispute, difference or question
("Dispute") between any of the Partners or assignees of the Partners or the
Partnership ("Disputing Parties"), which cannot be otherwise informally resolved
by the Disputing Parties themselves, the Disputing Parties will utilize the
procedures specified in this Article XVI (the "Procedure") to resolve the
Dispute. The Disputing Party seeking to initiate the Procedure (the "Initiating
Party") shall give written notice to the other Partners, assignees of the
Partners and the Partnership, describing, in general terms the nature of the
Dispute, the Initiating Party's claim for relief and identifying one or more
individuals with authority to settle the Dispute on such Party's behalf. The
Disputing Parties receiving such notice (the "Responding Party", whether one or
more) shall have ten (10) business days within which to designate by written
notice to the Initiating Party, one or more individuals with authority to settle
the Dispute on such Party's behalf The individuals so designated shall be known
as the "Authorized Individuals."
16.02 Negotiations. The Authorized Individuals shall be entitled to
make such investigation of the Dispute as they deem appropriate, but agree to
promptly, and in no event later than thirty (30) days from the date of the
Initiating Party's written notice, meet to discuss resolution of the Dispute.
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The Authorized Individuals shall meet at such times and places and with such
frequency as they may agree. The Disputing Parties agree to participate in good
faith in the direct negotiations to resolve the Dispute. If the Dispute has not
been resolved within thirty (30) days from the date of their initial meeting,
the Disputing Parties shall cease direct negotiations and shall submit the
Dispute to arbitration in accordance with the following procedure.
16.03 Arbitration. All Disputes will be settled by arbitration by an
arbitrator mutually acceptable to the Disputing Parties in an arbitration
proceeding conducted in (i) Houston, Texas (if Ardee is the Initiating Party) or
(ii) in New York, New York (if Pavilion is the Initiating Party), in accordance
with the rules as then in effect of the American Arbitration Association. If the
Disputing, Parties hereto cannot agree on an arbitrator within ten (10) business
days of the initiation of the arbitration proceeding, an arbitrator shall be
selected for the Disputing Parties by the American Arbitration Association. The
decision of such arbitrator shall be final (except that errors of law shall be
subject to appeal) , and judgment upon the award rendered by the arbitration may
be entered in any court having jurisdiction thereof. The costs (including,
without limitation, reasonable fees and expenses of counsel and experts for the
Disputing Parties) of such arbitration (including the costs to enforce or
preserve the rights awarded in the arbitration) shall be borne by the Disputing
Parties in the amounts and proportions specified by the arbitrator in his final
decision.
Section 16.04 Confidentiality. No Partner (or assignee) shall, directly
or indirectly, disclose or provide to any other person (other than the partners,
Affiliates, attorneys, employees, agents and representatives of such Partner)
any nonpublic information of a confidential nature concerning the business or
operations of the Partnership (including, without limitation, any and all
Partnership business records, data, or other information regarding the business
of the Partnership or the Partnership assets), except as is required by law or
statute (including federal securities laws) or in governmental filings or
judicial, administrative or arbitration proceedings or as authorized by the
Managing Partner in furtherance of the Partnership Purposes. In the event that
any Partner is required in connection with judicial, administrative or
arbitration proceedings (by oral questions, interrogatories, requests for
information or document subpoena, civil investigative demand or similar process)
to disclose any such information, that Partner shall provide the other Partner
with prompt prior notice of such request so that the other Partner may seek an
appropriate protective order to take other appropriate action. Each Partner (and
assignee) agrees that any unauthorized disclosure of such information would not
be adequately compensable in damages and, thus, agrees that, in the event of any
such disclosure, the Partnership shall, in addition to any claim for damages for
breach of this Agreement, be entitled to seek and obtain equitable relief by way
of injunction or otherwise in a court of competent jurisdiction. This
confidentiality provision may be enforced by specific performance.
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ARTICLE XVII
Dissolution and Termination
17.01 Dissolution. The Partnership shall be dissolved upon the
occurrence of any of the following:
(a) The unanimous agreement of the Partners;
(b) The expiration of the Partnership's term as specified pursuant to
Article IV hereof,
(c) The sale, transfer, assignment or termination of all or
substantially all of the Partnership's ownership interest in the Amphitheater
including, without limitation, termination of the Lease Agreement upon
expiration of its term or otherwise; or
(d) If the Lease Agreement has not been executed and entered into by
and between the Partnership and NJHA on or before January 31, 1997, then upon
the election of either Partner at any time thereafter and before execution of
the Lease Agreement, such election to be made by notice to the other Partner.
The dissolution shall be effective on the day on which the event occurs causing,
dissolution ("Effective Date of Dissolution"), but the Partnership shall not
terminate until the assets have been distributed in accordance with the
provisions of this Agreement.
17.02 Nondissolution Events. None of the following, events shall
constitute or cause the dissolution of the Partnership, with the result that,
upon the happening of any one or more of these events, no one shall have the
right to compel the termination and liquidation of the Partnership:
(i) the bankruptcy, dissolution or liquidation of a Partner; or
(ii) the withdrawal of a Partner.
Each Partner waives its right and power either to dissolve the Partnership, or
to seek a court decree of dissolution.
17.03 Distributions Upon Dissolution. On dissolution of the
Partnership, the Partners shall proceed diligently to wind up the affairs of the
Partnership and distribute its assets. The Managing Partner shall decide which
Partnership assets are to be sold for cash and which are to be distributed in
kind. The Partnership's assets, or the proceeds of their sale, shall be applied
or distributed in the following order of priority:
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(a) In payment of all liabilities of the Partnership to
creditors other than Partners. If any liability is contingent or
uncertain in amount, a reserve equal to the maximum amount for which
the Partnership could be reasonably held liable shall be established.
Upon the satisfaction or other discharge of that contingency, the
amount of the reserve not required, if any, will be treated as income
to the extent previously treated as a deduction.
(b) In payment of any loans owed by the Partnership to any
Partner.
(c) After all adjustments required to be made to the Capital
Accounts of the Partners pursuant to the provisions hereof as a result
of the allocation of all of the Partnership's income, gains, losses and
deductions through the Partnership's final Tax Year have been
completed, to the Partners in proportion to and to the extent of the
balances in their respective Capital Accounts.
ARTICLE XVIII
Transfer Restrictions
18.01 Partner Interest. Except for a transfer of a Partnership Interest
as permitted in strict accordance with the provisions of Sections 18.04 or 18.05
hereof, neither Partner shall have the right to sell, assign, convey, transfer,
pledge, mortgage or hypothecate, by operation of law or otherwise, all or any
portion of its Partnership Interest without the prior consent of the other
Partner, it being agreed and acknowledged that such consent may be withheld in
such other Partner's sole discretion for any reason whatsoever. Any purported
sale, assignment, mortgage, conveyance, transfer, pledge or hypothecation of any
Partner's Partnership Interest in violation of the provisions of this Section
18.01 shall be voidable at the option of the other Partner.
18.02 Ardee's Stock.
(a) No capital stock of Ardee may, at any time, be issued to,
sold, conveyed or otherwise transferred to any Person other than to Ron
Delsener, Mitch Slater or any person taking under either such
individual's Last Will and Testament upon his death except in
accordance with the following provisions:
(1) Issued and outstanding shares of capital stock of
Ardee may be sold to a third party purchaser provided that
prior notice thereof ("Ardee Stock Sale Notice") is provided
to Pavilion. To be validly provided, an Ardee Stock Sale
Notice must include the identity of the purchaser, the number
of shares being sold, the resulting ownership of the issued
and outstanding capital stock upon completion of the sale and
a copy of any employment contracts to be entered into upon
completion of the sale between Ardee, as employer, and Ron
Delsener or Mitch Slater, as employees. Copies of any
employment contracts to be provided to Pavilion pursuant
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to the provisions of the immediately preceding sentence may,
at the option of Ardee, be modified to eliminate references to
the terms of compensation payable to the employees thereunder
and shall, in any event, be subject to the confidentiality
provisions set forth in Section 16.04 hereof.
(2) If, at any time following completion of a sale of
capital stock of Ardee permitted by the provisions of clause
(1) of this Section 18.02(a), one or both of Ron Delsener and
Mitch Slater do not control the operation of Ardee, by
contract, voting control or otherwise, then Pavilion shall
have the right and option, by notice to Ardee, to terminate
all management rights, powers and authorities granted to Ardee
pursuant to the provisions of this Agreement, including
(without limitation) (i) the right to approve Major Actions
pursuant to Section 12.01 hereof, (ii) the right to act as the
party primarily responsible for booking talent at the
Amphitheater and for advertising concerts at the Amphitheater
pursuant to Section 12.03 hereof and (iii) the right to
approve the adoption of Annual Operating Budgets pursuant to
Section 12.04 hereof. In order to avoid ambiguity, uncertainty
or doubt, it is hereby expressly stipulated and acknowledged
by the Partners that an exercise of Pavilion's right created
pursuant to the provisions of the immediately preceding
sentence to terminate all management rights, powers and
authorities granted to Ardee pursuant to the provisions of
this Agreement shall not have the effect of modifying the
provisions contained herein relating to the financial rights
or obligations of Ardee under this Agreement (such as, by way
of example, capital contribution obligations and rights to
receive distributions) or in any way alter the requirements of
Section 19.04 that amendments to this Agreement shall require
the approval of all of the Partners.
(b) Simultaneously with the execution of this Agreement, Ardee
shall cause (A) Ron Delsener to execute a certificate or other
instrument in form reasonably acceptable to Pavilion in which he
confirms that (i) he is the owner of all of the issued and outstanding
capital stock of Ardee (subject to that certain Stock Purchase
Agreement ("SFX Stock Agreement") dated October 11, 1996 and entered
into with SFX Broadcasting, Inc., a copy of which has been previously
provided to Pavilion), (ii) his stock ownership interest in Ardee will
be burdened by and encumbered with the transfer restrictions contained
in this Section 18.02 and (iii) all share certificates evidencing the
capital stock in Ardee will include an appropriate legend which
references the transfer restrictions contained in this Section 18.02
and (B) SFX Broadcasting, Inc. to execute a certificate or other
instrument in form reasonably acceptable to Pavilion confirm that the
execution of this Agreement is approved by SFX Broadcasting, Inc. and
is not a violation of any term, provision or covenant contained in the
SFX Stock Agreement.
18.03 Ownership Interests in Pavilion. No ownership interest in
Pavilion may, at any time, be issued to, sold, conveyed or otherwise transferred
to any Person other than to PACE Entertainment Corporation, a Texas corporation,
Sony Music Entertainment, Inc., a Delaware
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corporation, Viacom Inc., a Delaware corporation, or any Affiliate of any such
party without the prior written consent of Ardee.
18.04 Sale of Partnership Interest. If (i) one Partner ("Selling
Partner") receives a written offer from a third party ("Proposed Purchaser") to
purchase all or substantially all of the Partnership's interest in the
Amphitheater which the Selling Partner desires to accept on behalf of the
Partnership and (ii) the other Partner ("Non-Selling Partner") is unwilling to
consent to the sale of the Amphitheater to the Proposed Purchaser upon the terms
and conditions contained in such offer, then the Selling Partner shall have the
right, subject to the provisions of Section 18.06 hereof, to sell all, but not
less than all, of its Partnership Interest if, but only if, the Selling Partner
complies with all of the following provisions:
(a) The Selling Partner shall provide prompt written notice to
the Non-Selling Partner upon the commencement of negotiation concerning
any proposed sale of the Selling- Partner's Partnership Interest to the
Proposed Purchaser.
(b) Upon request of the Non-Selling Partner at any time
following the notice given pursuant to clause (a), the Selling Partner
shall provide an oral report as to the status of the negotiations for
the proposed sale of the Selling Partner's Partnership Interest to the
Proposed Purchaser.
(c) The Selling Partner shall provide to the Non-Selling
Partner copies of all written drafts, letters or other documentation
pertaining to such proposed sale of the Selling Partner's Partnership
Interest to the Proposed Purchaser.
(d) Within five (5) days following the execution of a
definitive agreement ("Purchase Agreement") pursuant to which the
Selling Partner agrees to sell its Partnership Interest to the Proposed
Purchaser, the performance of each party thereto being conditioned
expressly upon the provisions of this Section 18.04, the Selling
Partner shall provide a true, correct, complete and accurate copy
thereof to the Non-Selling Partner.
(e) Following receipt of a Purchase Agreement, the Non-Selling
Partner shall have the right and option ("Purchase Option"),
exercisable in its sole discretion, to purchase the Selling Partner's
Partnership Interest upon the same terms, provisions and conditions
contained in such Purchase Agreement.
(f) The Purchase Option may be exercised by the Non-Selling,
Partner at any time within thirty (30) days after receipt of a Purchase
Agreement by providing written notice thereof to the Selling Partner.
If the Non-Selling Partner should exercise the Purchase Option in a
timely manner, then the Selling Partner shall be required, at the
closing of the sale of the Selling Partner's Partnership Interest to
the Non-Selling Partner, to execute such reasonable documentation as
may be requested or required by the NonSelling Partner to indicate the
Selling Partner's agreement that it and its Affiliates will continue to
be bound
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by the restrictions, limitations and covenants contained in the Article
XIII of this Agreement for a period commencing on the date of the
closing of such sale to the Non-Selling Partner and continuing through
and until the third (3rd) anniversary date of the closing of such sale.
The closing of the sale of a Selling Partner's Partnership Interest to
a Non-Selling Partner pursuant to a timely exercise of the Purchase
Option shall occur on or before the later of (i) sixty (60) days
following the exercise of the Purchase Option or (ii) the outside date
for closing the transaction contemplated by the Purchase Agreement
which was the subject of the Purchase Option.
(g) If, at any time after delivery of a Purchase Agreement to
the Non-Selling Partner, whether before or after the deadline for the
Non-Selling Partner's decision to exercise the Purchase Option, any of
the terms or provisions contained in such Purchase Agreement should be
amended by agreement between the Selling Partner and the Proposed
Purchaser, then the Selling Partner shall provide prompt written notice
of such modification to the Non-Selling Partner, and the Purchase
Option shall be extended until the date which is thirty (30) days after
the provision of such notice of such amendment.
(h) If the Non-Selling Partner does not exercise the Purchase
Option within thirty (30) days after receipt of a Purchase Agreement
(or, if applicable, after receipt of notification pursuant to clause
(g) of an amendment to a Purchase Agreement), then the Selling Partner
may thereafter complete the proposed sale of its Partnership Interest
to the Proposed Purchaser upon the same terms, conditions and
provisions contained in the Purchase Agreement previously provided to
the Non-Selling Partner in accordance with the provisions thereof,
provided that the following provisions are complied with at the closing
of the sale:
(1) The Proposed Purchaser must execute such
reasonable documentation as may be requested or required by
the Non-Selling Partner to indicate the Proposed Purchaser's
agreement to be bound by all of the terms, provisions,
agreements, covenants and restrictions contained herein to the
same extent, and in the same manner as if, the Proposed
Purchaser had been an original party hereto.
(2) The Selling Partner must execute such reasonable
documentation as may be requested or required by the
Non-Selling Partner to indicate the Selling Partner's
agreement that it and its Affiliates will continue to be bound
by the restrictions, limitations and covenants contained in
Article XIII of this Agreement for a period commencing on the
date of the closing of such sale to the Proposed Purchaser and
continuing through and until the third (3 )rd) anniversary
date of the closing of such sale.
Upon completion of such sale of the Selling Partner's Partnership
Interest to the Proposed Purchaser in accordance with the foregoing
provisions, the Proposed Purchaser shall be admitted as a new Partner
in the Partnership in place of the Selling Partner.
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18.05 Transfers/Pledges to Owners. The following limited exceptions
shall apply to the restrictions created in Section 18.01 hereof:
(a) Pavilion, with prior notice to Ardee, may transfer or
pledge its Partnership Interest to any one or more of PACE
Entertainment Corporation, Sony Music Entertainment Inc., Viacom Inc.
or a Person wholly-owned by one or more of such corporations.
(b) Ardee, with prior notice to Pavilion, may transfer or
pledge its Partnership Interest to any one or more of Ron Delsener,
Mitch Slater or a Person wholly-owned by one or both of such
individuals.
Upon (i) completion of any transfer of a Partner's Partnership Interest
(including a foreclosure of a pledge previously made pursuant to the provisions
of this Section 18.05) permitted by the foregoing provisions of this Section
18.05 and (ii) the acquiring party executing such reasonable documentation as
may be required by the other Partner to indicate the acquiring party's agreement
to be bound by all of the terms, provisions, agreements, covenants and
restrictions contained herein to the same extent, and in the same manner as if,
such acquiring party had been an original party hereto, the acquiring party
shall be admitted as a new Partner in the Partnership in place of the
transferring Partner.
18.06 No Violation of Lease Agreement. Notwithstanding anything to the
contrary contained in this Article XVIII, neither Partner shall have the right
to transfer its Partnership Interest to a third party, or permit a transfer of
any ownership interest, direct or indirect, in such Partner in a manner which
could result in a violation of any restriction, covenant or provision contained
in the Lease Agreement or could otherwise cause the Tenant to be in default
under any provision of the Lease Agreement. Any purported transfer of a
Partnership Interest by either Partner or of any ownership interest, direct or
indirect, in either Partner which violates the provisions contained in the
immediately preceding sentence shall (i) be null and void, ab initio and (ii) be
deemed to be the occurrence of a Partner Default with respect to such Partner.
ARTICLE XIX
Miscellaneous Provisions
19.01 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing, and shall be deemed to
have been duly given if delivered personally with receipt acknowledged or sent
by registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile, telex or cablegram (which shall be confirmed by a
writing sent by registered or certified mail or equivalent on the same day that
such facsimile, telex or cablegram is sent), or by recognized overnight courier
for next day delivery, addressed or sent to the parties at the following,
addresses and facsimile
42
<PAGE>
numbers or to such other additional address or facsimile number as any party
shall hereafter specify by Communication to the other parties:
Pavilion: c/o SM/PACE, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: (713) 693-8617
ATTN: Mr. Jeffrey B. Lewis
with a copy to: Michael F. Rogers
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77009
Facsimile No.: (713) 308-5555
and
Sony Music Entertainment Inc.
550 Madison Avenue
New York, New York 10022-3211
ATTN: David H. Johnson
Facsimile No.: (212) 8333-8083
and
Sony Music Entertainment Inc.
550 Madison Avenue
New York, New York 10022-3211
ATTN: Marvin Cohn
Facsimile No.: (212) 833-4007
Ardee: Exit 116 Revisited, Inc.
27 East 67th Street
New York, New York 10021
ATTN: Ron Delsener
Facsimile No.: (212) 879-1926
with a copy to: Saretsky Katz & Dranoff, P.C.
950 Third Avenue
New York, N.Y. 10022
ATTN: Mr. Alan G. Katz
43
<PAGE>
19.02 Delaware Law to Apply. This Agreement shall be construed under
and in accordance with laws of the State of Delaware.
19.03 Other Instruments. The parties hereto covenant and agree that
they will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the Partnership
created by this Agreement.
19.04 Amendment. This Agreement may be amended or modified by the
Partners from time to time but only upon approval by all of the Partners
contained in a written instrument.
19.05 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of terms of this Agreement.
19.06 Parties Bound. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
19.07 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision thereof and this
Partnership Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
19.08 Counterparts. This Partnership Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original.
19.09 Gender. Wherever the context shall so require, all words herein
in the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
19.10 Affiliate Liability. Notwithstanding anything to the contrary
contained herein, or implied hereby, in no event shall any Person, except for
the Partners and the general partners of Pavilion, be liable for the
responsibilities, obligations or liabilities of either of the Partners
hereunder. In that connection, it is specifically agreed and acknowledged that,
except for the general partners of Pavilion, no officer, shareholder, director
or other Affiliate of a Partner shall be liable for any of the responsibilities,
liabilities or obligations of any Partner hereunder.
19.11 Prior Agreements Superseded. This Agreement (i) is an amendment
and restatement of the Partnership Agreement dated May 31, 1996 and entered into
by and between the Partners and (ii) supersedes any prior understandings or
written or oral agreements between the parties respecting the within subject
matter.
44
<PAGE>
19.12 Failure to Execute Lease Agreement.
(a) Except as expressly provided in clause (b) of this Section
19.12, neither Partner (nor any of its Affiliates) shall execute at any
time a Lease Agreement with NJHA providing for the use, operation and
possession of the Amphitheater during the 1997 Amphitheater Season
unless such Lease Agreement is in favor of the Partnership and approved
for execution by both of the Partners. The provisions of this Section
19.12 shall (i) survive dissolution and termination of the Partnership
and (ii) not preclude Ardee and its Affiliates from booking the
Amphitheater consistent with past practices after dissolution and
termination of the Partnership.
(b) If, upon final completion of negotiations with NJHA of the
terms to be included in the Lease Agreement, one of the Partners
refuses to approve the execution of the final negotiated form of the
Lease Agreement ("Final Lease Form"), then the other Partner shall have
the right, notwithstanding the provisions of clause (a) of this Section
19.12, to thereafter execute and enter into, on its own behalf or
together with other partners, a Lease Agreement with NJHA upon the same
terms and provisions contained in the Final Lease Form.
(The remainder of this page is intentionally blank.]
45
<PAGE>
EXECUTED as of the day and year first written above.
PAVILION PARTNERS, a
Delaware general partnership
By: SM/PACE, Inc., a Texas corporation
By: /s/ Brian E. Becker
----------------------------
Name: BRIAN E. BECKER
Title: CHIEF EXECUTIVE OFFICER
EXIT 116 REVISITED, INC.,
a New Jersey corporation
By: /s/ Mitchell Slater
-------------------------------------
Name: Mitchell Slater
Title: President
<PAGE>
Exhibit "A- I
Restricted NJ Area
The "Restricted NJ Area" shall consist of the entire state of New
Jersey except for (i) the counties of Camden, Gloucester, Salem and Cumberland
and (ii) the portion of Burlington County which lies west of Highway 206.
<PAGE>
Exhibit "A-2"
Restricted NY Area
The "Restricted NY Area" shall consist of all of the following:
(a) That portion of Westchester County, New York which lies south of
Tarrytown, New York and within two and one-half (2-1/2) miles of the eastern
shoreline of the Hudson River.
(b) That portion of Bronx County, New York which lies within two and
one-half (2-1/2) miles of the eastern shoreline of the Hudson River.
(c) All of Manhattan Island, New York.
(d) That portion of Kings County, New York which lies west of Flatbush
Avenue.
(e) All of Staten Island, New York.
(f) All of Rockland County, New York.
<PAGE>
PNC BANK ARTS CENTER CONSTRUCTION BUDGET
Budget
Cost Item Budget Souce 11/19/96
- --------------------------------------------------------------------------------
CONSTRUCTION HARD COST
Cost Item Budget Source Budget 11/19/96
- --------------------------------------------------------------------------------
[DELETED]
- --------------------------------------------------------------------------------
CONSTRUCTION HARD COST SUBTOTAL 5,572,338
- --------------------------------------------------------------------------------
[DELETED]
Subtotal 6,140,626
EXHIBIT B
<PAGE>
PNC BANK ARTS CENTER CONSTRUCTION BUDGET
Budget
Cost Item Budget Souce 11/19/96
- --------------------------------------------------------------------------------
TOTAL GNP HARD COST 6,575,626
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INSTALLED EQUIPMENT
- --------------------------------------------------------------------------------
[DELETED]
- --------------------------------------------------------------------------------
INSTALLED EQUIPMENT SUBTOTAL 665,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GRAND TOTAL HARD COST 7,240,626
- --------------------------------------------------------------------------------
EQUIPMENT
[DELETED]
EXHIBIT B
<PAGE>
PNC BANK ARTS CENTER CONSTRUCTION BUDGET
OSNOVBUD
Budget
Cost Item Budget Souce 11/19/96
[DELETED]
- --------------------------------------------------------------------------------
EQUIPMENT SUBTOTAL 978.375
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A & E CONSULTANTS AND MISC
- --------------------------------------------------------------------------------
[DELETED]
- --------------------------------------------------------------------------------
A & E CONSULTANTS AND MISC. SUBTOTAL 796,960
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OVERHEAD 1.42% 130,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL PROJECT COSTS 9,145,961
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Overhead Detail Analysis
Total Overhead 130,000
- --------------------------------------------------------------------------------
EXHIBIT B
<PAGE>
EXHIBIT "C"
1. Parking Lot Improvements - A sufficient number of new onsite parking
spaces will be constructed by expanding existing parking lots and
creating new parking areas. Not less than 1,700 new onsite parking
spaces will be built, prior to the Opening Date. Additional on-site
parking built at any time after the Commencement Date will be
considered part of the Renovation Work for purposes of this Lease. The
parking lots will be lighted and include drainage, storm water
collection systems and detention basins so that there will be no net
increase in the present runoff. The parking lots will consist of 4
inches of dense graded aggregate base course, 3 inches of a stabilized
base course, I-2 and 1 1/2inches of bituminous concrete surface course,
I-4. Parking lot areas will be evaluated in an effort to obtain
sufficient cut on site to accommodate the required fill but outside
fill may be required.
2. On Site Facility Improvements -
(a) Main Plaza Improvements - A new box office will be constructed at the
front of the main entry as well as entry gates and structures
consisting of 11 regular gates and 1 handicapped gate. The existing
buildings within the main plaza area will be reconfigured to create a
concession area and additional restroom facilities. Without negating
Tenant's general obligations to repair and maintain the Amphitheater
through the Term, it is hereby expressly recognized, agreed and
acknowledged that Tenant does not intend to, and shall not be required
to, cause the pavement in the plaza area to be replaced as a part of
the Renovation Work. The plans for the Renovation Work shall provide
for and include a first aid and security building.
(b) East and West Plaza Improvements - The 2 existing plazas will be
expanded by approximately 40,000 square feet of asphalt paving with
minimal disruption to the existing trees. That surface will consist of
4 inches of crushed stone subbase, 3 inches of asphalt binder course
and 1 1/2inches of asphalt wearing course. Additional lighting will be
installed on the plazas. The existing restrooms will be expanded by
approximately 4,200 square feet and the points of service in the
concession building will be expanded by adding an additional 6,000
square feet of concession buildings divided equally between the 2
plazas. Access walkways from the main entry plaza to both the east and
west plazas will be constructed.
(c) Reserved Fixed Seating - The fixed seating will be increased by
approximately 1,725 seats which will be added in and among the existing
seats where aisle ways are deleted and to the back of the existing seat
area underneath the existing overhang. All work shall meet applicable
DCA codes and ADA requirements. Twenty to thirty box seats may be added
by removing three rows of seats. A mixing booth will be added near the
center of the facility.
(d) Lawn Seating Area - The lawn seating area will be increased to 10,500
capacity which is an increase of 5,000 over the existing capacity.
Cross aisle retaining walls will be required along the handrails and
access stair requirements. The pergola will be demolished and the
existing
<PAGE>
gates utilized elsewhere on the project. The proximity of the new lawn
seating to the parking lot, main plaza and Meyner Center tracts will
necessitate a reconfiguration of the perimeter fence, but such
reconfiguration will not interfere with the operations of the Meyner
Reception Center.
3. General - All clearing work performed in connection with the
improvements described above shall comply with public law,
PL1993-Chapter 106, which states in general terms that for every area
cleared of trees an equal area must be re-forested elsewhere. In
addition, all improvements described above shall provide for drainage,
storm water collection systems and detention basins so that there will
be no net increase in the present runoff. Landscaping other than mature
trees will be replaced consistent with existing landscape. Most of the
large trees in the area of the expanded plazas and hill seating will be
removed. Tree removal will be mitigated in accordance with applicable
criteria/laws.
<PAGE>
EXHIBIT D-1
PAVILION'S DEVELOPMENT COSTS AS OF SEPTEMBER 30, 1996
RENOVATION DETAIL
Architect/Engineer Fees $177,069
Development Costs $92,042
Construction $598
Professional Fees $5,000
Graphic Design/Artwork $1,065
Consulting $112,515
Total Renovation $388,289
START-UP DETAIL
Delivery and Postage $ 474
Donations/Charities $ 500
Legal $ 89,924
Meals and Entertainment $ 7,859
Mileage and Parking $ 2,170
Miscellaneous $ 1,875
Printing/Office Supplies $ 2,154
Telephone $ 699
Transportation $ 3,995
Travel and Lodging $ 30,707
--------
Total Start-up $140,357
========
TOTAL RENOVATION COSTS THROUGH 9.30.96 $528,646
========
<PAGE>
EXHIBIT D-2
Airfare
December 6th $ 1,341.00
December 19th 836.00
May 10th 1,509.85
----------
$ 3,686.86
Ground Transportation
GSAC presentation $ 1,298.56
Highway Authority meeting 333.50
----------
$1,632.06
Legal Fees & Disbursements
Fees $49,136.24
Disbursements 1,595.12
----------
Total Expenses $56,050.28
==========
<PAGE>
(Table of Contents Deleted)
<PAGE>
SECOND AMENDED AND
COMPLETELY RESTATED
AGREEMENT OF GENERAL PARTNERSHIP
OF
IRVINE MEADOWS AMPHITHEATER
THIS SECOND AMENDED AND COMPLETELY RESTATED AGREEMENT OF GENERAL
PARTNERSHIP OF IRVINE MEADOWS AMPHITHEATER is entered into effective as of
April 1, 1991, by and among IMA INVESTMENT CORP., a California corporation,
PAUL C. HEGNESS, SHELLI MEADOWS, INC., a California corporation and AUDREY &
JANE, INC., a California corporation. The capitalized terms used in this
Agreement shall have the respective meanings assigned to such terms in Article
XII hereof.
R E C I T A L S:
A. The Partnership was previously governed by that certain Irvine Meadows
Amphitheater, A California General Partnership, Amended and Restated
Partnership Agreement entered into as of January 1, 1981 (the "Original
Partnership Agreement"). The Original Partnership Agreement was amended and
restated in its entirety pursuant to that certain Letter Agreement dated as of
June 27, 1990 (the "June 27 Agreement"), as supplemented by that certain letter
agreement dated July 16, 1990 (the "July 16 Agreement"). The June 27 Agreement
and the July 16 Amendment are collectively referred to herein as the "Letter
Agreement".
B. The parties hereto now desire to memorialize the terms of the Letter
Agreement in the manner set forth hereinbelow.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
ARTICLE I
CONTINUATION AND AGREEMENT OF
GENERAL PARTNERSHIP
1.01 Continuation. The Partners do hereby continue a general partnership
under the Uniform Partnership Act as set forth in Title 2, Chapter 1 of the
California Corporations Code and do hereby make and execute this Agreement for
the purpose of setting forth the rights, duties, and obligations of the
Partners with respect to the assets of the Partnership and the profits which
the Partners may receive from the Partnership by reason of their being
Partners.
<PAGE>
1.02 Name. The Partners hereby agree that the Partnership shall continue
to conduct its business under the name of "Irvine Meadows Amphitheater" and the
Partners shall execute and cause to be published a Fictitious Business Name
Statement on behalf of the Partnership (or an amendment to any such statement
that was previously filed) and cause the same to be filed in the office of the
County Clerk of Orange County, State of California, all in accordance with
Sections 17900-17930 of the Business and Professions Code of the State of
California. The Partners agree to file from time to time hereafter such other
Fictitious Business Name Statements on behalf of the Partnership, and to cause
the same to be published, as may from time to time be required by law.
1.03 Statement. The Partners agree that, in addition to the execution of
this Agreement, the Partners shall execute, acknowledge and verify one or more
copies or a Statement or Partnership pursuant to the provisions of Section
15010.5 of the California Corporations Code (or an amendment to any such
statement that was previously recorded), which shall be duly recorded forthwith
in the Official Records in the County of Orange, State of California, and in
each other county in which the Partnership holds or shall hereafter hold title
to real property. The Partners shall also execute, acknowledge, verify, file,
and/or record such other instruments and statements as may be required by this
Agreement, amendments hereto, or by law.
1.04 Principal Place of Business. The principal place of business of the
Partnership shall be at 17835 Ventura Boulevard, Suite 206, Encino, California
91316, or shall be at such other one or more places as the Operating Partners
may from time to time determine after giving written notice of such change to
the other Partners.
1.05 Nature of Business. The express, limited, and only purposes for which
the Partnership is to exist are (i) to continue to own (a) the leasehold
interest, granted pursuant to that certain Ground Lease (the "Lease") dated as
of February 11, 1969, as amended, by and between The Irvine Company, as lessor
thereunder, and Lion Country Safari, Inc. - California, a Florida corporation
(formerly known as National Leisure, Inc.), which was the
predecessor-in-interest to the Partnership, as lessee thereunder, encumbering
that certain improved real property generally located in the City of Irvine,
County of Orange, State of California, and more fully described on Exhibit "A"
attached hereto (such real property shall be referenced herein as the
"Property"), (b) all rights appurtenant to such leasehold interest, (c) that
certain amphitheater facility commonly known as the Irvine Meadows
Amphitheater, the related parking area, and any and all other infrastructure
and other improvements situated upon the Property, and (d) all of the rights,
duties, obligations and any other interests of the Partnership in and to that
certain option to Ground Lease dated as of April 27, 1984 (the "Option
Agreement"), by and between The Irvine Company, as optionor thereunder, and the
Partnership, as optionee thereunder, and any other related rights or agreements
(such leasehold interest, such appurtenant rights, such amphitheater, such
other improvements situated upon the Property, the Option Agreement and such
other related rights and agreements shall be collectively referenced as the
"Project"); (ii) to own, hold for investment, operate, manage, maintain,
market, lease, rent, and promote for concert or other entertainment purposes;
sell tickets and hard and soft concessions, and conduct such other activities
related to the presentation of concerts at, and otherwise realize the economic
benefit
- 2 -
<PAGE>
from, the Project; and (iii) to conduct such other securities with respect to
the Project as are appropriate to accomplish the foregoing purposes.
1.06 Duties.
(a) In view of the exclusive purposes of the Partnership, Hegness,
and any Affiliate of any Partner including, without limitation, Koll,
Azoff and/or Geddes shall not have any fiduciary obligation with respect
to the Partnership or to the other Partners insofar as making other
investment opportunities available to the Partnership or to any other
Partner. Hegness and any Affiliate of any Partner including, without
limitation, Koll, Azoff and/or Geddes may, notwithstanding the existence
of this Agreement, engage in whatever activities such Partner and/or
Affiliate may choose, whether the same are competitive with the
Partnership or otherwise, without having or incurring any obligation to
offer any interest in such activities to the Partnership or to any other
Partner. Neither this Agreement nor any activities undertaken pursuant
hereto shall prevent Hegness, or any Affiliate of any Partner, including,
without limitation, Koll, Azoff and/or Geddes from engaging in such
activities, and the fiduciary duties of the Partners and Affiliates
thereof shall be limited solely to those arising from owning, holding for
investment, operating, managing maintaining, marketing, leasing, renting,
and promoting for concert or other entertainment purposes; and selling
tickets and hard and soft concessions, and conducting such other
activities related to the presentation of concerts at; and otherwise
realizing the economic benefit from; the Project. Any property (other than
the Project or any portion thereof) acquired by or standing in the name of
Hegness or any Affiliate of any Partner, including, without limitation,
Koll, Azoff and/or Geddes shall be conclusively presumed not to be
Partnership property, unless an instrument in writing, signed by the
particular Partner, shall specify to the contrary.
(b) Each of IMA Corp., SMI and A&J hereby agrees that while it is a
Partner in the Partnership it will not, without the prior written consent
of the Management Committee, engage in any business of any nature
whatsoever, other than ownership of its Partnership Interest.
1.07 Names and Addresses of the Partners. The names and places of business
of the Partners are as follows:
IMA Investment Corp., a California corporation
c/o The Koll Company
4343 Von Karman Avenue
Newport Beach, California 92660
Attention: Sydney E. Buck
Paul C. Hegness, Esq.
c/o Good, Wildeman, Hegness & Walley
5000 Campus Drive
Newport Beach, California 92660
- 3 -
<PAGE>
Shelli Meadows, Inc., a California corporation
c/o Azoff Entertainment Company
345 North Maple Drive
Suite 205
Beverly Hills, California 90210
Audrey & Jane, Inc., a California corporation
17835 Ventura Boulevard
Suite 206
Encino, California 91316
1.08 Term of Partnership. The term of the Partnership commenced on or
about September 16, 1980, and shall continue for a period of fifty (50) years
thereafter, unless terminated sooner as a result of the dissolution and winding
up of the Partnership in accordance with Article VIII hereof or unless extended
by the unanimous agreement of the Partners.
ARTICLE II
MANAGEMENT AND OPERATION OF
THE PARTNERSHIP
---------------------------
2.01 Overall Management by the Management Committee.
(a) The overall business and affairs of the Partnership shall be managed
by a committee (the "Management Committee") consisting of IMA Corp., SMI and
A&J, which, except as otherwise provided in this Agreement, shall have full and
complete charge of all facets of the overall business affairs of the
Partnership, and the overall management and control of the Partnership's
business shall rest exclusively with the Management Committee. Any decision by
the Management Committee shall require the unanimous affirmative vote of all of
the members thereon and shall bind the Partnership and all of the Partners.
Except as otherwise provided in this Agreement, all conveyances of title to
Partnership property or any interest therein, all loan documents, deeds of
trust, deeds, mortgages, and any and all other instruments of conveyance,
encumbrance or indebtedness may be executed only by all of the Partners
comprising the Management Committee, acting together, and may not be executed
by any Partner individually or by any other group of Partners. Any and all
documents and/or other instruments executed in accordance with the foregoing
provisions of this. Section 2.01(a) shall bind the Partnership and each
Partner. Nothing contained herein shall prevent any Partner or any of such
Partner's employees, agents, or representatives, or Affiliates thereof from
devoting time to other businesses, whether or not similar in nature to the
business of the Partnership.
(b) No Partner shall, without the consent of the Management Committee,
take any action on behalf of or in the name of the Partnership, or enter into
any commitment or obligation binding upon the Partnership, except for actions
which have been expressly authorized hereunder or are within the scope of such
Partner's authority granted hereunder. Each Partner
- 4 -
<PAGE>
hereby indemnifies, defends, and holds wholly free and harmless each other
Partner and each such other Partner's employees, agents, representatives and
Affiliates thereof, from and against any loss, liability, claim, damage, or
expense arising out of any breach of the foregoing provision of this Section
2.01(b) by such indemnifying Partner or such indemnifying Partner's agents,
employees, agents or representatives, or Affiliates thereof.
2.02 Operating Partners. Until such time as their authority is terminated
pursuant to Section 2.04, SMI and A&J shall act, and are hereby designated, as
the operating partners (individually, an "Operating Partner" and collectively,
the "Operating Partners") of the Partnership. In their capacity as the
operating Partners of the Partnership, SMI and A&J shall be responsible,
subject to the terms of this Agreement, for the implementation of the decisions
of the Management Committee and for managing, supervising, and conducting the
ordinary and usual day-to-day business and affairs of the Partnership. Except
as otherwise provided in this Agreement, the Operating Partners shall not
receive a salary or any other compensation for serving in their capacity as
such. The acts of the Operating Partners shall bind the Partners and the
Partnership when such acts are within the scope of the Operating Partners'
authority. The Operating Partners shall at all times conform to policies and
programs established and approved by the Management Committee as set forth in
this Agreement and may from time to time be further agreed to by the Management
Committee and the scope of the Operating Partner's authority shall be limited
to such policies and programs. Each Operating Partner shall use such Partner's
reasonable, diligent and good faith efforts to carry out the day-to-day
business affairs of the Partnership and shall devote such time to the
Partnership as is necessary, in the reasonable discretion of such Partner, for
the efficient operation of such day-to-day business affairs. Each Operating
Partner shall use such Partner's good faith and reasonable efforts to keep each
other Partner informed as to all matters of concern to the Partnership.
2.03 Rights and Duties of the Operating Partners. Notwithstanding the
provisions of Section 2.01, but subject to the last approved Operating Budget
and the provisions of Section 2.02, and unless and until the authority of the
Operating Partners is terminated pursuant to Section 2.04, the Operating
Partners, on behalf of the Partnership, shall have the following rights, duties
and responsibilities and shall conduct or cause to be conducted the following
functions of the Partnership:
(a) Negotiating, entering into and executing on behalf of, and in the
name of the Partnership, and implementing (i) agreements not having a term
in excess of one year (including renewal options) for advertising and
publicity for the Project or any portion thereof, and (ii) contracts or
other agreements for the provision of such other services, supplies,
equipment, repairs, and/or improvements as are reasonably necessary to
carry out the day-to-day business affairs of the Partnership;
(b) Negotiating, entering into and executing on behalf of, and , in
the name of the Partnership, and implementing contracts with performing
artists and arranging all booking and scheduling of acts for the Project;
- 5 -
<PAGE>
(c) Preparing and submitting to the Management Committee for its
review and approval, and, once approved, implementing the operating
Budgets as provided in Section 2.05;
(d) Selecting, employing, supervising, coordinating, and discharging
any sound engineers, theater management, attorneys, accountants,
bookkeepers, clerical personnel, and other consultants necessary or
appropriate to carry out the day-to-day business affairs of the
Partnership;
(e) Collecting, receiving, and accounting for all funds received as a
consequence of the operation of the Partnership for the benefit of the
Partnership, and making disbursements from Partnership funds to pay for
all amounts due and payable as operating expenses of the Project and/or
the Partnership in accordance with the provisions of the applicable
Operating Budget; including, without limitation, payments to performing
artists, consultants and suppliers providing services and/or supplies for
the Project, and payments for advertising and promotional expenses; taxes;
special assessments; and similar obligations imposed against the Project
or any other Partnership property; insurance; utilities; and principal and
interest on any financing for the Project;
(f) Managing the Partnership's cash assets, including, without
limitation, investing Partnership funds temporarily in interest bearing
accounts, commercial paper, United States governmental securities,
certificates of deposit, or other similar investments;
(g) Procuring and maintaining on behalf of the Partnership, from
Partnership funds, policies of insurance for the protection of the
Partnership, the Partners, and/or the conservation of the Project or any
other assets of the Partnership providing adequate coverage limits
(including, as applicable, insuring any and all improvements situated upon
the Project to full replacement value), including, without limitation,
workers' compensation, fire, vandalism, malicious mischief, and extended
coverage, comprehensive liability for property damage and bodily injury,
and such other insurance coverage as the Operating Partners, in such
Partners' reasonable discretion, shall deem necessary or advisable, plus
any additional insurance that may be required by any lender of a loan
secured by all or any portion of the Project;
(h) Supervising and coordinating the operation, management,
maintenance, and repair of the Project;
(i) Performing or causing to be performed the accounting functions of
the Partnership in accordance with Article X; and
(j) Performing any and all other services and/or functions of a
general and/or administrative nature required under the provisions of this
Agreement or otherwise necessary or desirable in connection with the
day-to-day business affairs of the Partnership; provided, however, that
such services and/or functions are not prohibited under this Agreement.
- 6 -
<PAGE>
2.04 Termination of Authority of the Operating Partners. Any one of IMA
Corp., SMI and/or A&J shall have the right, but not the obligation, to
terminate the authority, rights and duties of both of SMI and A&J as the
Operating Partners of the Partnership for any reason whatsoever, with or
without cause, upon ten (10) days' prior written notice. Following any such
termination, the authority, rights and duties held by the Operating Partners
prior to such termination shall be vested entirely with the Management
Committee or with such, other person(s) or entity(ies) as may be selected by
the Management Committee.
2.05 Operating Budget. The Operating Partners shall prepare and deliver to
IMA Corp. for IMA Corp.'s review and approval, which approval shall not be
unreasonably withheld, at least thirty (30) days prior to the beginning of each
fiscal year of the Partnership, an operating budget ("Operating Budget") for
such fiscal year or portion thereof with respect to the Project; provided,
however, the Partners acknowledge that the Operating Budget for the 1991 fiscal
year was previously delivered to Koll (the predecessor-in-interest to IMA
Corp.) and approved by Koll in accordance with the provisions of the Letter
Agreement. Each Operating Budget shall set forth all receipts (including
proceeds projected to arise from the occurrence of the sale or other
disposition of the Project or any applicable portion thereof, which proceeds
shall be separately identified) projected for the period of such Operating
Budget and all expenses, by category, of owning and operating the Project or
any applicable portion thereof (including capital improvements projected to be
incurred during such period). If, following the approval of the Operating
Budget for the 1991 fiscal year, any Operating Budget proposed by the Operating
Partners for any subsequent fiscal year is not approved by IMA Corp., then the
last approved Operating Budget (as previously increased, if applicable, in
accordance with the provisions set forth below in this Section 2.05 (but
exclusive of any capital improvements included in such fiscal year Operating
Budget)) shall be deemed to apply with respect to such fiscal year until a
revised Operating Budget is approved for such year; provided, however, (i)
appropriate adjustments to such last approved Operating Budget shall be
automatically made to reflect actual increases in real property taxes,
insurance premiums, utility charges, and similar items over which the
Partnership has no control, and (ii) each other item of expense in such last
approved Operating Budget shall be increased by one percent (1%) semi-annually
until such time as the Partners are able to agree upon a revised Operating
Budget. Subject to the restriction on the execution of documents set forth in
Section 2.01(a), either of the Operating Partners shall have the power to incur
costs on behalf of the Partnership, without the consent of any other Partner,
during the period covered by any pertinent Operating Budget applicable to such
period in accordance with this Section 2.05 so long as the amount of any such
expenditure incurred by the Partnership or by such Operating Partner on behalf
of the Partnership for any line item included within such Operating Budget does
not exceed the amount of the projected expenditure for such line item set forth
in such budget (as previously increased, if applicable, in accordance with the
provisions set forth above in this Section 1.05).
2.06 General Rights and Limitations. Hegness shall not have any right,
power, or authority to act for or bind the Partnership. Subject to the
provisions of Section 2.07 below and except as otherwise provided in this
Agreement, Hegness shall not take any part in the conduct or control of the
Partnership business and shall only have the right to vote upon Partnership
matters in the manner set forth in this Section 2.06 below. Moreover,
notwithstanding any term or
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provision set forth in Sections 2.01, 2.02, 2.03 and/or 2.05, no Partner shall
have the power to undertake any of the following without obtaining the approval
of the Partners as set forth below in this Section 2.06:
(a) Any act in contravention of this Agreement;
(b) Any act which would make it impossible or unreasonably burdensome
to carry on the business of the Partnership;
(c) The sale, exchange, conveyance, disposition, condemnation (or
acquisition by an entity with power of eminent domain in lieu of formal
condemnation proceedings) or other transfer of the Project or any portion
thereof;
(d) The procurement, increase, modification, consolidation,
replacement or extension of any financing, whether secured or unsecured,
affecting the Project or the Partnership;
(e) The entry into, extension, cancellation, amendment or other
modification to any lease or sub-lease encumbering the Project or any
portion thereof;
(f) The making of any loans or the extension of credit by the
Partnership or causing the Partnership to become a surety, guarantor,
endorser or accommodation endorser for any person or entity;
(g) The making of any single expenditure or obligating the
Partnership to make any single expenditure not included in the then
effective Operating Budget and involving an amount in excess of Ten
Thousand Dollars ($10,000);
(h) The commencement, defense, waiver, settlement and/or compromise
of any litigation with respect to the Partnership or any assets thereof;
(i) Except with respect to any transfers between or among the
Partners as permitted under this Agreement, the entry into, extension,
cancellation, amendment or other modification of any agreement affecting
the Partnership or the Project by and between the Partnership or the
Project by and between the Partnership or any Partner, or any Affiliate,
agent, employee or other representative of a Partner, on the one hand, and
any other Partner, or any Affiliate, agent, employee or other
representative of a Partner, on the other hand;
(j) The dissolution of the Partnership;
(k) The distribution of any asset of the Partnership (other than
cash) in kind to one or more Partners, in accordance with the provisions
of Section 6.02;
(l) The amendment of this Agreement; or
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(m) Any other matter requiring the affirmative vote of one or more of
the Partners pursuant to the terms of this Agreement.
Voting with respect to the above matters shall be as follows: (i) all of
the matters described in paragraphs (a) through (k), inclusive, above shall
require the unanimous affirmative vote of the Management Committee, (ii) the
matter described in paragraph (1) above shall require the unanimous affirmative
vote of all of the Partners except for any amendment to reflect a permitted
transfer and the admission of such permitted transferee into the Partnership as
a substituted Partner pursuant to Sections 7.05 and 7.06, respectively, which
shall require the unanimous affirmative vote of all of the non-transferring
Partners (other than Hegness) and (iii) any matter described in paragraph (m)
above shall require the affirmative vote of the Partner or Partners as
otherwise required pursuant to the terms of this Agreement.
2.07 Voting Rights of Hegness. Notwithstanding any other provision
contained in this Agreement, IMA Corp., shall be entitled to vote or make any
other decision, in place of Hegness, on any and all of the matters which
Hegness may be entitled to vote or make any other decision on under the terms
of this Agreement. In furtherance of the foregoing, IMA Corp. and any of IMA
Corp.'s representatives are hereby designated as the attorney(s)-in-fact of
Hegness with full power to prepare, execute, acknowledge and deliver all
documents or other instruments necessary to effectuate the provisions of this
Section 2.07. The special power of attorney so granted shall be deemed to be
coupled with an interest and, except as provided below in this Section 2.07,
shall be irrevocable. At such time as the Partnership has distributed to IMA
Corp. the entire amount of Cash Flow that IMA Corp. is entitled to receive
pursuant to the provisions of Sections 6.01(c), 6.01(d) and 6.01(e), the rights
of IMA Corp. and the special power of attorney described above in this Section
2.07 shall terminate and Hegness shall thereafter be entitled to vote and make
any other decisions which Hegness is entitled to make under this Agreement.
2.08 Consents and Approvals. Except as otherwise expressly provided
herein, whenever any Partner desires to take any proposed action which such
Partner is permitted to take under the terms of this Agreement and which
requires the prior approval of any one or more other Partners hereunder, then
such Partner shall give to each other Partner entitled hereunder to approve
such action written notice thereof, describing such action in sufficient detail
to enable each such other Partner to exercise an informed judgment with respect
thereto. As soon as practicable thereafter, each such other Partner shall give
the requesting Partner written notice that such other Partner either approves
or disapproves the proposed action (which shall set forth such other Partner's
reasons therefor if such other Partner elects to so disapprove). In the event
that any Partner fails to respond (as provided herein) on or before the
twentieth (20th) day following the effective date of written notice of any such
action proposed by the requesting Partner, then such nonresponding Partner
shall be conclusively presumed to have approved such action.
2.09 Booking and Management Fees. As consideration for rendering services
in connection with the operation of the Project, A&J and SMI shall be entitled
to the following booking and management fees (the "Booking and Management
Fees") (which fees shall be divided between such Partners in such manner as
shall be mutually determined by such Partners):
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(a) An annual fee of One Hundred Fifty Thousand Dollars ($150,000)
payable in equal monthly installments of Twelve Thousand Five Hundred
Dollars ($12,500) on the first day of each calendar month commencing as of
July 1, 1990; and
(b) An additional amount equal to the sum of (i) 50/100 Dollars
($.50) for each paid admission for the first three hundred thousand
(300,000) attendees of the Project for each fiscal year, (ii) 75/100
Dollars ($.75) for each paid admission between three hundred thousand one
(300,001) and four hundred thousand (400,000), inclusive, attendees for
such fiscal year and (iii) One Dollar ($1.00) for each paid admission in
excess of four hundred thousand (400,000) attendees for such fiscal year.
The portion of the Booking and Management Fee described in this paragraph
(b) shall be paid within three (3) business days of the conclusion of each
event presented at the Project.
In the event that Avalon Attractions is terminated as the booking agent for the
Partnership pursuant to the provisions of Section 3.02, then at the election of
both SMI and A&J either (i) the Booking and Management Fees shall continue to
be paid to SMI (and A&J, in the event the Partnership Interest of A&J is not
purchased pursuant. to the provisions of Section 3.03) in the manner described
above, SMI (and A&J, as the case may be) shall retain a new booking agent for
the Partnership, and SMI (and A&J, as the case may be) shall be obligated to
pay any such new booking agent the entire amount of the fee payable by the
Partnership to such booking agent from the Booking and Management Fees
otherwise payable to SMI (and A&J, as the case may be) pursuant to the
provisions of this Section 2.09 or (ii) SMI and A&J shall no longer be entitled
to the payment of the Booking and Management Fees described in this Section
2.09. Any and all accrued and unpaid portions of such Booking and Management
Fees shall be paid in full prior to the distribution of cash or other property
otherwise distributable with respect to the Partnership Interests of the
Partners pursuant to Articles VI or VIII, or otherwise hereunder. For financial
and income tax reporting purposes, the Booking and Management Fees shall be
treated as guaranteed payments within the meaning of Section 707(c) of the Code
and, to the extent any portion of the Booking and Management Fees have not been
paid in full, such unpaid portion of such fees shall be debts of the
Partnership payable upon the liquidation thereof.
2.10 Advertising Fee. The Partners hereby acknowledge that the Partnership
may retain TBA Media, an Affiliate of Geddes, as the advertising agency for the
Project. TBA Media shall be entitled to a fee for acting in such capacity equal
to fifteen percent (15%) of the cost of advertising for each event presented at
the Project. Any such advertising fee shall be paid within three (3) business
days of the conclusion of each such event. Any accrued and unpaid portions of
such advertising fee shall be paid in full prior to the distribution of any
cash or other property otherwise distributable with respect to the Partnership
Interests of the Partners pursuant to Articles VI or VIII, or otherwise
hereunder. To the extent any accrued portion of such advertising fee has not
been paid in full, such unpaid portion of such fee shall be a debt of the
Partnership payable upon the liquidation thereof.
2.11 Sponsorship Fee. The Partners acknowledge that the Partnership may
retain an Affiliate of Geddes to procure sponsorship for acts presented at the
Project. Any such entity that is retained in such capacity shall be paid a fee
equal to fifteen percent (15%) of the gross
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revenues derived from any sponsor procured through the sole and exclusive
efforts of such entity. Any such entity shall not be entitled to any
sponsorship fee for any sponsors procured in whole or in part through the
efforts of any Partner or any other person or entity. Any accrued and unpaid
portions of such sponsorship fee shall be paid in full prior to the
distribution of any cash or other property otherwise distributable with respect
to the Partnership Interests of the Partners pursuant to Articles VI or VIII,
or otherwise hereunder. To the extent any accrued portion of such sponsorship
fee has not been paid in full, such unpaid portion of such fee shall be a debt
of the Partnership payable upon the liquidation thereof.
2.12 Reimbursement and Fees. Except as otherwise provided in this
Agreement, or as may be agreed to in writing by a Majority-in-Interest of IMA
Corp., SMI and A&J, no Partner, or Affiliate, agent, employee or other
representative of a Partner shall be entitled to any fees, compensation and/or
other cost reimbursements, including, without limitation, general and
administrative expenses and/or overhead allowances.
ARTICLE III
BOOKING AGENT
3.01 Generally. Avalon Attractions shall be retained by the Partnership as
the exclusive booking agent for all of the acts presented at the Project. It is
presently contemplated that Avalon Attractions will enter into an operating
agreement with the Partnership relative to providing services as such booking
agent. In any event, A&J and SMI shall be obligated to pay to Avalon
Attractions a fee for acting in such capacity from a portion of the Booking and
Management Fees paid to A&J and SMI pursuant to Section 2.09. Avalon
Attractions shall not otherwise be entitled to any fees, compensation and/or
other cost reimbursements from the Partnership.
3.02 Termination. Avalon Attractions may not be terminated as the
exclusive booking agent for the Partnership except in accordance with the
following procedures:
(a) At any time within the one hundred twenty (120)-day period
following the end of each of the 1991, 1992 and 1993 calendar years, a
Majority-in-Interest of IMA Corp., A&J and/or SMI may elect to cause such
termination if the operating receipts for the Partnership fail to exceed
the operating expenditures for the Partnership (as determined by the
accountants regularly employed by the Partnership) for any such calendar
year. Any proceeds realized in connection with the sale of the concession
rights for the Project or any other Extraordinary Event shall be excluded
from any such determination.
(b) At any time following the expiration of the one hundred twenty
(120) day period following the end of the 1993 calendar year, a
Majority-in-Interest of IMA Corp., A&J and/or SMI may elect to cause such
termination for any reason other than Just Cause, upon ten (10) days,
prior written notice.
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(c) At any time following the execution of this Agreement, a
Majority-in-Interest of IMA Corp., A&J and/or SMI may elect to cause such
termination for Just Cause upon ten (10) days' prior written notice.
(d) At any time following the execution of this Agreement, a
Majority-in-Interest of IMA Corp., A&J and/or SMI may elect to cause such
termination if (i) either (A) Geddes is no longer both a director and an
officer of Avalon Attractions, (B) Geddes fails to own at least twenty
percent (20%) of the beneficial ownership and voting interests in Avalon
Attractions, or (C) Geddes is no longer directly involved in the
day-to-day business and affairs of Avalon Attractions in a manner similar
to his involvement with Avalon Attractions on the effective date hereof;
and (ii) either (A) at any time following the occurrence of any of the
events described in clause (i) above, Avalon Attractions fails to provide
services to the Partnership in the same manner and on the same or more
favorable terms as such services are being provided to the Partnership
immediately prior to the occurrence of any of the events set forth in
clause (i) above, which terms shall include, but not be limited to, the
cost to the Partnership of obtaining substantially similar services and
the projected number of concerts to be promoted at the Project, or (B)
Avalon Attractions promotes or is otherwise involved with any concert
(other than a concert at the Project or a concert occurring during the
periods from January 1 to April 15, inclusive, and from November 15 to
December 31, inclusive, of each calendar year) at any facility in Orange
County, California with a seating capacity of greater than or equal to
twelve thousand (12,000) seats and less than or equal to twenty thousand
(20,000) seats.
3.03 Appraised Buy-Out of the Partnership Interest of A&J. If, and only
if, Avalon Attractions is terminated by a Majority-in-Interest consisting of
IMA Corp. and SMI in accordance with the provisions of Section 3.02(a) or
3.02(b) above, then for a period of thirty (30) days following such
termination, A&J shall have the right, but not the obligation, by delivering
written notice "Election Notice" to IMA Corp. and SMI, to cause the purchase of
the entire Partnership Interest of A&J in accordance with the provisions of
this Section 3.03. In the event A&J timely and validly makes such an election,
then SMI shall be required to purchase the entire Partnership Interest of A&J
in accordance with the provisions of this Section 3.03; provided, however, for
a period of thirty (30) days following the effective date of the Election
Notice, SMI shall have the right, but not the obligation, by delivering written
notice to IMA Corp., to cause IMA Corp. and SMI to each purchase the portion of
the Partnership Interest of A&J that corresponds, in the case of SMI, to the
fraction obtained by dividing (i) the Percentage Interest (as of the effective
date of the Election Notice) of SMI by (ii) the aggregate Percentage Interests
(as of the effective date of the Election Notice) of SMI and the Koll Partners,
and, in the case of IMA Corp., to the fraction found by dividing (i) the
aggregate Percentage Interests (as of the effective date of the Election
Notice) of the Koll Partners by (ii) the aggregate Percentage Interests (as of
the effective date of the Election Notice) of SMI and the Koll Partners. Any
such purchase and sale of the Partnership Interest of A&J by SMI or by SMI and
IMA Corp. (the "Purchasing Partner(s)"), as the case may be, shall be made in
accordance with the following terms and conditions:
(a) The Election Notice shall include the name of an appraiser with
at least five (5) years experience appraising business similar in nature
to the Project. Within forty (40)
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days after the effective date of the Election Notice, the Purchasing Partner(s)
shall either agree to such appraiser or select a second appraiser (with similar
appraisal experience) and notify A&J of such second appraiser. If two (2)
appraisers are selected, then they shall appoint a third appraiser (with
similar appraisal experience) within five (5) days of the selection of the
second appraiser. In the event A&J, on the one hand, or the Purchasing
Partner(s), on the other hand, fail to appoint an appraiser within the time
period specified, and after the expiration of five (5) days following the
effective date of written demand that an appraiser be appointed, then the
appraiser duly appointed by the party making such demand and appointing such
appraiser shall proceed to make the appraisal as herein set forth and the
determination of such appraiser shall be conclusive. Upon the failure of the
two (2) appointed appraisers to timely appoint a third appraiser within the
time period specified therefor, either A&J, on the one hand, or the Purchasing
Partner(s), on the other hand, may petition a court of competent jurisdiction
to appoint a third appraiser, in the same manner as provided for the
appointment of an arbitrator pursuant to Code of Civil Procedure Section
1261.6.
(b) The appraiser or three (3) appraisers, as the case may be, shall
promptly fix a time for the completion of the appraisal, which shall not
be later than thirty (30) days from the date of appointment of the last
appraiser. Each appraiser shall determine the fair market value of the
combined business and assets of the Partnership which shall be the fairest
price estimated in terms of money which the Partnership could obtain if
such business and assets were sold in the open market as a going concern,
allowing a reasonable time to find a purchaser who purchases with
knowledge of the uses which such business and assets in their then
condition are adapted and for which such business and assets are capable
of being used as of the effective date of the Election Notice.
(c) Upon the submission of the appraisal setting forth the opinions
as to the fair market value of the combined business and assets of the
Partnership (determined by each appraiser in accordance with Section
3-03(b)), the two (2) such appraisals which are nearest in amount shall be
retained, and the third appraisal shall be discarded. The average of the
two (2) retained appraisals shall constitute the "Appraised Value";
provided, however, that if one of the appraisals is the mean of the other
two (2), then that appraisal shall constitute the "Appraised Value".
(d) Within fifteen (15) days after the determination of the Appraised
Value, the certified public accountants regularly employed by the
Partnership shall determine the purchase price ("Purchase Price") for the
Partnership Interest of A&J. The Purchase Price shall be equal to the
greater of (i) the sum of the balances standing in the Unrecovered
Contribution Account and Unrecovered Additional Contribution Account of
A&J, determined as of the effective date of the Election Notice, or (ii)
one hundred percent (100%) of the aggregate amount of cash that would be
distributed to A&J pursuant to Section 8.02(c) if (A) the combined
business and assets of the Partnership were sold for the Appraised value
thereof as of the effective date of the Election Notice; (B) the
liabilities of the Partnership were liquidated pursuant to Section
8.02(a); (C) a reserve were established for any contingent or unforeseen
liabilities of the Partnership pursuant to Section 8.02(b); and (D) the
Partnership made its required distributions to the Partners pursuant to
Section 8.02(c). Upon the determination by the
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accountants of the Purchase Price, such accountants shall give A&J, SMI and IMA
Corp. written notice ("Accountant's Notice") of the Purchase Price. The
determination by such accountants of the Purchase Price and any and all
components thereof (including, without limitation, the amount of any reserve)
shall be deemed conclusive.
(e) The closing of a purchase and sale pursuant to this Section 3.03
shall be held at the principal place of business of the Partnership on
such date as is designated by the Purchasing Partner(s) , but in no event
later than the one hundred twentieth (120th) day following the effective
date of the Accountant's Notice. A&J shall transfer to the Purchasing
Partner(s) the entire Partnership Interest of A&J free and clear of all
liens, security interests, and competing claims (other than security
interests granted in favor of the Purchasing Partner(s) and shall deliver
to the Purchasing Partner(s) such instruments of transfer, and such
evidence of due authorization, execution, and delivery, and of the absence
of any such liens, security interests, or competing claims, as the
Purchasing Partner(s) shall reasonably request. The Purchasing Partner(s)
shall pay the Purchase Price to A&J at the closing by delivering to A&J
cash, a certified or bank cashier's check or a confirmed wire transfer of
funds payable to the order of A&J.
(f) The portion of the Purchase Price for the Partnership Interest of
A&J to be paid by any Purchasing Partner shall be offset by the unpaid
balance of any and all Partner Loan(s) (together with all accrued interest
thereon) made by such Purchasing Partner to A&J. Such Partner Loan(s)
(together with all accrued interest thereon) shall be deemed paid to the
extent of such offset, with such deemed payment to be applied first to the
accrued interest thereon and thereafter to the payment of the outstanding
principal amount thereof. If the Purchase Price for the Partnership
Interest of A&J is insufficient to fully offset the outstanding, unpaid
balances (including all principal amounts thereof and all accrued interest
thereon) made by any' and all of the Purchasing Partners to A&J, then such
loans shall be offset in proportion to their respective outstanding
balances (including all principal amounts thereof and all accrued, unpaid
interest thereon). In addition, the outstanding, unpaid balances
(including all principal amounts thereof and all accrued interest thereon)
made by any one or more non-purchasing Partners to A&J shall be due and
payable at the closing of the transfer of the Partnership Interest of A&J
pursuant to this Section 3.03 and shall be repaid, in proportion to such
respective outstanding balances, out of any and all of the proceeds of the
Purchase Price (after reduction of such price otherwise payable to A&J
pursuant to this Section 3.03 pursuant to the offset described above in
this Section 3.13(f), prior to any payment of such proceeds to A&J
pursuant to this Section 3.03. To the extent any portion of any Partner
Loan made by a Partner to A&J is not satisfied pursuant to the foregoing
provisions of this Section 3.03(f), then A&J shall pay the remaining
outstanding balance (including all principal amounts thereof and all
accrued, unpaid interest thereon) at the closing. Also, notwithstanding
any provision of this Agreement to the contrary, the outstanding unpaid
balance of any and all Partner Loan(s) (including all principal amounts
thereof and all accrued, unpaid interest thereon) made by A&J to any
Partner shall be due and payable in full to A&J at the closing of the
purchase of the Partnership Interest of A&J pursuant to Section 3.03(e).
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(g) All costs (including, without limitation, the costs of the
appraisers and the accountants referenced in Sections 3.03(a) and/or
3.03(d) of the purchase and sale of the Partnership Interest of A&J
pursuant to this Section 3.03 shall be paid one-half (1/2) by A&J and
one-half (1/2) by the Purchasing Partner(s) (with such costs being divided
between such Purchasing Partners based upon the relative portion of the
Partnership Interest of A&J purchased by each such Purchasing Partner).
(h) On or before the closing of a purchase and sale transaction held
pursuant to this Section 3.03, the Purchasing Partner(s) shall use such
Partner's(sl) reasonable, diligent, and good faith efforts to obtain
written releases of A&J and/or any Affiliates of A&J from all guarantees
of liabilities of the Partnership previously executed by A&J and/or such
Affiliates. To the extent such releases cannot be obtained by the
Purchasing Partner(s), the Purchasing Partner(s) shall severally (in
proportion to their respective Percentage Interests as of the effective
date of the Election Notice) indemnify, defend, and hold free and harmless
A&J from and against any and all claims, liabilities, causes of action,
liens, charges, and all other matters arising out of or in connection with
the business and affairs of the Partnership, whether arising prior to or
subsequent to the effective date of such closing, except for unknown
liabilities arising prior to the effective date of such closing and not
taken into account in calculating the Purchase Price for the Partnership
Interest of A&J.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND
FINANCIAL OBLIGATIONS OF THE PARTNERS
4.01 Initial Contributions of the Koll Partners. None of the Koll Partners
shall be required to make any initial contributions to the capital of the
Partnership, in connection with the execution of this Agreement or the Letter
Agreement.
4.02 Initial Contributions of SMI and A&J. Concurrently with the execution
of the Letter Agreement, SMI and A&J (or their respective
predecessors-in-interest) each made a cash contribution to the capital of the
Partnership of Three Million Dollars ($3,000,000) which amount was concurrently
credited to each such Partner's Capital Account and Unrecovered Contribution
Account.
4.03 Restated Capital Account Balances. The Partners Project, hereby agree
that the aggregate fair market value of the Project of the outstanding balance
of the Security Pacific Loan and the deferred obligation (in the approximate
amount of One Million Fifty-Four Thousand Dollars ($1,054,000)) owed to The
Irvine Company, is equal to Eight Million Dollars ($8,000,000) and the assets
of the Partnership shall be adjusted on the Partnership's books to reflect such
amount as of July 23, 1990. In furtherance of the foregoing, the Partners
hereby agree that the restated Capital Account and Unrecovered Contribution
Account balances of the Partners as of July 23, 1990 (taking into account the
initial capital contributions made to the Partnership by SMI and A&J pursuant
to Section 4.02 above) shall be as follows:
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Restated Capital
Account and Unrecovered
Partner Contribution Balances
- ------- -----------------------
IMA Corp. $8,000,000
Hegness -0-
SMI $3,000,000
A&J $3,000,000
4.04 Partial Repayment of the Security Pacific Loan. The Partners hereby
acknowledge and agree that (i) the Partnership previously had outstanding
indebtedness in the principal amount of approximately Eight Million Dollars
($8,000,000) owed to Security Pacific National Bank (the "Security Pacific
Loan"), and (ii) the entire capital contributions of SMI and A&J made pursuant
to Section 4.02 above were utilized to repay a portion of the outstanding
balance of the Security Pacific Loan.
4.05 Additional Capital Contributions. Any decision to require additional
capital contributions to be made by the Partners for other than operating
deficits including, without limitation, to fund capital improvements for the
Project, shall be made by the unanimous approval of the Management Committee in
accordance with the provisions of Article II. In the event the Partnership
requires financing to fund operating deficits in addition to the initial
capital contributions of SMI and A&J set forth in Section 4.02 above, as
reasonably determined by any one of IMA Corp., SMI or A&J, then such
determining Partner shall give written notice of such operating deficit to all
of the Partners, which notice, in the event such determining Partner is an
Operating Partner as of the effective date of such notice, shall summarize,
with reasonable particularity, the Partnership's actual and projected cash
obligations, cash on hand, and the projected sources and amounts of future cash
flow and which notice shall also specify a contribution date ("Contribution
Date") (which shall not be less than fifteen (15) days following the effective
date of such notice) upon which each Partner shall have the obligation to
contribute to the capital of the Partnership, in cash, such Partner's
Percentage Interest (as of the Contribution Date) of such cash deficit ("Cash
Deficit Contribution"). Any and all amounts contributed by a Partner to the
capital of the Partnership pursuant to this Section 4.05 shall be credited to
each of the Capital Account and the Unrecovered Additional Contribution Account
of such Partner concurrently with the contribution of same.
4.06 Remedy for Failure to Contribute Capital. If any Partner (the
"Non-Contributing Partner") fails to contribute all or any portion of the Cash
Deficit Contribution or any other amount required to be made by such Partner
pursuant to Section 4.05 ("Delinquent Contribution"), and provided that one or
more of the other Partners (collectively, the "Contributing Partners") have
contributed to the capital of the Partnership all of the Cash Deficit
Contribution or any other amount required to be made by such Contributing
Partner(s) pursuant to Section 4.05, then such Contributing Partner(s), in
addition to any other remedies or rights the Contributing Partner(s) may have
at law or in equity, shall have the following options:
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(a) Subject to Section 4.06(c), the Contributing Partner(s) may
advance to the Partnership, in cash, within thirty (30) days following the
Contribution Date and in proportion to the respective Percentage Interests
(as of the Contribution Date) of the Contributing Partner(s) electing the
option specified in this Section 4.06(a) (or in such different proportion
as they may otherwise unanimously agree) an amount equal to the Delinquent
Contribution, and such advance shall be treated as a recourse loan
("Partner Loan") made by such Contributing Partner(s) to the
Non-Contributing Partner, bearing interest at a rate equal to the lesser
of (i) the prevailing Wells Fargo Bank commercial reference (prime)
lending rate plus four (4) percentage points, adjusted and compounded on
the first day of each month during the term of such Partner Loan, or (ii)
the maximum, non-usurious rate then permitted by law for such loans. Each
Partner Loan, subject to the provisions of Section 3.03(f), shall be due
and payable in full six (6) months from the date such loan was advanced,
and thereafter on demand. As of the effective date of any such advance of
a Partner Loan, the Non-Contributing Partner shall be deemed to have
contributed an amount equal to the principal amount of such Partner Loan
to the capital of the Partnership, and each of the Capital Account and the
Unrecovered Additional Contribution Account of the Non-Contributing
Partner shall be credited with a like amount. Notwithstanding the
provisions of Articles VI and VIII hereof, until any and all Partner Loans
advanced to a Non-Contributing Partner are repaid in full, such
Non-Contributing Partner shall draw no further distributions from the
Partnership, and all cash or other property otherwise distributable with
respect to the Non-Contributing Partner's Partnership Interest shall be
distributed to the Contributing Partner(s) which have advanced Partner
Loan(s) to such Non-Contributing Partner, in proportion to (and as a
reduction of) the outstanding balance of (together with all accrued,
unpaid interest on) such Partner Loan(s), with such funds being applied
first to reduce any unpaid interest accrued on such Partner Loan(s) and
then to reduce the principal amount thereof. Any amounts so applied shall
be treated, for all purposes under this Agreement, as having actually been
distributed to the Non-Contributing Partner and used by the
Non-Contributing Partner to repay such outstanding Partner Loan(s). To
secure the repayment of any and all Partner Loans made on behalf of a
Non-Contributing Partner, such Non-Contributing Partner hereby grants a
security interest in favor of the Contributing Partner(s) advancing such
Partner Loan(s), in and to all distributions to which such
Non-Contributing Partner may be entitled under this Agreement and hereby
irrevocably appoints such Contributing Partner(s), and any of such
Contributing Partners(s) respective agents, employees or other
representatives, as such Non-Contributing Partner's attorney(s)-in-fact,
with full power to prepare, execute, acknowledge, and deliver, as
applicable, all documents, instruments, and/or agreements memorializing
and/or securing such Partner Loan(s), including, without limitation, such
Uniform Commercial Code financing and continuation statements, mortgages,
and other security instruments as may be reasonably appropriate to perfect
and continue such security interest in favor of such Contributing
Partner(s). The special power of attorney so granted by a Non-Contributing
Partner shall be deemed to be coupled with an interest and shall be
irrevocable.
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If, upon the maturity of a Partner Loan or any portion thereof
(taking into account any extensions thereof) any principal thereof and/or
accrued interest thereon remains outstanding, each Contributing Partner
that previously advanced such Partner Loan or portion thereof may elect
any one of the following options (in addition to all other rights such
Contributing Partner may have at law or in equity): (i) to demand
immediate repayment of such Partner Loan (or portion thereof); (ii) to
renew such Partner Loan (or portion thereof) pursuant to the terms and
provisions of this Section 4. 06(a) ; or (iii) to contribute the
outstanding principal of and/or accrued, unpaid interest on such Partner
Loan (or portion thereof) to the capital of the Partnership and dilute the
Percentage Interest of the Non-Contributing Partner pursuant to Section
4.06(b). Any such lending Contributing Partner may elect any of the
options set forth in the immediately preceding sentence by giving written
notice of such election to the Non-Contributing Partner within thirty (30)
days following such maturity date. Failure of any such lending
Contributing Partner to give such written notice to such Non-Contributing
Partner shall be deemed to constitute an election by such lending
Contributing Partner to renew such Partner Loan for an additional term of
six (6) months on the terms set forth herein. Notwithstanding the
foregoing provisions of this Section 4.06(a) and the provisions of Section
4.06(b), such Non-Contributing Partner shall have the right, but not the
obligation, to repay any Partner Loan or portion thereof (together with
all accrued, unpaid interest thereon) which a lending Contributing Partner
has elected to contribute to the capital of the Partnership pursuant to
Section 4.06(b) within thirty (30) days following the effective date of
such written notice setting forth such contribution election and thereby
avoid dilution of such Non-Contributing Partner's Percentage Interest
pursuant to Section 4.06(b);
(b) Subject to Section 4.06(c), the Contributing Partner(s) may
contribute to the capital of the Partnership, in cash, within ten (10)
days following the Contribution Date and in proportion to the respective
Percentage Interests of the Contributing Partner(s) electing the option
pursuant to this Section 4.06(b) (or in such different proportion as they
may otherwise unanimously agree), an amount equal to the Delinquent
Contribution, and such Contributing Partner's respective Capital
Account(s) and Unrecovered Additional Contribution Account(s) shall each
be credited with the respective amounts so contributed by such
Contributing Partners. Upon the maturity of a Partner Loan that is not
fully repaid on or before the maturity thereof, each Contributing Partner
advancing such Partner Loan (or any portion thereof) also may contribute
to the capital of the Partnership, in accordance with the provisions of
Section 4.06(a) above and in proportion to the respective Percentage
Interests of such lending Contributing Partners electing the option
pursuant to Section 4.06(a) above (or in such different proportion as they
may otherwise unanimously agree), the outstanding principal of and/or
accrued, unpaid interest on such Partner Loan (or portion thereof)
previously advanced by such Contributing Partner(s) that is not repaid on
or before the maturity thereof. In the event of any such contribution of a
Partner Loan (or any portion thereof) by a Contributing Partner who
previously advanced such Partner Loan (or portion thereof), (i) the amount
of the outstanding principal and/or accrued, unpaid interest on such
Partner Loan (or portion thereof) so contributed shall be deemed repaid
and satisfied and (ii) each of the Capital Account and the Unrecovered
Additional Contribution Account of the relevant
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Non-Contributing Partner shall be debited, and each of the Capital Account
and the Unrecovered Additional Contribution Account of such Contributing
Partner shall be credited, by the amount of such outstanding principal
and/or interest so contributed. In the event of any contribution by one or
more Contributing Partners pursuant to this Section 4.06(b), the
Percentage Interest of the relevant Non-Contributing Partner in Net
Profits and Cash Flow (and Net Losses if a Majority-in-Interest of the
Contributing Partners electing the option pursuant to this Section 4
.06(b) so agree) shall be decreased, as of the Contribution Date (or the
date the pertinent Partner Loan or portion thereof is contributed to the
capital of the Partnership, as the case may be) by one percentage point
(or fraction thereof, as the case may be, but rounded to the nearest
one-hundredth of one percentage point) for each Fifty Thousand Dollars
($50,000) (or proportionate fraction thereof, as the case may be) of the
Delinquent Contribution (or of the outstanding principal of and/or
accrued, unpaid interest on a Partner Loan, as the case may be)
contributed by such Contributing Partner(s) pursuant to this Section
4.06(b). The Percentage Interests of the relevant Contributing Partner(s)
electing the option pursuant to this Section 4.06(b) shall be increased,
in the aggregate, by a like amount in proportion to the portion of the
Delinquent Contribution (or the outstanding principal of and accrued,
unpaid interest on any Partner Loan or portion thereof), as the case may
be, contributed by each such Contributing Partner to the capital of the
Partnership pursuant to this Section 4.06(b); provided; however, such
Contributing Partner(s) shall in no event succeed to all or any portion of
the Capital Account, the Unrecovered Contribution Account and/or the
Unrecovered Additional Contribution Account of the relevant
NonContributing Partner by operation of this Section 4.06(b). For example,
if (i) the Percentage Interest of the Non-Contributing Partner were equal
to twenty percent (20%) and (ii) the amount of the Delinquent
Contributions contributed to the Partnership by two (2) Contributing
Partners with Percentage Interests equal to thirty percent (30%) and ten
percent (10%), respectively, on behalf of the Non-Contributing Partner
were equal to Four Hundred Fifty Thousand Dollars ($450,000), and One
Hundred Fifty Thousand Dollars ($150,000), respectively, then the
Percentage Interest of the Non-Contributing Partner would be decreased by
twelve (12) percentage points ($600,000/$50,000) from twenty percent (20%)
to eight percent (8%), and the Percentage Interests of the Contributing
Partners would be increased, in the aggregate, by a like amount of
percentage points so that their respective Percentage Interests would
equal, immediately following such dilution, thirty-nine percent (39%) and
thirteen percent (13%), respectively.
(c) Notwithstanding any provision contained in this Section .4.06, in
the event that either Hegness, on the one hand, or A&J, on the other hand,
is a Non-Contributing Partner, then IMA Corp., in the first instance, and
SMI, in the second instance, (but not any other Partner) for a period
often (10) days after the date such contribution was required to be made
by such Non-Contributing Partner, shall have the right, but not the
obligation, (i) to elect to pursue any rights or remedies IMA Corp. or
SMI, as the case may be, may have against such Non-Contributing Partner at
law or in equity by delivering written notice of such election within such
ten (10) day period or (B) exercise any of the remedies set forth in
Sections 4.06(a) and/or 4.06(b) above. Following the
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expiration of such ten (10) day period, if IMA Corp. or SMI, as the case
may be, has failed to elect to exercise any of such remedies, then any
Contributing Partner (including IMA Corp. and/or SMI) may exercise any
remedy such Partner may have against the Non-Contributing Partner at law
or in equity, as well as either or both of the remedies set forth in
Sections 4.06(a) and/or 4.06(b) above, all in accordance with the
provisions of this Section 4.06.
(d) Notwithstanding any provision contained in Section 4.06(b), the
Non-Contributing Partner's Percentage Interest shall in no event be
reduced below one-tenth one percentage point, the Partners Percentage
Interest, by operation of Section 4.06(b). In the event that the
Non-Contributing Partner's Percentage Interest in Cash Flow and Net
Profits is reduced to the Minimum Percentage Interest, then the
Non-Contributing Partner shall remain as a partner in the Partnership with
all of the rights, duties and obligations of a partner under this
Agreement.
4.07 Capital Contributions in General. Except as otherwise expressly
provided in this Agreement or as may otherwise be unanimously agreed in writing
by all of the Partners, (i) no part of the contributions of any Partner to the
capital of the Partnership may be withdrawn by such Partner, (ii) no Partner
shall be entitled to receive interest on such Partner's contributions to the
capital of the Partnership, (iii) no Partner shall have the right to demand or
receive property other than cash in return for such Partner's contribution to
the Partnership, and (iv) no Partner shall be required or entitled to
contribute additional capital to the Partnership other than as permitted or
required under this Article IV and/or Section 8.03.
ARTICLE V
ALLOCATION OF PROFITS AND LOSSES
5.01 Net Losses from Operations. Net Losses resulting f rom the operations
of the Partnership (as distinguished from an Extraordinary Event) for each
fiscal year (or part thereof) shall be allocated at the end of such fiscal year
(or part thereof) to the Partners in proportion to their respective Percentage
Interests.
5.02 Net Losses from Extraordinary Events. Net Losses resulting from the
occurrence of an Extraordinary Event or the Liquidation of the Partnership, as
the case may be, shall be allocated (i) after adjusting the Capital Accounts of
the Partners for all previous allocations of Net Profits and Net Losses
resulting from the operations of the Partnership and all previous distributions
of Cash Flow for the fiscal year of such Extraordinary Event, but prior to the
distribution of Cash Flow resulting from such Extraordinary Event and/or the
proceeds from the Liquidation of the Partnership, as the case may be, or (ii)
at the end of the fiscal year in which such Extraordinary Event occurred but
following the adjustments to the Partners respective Capital Accounts
referenced above in clause (i) of this Section, whichever occurs earlier, in
the following order of priority:
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(a) First, to the Partners, in proportion to, and to the extent of,
the amount by which the cumulative Net Profits previously allocated to
each such Partner pursuant to Section 5.04(e) exceeds the cumulative Net
Losses previously allocated to each such Partner pursuant to this Section
5.02(a);
(b) Second, to IMA Corp., until the cumulative Net Losses allocated
to IMA Corp. pursuant to this Section 5.02(b) equals Four Million Dollars
($4,000,000);
(c) Third, fifty percent (50%) to IMA Corp., twenty-five percent
(25%) to A&J and twenty-five percent (25%) to SMI until the cumulative Net
Losses allocated to all of such Partners pursuant to this Section 5.02(c)
equals Ten Million Dollars ($10,000,000);
(d) Fourth, to the Partners in proportion to, and to the extent of,
their respective positive capital account balances, if any; and
(e) Thereafter, to the Partners in proportion their respective
Percentage Interests.
5.03 Net Profits form Operations. Net Profits resulting from the
operations of the Partnership (as distinguished from an Extraordinary Event)
for each fiscal year (or part thereof) shall be allocated at the end of such
fiscal year (or part thereof) in the following order of priority:
(a) First, to SMI, based upon such Partner's Percentage Interest, to
A&J, based upon such Partner's Percentage Interest and to IMA Corp., based
upon the Koll Partners' Percentage Interests, until such time as the
Partnership has distributed to each Partner the entire amount of Cash Flow
each such Partner is entitled to receive pursuant to Sections 6.01(a),
6.01(c), 6.01(d), and/or 6.01(e), if any; and
(b) Thereafter, to the Partners in proportion to their respective
Percentage Interests.
5.04 Net Profits form Extraordinary Events. Net Profits resulting from the
occurrence of an Extraordinary Event or upon the Liquidation of the
Partnership, as the case may be, shall be allocated (i) after adjusting the
Capital Accounts of the Partners for all previous allocations of Net Profits
and Net Losses resulting from the operations of the Partnership and all
previous distributions of Cash Flow for the fiscal year of such Extraordinary
Event, but prior to the distribution of Cash Flow resulting from such
Extraordinary Event and/or the proceeds from the Liquidation of the
Partnership, as the case may be, or (ii) at the end of the fiscal year in which
such Extraordinary Event occurred but following the adjustments to the
Partners' respective Capital Accounts referenced above in clause (i) of this
Section, whichever occurs earlier, in the following order of priority:
(a) First, to the Partners in proportion to, and to the extent of,
the amount by which the cumulative Net Losses previously allocated to each
such Partner pursuant to
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Section 5.02(e) exceeds the cumulative Net Profits previously allocated to
each such Partner pursuant to this Section 5.04(a);
(b) Second, to the Partners in proportion to, and to the extent of,
the amount by which the cumulative Net Losses previously allocated to each
such Partner pursuant to Section 5.02(d) exceeds the cumulative Net
Profits previously allocated to each such Partner pursuant to this Section
5.04(b);
(c) Third, to IMA Corp. , SMI and A&J in proportion to, and to the
extent of , the amount by which the cumulative Net Losses previously
allocated to each such Partner pursuant to Section 5.02(c) exceeds the
cumulative Net Profits previously allocated to each such Partner pursuant
to this Section 5.04(c);
(d) Fourth, to IMA Corp. to the extent by which the cumulative Net
Losses previously allocated to IMA Corp. pursuant to Section 5.02(b)
exceeds the cumulative Net Profits previously allocated to IMA Corp.
pursuant to this Section 5.04(d);
(e) Thereafter, to the Partners in proportion to their respective
Percentage Interests.
5.05 Special Allocation of Gross Income to SMI, A&J and Hegness.
Notwithstanding the provisions of Section 5. 04 (e), in the event that at any
time prior to the occurrence of the relevant Extraordinary Event referenced in
Section 5.04, Net Profits are allocated to IMA Corp. pursuant to Section
5.03(a) have otherwise been allocated to Hegness if such Net Profits had been
allocated pursuant to the provisions of Section 5.03(b) ("Disproportionate
Allocation"), then (i) any Gross Income realized by the Partnership as the
result of such Extraordinary Event shall be allocated (A) first, to SMI, A&J
and Hegness to the extent of, and in proportion to, the aggregate amount of Net
Profits that would otherwise be allocated to such Partners pursuant to Section
5.04(e) if the provisions of this Section 5.05 were not taken into account, and
(B) thereafter, to Hegness to the extent of the aggregate amount of any and all
Disproportionate Allocations, and (ii) after taking into account the provisions
of clause (i) above, any remaining Net Profits allocable under Section 5.04(e)
or Net Losses (which are created as the result of such Gross Income
allocations), as the case may be, shall be allocated one hundred percent (100%)
to IMA Corp.
5.06 Minimum Gain Chargeback and Excess Nonrecourse Liabilities.
Notwithstanding any other provision in this Article V, (i) any and all
"nonrecourse deductions" (as defined in Treasury Regulation Sections l.704-1T
(b) (4) (iv) (a) (1) and 1.704-1T (b) (4) (iv) (b)) of the Partnership for any
fiscal year or other period shall be allocated to the Partners in proportion to
their respective Percentage Interests; and (ii) each Partner shall be specially
allocated items of Partnership income and gain in accordance with the minimum
gain chargeback requirements set forth in Treasury Regulation Sections l.704-1T
(b) (4) (iv) (e) and 1.704-1T (b) (4) (iv) (f). Any and all "excess nonrecourse
liabilities" (as determined in accordance with the provisions of Treasury
Regulation Sec Section 1.752-1T (e) (3) (ii) (B)) shall be allocated to the
Partners in proportion to their respective Percentage Interests.
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5.07 Differing Tax Basis; Tax Allocation. The Partners shall cause
depreciation and/or cost recovery deductions and gain or loss with respect to
each item of property treated as contributed to the capital of the Partnership
to be allocated among the Partners for federal income tax purposes in
accordance with the principles of Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder, and for state income tax purposes in
accordance with comparable provisions of the California Revenue & Taxation
Code, as amended, and the regulations promulgated thereunder, so as to take
into account the variation, if any, between the adjusted tax basis of such
property and its book value (as determined for purposes of the maintenance of
Capital Accounts in accordance with this Agreement and Treasury Regulation
Section 1.704-1 (b) (2) (iv) (g)).
5.08 Interpretation of Allocations. The allocation provisions contained in
this Article V are intended to comply with, and shall be interpreted and
construed consistently with, the provisions of Sections 704(b), 704(c) and 752
of the Code and the Treasury Regulations promulgated thereunder. To the extent
any allocation is mandated by such Code Sections or such Treasury Regulations
to be made in a manner different than expressly provided herein or in a manner
not specifically provided herein such allocation shall be made in accordance
with the requirement of the applicable Code Sections and/or Treasury
Regulations to the extent reasonable and economically consistent with the
interests of the Partners in the Partnership, taking into account the disparity
in such interests created by the Partners' respective Capital Account,
Unrecovered Additional Contribution Account and/or Unrecovered Contribution
Account balances.
ARTICLE VI
DISTRIBUTIONS
6.01 Distribution of Cash Flow. Subject to Section 8.02, Cash Flow of the
Partnership which is determined pursuant to this Agreement with respect to any
fiscal year shall be distributed to the Partners in the following order of
priority:
(a) First, fifty percent (50%) to each of A&J and SMI until the
cumulative and collective distributions made pursuant to this Section
6.01(a) equal Two Million Dollars ($2,000,000);
(b) Second, to repay the entire remaining outstanding balance of the
Security Pacific Loan (including any and all accrued and unpaid interest
thereon);
(c) Third, to the Partners to the extent of, and in proportion to,
their respective positive Unrecovered Additional Contribution Account
balances, if any;
(d) Fourth, sixty percent (60%) to IMA Corp. and twenty percent (20%)
to each of SMI and A&J until the cumulative and collective distributions
made pursuant to this Section 6.01(d) equal Ten Million Dollars
($10,000,000);
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(e) Fifth, one hundred percent (100%) to IMA Corp. until the
cumulative distributions made pursuant to this Section 6.01(e) equal Two
Million Dollars ($2,000,000); and
(f) Thereafter, to the Partners in proportion to their respective
Percentage Interests.
6.02 In-Kind Distribution. Assets of the Partnership (other than cash)
shall not be distributed in kind to the Partners without the prior written
approval of all of the Partners. If any assets of the Partnership are
distributed to the Partners in kind, then for purposes of this Agreement, such
assets shall be valued on the basis of the agreed upon fair market value
thereof (without taking into account Section 7701(g) of the Code) on the date
of distribution, and any Partner entitled to any interest in such assets shall
receive such interest as a tenant-in-common with the other Partner(s) so
entitled with an undivided interest in such assets in proportion to their
respective Capital Accounts (after taking into account all Capital Account
adjustments, including any book-up or book-down caused by such distribution) or
as such Partners may otherwise unanimously agree. Upon such distribution, the
Capital Accounts of the Partners shall be adjusted to reflect the amount of
gain or loss that would have been allocated to the Partners pursuant to the
appropriate provisions of this Agreement had the Partnership sold the assets
being distributed for their agreed upon fair market value (taking into account
Section 7701(g) of the Code) immediately prior to their distribution.
ARTICLE VII
RESTRICTIONS ON TRANSFER OF
PARTNERSHIP INTEREST
7.01 Limitations on Transfer. Except as expressly provided in this Article
VII and in Section 3.03, no Partner shall sell, exchange, assign, transfer,
pledge, mortgage, encumber, grant a security interest in or otherwise dispose
of or hypothecate, directly or indirectly, all or any part of such Partner's
Partnership Interest, without the prior written consent of each of IMA Corp.,
SMI and A&J, which consent may be withheld in any of such Partner's sole
discretion. Any transfer or attempted transfer by a Partner of all or any
portion of such Partner's Partnership Interest in violation of the restrictions
against transfer set forth in this Article VII shall be deemed null and void ab
initio and of no force or effect.
7.02 Right of First Refusal With Respect to IMA Corp. If IMA Corp. desires
to transfer or otherwise dispose of all or any portion of the Partnership
Interest of IMA Corp. (the "IMA Corp. Offered Interest"), then IMA Corp. shall
give written notice ("IMA Corp. Offering Notice") to each of SMI and A&J
(collectively, the "Non-Transferring Partners") of IMA Corp.'s intention to so
transfer. The IMA Corp. Offering Notice shall specify the IMA Corp. Offered
Interest to be transferred, the consideration to be received therefor, the
identity of the proposed purchaser, and the terms upon which IMA Corp. intends
to so transfer. For a period of ten (10) days following the effective date of
the IMA Corp. Offering Notice each Non-Transferring
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Partner shall have the option to purchase all but not less than all, of the IMA
Corp. Offered Interest for the price and on the terms stated in the IRA Corp.
Offering Notice. If more than one Non-Transferring Partner timely and validly
elects to so purchase all of the IMA Corp. Offered Interest, then such
Non-Transferring Partners shall purchase the IMA Corp. Offered Interest in
proportion to their respective Percentage Interests as of the effective date of
the IMA Corp. Offering Notice (or in such different proportion as such
Non-Transferring Partners may unanimously agree). If the Non-Transferring
Partners, or any of them, timely and validly elect to so purchase all of the
IMA Corp. Offered Interest within the time period specified, then the transfer
of the IMA Corp. Offered Interest from IMA Corp. to the Non-Transferring
Partner(s) so electing shall be closed and consummated at the principal place
of business of the Partnership upon the later of the closing set forth in the
IMA Corp. Offering Notice or thirty (30) days following the effective date of
the last delivered purchase-election notice of the Non-Transferring Partner(s).
If, within the ten (10)-day period during which the Non-Transferring Partners
have the right to purchase the IMA Corp. Offered Interest, none of the
Non-Transferring Partners timely and validly elects to purchase all of the IMA
Corp. Offered Interest in accordance with this Section 7.02, then IMA Corp.
may, within one hundred twenty (120) days following the expiration of said ten
(10)-day period, transfer the entire IMA Corp. Offered Interest to the person
or entity identified in the IMA Corp.
7.03 Right of First Refusal/Right of Co-Sale With Respect to SMI and A&J..
If either SMI, on the one hand, or A&J, on the other hand, desires to transfer
or otherwise dispose of all or a proportionate share of the entire Partnership.
Interest of such Partner (the "S/G Offered Interest"), then such Partner (the
"Selling Partner") shall give written notice (the "S/G Offering Notice") to
whichever of SMI or A&J is not the Selling Partner (the "Non-Selling Partner")
and IMA Corp. of the Selling Partner's intention to so transfer. The SIG
Offering Notice shall specify the SIG Offered Interest to be transferred, the
consideration to be received therefor, the identity of the proposed purchaser,
and the terms upon which the Selling Partner intends to so transfer. For a
period of ten (10) days following the effective date of the SIG Offering
Notice, the Non-Selling Partner shall have the option to purchase all, but not
less than all, of the S/G Offered Interest for the price and on the terms
stated in the S/G Offering Notice. If the Non-Selling Partner timely and
validly elects to so purchase all of the S/G Offered Interest then the transfer
of the S/G Offered Interest from the Selling Partner to the Non-Selling Partner
shall be closed and consummated at the principal place of business of the
Partnership upon the later of the closing set forth in the S/G Offering Notice
or thirty (30) days following the effective date of the purchase-election
notice delivered by the Non-Selling Partner. If the Non-Selling Partner fails
to timely and validly elect to purchase all of the S/G Offered Interest within
the ten (10)-day period set forth above, then for a period of fifteen (15) days
following the expiration of such ten (10)-day period, IMA Corp. shall have the
right, but not the obligation, (i) to purchase all, but not less than all, of
the S/G Offered Interest for the price and on the terms stated in the S/G
Offering Notice in accordance with the provisions set forth below or (ii) to
require the Selling Partner to cause the sale to the proposed purchaser of the
portion of the Partnership Interests of the Koll Partners that corresponds to
the Proportionate Share of the S/G Offered Interest. It is the intention of the
Partners that the portion of the Partnership Interests of the Koll Partners
that is transferred as a result of the exercise by IMA Corp. of the co-sale
provision described in clause (ii) above shall to the extent possible be
identical in all respects to the additional portion of the
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Partnership Interest which would have been transferred by the Selling Partner
in connection therewith if IMA Corp. had not so elected, including, without
limitation, the portion of the Capital Account, Unrecovered Contribution
Account and/or Unrecovered Additional Contribution Account so transferred, the
Percentage Interest, and the priority rights relative to distributions of Cash
Flow and allocations of Net Profits and Net Losses. Accordingly, to the extent
possible, appropriate adjustment shall be made to the Partnership Interests of
the Koll Partners so transferred so as to take into account the disparities in
the interests of the Partners relative to the items described in the preceding
sentence. The purchase price payable by such proposed purchaser to the Selling
Partner and the Koll Partners shall be proportionately allocated between the
Selling Partner and the Koll Partners so as to take into account the foregoing
proportionate purchases of such Partnership Interests, and shall otherwise be
on the same terms and conditions set forth in the SIG Offering Notice.
If IMA Corp. timely and validly elects to purchase all of the S/G Offered
Interest within the fifteen (15)-day period set forth above in accordance with
clause (i) above, then the transfer of the S/G Offered Interest from the
Selling Partner to IMA Corp. shall be closed and consummated at the principal
place of business of the Partnership upon the later of the closing set forth in
the S/G Offering Notice or thirty (30) days following the effective date of the
purchase-election notice delivered to the Selling Partners by IMA Corp. If IMA
Corp. timely and validly elects to require the Selling Partner to cause the
sale of a portion of the Partnership Interests of the Koll Partners pursuant to
clause (ii) above, then the transfer of the proportionate Partnership Interests
of the Koll Partners and the Selling Partner shall be closed and consummated in
accordance with the terms and conditions of the S/G Offering Notice. In the
event IMA Corp. fails to timely and validly elect either of the options set
forth in clauses (i) and (ii) above, then the Selling Partner may, within one
hundred twenty (120) days following the expiration of said fifteen (15)-day
period, transfer the entire S/G Offered Interest to the person or entity
identified in the S/G Offering Notice, on the same terms and conditions and at
the same price specified in the S/G Offering Notice. If the Selling Partner
fails to so transfer the S/G Offered Interest within such one hundred twenty
(120)-day period, then, prior to transferring the S/G Offered Interest, the
Selling Partner shall and must resubmit a S/G Offering Notice to the
Non-Selling Partner and IMA Corp., and again comply with the foregoing
provisions of this Section 7.03.
7.04 Right of First Refusal With Respect to Hegness. If Hegness desires to
transfer or otherwise dispose of all or any portion of the Partnership Interest
of Hegness (the "Hegness Offered Interest"), then Hegness shall give written
notice ("Hegness Offering Notice") to SMI and A&J (collectively, the
Non-Assigning Partners") and IMA Corp. of the intention of Hegness to so
transfer. The Hegness Offering Notice shall specify the Hegness Offered
Interest to be transferred, the consideration to be received therefore, the
identity of the proposed purchaser, and the terms upon which Hegness intends to
so transfer. For a period of ten (10) days following the effective date of the
Hegness Offering Notice, IMA Corp. shall have the option to purchase all, but
not less than all, of the Hegness Offered Interest for the price and on the
terms stated in the Hegness Offering Notice. If IMA Corp. timely and validly
elects to so purchase a 11 of the Hegness Offered Interest then the transfer of
the Hegness Offered Interest from Hegness to IMA Corp. shall be closed and
consummated at the principal place of business of the Partnership
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within thirty (30) days following the effective date of the purchase-election
notice delivered by IMA Corp. If IMA Corp. does not timely and validly elect to
purchase all of the Hegness Offered Interest within the ten (10)-day period set
forth above, then each of the Non-Assigning Partners shall have the option for
a period of eleven (11) days following the expiration of such ten (10)-day
period to purchase all, but not less than all, of the Hegness Offered Interest
for the price and on the terms stated in the Hegness Offering Notice. If more
than one Non-Assigning Partner timely and validly elects to so purchase all of
the Hegness Offered interest, than such Non-Assigning Partner shall purchase
the Hegness Offered Interest in proportion to their respective Percentage
Interests as of the effective date of the Hegness Offering Notice (or in such
different proportion as such Non-Assigning Partners may unanimously agree). If
the Non-Assigning Partners, or any of them, timely and validly elects to so
purchase all of the Hegness Offered Interest within the time period specified,
then the transfer of Hegness Offered Interest from Hegness to the Non-Assigning
Partner(s) so electing shall be closed and consummated at the principal place
of business of the Partnership within thirty (30) days following the effective
date of the last delivered purchase-election notice of the Non-Assigning
Partner(s). If, within the eleven (11)-day period during which the
Non-Assigning Partners have the right to purchase the Hegness Offered Interest,
none of the Non-Assigning Partners timely and validly elects to purchase all of
the Hegness Offered Interest in accordance with this Section 7.04, then Hegness
may, within one hundred twenty (120) days following the expiration of said
eleven (11)-day period, transfer the entire Hegness Offered Interest to the
person or entity identified in the Hegness Offering Notice, on the same terms
and conditions and at the same price specified in the Hegness Offering Notice.
If Hegness fails to so transfer the Hegness Offered Interest within such one
hundred twenty (120)-day period, then, prior to transferring the Hegness
Offered Interest, Hegness shall and must resubmit a Hegness Offering Notice to
the other Partners and again comply with the foregoing provisions of this
Section 7.04.
7.05 Permitted Transfers. Notwithstanding the provisions of Section 7.01
and without complying with the provisions of Sections 7.02, 7.03 and 7.04, the
following Partners and constituent owners of Partners may transfer all or any
part of their respective Partnership Interests, or ownership interests in a
Partner, as the case may be, to the following (collectively, "Permitted
Transferees."):
(a) In the case of any Partner, any entity in which such Partner,
directly or indirectly, retains more than eighty percent (80%) of the
voting and/or beneficial ownership interests in such entity, provided that
any transfer of any ownership interest in such entity which results in
such Partner not owning, directly or indirectly, more than eighty percent
(80%) of the voting and/or beneficial ownership interests in such entity
shall constitute, notwithstanding anything to the contrary contained in
this Agreement, a non-permitted transfer);
(b) In the case of any constituent owner of IMA Corp., SMI and/or
A&J:
(i) Any inter vivos trust established for estate planning
purposes for the sole benefit of such owner, one or more members of
such owner's family that are related to such owner by blood (which
members shall include, without
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limitation, the spouse, adopted children, and step-children of such
owner) and/or any other lineal descendant's of such owner and in
which such owner is a trustee thereof; or
(ii) In the event of the death or adjudicated incompetence of
such owner, such owner's legal representatives, estate, heirs, or a
testamentary trust established for the sole benefit of one or more of
the members of such owner's family described in Section 7.05(b)(i)
above and/or any other lineal descendants of such owner.
(c) In the case of Hegness:
(i) Any inter vivos trust established for estate planning
purposes for the sole benefit of such Partner, one or more members of
such Partner's family that are related to such Partner by blood
(which members shall include, without limitation, the spouse, adopted
children, and step-children of such Partner) and/or any other lineal
descendant's of such Partner and in which such Partner is a trustee
thereof; or
(ii) In the event of the death or adjudicated incompetence of
such Partner, such Partner's legal representatives, estate, heirs, or
a testamentary trust established for the sole benefit of one or more
of the members of such Partner's family described in Section
7.05(c)(i) above and/or any other lineal descendants of such Partner.
Notwithstanding any other provision of this Article VII, no transfer by any
Partner or constituent owner of a Partner shall be permitted if the
consummation of such transfer would result in a breach or violation in (i) any
loan documentation relative to any indebtedness encumbering all or any portion
of the Project and/or (ii) any lease or sub-lease documentation relative to any
lease or sub-lease encumbering all or any, portion of the Project, and such
transfer restrictions are not waived by the applicable lender or the applicable
lessor (or sub-lessor), as the case may be.
7.06 Admission of Substituted Partners. If any Partner assigns or
otherwise transfers such Partner's Partnership Interest to a transferee in
accordance with this Article VII, and such transferee is designated by the
transferring Partner as a substituted partner, then such transferee shall be
entitled to be admitted into the Partnership as a substituted partner, and this
Agreement, the Fictitious Business Name Statement and the Statement of
Partnership for the Partnership shall be amended to reflect such admission,
provided that the following conditions are complied with:
(a) Each of the non-transferring Partners (other than Hegness)
reasonably approves the form and content of the instrument of assignment;
(b) The transferring Partner and such Partner's transferee execute
and acknowledge such other one or more instruments as each of the
non-transferring Partners
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(other than Hegness) may reasonably deem necessary or desirable to
effectuate such admission in accordance with this Article VII;
(c) The transferee in writing accepts and adopts all of the terms and
conditions of this Agreement, as the same may have been amended; and
(d) The transferring Partner or such Partner's transferee pays to the
Partnership, as each of the non-transferring Partners (other than Hegness)
may reasonably determine, all expenses incurred in connection with such
admission, including, without limitation, legal fees and costs (which
costs may include, for example, the cost of preparing, recording, filing
and/or publishing any amendment to the Statement of Partnership any
amendment to the Statement of Partnership and/or Fictitious Business Name
Statement to reflect such admission).
In the event of non-compliance by the transferring Partner or such Partner's
transferee with any of the provisions of paragraphs (a) through (d) of this
Section 7.06 within the time provided for the consummation of such transfer,
then such transfer shall be deemed null and void ab initio and of no force and
effect.
7.07 Restrictions on Transferees. A transferee of a Partnership Interest
who does not become a substituted partner in accordance with Section 7.06 above
shall have no right to require any information relating to the Partnership or
an accounting of the Partnership's transactions, to inspect the Partnership
books, or to vote on any of the matters as to which a Partner would be entitled
to vote under this Agreement. Such transferee shall only be entitled to receive
the share of the profits or other compensation by way of income, or the return
of such transferee's contributions, to which such transferee's assignor would
otherwise be entitled.
7.08 Election. In the event of a transfer of the Partnership Interest of
any Partner, the death of a Partner, or the distribution of any property of the
Partnership to a Partner, the Partnership may file, in the reasonable
discretion of the Management Committee, an election in accordance with
applicable Treasury Regulations to cause the basis of the Partnership property
to be adjusted for federal income tax purposes as provided by Sections 734 and
743 of the Code, provided such an adjustment results in a net increase to the
bases of the Partnership's assets. Subject to the provisions of Treasury
Regulation Section 1.704-1(b), adjustments to the adjusted tax basis of
Partnership property under Section 743 and 732(d) of the Code shall not be
reflected in the Capital Account of the transferee Partner or on the books of
the Partnership, and subsequent Capital Account adjustments for distributions,
depreciation, amortization, and gain or loss with respect to such property
shall disregard the effect of such basis adjustment.
7.09 Allocations Between Transferor and Transferee. Upon the transfer of
all or any part of the Partnership Interest of a Partner as hereinabove
provided or the dilution of a Partner's Percentage Interest pursuant to Section
4.06(b), Net Profits and Net Losses shall be allocated between the transferor
and transferee (or the Partners, in the case of any such dilution) on the basis
of the computation method which in the reasonable discretion of the Management
Committee is in the best interests of the Partnership, provided such method is
in conformity with
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<PAGE>
the methods prescribed by Section 706 of the Code 1.706-1(c)(2)(ii).
Distributions of Cash Flow shall be made to the holder of record of the
Partnership Interest on the date of distribution. Except in the case of any
such dilution, and taking into account the adjustments set forth in Section
7.03, any transferee of a Partnership Interest shall succeed to the Capital
Account, and, if applicable, the Unrecovered Contribution Account and/or the
Unrecovered Additional Contribution Account of the transferor Partner to the
extent such accounts relate to the transferred interest; provided, however,
that if such transfer causes a termination of the Partnership pursuant to
Section 708(b)(1)(B) of the Code, the Capital Accounts of all Partners,
including the transferee, shall be redetermined as of the date of such
termination in accordance with Treasury Regulation Sections 1.704-1(b) and
1.704-IT(b).
7.10 Partition. No Partner shall have the right to partition any property
of the Partnership, or any interest therein, nor shall any Partner make
application to any court or authority to commence or prosecute any action or
proceeding for a partition thereof, and upon any breach of the provisions of
this Section 7.10 by any Partner, the other Partners (in addition to all rights
and remedies afforded by law or equity) shall be entitled to a decree or order
restraining or enjoining such application, actions or proceedings.
ARTICLE VIII
DISSOLUTION AND WINDING UP OF THE PARTNERSHIP
8.01 Events Causing Dissolution of the Partnership. In the event of any
Partner's bankruptcy or other withdrawal from the Partnership or the admission
of a new partner into the Partnership, the Partnership shall not dissolve or
terminate but shall continue without interruption or a break in continuity. The
Partnership shall, however, be dissolved upon the first to occur of any of the
following events:
(a) The expiration of the term of the Partnership unless such term
has been extended by the unanimous agreement of the Partners;
(b) The sale, transfer or other disposition (exclusive of an exchange
for other real property) of all or substantially all of the Project and
the collection by the Partnership of all Cash Flow derived therefrom; or
(c) The unanimous affirmative election of the Management Committee to
dissolve the Partnership.
8.02 Termination of the Partnership. Upon the Liquidation of the
Partnership caused by other than the termination of the Partnership under
Section 708(b)(1)(B) of the Code (in which latter case the Partnership shall
remain in existence in accordance with the provisions of such Section of the
Code), the Liquidator shall proceed to complete and conclude the affairs of the
Partnership. During such period of proceeding to the completion and conclusion
of the Partnership's affairs, the Net Profits, Net Losses, and cash
distributions of the Partnership shall
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continue to be shared by the Partners in accordance with this Agreement. The
assets of the Partnership shall be liquidated as promptly as consistent with
obtaining a fair value therefor, and the proceeds therefrom, to the extent
available, shall be applied and distributed by the Partnership on or before the
end of the taxable year of such Liquidation or, if later, within ninety (90)
days after such Liquidation, in the following order:
(a) First, to creditors, including Partners who are creditors, in the
order of priority as provided by law;
(b) Second, to the setting up of any reserves which the Liquidator
deems necessary, in the Liquidator's reasonable discretion, for any
contingent or unforeseen. liabilities or obligations of the Partnership;
and
(c) Thereafter, to the Partners in proportion to, and to the extent
of, the positive balance in each such Partner's Capital Account (after
taking into account all Capital Account adjustments for the taxable year
of such Liquidation).
Any amounts withheld for reserves pursuant to paragraph (b) of this
Section 8.02 shall be distributed to the Partners as soon as practicable, as
determined by the Liquidator, in proportion to the Partners' respective
positive Capital Account balances.
8.03 Negative Capital Account Restoration. Upon the Liquidation of the
Partnership (or upon the Liquidation of a Partner's Partnership Interest where
the Partnership is not in Liquidation), each Partner (or the relevant Partner
where the Partnership is not in Liquidation) shall be obligated to contribute
to the capital of the Partnership an amount equal to the negative balance, if
any, standing in such Partner's Capital Account (after taking into account all
Capital Account adjustments for all taxable years, including the year such
Liquidation occurs, and after adding a positive sum to such negative balance
(but only until such balance is increased to zero) equal to the amount of such
Partner's allocable share of minimum gain (as determined in accordance with the
provisions of Treasury Regulation Section 1.704-1T (b) (4) (iv) (f)) on or
before the end of the taxable year of such Liquidation or, if later, within
ninety (90) days after such Liquidation in compliance with Treasury Regulation
Section 1.704-1 (b). The entire amount so contributed shall be treated as
proceeds from the Liquidation of the Partnership and shall be applied to
satisfy any outstanding Partnership indebtedness and obligations, including,
without limitation, the Partnership's obligation to distribute to each Partner
having a positive Capital Account balance a sum equal to such positive balance.
8.04 Retirement or Withdrawal of a Partner. No Partner shall have the
right to voluntarily or involuntarily withdraw or retire from the Partnership
(by reason of such Partner's death, physical or mental incapacity, bankruptcy
or otherwise) and any such voluntary or involuntary withdrawal or retirement
shall constitute a breach of this Agreement unless such Partner's Partnership
Interest is transferred in accordance with the provisions of Section 8.03 or
Article VII. Each Partner hereby waives any of the rights or remedies available
to such Partner
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<PAGE>
(or such Partner's successor(s)-in-interest) pursuant to Section 15042 of the
California Corporations Code, as amended, to have the interest of such
withdrawing or retiring Partner purchased upon the withdrawal or retirement of
such Partner.
ARTICLE IX
ARBITRATION OF DISPUTES
ANY DISPUTE, CONTROVERSY OR OTHER CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE BREACH OR INTERPRETATION THEREOF, SHALL BE SETTLED BY
ARBITRATION BEFORE THE JUDICIAL ARBITRATION AND MEDIATION SERVICE (THE
"SERVICE"), LOCATED AT 500 NORTH STATE COLLEGE BOULEVARD, SUITE 600, ORANGE,
CALIFORNIA 92668, IN ACCORDANCE WITH THE USUAL PROCEDURES OF THE SERVICE,
SUBJECT TO THE FOLLOWING PROVISIONS:
(a) THE PARTNER SEEKING ARBITRATION SHALL DELIVER A WRITTEN NOTICE OF
DEMAND TO RESOLVE DISPUTE (THE "DEMAND") TO THE OTHER PARTNERS AND TO THE
SERVICE. THE DEMAND SHALL INCLUDE A BRIEF STATEMENT OF SUCH PARTNER'S
CLAIM, THE AMOUNT THEREOF, AND THE NAME OF THE PROPOSED RETIRED JUDGE FROM
THE SERVICE TO DECIDE THE DISPUTE ("ARBITRATOR"). WITHIN TEN (10) DAYS
AFTER THE EFFECTIVE DATE OF THE DEMAND, EACH OTHER PARTNER AGAINST WHOM A
DEMAND IS MADE SHALL DELIVER A WRITTEN RESPONSE TO THE DEMANDING PARTNER
AND THE SERVICE. SUCH RESPONSE SHALL INCLUDE A SHORT AND PLAIN STATEMENT
OF THE NON-DEMANDING PARTNER'S DEFENSES TO THE CLAIM AND SHALL ALSO STATE
WHETHER SUCH PARTNER AGREES TO THE ARBITRATOR CHOSEN BY THE DEMANDING
PARTNER. IN THE EVENT THE PARTNERS CANNOT AGREE UPON AN ARBITRATOR, THEN
THE SERVICE SHALL SELECT AND NAME AN ARBITRATOR TO CONDUCT THE HEARINGS.
(b) THE LOCALE OF THE ARBITRATION SHALL BE IN ORANGE COUNTY,
CALIFORNIA.
(c) IN THE EVENT THE SERVICE IS NO LONGER IN BUSINESS AND THERE IS NO
COMPARABLE SUCCESSOR, THEN THE PARTIES SHALL AGREE UPON ANOTHER
ARBITRATOR. IF THE PARTIES CANNOT AGREE UPON ANOTHER ARBITRATOR, THEN A
SINGLE NEUTRAL ARBITRATOR SHALL BE APPOINTED PURSUANT TO SECTION 1281.6 OF
THE CALIFORNIA CODE 0.7 CIVIL PROCEDURE.
(d) IN THE EVENT THE CLAIM OR DISPUTE EQUALS OR EXCEEDS THE SUM OF
FIFTY THOUSAND DOLLARS ($50,000), THEN THE PARTNERS
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<PAGE>
SHALL BE ENTITLED TO FULL RIGHTS OF DISCOVERY AS SET FORTH IN THE
CALIFORNIA CODE OF CIVIL PROCEDURE FOR CIVIL ________ _____ IN THE
SUPERIOR COURTS OF THE STATE OF CALIFORNIA, SUBJECT TO SUCH ORDERS AS MAY
BE MADE BY THE SERVICE. IN THE EVENT THE DISPUTE BETWEEN THE PARTNERS IS
LESS THAN FIFTY THOUSAND DOLLARS ($50,000), THEN THERE SHALL BE NO RIGHT
TO DISCOVERY EXCEPT BY STIPULATION OF THE PARTIES OR PURSUANT TO THE
DISCRETION OF THE SERVICE. IN THE EVENT THE PARTNERS CANNOT AGREE AS TO
THE AMOUNT IN ISSUE, THE SERVICE SHALL HOLD A PRELIMINARY HEARING FOR THE
PURPOSE OF DETERMINING WHETHER THE AMOUNT IN ISSUE EQUALS OR EXCEEDS FIFTY
THOUSAND DOLLARS ($50,000).
(e) THE ARBITRATOR'S POWERS SHALL BE LIMITED AS FOLLOWS: THE
ARBITRATOR SHALL FOLLOW THE SUBSTANTIVE LAWS OF THE STATE OF CALIFORNIA,
INCLUDING RULES OF EVIDENCE, AND THE ARBITRATOR'S DECISION SHALL BE
SUBJECT TO REVIEW THEREON AS WOULD THE DECISION OF THE SUPERIOR COURT OF
THE STATE OF CALIFORNIA SITTING WITHOUT A JURY. THE ARBITRATOR SHALL NOT
CONSIDER ANYTHING OUTSIDE THE RECORD UNLESS NOTICE IS GIVEN TO ALL PARTIES
WITH THE OPPORTUNITY TO RESPOND TO SUCH MATTERS. THE ARBITRATOR SHALL HAVE
NO POWER TO MODIFY ANY OF THE PROVISIONS OF THIS AGREEMENT AND THE
ARBITRATOR'S JURISDICTION IS LIMITED ACCORDINGLY. THE ARBITRATOR SHALL
PREPARE AND SERVE A WRITTEN DECISION WHICH DETERMINES THE DISPUTE,
CONTROVERSY, OR CLAIM AND WHICH DESIGNATES THE PARTY AGAINST WHOSE
POSITION THE DECISION IS RENDERED. JUDGMENT UPON THE AWARD RENDERED BY THE
ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.
(f) THE COSTS OF THE RESOLUTION SHALL BE SPLIT EQUALLY BETWEEN THE
PARTNERS INVOLVED IN SUCH DISPUTE; PROVIDED, HOWEVER, THAT SUCH COSTS,
ALONG WITH ALL OTHER COSTS AND EXPENSES, INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES, SHALL BE SUBJECT TO AWARD, IN FULL OR IN PART, BY THE
ARBITRATOR, IN THE ARBITRATOR'S DISCRETION, TO THE PREVAILING PARTY.
UNLESS THE ARBITRATOR SO AWARDS ATTORNEYS' FEES EACH PARTY SHALL BE
RESPONSIBLE FOR SUCH PARTY'S OWN ATTORNEYS' FEES.
(g) TO THE EXTENT POSSIBLE, THE ARBITRATION HEARINGS SHALL BE
CONDUCTED ON CONSECUTIVE DAYS, EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS,
UNTIL THE COMPLETION OF THE CASE.
(h) IN CONNECTION WITH ANY ARBITRATION PROCEEDINGS COMMENCED
HEREUNDER, ANY PARTNER SHALL HAVE THE RIGHT TO JOIN ANY THIRD PARTIES IN
SUCH PROCEEDINGS IN ORDER TO RESOLVE
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<PAGE>
ANY OTHER DISPUTES, THE FACTS OF WHICH ARE RELATED TO THE MATTERS
SUBMITTED FOR ARBITRATION HEREUNDER.
(i) NOTWITHSTANDING ANY PROVISION CONTAINED IN THIS ARTICLE IX, NONE
OF THE PARTNERS MAY SEEK ARBITRATION UNDER THE PROVISIONS OF THIS ARTICLE
IX WITH RESPECT TO (i) ANY DECISION TO REMOVE THE OPERATING PARTNERS IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 2.04, (ii) ANY DETERMINATION OF
THE APPRAISED VALUE OF THE PARTNERSHIP INTEREST OF A&J IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 3.03, AND/OR (iii) ANY DECISION TO TERMINATE
AVALON ATTRACTIONS AS THE EXCLUSIVE BOOKING AGENT FOR THE PROJECT IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.02(d).
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR
JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL EXCEPT TO THE EXTENT SUCH RIGHTS ARE
SPECIFICALLY INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION. IF YOU REFUSE
TO SUBMIT TO ARBITRATION AFTER AGREEING TO THESE PROVISIONS, YOU MAY BE
COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE E. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE
READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF
THE MATTERS INCLUDED IN THIS ARBITRATION.
/s/ name illegible /s/ name illegible /s/ name illegible /s/ name illegible
- ------------------ ------------------ ------------------ ------------------
Initials of Initials of Initials of Initials of
IMA Corp Hegness SMI A&J
(j) THE COSTS OF THE RESOLUTION SHALL BE SPLIT EQUALLY BETWEEN THE
PARTNERS INVOLVED IN SUCH DISPUTE; PROVIDED, HOWEVER, "THAT SUCH COSTS,
ALONG WITH ALL OTHER COSTS AND EXPENSES, INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES, SHALL BE SUBJECT TO AWARD, IN FULL OR IN PART, BY THE
ARBITRATOR, IN THE ARBITRATOR'S DISCRETION, TO THE PREVAILING PARTY.
UNLESS THE ARBITRATOR SO AWARDS ATTORNEYS' FEES, EACH PARTY SHALL BE
RESPONSIBLE FOR SUCH PARTY'S OWN ATTORNEYS' FEES.
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ARTICLE X
BOOKS AND RECORDS
10.01 Books of Account. The fiscal year and the taxable year of the
Partnership shall be the calendar year commencing January l and ending December
31. The Operating Partners shall maintain (or cause to be maintained) for the
Partnership true and accurate books, records, and accounts on an accrual basis
(for financial and income tax reporting purposes) in accordance with generally
accepted accounting principles on a consistent basis from year to year. All
books and records of the Partnership shall be kept and maintained at the
principal place of business of the Partnership or such other place as may be
designated by the Management Committee and, during regular and reasonable
business hours, shall be available for reasonable inspection, audit, and
duplication by any Partner or such Partner's designated representatives
(including, without limitation, attorneys, auditors, and accountants), at such
Partner's sole cost and expense.
10.02 Annual Reports and Tax Returns. Within ninety (90) days after the
close of each fiscal year, the Operating Partners shall cause to be prepared
and timely filed and distributed to each Partner, at the expense of the
Partnership, all required federal and California state partnership tax returns,
including information returns reflecting each Partner's distributive share of
tax items. Additionally, within ninety (90) days after the close of each fiscal
year, the Operating Partners shall cause to be prepared and distributed to each
Partner, at the expense of the Partnership, unaudited financial statements.
Such financial statements shall be prepared by the independent certified public
accountants for the Partnership (which shall not be changed without the prior
approval of the Management Committee) and shall include, without limitation, a
balance sheet of the Partnership as of the last day of such fiscal year, an
operating (income or loss) statement of the Partnership for such fiscal year, a
statement of each Partner's Capital Account as of the last day of such fiscal
year, and all other information customarily shown on financial statements
prepared in accordance with generally, accepted accounting principles,
consistently applied. Upon written request by IMA Corp., or SMI, in the event
SMI is not an Operating Partner, such financial statements shall be audited, at
the expense of the Partnership, by an independent certified public accountant
selected in the reasonable discretion of such requesting Partner.
10.03 Bank Accounts. All funds of the Partnership shall be deposited in
the Partnership's name in such bank account or accounts as shall be designated
by the Operating Partners. Disbursements and/or withdrawals from such one or
more accounts may be made only upon the signature of an authorized
representative of the Operating Partners. In the event the authority of the
Operating Partners is terminated pursuant to Section 2.04, then any
disbursements and/or withdrawals from such one or more accounts shall be made
only upon the signature of an authorized representative of the Management
Committee.
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ARTICLE XI
MISCELLANEOUS
11.01 Notices. All notices, demands or other communications required or
permitted hereunder shall be in writing, and shall be delivered or sent, as the
case may be, by any of the following methods: (i) personal delivery; (ii)
overnight commercial carrier or delivery service; (iii) registered or certified
mail (with postage prepaid and return receipt requested); or (iv) telegraph,
telex, telecopy, or cable. Any such notice or other communication shall be
deemed received and effective upon the earlier of (i) if personally delivered,
the date of delivery to the address of the party to receive such notice; (ii)
if delivered by overnight commercial carrier or delivery service, one day
following the receipt of such communication by such carrier or service from the
sender, as shown on the sender's delivery invoice from such carrier or service,
as the case may be; (iii) if mailed, forty-eight (48) hours after the date of
posting as shown on the sender's registry or certification receipt; (iv) if
given by telegraph or cable, when delivered to the telegraph company with
charges prepaid; or (v) if given by telex or telecopy, when sent. Any notice or
other communication sent by cable, telex, or telecopy must be confirmed within
forty-eight (48) hours by letter mailed or delivered in accordance with the
foregoing. Any reference herein to the date of receipt, delivery, or giving, as
the case may be of any notice, date or other communication shall refer to the
date such communication becomes effective under the terms of this Section
11.01. The address for purposes of the giving of notices hereunder (i) to the
Partnership is the address set forth in Section 1.04 and (ii) to a Partner is
the address set forth for such Partner in Section 1.07. Notice of change of
address shall be given by written notice in the manner detailed in this Section
11.01. Rejection or other refusal to accept or the inability to deliver because
of changed address of which no notice was given shall be deemed to constitute
receipt of the notice or other communication sent.
11.02 Construction of Agreement. Article and Section headings of this
Agreement are used herein for reference purposes only and should not govern,
limit, or be used in construing this Agreement or any provision hereof. Each of
the Exhibits attached hereto is incorporated herein by reference and expressly
made a part of this Agreement for all purposes. References to any Exhibit made
in this Agreement shall be deemed to include this reference and incorporation.
Where the context so requires, the use of the neuter gender shall include the
masculine and feminine genders, the masculine gender shall include the feminine
and neuter genders, and the singular number shall include the plural and vice
versa. Time is of the essence of this Agreement. The provisions of this
Agreement shall be construed and enforced in accordance with the law of the
State of California. Except to the extent that the California Uniform
Partnership Act, as amended, is inconsistent with the provisions of this
Agreement (in which case this Agreement shall apply to the extent legally
permissible), the provisions of such Act shall apply to the Partnership. Each
party hereto acknowledges that (i) each party hereto is of equal bargaining
strength; (ii) each such party has actively participated in the drafting,
preparation, and negotiation of this Agreement; (iii) each party and such
party's counsel have reviewed this Agreement; and (iv) any rule of construction
to the effect that ambiguities to be
- 36 -
<PAGE>
resolved against the drafting party shall not apply in the interpretation of
this Agreement, any portion hereof, any amendments hereto, or any Exhibits
attached hereto.
11.03 Successors and Assigns. Subject to the restrictions against
transfers set forth in Article VII, this Agreement shall inure to the benefit
of and shall bind the Parties hereto and their respective personal
representatives, successors, and assigns.
11.04 Survivability of the Letter Agreement. This Agreement hereby amends,
restates and supersedes any and all of the provisions of the Letter Agreement
except those provisions contained in Paragraphs 12 and 14 of the June 27
Agreement and the entire July 16 Amendment which shall remain in full force and
effect and shall survive the execution and delivery of this Agreement.
11.05 Entire Agreement. This Agreement, that certain letter agreement
dated June 30, 1990 (the "June 30 Agreement"), by and between Azoff and Geddes,
and the surviving provisions of the Letter Agreement described above in Section
11.04, contain the entire understanding among the parties hereto with respect
to the subject matter hereof and supersede any and all prior or other
contemporaneous understandings, correspondence, negotiations, or agreements
between them respecting the within subject matter. No alterations,
modification, or interpretations hereof shall be binding unless writing and
signed by all the Partners.
11.06 Counterparts and Execution. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original Agreement, but
all of which shall constitute one Agreement, binding upon the parties hereto.
The signature of any party hereto to any counterpart hereof shall be deemed a
signature to, and may be appended to, any other counterpart hereof.
11.07 Attorneys' Fees. Subject to the provisions of Article IX(f), should
any litigation be commenced between the Partners or their representatives
concerning any provision of this Agreement or the rights and duties of any
person or entity in relation thereto, the Partner prevailing in such
litigation, whether by out-of-court settlement or final judgment, shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum as and for attorneys' fees incurred in such litigation.
11.08 No Third Party Beneficiary. Any agreement to pay any amount and any
assumption of liability herein contained, express or implied, shall be only for
the benefit of the Partners and their respective successors and assigns, and
such Agreements and assumptions shall not inure to the benefit of the obligees;
of any indebtedness or any other party, whomsoever, deemed to be a third-party
beneficiary of this Agreement. In this regard, it is hereby expressly agreed
and understood that any right of the Partnership or the Partners to require any
additional capital contributions under the terms of this Agreement shall not be
construed as conferring any rights or benefits to or upon any party not a party
to this Agreement.
11.09 Other Acts. Each Partner covenants, on behalf of such Partner and
such Partner's successors and assigns, to execute, with acknowledgment,
verification, or affidavit, if required,
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<PAGE>
any and all documents and writings, and to perform any and all other acts, that
may be necessary or desirable to implement, accomplish, and/or consummate the
formation of the Partnership, the achievement of the Partnership's purposes, or
any other matter contemplated under this Agreement.
11.10 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, then such illegality or invalidity shall not affect the validity of
the remainder of this Agreement.
11.11 Waiver. No consent or waiver, express or implied, by a Partner to or
of any breach or default by any other Partner in the performance by such other
Partner of such other Partner's obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such other Partner hereunder. Failure on the part of a Partner
to complain of any act or failure to act of any other Partner or to declare any
other Partner in default, irrespective of how long such failure continues,
shall not constitute a waiver by such non-complaining or non-declaring Partner
of the latter's rights hereunder.
11.12 Equitable Remedies; Remedies Cumulative. Except a otherwise provided
in this Agreement, each Partner, in addition to all other rights provided
herein or as may be provided by law shall be entitled to all equitable
remedies, including, without limitation, those of specific performance and
injunction, to enforce such Partner's rights hereunder. Except as otherwise
provided herein, each right, power, and remedy provided for herein or now or
hereafter existing at law or in equity, by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for herein or now or hereafter existing at law or in equity,
by statute or otherwise, and the exercise, the commencement of the exercise, or
the forbearance of the exercise by any party of any one or more of such rights,
powers, or remedies shall not preclude the simultaneous or later exercise by
such party of any or all of such other rights, powers, or remedies.
11.13 Acquisition of Ownership Interests by SMI. As of the effective date
hereof, SMI and the Affiliates, agents, employees and other representatives of
SMI hereby represent that SMI and such Affiliates, agents, employees and other
representatives do not own any ownership interests in any entity that is an
Affiliate, agent, employee or other representative of Geddes other than the
Partnership and have not entered into any agreements with Geddes and/or any
such Affiliates or other representatives of Geddes other than this Agreement
and the Letter Agreement. Notwithstanding any other provisions of this
Agreement, Geddes and SMI hereby agree that neither of such Partners, without
the prior written consent of IMA Corp., which may be withheld in the sole
discretion of IMA Corp., will (i) acquire any ownership interest in any
Affiliate, agent, employee or other representative of the other of such
Partners, (ii) amend or otherwise modify the provisions of the June 30
Agreement and/or the July 16 Amendment, and/or (iii) enter into, amend or
otherwise modify any other agreement with the other of such Partners, or any
Affiliate, agent, employee or other representative of the other of such
Partners.
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<PAGE>
ARTICLE XII
MISCELLANEOUS
12.01 The term "A&J" means Audrey & Jane, Inc., a California corporation.
12.02 The term "Affiliate" means any person or entity which, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with another person or entity. The term "control" as
used herein (including the terms "controlling," "controlled by," and "under
common control with") means the possession, direct or indirect, of the power to
(i) vote ten percent (10%) or more of the outstanding voting securities of such
person or entity, or (ii) otherwise direct management policies of such person
by contract or otherwise.
12.03 The term "Accountant's Notice" is defined in Section 3.03(d).
12.04 The term "Agreement" means this Second Amended and Completely
Restated Agreement of General Partnership of Irvine Meadows Amphitheater.
12.05 The term "Appraised Value" is defined in Section 3.03(c).
12.06 The term "Arbitrator" is defined in Article IX(a).
12.07 The term "Avalon Attractions" means New Avalon Inc., a California
corporation, d/b/a Avalon Attractions.
12.08 The term "Azoff" means Irving Azoff, an individual.
12.09 The term "Booking and Management Fees" is defined in Section 2.09.
12.10 The term "Capital Account" means, in respect to each Partner, the
aggregate amount of money contributed (or deemed contributed) by such Partner
to the capital of the Partnership, "increased" by the aggregate fair market
value (as mutually determined by the contributing Partner and the Partnership)
of all property contributed (or deemed contributed) by such Partner to the
capital of the Partnership (net of liabilities secured by such contributed
property that the Partnership is considered to assume or take subject to under
Section 752 of the Code), the aggregate amount of all Net Profits allocated to
such Partner, of any Gross Income allocated to such Partner pursuant to Section
5.05, and Partnership income or gain specially allocated to such Partner
pursuant to Section 5.06, and decreased by the aggregate amount of money
distributed (or deemed distributed) to such Partner by the Partnership
(exclusive of any guaranteed payment within the meaning of Section 707(c) of
the Code paid to such Partner) , the aggregate f air market value (as mutually
determined by the distributee Partner and the Partnership) of all property
distributed (or deemed distributed) to such Partner by the Partnership (net of
liabilities secured by such distributed property that such Partner is
considered to assume
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<PAGE>
or take subject to under Section 752 of the Code), the aggregate amount of all
Net Losses charged to such Partner, and the aggregate amount of all
"nonrecourse deductions" specially allocated to such Partner pursuant to
Section 5.06. For purposes of Section 5.06 only, each Partner's Capital Account
shall be further adjusted in the manner set forth in the second and third
sentences of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
increased for (i) such Partner's allocable share of minimum gain (as determined
pursuant to Treasury Regulation Section 1.704-1T(b)(4)(iv)(f)) and (ii) the
amount such Partner is unconditionally obligated to contribute to the capital
of the Partnership pursuant to this Agreement. The foregoing Capital Account
definition and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulation
Sections 1.704-1(b) and 1.704-IT(b) and shall be interpreted and applied in a
manner consistent with such Regulations.
12.11 The term "Cash Deficit Contribution" is defined in Section 4.05.
12.12 The term "Cash Flow" means the excess, if any, of all cash receipts
of the Partnership as of any applicable determination date in excess of the sum
of (i) any and all cash disbursements (exclusive of distributions to the
Partners in their capacities as such and distributions applied to reduce the
outstanding balance of the Security Pacific Loan pursuant to Section 6.01(b),
but inclusive of any payments treated hereunder as guaranteed payments under
Section 707(c) of the Code) of the Partnership prior to that date and (ii) any
commercially reasonable reserve established in the reasonable discretion of the
Management Committee for anticipated cash disbursements that will have to be
made before additional cash receipts from third parties will provide the funds
therefore. Cash Flow shall be determined annually by the Management Committee
and shall be distributed annually or at such other times as the Management
Committee determines that funds are available therefore.
12.13 The term "Code" means the Internal Revenue Code of 1986, as
heretofore and hereafter amended from time to time (and/or any corresponding
provisions of any succeeding law).
12.14 The term "Contributing Partners" is defined in Section 4.06.
12.15 The term "Contribution-Date" is defined in Section 4.05.
12.16 The term "Delinquent Contribution" is defined in Section 4.06.
12.17 The term "Demand" is defined in Article XI(a).
12.18 The term "Disproportionate Allocation" is defined in Section 5.05.
12.19 The term "Election Notice" is defined in Section 3.03.
12.20 The term "Extraordinary Event" means the sale, disposition,
exchange, or other transfer, condemnation or acquisition by an entity with the
power of eminent domain in lieu of formal condemnation proceedings, damage or
destruction, of all or any portion of the Project,
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<PAGE>
including, without limitation, any possession rights related to the Project,
and/or any other property of the Partnership (other than the incidental sales
or exchanges of tangible personal property and fixtures).
12.21 The term "Geddes" means Robert E. Geddes, an individual.
12.22 The term "Cross Income" shall mean with respect to any Extraordinary
Event, an amount equal to the Partnership's gross income, gain and items
thereof as determined for federal income tax purposes for such Extraordinary
Event, except that gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for tax purposes
shall be computed by referenced to the book value of such property used for the
purposes of determining Net Profits and Net Losses in accordance with the
provisions of this Agreement and for the purposes of maintaining the Partners'
Capital Accounts in accordance with Treasury Regulation Section 1.704-1(b),
rather than by reference to such property's adjusted tax basis.
12.23 The term "Hegness" means Paul C. Hegness, an individual.
12.24 The term "Hegness Offered Interest" is defined in Section 7.04.
12.25 The term "Hegness Offering Notice" is defined in Section 7.04.
12.26 The term "IMA Corp."means IMA Investment Corp., a California
corporation.
12.27 The term "IMA Corp. Offered Interest" Section 7.02.
12.28 The term "IMA Corp. Offering Notice" is defined in Section 7.02.
12.29 The term "July 16 Amendment" is def defined in Recital A.
12.30 The term "June 27 Agreement" is defined in Recital A.
12.31 The term "June 30 Agreement" is defined in Section 11.13.
12.32 The term "Just Cause" shall mean the willful misconduct or
negligence, or the habitual neglect of the duties, of Avalon Attractions in its
capacity as the booking agent for the Project.
12.33 The term "Koll" means Donald M. Koll, an individual.
12.34 The term "Koll Partners" means IMA Corp. and Hegness.
12.35 The term "Lease" is defined in Section 1.05.
12.36 The term "Letter Agreement" is defined in Recital A.
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<PAGE>
12.37 The term "Liquidation" means, (i) in respect to the Partnership, the
earlier of the date upon which the Partnership is terminated under Section
708(b)(1) of the Code or the date upon which the Partnership ceases to be a
going concern (even though it may continue in existence for the purpose of
winding up its affairs, paying its debts, and distributing any remaining
balance to its Partners), and (ii) in respect to a Partner wherein the
Partnership is not in Liquidation, means the liquidation of a Partner's
Partnership Interest under Treasury Regulation Section 1.761-1(d).
12.38 The term "Liquidator" means the Management Committee; provided that
if none of the members of the Management Committee is a partner in the
Partnership at the time of the liquidation thereof and a trustee is appointed,
then such trustee.
12.39 The term. "Majority-in-Interest" means with respect to any relevant
group of Partners, greater than fifty percent (50%) of such Partners in terms
of Percentage Interests; provided, however, for purposes of the foregoing
calculation, the Percentage Interest of IMA Corp. shall be deemed to include
the Percentage Interest of Hegness until such time as IMA Corp. is no longer
permitted to vote and make other decisions on behalf of Hegness as determined
in accordance with the provisions of Section 2.07.
12.40 The term "Management Committee" is defined in Section 2.01(a).
12.41 The term "Minimum Percentage Interest" is defined in Section
4.06(d).
12.42 The terms "Net Profit" and "Net Losses" mean, for each fiscal year
or other period, an amount equal to the Partnership's taxable income or loss,
as the case may be, for such year or period, determined in accordance with
Section 703(a) of the Code (for this purpose, all items of income, gain, loss
and deduction required to be stated separately pursuant to Section 703(a)(1) of
the Code shall be included in taxable income or loss); provided, however, for
purposes of computing such taxable income or loss, (i) such taxable income or
loss shall be adjusted by any and all adjustments required to be made in order
to maintain Capital Account balances in compliance with Treasury Regulation
Sections 1.704-1(b) and 1.704-IT(b); (ii) any Gross Income (or items thereof)
specially allocated in accordance with the provisions of Section 5.05 shall
only be taken into account in determining Net Profits or Net Losses in the
manner set forth in such Section; and (iii) any and all "nonrecourse
deductions" and/or items of Partnership income and gain specially allocated to
any Partner pursuant to Section 5.06 shall not be taken into account in
computing such taxable income or loss. Such adjustments shall also include,
without limitation, the computation, in accordance with the Code, of (i)
deductions for depreciation, cost recovery, and amortization attributable to,
and/or (ii) any gain or loss attributable to the taxable disposition of, any
Partnership property by reference to the book value of such property (as
determined for purposes of the maintenance of Capital Accounts in accordance
with this Agreement and Treasury Regulation Section 1.704-1(b)(2)(iv)(q)), as
such book value may from time to time be adjusted to equal such property's fair
market value (as reasonably determined by the Management Committee).
12.43 The term "Non-Assigning Partners" is defined in Section 7.04.
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<PAGE>
12.44 The term "Non-Contributing Partner" is defined in Section 4.06.
12.45 The term rm "Non-Selling Partner" is defined in Section 7.03.
12.46 The term "Non-Transferring Partners" is defined in Section 7.02.
12.47 The terms "Operating Partner" and "Operating Partners" are defined
in Section 2.02.
12.48 The term "Operating Budget" is defined in Section 2.05.
12.49 The term "Options Agreement" is defined in Section 1.05.
12.50 The term "Original Partnership Agreement" is defined in Recital A.
12.51 The term "Partners" means IMA Corp., Hegness, SMI and A&J,
collectively the term "Partner" means any one of the Partners.
12.52 The term "Partner Loan" is defined in Section 4.06(a).
12.53 The term "Partnership" means the partnership continued pursuant to
this Agreement.
12.54 The term "Partnership Interest" means, in respect to each Partner,
all of such Partner's right, title, and interest in and to the Net Profits, Net
Losses, Cash Flow, and capital of the Partnership, and any other interest
therein.
12.55 The term "Percentage Interest" means forty-five percent (45%) with
respect to IMA Corp., five percent (5%) with respect to Hegness; twenty-five
percent (25%) with respect to SMI, and twenty-five percent (25%) with respect
to A&J; subject, however, to appropriate adjustment in the event of any
dilution pursuant to Section 4.06(b), in the event of any transfer pursuant to
Articles III and/or VII, or as may be otherwise provided in this Agreement.
12.56 The term "Permitted Transferees" is defined in Section 7.05.
12.57 The term "Project" is defined in Section 1.05.
12.58 The term "Property" is defined in Section 1.05.
12.59 The term "Proportionate Share" means a fraction, the numerator of
which is the Koll Partners' Percentage Interests and the denominator of which
is the sum of the Koll Partners' Percentage Interests and the Selling Partner's
Percentage Interest. For purposes of determining the foregoing fraction, any
such Percentage Interests shall be determined as of the effective date of any
applicable S/G Offering Notice.
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<PAGE>
12.60 The term "Purchase Price" is defined in Section 3.03(d).
12.61 The term "Purchasing Partner(s)" is defined in Section 3.03.
12.62 The term "S/G Offered Interest" is defined in Section 7.03.
12.63 The term "SIG Offering Notice" is defined in Section 7.03.
12.64 The term "SMI" means Shelli Meadows, Inc., a California corporation.
12.65 The term "Security Pacific Loan" is defined in Section 4.04.
12.66 The term "Selling Partner" is defined in Section 7.03.
12.67 The term "Service" is defined in Article IX.
12.68 The term "The Irvine Company" means The Irvine Company, a Michigan
corporation.
12.69 The term "Treasury Regulation" means any proposed temporary and/or
final federal income tax regulation promulgated by the United States Department
of the Treasury as heretofore and hereafter amended from time to time (and/or
any corresponding provisions of any succeeding law and/or regulation).
12.70 The term "Unrecovered Additional Contribution Account" means, with
respect to each Partner, the aggregate amount of money contributed (or deemed
contributed) by such Partner to the capital of the Partnership pursuant to
Sections 4.05 and/or 4.06, and decreased by (i) the aggregate amount of any and
all Cash Flow distributed to such Partner pursuant to Section 6.01(c), and (ii)
the aggregate agreed upon fair market value of any and all property distributed
to such Partner (net of liabilities secured by such distributed property that
such Partner is considered to assume or take subject to under Section 752 of
the Code) pursuant to Section 6.01(c).
12.71 The term "Unrecovered Contribution Account" means, with respect to
each Partner, the amount credited to such Partner's Capital Account pursuant to
Section 4.03, and decreased by (i) the aggregate amount of any and all Cash
Flow distributed to such Partner pursuant to Sections 6.01(a), 6.01(c), 6.01(d)
and/or 6.01(e), as the case may be, and (ii) the aggregate agreed upon fair
market value of any and all property distributed to such Partner (net of
liabilities secured by such distributed property that such Partner is
considered to assume or take subject to under Section 752 of the Code) pursuant
to Sections 6.01(a), 6.01(c), 6.01(d) and/or 6.01(e), as the case may be.
- 44 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the date first set forth above.
IMA INVESTMENT CORP.,
a California corporation
By: /s/ Donald M. Koll
---------------------------------
Donald M. Koll
Its: President
/s/ Paul C. Hegness
-------------------------------------
PAUL C. HEGNESS
SHELLI MEADOWS, INC., a California
corporation
By: /s/ Irving Azoff
---------------------------------
Irving Azoff
Its: President
AUDREY & JANE, INC., a California
corporation
By: /s/ Robert E. Geddes
---------------------------------
Robert E. Geddes
Its: President
- 45 -
<PAGE>
LEGAL DESCRIPTION OF THE PROPERTY
---------------------------------
A portion of Block 157 of the Irvine Subdivision per map filed In Book 1, Page
88 of Miscellaneous Record Maps of Orange County, California, also being a
portion of Parcel 2 of Parcel Map filed In Parcel Map Book 102, pages 30 and 31
of Parcel Maps of Orange County, being described as follows:
[deleted]
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<PAGE>
SPOUSAL CONSENT
I acknowledge that I am the spouse of Paul C. Hegness, one of the partners
in Irvine Meadows Amphitheater, a California general partnership
("Partnership"), that I have read, approve of, and agree to the terms of the
Second Amended and Completely Restated Agreement of General Partnership of
Irvine Meadows Amphitheater entered into effective as of January 1, 1991
("Agreement"), to which this consent is attached, and know the contents
thereof, including, without limitation, the provision of the Agreement relating
to the contribution of property and/or money to the Partnership, management of
Partnership property, and the purchase, sale, or other disposition of
Partnership property and of the interest of any partner therein. I am aware
that, under the Agreement, my spouse has agreed to certain restrictions on my
spouse's ability to sell my spouse's interest in the Partnership as more fully
described in the Agreement. I hereby consent to each and every such provision
or restriction set forth in the Agreement and approve all of the provisions of
the Agreement. I hereby agree that any and all interest I may have in the
Partnership, by community property laws or otherwise, shall be governed by the
terms of the Agreement and this consent, and I hereby designate and appoint my
spouse, which appointment is coupled with an interest and hereby declared
irrevocable, as my true and lawful attorney-in-fact for all purposes of the
Agreement, including without limitation, to act for and bind me in all
Partnership matters and affairs.
DATED: As of April 1, 1991 /s/ Nancy H. Hegness
----------------------
NANCY H. HEGNESS
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<PAGE>
CORP SECY
NAME DEPARTMENT COVERAGE
---- ---------- --------
Madeline Bermudez Administration
Irene Aspillera Corporate-Asia Desk
Devra Block Corporate-Securities
Christopher Roehrs Corporate-Securities
Anne Zagorin Litigation
Emerita Ruiz Recruiting
Anna Stoloff Accounting
- 9 -
<PAGE>
JEFKO PRODUCTIONS
234 W. 44th Street, #900
New York, NY 10036
(212) 382-3410 (212)382-3548 fax
February 27, 1997
Robert B. Cayne Jr, Inc.
c/6 Lou Ray Associates
P.O. Box 361070
Strongsville, OH 44136
RE: WEST SIDE STORY (NON-EQUITY)
Dear Mr. Cayne,
This letter shall confirm our agreement between Jefko Productions and Robert B.
Cayne Jr., Inc. for our tour of WEST SIDE STORY.
Robert B. Cayne Jr., Inc. agrees to provide full capitalization for the tour.
In consideration of such investment you shall receive the following:
1. One hundred (100%) percent of the net weekly operating profits until
recoupment of production costs. Thereafter, you shall receive fifty (50%)
percent of all net profits derived from the tour.
2. One and a half (1.5%) percent of the weekly company share.
3. As further inducement, you shall receive the right of the first (1st)
refusal to present the production alone or in association with others in each
market on the tour, upon terms consistent with other presenters on the tour.
Thank you and please indicate your consent by signing below.
Agreed to and Accepted by:
/s/ Robert B. Cayne, Jr. /s/ Jeffrey Chrzezon
- --------------------------------- ------------------------------
Robert B. Cayne, Jr. Jeffrey Chrzezon
Robert B. Cayne Jr., Inc. Jefko Productions
<PAGE>
MAGIC
PROMOTIONS & THEATRICALS
Robert B. Cayne Jr., Inc.
c\o Lou Ray Associates
P. O. Box 361070
Strongsville, Ohio 44136
RE: WEST SIDE STORY (NON-EQUITY)
This letter shall confirm our agreement between Magic Promotion (Magic) and
Robert B. Cayne Jr., Inc. (Cayne) for the tour of West Side Story.
Magic Promotions understands that Cayne has entered into an agreement with
Jefko Productions for producing West Side Story. (hereinafter referred to as
the Cayne/Jefko Agreement).
It is agreed that Magic will fund 100% of the money that is needed for Robert
B. Cayne Jr., Inc. to fulfil the Cayne/Jefko Agreement and Magic will receive
the following:
One hundred (100%) percent of all money due Robert B. Cayne Jr., Inc. from the
production of West Side Story. (Pursuant to the Cayne/Jefko Agreement, attached
hereto as exhibit A).
Please indicate your consent by signing below.
Agreed to and Accepted by
/s/ Robert B. Cayne, Jr. /s/ John Norman
- -------------------------------- ---------------------------------
Robert B. Cayne, Jr. John Norman
Robert B. Cayne Jr., Inc. Magic Promotions, Inc.
<PAGE>
ARTICLES OF INCORPORATION
OF
MAGICSPORTS - GRAND SLAM MANAGEMENT, INC.
ARTICLE I
The name of the corporation is MAGICSPORTS - GRAND SLAM MANAGEMENT, INC.
(the "Corporation").
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is 930 Washington Avenue, 5th Floor, Miami Beach, Florida 33139.
ARTICLE III
This Corporation shall have authority to issue One Thousand (1,000) shares
of Common Stock having a par value of $0.01 per share.
ARTICLE IV
The Corporation shall hold a special meeting of shareholders only.
(1) On call of the Board of Directors or persons authorized to do so by
the Corporation's Bylaws; or
(2) If the holders of not less than 50 percent of all votes entitled to
be cast on any issue proposed to be considered at the proposed
special meeting sign, date, and deliver to the Corporation's
secretary one or more written demands for the meeting describing the
purpose or purposes for which it is to be held.
ARTICLE V
The street address of the Corporation's initial registered office is
1201 Hays Street, City of Tallahassee, County of Leon, State of Florida
32301 and the name of its initial registered agent at such office is
Corporation Service Company.
<PAGE>
ARTICLE VI
The Board of Directors of the Corporation shall consist of at least one
director, with the exact number to be fixed from time to time in the manner
provided in the Corporation's Bylaws.
ARTICLE VII
The name of the Incorporator is Lisa R. Carstarphen and the address of the
Incorporator is 1221 Brickell Avenue, Suite 2200, Miami, Florida 33131.
ARTICLE VIII
This Corporation shall indemnify and shall advance expenses on behalf of
its officers and directors to the fullest extent not prohibited by law in
existence either now or hereafter.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named above,
for the purpose of forming a corporation pursuant to the Florida Business
Corporation Act of the State of Florida has signed these Articles of
Incorporation this 5th day of August 1998.
/s/ Lisa R. Carstarphen
---------------------------------------
Lisa R. Carstarphen, Incorporator
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
The undersigned, having been named the Registered Agent of MAGICSPORTS
GRAND SLAM MANAGEMENT, INC. hereby accepts such designation and is familiar
with, and accepts, the obligations of such position, as provided in Florida
Statutes ss.607.0505.
CORPORATION SERVICE COMPANY
/s/ Deborah D. Skipper
-----------------------------------
Deborah D. Skipper
as Agent for the Registered Agent
Dated, August 6th, 1998
- 2 -
<PAGE>
BY-LAWS
OF
MAGICSPORTS - GRAND SLAM MANAGEMENT, INC.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be established and
maintained at and shall be the registered agent of the Corporation in charge
hereof.
1.2 Other Offices: The corporation may have other offices, either within
or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require, provided, however, that the corporation's books and records shall be
maintained at such place within the continental United States as the Board of
Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the stockholders of
the corporation shall be held at such place or places, within or outside the
State of Delaware as may be fixed by the Board of Directors from time to time
or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual meeting of
stockholders shall be held each year within five months after the close of the
fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the stockholders
shall elect the members of the Board of Directors for the succeeding year. At
any such annual meeting any further proper business may be transacted.
2.4 Special Meetings of Stockholders: Special meetings of the stockholders
or of any class or series thereof entitled to vote may be called by the
President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly
required or permitted by law, not less than ten days nor more than sixty days
before the date of every stockholders' meeting the Secretary shall give to each
stockholder of record entitled to vote
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at such meeting, written notice, served personally by mail or by telegram,
stating the place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. Such notice,
if mailed shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address for notices to such
stockholder as it appears on the records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by the
Certificate of Incorporation or by law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall be present,
a majority of voting stockholders, present in person or by proxy, may adjourn
the meeting from time to time without notice other than announcement at the
meeting. In the absence of a quorum, the officer presiding thereat shall have
power to adjourn the meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting, other than announcement at the meeting, shall
not be required to be given except as provided in paragraph (d) below and
except where expressly required by law.
(c) At any adjourned session at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called but only those stockholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.7 Chairman and Secretary of Meetings: The President, shall preside at
meetings of the stockholders. The Secretary shall act as secretary of the
meeting or if he is not present, then the presiding officer may appoint a
person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on the books of the corporation on the record
date for the meeting. Except as otherwise provided by these by-laws, all
elections and questions shall be decided by the vote of a majority in interest
of the stockholders present in person or represented by proxy and entitled to
vote at the meeting.
2.9 Proxies: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, scaled, witnessed or acknowledged.
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2.10 Inspectors: The election of directors and any other vote by ballot at
any meeting of the stockholders shall be supervised by at least two inspectors.
Such inspectors may be appointed by the presiding officer before or at the
meeting; or if one or both inspectors so appointed shall refuse to serve or
shall not be present, such appointment shall be made by the officer presiding
at the meeting.
2.11 List of Stockholders: (a) At least ten days before every meeting of
stockholders, the Secretary shall prepare and make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder.
(b) During ordinary business hours, for a period of at least ten days
prior to the meeting, such list shall be open to examination by any stockholder
for any purpose germane to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
(c) The list shall also be produced and kept at the time and place of the
meeting during the whole time of the meeting, and it may be inspected by any
stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise provided by
these by-laws or any resolutions adopted by the stockholders or Board of
Directors, the order of business and all other matters of procedure at every
meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
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ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the
corporation shall be managed by its Board of Directors which may exercise all
the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The number
of directors which shall constitute the Board of Directors shall be ( )
unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not
be stockholders.
3.3 Vacancies on Board of Directors: Removal: (a) Any director may resign
his office at any time by delivering his resignation in writing to the Chairman
of the Board or to the President. It will take effect at the time specified
therein or, if no time is specified, it will be effective at the time of its
receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the
resignation.
(b) Any vacancy in the authorized number of directors may be filled by
majority vote of the stockholders and any director so chosen shall hold office
until the next annual election of directors by the stockholders and until his
successor is duly elected and qualified or until his earlier resignation or
removal.
(c) Any director may be removed with or without cause at any time by the
majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of Directors may
hold their meetings, both regular and special, either within or outside the
State of Delaware.
(b) Regular meetings of the Board of Directors may be held at such time
and place as shall from time to time be determined by resolution of the Board
of Directors. No notice of such regular meetings shall be required. If the date
designated for any regular meeting be a legal holiday, then the meeting shall
be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors shall be
held immediately following the annual meeting of the stockholders for the
election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting,
no notice thereof shall be required.
(d) Special meetings of the Board of Directors shall be held whenever
called by direction of the Chairman of the Board or the President or at the
written request of any one director.
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(e) The Secretary shall give notice to each director of any special
meeting of the Board of Directors by mailing the same at least three days
before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a statement of the
business to be transacted at, or the purpose of, any such meeting. Any and all
business may be transacted at any meeting of the Board of Directors. No notice
of any adjourned meeting need be given. No notice to or waiver by any director
shall be required with respect to any meeting at which the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by the
Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall
be less than a quorum at any meeting of the Board, a majority of those present
may adjourn the meeting from time to time. The vote of a majority of the
Directors present at any meeting at which a quorum is present shall be
necessary to constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The President, or, in
his absence a member of the Board of Directors selected by the members present,
shall preside at meetings of the Board. The Secretary shall act as secretary of
the meeting, but in his absence the presiding officer may appoint a secretary
of the meeting.
3.7 Action by Consent Without Meeting: Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of Directors, or
any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or resolutions
passed by a majority of Directors designate one or more committees, each of
such conunittees to consist of one or more Directors of the Corporation, for
such purposes as the Board shall determine. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board of Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
mectings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be
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construed to preclude any Director from serving in any other capacity and
receiving compensation therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected officers of the
corporation shall be a President, a Treasurer and a Secretary, and such other
officers as the Board of Directors shall deem advisable. The officers shall be
elected by the Board of Directors at its annual meeting following the annual
meeting of the stockholders, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time, and from time
to time, additional officers or agents with such duties as it may deem
necessary or desirable. Such additional officers shall serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election or appointment. Two or more offices may be held by the same person.
(c) Any vacancy in any office may be filled for the unexpired portion of
the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such resignation shall
be made in writing and shall take effect at the time specified therein or, if
no time has been specified, at the time of its receipt by the corporation. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be fixed by the
Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be removed at any
time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then
in office.
4.3 Duties: (a) President: The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of the
corporation. He shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect (unless any such
order or resolution shall provide otherwise), and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the Board of Directors from time to time.
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(b) Treasurer: The Treasurer shall (1) have charge and custody of and be
responsible for all funds and securities of the Corporation; (2) receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever; (3) deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositories as shall be selected by
resolution of the Board of Directors; and (4) in general perform all duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors. He shall,
if required by the Board of Directors, give a bond for the faithful discharge
of his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the meetings of
the stockholders, the Board of Directors, and all committees, if any, of which
a secretary shall not have been appointed, in one or more books provided for
that purpose; (2) see that all notices are duly given in accordance with the
provisions of these by-laws and as required by law; (3) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents, the execution of which on behalf
of the corporation wider its seal, is duly authorized; (4) keep a register of
the post office address of each stockholder which shall be furnished to the
Secretary by such stockholder; (5) have general charge of stock transfer books
of the Corporation; and (6) in general perform all duties incident to the
office of secretary and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the corporation shall
be entitled to have a certificate signed by, or in the name of, the corporation
by the President and by the Treasurer or the Secretary, certifying the number
of shares owned by him.
(b) If such certificate is countersigned by a transfer agent other than
the corporation or its employee, or by a registrar other than the corporation
or its employee, the signatures of the officers of the corporation may be
facsimiles, and, if permitted by law, any other signature may be a facsimile.
(c) In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer at the date of issue.
(d) Certificates of stock shall be issued in such form not inconsistent
with the Certificate of Incorporation as shall be approved by the Board of
Directors, and shall be numbered and registered in the order in which they were
issued.
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(e) All certificates surrendered to the corporation shall be canceled with
the date of cancellation, and shall be retained by the Secretary, together with
the powers of attorney to transfer and the assignments of the shares
represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the holder of
such certificate, the number of shares represented thereby and the date of
issue thereof shall be made on the corporation's books. The corporation shall
be entitled to treat the holder of any share of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be made on the
books of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assessment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates representing
shares of the stock of the corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and
on such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent: Registrar: Rules Respecting Certificates: The
corporation may maintain one or more transfer offices or agencies where stock
of the corporation shall be transferable. The corporation may also maintain one
or more registry offices where such stock shall be registered. The Board of
Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of Record: The
Board of Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at, any
meeting of the stockholders or any adjournment thereof, or the stockholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in
any case shall be not more than sixty days nor less than ten days before the
date of a meeting of the stockholders, nor more than sixty days prior to any
other action requiring such determination of the stockholders. A determination
of stockholders of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
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5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the
President, the Secretary or the Treasurer shall have full power and authority,
on behalf of the corporation, to attend, act and vote at any meeting of the
stockholders of any corporation in which the corporation may hold stock, and at
such meeting to exercise any or all rights and powers incident to the ownership
of such stock, and to execute on behalf of the corporation a proxy or proxies
empowering another or others to act as aforesaid. The Board of Directors from
time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held By the Corporation:
(a) Any of the following officers, to wit: the President and the Treasurer
shall be, and they hereby are, authorized and empowered to transfer, convert,
endorse, sell, assign, set over and deliver any and all shares of stock, bonds,
debentures, notes, subscription warrants, stock purchase warrants, evidence of
indebtedness, or other securities now or hereafter standing in the name of or
owned by the corporation, and to make, execute and deliver, under the seal of
the corporation, any and all written instruments of assignment and transfer
necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of assignment and
transfer executed pursuant to and in accordance with the foregoing paragraph
(a), a certificate of the Secretary of the corporation in office at the date of
such certificate setting forth the provisions of this Section 6.2 and stating
that they are in full force and effect and setting forth the names of persons
who are then officers of the corporation, then all persons to whom such
instrument and annexed certificate shall thereafter come, shall be entitled,
without further inquiry or investigation and regardless of the date of such
certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly transferred, endorsed, sold, assigned, set over and delivered
by the corporation, and that with respect to such securities the authority of
these provisions of the by-laws and of such officers is still in full force and
effect.
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ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form and shall have
such content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place or
purpose of any meeting of the stockholders, directors or a committee is
required to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the holding
thereof, or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors, officers and
employees to the fullest extent allowed by law, provided, however, that it
shall be within the discretion of the Board of Directors whether to advance any
funds in advance of disposition of any action, suit or proceeding, and provided
further that nothing in this section 7.4 shall be deemed to obviate the
necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth
in subsections (a) and (b) of Section 145 of the Delaware General Corporation
Law.
7.5 Fiscal Year: Except as from time to time otherwise determined by the
Board of Directors, the fiscal year of the corporation shall end on .
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STATE OF FLORIDA
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of MAGICWORKS CONCERTS, INC., a corporation organized under the
laws of the State of Florida, filed on June 10, 1998, as shown by the records of
this office.
The document number of this corporation is P97000024985.
Given under my hand and the Great Seal of the State of Florida at Tallahassee,
the Capitol, this the Twelfth day of October, 1998
/s/ S.B.M.
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
MAGIC CONCERTS PROMOTIONS INC.
ARTICLE I
The name of the corporation is MAGIC CONCERTS PROMOTIONS, INC. (the
"Corporation").
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is: 199 E. Garfield Road, Aurora, Ohio 44202.
ARTICLE III
The capital stock authorized, the par value thereof, and the
characteristics of such stock shall be as follows:
Number of Shares Authorized: 1,000;Par Value Per Share $0.01; Class of
Stock: Common
ARTICLE IV
The Corporation shall hold a special meeting of shareholders only:
(1) On call of the Board of Directors or persons authorized to do
so by the Corporation's Bylaws; or
(2) If the holders of not less than 50 percent of the shares
entitled to vote on any issue proposed to be considered at the
proposed special meeting sign, date, and deliver to the
Corporation's secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to
be held.
ARTICLE V
The street address of the Corporation's initial registered office is
1201 Hays Street City of Tallahassee, County of Leon, State of Florida 32301,
and the name of its initial registered agent at such of the is Corporation
Service Company.
<PAGE>
ARTICLE VI
The Board of Directors of the Corporation shall consist of at least one
director, with the exact number to be fixed from time to time in the manner
provided in the Corporation's Bylaws. The number of directors constituting the
initial Board of Directors is one, and the name and address of the member of the
Initial Board of Directors, who will serve as the Corporation's director until
successors are duly elected and qualified is
Lee Marshall
199 E. Garfield Road
Aurora, Ohio 44202
ARTICLE VII
The name and address of the Incorporator Is Joel D. Maser, 1221
Brickell Avenue, Suite 2100, Miami, Florida 33131.
ARTICLE VIII
This Corporation shall indemnify and shall advance expenses on behalf
of its officers; and directors to the fullest extent not prohibited by law in
existence either now or hereafter.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named
above, for the purpose of forming a corporation pursuant to the Florida Business
Corporation Act of the State of Florida has signed these Articles of
Incorporation this 18 day of March, 1997.
/s/ Joel D. Maser
Joel D. Maser - Incorporator
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
The undersigned, having been named the Registered Agent of MAGIC
CONCERTS PROMOTIONS, INC., hereby accepts such designation and is familiar with,
and accepts, the obligations of such position, as provided in Florida Statutes
ss.607.0505.
CORPORATION SERVICE COMPANY,
Registered Agent
By: /s/ DDS
Deborah D. Skipper
its Agent
Dated: March 19, 1997
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ARTICLES OF AMENDMENT
Article I. Name
The name of this Florida corporation is Magic Concerts Promotions, Inc.
Article II. Amendment
The Articles of Incorporation of the Corporation are amended so that the
name of the Corporation is changed from Magic Concerts Promotions, Inc. to
Magicworks Concerts, Inc.
Article III. Date Amendment Adopted
The amendment set forth in these Articles of Amendment was adopted on the date
shown below.
Article IV Shareholder Approval of Amendment
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
The undersigned executed this document on the date shown below.
Magic Concerts Promotions. Inc.
By: /s/ Steve Chaby
Print Name: Steve Chaby
Print Title: Vice President
Corporate Creations International Inc.
8893 North Military Trail, Suite 202D
Palm Beach Gardens FL 33410-0288
(561) 694-8107
<PAGE>
BYLAWS
OF
MAGIC CONCERTS PROMOTIONS, INC.
(A FLORIDA CORPORATION)
INDEX [DELETED]
<PAGE>
MAGIC CONCERTS PROMOTIONS, INC.
BYLAWS
ARTICLE ONE
OFFICES
Section 1. Registered Office. The registered office of MAGIC
CONCERTS PROMOTIONS, INC., a Florida corporation (the "Corporation"), shall be
located in the City of Tallahassee, State of Florida, unless otherwise
designated by the Board of Directors.
Section 2. Other Offices. The Corporation may also have
offices at such other places, either within or without the State of Florida, as
the Board of Directors of the Corporation (the "Board of Directors") may from
time to time determine or as the business of the Corporation may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
Section 1. Place. All annual meetings of shareholders shall be
held at such place, within or without the State of Florida, as may be designated
by the Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Special meetings of shareholders may be held
at such place, within or without the State of Florida, and at such time as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Time of Annual Meeting. Annual meetings of
shareholders shall be held on such date and at such time fixed, from time to
time, by the Board of Directors, provided that there shall be an annual meeting
held every year at which the shareholders shall elect a Board of Directors and
transact such other business as may properly be brought before the meeting.
Section 3. Call of Special Meetings. Special meetings of the
shareholders shall be held if called by the Board of Directors, the President,
or if the holders of not less than fifty percent (50%) of all the votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date, and deliver to the Secretary one or more written demands for
the meeting describing the purpose or purposes for which it is to be held.
Section 4. Conduct of Meetings. The Chairman of the Board (or
in his absence, the President or such other designee of the Chairman of the
Board) shall preside at the annual and special meetings of shareholders and
shall be given full discretion in establishing the rules and procedures to be
followed in conducting the meetings, except as otherwise provided by law or in
these Bylaws.
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Section 5. Notice and Waiver of Notice. Except as otherwise
provided by law, written or printed notice stating the place, day and hour of
the meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten (10) nor more
than sixty (60) days before the day of the meeting, either personally or by
first-class mail, by or at the direction of the President, the Secretary, or the
officer or person calling the meeting, to each shareholder of record entitled to
vote at such meeting. If the notice is mailed at least thirty (30) days before
the date of the meeting, it may be done by a class of United States mail other
than first-class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation, with postage
thereon prepaid. If a meeting is adjourned to another time and/or place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fixes a new record date for the adjourned
meeting. Whenever any notice is required to be given to any shareholder, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether signed before, during or after the time of the meeting stated
therein, and delivered to the Corporation for inclusion in the minutes or filing
with the corporate records, shall be equivalent to the giving of such notice.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the shareholders need be specified in any written waiver of
notice. Attendance of a person at a meeting shall constitute a waiver of (a)
lack of or defective notice of such meeting, unless the person objects at the
beginning to the holding of the meeting or the transacting of any business at
the meeting, or (b) lack of defective notice of a particular matter at a meeting
that is not within the purpose or purposes described in the meeting notice,
unless the person objects to considering such matter when it is presented.
Section 6. Business of Special Meeting. Business transacted at
any special meeting shall be confined to the purposes stated in the notice
thereof.
Section 7. Quorum. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum of these
shares exists with respect to that matter. Except as otherwise provided in the
Articles of Incorporation or by law, a majority of the shares entitled to vote
on the matter by each voting group, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders, but in no event shall a
quorum consist of less than one-third (1/3) of the shares of each voting group
entitled to vote. If less than a majority of outstanding shares entitled to vote
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. After a quorum has
been established at any shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
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Section 8. Voting Per Share. Except as otherwise provided in
the Articles of Incorporation or by law, each shareholder is entitled to one (1)
vote for each outstanding share held by him on each matter voted at a
shareholders' meeting.
Section 9. Voting of Shares. A shareholder may vote at any
meeting of shareholders of the Corporation, either in person or by proxy. Shares
standing in the name of another corporation, domestic or foreign, may be voted
by the officer, agent or proxy designated by the bylaws of such corporate
shareholder or, in the absence of any applicable bylaw, by such person or
persons as the board of directors of the corporate shareholder may designate. In
the absence of any such designation, or, in case of conflicting designation by
the corporate shareholder, the chairman of the board, the president, any vice
president, the secretary and the treasurer of the corporate shareholder, in that
order, shall be presumed to be fully authorized to vote such shares. Shares held
by an administrator, executor, guardian, personal representative, or conservator
may be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name or the name
of his nominee. Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by such person without the transfer thereof into his name. If shares stand of
record in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary of the Corporation is given
notice to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided, then
acts with respect to voting shall have the following effect: (a) if only one
votes, in person or by proxy, his act binds all; (b) if more than one vote, in
person or by proxy, the act of the majority so voting binds all; (c) if more
than one vote, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is entitled to vote the share or shares in
question proportionally; or (d) if the instrument or order so filed shows that
any such tenancy is held in unequal interest, a majority or a vote evenly split
for purposes hereof shall be a majority or a vote evenly split in interest. The
principles of this paragraph shall apply, insofar as possible, to execution of
proxies, waivers, consents, or objections and for the purpose of ascertaining
the presence of a quorum.
Section 10. Proxies. Any shareholder of the Corporation, other
person entitled to vote on behalf of a shareholder pursuant to law, or
attorney-in-fact for such persons may vote the shareholder's shares in person or
by proxy. Any shareholder of the Corporation may appoint a proxy to vote or
otherwise act for him by signing an appointment form, either personally or by
his attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the Corporation to
accept the proxy's authority unless notice of the
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death or incapacity is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his authority under the
appointment. An appointment of a proxy is revocable by the shareholder unless
the appointment is coupled with an interest.
Section 11. Shareholder List. After fixing a record date for a
meeting of shareholders, the Corporation shall prepare an alphabetical list of
the names of all its shareholders who are entitled to notice of the meeting,
arranged by voting group with the address of, and the number and class and
series, if any, of shares held by each. The shareholders' list must be available
for inspection by any shareholder for a period of ten (10) days prior to the
meeting or such shorter time as exists between the record date and the meeting
and continuing through the meeting at the Corporation's principal office, at a
place identified in the meeting notice in the city where the meeting will be
held, or at the office of the Corporation's transfer agent or registrar. Any
shareholder of the Corporation or his agent or attorney is entitled on written
demand to inspect the shareholders' list (subject to the requirements of law),
during regular business hours and at his expense, during the period it is
available for inspection. The Corporation shall make the shareholders' list
available at the meeting of shareholders, and any shareholder or his agent or
attorney is entitled to inspect the list at any time during the meeting or any
adjournment.
Section 12. Action Without Meeting. Any action required by law
to be taken at a meeting of shareholders, or any action that may be taken at a
meeting of shareholders, may be taken without a meeting or notice if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted with respect to the subject
matter thereof, and such consent shall have the same force and effect as a vote
of shareholders taken at such a meeting.
Section 13. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than sixty
(60) days, and, in case of a meeting of shareholders, not less than ten (10)
days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section 13, such determination
shall apply to any adjournment thereof, except where the Board of Directors
fixes a new record date for the adjourned meeting or as required by law.
Section 14. Inspectors and Judges. The Board of Directors in
advance of any meeting may, but need not, appoint one or more inspectors of
election or judges of the vote, as the case may be, to act at the meeting or any
adjournment(s) thereof. If any inspector or
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inspectors, or judge or judges, are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors or judges. In case any
person who may be appointed as an inspector or judge fails to appear or act, the
vacancy may be filled by the Board of Directors in advance of the meeting, or at
the meeting by the person presiding thereat. The inspectors or judges, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots and
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate votes, ballots and consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting, the inspector or inspectors or judge or judges, if any, shall make
a report in writing of any challenge, question or matter determined by him or
them, and execute a certificate of any fact found by him or them.
Section 15. Voting for Directors. Unless otherwise provided in
the Articles of Incorporation, directors shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present.
ARTICLE THREE
DIRECTORS
Section 1. Number, Election and Term. The number of directors
of the Corporation shall be fixed from time to time, within the limits specified
by the Articles of Incorporation, by resolution of the Board of Directors;
provided, however, no director's term shall be shortened by reason of a
resolution reducing the number of directors. The directors shall be elected at
the annual meeting of the shareholders, except as provided in Section 2 of this
Article, and each director elected shall hold office for the term for which he
is elected and until his successor is elected and qualified or until his earlier
resignation, removal from office or death. Directors must be natural persons who
are 18 years of age or older but need not be residents of the State of Florida,
shareholders of the Corporation or citizens of the United States. Any director
may be removed at any time, with or without cause, at a special meeting of the
shareholders called for that purpose.
Section 2. Vacancies. A director may resign at any time by
giving written notice to the Corporation, the Board of Directors or the Chairman
of the Board. Such resignation shall take effect when the notice is delivered
unless the notice specifies a later effective date, in which event the Board of
Directors may fill the pending vacancy before the effective date if they provide
that the successor does not take office until the effective date. Any vacancy
occurring in the Board of Directors and any directorship to be filled by reason
of an increase in the size of the Board of Directors shall be filled by the
affirmative vote of a majority of the current directors though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
or special meeting of the shareholders called for that purpose, unless otherwise
provided by law. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, or until the next election of one
or more directors by shareholders if the vacancy is caused by an increase in the
number of directors.
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Section 3. Powers. Except as provided in the Articles of
Incorporation and by law, all corporate powers shall be exercised by or under
the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, its Board of Directors.
Section 4. Place of Meetings. Meetings of the Board of
Directors, regular or special, may be held either within or without the State of
Florida.
Section 5. Annual Meeting. The first meeting of each newly
elected Board of Directors shall be held, without call or notice, immediately
following each annual meeting of shareholders.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors may also be held without notice at such time and at such place as
shall from time to time be determined by the Board of Directors.
Section 7. Special Meetings and Notice. Special meetings of
the Board of Directors may be called by the Chairman of the Board or by the
President and shall be called by the Secretary on the written request of any two
directors. Written notice of special meetings of the Board of Directors shall be
given to each director at least forty-eight (48) hours before the meeting.
Except as required by statute, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting. Notices to
directors shall be in writing and delivered personally or mailed to the
directors at their addresses appearing on the books of the Corporation. Notice
by mail shall be deemed to be given at the time when the same shall be received.
Notice to directors may also be given by telegram, teletype or other form of
electronic communication. Notice of a meeting of the Board of Directors need not
be given to any director who signs a written waiver of notice before, during or
after the meeting. Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting and a waiver of any and all objections to the
place of the meeting, the time of the meeting and the manner in which it has
been called or convened, except when a director states, at the beginning of the
meeting or promptly upon arrival at the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
Section 8. Quorum; Required Vote; Presumption of Assent. A
majority of the number of directors fixed by, or in the manner provided in,
these bylaws shall constitute a quorum for the transaction of business;
provided, however, that whenever, for any reason, a vacancy occurs in the Board
of Directors, a quorum shall consist of a majority of the remaining directors
until the vacancy has been filled. The act of a majority of the directors
present at a meeting at which a quorum is present when the vote is taken shall
be the act of the Board of Directors. A director of the Corporation who is
present at a meeting of the Board of Directors or a committee of the Board of
Directors when corporate action is taken shall be presumed to have assented to
the action taken, unless he objects at the beginning of the meeting, or promptly
upon his arrival, to holding the meeting or transacting specific business at the
meeting, or he votes against or abstains from the action taken.
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Section 9. Action Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors or a committee
thereof may be taken without a meeting if a consent in writing, setting forth
the action taken, is signed by all of the members of the Board of Directors or
the committee, as the case may be, and such consent shall have the same force
and effect as a unanimous vote at a meeting. Action taken under this section is
effective when the last director signs the consent, unless the consent specifies
a different effective date. A consent signed under this Section 9 shall have the
effect of a meeting vote and may be described as such in any document.
Section 10. Conference Telephone or Similar Communications
Equipment Meetings. Members of the Board of Directors may participate in a
meeting of the Board by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground the meeting is not lawfully called or convened.
Section 11. Committees. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members an executive committee and one or more other committees, each of
which, to the extent provided in such resolution, shall have and may exercise
all of the authority of the Board of Directors in the business and affairs of
the Corporation except where the action of the full Board of Directors is
required by statute. Each committee must have two or more members who serve at
the pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies in the membership of a committee shall be filled by the Board of
Directors at a regular or special meeting of the Board of Directors. The
executive committee shall keep regular minutes of its proceedings and report the
same to the Board of Directors when required. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
Section 12. Compensation of Directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 13. Chairman of the Board. The Board of Directors may,
in its discretion, choose a chairman of the board who shall preside at meetings
of the shareholders and of the directors and shall be an ex officio member of
all standing committees. The Chairman of the Board shall have such other powers
and shall perform such other duties as shall be designated by the Board of
Directors. The Chairman of the Board shall be a member of the Board of Directors
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but no other officers of the Corporation need be a director. The Chairman of the
Board shall serve until his successor is chosen and qualified, but he may be
removed at any time by the affirmative vote of a majority of the Board of
Directors.
ARTICLE FOUR
OFFICERS
Section 1. Positions. The officers of the Corporation shall
consist of a President, a Secretary and a Treasurer, and, if elected by the
Board of Directors by resolution, a Chairman of the Board and/or one or more
Vice Presidents. Any two or more offices may be held by the same person.
Section 2. Election of Specified Officers by Board. The Board
of Directors at its first meeting after each annual meeting of shareholders
shall elect a President, a Secretary, a Treasurer and may elect one or more Vice
Presidents.
Section 3. Election or Appointment of Other Officers. Such
other officers and assistant officers and agents as may be deemed necessary may
be elected or appointed by the Board of Directors, or, unless otherwise
specified herein, appointed by the President of the Corporation. The Board of
Directors shall be advised of appointments by the President at or before the
next scheduled Board of Directors meeting.
Section 4. Salaries. The salaries of all officers of the
Corporation to be elected by the Board of Directors pursuant to Article Four,
Section 2 hereof shall be fixed from time to time by the Board of Directors or
pursuant to its discretion. The salaries of all other elected or appointed
officers of the Corporation shall be fixed from time to time by the President of
the Corporation or pursuant to his direction.
Section 5. Term; Resignation. The officers of the Corporation
shall hold office until their successors are chosen and qualified. Any officer
or agent elected or appointed by the Board of Directors or the President of the
Corporation may be removed, with or without cause, by the Board of Directors.
Any officers or agents appointed by the President of the Corporation pursuant to
Section 3 of this Article Four may also be removed from such officer positions
by the President, with or without cause. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise shall be filled by
the Board of Directors, or, in the case of an officer appointed by the President
of the Corporation, by the President or the Board of Directors. Any officer of
the Corporation may resign from his respective office or position by delivering
notice to the Corporation. Such resignation is effective when delivered unless
the notice specifies a later effective date. If a resignation is made effective
at a later date and the Corporation accepts the future effective date, the Board
of Directors may fill the pending vacancy before the effective date if the Board
provides that the successor does not take office until the effective date.
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Section 6. President. The President shall be the Chief
Executive Officer of the Corporation, shall have general and active management
of the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. In the absence of the
Chairman of the Board or in the event the Board of Directors shall not have
designated a chairman of the board, the President shall preside at meetings of
the shareholders and the Board of Directors.
Section 7. Vice Presidents. The Vice Presidents in the order
of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the President, perform the duties and
exercise the powers of the President. They shall perform such other duties and
have such other powers as the Board of Directors shall prescribe or as the
President may from time to time delegate.
Section 8. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the shareholders and record all
the proceedings of the meetings of the shareholders and of the Board of
Directors in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall be. He shall keep in
safe custody the seal of the Corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it.
Section 9. Treasurer. The Treasurer shall have the custody of
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board or Directors at its regular meetings or
when the Board of Directors so requires an account of all his transactions as
treasurer and of the financial condition of the Corporation unless otherwise
specified by the Board of Directors, the Treasurer shall be the Corporation's
Chief Financial Officer.
Section 10. Other Officers, Employees and Agents. Each and
every other officer, employee and agent of the Corporation shall possess, and
may exercise, such power and authority, and shall perform such duties, as may
from time to time be assigned to him by the Board of Directors, the officer so
appointing him and such officer or officers who may from time to time be
designated by the Board of Directors to exercise such supervisory authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
Section 1. Issue of Certificates. The Corporation shall
deliver certificates representing all shares to which shareholders are entitled;
and such certificates shall be signed by
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the Chairman of the Board, President or a Vice President, and by the Secretary
or an Assistant Secretary of the Corporation, and may be sealed with the seal of
the Corporation or a facsimile thereof.
Section 2. Legends for Preferences and Restrictions on
Transfer. The designations, relative rights, preferences and limitations
applicable to each class of shares and the variations in rights, preferences and
limitations determined for each series within a class (and the authority of the
Board of Directors to determine variations for future series) shall be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the Corporation
will furnish the shareholder a full statement of this information on request and
without charge. Every certificate representing shares that are restricted as to
the sale, disposition, or transfer of such shares shall also indicate that such
shares are restricted as to transfer and there shall be set forth or fairly
summarized upon the certificate, or the certificate shall indicate that the
Corporation will furnish to any shareholder upon request and without charge, a
full statement of such restrictions. If the Corporation issues any shares that
are not registered under the Securities Act of 1933, as amended, and registered
or qualified under the applicable state securities laws, the transfer of any
such shares shall be restricted substantially in accordance with the following
legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AT
HOLDER'S EXPENSE, AN OPINION (SATISFACTORY TO THE CORPORATION) OF
COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT
REQUIRED."
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Section 3. Facsimile Signatures. The signatures of the
Chairman of the Board, the President or a Vice President and the Secretary or
Assistant Secretary upon a certificate may be facsimiles, if the certificate is
manually signed by a transfer agent, or registered by a registrar, other than
the Corporation itself or an employee of the Corporation. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of the issuance.
Section 4. Lost Certificates. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
Section 5. Transfer of Shares. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 6. Registered Shareholders. The Corporation shall be
entitled to recognize the exclusive rights of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Florida.
Section 7. Redemption of Control Shares. As provided by the
Florida Business Corporation Act, if a person acquiring control shares of the
Corporation does not file an acquiring person statement with the Corporation,
the Corporation may redeem the control shares at fair market value at any time
during the 60-day period after the last acquisition of such control shares. If a
person acquiring control shares of the Corporation files an acquiring person
statement with the Corporation, the control shares may be redeemed by the
Corporation only if such shares are not accorded full voting rights by the
shareholders as provided by law.
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ARTICLE SIX
GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors may from time to
time declare, and the Corporation may pay, dividends on its outstanding shares
in cash, property, or its own shares pursuant to law and subject to the
provisions of the Articles of Incorporation.
Section 2. Reserves. The Board of Directors may by resolution
create a reserve or reserves out of earned surplus for any proper purpose or
purposes, and may abolish any such reserve in the same manner.
Section 3. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the Corporation
shall end on December 31st of each year, unless otherwise fixed by resolution of
the Board of Directors.
Section 5. Seal. The corporate seal shall have inscribed
thereon the name and state of incorporation of the Corporation. The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
Section 6. Gender. All words used in these Bylaws in the
masculine gender shall extend to and shall include the feminine and neuter
genders.
ARTICLE SEVEN
AMENDMENTS OF BYLAWS
Unless otherwise provided by law, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted by action of the Board of Directors.
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Year:________
WAIVER OF NOTICE AND MINUTES OF ANNUAL MEETING OF DIRECTORS OF
----------------
The Annual Meeting of Directors of the above named corporation was
called to order on ________________, 19_, at _________________________ by
_________________________, the President of the above named corporation.
The Secretary, _________________________, then called the role of the
directors of the above named corporation. All directors were either in
attendance at the meeting or else signed and executed the within document,
indicating their waiver of notice of the meeting and their ratification of the
actions taken at the meeting.
The above named corporation's President, _________________________ then
declared the meeting to be in compliance with Florida Law and that the purpose
of the annual meeting was to address the following matters:
(a) Election of officers for the current year.
Regarding the election of officers for the following year, the current
officers were renominated for office and were all unanimously re-elected to
their respective positions as directors for the above named corporation for the
following year.
There being no further business to come before the meeting, the
President announced that the Annual Meeting of Directors of the above named
corporation was ADJOURNED. DATED:
DATED: _______________ _______________________________________________
CORPORATE SECRETARY
We, the undersigned directors, do hereby waive any notice required with respect
to said meeting and do hereby ratify and confirm the above actions taken at said
meeting.
- ------------------------- -------------------------
DIRECTOR DIRECTOR
- ------------------------- -------------------------
DIRECTOR DIRECTOR
- 13 -
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THE COMPANIES ORDINANCE (Chapter 32)
-------------------------------
Company Limited by Shares
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ARTICLES OF ASSOCIATION
OF
Name changed to MAGICWORKS ENTERTAINMENT
ASIA LIMITED w.e.f. April 25, 1997
PEDRO TRADING LIMITED
PRELIMINARY
1. The regulations in Table A in the First Schedule to the Ordinance shall
not apply to the Company.
INTERPRETATION
2. (a) In these Articles, save where the context otherwise requires:
"the Company" means the above named Company;
"the Ordinance" means the Companies Ordinance (Chapter 32 of the Laws of Hong
Kong), and includes every other ordinance incorporated therewith or substituted
therefor; and in the case of any such substitution the references in these
Articles to the provisions of the Ordinance shall be read as references to the
provisions substituted therefor in the new ordinance;
"the Board" and "the Directors" means the directors for the time being of the
Company or the directors present at a duly convened meeting of directors at
which a quorum is present;
"Dividend" includes bonuses, distributions in specie and in kind, capital
distributions and capitalisation issues; "month" means calendar month;
"the Office" means the registered office of the Company for the time being;
"paid up;" includes credited as paid up;
"the Register" means the register of members of the Company kept pursuant to the
Ordinance and includes any branch register kept pursuant to the Ordinance;
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"the Secretary" means the secretary for the time being of the Company;
"the Seal" means the common seal of the Company or any official seal that the
Company may have as permitted by the Ordinance; "these Articles" means these
Articles of Association in their present form or as altered from time to time;
"in writing and "written" includes cable, telex, facsimile messages and any mode
of reproducing words in a legible and non-transitory form.
(b) In these Articles, if not inconsistent with the subject or context,
words importing the singular number only shall include the plural
number and vice versa, and words importing any gender shall include all
genders and vice versa.
(c) Subject as aforesaid, any words defined in the Ordinance or any
statutory modification thereof in force at the date at which these
Articles become binding on the Company shall, if not inconsistent with
the subject or context, bear the same meaning in these Articles.
(d) The headings are inserted for convenience only and shall not affect
the construction of these Articles.
PRIVATE COMPANY
3. The Company is a private company, and accordingly:-
(a) any invitation to the public to subscribe for any shares or
debentures of the Company is prohibited;
(b) the number of the members of the Company (not including persons who
are in the employment of the Company, and persons who, having been
formerly in the employment of the Company, were, while in such
employment, and have continued after the determination of such
employment to be, members of the Company) shall be limited to fifty
PROVIDED that where two or more persons hold one or more shares in the
Company jointly they shall, for the purposes of this Article, be
treated as a single member;
(c) the right to transfer the shares of the Company shall be restricted
in manner hereinafter prescribed; and
(d) the Company shall not have power to issue share warrants to bearer.
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THE OFFICE
4. The Office shall be at such place in Hong Kong as the Directors or
Secretary shall from time to time appoint.
SHARES
5 (a) Subject to the provisions of Section 57B of the Ordinance, and save
as provided by contract or these Articles to the contrary, all unissued
shares shall be at the disposal of the Directors who may allot, grant
options over, or otherwise deal with or dispose of the same to such
persons, at such times, for such consideration and generally upon such
terms and conditions as they think proper, but so that no shares of any
class shall be issued at a discount except in accordance with Section
50 of the Ordinance.
(b) The Company may give such financial assistance for purposes of
acquiring shares in the Company as is not prohibited by the Ordinance.
(c) For purposes of Article 8(b) the Directors are authorised to make
statutory declarations or take such other steps as may be required by
the Ordinance in relation to the giving of financial assistance to
acquire shares in the Company.
6. The Company may make arrangements on the issue of shares for a
difference between the holders of such shares in the amount of calls to
be paid and the time of payment of such calls.
7. If by the conditions of allotment of any shares the whole or part of
the amount or issue price thereof shall be payable by instalments,
every such instalment shall, when due, be paid to the Company by the
person who for the time being is the registered holder of the shares,
or his legal personal representative.
8. (a.) Subject to sections 49 to 49S of the Ordinance, the
Company may issue shares which are to be redeemed or are
liable to be redeemed at the option of the Company or the
shareholder. The redemption of shares may be effected upon
such terms and in such manner as the Company before or upon
issue of the shares shall by ordinary resolution determine.
(b.) Subject to sections 49 to 49S of the Ordinance, the Company
may purchase its own shares (including redeemable shares) and
without prejudice to the generality of the foregoing the
Company may purchase its own shares (including any redeemable
shares) in order to:
(1) settle or compromise a debt or claim;
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(2) eliminate a fractional share or fractional entitlement;
(3) fulfil an agreement in which the Company has an option or is
obliged to purchase shares under an employee share scheme which had
previously been approved by the Company in general meeting;
(4) comply with an order of court under section 8(4),47G(6), or 168A(2)
of the Ordinance.
(c.) Subject to sections 49I to 49O of the Ordinance, the Company may
make a payment in respect of the redemption or purchase under section
49A or (as the case may be) section 49B of its own shares otherwise
than out of its distributable profits or the proceeds of a fresh issue
of shares.
(d.) For purposes of Article 8(c), the Directors are authorised to make
statutory declarations or take such other steps as may be required by
the Ordinance in relation to the redemption or purchase by the Company
of its own shares out of capital.
9. Subject to the provisions of these Articles, the Company shall not,
except as required by law, be bound by or required in any way to
recognise any contingent, future, partial or equitable interest in any
share or in any fractional part of a share, or any other right in
respect of any share, or any other claim to or in respect of any such
share on the part of any person (even when having notice thereof)
except an absolute right to the entirely thereof in the registered
holder.
10. The Company may in connection with the issue of any shares exercise all
powers of paying interest out of capital and of paying commission and
brokerage conferred or permitted by the Ordinance.
11. No person shall become a member until his name shall have been entered
into the Register.
JOINT HOLDERS OF SHARES
12. Where two or more persons are registered as the holders of any share
they shall be deemed to hold the same as joint tenants with benefit of
survivorship, subject to the following provisions:
(a) the Company shall not be bound to register more than
three persons as the holders of any shares except in
the case of the legal personal representative of a
deceased member;
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(b) the joint holders of any shares shall be liable severally as
well as jointly in respect of all payments which ought to be
made in respect of such shares;
(c) on the death of any one of such joint holders the survivor or
survivors shall be the only person or persons recognized by
the Company as having any title to such shares, but the
Directors may require such evidence of death as they may deem
fit;
(d) any one of such joint holders may give effectual receipts for
any dividend, return of capital or other payment in the share;
and
(e) the Company shall be at liberty to treat the person whose name
stands first in the Register as one of the joint holders of
any shares as solely entitled to delivery of the certificate
relating to such shares, or to receive notices from the
Company, and to attend and vote at general meetings of the
Company, and any notice given to such person shall be deemed
notice to all the joint holders; but anyone of such joint
holders may be appointed the proxy of the persons entitled to
vote on behalf of such joint holders, and as such proxy to
attend and vote at general meetings of the Company, and if
more than one of such joint holders be present at any meeting
personally or by proxy that one so present whose name stands
first in the Register in respect of such shares shall alone be
entitled to vote in respect thereof.
SHARE CERTIFICATES
13. Every member shall, without payment, be entitled to receive within two
months after allotment or lodgment of an instrument of transfer duly
stamped, or within such other period as the conditions of issue may
provide, a certificate for all his shares of any particular class, or
several certificates, each for one or more of his shares, upon payment
of such fee, not exceeding two dollars for every certificate after the
first, as the Directors shall from time to time determine, provided
that in the event of a member transferring part of the shares
represented by a certificate in his name a new certificate in respect
of the balance thereof shall be issued in his name without payment and,
in the case of joint holders, the Company shall not be bound to issue
more than one certificate for all the shares of any particular class
registered in their joint names.
14. Every share certificate shall be issued under the Seal and shall
specify the number and class of shares, and, if required, the
distinctive numbers thereof comprised therein, the amount paid up
thereon and, if appropriate, whether such shares carry no voting
rights. No certificate shall be issued in respect of more than one
class of shares. If there shall be more than one class of shares then
each certificate of every class shall state thereon that the share
capital is divided into different classes and the nominal value of the
voting rights attaching to each class.
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15. If any share certificate shall be worn out, defaced, destroyed or lost,
it may be renewed on such evidence being produced as the Directors
shall require, and in case of wearing out or defacement, on delivery up
of the old certificate, and in case of destruction or loss, on the
execution of such indemnity (if any), as the Directors may from time to
time require. In case of destruction or loss, the person to whom such
renewed certificate is given shall also bear and pay to the Company all
expenses incidental to the investigation by the Company of the evidence
of such destruction or loss and of such indemnity.
CALLS ON SHARES
16. (a) The Directors may from time to time make calls upon the
members in respect of all moneys unpaid on their shares
(whether on account of the nominal value of the shares or by
way of premium) but subject always to the terms of issue of
such shares, and any such call may be made payable by
instalments.
(b) Each member shall, subject to receiving at least fourteen days'
notice specifying the time or times and place for payment, pay to
the Company the amount called on his shares and at the time or
times and place so specified. The nonreceipt of a notice of any
call by, or the accidental omission to give notice of a call to,
any of the members shall not invalidate the call.
17. A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed. A call
may be revoked, varied or postponed as the Directors may determine.
18. If any part of a sum called in respect of any shares or any instalment
of a call be not paid before, or on the day appointed for payment
thereof, the person from whom the sum is due shall be liable to pay
interest on the outstanding part thereof at such rate as the Directors
shall determine from the day appointed for the payment of such call or
instalment to the time of discharge thereof in full; but the Directors
may, if they shall think fit, waive the payment of such interest or any
part thereof.
19. If, by the terms of the issue of any shares or otherwise, any amount is
made payable upon allotment or at any fixed time, whether on account of
the nominal amount of the shares or by way of premium, every such
amount shall be payable as if it were a call duly made and payable on
the date on which by the terms of the issue the same becomes payable;
and all the provisions thereof with respect to the payment of calls and
interest thereon, or to the forfeiture of shares for non-payment of
calls, shall apply to every such amount and the shares in respect of
which it is payable in the case of non-payment thereof.
20. The Directors may, if they shall think fit, receive from any member
willing to advance the same all or any part of the moneys uncalled and
unpaid upon any shares held by him;
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and upon all or any of the moneys so paid in advance the Directors may
(until the same would, but for such payment in advance, become
presently payable) pay interest at such rate as may be agreed upon
between the member paying the moneys in advance and the Directors. The
Directors may also at any time repay the amount so advanced upon giving
to such member one month's notice in writing.
21. On the trial or hearing of any action for the recovery of any money due
for any call, it shall be sufficient to prove that the name of the
member sued is entered in the Register as the holder, or one of the
holders, of the shares in respect of which such debt accrued; that the
resolution making the call is duly recorded in the Minute Book; and
that notice of such call was duly given to the member sued in pursuance
of these Articles; and it shall not be necessary to prove the
appointment of the Directors who made such call, nor any other matters
whatsoever, but the proof of the matters aforesaid shall be conclusive
evidence of the debt.
22. No member shall, unless the Directors otherwise determine, be entitled
to receive any dividend, or, subject to the Ordinance, to receive
notice of or to be present or vote at any general meeting, either
personally or (save as proxy for another member) by proxy, or to
exercise any privileges as a member, or be reckoned in a quorum, until
he shall have paid all calls or other sums for the time being due and
payable on every share held by him, whether alone or jointly with any
other person, together with interest and expenses (if any).
FORFEITURE
23. If any member fails to pay in full any call or instalment of a call on
the day appointed for payment thereof, the Directors may at any time
thereafter, during such time as any part of the call or instalment
remains unpaid, serve a notice on him requiring him to pay so much of
the call or instalment as is unpaid together with interest accrued and
any expenses incurred by reason of such non-payment.
24. The notice shall name a further day (not being less than fourteen days
from the date of the notice) on or before which such call or instalment
or part thereof and all interest accrued and expenses incurred by
reason of such non-payment are to be paid, and it shall also name the
place where payment is to be made, such place being either the Office,
or some other place at which calls of the Company are usually made
payable. The notice shall also state that, in the event of non-payment
at or before the time and at the place appointed, the shares in respect
of which such call or instalment is payable will be liable to be
forfeited.
25. If the requirements of any such notice as aforesaid be not complied
with, any shares in respect of which such notice has been given may, at
any time thereafter before the payment required by the notice had been
made, be forfeited by a resolution of the
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Directors to that effect, and any such forfeiture shall extend to all
dividends declared in respect of the shares so forfeited but not
actually paid before such forfeiture. The Directors may accept the
surrender of any shares liable to be forfeited hereunder and in such
case references in these Articles to forfeiture shall include
surrender.
26. Any shares so forfeited shall be deemed for the purposes of this
Article to be the property of the Company, and may be sold, re-allotted
or otherwise disposed of either subject to or discharged from all calls
made or instalments due prior to the forfeiture, to any person, upon
such terms and in such manner and at such time or times as the
Directors think fit. For the purpose of giving effect to any such sale
or other disposition the Directors may authorise some person to
transfer the shares so sold or otherwise disposed of to the purchaser
thereof or any other person becoming entitled thereto.
27. The Directors may, at any time before any shares so forfeited shall
have been sold, re-allotted or otherwise disposed of, annul the
forfeiture thereof upon such conditions as they think fit.
28. Any person whose shares have been forfeited shall thereupon cease to be
the holder of any such shares but shall notwithstanding be and remain
liable to pay to the Company all calls, instalments, interest and
expenses owing upon or in respect of such shares at the time of the
forfeiture together with interest thereon from the time of forfeiture
until payment at such rate as the Directors shall think fit and without
any deduction or allowance for the value of the shares at the time of
forfeiture, and the Directors may enforce the payment of such moneys or
any part thereof and may waive payment of such interest wholly or in
part.
29. When any shares have been forfeited an entry shall be made in the
Register recording the forfeiture and the date thereof, and so soon as
the shares so forfeited have been sold or otherwise disposed of an
entry shall also be made of the manner and date of the sale or disposal
thereof.
LIEN
30. The Company shall have a first and paramount lien on every share for
all moneys outstanding in respect of such share, whether presently
payable or not, and the Company shall also have a first and paramount
lien on every share standing registered in the name of a member,
whether singly or jointly with any other person or persons, for all the
debts and liabilities of such member or his estate to the Company,
whether the same shall have been incurred before or after notice to the
Company of any interest of any person other than such member, and
whether the same shall have fallen due for payment or not, and
notwithstanding that the same are joint debts or liabilities of such
member or his estate and any other person, whether a member or not. The
Directors may at any time either
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generally or in any particular case waive any lien that has arisen, or
declare any share to be wholly or in part exempt from the provisions of
this Article.
31. The Company may sell in such manner as the Directors think fit any
share on which the Company has a lien, but no sale shall be made unless
some sum in respect of which the lien exists is presently payable, nor
until the expiration of fourteen days after a notice in writing stating
and demanding payment of the sum presently payable and giving notice of
intention to sell in default shall have been given to the holder for
the time being of the share or the person entitled thereto by reason of
his death, bankruptcy or winding up or otherwise by operation of law or
court order.
32. The net proceeds of such sale after payment of the costs of such sale
shall be applied in or towards payment or satisfaction of the debts or
liabilities in respect whereof the lien existed so far as the same are
presently payable and any residue shall (subject to a like lien for
debts or liabilities not presently payable as existed upon the shares
prior to the sale) be paid to the person entitled to the shares at the
time of the sale. For giving effect to any such sale the Directors may
authorise some person to transfer the shares so sold to the purchaser
thereof.
33. A statutory declaration in writing that the declarant is a Director or
the Secretary of the Company and that a share has been duly forfeited
or surrendered or sold to satisfy a lien of the Company on a date
stated in the declaration shall be conclusive evidence of the facts
therein stated as against all persons claiming to be entitled to the
share. Such declaration and the receipt of the Company for the
consideration (if any) given for the share on the sale, re-allotment or
disposal thereof together with the share certificate delivered to a
purchaser or allottee thereof shall (subject to the execution of a
transfer if the same be required) constitute a good title to the share
and the person to whom the share is sold, re-allotted or disposed of
shall be registered as the holder of the share and shall not be bound
to see to the application of the purchase money (if any) nor shall his
title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, surrender, sale,
reallotment ,or disposal of the share.
TRANSFER OF SHARES
34. The instrument of transfer of any shares in the Company shall be in
writing and shall be executed by or on behalf of the transferor and by
or on behalf of the transferee. The transferor shall remain the holder
of the shares concerned until the name of the transferee is entered in
the Register in respect thereof.
35. Every instrument of transfer shall be lodged at the Office for
registration accompanied by the certificate relating to the shares to
be transferred and such other evidence as the Directors may require in
relation thereto. All instruments of transfer which shall be registered
shall be retained by the Company but, save where fraud is suspected,
any
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instrument of transfer which the Directors may decline to register
shall, on demand, be returned to the person depositing the same.
36. There shall be paid to the Company in respect of the registration of a
transfer and of any Grant of Probate or Letters of Administration,
Certificate of Marriage or Death, Power of Attorney or other document
relating to or affecting the title to any share or the making of any
entry in the Register affecting the title to any share such fee (if
any) as the Directors may from time to time require or prescribe.
37. The registration of transfers may be suspended at such times and for
such periods as the Directors may from time to time determine and
either generally or in respect of any class of shares provided always
that such registration shall not be suspended for more than thirty days
in any year.
38. (a) The Directors may at any time in their absolute discretion and
without assigning any reason therefor, decline to register any
transfer of any share whether or not it is a fully paid share.
(b) The Directors may also decline to register any transfer unless:
(i) The instrument of transfer is in respect of only one class
of shares;
(ii) in the case of a transfer to joint holders, the number of
joint holders to whom the shares are to be transferred does
not exceed three; and
(iii)the shares concerned are free of any lien in favour of the
Company.
(c) If the Directors refuse to register a transfer they shall, within
two months after the date on which the transfer was lodged with
the Company, send to the transferor and transferee notice of the
refusal.
TRANSMISSION OF SHARES
39. In case of the death of a member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of
the deceased where he was a sole holder, shall be the only persons
recognized by the Company as having any title to his interest in the
shares; but nothing herein contained shall release the estate of a
deceased joint holder from any liability in respect of any share which
had been jointly held by him with other persons.
40. (a) Any person becoming entitled to a share in consequence of the
death or bankruptcy of a member may, upon such evidence being
produced as may from time to time properly be required by the
Directors and, subject as hereinafter provided, elect either to be
registered himself as holder of the share or to have some person
nominated by
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him registered as the transferee thereof, but the directors shall,
in either case, have the same right to decline or suspend
registration as they would have had in the case of a transfer of
the share by that member before his death or bankruptcy, as the
case may be.
(b) If the person so becoming entitled shall elect to be registered
himself, he shall deliver or send to the company a notice in
writing signed by him stating that he so elects. If he shall elect
to have another person registered he shall execute a transfer of
the share in favour of that person. All the limitations,
restrictions and provisions of these regulations relating to the
right to transfer and the registration of transfers of shares
shall be applicable to any such notice or transfer as aforesaid as
if the death or bankruptcy of the member had not occurred and the
notice or transfer were a transfer signed by the member.
41. A person becoming entitled to a share by reason of the death or
bankruptcy of the holder shall be entitled to the same dividends and
other advantages to which he would be entitled if he were the
registered holder of the share, except that he shall not, before being
registered as a member in respect of the share, be entitled in respect
of it to exercise any right conferred by membership in relation to
meetings of the Company:
PROVIDED always that the Directors may at any time give notice
requiring any such person to elect either to be registered himself or
to transfer the share, and if the notice is not complied with within 90
days the Directors may thereafter withhold payment of all dividends or
other moneys payable in respect of the share until the requirements of
the notice have been complied with.
42. Any person to whom the right to any shares in the company has been
transmitted by operation of law shall, if the Directors refuse to
register the transfer, be entitled to call on the Directors to furnish
within 28 days a statement of the reasons for the refusal.
STOCK
43. The Company may from time to time by ordinary resolution convert any
fully paid-up shares into stock and may reconvert any stock into fully
paid-up shares of any denomination. After the passing of any resolution
converting all the fully paid-up shares of any class in the capital of
the Company into stock, any shares of that class which subsequently
become fully paid-up and rank pari passu in all other respects with
such shares shall, by virtue of this Article and such resolution, be
converted into stock transferable in the same units as the shares
already converted.
44. The holders of stock may transfer the same or any part thereof in the
same manner and subject to the same regulations as the shares from
which the stock arose might prior to conversion have been transferred
or as near thereto as circumstances admit. The
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Directors may from time to time fix the minimum amount of stock
transferable and restrict or forbid the transfer of fractions of such
minimum, but the minimum shall not without the sanction of an ordinary
resolution of the Company, exceed the nominal amount of each of the
shares from which the stock arose.
45. The holders of stock shall, according to the amount of the stock held
by them, have the same rights as regards dividends, voting at general
meetings of the Company and other matters as if they held the shares
from which the stock arose, but no such right (except as to
participation in dividends and profits of the Company and in assets on
a reduction of capital or a winding up) shall be conferred by an amount
of stock which would not, if existing in shares, have conferred such
right.
46. Such of these Articles as are applicable to fully paid up shares shall
apply mutatis mutandis to stock, and the words "share" and
"shareholder" therein shall include "stock" and "stockholder".
INCREASE OF CAPITAL
47. The Company may, from time to time, by ordinary resolution increase its
authorised capital by such sum divided into shares of such amounts as
the resolution shall prescribe.
48. Without prejudice to any special rights, privileges or restrictions for
the time being attaching to any then existing class of shares in the
capital of the Company, any new shares created pursuant to Article 47
may be issued upon such terms and conditions, and with such fights,
privileges and restrictions attached thereto as the general meeting
resolving upon the creation thereof shall direct or, if no such
direction be given, as the Directors shall determine, and in particular
such shares may be issued with a preferential, qualified or deferred
right to dividends and in the distribution of assets of the Company,
and with a special, or without any, right of voting.
49. The general meeting resolving upon the creation of any new shares may
direct that the same or any of them shall be offered in the first
instance, and either at par or at a premium or (subject to the
provisions of the Ordinance) at a discount, to all the holders for the
time being of any class of shares in the capital of the Company in
proportion to the number of shares of such class held by them
respectively, or make any other provisions as to the issue and
allotment of the new shares.
50. Subject to any direction or determination that may be given or made in
accordance with the powers contained in these Articles all new shares
created pursuant to Article 47 shall be subject to the same provisions
herein contained with reference to the payment of calls, transfer,
transmission, forfeiture, lien and otherwise as the shares in the
capital of the Company existing at the date of creation of such new
shares.
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ALTERATIONS OF SHARE CAPITAL
51. The Company may by ordinary resolution:-
(a) subdivide its existing shares or any of them into shares of
smaller amount than is fixed by the Memorandum of Association of
the Company, provided that in the subdivision of an existing share
the proportion between the amount paid and the amount (if any)
unpaid on each reduced share shall be the same as it was in the
case of the share from which the reduced share is derived, and so
that the resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
subdivision one or more of the shares may, as compared with the
others, have any such preferred, deferred or other special rights
or be subject to any such restrictions as the Company has power to
attach to unissued or new shares;
(b) consolidate and divide its capital or any part thereof into shares
of larger amount than its existing shares; or
(c) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any person
and diminish the amount of its authorised capital by the amount of
the shares so cancelled.
52. The Company may by special resolution reduce its share capital and any
capital redemption reserve fund or any share premium account in any
manner allowed by law.
53. Where any difficulty arises in regard to any consolidation and division
under paragraph (b) of Article 51, the Directors may settle the same as
they think expedient and in particular may arrange for the sale of the
shares representing fractions and the distribution of the net proceeds
of sale in due proportion amongst the members who would have been
entitled to the fractions, and for this purpose the Directors may
authorise some person to transfer the shares representing fractions to
the purchaser thereof, who shall not be bound to see to the application
of the purchase money nor shall his title to the shares be affected by
any irregularity or invalidity in the proceedings relating to the sale.
MODIFICATION OF RIGHTS
54. (a) All or any of the rights attached to any class of shares in the
Capital of the company for the time being may, at any time, as
well before as during liquidation, be altered or abrogated either
with the consent in writing of the holders of not less than
three-fourths of the issued shares of the class or with the
sanction of a special resolution passed at a separate general
meeting of the holders of shares of the class, and all the
provisions contained in these Articles relating to general
meetings shall mutatis mutandis apply to every such meeting, but
so that the quorum thereof shall be not less than two persons
personally present and holding or representing by proxy
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one-third in nominal value of the issued shares of the class, and
that any holder of shares of the class present in person or by
proxy may demand a poll, and that each holder of shares of the
class present in person or by proxy shall on a poll be entitled to
one vote for each share of the class held by him, and if at any
adjourned meeting of such holders such quorum as aforesaid is not
present, any two holders of shares of the class who are personally
present in person or by proxy shall be a quorum.
(b) The foregoing provisions of this Article shall apply to the
variation or abrogation of the rights attached to some only of the
shares of any class as if each group of shares of the class
differently treated formed a separate class, the rights whereof
are to be varied.
55. The special rights conferred upon the holders of any shares or such
class of shares shall not, unless otherwise expressly provided in the
rights attaching to or the terms of issue of such shares, be deemed to
be altered by the creation or issue of further shares ranking pari
passu therewith.
GENERAL MEETINGS
56. (a) The Company shall in each year hold a general meeting as its
annual general meeting in addition to any other meetings in that
year, and shall specify the meeting as such in the notices calling
it, and not more than 15 months shall elapse between the date of
one annual general meeting of the company and that of the next,
PROVIDED that so long as the Company holds its first annual
general meeting within 18 months of its incorporation, it need not
hold it in the year of its incorporation or in the following year.
The annual general meeting shall be held at such time and place as
the Directors shall appoint.
(b) All other general meetings shall be called extraordinary general
meetings.
57. The Directors may, whenever they think fit, and shall, on requisition
by Members in accordance with the Ordinance, proceed to convene an
extraordinary general meeting. The provisions of the Ordinance shall
apply to any requisition and to any failure by the Directors to convene
an extraordinary general meeting when so requisitioned.
NOTICE OF GENERAL MEETINGS
58. An annual general meeting and a meeting called for the passing of a
special resolution shall be called by 21 days' notice in writing at the
least, and a meeting of the company other than an annual general
meeting or a meeting for the passing of a special resolution shall be
called by 14 days' notice in writing at the least. The notice shall
specify the place, the day and the hour of meeting and, in case of
special business, the general nature of that business, and shall be
given in manner hereinafter mentioned or in such other
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manner, if any, as may be prescribed by the Company in general meeting,
to such persons as are, under the Articles of the Company, entitled to
receive such notices from the Company:
PROVIDED that a meeting of the Company shall, notwithstanding that it
is called by shorter notice than that specified in this Article, be
deemed to have been duly called if it is so agreed:-
(a) in the case of a meeting called as the annual general meeting, by
all the members entitled to attend and vote thereat; and
(b) in the case of any other meeting, by a majority in number of the
members having a right to attend and vote at the meeting, being a
majority together holding not less than 95 per cent in nominal
value of the shares giving that right.
59. The accidental omission to give notice of a meeting or (in cases where
an instrument of proxy is sent out with the notice) the accidental
omission to send such instrument of proxy to, or the non-receipt of
notice of a Meeting or such instrument of proxy by, any person entitled
to receive such notice shall not invalidate the proceedings at that
meeting.
PROCEEDINGS AT GENERAL MEETINGS
60. All business shall be deemed special that is transacted at an
extraordinary general meeting and also all business that is transacted
at an annual general meeting with the exception of:-
(a) the declaration and sanction of dividends;
(b) the consideration of the accounts and balance sheets and the
reports of the Directors and other documents required to be
annexed to the accounts;
(c) the election of Directors in place of those retiring (if any);
(d) the appointment of the Auditors of the Company and the fixing of,
or the determination of the method of fixing, the remuneration of
the Auditors.
61. No business, save the election of a chairman of the meeting, shall be
transacted at any general meeting, unless a quorum is present when the
meeting proceeds to business. Two members present in person or by proxy
and holding between them at least fifty-one per centum (51%) in nominal
value of the issued shares of the Company for the time being shall be a
quorum for all purposes.
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62. The Chairman (if any) of the Board or, in his absence, a Deputy
Chairman (if any) shall preside as chairman at every general meeting.
If there is no such Chairman or Deputy Chairman, or if at any meeting
neither the Chairman nor a Deputy Chairman is present within fifteen
minutes after the time appointed for holding the meeting, or if neither
of them is willing to act as chairman, the Directors present shall
choose one of their number to act, or if one Director only is present
he shall preside as chairman if willing to act. If no Director is
present, or if each of the Directors present declines to act as
chairman, the persons present and entitled to vote shall elect one of
their number to be chairman of the meeting.
63. If within fifteen minutes from the time appointed for the meeting a
quorum be not present, the meeting, if convened upon a requisition as
specified in Article 57, shall be dissolved; but in any other case it
shall stand adjourned to the same day in the next week at the same time
and place, or to such other day, time and place as the chairman of the
meeting may determine. If at such adjourned meeting a quorum be not
present within fifteen minutes from the time appointed for the meeting,
the members present in person or by proxy shall be a quorum.
64. The chairman of any general meeting at which a quorum is present may,
with the consent of the meeting, and shall, if so directed by the
meeting, adjourn the meeting from time to time and from place to place
or sine die; but no business shall be transacted at any adjourned
meeting other than business which might have been transacted at the
meeting from which the adjournment took place, unless due notice
thereof is given or such notice is waived in the manner prescribed by
these Articles. When a meeting is adjourned for thirty days or more, or
sine die, notice of the adjourned meeting shall be given as in the case
of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjourned meeting or the business to be
transacted thereat. Where a meeting is adjourned sine die the time and
place for the adjourned meeting shall be fixed by the Directors.
VOTING
65. (a) At any general meeting a resolution put to the vote of the
meeting shall be decided on a show of hands unless, before or on
the declaration of the result of the show of hands or on the
withdrawal of any other demand for a poll, a poll is demanded by:-
(i) the chairman of the meeting; or
(ii) at least two members present in person or by proxy and
entitled to vote; or
(iii)any member or members present in person or by proxy and
representing in the aggregate not less than one-tenth of the
total voting rights of all members having the right to attend
and vote at the meeting; or
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(iv) any member or members present in person or by proxy and
holding shares conferring a right to attend and vote at the
meeting on which there have been paid up sums in the
aggregate equal to not less than one-tenth of the total sum
paid up on all shares conferring that right.
(b) Unless a poll is so demanded and the demand is not withdrawn, a
declaration by the chairman that a resolution has, on a show of
hands, been carried unanimously or by a particular majority or not
carried by a particular majority or lost shall be final and
conclusive evidence of the fact without proof of the number of the
votes recorded for or against such resolution.
66. A demand for a poll may be withdrawn only with the approval of the
meeting. If a poll be directed or demanded in the manner above
mentioned it shall (subject to the provisions of Article 68 hereof) be
taken at such time (being not later than seven days after the date of
the demand) and in such manner as the chairman of the meeting may
appoint. No notice need be given of a poll not taken immediately. The
result of such poll shall be deemed for all purposes to be the
resolution of the meeting at which the poll was so directed or
demanded.
67. In the case of an equality of votes at any general meeting, whether
upon a show of hands or on a poll, the chairman of the meeting shall be
entitled to a second or casting vote.
68. A poll demanded upon the election of a chairman or upon a question of
adjournment shall be taken forthwith. Any business, other than that
upon which a poll has been demanded, may be proceeded with pending the
taking of the poll.
69. (a) No objection shall be made to the validity of any vote except
at a meeting or poll at which such vote shall be tendered and
every vote whether given personally or by proxy not disallowed at
such meeting or poll shall be deemed valid for all purposes
whatsoever of such meeting or poll.
(b) In case of any dispute as to voting the chairman shall determine
the same, and such determination shall be final and conclusive.
70. Subject to the provisions of the Ordinance, a resolution in writing
signed by all the members for the time being entitled to receive notice
of and to attend and vote at general meetings (or, being corporations,
by their duly authorised representatives) shall be as valid and
effective as if the same had been passed at a general meeting of the
Company duly convened and held. A written notice of confirmation of
such resolution in writing sent by or on behalf of a member shall be
deemed to be his signature to such resolution in writing for the
purposes of this Article. Such resolution in writing may consist of
several documents, and each such document shall be certified by the
Secretary to contain the correct version of the proposed resolution.
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VOTES OF MEMBERS
71. Subject to any special rights or restrictions for the time being
attaching to any special class of shares in the capital of the Company,
on a show of hands every member who is present in person or by proxy or
by attorney shall be entitled to one vote only, and, in the case of a
poll, every member present in person or by proxy or by attorney shall
be entitled to one vote for each share held by him.
72. On a poll, votes may be given either personally or by proxy and a
member entitled to more than one vote need not use all his votes or
cast all the votes he uses in the same way.
73. A member of unsound mind, or in respect of whom an order has been made
by any court having jurisdiction in lunacy, may vote, whether on a show
of hands or on a poll, by his committee, curator bonis or other person
in the nature of a committee or curator bonis appointed by that court,
and any such committee, curator bonis or other person may, on a poll,
vote by proxy. If any member be a minor, he may vote by his guardian or
one of his guardians who may give their votes personally or by proxy.
PROXIES
74. (a) A proxy need not be a member of the Company.
(b) An instrument appointing a proxy shall be in writing in any usual
or common form or in any other form which the Directors may
accept, and shall be deemed, save where the contrary appears on
the face of the instrument of proxy, to confer authority to demand
or concur in demanding a poll and to include power to act
generally at the meeting for the person giving the proxy and any
adjournment thereof, and either to vote on any resolution (or
amendment thereto) put to the meeting for which it is given as the
proxy thinks fit. No instrument appointing a proxy shall be valid
except for the meeting mentioned therein and any adjournment
thereof.
75. The instrument appointing a proxy shall be signed by the appointor, or
his duly authorised attorney in writing or, if such appointor be a
corporation, under its common seal or signed by such officer, attorney
or other person duly authorised in that behalf.
76. The instrument appointing a proxy and the power of attorney or other
authority (if any) under which it is signed, or a notarially certified
copy of such power or authority, shall be deposited at the Office at
least forty-eight hours before the time fixed for holding the meeting
at which the person named in such instrument proposes to vote or, in
the case of a poll, not less than twenty-four hours before the time
appointed for taking the poll; otherwise the person so named shall not
be entitled to vote in respect thereof except with the approval of the
chairman of the meeting.
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77. Any member may by power of attorney appoint any person to be his
attorney for the purpose of voting at any meeting, and such power may
be a special power limited to any particular meeting or a general power
extending to all meetings at which such member is entitled to vote.
Every such power shall be deposited at the Office at least forty-eight
hours before being acted upon.
78. (a) An instrument of proxy may be revoked by forwarding to the
Office written notification of such revocation signed by or on
behalf of the person who issued or authorised the issue of the
instrument of proxy.
(b) A vote given in accordance with the terms of an instrument of
proxy or power of attorney shall be valid notwithstanding the
previous death or insanity of the principal, or revocation of the
proxy or power of attorney, or transfer of the shares in respect
of which the vote is given, provided that no intimation in writing
of the death, insanity, revocation or transfer shall have been
received at the Office twenty-four hours at least before the time
fixed for holding the meeting, or adjourned meeting, or the taking
of the poll, at which the instrument of proxy is to be used.
CORPORATIONS ACTING BY REPRESENTATIVES
79. Any corporation which is a member of the Company may by resolution of
its directors or other governing body authorize such person as it
thinks fit to act as its representative at any meeting of the Company
or of any class of members of the Company, and the person so authorized
shall be entitled to exercise the same powers on behalf of the
corporation which he represents as that corporation could exercise if
it were an individual member of the Company.
DIRECTORS
80. The first Directors shall be appointed in writing by the subscribers to
the Memorandum of Association of the Company or by the Company in
general meeting.
81. Unless and until otherwise determined by an ordinary resolution of the
Company, the Directors shall not be less than two in number, and there
shall be no maximum number of Directors.
82. A Director need not hold any shares in the Company. A director who is
not a member of the Company shall nevertheless be entitled to attend
and speak at general meetings.
DIRECTORS' REMUNERATION
83. The remuneration of the Directors shall from time to time be determined
by the Company in general meeting. Such remuneration shall be deemed to
accrue from day to day. The
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Directors may also be paid all travelling, hotel and other expenses
properly incurred by them in attending and returning from meetings of
the Directors or any committee of the Directors or general meetings of
the Company or in connection with the business of the Company.
POWERS OF DIRECTORS
84. The business of the Company shall be managed by the Directors, who
shall pay all expenses incurred in the formation and registration of
the Company, and who may exercise all such powers of the company as are
not by the Ordinance or by these Articles required to be exercised by
the Company in general meeting, subject to any provision in these
Articles or the Ordinance and to such regulations, not being
inconsistent with any such provision, as may be prescribed by the
Company in general meeting; but no such regulation shall invalidate any
prior act of the Directors which would have been valid if such
regulation had not been made. The general powers given by this Article
shall not be limited or restricted by any special authority or power
given to the Directors by any other Article.
85. The Directors may establish any local boards or agencies for managing
any of the affairs of the Company, either in Hong Kong or elsewhere,
and may appoint any persons to be members of such local boards, or any
managers or agents for the Company, and may fix their remuneration, and
may delegate to any local board, manager or agent any of the powers,
authorities and discretions vested in the Directors, with power to
sub-delegate, and may authorise the members of any local boards, or any
of them, to fill any vacancies therein, and to act notwithstanding
vacancies, and any such appointment and delegation may be made upon
such terms and subject to such conditions as the Directors may think
fit, and the Directors may remove any person so appointed, and may
annul or vary any such delegation, but no person dealing in good faith
and without notice of any such annulment or variation shall be affected
thereby.
86. The Directors may from time to time and at any time by power of
attorney or otherwise appoint any company, firm or person or any
fluctuating body of persons, to be the attorney or attorneys of the
Company for such purposes and with such powers, authorities and
discretions (not exceeding those vested in or exercisable by the
Directors under these Articles) and for such period and subject to such
conditions as they may think fit, and any such power of attorney may
contain such provisions for the protection and convenience of persons
dealing with any such attorney as the Directors may think fit, and may
also authorise any such attorney to sub-delegate all or any of the
powers, authorities and discretions vested in him.
87. Subject to and to the extent permitted by the Ordinance, the Company,
or the Directors on behalf of the Company, may cause to be kept in any
territory a Branch Register of
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members resident in such territory, and the Directors may make and vary
such regulations as they may think fit respecting the keeping of any
such Branch Register.
88. All cheques, promissory notes, drafts, bills of exchange, and other
negotiable or transferable instruments, and a receipts for moneys paid
to the Company, shall be signed, drawn, accepted, endorsed, or
otherwise executed, as the case may be, in such manner as the Directors
shall from time to time by resolution determine.
89. The Directors may exercise all the powers of the Company to borrow
money and to mortgage or charge all or any part of the undertaking,
property and assets (present and future) and uncalled capital of the
Company and to issue debentures including, subject to Section 57B of
the Ordinance, convertible debentures and convertible debenture stock,
and other securities, whether outright or as collateral security for
any debt, liability or obligation of the Company or of any third party.
APPOINTMENT AND REMOVAL OF DIRECTORS
90. The Company may by special resolution remove any Director
notwithstanding anything in these Articles or in any agreement between
him and the Company (but without prejudice to any right to damages for
termination of such agreement not in accordance with the terms
thereof), and may, if thought fit, by ordinary resolution, appoint
another person in his stead.
91. The Company may, without prejudice to the powers of the Directors under
Article 92, from time to time, by ordinary resolution appoint new
Directors either to fill a casual vacancy or as an addition to the
existing Directors, and change any minimum or maximum number of
Directors specified in Article 81, or prescribe such minimum or maximum
if there be none so specified.
92. The Directors shall have power, exercisable at any time and from time
to time, to appoint any other person as a Director, either to fill a
casual vacancy or as an addition to the Board.
93. The continuing Directors may act notwithstanding any vacancy in their
body, but if and so long as the number of Directors is reduced below
the number fixed by or pursuant to these Articles as the necessary
quorum of Directors, the continuing Directors may act for the purpose
of increasing the number of Directors to that number, or of summoning a
general meeting of the Company, but for no other purpose. If there
shall be no Directors able or willing to act, then any member may
summon a general meeting for the purpose of appointing Directors.
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ALTERNATE DIRECTORS
94. Each Director may by written notification to the Company nominate any
other person to act as alternate Director in his place and, at his
discretion, in similar manner remove such alternate Director. A
Director may appoint two or more persons in the alternative to act as
Alternate Director and in the event of any dispute as to who is to
represent the Director as his Alternate the first named of such
alternative persons should be the only person recognised as the
Alternate Director and shall in any case, if in Hong Kong, be the only
person entitled to receive notice of Directors' meetings in the absence
from Hong Kong of his appointor. The alternate Director shall (except
as regards the power to appoint an alternate) be subject in all
respects to the terms and conditions existing with reference to the
other Directors of the Company; and each alternate Director, whilst
acting as such, shall exercise and discharge all the functions, powers
and duties of the Director he represents, but shall look to such
Director solely for his remuneration as alternate Director. Every
person acting as an alternate Director shall have one vote for each
Director for whom he acts as alternate (in addition to his own vote if
he is also a Director). The signature of an alternate Director to any
resolution in writing of the Board or a committee of the Board shall,
unless the notice of his appointment provides to the contrary, be as
effective as the signature of his appointor. Any person appointed as an
alternate Director shall vacate his office as such alternate Director
as and when the Director by whom he has been appointed removes him or
vacates office as Director. A Director shall not be liable for the acts
or defaults of any alternate Director appointed by him.
DISQUALIFICATION OF DIRECTORS
95. The office of a Director shall ipso facto be vacated:-
(a) if he becomes prohibited by law or court order from being a
Director;
(b) if a receiving order or, in the case of a company a winding-up
order is made against him or he makes any arrangement or
composition with his creditors;
(c) if he becomes of unsound mind;
(d) if he gives the Company notice in writing that he resigns his
office;
(e) if he is removed by a special resolution of the company in
accordance with the provisions of these Articles;
(f) if he is convicted of an arrestable offence.
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DIRECTORS' INTERESTS
96. A Director may hold any other office or place of profit under the
company (other than the office of Auditor), and he or any firm of which
he is a member may act in a professional capacity for the Company in
conjunction with his office of Director, for such period and on such
terms (as to remuneration and otherwise) as the Directors may
determine. No Director or intending Director shall be disqualified by
his office from contracting with the Company, nor shall any contract or
arrangement entered into by or on behalf of the Company in which any
Director or intending Director is in any way interested be liable to be
avoided, nor shall any Director so contracting or being so interested
be liable to account to the Company for any profit, remuneration or
other benefits of such Director holding that office, or of any
fiduciary relationship thereby established.
97. A Director who is in any way, whether directly or indirectly,
interested in a contract or proposed contract (being a contract of
significance in relation to the Company's business) with the Company
shall declare the nature of his interest in accordance with the
provisions of the Ordinance. A general notice given to the Directors by
a Director to the effect that he is a member of a specified company or
firm, and is to be regarded as interested in any contract, arrangement
or dealing which may, after the date of the notice, be entered into or
made with that company or firm, shall, for the purposes of this
Article, be deemed to be a sufficient disclosure of interest in
relation to any contract, arrangement or dealing so entered into or
made.
98. A Director may vote as a Director in regard to any contract or
arrangement in which he is interested or upon any matter arising
thereout, and if he shall so vote his vote shall be counted and he
shall be taken into account in determining a quorum when any such
contract or arrangement is under consideration.
99. A Director may hold office as a director in or as manager of any other
company in which the Company is a shareholder or is otherwise
interested, and (subject to any agreement with the Company to the
contrary) shall not be liable to account to the Company for any
remuneration or other benefits receivable by him from such other
company. The Board may exercise the voting power conferred by the
shares in any company held or owned by the Company in such manner and
in all respects as the Board thinks fit (including the exercise thereof
in favour of any resolution appointing the Directors or any of them
directors of such company or voting or providing for the payment of
remuneration to the directors of such company) and any Director of the
Company may vote in favour of the exercise of such voting rights other
than his own appointment or the arrangement of the terms thereof, in
manner aforesaid.
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MANAGING DIRECTORS AND OTHER APPOINTMENTS
100. The Directors may, from time to time, appoint one or more of their
number to be Managing Director or Joint Managing Director of the
Company, or to hold such office in the management, administration or
conduct of the business of the Company as they may decide, and for such
period and upon such terms and for such remuneration as the Directors
shall think fit, and the Directors may also, from time to time (subject
to the provisions of any agreement between him or them and the Company)
remove him or them from office, and appoint another or others in his or
their place or places.
101. A Managing Director or a Joint Managing Director (subject to the
provisions of any agreement between him as Managing Director or a Joint
Managing Director and the Company) shall be subject to the same
provisions as to resignation and removal as the other Directors of the
Company, and shall ipso facto and immediately cease to be Managing
Director or Joint Managing Director if he shall cease to hold the
office of Director.
102. The Directors may, from time to time, entrust to and confer upon any
Managing Director, Joint Managing Director or Director holding any
other office in the management, administration or conduct of the
business of the Company, such of the powers exercisable under these
Articles by the Directors as they may think fit, and may confer such
powers for such time, and to be exercised for such objects and
purposes, and upon such terms and conditions and with such restrictions
as they may consider expedient, and may confer such powers collaterally
with, or to the exclusion of, and in substitution for, all or any of
the powers of the Directors in that behalf, and may from time to time
revoke, withdraw, alter or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
103. The Directors may meet together for the despatch of business, adjourn
and otherwise regulate their meetings as they think fit, and determine
the quorum necessary for the transaction of business. Until otherwise
determined by the Board, two Directors shall constitute a quorum.
Questions arising at any meeting shall be decided by a majority of
votes. In case of an equality of votes the chairman of the meeting
shall have a second or casting vote. A Director or the Secretary may,
at any time, summon a meeting of the Directors.
104. Notice of a meeting of Directors shall be deemed to be duly given to a
Director if it is given to him personally in writing or by word of
mouth or sent to him at his last known address or any other address
given by him to the Company for this purpose. A Director may consent to
short notice of and may waive notice of any meeting and any such waiver
may be retrospective.
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105. The Directors may elect a Chairman of the Board and determine the
period for which he is to hold office; but if no such Chairman be
elected, or if at any meeting the Chairman be not present within
fifteen minutes after the time appointed for holding the same, the
Directors present shall choose one of their number to be chairman of
such meeting.
106 (a.) A resolution in writing signed by a simple majority of the
Directors for the time being shall be as effective for all
purposes as a resolution of the Directors passed at a meeting duly
convened, held and constituted. A written notification of
confirmation of such resolution in writing sent by a Director
shall be deemed to be his signature to such resolution in writing
for the purposes of this Article. Such resolution in writing may
consist of several documents, each signed by one or more
Directors.
(b.) Any Director or member of a committee of Directors may participate
in a meeting of the Directors or such committee by means of a
telephone or other audio communications equipment whereby all
persons attending or participating the meeting can hear each
other. The person or persons participating the meeting in the
aforesaid manner shall be deemed for all purposes to be present in
person at such meeting.
107. A meeting of the Directors at which a quorum is present shall be
competent to exercise all the powers, authorities and discretions for
the time being vested in or exercisable by the Directors generally.
108. The Directors may, from time to time, appoint committees consisting of
such persons as they think fit, and may delegate any of their powers to
any such committee and, from time to time, revoke any such delegation
and discharge any such committee wholly or in part. Any committee so
formed shall, in the exercise of the powers so delegated, conform to
any regulations that may, from time to time, be imposed upon it by the
Directors. Any such committee shall be properly constituted even if it
consists of one person.
109. The meetings and proceedings of any such committee consisting of two or
more members shall he governed mutatis mutandis by the provisions of
these Articles regulating the meetings and proceedings of the Directors
insofar as the same are not superseded by any regulations made by the
Directors under the last preceding Article.
110. All acts done bona fide by any meeting of the Directors or of a
committee of Directors, or by any persons acting as Directors, shall,
notwithstanding that there was some defect in the appointment of any
such Directors or persons acting as aforesaid, or that they or any of
them were disqualified, or had vacated office, he as valid as if every
such person had been duly appointed and was qualified and continued to
be a Director.
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MINUTES
111. The Directors shall cause to be entered and kept in books provided for
the purpose minutes of the following:-
(a) all appointments of officers;
(b) the names of the Directors and any alternate Director who is not
also a Director present at each meeting of the Directors and of
any committee of Directors;
(c) all orders made by the Directors and committees of Directors; and
(d) all resolutions and proceedings of general meetings and meetings
of the Directors and committees.
Any such minutes of any meeting of the Directors, or any committee, or
of the Company, if purporting to be signed by the Chairman of such
meeting, or by the Chairman of the next succeeding meeting shall be
receivable as prima facie evidence of the matters stated in such
minutes.
THE SEAL
112. The Directors shall forthwith procure a common seal to be made for the
Company, and shall provide for the safe custody thereof. The Seal shall
not be affixed to any instrument except by the authority of a
resolution of the Directors or a committee of the Directors and every
instrument to which the Seal shall be affixed shall be signed by one
Director or some other person nominated by the Directors for the
purpose.
113. The Company may exercise all the powers of having official seals
conferred by the Ordinance and such powers shall be vested in the
Directors.
SECRETARY
114. The Company shall have a Secretary. The Secretary and any joint
secretaries or deputy or assistant secretary or secretaries may be
appointed by the Directors for such term, at such remuneration and upon
such conditions as the Directors may think fit and the Secretary and
any joint secretaries or deputy or assistant secretary so appointed may
at any time be removed from office by the Directors. A Director may be
the Secretary. The First Secretary shall be Offshore Incorporations
Limited.
26
<PAGE>
115. A provision of the Ordinance or these regulations requiring or
authorizing a thing to be done by or to a Director and the Secretary
shall not be satisfied by its being done by or to the same person
acting both as Director and as, or in place of, the Secretary.
DIVIDENDS AND RESERVES
116. (a.) The Company may by ordinary resolution declare dividends but
no such dividend shall exceed the amount recommended by the
Directors.
(b.) No distribution (as defined in section 79A of the Ordinance) shall
be made save in accordance with the provisions of Part IIA of the
Ordinance.
117. The Directors may, if they think fit, from time to time, pay to the
members such interim dividends as appear to the Directors to be
justified by the profits of the Company. If at any time the share
capital of the Company is divided into different classes the Directors
may pay such interim dividends in respect of those shares in the
capital of the Company which confer on the holders thereof deferred or
non-preferred rights as well as in respect of those shares which confer
on the holders thereof preferential or special rights in regard to
dividend, and provided that the Directors act bona fide they shall not
incur any responsibility to the holders of shares conferring a
preference for any damage that they may suffer by reason of the payment
of an interim dividend on any shares having deferred or non-preferred
rights. The Directors may also pay at half-yearly or at other suitable
intervals to be settled by them any dividend which may be payable at a
fixed rate if they are of the opinion that the profits justify the
payment.
118. The Directors may, before recommending any dividend, set aside out of
the profits of the Company such sums as they think proper as a reserve
or reserves which shall, at the discretion of the Directors, be
applicable for any purpose to which the profits of the Company may be
properly applied, and pending such application may, at the like
discretion, either be employed in the business of the Company or be
invested in such investments (other than shares of the company) as the
Directors may from time to time think fit. The Directors may also
without placing the same to reserve carry forward any profits which
they may think prudent not to divide.
119. No dividend shall be payable except out of the profits of the Company,
and no dividend shall bear interest as against the Company.
120. The Directors may retain any dividend or other monies; payable on or in
respect of a share on which the Company has a lien, and may apply the
same in or towards satisfaction of the debts and liabilities in respect
of which the lien exists.
27
<PAGE>
121. Any resolution declaring a dividend on shares of any class, whether a
resolution of the Company in general meeting or a resolution of the
Directors, may specify that the same shall be payable to the persons
registered as the holders of such shares at the close of business on a
particular date, notwithstanding that it may be a date prior to that on
which the resolution is passed, and thereupon the dividend shall be
payable to them in accordance with their respective holdings so
registered, but without prejudice to the rights inter se in respect of
such dividend of transferors and transferees of any such shares. The
provisions of this Article shall mutatis mutandis apply to
capitalizations to be effected in pursuance of these Articles.
122. Unless and to the extent that the rights attached to any shares or the
terms of issue thereof otherwise provide, all dividends shall (as
regards any shares not fully paid throughout the period in respect of
which the dividend is paid) be apportioned and paid pro rata according
to the amounts paid on the shares during any portion or portions of the
period in respect of which the dividend is paid. For the purposes of
this Article no amount paid on a share in advance of calls shall be
treated as paid on the share.
123. Unless otherwise directed, any dividend or other monies payable in cash
on or in respect of a share may be paid by cheque or warrant sent
through the post to the registered address of the member or person
entitled, or, in the case of joint holders, to the registered address
of that one whose name stands first on the register in respect of joint
holding, or addressed to such person at such address as the holder or
joint holders shall direct. The Company shall not be liable or
responsible for any cheque or warrant lost in transmission nor for any
dividend or other monies lost to the member or person entitled thereto
by the forged endorsement of any cheque or warrant. Payment of the
cheque or warrant by the banker on whom it is drawn shall be a good
discharge to the Company.
124. The Directors may, with the sanction of the Company in general meeting,
distribute in specie or in kind among the members in satisfaction in
whole or in part of any dividend any of the assets of the Company, and
in particular any shares or securities of other companies to which the
Company is entitled.
125. All dividends unclaimed for one year after having been declared may be
invested or otherwise made use of by the Directors for the benefit of
the Company until claimed, and all dividends unclaimed for two years
after having been declared may be forfeited by the Directors and shall
revert to the Company. The payment into a separate account of any
monies payable in respect of a share shall not constitute the Company a
trustee in respect thereof for any person.
CAPITALISATION OF RESERVES ETC.
126. The Company in general meeting may upon the recommendation of the
Directors resolve to capitalise any part of the amount for the time
being standing to the credit of any of the
28
<PAGE>
Company's reserve accounts or to the credit of the profit and loss
account or otherwise available for distribution, and accordingly that
such sums be set free for distribution amongst the members who would
have been entitled thereto if distributed by way of dividend and in the
same proportions, on condition that the same be not paid in cash but be
applied either in or towards paying up any amounts for the time being
unpaid on any shares held by such members respectively or paying up in
full unissued shares or debentures or other obligations of the Company
to be allotted and distributed credited as fully paid-up to and amongst
such members in the proportions aforesaid, or partly in one way and
partly in the other, and the Directors shall give effect to such
resolution:
PROVIDED that a share premium account and a capital redemption reserve
fund may, for the purposes of this Article, only be applied in the
paying up of unissued shares to be issued to members of the Company as
fully paid bonus shares.
127. Whenever such a resolution as aforesaid shall have been passed the
Directors shall make all appropriations and applications of the
undivided profits resolved to be capitalised thereby, and all
allotments and issues of fully paid shares or debentures, if any, and
generally shall do all acts and things required to give effect thereto.
128. For the purpose of giving effect to any resolution under Articles 124
and 126 hereof the Directors may settle any difficulty which may arise
in regard to the distribution as they think expedient, and in
particular may issue fractional certificates, and may fix the value for
distribution of any specific assets, and may determine that cash
payments shall be made to any members upon the footing of the value so
fixed or that fractions of such value as the Directors may determine
may be disregarded in order to adjust the rights of all parties, and
may vest any such cash or specific assets in trustees upon such trusts
for the persons entitled to the dividend or capitalised fund as may
seem expedient to the Directors. The provisions of the Ordinance in
relation to the filing of contracts for allotment shall be observed,
and the Directors may appoint any person to sign such contract on
behalf of the persons entitled to share in the appropriation and
distribution, and such appointment shall be effective and binding upon
all concerned, and the contract may provide for the acceptance by such
persons of the shares or debentures to be allotted and distributed to
them respectively in satisfaction of their claims in respect of the sum
so capitalised.
ACCOUNTS AND AUDITORS
129. (a) The Directors shall cause proper and true books of account to be
kept of all sums of money received and expended by the Company,
and the matters in respect of which such receipt and expenditure
take place; of all sales and purchases of goods by the Company;
and of the assets and liabilities of the Company and of all other
matters necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
29
<PAGE>
(b) The Directors shall from time to time determine whether and to
what extent and at what times and places and under what conditions
or regulations the accounts and books of the company or any of
them shall be open to the inspection of members not being
Directors, and no member (not being a Director) shall have any
right of inspecting any account or book or document of the Company
except as conferred by statute or authorised by the Directors or
by the Company in general meeting.
130. The Directors shall from time to time, in accordance with the
provisions of the Ordinance, cause to be prepared and to be laid before
the Company in general meeting such Profit and Loss Accounts, Balance
Sheets, Group Accounts (if any) and Reports as are required by the
Ordinance.
131. A copy of every Balance Sheet (including every document required by law
to be annexed thereto) which is to be laid before the Company in
general meeting, together with a copy of the Directors' Report and a
copy of the Auditors' Report, shall, not less than twenty-one days
before the date of the meeting, be sent to every member of, and every
holder of debentures of, the Company and to all persons other than
members or holders of debentures of the Company, being persons entitled
to receive notices of general meetings of the Company:
PROVIDED that this Article shall not require a copy of those documents
to be sent to any person of whose address the Company is not aware nor
to more than one of the joint holders of any shares or debentures.
132. Auditors shall be appointed and their duties regulated in the manner
provided by the Ordinance.
NOTICES
133. Any notice or other document may be served by the company upon any
member either personally or by sending it through the post in prepaid
letter, envelope or wrapper addressed to such member at his registered
address, and, in any case where the registered address of a member is
outside Hong Kong, by prepaid airmail. The signature to any notice to
be given by the Company may be written or printed.
134. Each member shall, from time to time, notify in writing to the Company
some place which shall be deemed his registered address within the
meaning of the last preceding Article.
135. Any notice sent by post shall be deemed to have been served in the case
where the member's registered address is in Hong Kong at the expiration
of 48 hours after the letter, envelope or wrapper containing the same
was posted in Hong Kong and in any other case on the fifth day after
the day of posting. In proving such service it shall be sufficient to
30
<PAGE>
prove that the letter, envelope or wrapper containing the notice was
properly addressed and put in the post as a prepaid letter.
136. A notice may be given by the Company to the persons entitled to a share
in consequence of the death or bankruptcy of a member by sending it
through the post in a prepaid letter addressed to them by name, or by
the title of representatives of the deceased, or trustee of the
bankrupt, or by any like description, at the address, if any, within
Hong Kong supplied for the purpose by the persons claiming to be so
entitled, or (until I such an address has been so supplied) by giving
the notice in any manner in which the same might have been given if the
death or bankruptcy had not occurred.
137. Notice of every general meeting shall be given in any manner
hereinbefore authorized to:-
(a) every member except those members who (having no registered
address within Hong Kong) have not supplied to the Company an
address within Hong Kong for the giving of notices to them;
(b) every person entitled to a share in consequence of the death or
bankruptcy of a member who, but for his death or bankruptcy, would
be entitled to receive notice of the meeting; and
(c) the Auditors for the time being of the Company.
No other person shall be entitled to receive notices of general
meetings.
138. Any summons, notice, order or other document required to be sent to or
served upon the Company, or upon any officer of the Company, may be
sent or served by leaving the same or sending it through the post in a
prepaid letter, envelope or wrapper, addressed to the Company or to
such officer at the Office.
139. Subject to any special provisions contained in these Articles or in the
Ordinance, a notices required to be given by advertisement shall be
advertised in at least one daily Chinese and one daily English
newspaper in Hong Kong.
140. In reckoning the period for any notice given under these Articles, the
day on which notice is served, or deemed to be served and the day for
which such notice is given shall be excluded.
WINDING UP
141. If the Company shall be wound up, the surplus assets remaining after
payment to all creditors shall be divided among the members in
proportion to the capital which at the
31
<PAGE>
commencement of the winding up is paid up on the shares held by them
respectively, and if such surplus assets shall be insufficient to repay
the whole of the paid-up capital, they shall be distributed so that, as
nearly as may be, the losses shall be home by the members in proportion
to the capital paid up at the commencement of the winding up on the
shares held by them respectively. This Article is, however, to be
subject to the rights of any shares which may be issued on special
terms or conditions.
142. If the Company shall be wound up the liquidator may, with the sanction
of a special resolution of the Company and any other sanction required
by the Ordinance, divide amongst the members in specie or kind the
whole or any part of the assets of the Company (whether they shall
consist of property of the same kind or not) and may, for such purpose,
set such value as he deems fair upon any property to be divided as
aforesaid and may determine how such division shall be carried out as
between the members of different classes of members. The liquidator
may, with the like sanction, vest the whole or any part of such assets
in trustees upon such trusts for the benefit of the contributories as
the liquidator, with the like sanction, shall think fit, but so that no
member shall be compelled to accept any shares or other securities
whereon there is any liability.
INDEMNITY
143. Every Director, Managing Director, agent, auditor, Secretary and other
officer for the time being of the Company shall be indemnified out of
the assets of the Company against any liability incurred by him in
relation to the Company in defending any proceedings, whether civil or
criminal, in which judgment is given in his favour or in which he is
acquitted or in connection with any application under Section 358 of
the Ordinance in which relief is granted to him by the court.
32
<PAGE>
Names, Addresses and Descriptions of Subscribers
For and on behalf of
OFFSHORE INCORPORATIONS LIMITED
(Sd.) E.T. POWELL
.......................................
E. T. POWELL, Director
9/F Ruttonjee House
11 Duddell Street
Central
Hong Kong
Corporation
For and on behalf of
WELL HELD LIMITED
(Sd.) E. T. POWELL
.......................................
E. T. POWELL, Authorised Representative
9/17 Ruttonjee House
11 Duddell Street
Central
Hong Kong
Corporation
DATED 5th September 1996
WITNESS to the above signatures: (Sd.) FANDY TSOI
9/F Ruttonjee House
11 Duddell Street
Central
Hong Kong
Administrative Assistant
33
<PAGE>
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "RATTLESNAKE GOLD, INC.", FILED IN THIS OFFICE ON THE
THIRTEENTH DAY OF APRIL, A.D. 1988, AT 10 O'CLOCK A.M.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
2157668 8100 AUTHENTICATION: 9349269
981393204 DATE: 10-12-98
<PAGE>
FILED
APR 13 1988 10 Am
(Illegible)
Secretary of State
CERTIFICATE OF INCORPORATION
OF
RATTLESNAKE GOLD, INC.
ARTICLE I
NAME
The name of the corporation hereby created shall be RATTLESNAKE GOLD,
INC. (hereinafter referred to as the "Corporation").
ARTICLE II
DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES
The purposes for which this Corporation is organized are:
(a) To seek, investigate, acquire interest(s) in, dispose of
and operate rushes for gold and all other minerals, and engage in
natural resource development and exploration; to own and operate any
lawful enterprise(s) whatsoever; to acquire, hold, and dispose of real
or personal properties of any kind or nature whether tangible or
intangible; and generally to do or perform any act necessary or
desirable in connection with the foregoing.
(b) To acquire by purchase or otherwise, own, hold, lease,
rent, mortgage, or otherwise, to trade with and deal in real estate
lands, mining claims and mineral interests, interests in lands of every
description and all other property of every kind and nature.
(c) To acquire, sell, and otherwise, dispose of, deal in
stocks. bonds, mortgages. securities, notes, and commercial paper for
corporations and individuals.
(d) To borrow money and to execute notes and obligations and
security contracts therefor, and to lend any of monies or funds of the
Corporation and to take
<PAGE>
evidence of indebtedness therefor, and also to negotiate Loans; to
carry on a general mining and natural resource development business and
to purchase, sell, and deal in such goods and supplies as are necessary
or desirable in connection therewith.
(e) To guarantee the payment of dividends or interest on any
other contract or obligation of any corporation whenever proper or
necessary for the business of the Corporation in the judgment of its
directors.
(f) To do all and everything necessary, suitable, convenient,
or proper for the accomplishment of any of the purposes of the
attainment of any one or more of the objects herein enumerated, or
incidental to the powers therein named, or which shall at any time
appear conclusive or expedient for the protection or benefit of the
Corporation, either as holders of or interested in any property, or
otherwise; with all the powers hereafter conferred by the laws under
which this Corporation is organized.
(g) To engage in any and all other lawful purposes,
activities. and pursuits, whether similar or dissimilar to the
foregoing, and the Corporation shall have all powers allowed or
permitted by the laws of the State of Delaware.
ARTICLE IV
CAPITALIZATION
The Corporation shall have authority to issue 250,000,000 shares of
common stock having a par value of $.0001 per share (the "Common Stock"). All
shares of Common Stock shall be of the same class and shall have the same rights
and preferences. A statement of the designations and the powers, preferences,
and rights, and the qualifications, limitations, or restrictions thereof, of the
shares of Common Stock which the Corporation shall be authorized to issue, is as
follows:
(a) Common Stock. The Common Stock shall be non-assessable and
shall not have cumulative voting rights or pre-emptive rights. In
addition, the Common Stock shall have the following powers,
preferences, rights, qualifications, limitations, and restrictions;
(i) After the requirements with respect to preferential
dividends of preferred stock, if any, shall have been met and
after this Corporation shall comply with all the requirements,
if any, with respect to the setting aside of funds as sinking
funds or redemption or purchase accounts and subject further
to any other conditions which may be required by the General
Corporation Law of Delaware, then, but not otherwise, the
holders of Common Stock shall be entitled to receive such
dividends, if any, as may be declared from-time to time by the
board of directors without distinction as to series.
-2-
<PAGE>
(ii) After distribution in full or any preferential amount
to be distributed to the holders of preferred stock, if any,
in the event of a voluntary or involuntary liquidation,
distribution or sale of assets, dissolution, or winding up of
this Corporation, the holders of the Common Stock shall be
entitled to receive all the remaining assets of this
Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders, ratably in
proportion to the number of shares of the Common Stock held by
each without distinction as to series, if any.
(iii) Except as may otherwise be required by law or this
Certificate of Incorporation, in all matters as to which the
vote or consent of stockholders of the Corporation shall be
required or be taken, including, any vote to amend this
Certificate of Incorporation, to increase or decrease the par
value of any class of stock, effect a stock split or
combination of shares, or alter or change the powers,
preferences, or special rights of any class or series of
stock, the holders of the Common Stock shall have one vote per
share of Common Stock on all such matters.
(b) Other Provisions.
(i) Shares of the Common Stock or any series thereof may
be issued from time to time as the board of directors shall
determine and on such terms and for such consideration as
shall be fixed by the board of directors;
(ii) No holder of any of the shares of any class or series
of stock or of options, warrants, or other rights to purchase
shares of any class or series of stock or of other securities
of the Corporation shall have any pre-emptive right to
purchase or subscribe for any unissued stock of any class or
series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital
stock of the Corporation of any class or series, or bonds,
certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of the Corporation
of any class or series, or carrying any rights to purchase
stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series
of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued
and disposed of pursuant to resolution of the board of
directors to such persons, firms, corporations, or
associations, whether such holders or others, and on such
terms as may be deemed advisable by the board of directors in
the exercise of its sole discretion.
-3-
<PAGE>
ARTICLE V
BYLAWS
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter, or
repeal the bylaws of the Corporation.
ARTICLE VI
MEETINGS AND RECORDS
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
ARTICLE VII
NO PRE-EMPTIVE RIGHTS
Shareholders of all classes of the securities of the Corporation shall
not have pre-emptive rights to subscribe for or acquire additional shares of the
Corporation, whether such shares be hereby or hereafter authorized.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall indemnify any and all persons who may serve or
who have served at any time as directors or officers, or who, at the request of
the board of directors of the Corporation, may serve, or at any time have served
as directors or officers of another corporation in which the Corporation at such
time owned or may own shares of stock, or which it was or may be a creditor and
their respective heirs, administrators, successors, and assigns, against any and
all expenses, including amounts paid on judgment, counsel fees, and amounts paid
in settlement (before or after suit is commenced), actually or necessarily
incurred by such persons in connection with the defense or settlement of any
claim, action, suit, or proceeding in which they, or any of them, are made
parties, or a party, or which may be assessed against them or any of them, by
reason of being or having been directors or officers of the Corporation, or such
other corporation, except in relation to matters as to which any such director
or officer of the Corporation, or such other corporation, or former director or
officer shall be adjudged in any action, suit, or proceeding to be liable for
his own negligence of misconduct in the performance of his duties. Such
indemnification shall be in addition to any other rights to which those
-4-
<PAGE>
indemnified may be entitled under any law, bylaw, agreement, vote, of
stockholders, or otherwise.
ARTICLE IX
LIMITED LIABILITY OF DIRECTORS
A director of the Corporation shall have no personal liability to the
Corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a director, except (i) for any breach of a director's duty of loyalty to
the Corporation of its stockholders, (ii) for acts or omissions; not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under section 174 of the General Corporation Law of Delaware as it may
from time to time be amended or any successor provision thereto, or (iv) for any
transaction from which a director derived an improper personal benefit.
ARTICLE X
OFFICERS AND DIRECTORS CONTRACTS
No contract or other transaction between this Corporation and any other
firm or corporation shall be affected by the fact that a director of officer of
this Corporation has an interest in, or is a director or officer of this
Corporation or any other corporation. Any officer or director individually or
with others, may be a party to, or may have an interest in, any transaction of
this Corporation, or any transaction in which this Corporation is a party or has
an interest. Each person who is now of may become an officer or director of this
Corporation is hereby relieved from liability he might otherwise obtain in the
event such officer or director contracts with this Corporation for the benefit
of himself or any firm or other corporation in which he may have an interest,
provided such officer or director acts in good faith.
ARTICLE XI
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
19801. The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE XII
AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
-5-
<PAGE>
ARTICLE XIII
DIRECTORS
The Corporation shall have not less than two nor more than nine
directors as determined, from time to time, by the board of directors. The
original board of directors shall consist of the following persons who shall
each serve until the first annual meeting of the stockholders or until a
successor is elected and qualified:
Name Mailing Address
---- ---------------
Harry F. Nelson 3615 Wolf Creek
Eden, Utah 84310
Garth Showelter 650 West 800 South
Salt Lake City, Utah 84104
ARTICLE XIV
INCORPORATOR
The name and mailing address of the sole incorporator of this
corporation is as follows:
Harry F. Nelson 3615 Wolf Creek
Eden, Utah 84310
-6-
<PAGE>
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do hereby make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated true, and
accordingly have hereunto set my hand this 12th day of April, 1980.
/s/ Harry F. Nelson
Harry F. Nelson
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, Valerie J. Shaw, a notary public, hereby certify that on the 12th
day of April, 1988, personally appeared before me Harry F. Nelson who being by
me first duly sworn, declared that he is the person who signed the foregoing
Certificate of Incorporation as sole incorporator of Rattlesnake Gold, Inc., and
that the statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL.
/s/ Valerie J. Shaw
Valerie J. Shaw
Notary Public
Residing in Salt Lake City, UT
My Commission Expires:
May 11, 1988
CDN4090W
-7-
<PAGE>
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "MAGICWORKS ENTERTAINMENT INCORPORATED", FILED IN THIS OFFICE ON
THE ELEVENTH DAY OF SEPTEMBER, A.D. 1998, AT 2 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
2157668 8100 AUTHENTICATION: 9301204
981355419 DATE: 09-15-98
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
MAGICWORKS ENTERTAINMENT INCORPORATED
(PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE)
Magicworks Entertainment Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the Stat e of
Delaware (the "Corporation"), hereby certifies:
FIRST, that the Board of Directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of the Corporation in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware:
"RESOLVED that the Board of Directors of the Corporation deems and
declares advisable an amendment to the Certificate of Incorporation to amend
Article IV to read in its entirety as follows:
The aggregate number of shares which this Corporation shall have
authority to issue is 10,000 shares, consisting of 10,000 shares of
Common Stock, par value $0.001 per share (the "Shares").
Upon the filing of this Amendment to the Certificate of
Incorporation with the Delaware Secretary of State, each Share issued
and outstanding immediately prior to such filing (the "Old Shares")
shall, without any action on the part of the holder thereof, be
converted and reclassified into such number of fully paid and
nonassessable Shares equal to the product of (A) the number of Old
Shares held by such holder and (B) the quotient realized by dividing
100 by the total number of Old Shares outstanding determined on a fully
diluted basis. Any fraction of a Share that would otherwise result
pursuant to the preceding sentence (after aggregating all fractional
shares held by each stockholder) shall automatically be eliminated.
Each certificate representing Old Shares shall thereafter represent
that number of Shares determined in the previous sentences; provided,
however, that each person holding of record a stock certificate or
certificates representing Old Shares shall receive, upon surrender of
such certificate or certificates, a new certificate or certificates
evidencing and representing the number of Shares to which such person
is entitled."
SECOND, that in lieu of a meeting and vote of stockholders, the sole
stockholder of the Corporation has given written consent to said amendments in
accordance with the provisions of Section 228(a) of the General Corporation Law
of the State of Delaware.
<PAGE>
THIRD, that the previously stated amendments to the Certificate of
Incorporation of the Corporation were duly adopted by the sole stockholder of
the Corporation in accordance with the provisions of Section 228(a) and 242 and
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
11th day of September, 1998.
MAGICWORKS ENTERTAINMENT INCORPORATED
By: /s/ Thomas P. Benson
Name: Thomas P. Benson
Title: Chief Financial Officer
<PAGE>
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"MWE ACQUISITION CORP.", A DELAWARE CORPORATION, WITH AND INTO
"MAGICWORKS ENTERTAINMENT INCORPORATED" UNDER THE NAME OF "MAGICWORKS
ENTERTAINMENT INCORPORATED", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS
OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE ELEVENTH DAY
OF SEPTEMBER, A.D. 1998, AT 11 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
2157668 8100M AUTHENTICATION: 9297544
981353676 DATE: 09-11-98
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
OF
MWE ACQUISITION CORP.
(A DELAWARE CORPORATION)
INTO
MAGICWORKS ENTERTAINMENT INCORPORATED
(A DELAWARE CORPORATION)
MWE Acquisition Corp., a Delaware corporation (the "Corporation"),
desiring to merge with and into Magicworks Entertainment Incorporated, a
Delaware corporation (the "Subsidiary"), pursuant to the provisions of Section
253 of the General Corporation Law of the State of Delaware, as amended (the
"DGCL"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: That the Corporation owns at least ninety percent of the outstanding
shares of common stock, par value $.001 per share (the "Common Stock"), of the
Subsidiary. The Subsidiary has no other outstanding shares of capital stock.
SECOND: The following resolutions for merging the Corporation with and into the
Subsidiary as approved by the Board of Directors of the Corporation and by the
sole stockholder of the Corporation on August 6, 1998:
RESOLVED, that the Board of Directors of MWE Acquisition Corp. (the
"Company") deems it advisable, fair to and in the best interests of the
Company, that the Company enter into the Agreement and Plan of Merger
(the "Merger Agreement") among SFX Entertainment, Inc., a Delaware
corporation ("SIX"), the Company and Magicworks Entertainment
Incorporated, a Delaware corporation ("Target"), providing for the
merger of the Company with and into Target (the "Merger"); that the
Merger Agreement and all of the transactions contemplated thereby,
including without limitation the Merger, the Stockholder Agreements and
the Transactions (as each is defined in the Merger Agreement), be, and
each of them hereby is, authorized and approved in all respects; and
that the Executive Chairman of the Board, the President the Chief
Financial Officer or any Executive Vice President (each a "Designated
Officer") of the Company be, and each of them hereby is, authorized to
execute and deliver on behalf of the Company the Merger Agreement with
such changes therein and additions or amendments thereto, to the extent
permitted by law, and any and all ancillary agreements and other
documents, in such form as a Designated Officer shall approve, such
Designated Officer's execution thereof to be conclusive evidence of
such approval;
FURTHER RESOLVED, that the Company is hereby authorized to commence a
tender offer (the "Offer") for all outstanding shares of common stock,
par value $.001 (the "Common Stock"), of Target, at a price not to
exceed $4.00 per share; and that the Offer
<PAGE>
shall have such other terms and conditions as shall be approved by a
Designated Officer of the Company, including a condition that a minimum
number of shares be validly tendered and not withdrawn at the time the
shares are first accepted for payment under the Offer; and that the
Company is hereby authorized to purchase any and all shares of Common
Stock tendered pursuant to the Offer upon the terms and conditions of
the Offer as set forth in the Merger Agreement;
FURTHER RESOLVED, that the Company, upon completion of the Offer and
the acceptance of shares of Common Stock pursuant to the Offer, and at
such time that the Company owns at least 90 percent of shares of Common
Stock, is hereby authorized to merge the Company with and into Target
pursuant to Section 253 of the Delaware General Corporation Law (the
"DGCL"), upon the terms and conditions prescribed and set forth herein,
and that the matters and actions taken to accomplish such Merger are
hereby approved and authorized;
FURTHER RESOLVED, that the Company shall, pursuant to the provisions of
the DGCL, be merged with and into Target, which shall be the surviving
corporation from and after the effective time of such merger, and which
is sometimes hereinafter referred to as the "surviving corporation,"
and which shall continue to exist as said surviving corporation under
the name "Magicworks Entertainment Incorporated" pursuant to the
provisions of the DGCL. The separate existence of the Company, which is
sometimes hereinafter referred to as the "terminating corporation,"
shall cease at the effective time of the Merger in accordance with the
provisions of the DGCL;
FURTHER RESOLVED, that the surviving corporation shall possess all the
rights, privileges, powers and franchises as well as of a public as of
a private nature, and shall be subject to all the restrictions,
disabilities and duties of each of the Company and Target, all in
accordance with, and with the effect stated in, Section 259 of the
DGCL;
FURTHER RESOLVED, that the Certificate of Incorporation of Target as in
force and effect at the effective time of the Merger shall be the
Certificate of Incorporation of the surviving corporation until further
amended pursuant to the provisions of the DGCL;
FURTHER RESOLVED, that the by-laws of the Company as in force and
effect at the effective time of the Merger shall be the by-laws of the
surviving corporation, until further amended as provided therein and in
the manner prescribed by the provisions of the DGCL;
FURTHER RESOLVED, that the directors of the Company immediately prior
to the effective time of the Merger shall become the directors of the
surviving corporation, all of whom shall hold their directorships until
the earlier of their resignation or removal or until the election and
qualification of their respective successors;
FURTHER RESOLVED, that each Share of common stock of Target issued and
outstanding immediately prior to the effective time of the Merger
(other than shares of
<PAGE>
common stock of Target held in the treasury of Target, held by SFX, the
Company, Target or any wholly owned subsidiary of any of the foregoing,
and other than shares of common stock held by stockholders of Target
who have properly exercised appraisal rights with respect thereto in
accordance with Section 262 of the DGCL) shall, by virtue of the merger
and without any action on the part of the holder thereof, be converted
into the right to receive, as consideration therefor, $4.00 in cash.
Each such share of common stock of Target shall, by virtue of the
merger and without any action on the part of the holder thereof, no
longer be outstanding, be canceled and retired and cease to exist, and
each holder of a certificate representing any such shares of common
stock of Target shall thereafter cease to have any rights with respect
to such shares, except the right of such holders to (i) receive the
aforementioned consideration of $4.00 per share for any such
certificate upon surrender to the surviving corporation or (ii)
exercise appraisal rights as set forth in Section 262 of the DGCL, if
properly perfected;
FURTHER RESOLVED, that each share of common stock of Target issued and
outstanding and held by SFX, the Company, the Target or any wholly
owned subsidiary of any of the foregoing immediately prior to the
effective time of the Merger shall, by virtue of the Merger and without
any action on the part of the holder thereof, cease to be outstanding,
be canceled and retired without payment of any consideration therefor
and cease to exist;
FURTHER RESOLVED, that each share of common stock of the Company issued
and outstanding immediately prior to the effective time shall by virtue
of the Merger and without any action on the part of the holder thereof,
be converted into and become a number of fully paid and nonassessable
shares of common stock, par value $.001 per share, of the surviving
corporation equal to the quotient realized by dividing (a) the
aggregate number of shares of Target common stock determined on a
fully-diluted basis immediately prior to the effective time of the
Merger by (b) the aggregate number of shares of capital stock of the
Company issued and outstanding immediately prior to the effective time
of the Merger;
FURTHER RESOLVED, that the effective time of the Merger Agreement, and
the time the Merger shall become effective in the State of Delaware,
shall be immediately upon the proper filing or a certificate or Merger
or Certificate of Ownership and Merger with the Delaware Secretary of
State.
THIRD: The merger herein described has been approved by written consent of the
sole stockholder of the Corporation, PACE Entertainment Corporation, a Delaware
corporation, on September 11, 1998 in accordance with Section 228(a) of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Ownership and Merger is hereby
executed upon behalf of the Corporation as of September 11, 1998.
MWE ACQUISITION CORP.
<PAGE>
By:/s/ Thomas P. Benson
Name: Thomas P. Benson
Its: Chief Financial Officer
<PAGE>
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF MERGER, WHICH MERGES:
"MAGICWORKS ENTERTAINMENT INCORPORATED", A FLORIDA
CORPORATION,
WITH AND INTO "SHADOW WOOD CORPORATION" UNDER THE NAME OF "MAGICWORKS
ENTERTAINMENT INCORPORATED", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS
OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE THIRTIETH DAY
OF JULY, A.D. 1996, AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
2157668 8100M AUTHENTICATION: 8438889
971135864 DATE: 04-28-97
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 07/30/1996
960222095 - 215766B
CERTIFICATE AND ARTICLES OF MERGER
OF
MAGICWORKS ENTERTAINMENT INCORPORATED
A FLORIDA CORPORATION
INTO
SHADOW WOOD CORPORATION
A DELAWARE CORPORATION
THE UNDERSIGNED CORPORATIONS DO HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations (the "Constituent Corporations") of the merger (the
"Merger" is as follows:
Name State of Incorporation
---- ----------------------
Magicworks Entertainment Incorporated Florida
Shadow Wood Corporation Delaware
SECOND: That an Agreement and Plan of Merger between the Constituent
Corporations has been approved, adopted, certified, executed and acknowledged by
each of the Constituent Corporations in accordance with Section 252 of the
Delaware General Corporation Law and the requirements of Florida law and that
upon filing this document with the Secretary of State of Florida and the
Secretary of State of Delaware, the Merger shall be effective (the "Effective
Time").
THIRD: Shadow Wood Corporation ("SWC" or the "Surviving Corporation")
has an authorized capitalization consisting of 250,000,000 shares of $.0001 par
value common stock ("SWC Common Stock"), of which 3,889,750 shares are issued
and outstanding as of the date of execution hereof, and Magicworks Entertainment
Incorporated ("MEI") has an authorized capitalization consisting of 50,000,000
shares of common stock, $.001 par value (MEI Common Stock"), of which 19,00,000
shares are issued and outstanding as of the date hereof.
FOURTH: The surviving corporation of the Merger is Shadow Wood
Corporation, a Delaware corporation.
FIFTH: The Plan of Merger and the terms and conditions of the Merger
and the manner and basis of converting the shares of the Constituent
Corporations is as follows:
(a) Corporate Existence
(1) From and after the Effective Time, the Surviving
Corporation shall continue its corporate existence as a Delaware
corporation and (i) it shall thereupon and thereafter possess all
rights, privileges, powers, franchises and property (real, personal and
mixed) of each of the Constituent Corporations; (ii) all debts due to
either of the Constituent Corporations, on whatever account, all causes
in action and all other things belonging to either of the Constituent
Corporations shall be taken and deemed to be transferred to and shall
be vested in the Surviving Corporation by virtue of the Merger
<PAGE>
without further act or deed; (iii) the title to any real estate vested
by deed or otherwise, under the laws of any jurisdiction, in either of
the Constituent Corporations, shall not revert or be in any way
impaired by reason of the Merger; and (iv) all rights of creditors and
all liens upon any property of any of the Constituent Corporations
shall be preserved unimpaired, and all debts, liabilities and duties of
the Constituent Corporations shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if
such debts, liabilities and duties had been incurred or contracted by
the Surviving Corporation.
(2) From and after the Effective Time, (i) the Certificate of
Incorporation and By-laws of SWC, as existing immediately prior to the
Effective Time, shall be the Certificate of Incorporation and By-Laws
of the Surviving Corporation subject to amendments adopted herein and
any subsequent amendments; (ii) the members of the Board of Directors
of MEI holding office immediately prior to the Effective Time shall
become the members of the Board of Directors of the Surviving
Corporation, each to serve subject to the Surviving Corporation's
Bylaws; (iii) the Surviving Corporation shall change its name to
Magicworks Entertainment Incorporated; (iv) all persons who hold
executive offices of MEI at the Effective Time shall be elected by the
board of directors of the Surviving Corporation to hold the same
offices of the Surviving Corporation, each to serve subject to the
Surviving Corporation's By-laws.
(b) Conversion of Securities
As of the Effective Time and without any action on the part
of the Constituent Corporations or the holders of any of the
securities of either of these corporations each of the events set
forth below shall occur. All capitalized terms are defined in the
Agreement and Plan of Merger referred to in the EIGHTH article hereof:
(1) Each of the MEI Historical Shares issued and outstanding
immediately prior to the Effective Time shall be converted into one
share of SWC Common Stock. All such shares of MEI Common Stock shall no
longer be outstanding and shall automatically be canceled and shall
cease to exist, and each certificate previously evidencing any such
shares shall thereafter represent the right to receive certificates
evidencing such number of shares of SWC Common Stock into which such
shares of MEI Common Stock were converted. The holders of such
certificates previously evidencing shares of MEI Common Stock
outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such shares of MEI Common Stock except as
otherwise provided herein or by applicable law;
(2) Any shares of MEI Common Stock held in the treasury of MEI
immediately prior to the Effective Time shall automatically be canceled
and extinguished without any conversion thereof and no payment shall be
made with respect thereto;
(3) In fulfillment of the obligation of MEI to issue
securities underlying Units sold in its Private Placement to purchasers
in the Private Placement, SWC shall issue on the terms and subject to
the conditions set forth in the Memorandum; (a) shares of SWC Common
Stock on the basis of one share for each share of MEI Common Stock sold
in the Private Placement, (b) an unsecured senior convertible note
("Note" or Notes") in the principal amount of $12,500 for each Note
sold in the Private Placement. The terms of
<PAGE>
the Notes shall be as described in the Memorandum and in the form as
attached to the Memorandum as an exhibit, and SWC hereby agrees to
assume all responsibility, upon Closing, to implement the sinking fund
and other arrangements as defined and contemplated in the Memorandum,
including, without limitation, the obligation to issue SWC Common Stock
in the event of conversion of the Notes or the obligation to issue
redeemable common stock purchase warrants in the event of prepayment of
the Notes under certain circumstances;
(4) Subject to completion of the sale of at least $10,000,000
in Units in the Private Placement, SWC shall issue to Capital Growth
International, LLC ("CGI") or its designees, after giving effect to the
SWC reverse stock split, 488,820 shares of SWC Common Stock and
Warrants to purchase 500,000 shares of SWC Common Stock under the terms
and conditions of the Placement Agent Agreement between MEI and CGI
dated June 14, 1996, and as described in the Memorandum.
(5) The 311,180 shares of SWC Common Stock previously issued
and outstanding prior to the Merger will remain issued and outstanding;
(6) At Closing, there shall be no securities convertible into
or exercisable or exchangeable for shares of SWC or MEI Common Stock
except as described in the Memorandum.
SIXTH: Voting results for the Merger are as follows:
(a) Shadow Wood Corporation. The Agreement and Plan of Merger (the
"Plan") was submitted to certain stockholders of Shadow Wood Corporation by the
board of directors on July 2, 1996, and out of 3,889,750 shares of common stock
entitled to vote on the Plan, 3,490,250 (89%) shares approved the plan by
written consent, resulting in approval of the Plan.
(b) Magicworks Entertainment Incorporated. The Plan was submitted to
certain stockholders of Magicworks Entertainment Incorporated by the board of
directors on June 22, 1996, and out of 19,000,000 shares of common stock
entitled to vote on the Plan, 19,000,000 (100%) shares approved the Plan by
written consent, resulting in approval of the Plan.
(c) General. The number of votes cast for the Plan by each group was
sufficient under Florida and Delaware law for approval by that voting group.
SEVENTH: The Certificate of Incorporation of Shadow Wood Corporation
shall be the Certificate of Incorporation of the Surviving Corporation and is
hereby amended as follows:
1. Article I is amended to read as follows:
ARTICLE I
NAME
The name of the corporation is Magicworks Entertainment Incorporated.
2. Article IV is amended to read as follows:
ARTICLE IV
CAPITALIZATION
The aggregate number of shares which this Corporation shall have
authority to issue is:
(a) COMMON STOCK. The Corporation shall have authority to
issue 50,000,000 shares of common stock having a par value of $.001 per
share. All shares of common stock shall have the same rights and shall
not be liable to any further call or assessment and shall have no
pre-emptive rights.
<PAGE>
(b) PREFERRED STOCK. The Corporation shall have authority to
issue 5,000,000 shares of preferred stock, $.001 par value, which may
be issued in one or more series and with such rights, preferences and
designations as determined by the Corporation's board of directors. All
shares of any one series shall be alike in every particular.
EIGHTH: The Agreement and Plan of Merger dated July 24, 1996, between
SWC and MEI is on file at the principal place of business of SWC at 1258 E.
Malvern Ave., Salt Lake City, UT 84117 and will be furnished on request without
cost to any stockholder of either of the Constituent Corporations.
NINTH: Upon this Merger becoming effective, the Surviving Corporation
acknowledges that it is deemed, under Florida law:
(a) To appoint the Secretary of State as its agent for service
of process in a proceeding to enforce any obligation or the rights of
dissenting shareholders of each domestic corporation party to the
merger or share exchange; and
(b) To agree that it will promptly pay to the dissenting
shareholders of each domestic corporation party to the merger or share
exchange the amount, if any, to which they are entitled under Section
607.1302, Florida Statutes.
SHADOW WOOD CORPORATION
By:/s/ Robert L. Wright
Robert L. Wright, President
By:/s/ Mark Archibald
Mark Archibald, Secretary
MAGICWORKS ENTERTAINMENT
INCORPORATED
By:/s/ Lee Marshall
Lee Marshall, President
By:/s/ Larry Turk
Larry Turk, Secretary
<PAGE>
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "RATTLESNAKE GOLD, INC.", CHANGING ITS NAME FROM "RATTLESNAKE GOLD,
INC." TO "SHADOW WOOD CORPORATION", FILED IN THIS OFFICE ON THE FIFTH DAY OF
SEPTEMBER, A.D. 1995, AT 1:30 O'CLOCK P.M.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
2157668 8100 AUTHENTICATION: 8438890
971135864 DATE: 04-28-97
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:30 PM 09/05/1995
950200917 - 2157668
CERTIFICATE OF AMENDMENT
TO CERTIFICATE OF INCORPORATION
OF
RATTLESNAKE GOLD, INC.
(changed herein to "SHADOW WOOD CORPORATION")
In accordance with Section 242 of the Delaware Corporation Law
Annotated, as amended, Rattlesnake Gold, Inc. (the "Corporation"), a Delaware
corporation, does hereby adopt the following Certificate of Amendment (the
"Amendment") to the Certificate of Incorporation.
1. The Certificate of Incorporation of the Corporation is hereby
amended by deleting Article I in its entirety and inserting the following in
lieu thereof.
ARTICLE I
NAME
The name of the Corporation hereby created shall be:
SHADOW WOOD CORPORATION
2. Except as specifically provided herein, the provisions of the
Corporation's Certificate of Incorporation shall remain unamended and shall
continue in full force and effect.
3. By execution of this Certificate of Amendment to the Certificate of
Incorporation, the president and secretary of the Corporation do hereby certify
that the foregoing amendment to the Certificate of Incorporation was adopted as
amendments to the original Certificate of Incorporation of the Corporation by
the shareholders of said Corporation at a special meeting of the shareholders of
the Corporation in accordance with Section 242, Delaware Corporation Law
Annotated.
<PAGE>
IN WITNESS WHEREOF, the foregoing Certificate of Amendment to the
Certificate of Incorporation of Rattlesnake Gold. Inc., has been executed this
31st day of August, 1995.
ATTEST: RATTLESNAKE GOLD, INC.
/s/ Mark Archibald By /s/ Edward Dallin Bagley
Mark Archibald Edward Dallin Bagley, President
STATE OF UTAH )
: ss.
COUNTY OF DAVIS )
On this 31st day of August, 1995, personally appeared before me Edward
Dallin Barley and Mark Archibald, who being by me duly sworn did say, each for
themselves, that he, the said Edward Dallin Bagley, is the president, and he,
the said Mark Archibald, is the secretary, respectively, of Rattlesnake Gold,
Inc., and that they are the persons who executed the foregoing Certificate of
Amendment to the Certificate of Incorporation for and on behalf of Rattlesnake
Gold, Inc., and that the statements contained therein are true.
WITNESS MY HAND AND OFFICIAL SEAL.
/s/ Elizabeth Maloy
Elizabeth Maloy
NOTARY PUBLIC
Residing in Davis City, Utah
My Commission Expires:
11/1/97
-2-
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
MAGICWORKS ENTERTAINMENT INCORPORATED
A DELAWARE CORPORATION
<PAGE>
[TABLE OF CONTENTS DELETED]
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
MAGICWORKS ENTERTAINMENT INCORPORATED
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Magicworks Entertainment Incorporated, a
Delaware corporation (the "Corporation"). In the event of a direct conflict
between the provisions of these bylaws and the mandatory provisions of the
Delaware General Corporation Law or the provisions of the certificate of
incorporation of the Corporation, such provisions of the Delaware General
Corporation Law or the certificate of incorporation of the Corporation, as the
case may be, will be controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Delaware, as the board of directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
2.2 Special Meeting. A special meeting of the stockholders may be
called at any time by the Executive Chairman of the Board, the Chief Executive
Officer, the President, the board of directors, and shall be called by the Chief
Executive Officer, the President or the Secretary at the request in writing of
the stockholders of record of not less than ten percent of all shares entitled
<PAGE>
to vote at such meeting or as otherwise provided by the certificate of
incorporation of the Corporation. A special meeting shall be held on such date
and at such time as shall be designated by the person(s) calling the meeting and
stated in the notice of the meeting or in a duly executed waiver of notice of
such meeting. Only such business shall be transacted at a special meeting as may
be stated or indicated in the notice of such meeting or in a duly executed
waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal office of the Corporation unless another place is
designated for meetings in the mariner provided herein.
2.4 Notice. (a) Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten nor more than 60 days before the date of the meeting, either personally
or by mail, by or at the direction of the Chief Executive Officer, the
President, the Secretary, or the officer or person(s) calling the meeting, to
each stockholder of record entitled to vote at such meeting. If such notice is
to be sent by mail, it shall be directed to such stockholder at his address as
it appears on the records of the Corporation, unless he shall have filed with
the Secretary of the Corporation a written request that notices to him be mailed
to some other address, in which case it shall be directed to him at such other
address. Notice of any meeting of stockholders shall not be required to be given
to any stockholder who shall attend such meeting in person or by proxy and shall
not, at the beginning of such meeting, object to the transaction of any business
because the meeting is not lawfully called or convened, or who shall, either
before or after the meeting, submit a signed waiver of notice, in person or by
proxy.
(b) Notice shall not be required to be given to any stockholder to whom
(a) notice of two consecutive annual meetings, and all notices of meetings or of
the taking of action by written consent without a meeting to such stockholder
during the period between such two annual meetings, or (b) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve month period, have been mailed addressed to such
stockholder at his address as shown on the records of the Corporation and have
been returned undeliverable. Any action or meeting which shall be taken or held
without notice to such stockholder shall have the same force and effect as if
such notice had been duly given. If any such stockholder shall deliver to the
Corporation a written notice setting forth his then current address, the
requirement that notice be given to such stockholder shall be reinstated.
2.5 Voting List.. At least ten days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged
2
<PAGE>
in alphabetical order and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting or a duly executed waiver of notice of such meeting or, if not
so specified, at the place where the meeting is to be held and shall be open to
examination by any stockholder during ordinary business hours. Such list shall
be produced at such meeting and kept at the meeting at all times during such
meeting and may be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these bylaws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote: Withdrawal of Quorum. When a quorum is present at
any meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting: Proxies. Except as otherwise provided in the
certificate of incorporation of the Corporation or bylaws, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact, or by any
proxy method permitted by the Delaware General Corporation Law. Each such proxy
shall be filed with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to
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be voted. Each proxy shall be revocable unless expressly provided therein to be
irrevocable and coupled with an interest sufficient in law to support an
irrevocable power or unless otherwise made irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination of
stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law or these bylaws, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
in the State of Delaware, principal place of business, or such officer or agent
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the board of directors is required by law or these bylaws, the record date for
determining stockholders entitled to consent to corporate
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action in writing without a meeting shall be at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Executive Chairman of the Board, if such
office has been filled, and, if not or if the Executive Chairman of the Board is
absent or otherwise unable to act, the Chief Executive Officer shall preside at
all meetings of stockholders. The Secretary shall keep the records of each
meeting of stockholders. In the absence or inability to act of any such officer,
such officer's duties shall be performed by the officer given the authority to
act for such absent or nonacting officer under these bylaws or by some person
appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any meeting
of stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, or if inspectors shall not have been appointed, the chairman of the
meeting may, appoint one or more inspectors. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors shall determine the number
of shares of capital stock of the Corporation outstanding and the voting power
of each, the number of shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies and shall receive votes, ballots,
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots, or
consents, determine the results, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting, the inspectors shall make a report in writing of any challenge,
request, or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as an inspector of an election of directors. Inspectors need not be
stockholders.
ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these bylaws, the board
of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election Term. The number of directors which
shall constitute the entire board of directors shall be not less than one. The
first board of directors shall consist of the number of directors named in the
certificate of incorporation of the Corporation or, if no directors are so
named, shall consist of the number of directors elected by the incorporator(s)
at an organizational meeting or by unanimous written consent in lieu thereof.
Thereafter, within the limits above specified, the number of directors which
shall constitute the entire board of directors shall be determined by resolution
of the board of directors or by resolution of the stockholders at the annual
meeting thereof or at a special meeting thereof called for that purpose. Except
as otherwise required by law, the certificate of incorporation of the
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Corporation, or these bylaws, the directors shall be elected at an annual
meeting of stockholders at which a quorum is present. Directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy and entitled to vote on the election of directors. Each director so chosen
shall hold office until the first annual meeting of stockholders held after his
election and until his successor is elected and qualified or, if earlier, until
his death, resignation, or removal from office. None of the directors need be a
stockholder of the Corporation or a resident of the State of Delaware. Each
director must have attained the age of majority.
3.3 Change in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
incorporation of the Corporation or these bylaws, at any meeting of stockholders
called expressly for that purpose, any director or the entire board of directors
may be removed, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote on the election of directors; provided,
however, that so long as stockholders have the right to cumulate votes in the
election of directors pursuant to the certificate of incorporation of the
Corporation, if less than the entire board of directors is to be removed, no one
of the directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board of directors.
3.5 Vacancies. Vacancies and newly-created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by the sole
remaining director, and each director so chosen shall hold office until the
first annual meeting of stockholders held after his election and until his
successor is elected and qualified or, if earlier, until his death, resignation,
or removal from office. If there are no directors in office, an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly-created directorship, the directors then in
office shall constitute less than a majority of the whole board of directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least 10% of the
total number of the shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly-created directorships or to replace the directors chosen by
the directors then in office. Except as otherwise provided in these bylaws, when
one or more directors shall resign from the board of directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have the power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
bylaws with respect to the filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings and
may have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time
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to time determine or as shall be specified in the notice of such meeting or duly
executed waiver of notice of such meeting.
3.7 First Meeting. Each newly elected board of directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors shall
be held at such times and places as shall be designated from time to time by
resolution of the board of directors. Notice of such regular meetings shall not
be required.
3.10 Special Meetings. Special meetings of the board of directors shall
be held whenever called by the Executive Chairman of the Board, the Chief
Executive Officer, the President, or any director.
3.11 Notice. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of directors,
a majority of the directors fixed in the manner provided in these bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote per director on any matter, every reference in these bylaws to a majority
or other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall
be transacted in such order as from time to time the board of directors may
determine. The Executive Chairman of the Board, if such office has been filled,
and, if not or if the Executive Chairman of the Board is absent or otherwise
unable to act, the Chief Executive Officer shall preside at all meetings of
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the board of directors. In the absence or inability to act of either such
officer, a chairman shall be chosen by the board of directors from among the
directors present. The Secretary of the Corporation shall act as the secretary
of each meeting of the board of directors unless the board of directors appoints
another person to act as secretary of the meeting. The board of directors shall
keep regular minutes of its proceedings which shall be placed in the minute book
of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority to
fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof, provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate one or more committees.
4.2 Number; Qualification; Term. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 Authority. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the power at
any time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 Alternate Members of Committees. The board of directors may
designate one or more directors as alternate members of any committee. Any such
alternate member may replace
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any absent or disqualified member at any meeting of the committee. If no
alternate committee members have been so appointed to a committee or each such
alternate committee member is absent or disqualified, the member or members of
such committee present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meeting. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least 24 hours before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority of
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its proceedings to
be prepared and shall report the same to the board of directors upon the request
of the board of directors. The minutes of the proceedings of each committee
shall be delivered to the Secretary of the Corporation for placement in the
minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed by law upon the board of
directors or such director.
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ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of
the Corporation, or these bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex, or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice required
or permitted to be given by telegram, telex, or telefax shall be deemed to be
delivered and given at the time transmitted with all charges prepaid and
addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation
shall be an Executive Chairman of the Board, a Chief Executive Officer, a
President, a Secretary, a Treasurer, and such other officers as the board of
directors may from time to time elect or appoint, including without limitation
one or more Vice Presidents (with each Vice President to have such descriptive
title, if any, as the board of directors shall determine), and an Assistant
Secretary. Each officer shall bold office until his successor shall have been
duly elected and shall have qualified, until his death, or until he shall resign
or shall have been removed in the manner hereinafter provided. Any two or more
offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Delaware.
6.2 Removal. Any officer or agent elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interest of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract
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rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the Corporation
(by death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 Authority. Officers shall have such authority and perform such
duties in the management of the Corporation as are provided in these bylaws or
as may be determined by resolution of the board of directors not inconsistent
with these bylaws.
6.5 Compensation. The compensation, if any, of officers and agents
shall be fixed from time to time by the board of directors; provided, however,
that the board of directors may delegate the power to determine the compensation
of any officer and agent (other than the officer to whom such power is
delegated) to the Executive Chairman of the Board, or the Chief Executive
Officer, or a committee of directors.
6.6 Executive Chairman of the Board. The Executive Chairman of the
Board, if elected by the board of directors, shall have such powers and duties
as may be prescribed by the board of directors. Such officer shall preside at
all meetings of the stockholders and of the board of directors. Such officer may
sip all certificates for shares of stock of the Corporation.
6.7 Chief Executive Officer. The Chief Executive Officer shall be the
chief executive officer of the Corporation and, subject to the board of
directors, he shall have general executive charge, management, and control of
the properties and operations of the Corporation in the ordinary course of its
business, with all powers with respect to such properties and operations as may
be reasonably incident to such responsibilities. If the board of directors has
not elected an Executive Chairman of the Board or in the absence or inability to
act of the Executive Chairman of the Board, the Chief Executive Officer shall
exercise all of the powers and discharge all of the duties of the Executive
Chairman of the Board. As between the Corporation and third parties, any action
taken by the Chief Executive Officer in the performance of the duties of the
Executive Chairman of the Board shall be conclusive evidence that there is no
Executive Chairman of the Board or that the Executive Chairman of the Board is
absent or unable to act.
6.8 President. The President shall be the chief operating officer of
the Corporation and, subject to the board of directors, he shall assist the
Chief Executive Officer in the general executive charge, management and control
of the properties and operations of the Corporation in the ordinary course of
business, with all powers with respect to such properties and operations as may
be reasonably incident to such responsibilities. The President shall, subject to
the board of directors, have charge of the actual day-to-day operations and
management of the corporation and its properties, with all such powers with
respect to such properties and operations as may be reasonably incident to such
responsibilities. In the absence of the Executive Chairman of the Board and the
Chief Executive Officer, the President shall preside at all meetings of the
board of directors and of the stockholders.
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6.9 Vice Presidents. If the board of directors elects or appoints one
or more Vice Presidents, each Vice President shall have such powers and duties
as may be assigned to him by the board of directors, the Executive Chairman of
the Board, the Chief Executive Officer, or the President, and (in order of their
seniority as determined by the board of directors or, in the absence of such
determination, as determined by the length of time they have held the office of
Vice President) shall exercise the powers of the President during that officer's
absence or inability to act. As between the Corporation and third parties, any
action taken by a Vice President in the performance of the duties of the
President shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken.
6.10 Treasurer. If the board of directors elects or appoints a
Treasurer, the Treasurer shall have custody of the Corporation's funds and
securities, shall keep full and accurate account of receipts and disbursements,
shall deposit all monies and valuable effects in the name and to the credit of
the Corporation in such depository or depositories as may be designated by the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors, the Executive Chairman of the Board, the Chief Executive
Officer, or the President.
6.11 Assistant Treasurers. If the board of directors elects or appoints
one or more Assistant Treasurers, each Assistant Treasurer shall have such
powers and duties as may be assigned to him by the board of directors, the
Executive Chairman of the Board, the Chief Executive Officer, or the President.
The Assistant Treasurers (in the order of their seniority as determined by the
board of directors or, in the absence of such a determination, as determined by
the length of time they have held the office of Assistant Treasurer) shall
exercise the powers of the Treasurer during that officer's absence or inability
to act.
6.12 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Executive Chairman
of the Board, the Chief Executive Officer, or the President, in the name of the
Corporation, all contracts of the Corporation and affix the seal of the
Corporation thereto. He may sign with the Executive Chairman of the Board, the
Chief Executive Officer, or the President all certificates for shares of stock
of the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which shall
at all reasonable times be open to inspection by any director upon application
at the office of the Corporation during business hours. He shall in general
perform all duties incident to the office of the Secretary, subject to the
control of the board of directors, the Executive Chairman of the Board, the
Chief Executive Officer, and the President.
6.13 Assistant Secretaries. If the board of directors elects or
appoints one or more Assistant Secretaries, each Assistant Secretary shall have
such powers and duties as may be assigned to him by the board of directors, the
Executive Chairman of the Board, the Chief Executive Officer, or the President.
The Assistant Secretaries (in the order of their seniority as determined by the
board of directors or, in the absence of such a determination, as determined by
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the length of time they have held the office of Assistant Secretary) shall
exercise the powers of the Secretary during that officer's absence or inability
to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Executive Chairman of the
Board, the Chief Executive Officer, or the President or a Vice President and
also by the Secretary or an Assistant Secretary or by the Treasurer or an
Assistant Treasurer. Any and all signatures on the certificate may be a
facsimile and may be sealed with the seal of the Corporation or a facsimile
thereof. If any officer, transfer agent, or registrar who has signed, or whose
facsimile signature has been placed upon, a certificate has ceased to be such
officer, transfer agent, or registrar before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue. The
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued and shall exhibit the holder's name and
the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
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7.5 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and authority
to provide that certificates representing shares of stock bear such legends as
the board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and payment
shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of
funds of the Corporation legally available therefor such reserve or reserves as
the directors from time to time, in their discretion, consider proper to provide
for contingencies, to equalize dividends, or to repair or maintain any property
of the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in their discretion.
8.3 Books and Records. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by
the board of directors; provided, that if such fiscal year is not fixed by the
board of directors and the selection of the fiscal year is not expressly
deferred by the board of directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to
time may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may resign
by so stating at any meeting of the board of directors or by giving written
notice to the board of directors, the Executive Chairman of the Board, the Chief
Executive Officer, the President, or the Secretary. Such resignation shall take
effect at the time specified therein or, if no time is specified therein,
immediately upon its receipt. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
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8.7 Securities of Other Corporations. The Executive Chairman of the
Board, the Chief Executive Officer, the President, or any Vice President of the
Corporation shall have the power and authority to transfer, endorse for
transfer, vote, consent, or take any other action with respect to any securities
of another issuer which may be held or owned by the Corporation and to make,
execute, and deliver any waiver, proxy, or consent with respect to any such
securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or through
a proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this section
shall constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which the holders of all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office, principal place
of business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested. If any such action is taken by less
than unanimous consent of the stockholders, prompt notice thereof shall be given
to all nonconsenting stockholders.
(b) Unless otherwise restricted by the certificate of incorporation of
the Corporation or by these bylaws, any action required or permitted to be taken
at a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
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subject matter thereof, and such consent shall have the same force and effect as
a vote of such directors or committee members, as the case may be, and may be
stated as such in any certificate or document filed with the Secretary of State
of the State of Delaware or in any certificate delivered to any person. Such
consent or consents shall be filed with the minutes of proceedings of the board
or committee, as the case may be.
8.10 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage,
or other instrument executed by the Corporation through its duly authorized
officer or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary,
or unless such attestation is required by law.
8.12 Headings. The headings used in these bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 References. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed or
new bylaws may be adopted by the stockholders or by the board of directors at
any regular meeting of the stockholders or the board of directors or at any
special meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of any such special meeting of the stockholders.
The undersigned, the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by unanimous consent by the directors of
the Corporation as of 1998.
/s/ Richard A. Liese
Richard A. Liese, Assistant Secretary
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[State of Florida Logo]
I certify the attached is a true and correct copy of the Articles of
Incorporation, as amended to date, of MAGICWORKS ENTERTAINMENT INTERNATIONAL,
INC., a corporation organized under the laws of the State of Florida, as shown
by the records of this office.
The document number of this corporation is P93000019649.
Given under my hand and the
Great Seal of the State of Florida
[State of Florida Seal Logo] at Tallahassee, the Capitol, this the
Twelfth day of October, 1998
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
STATE OF FLORIDA
ARTICLES OF INCORPORATION
OF
MAGIC PROMOTIONS, INC,
THE UNDERSIGNED, ACTING AS THE INCORPORATOR OF A CORPORATION
UNDER THE FLORIDA GENERAL CORPORATION ACT, ADOPTS THE FOLLOWING
ARTICLES OF INCORPORATION:
FIRST: THE NAME OF THE CORPORATION IS MAGIC PROMOTIONS, INC.
SECOND: THE PERIOD OF ITS DURATION IS PERPETUAL.
THIRD: THE DATE AND TIME OF THE COMMENCEMENT OF THE CORPORATE EXISTENCE
IF OTHER THAN THE TIME OF FILING OF ARTICLES BY THE DEPARTMENT OF STATE IS
IMMEDIATELY UPON FILING BY THE DEPARTMENT OF STATE.
FOURTH: THE PURPOSE OR PURPOSES FOR WHICH THE CORPORATION IS ORGANIZED
ARE:
TO ENGAGE IN THE TRANSACTION OF ANY OR ALL LAWFUL BUSINESS FOR
WHICH CORPORATIONS MAY BE INCORPORATED UNDER THE PROVISIONS OF THE
FLORIDA GENERAL CORPORATION ACT.
FIFTH: THE AGGREGATE NUMBER OF SHARES WHICH THE CORPORATION SHALL HAVE
AUTHORITY TO ISSUE IS:
One Thousand (1,000) common shares at a par value of One
Dollar ($1.00) per share.
SIXTH: PROVISIONS GRANTING PREEMPTIVE RIGHTS ARE: None
SEVENTH: PROVISIONS FOR THE REGULATION OF THE INTERNAL AFFAIRS OF THE
CORPORATION ARE: None.
- 1 -
<PAGE>
EIGHTH: THE PRINCIPAL OFFICE, MAILING ADDRESS AND THE STREET ADDRESS OF
THE INITIAL REGISTERED OFFICE OF THE CORPORATION IS 1117 Floridian Court, Cape
Coral, Florida 33904
AND THE NAME OF ITS INITIAL REGISTERED AGENT AT SUCH
ADDRESS IS Glenn Bechdel.
NINTH: THE NUMBER OF DIRECTORS CONSTITUTING THE INITIAL BOARD OF
DIRECTORS OF THE CORPORATION IS THREE (3), AND THE NAMES AND ADDRESSES OF THE
PERSONS WHO ARE TO SERVE AS DIRECTORS UNTIL THE FIRST ANNUAL MEETING OF
SHAREHOLDERS OR UNTIL THEIR SUCCESSORS ARE ELECTED AND SHALL QUALIFY ARE:
NAME STREET ADDRESS
---- --------------
Lee D. Marshall 9265 Olde Eight Road, Northfield, OH 44067
Joseph Marsh 930 Washington Avenue, Miami Beach, FL 33139
Glenn Bechdel 1117 Floridian Court, Cape Coral, FL 33904
TENTH: THE NAME AND ADDRESS OF EACH INCORPORATOR IS!
NAME STREET ADDRESS
---- --------------
Thomas M. Zwilling Suite 700, 322 Boulevard of the Allies,
Pittsburgh, PA 15222
DATED: March 2, 1993
/s/ Thomas M. Zwilling
Thomas M. Zwilling, Incorporator
- 2 -
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF ALLEGHENY
THE FOREGOING INSTRUMENT WAS ACKNOWLEDGED BEFORE ME THIS 3RD
DAY OF MARCH, 1993, BY THOMAS M. ZWILLING
(NAME OF INCORPORATOR)
OF MAGIC PROMOTIONS, INC.
/s/ Shirley A. Minchull
NOTARY PUBLIC
MY COMMISSION EXPIRES: illegible' 96
GLENN BECHDEL, having been designated to act as registered agent for
MAGIC PROMOTIONS, INC., hereby agrees to act in this capacity.
/s/ Glenn Bechdel
GLENN BECHDEL
- 3 -
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
MAGIC PROMOTIONS, INC.
Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act (the "Act"), the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
1. The name of the Corporation is MAGIC PROMOTIONS, INC. (the
"Corporation"), Charter #P93000019649, filed on March 16,1993.
2. The following Amendment to the Articles of Incorporation was adopted
by all of the Directors of the Corporation and the sole Shareholder of the
Corporation, the number of votes cast being sufficient for approval, on February
28, 1997 in the manner prescribed by Section 607.1003 of the Act:
ARTICLE I
The name of the Corporation is MAGICWORKS ENTERTAINMENT INTERNATIONAL,
INC- (the "Corporation").
3. Except as hereby amended, the Articles of Incorporation of the
Corporation shall remain the same.
IN WITNESS WHEREOF, the undersigned being the President of the
Corporation has executed these Articles of Amendment to Incorporation of MAGIC
PROMOTIONS, INC. this 28th day of February, 1997.
MAGIC PROMOTIONS, INC.
a Florida corporation
/s/ Lee D. Marshall
Lee Marshall, President
<PAGE>
BY-LAWS
OF
MAGICWORKS ENTERTAINMENT INTERNATIONAL, INC.
(changed name from Magic Promotions on February 28, 1997)
<PAGE>
BY-LAWS
ARTICLE I.
GENERAL
SECTION 1. The name of this Corporation shall be the MAGIC PROMOTIONS,
INC.
SECTION 2. The principal office of this Corporation shall be located at
1117 Floridian Court, Cape Coral, Florida 33904.
SECTION 3. The Corporation may, in addition to its principal office,
establish and maintain such other offices, at such place or places as the Board
of Directors may deem necessary, desirable or expedient from time to time.
Moreover, the Board of Directors shall have the authority to change the
principal office of the Corporation so long as proper notice and such filing of
documents as is required is made with the Department of State of the State of
Florida.
ARTICLE II.
CORPORATE SEAL
SECTION 1. The corporate seal of this Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization, and the word
"FLORIDA."
SECTION 2. The said seal may be used by any of the officers of the
Corporation by causing an impression or facsimile thereof to be impressed or
affixed to any paper or document necessary and proper to the conduct of the
business of the Corporation.
ARTICLE III.
SHAREHOLDERS AND THEIR RIGHTS
SECTION 1. All meetings of the Shareholders and of the Board of
Directors, if any, shall be held at the principal office of the corporation,
within the State of Florida, or at such other place or places as the directors
may, from time to time determine.
SECTION 2. The annual meeting of the Shareholders, commencing with the
year 1994, shall be held on the first Friday of April of each year at 2:00
o'clock, P.M., at which time they shall elect a Board of Directors, if required,
and transact any other business as may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting, specifying the
location, day and hour of the meeting, shall, at least ten (10) days prior to
the meeting, be served upon or mailed, postage
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prepaid, to each Shareholder entitled to vote thereat, being of record ten (10)
days next preceding the date of the meeting, at such address as appears on the
transfer books of the Corporation by the Secretary.
SECTION 4. Special meetings of the Shareholders for any purpose or
purposes, other than those regulated by statute, may be called at any time by
the President, or a majority of the Board of Directors, or the holders of not
less than one-half of all the shares issued and outstanding and entitled to vote
at the particular meeting, upon written request identifying the purpose (s) of
the meeting and delivered to the Secretary of the Corporation. Upon receipt of
any such request, it shall be the duty of the Secretary to call a special
meeting of the Shareholders to be held at such time, not less than ten (10) days
nor more than thirty (30) days thereafter, as the Secretary may fix.
SECTION 5. Written notice of any special meeting of the Shareholders
shall be given to each Shareholder entitled to vote thereat, at such address as
appears on the transfer books of the Corporation, at least ten (10) days before
such meeting, unless a greater period of notice is required by statute in a
particular case. Identification of the purpose(s) of the special meeting shall
be provided in the notice.
SECTION 6. Business transacted at all special meetings shall be
confined to the purpose(s) stated in the call and matters germane thereto.
SECTION 7. Those Shareholders present in person, or represented by
proxy, at any annual meeting of Shareholders or at any duly called and properly
noticed special meeting of Shareholders shall be requisite and shall constitute
a quorum at all such meetings of Shareholders for the transaction of business,
except as otherwise provided by statute, by the Articles of Incorporation or by
these By-Laws.
SECTION 8. When a quorum is present, or represented at any meeting, the
vote of the holders of a majority of the stock having voting power, present in
person, or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or the Articles of Incorporation or these By-Laws, a different vote is
required, in which case, such express provision shall govern and control the
decision of such question.
SECTION 9. At every Shareholders' meeting, every Shareholder entitled
to vote shall have the right to one (1) vote for every share of voting stock
standing in his name on the books of the Corporation. Unless a record date shall
have been fixed for the determination of Shareholders entitled to vote at a
shareholders' meeting, transferees of shares which are transferred on the books
of the Corporation within ten (10) days next preceding the date of such meeting
shall not be entitled to vote at such meeting. Upon demand made by a Shareholder
before the voting begins, at any election for Directors, the election shall be
by written ballot.
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SECTION 10. Every Shareholder entitled to vote may vote either in
person or by proxy. Every proxy shall be executed in writing by the Shareholder
or his duly authorized attorney- in- fact and filed with the Secretary of the
Corporation. A proxy, unless coupled with an interest explicitly set forth in
the proxy, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until notice thereof has been given to the Secretary of the
Corporation. No unrevoked proxy shall be valid after thirty (30) days from the
date of its execution, unless a longer time is expressly provided therein, but
in no event shall a proxy, unless coupled with an interest, be voted on after
ninety (90) days from the date of its execution. A proxy shall not be revoked by
the death or incapacity of the maker, unless, before the vote is counted or the
authority is exercised, written notice of such incapacity is given to the
Secretary of the Corporation.
SECTION 11. The officer or agent having charge of the transfer books
for shares of the Corporation shall make, at least ten (10) days before each
meeting of Shareholders, a complete list of the Shareholders entitled to vote at
the meeting, arranged in alphabetical order, with the address and the number of
shares held by each, which list shall be kept on file at the registered office
of the Corporation and shall be subject to inspection by any Shareholder at any
time during usual business hours. Such list shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting. If, at any time, there are
three (3) or less Shareholders of the Corporation, the duties imposed by this
section shall be waived.
SECTION 12. In advance of any meeting of Shareholders, the Board of
Directors may appoint judges of the election, who shall be Shareholders, to act
at such meeting or any adjournment thereof. If judges of election be not so
appointed, the Chairman of any such meeting, on the request of any Shareholder
or proxy, shall make such appointment at the meeting. The number of judges shall
be three (3). No person who is a candidate for office shall act as a judge. The
judges of election shall do all such acts as may be proper to conduct the
election or vote with fairness to all Shareholders and shall make a report of
any matter determined by them and execute a certificate of any fact found by
them, if requested by the Chairman of the meeting or any Shareholder or his
proxy. The decision on the act, or certificate of a majority of the judges of
the election shall be effective in all respects as the decision, act or
certificate of all Shareholders.
SECTION 13. If set forth in the notice calling a regular or special
meeting of the Shareholders, or if consented to by all of the Shareholders, any
regular or special meeting of Shareholders may be held by conference telephone.
Any meeting held by conference telephone shall require the participation of a
majority of the Shareholders, present by telephone or represented on the
telephone by proxy, to constitute a quorum of the Shareholders. In addition, for
non-telephone conference meetings, at the discretion of a majority of the
Shareholders present in person, or represented by proxy, any one or more of the
Shareholders may participate in any regular or special meeting of the
Shareholders by conference telephone in lieu of physically attending the
meeting.
3
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ARTICLE IV.
INFORMAL ACTION BY SHAREHOLDERS
SECTION 1. Any action required to be taken at a meeting of the
Shareholders may be taken without a meeting, if a consent in writing setting
forth the action so taken shall be signed by all shareholders who would be
entitled to vote at a meeting for such purposes and the consent shall be filed
with the Secretary of the Corporation.
ARTICLE V.
DIRECTORS
SECTION 1. The number of Directors which shall constitute the Board of
Directors shall be three (3). Directors shall be natural persons of full age and
need not be Shareholders of the corporation. Except as hereinafter provided in
the case of vacancies, Directors other than those constituting the first Board
of Directors shall be elected by the Shareholders, and each Director shall be
elected to serve for the term of one year and/or until his successor shall be
elected and shall qualify.
SECTION 2. Vacancies in the Board of Directors shall be filled by a
majority of the remaining members of the Board, though less than a quorum and
each person so elected shall be a Director until his successor is elected by the
Shareholders, who may make such election at the next annual meeting of the
Shareholders, or at any special meeting duly called for the purpose and held
prior thereto.
SECTION 3. The business and affairs of the Corporation shall be managed
by its Board of Directors which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute, or by the Articles
of Incorporation or by these By-Laws directed or required to be exercised and
done by the Shareholders.
SECTION 4. The Board of Directors shall exercise such powers as are
expressly given them by the Articles of Incorporation and these By-Laws,
together with such powers as will enable them to do all such lawful acts as are
necessary, proper and expedient for the welfare of this Corporation, and are not
directed or required to be exercised by the Shareholders by statute, the
Articles of Incorporation, or these By-Laws; and without prejudicing the general
powers of the Board of Directors, as hereinafter stated, it is expressly
declared that the Directors shall have the following powers:
(a) To make and change regulations not inconsistent with these
By-Laws for the management of the Corporation's business and affairs;
4
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(b) To have full power, from time to time, to purchase or
otherwise acquire for the Corporation any property, rights or privileges which
the Corporation is authorized by law to purchase, or otherwise acquire, at such
prices and considerations and upon such terms and conditions as the Board may
consider advisable, and in its discretion, may pay therefor, in whole or in
part, in money, or in stocks, bonds, or both, or other securities of the
Corporation;
(c) To sell, or otherwise dispose of, convey, any property of
the Corporation, at such considerations and upon such terms and conditions as
consider advisable, and in its discretion they may acccept in payment or
exchange therefore, in whole, or in part, money or stocks, or bonds, or other
securities of any Corporations, except as otherwise provided by law, or by the
Articles of Incorporation;
(d) To borrow money, and to make and issue notes, bonds, and
other negotiable and transferable instruments, mortgages, deeds of trust, and
trust agreements, and do every act and thing necessary to effectuate the same;
(e) To appoint and remove, or suspend, such employees, agents
or factors as they may deem necessary; to determine their duties, to fix, and
from time to time, to change their salaries or remuneration, and to require
security as and when they think fit;
(f) To manage the property, business and affairs of the
Corporation and the Directors, as a Board, are hereby invested in such
management with all the powers which the Corporation itself possesses so far as
such delegation of power is not incompatible with the provisions of these
By-Laws, or the laws of the State of Florida.
SECTION 5. Any Director shall be subject to removal by the majority
vote of the holders of the common voting stock, at a special meeting called for
that purpose, with or without cause.
SECTION 6. If the office of any Director shall become vacant by reason
of death, resignation, removal, or other reason, the remaining Directors, by a
majority vote may, at a meeting of the Board of Directors specially called,
elect a successor who shall hold office for the unexpired term and until his
successor is elected and qualifies, unless a special meeting of the holders of
the common voting stock is duly called for the purpose of filling the vacancy
and is actually held prior to the annual meeting.
SECTION 7. Directors, as such, shall not receive any stated salary for
their services, but by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board, provided that nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
5
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ARTICLE VI.
MEETINGS OF THE BOARD
SECTION 1. The meetings of the Board of Directors may be held at such
place within the State of Florida as a majority of the Directors may from time
to time appoint or as may be designated in the notice calling the meeting. If no
place is so appointed or designated, the meeting shall be held at the principal
place of business of the Corporation.
SECTION 2. The first meeting of each newly elected Board may be held at
such time and place as shall be fixed by the Shareholders at the meeting at
which such Directors were elected and no notice shall be necessary to the newly
elected Directors in order to legally constitute the meeting, provided a
majority of the whole Board shall be present; or it may convene at such time and
place as may be fixed by the consent in writing of all the Directors.
SECTION 3. Regular meetings of the Board shall be held at such time as
shall from time to time be determined by a majority of the Directors, on five
(5) days notice to each Director, given personally or by mail or by telegram.
SECTION 4. Special meetings of the Board may be called by the President
on three (3) days' notice to each Director, either personally or by mail or by
telegram, said notice specifying the purpose(s) of the special meeting; special
meetings shall be called by the President or Secretary in a like manner and on
like notice on the written request of two (2) Directors.
SECTION 5. At all meetings of the Board, a majority of the Directors in
office shall be necessary to constitute a quorum for the transaction of
business, and the acts of a majority of the Directors present at a meeting at
which a quorum is present, shall be the acts of the Board of Directors, except
as otherwise specifically provided by statute or by the Articles of
Incorporation, or by these By-Laws. If a quorum shall not be present at any
meeting of Directors, the Directors present thereat may adjourn the meeting from
time to time without notice other than announcement at the meeting, until a
quorum shall be present.
SECTION 6. If all the Directors shall severally or collectively consent
in writing to any action to be taken by the Corporation, such action shall be as
valid a corporate action as though it had been authorized at a meeting of the
Board of Directors. All consents shall be filed with the Secretary of the
Corporation.
SECTION 7. If set forth in the notice calling a regular special meeting
of the Board of Directors, or if consented to by all of the Board of Directors,
the regular or special meeting Board of Directors may be held by conference
telephone, with majority of the Directors present by telephone to constitute
quorum of the meeting. In addition, at the discretion of majority of the Board
of Directors present at a duly called noticed regular or special meeting of the
Board of Directors, one
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or more of the Directors may participate in the meeting by conference telephone
in lieu of physically attending the meeting.
ARTICLE VII.
OFFICERS
SECTION 1. The officers of the Corporation shall be chosen by the
Directors and shall be a president, a vice-president, a secretary, and a
treasurer. In addition, the Board of Directors may appoint any such other
vice-presidents, assistant secretaries, or assistant treasurers it deems
necessary to efficiently operate the Corporation. The president, secretary,
treasurer, vice-president and any other vice-presidents, assistant secretaries,
or assistant treasurers shall be natural persons of full age.
Any or all of the foregoing offices may be held by the same person.
SECTION 2. The Board of Directors, at their first meeting of each
calendar year commencing in 1993 shall elect a president, secretary and
treasurer and shall appoint such vice-presidents, assistant secretaries and
assistant treasurers as necessary.
SECTION 3. The Board of Directors may also choose such other officers
and assistant officers and agents as the needs of the Corporation may require,
who shall hold their offices for such terms and shall have such authority and
shall perform such duties as from time to time shall be determined by resolution
of the Board.
SECTION 4. The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
SECTION 5. The officers of the Corporation shall hold office for one
year and until their successors are chosen and have qualified. An officer or
agent, elected or appointed by the Board of Directors, may be removed by the
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby. If the office of any officer becomes vacant
for any reason, the vacancy shall be filled by the Board of Directors.
SECTION 6. The President shall be the chief executive officer of the
Corporation; he shall preside at all meetings of the Shareholders and Directors;
shall have general and active management of the business of the Corporation, and
shall see that all orders and resolutions of the Board are carried into effect.
SECTION 7. The President shall execute bonds, mortgages other contracts
requiring a seal, under the seal of and the Corporation, except where required
or permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
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SECTION 8. The Vice-President, if one is appointed, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President, and shall perform such other duties as shall from time
to time be imposed by the Board of Directors.
SECTION 9. The Secretary shall attend all meetings of the Shareholders
and of the Board of Directors, and shall act as clerk thereof. He shall record
the minutes of all transactions at each meeting in a book to be kept for that
purpose, wherein shall also be a record of all the votes of the Corporation. The
Secretary shall give or cause to be given notice of all meetings of the
Shareholders or the Board of Directors, where notice is required by statute or
these By-Laws, and shall, in addition thereto, perform such other duties as may
be prescribed by the Board of Directors or the President under whose supervision
he shall be. The Secretary shall keep in his custody the corporate seal, and
shall affix it to any instrument when authorized so to do by the Board of
Directors or the President, and when so affixed it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary. The
Assistant Secretary, if one is elected, shall perform all the duties of the
Secretary in the event the Secretary is absent for any reason and shall assist
the Secretary in the performance of his duties.
SECTION 10. The Treasurer shall have the care and custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation, and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as shall be designated by the Board of
Directors. The Assistant Treasurer, if one is elected, shall perform all the
duties of the Treasurer in the event the Treasurer is absent for any reason and
shall assist the Treasurer in the performance of his duties.
SECTION 11. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the President and Directors, at the regular meeting of the
Board of Directors, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the Corporation, in
addition, the Treasurer shall render an annual statement as to the financial
condition of the Corporation; he shall have charge and custody of the original
stock books, the stock transfer books and stock ledgers, shall act as the stock
transfer agent, and perform such other duties as may be incident to the office
of Treasurer.
SECTION 12. The Treasurer shall, if required by the Board of Directors,
give the Corporation a bond, in such sum, and with such surety or sureties as
may be satisfactory to the Board of Directors for the faithful discharge of the
duties of his office, and for the restoration of the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
8
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ARTICLE VIII.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. Litigation Brought by Third Parties. Each individual who was
or is a party or is threatened to be a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, or other, than an action by or in the right of the Corporation,
by reason of the fact that he is or was a Director, officer, employee or agent
of the Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise, indemnified by the Corporation against all
expenses, attorney's fees, judgments, fines, amounts paid in and all other
liabilities actually and reasonably incurred or imposed upon him in connection
with or arising from such action, suit, or proceeding: PROVIDED, HOWEVER, that
the Corporation shall not indemnify any such person, whose actions or failure to
act on behalf of the Corporation which gives rise to the claim for
indemnification, is determined by a court to constitute wilful misconduct or
recklessness.
SECTION 2. Litigation by or in the Right of the Corporation. Each
person, his heirs, executors or administrators, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Corporation only
as to the litigation expenses, including attorney's fees, actually and
reasonably incurred or imposed upon him in connection with the defense or
settlement of such action or suit; PROVIDED, HOWEVER, that the Corporation shall
not indemnify any person whose actions or failure to act has been determined by
a court to constitute willful misconduct or recklessness.
SECTION 3. Indemnification as of Right. To the extent that a Director,
officer, employee, or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
1 and 2, or in defense of any claim, issue or matter therein, he shall have the
absolute right to be indemnified against expenses, including attorney fees,
actually or reasonably incurred by him in connection therewith. The
determination of what expenses are actually or reasonably incurred shall be
determined by the Board of Directors, but in the event of disagreement, the
person making the request may apply to the Circuit Court of Lee County, Florida,
or in any other state court of appropriate jurisdiction for such determination.
SECTION 4. Advances for Expenses. Expenses incurred defending a civil
or criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by the
Board of Directors after making a determination upon the basis of the facts then
available that the person making the request for an advance is entitled thereto
under the standards of the applicable Section 1 or 2. Such advance shall be
granted only upon receipt of an undertaking by or on behalf of the Director,
officer, employee or agent to repay
9
<PAGE>
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 5. Non-Exclusivity and Non-Duplication. The indemnification
provided by this Article shall not be deemed exclusive of any rights to which
any person seeking indemnification may be entitled under any other By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to actions in his official capacity and as to actions in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators of such person. The indemnification
provided by this Article shall not be exclusive of any powers, rights,
agreements, or undertaking which may be legally permissible or authorized by or
under any applicable law. Notwithstanding any other provision set forth in this
Article, the indemnification authorized and provided hereby shall be applicable
only to the extent that any such indemnification shall not duplicate any
indemnification or reimbursement which such person has received or shall receive
otherwise than under this Article.
SECTION 6. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability asserted against him and incurred by him in any such capacity
under the provisions of this Article or otherwise, upon such terms and
conditions as the Corporation may deem requisite, including a requirement that
any such person must contribute a portion or all of the cost of maintaining such
insurance.
ARTICLE IX
PERSONAL LIABILITY OF DIRECTORS
SECTION 1. A Director of the Corporation shall not be personally liable
for monetary damages to the Corporation or any other person for any action
taken, or any failure to take any action, regarding corporate management or
policy, unless: (a) the Director has breached or failed to perform the duties of
his office as set forth under the laws of the State of Florida; and (b) the
breach of, or failure to perform, those duties constitutes (1) a violation of
any criminal statute, unless the director had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (2) selfdealing resulting in a direct or indirect personal benefit;
(3) an unlawful distribution; (4) conscious disregard for the best interest of
the Corporation; (5) willful misconduct; or (6) recklessness.
10
<PAGE>
ARTICLE X.
CERTIFICATE OF SHARES
SECTION 1. The certificates of shares of the Corporation shall be
numbered and registered in the share register as they are issued. They shall
exhibit the registered holder's name and the number and class of shares
represented thereby and the par value, if any, of each share.
SECTION 2. Every share certificate shall be signed by the President and
the Secretary, or the Treasurer and shall be sealed with the corporate seal. In
case any officer who has signed shall have ceased to be such officer because of
death, resignation, or otherwise, before the certificate is issued, it may be
issued by the Corporation with the same effect as if the officer had not ceased
to be such at the date of its issue.
SECTION 3. In the event of dissolution, the distribution of the assets
shall inure only to the benefit of the owners of the outstanding shares of
stock; said distribution of the assets to the owners of the outstanding shares
shall be in the same proportion which the number of shares of outstanding stock
held by each person bears to the total of shares outstanding.
SECTION 4. When the holder of any stock certificate, or his personal
representative shall allege and represent to the Treasurer of the Corporation
that a certificate of stock has been lost or destroyed or mutilated, the
Directors may direct that a duplicate certificate be issued, provided, however,
that the Board of Directors shall have the right to demand that the said holder,
or his personal representative, first give to the Corporation a bond with
sufficient surety in a sum equal to double the book value of the stock
represented by said certificate, to indemnify it against any loss which it may
in the future sustain by reason of the issuance of said duplicate certificate,
while the original certificate remains outstanding.
SECTION 5. (a) Provided that the terms of any shareholders agreement
which may be in effect from time to time are complied with, and all applicable
securities laws are complied with, Shares of the stock of this Corporation may
be transferred upon surrender of the certificate thereof to the Treasurer of the
Corporation endorsed by the holder named therein, or his attorney, lawfully
appointed or constituted in writing, which transfer shall immediately be entered
upon the proper books of the Corporation by the Treasurer thereof.
(b) Upon compliance with these terms, the Treasurer shall
cancel the surrendered certificate by an appropriate marking across its face,
and shall issue a new certificate therefore, indicating the new holder, and, in
the event that he had only a special interest in said stock, the nature of the
special interest.
SECTION 6. The Board of Directors may fix a time, not less than ten
(10) nor more than thirty (30) days prior to the date of any meeting of
Shareholders, as a record date for the determination of the Shareholders
entitled to receive payment of any such dividend or distribution,
11
<PAGE>
or to receive any such allotment of rights, or to exercise their rights in
respect to any such change, conversion or exchange of shares. In such case, only
such Shareholders as shall be Shareholders of record on the date so fixed shall
be entitled to notice of, and to vote at, such meeting, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights as the case may be, notwithstanding any transfer of any shares on the
books of the Corporation after any record date so fixed. The Board of Directors
may close the books of the Corporation against transfers of shares during the
whole or any part of such period and, in such case, written or printed notice
thereof shall be mailed at least five (5) days before the closing thereof to
each Shareholder of record at the address appearing on the records of the
Corporation or supplied by said Shareholder to the Corporation for the purpose
of notice.
SECTION 7. (a) Any stock acquired by the Corporation shall be held in
the name of the Corporation, subject to the control of the Board of Directors,
which may, offer it for sale at such price as it may deem proper to such entity
or entities as it may select. The Shareholders shall not have any preemptive
rights in the issuance of treasury stock nor in the issuance of authorized but
unissued stock.
(b) Any purchaser shall be subject to these By-Laws and any
provisions of a Shareholders Agreement that may be in effect at the time of
purchase.
SECTION 8. When issued, all certificates of stock shall be
conspicuously noted that they are issued subject to all limitations imposed by
these By-Laws, any Shareholders Agreement that may be in effect from time to
time, and any applicable Federal and State Securities Laws.
ARTICLE XI.
DIVIDENDS
SECTION 1. Dividends or distributions upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation relating
thereto, if any, may be declared by the Board of Directors at any regular or
special meeting pursuant to law. Dividends may be paid in cash, in property or
in shares of the Corporation.
SECTION 2. Before payment of any dividend or distribution to
Shareholders, there may be set aside out of any funds of the Corporation
available for dividends or distributions, such sum or sums as the Directors from
time to time in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends or distributions, or for
repairing or maintaining the property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interests of the
Corporation; PROVIDED, HOWEVER, that the Board of Directors may abolish any
reserve in the same manner as it was created.
12
<PAGE>
ARTICLE XII.
FINANCIAL REPORT TO SHAREHOLDERS
SECTION 1. The Directors shall, at their sole discretion, provide the
Shareholders all financial reports prepared for the Corporation at the end of
the fiscal year or at any time during the fiscal year. Said financial reports
may include, without limitation, a profit and loss statement, a balance sheet
and a statement of change in retained earnings. If provided, said financial
reports shall be provided within one Hundred Twenty (120) days of the close of
the Corporation's fiscal year. Any Shareholder shall have the right to demand
copies of any or all financial reports, if not provided by the Board of
Directors.
ARTICLE XIII.
CHECKS AND NOTES
SECTION 1. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate. If not specifically designated, the foregoing shall be
signed by the President and attested by the Secretary.
ARTICLE XIV.
FISCAL YEAR
The fiscal year shall begin the first day of January in each year.
ARTICLE XV.
NOTICES
SECTION 1. Whenever under the provisions of the statutes, or of the
Articles of Incorporation, or of these By-Laws, notice is required to be given
to any person, it may be given to such person either personally or by sending a
copy thereof through the mail, or by telegram (charges prepaid), to his address
appearing on the books of the Corporation or supplied by him to the Corporation
for the purpose of notice, or, in default of other address, to such person at
the General Post office in Cape Coral, Florida. If notice is sent by mail or by
telegram, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States Mail or with a telegraph office for
transmission to such person.
SECTION 2. Any notice required to be given to any person may be waived
in writing signed by the person entitled to such notice whether before or after
the time stated therein. Attendance of any person entitled to notice, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting.
13
<PAGE>
ARTICLE XVI.
AMENDMENTS TO BY-LAWS
SECTION 1. Amendments to these By-Laws may be made by a vote of the
Shareholders representing a majority of all the stock issued and outstanding, at
any annual Shareholders' meeting when the proposed amendment has been set forth
in the notice of such meeting.
SIGNATURE AND CERTIFICATION
I certify that the foregoing are the true and correct By-Laws (together
with all amendments thereto) of MAGIC PROMOTIONS, INC.
DATED: March [ ], 1993 /s/ Lee D. Marshall
---------------------- -------------------------------
LEE D. MARSHALL, VICE PRESIDENT
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<PAGE>
MAGICWORKS
ENTERTAINMENT
PROPOSED JOINT VENTURE BETWEEN
MAGICWORKS ENTERTAINMENT, INC.
and
WORLDWIDE LICENSING & MERCHANDISING, INC.
Term Sheet
1. Magicworks Entertainment, Inc. ("Magic") and Worldwide Licensing &
Merchandising, Inc. ("Worldwide") will enter into a joint venture (the "Joint
Venture") to produce and present in Orlando, Florida exhibits of some or all of
the floating Titanic artifacts recovered from the surface waters of the Titanic
wreck site and collected by Dennis Cochran, as well as other Titanic related
artifacts (the "Titanic Artifacts").
2. The Joint Venture will take the form of a limited liability company
or some other entity mutually agreed upon by the tax and legal counsel for the
parties. The operational guidelines for the Joint Venture will be the subject of
mutual agreement.
3. Worldwide is presently considering opening similar types of exhibits
in other locations featuring the Titanic artifacts. The parties will negotiate
in good faith to determine whether the proposed Joint Venture will include any
of such other locations.
4. Worldwide's capital contribution to the Joint Venture will be a
royalty free license to use and commercially exploit the Titanic Artifacts.
Magic will contribute the initial capitalization for construction of the exhibit
and start-up and operating costs of the exhibit as set forth in the Budget
attached hereto as Schedule A as Magic's capital contribution.
5. The net operating cash of the Joint Venture will be distributed as
follows: 100% of all revenue to Magic until recoupment of the financing, and
thereafter, all profits will be distributed 50% to Magic and 50% to Worldwide.
6. The parties will mutually agree on the payment of a finder's fee to
Ross Todd.
7. The Joint Venture will be subject to the execution of a definitive
agreement containing terms and conditions as are customary in transactions of
this nature for the protection of all parties.
<PAGE>
WORLDWIDE LICENSING &
MERCHANDISING, INC.
June , 1998 By: /s/ G. Michael Harris
---------- G. Michael Harris, WLM, Inc.
(President)
MAGICWORKS ENTERTAINMENT, INC
June , 1998 By: /s/ John [illegible]
------------ --------------------
<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation of MAGICWORKS EXHIBITIONS, INC., a corporation organized under the
laws of the State of Florida, filed on July 30, 1998, as shown by the records of
this office.
The document number of this corporation is P98000066960.
Given under my hand and the
Great Seal of the State of Florida at
Tallahassee, the Capitol, this the
Fifteenth day of October, 1998
/s/ Sandra B. Mortham
----------------------
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
MAGICWORKS EXHIBITIONS, INC.
ARTICLE I
The name of the corporation is MAGICWORKS EXHIBITIONS, INC. (the
"Corporation").
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is 930 Washington Avenue, 5th Floor, Miami Beach, Florida 33139.
ARTICLE III
The capital stock authorized, the par value thereof, and the
characteristics of such stock shall be as follows:
NUMBER OF SHARES PAR VALUE CLASS OF
AUTHORIZED PER SHARE STOCK
- ---------------- --------- --------
1,000 $ 0.01 Common
ARTICLE IV
The Corporation shall hold a special meeting of shareholders only:
(1) On call of the Board of Directors or persons authorized to do
so by the Corporation's Bylaws; or
(2) If the holders of not less than 50 percent of the shares
entitled to vote on any issue proposed to be considered at the
proposed special meeting sign, date, and deliver to the
Corporation's secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to
be held.
<PAGE>
ARTICLE V
The street address of the Corporation's initial registered office is
1201 Hays Street, City of Tallahassee, County of Leon, State of Florida 32301,
and the name of its initial registered agent at such office is Corporation
Service Company.
ARTICLE VI
The Board of Directors of the Corporation shall consist of at least one
director, With the exact number to be fixed from time to time in the manner
provided in the Corporation's Bylaws. The number of directors constituting the
initial Board of Directors is three (3), and the names and addresses of the
members of the initial Board of Directors, who will serve as the Corporation's
directors until successors are duly elected and qualified are:
Brad L. Krassner
930 Washington Avenue, 5th Floor
Miami Beach, Florida 33139
Lee D. Marshall
930 Washington Avenue, 5th Floor
Miami Beach, Florida 33139
Joe Marsh
930 Washington Avenue, 5th Floor
Miami Beach, Florida 33139
ARTICLE VII
The name of the Incorporator is Gail Shelby and the address of the
Incorporator is 1201 Hays Street, Tallahassee, Florida 32301.
ARTICLE VIII
This Corporation shall indemnify and shall advance expenses on behalf
of its officers and directors to the fullest extent not prohibited by law in
existence either now or hereafter.
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Incorporator named
above, for the purpose of forming a corporation pursuant to the Florida Business
Corporation Act of the State of Florida has signed these Articles of
Incorporation this 30th day of July, 1998.
/s/ Gail Shelby
-------------------------
Gail Shelby, Incorporator
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
The undersigned, having been named the Registered Agent of MAGICWORKS
EXHIBITIONS, INC. accepts such designation and is familiar with, and accepts,
the obligations of such position, as provided in Florida Statutes ss. 607.0505.
Corporation Service Company
/s/ Gail Shelby
---------------------------------------
Gail Shelby, Agent for Registered Agent
Dated: July 30, 1998
-3-
<PAGE>
BYLAWS
OF
MAGICWORKS EXHIBITIONS, INC.
(A Florida Corporation)
<PAGE>
[TABLE OF CONTENTS DELETED]
<PAGE>
MAGICWORKS EXHIBITIONS, INC.
BYLAWS
ARTICLE ONE
OFFICES
1. Registered Office. The registered office of MAGICWORKS
EXHIBITIONS, INC., a Florida corporation (the "Corporation"), shall be located
in the City of Tallahassee, State of Florida, unless otherwise designated by the
Board of Directors.
2. Other Offices. The Corporation may also have offices at
such other places, either within or without the State of Florida, as the Board
of Directors of the Corporation (the "Board of Directors") may from time to time
determine or as the business of the Corporation may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
1. Place. All annual meetings of shareholders shall be held at
such place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Special meetings of shareholders may be held at such
place, within or without the State of Florida, and at such time as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2. Time of Annual Meetings. Annual meetings of shareholders
shall be held on such date and at such time fixed, from time to time, by the
Board of Directors, provided that there shall be an annual meeting held every
year at which the shareholders shall elect a Board of Directors and transact
such other business as may properly be brought before the meeting.
3. Call of Special Meetings. Special meetings of the
shareholders shall be held if called by the Board of Directors, the President,
or if the holders of not less than fifty percent (50%) of all the votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date, and deliver to the Secretary one or more written demands for
the meeting describing the purpose or purposes for which it is to be held.
4. Conduct of Meetings. The Chairman of the Board (or in his
absence, the President or such other designee of the Chairman of the Board)
shall preside at the annual and special meetings of shareholders and shall be
given full discretion in establishing the rules and procedures to be followed in
conducting the meetings, except as otherwise provided by law or in these Bylaws.
<PAGE>
5. Notice and Waiver of Notice. Except as otherwise provided
by law, written or printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the day of the meeting, either personally or by first-class
mail, by or at the direction of the President, the Secretary, or the officer or
person calling the meeting, to each shareholder of record entitled to vote at
such meeting. If the notice is mailed at least thirty (30) days before the date
of the meeting, it may be done by a class of United States mail other than
first-class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation, with postage
thereon prepaid. If a meeting is adjourned to another time and/or place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fixes a new record date for the adjourned
meeting. Whenever any notice is required to be given to any shareholder, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether signed before, during or after the time of the meeting stated
therein, and delivered to the Corporation for inclusion in the minutes or filing
with the corporate records, shall be equivalent to the giving of such notice.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the shareholders need be specified in any written waiver of
notice. Attendance of a person at a meeting shall constitute a waiver of (a)
lack of or defective notice of such meeting, unless the person objects at the
beginning to the holding of the meeting or the transacting of any business at
the meeting, or (b) lack of defective notice of a particular matter at a meeting
that is not within the purpose or purposes described in the meeting notice,
unless the person objects to considering such matter when it is presented.
6. Business of Special Meeting. Business transacted at any
special meeting shall be confined to the purposes stated in the notice thereof.
7. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at a meeting only if a quorum of these shares exists
with respect to that matter. Except as otherwise provided in the Articles of
Incorporation or by law, a majority of the shares entitled to vote on the matter
by each voting group, represented in person or by proxy, shall constitute a
quorum at any meeting of shareholders, but in no event shall a quorum consist of
less than one-third (1/3) of the shares of each voting group entitled to vote.
If less than a majority of outstanding shares entitled to vote are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. After a quorum has been established at
any shareholders' meeting, the subsequent withdrawal of shareholders, so as to
reduce the number of shares entitled to vote at the meeting below the number
required for a quorum, shall not affect the validity of any action taken at the
meeting or any adjournment thereof. Once a share is represented for any purpose
at a meeting, it is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting unless a new record date is or
must be set for that adjourned meeting.
2
<PAGE>
8. Voting Per Share. Except as otherwise provided in the
Articles of Incorporation or by law each shareholder is entitled to one (1) vote
for each outstanding share held by him on each matter voted at a shareholders'
meeting.
9. Voting of Shares. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation, domestic or foreign, may be voted by the
officer, agent or proxy designated by the bylaws of such corporate shareholder
or, in the absence of any applicable bylaw, by such person or persons as the
board of directors of the corporate shareholder may designate. In the absence of
any such designation, or, in case of conflicting designation by the corporate
shareholder, the chairman of the board, the president, any vice president, the
secretary and the treasurer of the corporate shareholder, in that order, shall
be presumed to be fully authorized to vote such shares. Shares held by an
administrator, executor, guardian, personal representative, or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name or the name of his
nominee. Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by such person without the transfer thereof into his name. If shares stand of
record in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary of the Corporation is given
notice to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided, then
acts with respect to voting shall have the following effect: (a) if only one
votes, in person or by proxy, his act binds all; (b) if more than one vote, in
person or by proxy, the act of the majority so voting binds all; (c) if more
than one vote, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is entitled to vote the share or shares in
question proportionally; or (d) if the instrument or order so filed shows that
any such tenancy is held in unequal interest, a majority or a vote evenly split
for purposes hereof shall be a majority or a vote evenly split in interest. The
principles of this paragraph shall apply, insofar as possible, to execution of
proxies, waivers, consents, or objections and for the purpose of ascertaining
the presence of a quorum.
10. Proxies. Any shareholder of the Corporation, other person
entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact
for such persons may vote the shareholder's shares in person or by proxy. Any
shareholder of the Corporation may appoint a proxy to vote or otherwise act for
him by signing an appointment form, either personally or by his
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the Corporation to
accept the proxy's authority unless notice of the death or incapacity is
received by the
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secretary or other officer or agent authorized to tabulate votes before the
proxy exercises his authority under the appointment. An appointment of a proxy
is revocable by the shareholder unless the appointment is coupled with an
interest.
11. Shareholder List. After fixing a record date for a meeting
of shareholders, the Corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class and series, if any,
of shares held by each. The shareholders' list must be available for inspection
by any shareholder for a period of ten (10) days prior to the meeting or such
shorter time as exists between the record date and the meeting and continuing
through the meeting at the Corporation's principal office, at a place identified
in the meeting notice in the city where the meeting will be held, or at the
office of the Corporation's transfer agent or registrar. Any shareholder of the
Corporation or his agent or attorney is entitled on written demand to inspect
the shareholders' list (subject to the requirements of law), during regular
business hours and at his expense, during the period it is available for
inspection. The Corporation shall make the shareholders' list available at the
meeting of shareholders, and any shareholder or his agent or attorney is
entitled to inspect the list at any time during the meeting or any adjournment.
12. Action Without Meeting. Any action required by law to be
taken at a meeting of shareholders, or any action that may be taken at a meeting
of shareholders, may be taken without a meeting or notice if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted with respect to the subject
matter thereof, and such consent shall have the same force and effect as a vote
of shareholders taken at such a meeting.
13. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than sixty
(60) days, and, in case of a meeting of shareholders, not less than ten (10)
days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section 13, such determination
shall apply to any adjournment thereof, except where the Board of Directors
fixes a new record date for the adjourned meeting or as required by law.
14. Inspectors and Judges. The Board of Directors in advance
of any meeting may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may
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be, to act at the meeting or any adjournment(s) thereof. If any inspector or
inspectors, or judge or judges, are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors or judges. In case any
person who may be appointed as an inspector or judge and shall receive votes,
ballots and consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate votes, ballots and
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting, the inspector or inspectors or judge or judges, if
any, shall make a report in writing of any challenge, question or matter
determined by him or them, and execute a certificate of any fact found by him or
them.
15. Voting for Directors. Unless otherwise provided in the
Articles of Incorporation, directors shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present.
ARTICLE THREE
DIRECTORS
1. Number, Election and Term. The number of directors of the
Corporation shall be fixed from time to time, within the limits specified by the
Articles of Incorporation, by resolution of the Board of Directors; provided,
however, no director's term shall be shortened by reason of a resolution
reducing the number of directors. The directors shall be elected at the annual
meeting of the shareholders, except as provided in Section 2 of this Article,
and each director elected shall hold office for the term for which he is elected
and until his successor is elected and qualified or until his earlier
resignation, removal from office or death. Directors must be natural persons who
are 18 years of age or older but need not be residents of the State of Florida,
shareholders of the Corporation or citizens of the United States. Any director
may be removed at any time, with or without cause, at a special meeting of the
shareholders called for that purpose.
2. Vacancies. A director may resign at any time by giving
written notice to the Corporation, the Board of Directors or the Chairman of the
Board. Such resignation shall take effect when the notice is delivered unless
the notice specifies a later effective date, in which event the Board of
Directors may fill the pending vacancy before the effective date if they provide
that the successor does not take office until the effective date. Any vacancy
occurring in the Board of Directors and any directorship to be filled by reason
of an increase in the size of the Board of Directors shall be filled by the
affirmative vote of a majority of the current directors though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
or special meeting of the shareholders called for that purpose, unless otherwise
provided by law. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, or until the next election of one
or more directors by shareholders if the vacancy is caused by an increase in the
number of directors.
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3. Powers. Except as provided in the Articles of Incorporation
and by law, all corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of, its Board of Directors.
4. Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Florida.
5. Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held, without call or notice, immediately following
each annual meeting of shareholders.
6. Regular Meetings. Regular meetings of the Board of
Directors may also be held without notice at such time and at such place as
shall from time to time be determined by the Board of Directors.
7. Special Meetings and Notice. Special meetings of the Board
of Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
Written notice of special meetings of the Board of Directors shall be given to
each director at least forty-eight (48) hours before the meeting. Except as
required by statute, neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting. Notices to directors shall be
in writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall be
deemed to be given at the time when the same shall be received. Notice to
directors may also be given by telegram, teletype or other form of electronic
communication. Notice of a meeting of the Board of Directors need not be given
to any director who signs a written waiver of notice before, during or after the
meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting and a waiver of any and all objections to the place of
the meeting, the time of the meeting and the manner in which it has been called
or convened, except when a director states, at the beginning of the meeting or
promptly upon arrival at the meeting, any objection to the transaction of
business because the meeting is not lawfully called or convened.
8. Quorum; Required Vote; Presumption of Assent. A majority of
the number of directors fixed by, or in the manner provided in, these bylaws
shall constitute a quorum for the transaction of business; provided, however,
that whenever, for any reason, a vacancy occurs in the Board of Directors, a
quorum shall consist of a majority of the remaining directors until the vacancy
has been filled. The act of a majority of the directors present at a meeting at
which a quorum is present when the vote is taken shall be the act of the Board
of Directors. A director of the Corporation who is present at a meeting of the
Board of Directors or a committee of the Board of Directors when corporate
action is taken shall be presumed to have assented to the action taken, unless
he objects at the beginning of the meeting, or promptly upon his arrival, to
holding the meeting or transacting specific business at the meeting, or he votes
against or abstains from the action taken.
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9. Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if a consent in writing, setting forth the action taken,
is signed by all of the members of the Board of in any document.
10. Conference Telephone or Similar Communications Equipment
Meetings. Members of the Board of Directors may participate in a meeting of the
Board by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation in such a meeting shall constitute presence in
person at the meeting, except where a person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
the meeting is not lawfully called or convened.
11. Committees. The Board of Directors, by resolution adopted
by a majority of the full Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of which,
to the extent provided in such resolution, shall have and may exercise all of
the authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full Board of Directors is required
by statute. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies in the membership of a committee shall be filled by the Board of
Directors at a regular or special meeting of the Board of Directors. The
executive committee shall keep regular minutes of its proceedings and report the
same to the Board of Directors when required. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
13/ Chairman of the Board. The Board of Directors may, in its
discretion, choose a chairman of the board who shall preside at meetings of the
shareholders and of the directors and shall be an ex officio member of all
standing committees. The Chairman of the Board shall have such other powers and
shall perform such other duties as shall be designated by the Board of
Directors. The Chairman of the Board shall be a member of the Board of Directors
but no other officers of the Corporation need be a director. The Chairman of the
Board shall serve until his successor is chosen and qualified, but he may be
removed at any time by the affirmative vote of a majority of the Board of
Directors.
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ARTICLE FOUR
OFFICERS
1. Positions. The officers of the Corporation shall consist of
a President, a Secretary and a Treasurer, and, if elected by the Board of
Directors by resolution, a Chairman of the Board and/or one or more Vice
Presidents. Any two or more offices may be held by the same person.
2. Election of Specified Officers by Board. The Board of
Directors at its first meeting after each annual meeting of shareholders shall
elect a President, a Secretary, a Treasurer and may elect one or more Vice
Presidents.
3. Election or Appointment of Other Officers. Such other
officers and assistant officers and agents as may be deemed necessary may be
elected or appointed by the Board of Directors, or, unless otherwise specified
herein, appointed by the President of the Corporation. The Board of Directors
shall be advised of appointments by the President at or before the next
scheduled Board of Directors meeting.
4. Salaries. The salaries of all officers of the Corporation
to be elected by the Board of Directors pursuant to Article Four, Section 2
hereof shall be fixed from time to time by the Board of Directors or pursuant to
its discretion. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the President of the Corporation
or pursuant to his direction.
5. Term; Resignation. The officers of the Corporation shall
hold office until their successors are chosen and qualified. Any officer or
agent elected or appointed by the Board of Directors or the President of the
Corporation may be removed, with or without cause, by the Board of Directors.
Any officers or agents appointed by the President of the Corporation pursuant to
Section 3 of this Article Four may also be removed from such officer positions
by the President, with or without cause. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise shall be filled by
the Board of Directors, or, in the case of an officer appointed by the President
of the Corporation, by the President or the Board of Directors. Any officer of
the Corporation may resign from his respective office or position by delivering
notice to the Corporation. Such resignation is effective when delivered unless
the notice specifies a later effective date. If a resignation is made effective
at a later date and the Corporation accepts the future effective date, the Board
of Directors may fill the pending vacancy before the effective date if the Board
provides that the successor does not take office until the effective date.
6. President. The President shall be the Chief Executive
Officer of the Corporation, shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. In the absence of the Chairman of
the Board or in the event the Board of Directors shall not have designated a
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chairman of the board the President shall preside at meetings of the
shareholders and the Board of Directors.
7. Vice Presidents. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President. They shall perform such other duties and have such
other powers as the Board of Directors shall prescribe or as the President may
from time to time delegate.
8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all the
proceedings of the meetings of the shareholders and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall be. He shall keep in
safe custody the seal of the Corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it.
9. Treasurer. The Treasurer shall have the custody of
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors at its regular meetings or
when the Board of Directors so requires an account of all his transactions as
treasurer and of the financial condition of the Corporation unless otherwise
specified by the Board of Directors, the Treasurer shall be the Corporation's
Chief Financial Officer.
10. Other Officers, Employees and Agents. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to him by the Board of Directors, the officer so appointing him
and such officer or officers who may from time to time be designated by the
Board of Directors to exercise such supervisory authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
1. Issue of Certificates. The Corporation shall deliver
certificates representing all shares to which shareholders are entitled; and
such certificates shall be signed by the Chairman of the Board, President or a
Vice President, and by the Secretary or an Assistant Secretary of the
Corporation, and may be sealed with the seal of the Corporation or a facsimile
thereof.
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2. Legends for Preferences and Restrictions on Transfer. The
designations, relative rights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or transfer and there shall be set forth or fairly summarized upon the
certificate, or the certificate shall indicate that the Corporation will furnish
to any shareholder upon request and without charge, a full statement of such
restrictions. If the Corporation issues any shares that are not registered under
the Securities Act of 1933, as amended, and registered or qualified under the
applicable state securities laws, the transfer of any such shares shall be
restricted substantially in accordance with the following legend:
"THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF
THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME."
3. Facsimile Signatures. The signatures of the Chairman of the
Board, the President or a Vice President and the Secretary or Assistant
Secretary upon a certificate may be facsimiles, if the certificate is manually
signed by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. In case any officer who
has signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of the issuance.
4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost or destroyed.
5. Transfer of Shares. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new
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certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
6. Registered Shareholders. The Corporation shall be entitled
to recognize the exclusive rights of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Florida.
7. Redemption of Control Shares. As provided by the Florida
Business Corporation Act, if a person acquiring control shares of the
Corporation does not file an acquiring person statement with the Corporation,
the Corporation may redeem the control shares at fair market value at any time
during the 60-day period after the last acquisition of such control shares. If a
person acquiring control shares of the Corporation files an acquiring person
statement with the Corporation, the control shares may be redeemed by the
Corporation only if such shares are not accorded full voting rights by the
shareholders as provided by law.
ARTICLE SIX
GENERAL PROVISIONS
1. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
cash, property, or its own shares pursuant to law and subject to the provisions
of the Articles of Incorporation.
2. Reserves. The Board of Directors may by resolution create a
reserve or reserves out of earned surplus for any proper purpose or purposes,
and may abolish any such reserve in the same manner.
3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
4. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors and may be otherwise changed from time to time
by resolution of the Board of Directors.
5. Seal. The corporate seal shall have inscribed thereon the
name and state of incorporation of the Corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
6. Gender. All words used in these Bylaws in the masculine
gender shall extend to and shall include the feminine and neuter genders.
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ARTICLE SEVEN
AMENDMENTS OF BYLAWS
Unless otherwise provided by law, these Bylaws may be altered,
amended or repealed or new Bylaws may be adopted by action of the Board of
Directors.
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STATE OF FLORIDA
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of MAGICWORKS FASHION MANAGEMENT, INC., a corporation organized
under the laws of the State of Florida, filed on June 10, 1998, as shown by the
records of this office.
The document number of this corporation is P98000052303.
Given under my hand and the Great Seal of the State of Florida at Tallahassee,
the Capitol, this the Fifteenth day of October, 1998
/s/ S.B.M.
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
MAGICWORKS FASHION MANAGEMENT, INC.
ARTICLE I
The name of the corporation is MAGICWORKS FASHION MANAGEMENT, INC. (the
"Corporation").
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is 930 Washington Avenue, 5th Floor, Miami Beach. Florida 33139.
ARTICLE III
The capital stock authorized, the par value thereof. and the
characteristics of such stock shall be as follows:
Number of Shares Authorized: 1,000; Par Value Per Share: $0.01; Class
of Stock: Common
ARTICLE IV
The Corporation shall hold a special meeting of shareholders only:
(1) On call of the Board of Directors or persons authorized to do
so by the Corporation's Bylaws; or
(2) If the holders of not less than 50 percent of the shares
entitled to vote on any issue proposed to be considered at the
proposed special meeting sign, date, and deliver to the
Corporation's secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to
be held.
ARTICLE V
The street address of the Corporation's initial registered office is
1201 Hays Street City of Tallahassee, County of Leon, State of Florida 32301,
and the name of its initial registered agent at such of the is Corporation
Service Company.
ARTICLE VI
The Board of Directors of the Corporation shall consist of at least
one director, with the exact number to be filed from time to time in the manner
provided in the Corporation's Bylaws. The
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number of directors constituting the initial Board of Directors is three (3),
and the names and addresses of the members of the initial Board of Directors who
will serve as the Corporation's directors until successors are duly elected and
qualified are:
Brad L. Krassner
930 Washington Avenue, 5th Floor
Miami Beach, Florida 33139
Lee D. Marshall
930 Washington Avenue, 5th Floor
Miami Beach, Florida 33139
Robert G. Kreusler
930 Washington Avenue, 5th Floor
Miami Beach, Florida 33139
ARTICLE VII
The name of the Incorporator is Gail Shelby and the address of the
Incorporator is 1201 Hays Street, Tallahassee, Florida 32301.
ARTICLE VIII
This Corporation shall indemnify and shall advance expenses on behalf
of its officers and directors to the to the fullest extent not prohibited by law
in existence either now or hereafter.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named
above, for the purpose of forming a corporation pursuant to the Florida Business
Corporation Act of the State of Florida has signed these Articles of
Incorporation this 10th day of June, 1998.
/s/ G.S.
- -------------------------
Gail Shelby, Incorporator
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
The undersigned, having been named the Registered Agent of MAGICWORKS
FASHION MANAGEMENT, INC. accepts such designation and is familiar with, and
accepts, the obligations of such position, as provided in Florida Statutes
ss.607.0505.
Corporation Service Company
/s/ G.S.
- -------------------------
Gail Shelby, Incorporator
Dated: June 10, 1998
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BYLAWS
OF
MAGICWORKS FASHION MANAGEMENT, INC.
(A Florida Corporation)
<PAGE>
[Table of Contents deleted]
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MAGICWORKS FASHION MANAGEMENT, INC.
BYLAWS
ARTICLE ONE
OFFICES
1. Registered Office. The registered office of MAGICWORKS FASHION
MANAGEMENT, INC., a Florida corporation (the "Corporation"), shall be located
in the City of Tallahassee, State of Florida, unless otherwise designated by
the Board of Directors.
2. Other Offices. The Corporation may also have offices at such other
places, either within or without the State of Florida, as the Board of
Directors of the Corporation (the "Board of Directors") may from time to time
determine or as the business of the Corporation may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
1. Place. All annual meetings of shareholders shall be held at such
place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Special meetings of shareholders may be held
at such place, within or without the State of Florida, and at such time as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
2. Time of Annual Meeting. Annual meetings of shareholders shall be
held on such date and at such time fixed, from time to time, by the Board of
Directors, provided that there shall be an annual meeting held every year at
which the shareholders shall elect a Board of Directors and transact such other
business as may properly be brought before the meeting.
3. Call of Special Meetings. Special meetings of the shareholders
shall be held if called by the Board of Directors, the President, or if the
holders of not less than fifty percent (50%) of all the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date, and deliver to the Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held.
4. Conduct of Meetings. The Chairman of the Board (or in his absence,
the President or such other designee of the Chairman of the Board) shall
preside at the annual and special meetings of shareholders and shall be given
full discretion in establishing the rules and procedures to be followed in
conducting the meetings, except as otherwise provided by law or in these
Bylaws.
5. Notice and Waiver of Notice. Except as otherwise provided by law,
written or printed notice stating the place, day and hour of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before the day of the meeting, either personally or by first-class mail,
by or at the direction of the President, the Secretary, or the officer or
person calling the
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meeting, to each shareholder of record entitled to vote at such meeting. If the
notice is mailed at least thirty (30) days before the date of the meeting, it
may be done by a class of United States mail other than first-class. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail addressed to the shareholder at his address as it appears on the stock
transfer books of the Corporation, with postage thereon prepaid. If a meeting
is adjourned to another time and/or place, and if an announcement of the
adjourned time and/or place is made at the meeting, it shall not be necessary
to give notice of the adjourned meeting unless the Board of Directors, after
adjournment, fixes a new record date for the adjourned meeting. Whenever any
notice is required to be given to any shareholder, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether signed before,
during or after the time of the meeting stated therein, and delivered to the
Corporation for inclusion in the minutes or filing with the corporate records,
shall be equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders need be specified in any written waiver of notice. Attendance of a
person at a meeting shall constitute a waiver of (a) lack of or defective
notice of such meeting, unless the person objects at the beginning to the
holding of the meeting or the transacting of any business at the meeting, or
(b) lack of defective notice of a particular matter at a meeting that is not
within the purpose or purposes described in the meeting notice, unless the
person objects to considering such matter when it is presented.
6. Business of Special Meeting. Business transacted at any special
meeting shall be confined to the purposes stated in the notice thereof.
7. Quorum. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of these shares exists with
respect to that matter. Except as otherwise provided in the Articles of
Incorporation or by law, a majority of the shares entitled to vote on the
matter by each voting group, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders, but in no event shall a
quorum consist of less than one-third (1/3) of the shares of each voting group
entitled to vote. If less than a majority of outstanding shares entitled to
vote are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. After a quorum
has been established at any shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity
of any action taken at the meeting or any adjournment thereof. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
8. Voting Per Share. Except as otherwise provided in the Articles of
Incorporation or by law, each shareholder is entitled to one (1) vote for each
outstanding share held by him on each matter voted at a shareholders' meeting.
9. Voting of Shares. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation, domestic or foreign, may be voted by the
officer, agent or proxy designated by the bylaws of
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such corporate shareholder or, in the absence of any applicable bylaw, by such
person or persons as the board of directors of the corporate shareholder may
designate. In the absence of any such designation, or, in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares. Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee. Shares held by or under the
control of a receiver, a trustee in bankruptcy proceedings, or an assignee for
the benefit of creditors may be voted by such person without the transfer
thereof into his name. If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the
Secretary of the Corporation is given notice to the contrary and is furnished
with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, then acts with respect to voting shall
have the following effect: (a) if only one votes, in person or by proxy, his
act binds all; (b) if more than one vote, in person or by proxy, the act of the
majority so voting binds all; (c) if more than one vote, in person or by proxy,
but the vote is evenly split on any particular matter, each faction is entitled
to vote the share or shares in question proportionally; or (d) if the
instrument or order so filed shows that any such tenancy is held in unequal
interest, a majority or a vote evenly split for purposes hereof shall be a
majority or a vote evenly split in interest. The principles of this paragraph
shall apply, insofar as possible, to execution of proxies, waivers, consents,
or objections and for the purpose of ascertaining the presence of a quorum.
10. Proxies. Any shareholder of the Corporation, other person entitled
to vote on behalf of a shareholder pursuant to law, or attorney-in-fact for
such persons may vote the shareholder's shares in person or by proxy. Any
shareholder of the Corporation may appoint a proxy to vote or otherwise act for
him by signing an appointment form, either personally or by his
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the Corporation to
accept the proxy's authority unless notice of the death or incapacity is
received by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his authority under the appointment. An
appointment of a proxy is revocable by the shareholder unless the appointment
is coupled with an interest.
11. Shareholder List. After fixing a record date for a meeting of
shareholders, the Corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class
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and series, if any, of shares held by each. The shareholders' list must be
available for inspection by any shareholder for a period of ten (10) days prior
to the meeting or such shorter time as exists between the record date and the
meeting and continuing through the meeting at the Corporation's principal
office, at a place identified in the meeting notice in the city where the
meeting will be held, or at the office of the Corporation's transfer agent or
registrar. Any shareholder of the Corporation or his agent or attorney is
entitled on written demand to inspect the shareholders' list (subject to the
requirements of law), during regular business hours and at his expense, during
the period it is available for inspection. The Corporation shall make the
shareholders' list available at the meeting of shareholders, and any
shareholder or his agent or attorney is entitled to inspect the list at any
time during the meeting or any adjournment.
12. Action Without Meeting. Any action required by law to be taken at
a meeting of shareholders, or any action that may be taken at a meeting of
shareholders, may be taken without a meeting or notice if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted with respect to the subject
matter thereof, and such consent shall have the same force and effect as a vote
of shareholders taken at such a meeting.
13. Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
sixty (60) days, and, in case of a meeting of shareholders, not less than ten
(10) days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 13, such
determination shall apply to any adjournment thereof, except where the Board of
Directors fixes a new record date for the adjourned meeting or as required by
law.
14. Inspectors and Judges. The Board of Directors in advance of any
meeting may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment(s)
thereof. If any inspector or inspectors, or judge or judges, are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector
or judge fails to appear or act, the vacancy may be filled by the Board of
Directors in advance of the meeting, or at the meeting by the person presiding
thereat. The inspectors or judges, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies,
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and shall receive votes, ballots and consents, hear and determine all
challenges and questions arising in connection with the right to vote, count
and tabulate votes, ballots and consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting, the inspector
or inspectors or judge or judges, if any, shall make a report in writing of any
challenge, question or matter determined by him or them, and execute a
certificate of any fact found by him or them.
15. Voting for Directors. Unless otherwise provided in the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast by
the shares entitled to vote in the election at a meeting at which a quorum is
present.
ARTICLE THREE
DIRECTORS
1. Number, Election and Term. The number of directors of the
Corporation shall be fixed from time to time, within the limits specified by
the Articles of Incorporation, by resolution of the Board of Directors;
provided, however, no director's term shall be shortened by reason of a
resolution reducing the number of directors. The directors shall be elected at
the annual meeting of the shareholders, except as provided in Section 2 of this
Article, and each director elected shall hold office for the term for which he
is elected and until his successor is elected and qualified or until his
earlier resignation, removal from office or death. Directors must be natural
persons who are 18 years of age or older but need not be residents of the State
of Florida, shareholders of the Corporation or citizens of the United States.
Any director may be removed at any time, with or without cause, at a special
meeting of the shareholders called for that purpose.
2. Vacancies. A director may resign at any time by giving written
notice to the Corporation, the Board of Directors or the Chairman of the Board.
Such resignation shall take effect when the notice is delivered unless the
notice specifies a later effective date, in which event the Board of Directors
may fill the pending vacancy before the effective date if they provide that the
successor does not take office until the effective date. Any vacancy occurring
in the Board of Directors and any directorship to be filled by reason of an
increase in the size of the Board of Directors shall be filled by the
affirmative vote of a majority of the current directors though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
or special meeting of the shareholders called for that purpose, unless
otherwise provided by law. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office, or until the next
election of one or more directors by shareholders if the vacancy is caused by
an increase in the number of directors.
3. Powers. Except as provided in the Articles of Incorporation and by
law, all corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the
direction of, its Board of Directors.
4. Place of Meetings. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Florida.
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5. Annual Meeting. The first meeting of each newly elected Board of
Directors shall be held, without call or notice, immediately following each
annual meeting of shareholders.
6. Regular Meetings. Regular meetings of the Board of Directors may
also be held without notice at such time and at such place as shall from time
to time be determined by the Board of Directors.
7. Special Meetings and Notice. Special meetings of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
Written notice of special meetings of the Board of Directors shall be given to
each director at least forty-eight (48) hours before the meeting. Except as
required by statute, neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting. Notices to directors shall
be in writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall be
deemed to be given at the time when the same shall be received. Notice to
directors may also be given by telegram, teletype or other form of electronic
communication. Notice of a meeting of the Board of Directors need not be given
to any director who signs a written waiver of notice before, during or after
the meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting and a waiver of any and all objections to the place of
the meeting, the time of the meeting and the manner in which it has been called
or convened, except when a director states, at the beginning of the meeting or
promptly upon arrival at the meeting, any objection to the transaction of
business because the meeting is not lawfully called or convened.
8. Quorum; Required Vote; Presumption of Assent. A majority of the
number of directors fixed by, or in the manner provided in, these bylaws shall
constitute a quorum for the transaction of business; provided, however, that
whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum
shall consist of a majority of the remaining directors until the vacancy has
been filled. The act of a majority of the directors present at a meeting at
which a quorum is present when the vote is taken shall be the act of the Board
of Directors. A director of the Corporation who is present at a meeting of the
Board of Directors or a committee of the Board of Directors when corporate
action is taken shall be presumed to have assented to the action taken, unless
he objects at the beginning of the meeting, or promptly upon his arrival, to
holding the meeting or transacting specific business at the meeting, or he
votes against or abstains from the action taken.
9. Action Without Meeting. Any action required or permitted to be
taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if a consent in writing, setting forth the action
taken, is signed by all of the members of the Board of Directors or the
committee, as the case may be, and such consent shall have the same force and
effect as a unanimous vote at a meeting. Action taken under this section is
effective when the last director signs the consent, unless the consent
specifies a different effective date. A consent signed under this Section 9
shall have the effect of a meeting vote and may be described as such in any
document.
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10. Conference Telephone or Similar Communications Equipment Meetings.
Members of the Board of Directors may participate in a meeting of the Board by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation in such a meeting shall constitute presence in person at
the meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground the
meeting is not lawfully called or convened.
11. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate from among its members
an executive committee and one or more other committees, each of which, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full Board of Directors is required
by statute. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies in the membership of a committee shall be filled by the Board of
Directors at a regular or special meeting of the Board of Directors. The
executive committee shall keep regular minutes of its proceedings and report
the same to the Board of Directors when required. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
13. Chairman of the Board. The Board of Directors may, in its
discretion, choose a chairman of the board who shall preside at meetings of the
shareholders and of the directors and shall be an ex officio member of all
standing committees. The Chairman of the Board shall have such other powers and
shall perform such other duties as shall be designated by the Board of
Directors. The Chairman of the Board shall be a member of the Board of
Directors but no other officers of the Corporation need be a director. The
Chairman of the Board shall serve until his successor is chosen and qualified,
but he may be removed at any time by the affirmative vote of a majority of the
Board of Directors.
ARTICLE FOUR
OFFICERS
1. Positions. The officers of the Corporation shall consist of a
President, a Secretary and a Treasurer, and, if elected by the Board of
Directors by resolution, a Chairman of the Board and/or one or more Vice
Presidents. Any two or more offices may be held by the same person.
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2. Election of Specified Officers by Board. The Board of Directors at
its first meeting after each annual meeting of shareholders shall elect a
President, a Secretary, a Treasurer and may elect one or more Vice Presidents.
3. Election or Appointment of Other Officers. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors, or, unless otherwise specified herein,
appointed by the President of the Corporation. The Board of Directors shall be
advised of appointments by the President at or before the next scheduled Board
of Directors meeting.
4. Salaries. The salaries of all officers of the Corporation to be
elected by the Board of Directors pursuant to Article Four, Section 2 hereof
shall be fixed from time to time by the Board of Directors or pursuant to its
discretion. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the President of the
Corporation or pursuant to his direction.
5. Term; Resignation. The officers of the Corporation shall hold
office until their successors are chosen and qualified. Any officer or agent
elected or appointed by the Board of Directors or the President of the
Corporation may be removed, with or without cause, by the Board of Directors.
Any officers or agents appointed by the President of the Corporation pursuant
to Section 3 of this Article Four may also be removed from such officer
positions by the President, with or without cause. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise shall be
filled by the Board of Directors, or, in the case of an officer appointed by
the President of the Corporation, by the President or the Board of Directors.
Any officer of the Corporation may resign from his respective office or
position by delivering notice to the Corporation. Such resignation is effective
when delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date and the Corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board provides that the successor does not
take office until the effective date.
6. President. The President shall be the Chief Executive Officer of
the Corporation, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. In the absence of the Chairman of the Board
or in the event the Board of Directors shall not have designated a chairman of
the board, the President shall preside at meetings of the shareholders and the
Board of Directors.
7. Vice Presidents. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President. They shall perform such other duties and have such
other powers as the Board of Directors shall prescribe or as the President may
from time to time delegate.
8. Secretary. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the
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shareholders and of the Board of Directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
shareholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or President,
under whose supervision he shall be. He shall keep in safe custody the seal of
the Corporation and, when authorized by the Board of Directors, affix the same
to any instrument requiring it.
9. Treasurer. The Treasurer shall have the custody of corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors at its regular
meetings or when the Board of Directors so requires an account of all his
transactions as treasurer and of the financial condition of the Corporation
unless otherwise specified by the Board of Directors, the Treasurer shall be
the Corporation's Chief Financial Officer.
10. Other Officers. Employees and Agents. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to him by the Board of Directors, the officer so appointing
him and such officer or officers who may from time to time be designated by the
Board of Directors to exercise such supervisory authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
1. Issue of Certificates. The Corporation shall deliver certificates
representing all shares to which shareholders are entitled; and such
certificates shall be signed by the Chairman of the Board, President or a Vice
President, and by the Secretary or an Assistant Secretary of the Corporation,
and may be sealed with the seat of the Corporation or a facsimile thereof.
2. Legends for Preferences and Restrictions on Transfer. The
designations, relative rights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the Corporation will furnish the
shareholder a full statement of this information on request and without charge.
Every certificate representing shares that are restricted as to the sale,
disposition, or transfer of such shares shall also indicate that such shares
are restricted as to transfer and there shall be set forth or fairly summarized
upon the certificate, or the certificate shall indicate that the Corporation
will furnish to any shareholder upon request and without charge, a full
statement of such restrictions. If the Corporation issues any shares that are
not registered under the Securities Act of 1933, as amended, and registered or
qualified under the applicable state securities laws, the transfer of any such
shares shall be restricted substantially in accordance with the following
legend:
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"THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME."
3. Facsimile Signatures. The signatures of the Chairman of the Board,
the President or a Vice President and the Secretary or Assistant Secretary upon
a certificate may be facsimiles, if the certificate is manually signed by a
transfer agent, or registered by a registrar, other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of the
issuance.
4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
5. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6. Registered Shareholders. The Corporation shall be entitled to
recognize the exclusive rights of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Florida.
7. Redemption of Control Shares. As provided by the Florida Business
Corporation Act, if a person acquiring control shares of the Corporation does
not file an acquiring person statement with the Corporation, the Corporation
may redeem the control shares at fair market value at any time during the
60-day period after the last acquisition of such control shares. If a person
acquiring control shares of the Corporation files an acquiring person statement
with the
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Corporation, the control shares may be redeemed by the Corporation only if such
shares are not accorded full voting rights by the shareholders as provided by
law.
ARTICLE SIX
GENERAL PROVISIONS
1. Dividends. The Board of Directors may from time to time declare,
and the Corporation may pay, dividends on its outstanding shares in cash,
property, or its own shares pursuant to law and subject to the provisions of
the Articles of Incorporation.
2. Reserves. The Board of Directors may by resolution create a reserve
or reserves out of earned surplus for any proper purpose or purposes, and may
abolish any such reserve in the same manner.
3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
4. Fiscal Year. The fiscal year of the Corporation shall be fixed by
the Board of Directors and may be otherwise changed from time to time by
resolution of the Board of Directors.
5. Seal. The corporate seal shall have inscribed thereon the name and
state of incorporation of the Corporation. The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
6. Gender. All words used in these Bylaws in the masculine gender
shall extend to and shall include the feminine and neuter genders.
ARTICLE SEVEN
AMENDMENTS OF BYLAWS
Unless otherwise provided by law, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted by action of the Board of Directors.
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STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation, as amended to date, of MAGICWORKS MERCHANDISING, INC., a
corporation organized under the laws of the State of Florida, as shown by the
records of this office.
The document number of this corporation is K22575.
Given under my hand and the
Great Seal of the State of Florida at
Tallahassee, the Capitol, this the
Twelfth day of October, 1998
/s/ Sandra B. Mortham
----------------------
Sandra B. Mortham
Secretary of State
<PAGE>
EFFECTIVE DATE: 4-27-88
ARTICLES OF INCORPORATION
OF
DIAMOND BULLET MERCHANDISING, INC.
The undersigned, acting as incorporator of DIAMOND BULLET
MERCHANDISING, INC. under the Florida General Corporation Act, adopts the
following Articles of Incorporation:
ARTICLE I. NAME
The name of the corporation is DIAMOND BULLET MERCHANDISING, INC.
ARTICLE II. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
subscription and acknowledgment of these Articles of Incorporation.
ARTICLE III. PURPOSE
This corporation may engage in any activity or business permitted
under the laws of the United States and Florida.
ARTICLE IV. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 7,500 shares of common stock having a par value
of $1.00 per share. The consideration to be paid for each share shall be fixed
by the board of directors and may be paid in whole or in part in or other
property, tangible or intangible, or in labor or services actually performed
for the corporation, with a value, in the judgment of the directors, equivalent
to or greater than the full par value of the shares.
<PAGE>
ARTICLE V. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 12100 N.E. 16th Avenue, North Miami, Florida 33161, and the name of the
corporation's initial registered agent at that address is The Diamond Bullet
Corporation.
ARTICLE VI. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address of
the initial director is:
Name Address
Brad L. Krassner 12100 Northeast 16th Avenue
North Miami, Florida 33161
ARTICLE VII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Brad L. Krassner c/o The Diamond Bullet Corp.
12100 N.E. 16th Avenue
N. Miami, Florida 33161
The incorporator of the corporation assigns to this corporation his rights
under Section 607.161, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE VIII. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in
the board of directors and the shareholders, except that the board of directors
may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
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<PAGE>
ARTICLE IX. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal
any provision in these Articles of Incorporation in the manner prescribed by
law, and all rights conferred on shareholders are subject to this reservation.
These Articles may be amended prior to the issuance of shares of the
corporation by the unanimous approval or comment of the board of directors.
Thereafter, every amendment shall be approved by the board of directors,
proposed by them to the shareholders, and approved at a shareholders' meeting
by the holders of a majority of the shares entitled to vote on the matter or in
such other manner as may be provided by law.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 27 day of April, 1998.
/s/ Brad L. Krassner
Brad L. Krassner
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<PAGE>
STATE OF FLORIDA
COUNTY OF DADE
The foregoing instrument was acknowledged before me this 27 day of
April, 1988, by Brad L. Krassner.
/s/ Joanne Del Campo
Notary Public, State of Florida
at large
My commission expires:
Notary Public State of Florida
My Commission Expires July 28, 1990
(Affix notarial seal)
ACCEPTANCE OF APPOINTMENT AS REGISTERED AGENT
Having been named as registered agent for DIAMOND BULLET
MERCHANDISING, INC. in the foregoing articles of incorporation, I, on behalf of
The Diamond Bullet Corporation, a Florida corporation, hereby agree to accept
service of process for said Corporation and to comply with any and all Statutes
relative to the complete and proper performance of the duties of registered
agent.
THE DIAMOND BULLET CORPORATION
By: /s/ Brad L. Krassner, President
Brad L. Krassner, President
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<PAGE>
H98000000396
ARTICLES OF AMENDMENT
Article 1. Name
The name of this Florida corporation is Diamond Bullet Merchandising, Inc.
Article 2. Amendment
The Articles of Incorporation of the Corporation are amended so that the name
of the Corporation is changed from Diamond Bullet Merchandising, Inc. to
Magicworks Merchandising, Inc.
Article 3. Date Amendment Adopted
The amendment set forth in these Articles of Amendment was adopted on the date
shown below.
Article 4. Shareholder Approval of Amendment
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
The undersigned executed this document on the date shown below.
Diamond Bullet Merchandising, Inc.
By: /s/ Larry M. Turk
Print Name: Larry M. Turk
Print Title: President
Date: 2/10/98
[FILED - 96 FEB 16 PM 3:32 - SECRETARY OF STATE - TALLAHASSEE, FLORIDA]
Corporate Creations International Inc.
8895 North Military Trail o Suite 202D
Palm Beach Gardens FL 33410-6266
(561) 694-8107
H98000000396
<PAGE>
NAME CHANGED on 2/16/98
Old name was Diamond Bullet Merchandising, Inc.
New name: Magicworks Merchandising, Inc.
<PAGE>
BY LAWS
MAGICWORKS MERCHANDISING, INC.
ARTICLE ONE
CAPITAL STOCK
SECTION ONE: Share certificates, as approved by the Board of Directors, shall
be issued to shareholders specifying the name of the owner, number of shares,
and date of issue. Each certificate shall be signed by the President and
Secretary with the corporate seal affixed thereon. Each certificate shall be
numbered in the order in which it is issued.
SECTION TWO: Each shareholder shall be entitled to one vote per share of common
stock, unless otherwise stated in Article of Incorporation.
SECTION THREE: Transfer of shares of stock shall be in the transfer ledger of
the corporation. Such transfers shall be done in person or by power of
attorney. Transfers shall be completed on the surrender of the old certificate,
duly assigned.
ARTICLE TWO
SHAREHOLDER'S MEETINGS
SECTION ONE: The annual meeting of the shareholders shall be held on the 15th
day of March of each year at 12100 NE 16 Ave, N. Miami, FL 33161 if the stated
day is a weekend day or a legal holiday, the meeting shall be held on the next
succeeding day not a weekend day or a holiday.
SECTION TWO: The place of the annual meeting may be changed by the Board of
Directors within or without the State of incorporation for any given year upon
at least ten (10) and no more than sixty (60) days notice to the shareholders.
Special meetings may be held within or without the State of incorporation and
at such time as the Board of Directors may fix.
<PAGE>
SECTION THREE: Special meetings of the shareholders may be called at any time
by the Board of Directors or the President or upon written request of any
holder(s) of at least one-half of the outstanding capital stock.
SECTION FOUR: Notice of any special meeting of the shareholders shall be given
to all shareholders to their last known address by registered mail. Notice of
any special meeting of the shareholders shall state the purpose of such
meeting. Notice of a special meeting may be waived in writing either before or
after such meeting.
SECTION FIVE: Unless otherwise provided by law or the Articles of
Incorporation, all meetings of the shareholders, action may be taken by a
majority vote of the number of shares entitled to vote as represented by the
shareholders present at such meeting. Directors shall be elected by a plurality
vote. A quorum shall constitute one share over fifty percent of the outstanding
shares entitled to vote as represented by the shareholders present at such
meeting. No business may be transacted without the presence of a quorum. At any
time during any shareholders meeting, if it is determined that a quorum is no
longer present, the meeting shall be then adjourned.
SECTION SIX: Action may be taken by the shareholders without a formal meeting
by consent, if such consent is executed in writing by all of the shareholders
entitled to vote and if allowed under the laws of the State of incorporation.
ARTICLE THREE
DIRECTORS
SECTION ONE: The Board of Directors shall control the full and entire
management of the affairs and business of the corporation. The Board of
Directors shall adopt rules and regulations to manage the affairs and business
of the corporation by resolution at special or the annual meeting. A quorum
shall consist of a majority of the directors. Resolution adopted and all
business transacted by the Board of Directors shall be done by a majority vote
of the directors present at such meetings.
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<PAGE>
SECTION TWO: The Board of Directors shall consist of 4 members to be elected by
the shareholder at an annual meeting. The term of office shall be one year.
Vacancies may be filled by the Board of Directors prior to the expiration of
the term. Such appointment shall continue until the next annual meeting of
shareholders.
SECTION THREE: The Board Of Directors shall meet annually at the same place of
the shareholders meetings immediately following the annual meeting of the
shareholders. Special meetings of the Board of Directors may be called by the
President on three (3) days notice either personally or by mail or wire, or
such other and further notice as required by the laws of this State.
SECTION FOUR: Notice of special or regular meetings of the Board of Directors
other than the annual meeting of the Board of Directors, shall be made by mail
to the last known address of each director. Such notice shall be mailed ten
(10) days prior to such meeting and shall include time and place and reasons
for the meeting. All other requirements of the laws of the State of
incorporation for notices shall be followed.
SECTION FIVE: All directors of the corporation who are present at a meeting of
the Board of Directors shall be deemed to have assented to action taken at such
meeting as to any corporate action taken, unless a director who did not vote in
favor on such action goes on record in the minutes as dissenting. In such a
case, the dissenting director will not be deemed to having assented to the
action taken.
SECTION SIX: Directors may be removed for cause by a majority vote at a meeting
of the shareholders or Directors. Directors may be removed without cause by a
majority vote at a meeting of the shareholders.
ARTICLE FOUR
OFFICERS
SECTION ONE: The officers of the corporation shall consist of a President,
Secretary and Treasurer. All officers shall be elected by the Board of
Directors and shall serve a term for
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<PAGE>
compensation as fixed by the Board of Directors. The Board of Directors may
establish other offices as it may be deem fit.
SECTION TWO: The chief executive officer shall be the President. The president
shall have management powers of the corporation. His duties shall include but
are not limited to administration of the corporation presiding over
shareholders meeting including general supervision of the policies of the
corporation as well as general management. The President shall execute
contracts, mortgages, loans and bonds under the seal of the corporation. The
President shall have other powers as determined by the Board of Directors by
resolution.
SECTION THREE: The secretary shall keep the minutes of meetings of the Board of
Directors and shareholder meetings. The Secretary shall have charge of the
minute books, seal and stock books of the corporation. The Secretary shall have
other powers as delegated by the President.
SECTION FOUR: The Treasurer shall have the power to manage the financial
affairs of the corporation. The Treasurer shall keep books and records of the
financial affairs and make such available to the President and Board of
Directors upon request. The Treasurer may make recommendations to the officers
and directors in regard to the financial affairs of the corporation.
SECTION FIVE: The Vice-President, if one is appointed by the Board of
Directors, shall have such powers as delegated to him by the President. Upon
the inability to perform by the President, the Vice-President shall serve as
President until such time as the President shall be able to perform or further
action by the Board of Directors. The President shall be deemed unable to
perform his duties upon written notification by the President of such inability
or resignation to the Board of Directors that the President is unable to
perform.
SECTION SIX: Vacancies shall be filled by the Board of Directors. Until such
time as vacancies are filled the following rules of succession shall apply
without regard to Section Five of this Article. The Vice-President shall act as
President, the Treasurer shall act as Secretary, and the Secretary shall act as
Treasurer.
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<PAGE>
SECTION SEVEN: Assistants to officers may be appointed by the President. These
duties shall be those delegated to them by the President or the board of
Directors.
SECTION EIGHT: Compensation of the officers shall be determined by the Board of
Directors.
ARTICLE FIVE
CONTRACTS AND INSTRUMENTS OF INDEBTEDNESS
SECTION ONE: No contracts or any instrument of indebtedness shall he executed
without approval by the Board of Directors by resolution. Upon such resolution,
the President shall be authorized to execute contracts or instruments of
indebtedness as specified in the resolution.
SECTION TWO: All checks, drafts or other instruments of indebtedness shall be
executed in the manner as determined by the Board of Directors by resolution.
ARTICLE SIX
CORPORATE SEAL
The seal of the corporation shall be provided by the Board of
Directors by resolution. The seal shall be used by the President or other
officers of the corporation as provided for in these By-Laws.
ARTICLE SEVEN
AMENDMENT
These By-Laws may be amended from time to time by a majority vote of
the Board of Directors or by a majority vote of the shareholders. These By-Laws
may be repealed and new By-Laws established in the same manner as amendments.
These By-Laws will continue in full force and effect until amended or repealed
and replaced by new By-Laws.
ARTICLE EIGHT
DIVIDENDS
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<PAGE>
The Board of Directors may from time to time declare dividends to the
shareholders. These distributions may be in cash or property. No such dividends
may be made out of the capital of the corporation.
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<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation of MAGICWORKS SPORTS MANAGEMENT, INC., a corporation organized
under the laws of the State of Florida, filed on May 23, 1997, as shown by the
records of this office.
The document number of this corporation is P97000046060.
Given under my hand and the Great
Seal of the State of Florida at
Tallahassee, the Capitol, this the
Twelfth day of October, 1998
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
MAGICWORKS SPORTS MANAGEMENT, INC.
ARTICLE I
The name of the corporation MAGICWORKS SPORTS MANAGEMENT, INC. (the
"Corporation").
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is 930 Washington Avenue, 5th Floor, Miami Beach, Florida 33139.
ARTICLE III
This Corporation shall have authority to issue One Thousand (1,000)
shares of Common Stock having a par value of $0.01 per share.
ARTICLE IV
The Corporation shall hold a special meeting of shareholders only:
(1) On call of the Board of Directors or persons authorized to do
so by the Corporation's Bylaws; or
(2) If the holders of not less than 50 percent of all votes
entitled to be cast on any Issue proposed to be considered at
the proposed special meeting sign, date, and deliver to the
Corporations secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to
be held.
ARTICLE V
The street address of the Corporation's Initial registered office is
1201 Hays Street, City or Tallahassee, County of Leon, State of Florida 32301
and the name of its initial registered agent at such office is Corporation
Service Company.
<PAGE>
ARTICLE VI
The Board of Directors of the Corporation shall consist or at least
one director, with the exact number to be fixed from time to time In the manner
provided In the Corporations Bylaws.
ARTICLE VII
The name of the Incorporator is Fern S. Watts and the address or the
Incorporator is 1221 Brickell Avenue, Suits 2100, Miami, Florida 33131.
This Corporation shall Indemnity and shall advance expenses on behalf
of Its officers and directors to the fullest extent not prohibited by law In
existence either now or hereafter.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named
above, for the purpose of forming a corporation pursuant to the Florida
Business Corporation Act of the State of Florida has signed these Articles of
Incorporation this 22nd day of May, 1997.
/s/ Fern S. Watts
Fern S. Watts, Incorporator
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
The undersigned, having been named the Registered Agent of
MAGICWORKS SPORTS MANAGEMENT, INC. hereby accepts such designation and is
familiar with, and accepts, the obligations of such position, as provided in
Florida Statutes ss. 607.0505.
CORPORATION SERVICE COMPANY
/s/ Karen Rozar
Karen Rozar,
as Agent for the Registered Agent
Dated: May 23, 1997
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<PAGE>
BYLAWS
OF
MAGICWORKS SPORTS MANAGEMENT, INC.
(A FLORIDA CORPORATION)
<PAGE>
[Table of Contents deleted]
<PAGE>
MAGICWORKS SPORTS MANAGEMENT, INC.
BYLAWS
ARTICLE ONE
OFFICES
1. Registered Office. The registered office of MAGICWORKS SPORTS
MANAGEMENT, INC., a Florida corporation (the "Corporation"), shall be located
in the City of Tallahassee, State of Florida, unless otherwise designated by
the Board of Directors.
2. Other Offices. The Corporation may also have offices at such other
places, either within or without the State of Florida, as the Board of
Directors of the Corporation (the "Board of Directors") may from time to time
determine or as the business of the Corporation may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
1. Place. All annual meetings of shareholders shall be held at such
place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Special meetings of shareholders may be held
at such place, within or without the State of Florida, and at such time as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof
2. Time of Annual Meeting. Annual meetings of shareholders shall be
held on such date and at such time fixed, from time to time, by the Board of
Directors, provided that there shall be an annual meeting held every year at
which the shareholders shall elect a Board of Directors and transact such other
business as may properly be brought before the meeting.
3. Call of Special Meetings. Special meetings of the shareholders
shall be held if called by the Board of Directors, the President, or if the
holders of not less than fifty percent (50%) of all the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date, and deliver to the Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held.
4. Conduct of Meetings. The Chairman of the Board (or in his absence,
the President or such other designee of the Chairman of the Board) shall
preside at the annual and special meetings of shareholders and shall be given
full discretion in establishing the rules and procedures to be followed in
conducting the meetings, except as otherwise provided by law or in these
Bylaws.
<PAGE>
5. Notice and Waiver of Notice. Except as otherwise provided by law,
written or printed notice stating the place, day and hour of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before the day of the meeting, either personally or by first-class mail,
by or at the direction of the President, the Secretary, or the officer or
person calling the meeting, to each shareholder of record entitled to vote at
such meeting. If the notice is mailed at least thirty (30) days before the date
of the meeting, it may be done by a class of United States mail other than
first-class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation, with postage
thereon prepaid. If a meeting is adjourned to another time and/or place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fixes a new record date for the adjourned
meeting. Whenever any notice is required to be given to any shareholder, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether signed before, during or after the time of the meeting stated
therein, and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records, shall be equivalent to the giving of such
notice. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the shareholders need be specified in any written
waiver of notice. Attendance of a person at a meeting shall constitute a waiver
of (a) lack of or defective notice of such meeting, unless the person objects
at the beginning to the holding of the meeting or the transacting of any
business at the meeting, or (b) lack of defective notice of a particular matter
at a meeting that is not within the purpose or purposes described in the
meeting notice, unless the person objects to considering such matter when it is
presented.
6. Business of Special Meeting. Business transacted at any special
meeting shall be confined to the purposes stated in the notice thereof.
7. Quorum. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of these shares exists with
respect to that matter. Except as otherwise provided in the Articles of
Incorporation or by law, a majority of the shares entitled to vote on the
matter by each voting group, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders, but in no event shall a
quorum consist of less than one-third (1/3) of the shares of each voting group
entitled to vote. If less than a majority of outstanding shares entitled to
vote are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. After a quorum
has been established at any shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity
of any action taken at the meeting or any adjournment thereof Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
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<PAGE>
8. Voting Per Share. Except as otherwise provided in the Articles of
Incorporation or by law, each shareholder is entitled to one (1) vote for each
outstanding share held by him on each matter voted at a shareholders' meeting.
9. Voting of Shares. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation, domestic or foreign, may be voted by the
officer, agent or proxy designated by the bylaws of such corporate shareholder
or, in the absence of any applicable bylaw, by such person or persons as the
board of directors of the corporate shareholder may designate. In the absence
of any such designation, or, in case of conflicting designation by the
corporate shareholder, the chairman of the board, the president, any vice
president, the secretary and the treasurer of the corporate shareholder, in
that order, shall be presumed to be fully authorized to vote such shares.
Shares held by an administrator, executor, guardian, personal representative,
or conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him without a transfer of such shares into his
name or the name of his nominee. Shares held by or under the control of a
receiver, a trustee in bankruptcy proceedings, or an assignee for the benefit
of creditors may be voted by such person without the transfer thereof into his
name. If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or if two or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
Corporation is given notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, then acts with respect to voting shall have the following effect:
(a) if only one votes, in person or by proxy, his act binds all; (b) if more
than one vote, in person or by proxy, the act of the majority so voting binds
all; (c) if more than one vote, in person or by proxy, but the vote is evenly
split on any particular matter, each faction is entitled to vote the share or
shares in question proportionally; or (d) if the instrument or order so filed
shows that any such tenancy is held in unequal interest, a majority or a vote
evenly split for purposes hereof shall be a majority or a vote evenly split in
interest. The principles of this paragraph shall apply, insofar as possible, to
execution of proxies, waivers, consents, or objections and for the purpose of
ascertaining the presence of a quorum.
10. Proxies. Any shareholder of the Corporation, other person entitled
to vote on behalf of a shareholder pursuant to law, or attorney-in-fact for
such persons may vote the shareholder's shares in person or by proxy. Any
shareholder of the Corporation may appoint a proxy to vote or otherwise act for
him by signing an appointment form, either personally or by his
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form. The death or incapacity of the
shareholder appointing a proxy
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<PAGE>
does not affect the right of the Corporation to accept the proxy's authority
unless notice of the death or incapacity is received by the secretary or other
officer or agent authorized to tabulate votes before the proxy exercises his
authority under the appointment. An appointment of a proxy is revocable by the
shareholder unless the appointment is coupled with an interest.
11. Shareholder List. After fixing a record date for a meeting of
shareholders, the Corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class and series, if any,
of shares held by each. The shareholders' list must be available for inspection
by any shareholder for a period of ten (10) days prior to the meeting or such
shorter time as exists between the record date and the meeting and continuing
through the meeting at the Corporation's principal office, at a place
identified in the meeting notice in the city where the meeting will be held, or
at the office of the Corporation's transfer agent or registrar. Any shareholder
of the Corporation or his agent or attorney is entitled on written demand to
inspect The shareholders' list (subject to the requirements of law), during
regular business hours and at his expense, during the period it is available
for inspection. The Corporation shall make the shareholders' list available at
the meeting of shareholders, and any shareholder or his agent or attorney is
entitled to inspect the list at any time during the meeting or any adjournment.
12. Action Without Meeting. Any action required by law to be taken at
a meeting of shareholders, or any action that may be taken at a meeting of
shareholders, may be taken without a meeting or notice if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted with respect to the subject
matter thereof, and such consent shall have the same force and effect as a vote
of shareholders taken at such a meeting.
13. Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
sixty (60) days, and, in case of a meeting of shareholders, not less than ten
(10) days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 13, such
determination shall apply to any adjournment thereof, except where the Board of
Directors fixes a new record date for the adjourned meeting or as required by
law.
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<PAGE>
14. Inspectors and Judges. The Board of Directors in advance of any
meeting may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment(s)
thereof. If any inspector or inspectors, or judge or judges, are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector
or judge fails to appear or act, the vacancy may be filled by the Board of
Directors in advance of the meeting, or at the meeting by the person presiding
thereat. The inspectors or judges, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots and consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate votes, ballots and consents, determine the result, and do
such acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting, the inspector
or inspectors or judge or judges, if any, shall make a report in writing of any
challenge, question or matter determined by him or them, and execute a
certificate of any fact found by him or them.
15. Voting for Directors. Unless otherwise provided in the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast by
the shares entitled to vote in the election at a meeting at which a quorum is
present.
ARTICLE THREE
DIRECTORS
1. Number, Election and Term. The number of directors of the
Corporation shall be fixed from time to time, within the limits specified by
the Articles of Incorporation, by resolution of the Board of Directors;
provided, however, no director's term shall be shortened by reason of a
resolution reducing the number of directors. The directors shall be elected at
the annual meeting of the shareholders, except as provided in Section 2 of this
Article, and each director elected shall hold office for the term for which he
is elected and until his successor is elected and qualified or until his
earlier resignation, removal from office or death. Directors must be natural
persons who are 18 years of age or older but need not be residents of the State
of Florida, shareholders of the Corporation or citizens of the United States.
Any director may be removed at any time, with or without cause, at a special
meeting of the shareholders called for that purpose.
2. Vacancies. A director may resign at any time by giving written
notice to the Corporation, the Board of Directors or the Chairman of the Board.
Such resignation shall take effect when the notice is delivered unless the
notice specifies a later effective date, in which event the Board of Directors
may fill the pending vacancy before the effective date if they provide that the
successor does not take office until the effective date. Any vacancy occurring
in the Board of Directors and any directorship to be filled by reason of an
increase in the size of the Board of Directors shall be filled by the
affirmative vote of a majority of the current directors though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
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<PAGE>
or special meeting of the shareholders called for that purpose, unless
otherwise provided by law. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office, or until the next
election of one or more directors by shareholders if the vacancy is caused by
an increase in the number of directors.
3. Powers. Except as provided in the Articles of Incorporation and by
law, all corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the
direction of, its Board of Directors.
4. Place of Meeting. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Florida.
5. Annual Meeting. The first meeting of each newly elected Board of
Directors shall be held, without call or notice, immediately following each
annual meeting of shareholders.
6. Regular Meeting. Regular meetings of the Board of Directors may
also be held without notice at such time and at such place as shall from time
to time be determined by the Board of Directors.
7. Special Meetings and Notice. Special meetings of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
Written notice of special meetings of the Board of Directors shall be given to
each director at least forty-eight (48) hours before the meeting. Except as
required by statute, neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting. Notices to directors shall
be in writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall be
deemed to be given at the time when the same shall be received. Notice to
directors may also be given by telegram, teletype or other form of electronic
communication. Notice of a meeting of the Board of Directors need not be given
to any director who signs a written waiver of notice before, during or after
the meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting and a waiver of any and all objections to the place of
the meeting, the time of the meeting and the manner in which it has been called
or convened, except when a director states, at the beginning of the meeting or
promptly upon arrival at the meeting, any objection to the transaction of
business because the meeting is not lawfully called or convened.
8. Quorum; Required Vote; Presumption of Assent. A majority of the
number of directors fixed by, or in the manner provided in, these bylaws shall
constitute a quorum for the transaction of business; provided, however, that
whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum
shall consist of a majority of the remaining directors until the vacancy has
been filled. The act of a majority of the directors present at a meeting at
which a quorum is present when the vote is taken shall be the act of the Board
of Directors. A director of
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<PAGE>
the Corporation who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken shall be
presumed to have assented to the action taken, unless he objects at the
beginning of the meeting, or promptly upon his arrival, to holding the meeting
or transacting specific business at the meeting, or he votes against or
abstains from the action taken.
9. Action Without Meeting. Any action required or permitted to be
taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if a consent in writing, setting forth the action
taken, is signed by all of the members of the Board of Directors or the
committee, as the case may be, and such consent shall have the same force and
effect as a unanimous vote at a meeting. Action taken under this section is
effective when the last director signs the consent, unless the consent
specifies a different effective date. A consent signed under this Section 9
shall have the effect of a meeting vote and may be described as such in any
document.
10. Conference Telephone or Similar Communications Equipment Meetings.
Members of the Board of Directors may participate in a meeting of the Board by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation in such a meeting shall constitute presence in person at
the meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground the
meeting is not lawfully called or convened.
11. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate from among its members
an executive committee and one or more other committees, each of which, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full Board of Directors is required
by statute. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies in the membership of a committee shall be filled by the Board of
Directors at a regular or special meeting of the Board of Directors. The
executive committee shall keep regular minutes of its proceedings and report
the same to the Board of Directors when required. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
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<PAGE>
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
13. Chairman of the Board. The Board of Directors may, in its
discretion, choose a chairman of the board who shall preside at meetings of the
shareholders and of the directors and shall be an ex officio member of all
standing committees. The Chairman of the Board shall have such other powers and
shall perform such other duties as shall be designated by the Board of
Directors. The Chairman of the Board shall be a member of the Board of
Directors but no other officers of the Corporation need be a director. The
Chairman of the Board shall serve until his successor is chosen and qualified,
but he may be removed at any time by the affirmative vote of a majority of the
Board of Directors.
ARTICLE FOUR
OFFICERS
1. Positions. The officers of the Corporation shall consist of a
President, a Secretary and a Treasurer, and, if elected by the Board of
Directors by resolution, a Chairman of the Board and/or one or more Vice
Presidents. Any two or more offices may be held by the same person.
2. Election of Specified Officers by Board. The Board of Directors at
its first meeting after each annual meeting of shareholders shall elect a
President, a Secretary, a Treasurer and may elect one or more Vice Presidents.
3. Election or Appointment of Other Officers. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors, or, unless otherwise specified herein,
appointed by the President of the Corporation. The Board of Directors shall be
advised of appointments by the President at or before the next scheduled Board
of Directors meeting.
4. Salaries. The salaries of all officers of the Corporation to be
elected by the Board of Directors pursuant to Article Four, Section 2 hereof
shall be fixed from time to time by the Board of Directors or pursuant to its
discretion. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the President of the
Corporation or pursuant to his direction.
5. Term; Resignation. The officers of the Corporation shall hold
office until their successors are chosen and qualified. Any officer or agent
elected or appointed by the Board of Directors or the President of the
Corporation may be removed, with or without cause, by the Board of Directors.
Any officers or agents appointed by the President of the Corporation pursuant
to Section 3 of this Article Four may also be removed from such officer
positions by the President, with or without cause. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise shall be
filled by the Board of Directors, or, in the case
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<PAGE>
of an officer appointed by the President of the Corporation, by the President
or the Board of Directors. Any officer of the Corporation may resign from his
respective office or position by delivering notice to the Corporation. Such
resignation is effective when delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date if the Board provides that the
successor does not take office until the effective date.
6. President. The President shall be the Chief Executive Officer of
the Corporation, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. In the absence of the Chairman of the Board
or in the event the Board of Directors shall not have designated a chairman of
the board, the President shall preside at meetings of the shareholders and the
Board of Directors.
7. Vice Presidents. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President. They shall perform such other duties and have such
other powers as the Board of Directors shall prescribe or as the President may
from time to time delegate.
8. Secretary. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the shareholders and of the Board of Directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he shall be. He shall keep in
safe custody the seal of the Corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it.
9. Treasurer. The Treasurer shall have the custody of corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors at its regular
meetings or when the Board of Directors so requires an account of all his
transactions as treasurer and of the financial condition of the Corporation
unless otherwise specified by the Board of Directors, the Treasurer shall be
the Corporation's Chief Financial Officer.
10. Other Officers, Employees and Agents. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to him by the Board of Directors, the
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<PAGE>
officer so appointing him and such officer or officers who may from time to
time be designated by the Board of Directors to exercise such supervisory
authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
1. Issue of Certificates. The Corporation shall deliver certificates
representing all shares to which shareholders are entitled; and such
certificates shall be signed by the Chairman of the Board, President or a Vice
President, and by the Secretary or an Assistant Secretary of the Corporation,
and may be sealed with the seal of the Corporation or a facsimile thereof
2. Legends for Preferences and Restrictions on Transfer. The
designations, relative Tights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the Corporation will furnish the
shareholder a full statement of this information on request and without charge.
Every certificate representing shares that are restricted as to the sale,
disposition, or transfer of such shares shall also indicate that such shares
are restricted as to transfer and there shall be set forth or fairly summarized
upon the certificate, or the certificate shall indicate that the Corporation
will furnish to any shareholder upon request and without charge, a full
statement of such restrictions. If the Corporation issues any shares that are
not registered under the Securities Act of 1933, as amended, and registered or
qualified under the applicable state securities laws, the transfer of any such
shares shall be restricted substantially in accordance with the following
legend:
"THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME."
3. Facsimile Signatures. The signatures of the Chairman of the Board,
the President or a Vice President and the Secretary or Assistant Secretary upon
a certificate may be facsimiles, if the certificate is manually signed by a
transfer agent, or registered by a registrar, other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of the
issuance.
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<PAGE>
4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
5. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6. Registered Shareholders. The Corporation shall be entitled to
recognize the exclusive rights of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Florida.
7. Redemption of Control Shares. As provided by the Florida Business
Corporation Act, if a person acquiring control shares of the Corporation does
not file an acquiring person statement with the Corporation, the Corporation
may redeem the control shares at fair market value at any time during the
60-day period after the last acquisition of such control shares. If a person
acquiring control shares of the Corporation files an acquiring person statement
with the Corporation, the control shares may be redeemed by the Corporation
only if such shares are not accorded full voting rights by the shareholders as
provided by law.
ARTICLE SIX
GENERAL PROVISIONS
1. Dividends. The Board of Directors may from time to time declare,
and the Corporation may pay, dividends on its outstanding shares in cash,
property, or its own shares pursuant to law and subject to the provisions of
the Articles of Incorporation.
2. Reserves. The Board of Directors may by resolution create a reserve
or reserves out of earned surplus for any proper purpose or purposes, and may
abolish any such reserve in the same manner.
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<PAGE>
3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
4. Fiscal Year. The fiscal year of the Corporation shall be fixed by
the Board of Directors and may be otherwise changed from time to time by
resolution of the Board of Directors.
5. Seal. The corporate seal shall have inscribed thereon the name and
state of incorporation of the Corporation. The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
6. Gender. All words used in these Bylaws in the masculine gender
shall extend to and shall include the feminine and neuter genders.
ARTICLE SEVEN
AMENDMENTS OF BYLAWS
Unless otherwise provided by law, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted by action of the Board of Directors.
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<PAGE>
The State of Ohio
Bob Taft
Secretary of State
646107
Certificate
It is hereby certified that the Secretary of State of Ohio has custody of the
Records of Incorporation and Miscellaneous Filings; that said records show the
filing and recording of: AGA
of: MAGIC PROMOTION INC.
United States of America
State of Ohio
Office of the Secretary of State
Recorded on Roll H052 at Frame 0965 of the Records of Incorporation and
Miscellaneous Filings.
Witness my hand and the seal of the Secretary of State at Columbus, Ohio, this
22ND day of JAN A.D. 1991.
/s/ Bob Taft
Bob Taft
Secretary of State
<PAGE>
Change of Address of Statutory Agent for Ohio Corporations
The address of Lee Marshall, (Name of Agent) the statutory agent for Magic
Promotion, Inc.(Name of Corporation) has been changed from 26949 Chagrin
Boulevard (Old Street Address) Suite 203, Cleveland (City or Village), Cuyahoga
County, Ohio 44122 (Zip Code) to 9265 Ole Eight Road (New Street Address),
Northfield (City or Village), Summit County, Ohio, 44067 (Zip Code)
Date: 1-14-91 By: Lee Marshall
(Sec/Treas)
<PAGE>
January 17, 1991
Secretary of State
State office Bldg.
30 East Broad St.
Columbus, OH 43266-0418
Attention: Corporate Div.
In Re: Magic Promotion, Inc.
Charter No. 646107
To The Corporate Division:
Herein enclosed please find Change of Address of Statutory Agent. I
am also enclosing my check for $3 for the filing fee.
Please file the same and return the stamped copy back to my office.
Thank you.
Sincerely,
Sam J. Georges
SJG/mec
Encls.
<PAGE>
Department of State
The State of Ohio
Sherrod Brown
Secretary of State
646107
Certificate
It is hereby certified that the Secretary of State of Ohio has custody of the
Records of Incorporation and Miscellaneous Filings; that said records show the
filing and recording of: ARF of: MAGIC PROMOTION INC.
United States of America
State of Ohio
Office of the Secretary of State
Recorded on Roll F578 at Frame 1422 of the Records of incorporation and
Miscellaneous Filings.
Witness my hand and the seal of the Secretary of State, at the City of
Columbus, Ohio, this 17TH day of DEC, A.D. 1984 .
/s/ Sherrod Brown
Sherrod Brown
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
MAGIC PROMOTION, INC.
THE UNDERSIGNED, desiring to form a corporation for profit,
under ss.1701.01 et seq. of the Revised Code of Ohio, do hereby certify;
FIRST: The name of said corporation shall be MAGIC PROMOTION,
INC.
SECOND: The place in the state of Ohio where its principal
office is to be located is the City of Cleveland, County of Cuyahoga, and
located at 26949 Chagrin Boulevard, Suite 203, Cleveland, Ohio 44122.
THIRD: The purpose for which it is formed are: To engage in
any lawful act or activity for which corporations may be formed under
ss.1701.01 to ss.1701.98 inclusive of the Revised Code of Ohio.
To purchase or otherwise acquire, lease as lessee, invest in,
hold, use, lease as lessor, encumber, sell, exchange, transfer and dispose of
property of any description or any interest therein.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, copyrights, and trademarks and
tradenames, relating to or useful in connection with any business of this
corporation.
To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge, or otherwise dispose of or deal in
<PAGE>
and with any of the shares of the capital stock, or any voting trust
certificates in respect of the shares of the capital stock, scrip, warrants,
rights, bonds, debentures, notes, trust receipts, and other securities,
obligations, choses in action and evidences of indebtedness or interest issued
or created by any corporations, joint stock companies, syndicates,
associations, firms, trusts or persons, public or private, or by the
government, or by any state, States of America or by any foreign government, or
by any state, territory, province, municipality or other political subdivision
or by any government agency, and as owner thereof to possess and exercise all
the rights, powers and privileges of ownership, including the right to execute
consents and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement in
value thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation, municipality,
county, state, body politic or government or colony or dependency thereof.
To purchase or otherwise acquire all or any part of the
business, good will, rights, property and assets, and to assume all or any part
of the liabilities of any corporation, association, partnership or individual
engaged in any business in which any corporation organized under ss.1701.01 et
seq. of the Revised Code of Ohio is entitled to engage.
To borrow money, and issue, sell, and pledge its note, bonds,
and other evidences of indebtedness, and secure any of its obligations by
mortgage, pledge, or deed of trust of all or any of its property and guarantee
or secure obligations of any person.
To purchase, hold, sell and transfer the shares of own
capital stock to the extent permitted by law, but no such purchase may be made
when there is reasonable ground for be-
2
<PAGE>
lieving that the corporation is unable, or, by such purchase, be rendered
unable to satisfy its obligations and liabilities.
To conduct its business, and to have and maintain or more
offices, within and without the State of Ohio and in other states and
territories, in the District of Columbia, in all dependencies, colonies, or
possessions of the United States of America and in foreign countries; and to
purchase, or otherwise acquire, hold, own, equip, improve, manage, operate,
promote, finance, sell, convey, mortgage or otherwise dispose of real and
personal property in all such states and places, to the extent that the same
may be permissible under the laws thereof.
To carry on any other lawful business and to do any and every
thing necessary, suitable, convenient or proper for the accomplishment of any
of the purposes or the attainment of any one or all of the objects hereinbefore
enumerated or incidental to the powers herein named or for the enhancement of
the value of the properties of the corporation or which shall at any time
appear conducive thereto or expedient, either as holder of, or as interested
in, any property or otherwise, to have all the rights, powers, and privileges
now or hereafter conferred by the laws of the State of Ohio upon corporations
organized under ss.1701.01 et seq. of the Revised Code of Ohio or under any act
amendatory thereof, supplemental thereto or substituted therefor.
The objects and purposes specified in the foregoing clauses
shall, except where otherwise expressed, be in nowise limited or restricted by
reference to, or inferences from, the terms of any other clause in these
articles of incorporation, but the objects and purposes specified in each of
the foregoing clauses of this article shall be regarded as independent objects
and purposes.
FOURTH: The authorized number of shares of the corporation is
Seven Hundred Fifty (750) common shares, all of which shall be without par
value.
3
<PAGE>
FIFTH: The amount of stated capital with which the
corporation will begin business is Five Hundred Dollars ($500.00).
SIXTH: The following provisions are hereby agreed to for the
purpose of defining, limiting and regulating the exercise of the authority of
the corporation, or of the directors, or of all of the shareholders:
The board of directors is expressly authorized to set apart
out of any of the funds of the corporation available for dividends a reserve or
reserves for any proper purpose or to abolish any such reserve in the manner in
which it was created, and to purchase on behalf of the corporation any shares
issued by it to the extent of the surplus of the aggregate of its assets over
the aggregate of its liabilities plus stated capital.
The corporation may in its regulations confer powers upon its
board of directors in addition to the powers and authorities conferred upon it
expressly by ss.1701.01 et seq. of the Revised Code of Ohio.
Any meeting of the shareholders or the board of directors may
be held at any place within or without the State of Ohio in the manner provided
for in the regulations of the corporation.
Any amendments to the articles of incorporation may be made
from time to time, and any proposal or propositions requiring the action of the
shareholders may be authorized from time to time by the affirmative vote of the
holders of shares entitling them to exercise a majority of the voting power of
the corporation.
SEVENTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in its articles of incorporation, in
the manner now or hereafter prescribed
4
<PAGE>
by ss.1701.01 et seq. of the Revised Code of Ohio, and all rights conferred
upon shareholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, we have hereunto subscribed our names
this 23th day of April, 1984.
/s/ R.G.N.
ROBERT G. KONSTAND
Incorporator
5
<PAGE>
ORIGINAL APPOINTMENT OF AGENT
FOR
MAGIC PROMOTION, INC.
A CORPORATION OF THE STATE OF OHIO
The undersigned, being all of the incorporators of the above
named corporation hereby appoint LEE MARSHALL, who is a resident in the county
or, if a corporation, has a business address in the county in which this
corporation designating such Agent has its principal office, upon whom any
process, notice or demand required or permitted by statute to be served upon
this corporation may be served.
The full address of the Agent is 26949 Chagrin Boulevard,
Suite 203, Cleveland, Ohio 44122, Cuyahoga County, Ohio.
MAGIC PROMOTION, INC.
/s/ R.G.N.
ROBERT G. KONSTAND
Incorporator
Filed with Secretary of State ________, 1983
- -------------------------------------------------------------------------------
Akron, Ohio, April 23, 1984
The undersigned hereby accepts the foregoing appoint as Agent
of the corporation upon whom process, tax notices or demands may be served.
/s/ L.M.
LEE MARSHALL
<PAGE>
Prescribed by
Bob Taft, Secretary of State
30 East Broad Street, 14th Floor
Columbus, Ohio 43266-0418
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
Magic Promotion, Inc.
(Name of Corporation)
BRAD KRASSER, who is Vice President and LEE MARSHALL, who is: Secretary
of the above named Ohio corporation organized for profit does hereby certify
that: (Please check the appropriate box and complete the appropriate
statements.) . . . in a writing signed by all the shareholders who would be
entitled to notice of a meeting held for that purpose, the following resolution
to amend the articles was adopted:
RESOLVED, that the name of the corporation shall be changed to Magicworks
Theatricals, Inc.
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf of
the corporation, have hereto subscribed their names this 31st day of October
1997.
By: Brad Krassner By: Lee Marshall
(Chairman, President or Vice President) (Secretary or Assistant Secretary)
Brad Krassner, Vice President Lee Marshall, Secretary
<PAGE>
BY-LAWS
ARTICLE I.
GENERAL
SECTION 1. The name of this Corporation shall be the MAGIC PROMOTIONS, INC.
SECTION 2. The principal office of this Corporation shall be located at 1117
Floridian Court, Cape Coral, Florida 33904.
SECTION 3. The Corporation may, in addition to its principal office, establish
and maintain such other offices, at such place or places as the Board of
Directors may deem necessary, desirable or expedient from time to time.
Moreover, the Board of Directors shall have the authority to change the
principal office of the Corporation so long as proper notice and such filing of
documents as is required is made with the Department of State of the State of
Florida.
ARTICLE II.
CORPORATE SEAL
SECTION 1. The corporate seal of this Corporation shall have inscribed thereon
the name of the Corporation, the year of its organization, and the word
"FLORIDA."
SECTION 2. The said seal may be used by any of the officers of the corporation
by causing an impression or facsimile thereof to be impressed or affixed to any
paper or document necessary and proper to the conduct of the business of the
Corporation.
ARTICLE III.
SHAREHOLDERS AND THEIR RIGHTS
SECTION 1. All meetings of the Shareholders and of the Board of Directors, if
any, shall be held at the principal office of the Corporation, within the State
of Florida, or at such other place or places as the directors may, from time to
time determine.
<PAGE>
SECTION 2. The annual meeting of the Shareholders, commencing with the year
1994, shall be held on the first Friday of April of each year at 2:00 o'clock,
P.M., at which time they shall elect a Board of Directors, if required, and
transact any other business as may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting, specifying the location, day
and hour of the meeting, shall, at least ten (10) days prior to the meeting, be
served upon or mailed, postage prepaid, to each Shareholder entitled to vote
thereat, being of record ten (10) days next preceding the date of the meeting,
at such address as appears on the transfer books of the Corporation by the
Secretary.
SECTION 4. Special meetings of the Shareholders for any purpose or purposes,
other than those regulated by statute, may be called at any time by the
President, or a majority of the Board of Directors, or the holders of not less
than one-half of all the shares issued and outstanding and entitled to vote at
the particular meeting, upon written request identifying the purpose (s) of the
meeting and delivered to the Secretary of the Corporation. Upon receipt of any
such request, it shall be the duty of the Secretary to call a special meeting
of the Shareholders to be held at such time, not less than ten (10) days nor
more than thirty (30) days thereafter, as the Secretary may fix.
SECTION 5. Written notice of any special meeting of the Shareholders shall be
given to each Shareholder entitled to vote thereat, at such address as appears
on the transfer books of the Corporation, at least ten (lo) days before such
meeting, unless a greater period of notice is required by statute in a
particular case. Identification of the purpose(s) of the special meeting shall
be provided in the notice.
SECTION 6. Business transacted at all special meetings shall be confined to the
purpose (s) stated in the call and matters germane thereto.
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SECTION 7. Those Shareholders present in person, or represented by proxy, at
any annual meeting of Shareholders or at any duly called and properly noticed
special meeting of Shareholders shall be requisite and shall constitute a
quorum at all such meetings of Shareholders for the transaction of business,
except as otherwise provided by statute, by the Articles of Incorporation or by
these By-Laws.
SECTION 8. When a quorum is present, or represented at any meeting, the vote of
the holders of a majority of the stock having voting power, present in person,
or represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
the Articles of Incorporation or these By-Laws, a different vote is required,
in which case, such express provision shall govern and control the decision of
such question.
SECTION 9. At every Shareholders' meeting, every Shareholder entitled to vote
shall have the right to one (1) vote for every share of voting stock standing
in his name on the books of the Corporation. Unless a record date shall have
been fixed for the determination of Shareholders entitled to vote at a
Shareholders, meeting, transferees of shares which are transferred on the books
of the corporation within ten (10) days next preceding the date of such meeting
shall not be entitled to vote at such meeting. Upon demand made by a
Shareholder before the voting begins, at any election for Directors, the
election shall be by written ballot.
SECTION 10. Every shareholder entitled to vote may vote either in person or by
proxy. Every proxy shall be executed in writing by the Shareholder or his duly
authorized attorney- in-fact and filed with the Secretary of the Corporation. A
proxy, unless coupled with an interest explicitly set forth in the proxy, shall
be revocable at will, notwithstanding any other agreement or any provision in
the proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the Secretary of the Corporation. No
unrevoked proxy shall be valid after thirty (30) days from the date of its
execution, unless a longer time is expressly provided therein, but in no event
shall a proxy, unless coupled with an interest, be voted on after ninety (90)
days from the date of its execution. A proxy shall not be revoked by
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the death or incapacity of the maker, unless, before the vote is counted or the
authority is exercised, written notice of such incapacity is given to the
Secretary of the Corporation.
SECTION 11. The officer or agent having charge of the transfer books for shares
of the Corporation shall make, at least ten (10) days before each meeting of
Shareholders, a complete list of the Shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address and the number of
shares held by each, which list shall be kept on file at the registered office
of the Corporation and shall be subject to inspection by any Shareholder at any
time during usual business hours. Such list shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting. If, at any time, there are
three (3) or less Shareholders of the Corporation, the duties imposed by this
section shall be waived.
SECTION 12. In advance of any meeting of Shareholders, the Board of Directors
may appoint judges of the election, who shall be Shareholders, to act at such
meeting or any adjournment thereof. If judges of election be not so appointed,
the Chairman of any such meeting, on the request of any Shareholder or proxy,
shall make such appointment at the meeting. The number of judges shall be three
(3). No person who is a candidate for office shall act as a judge. The judges
of election shall do all such acts as may be proper to conduct the election or
vote with fairness to all Shareholders and shall make a report of any matter
determined by them and execute a certificate of any fact found by them, if
requested by the Chairman of the meeting or any Shareholder or his proxy. The
decision on the act, or certificate of a majority of the judges of the election
shall be effective in all respects as the decision, act or certificate of all
Shareholders.
SECTION 13. If set forth in the notice calling a regular or special meeting of
the Shareholders, or if consented to by all of the Shareholders, any regular or
special meeting of shareholders may be held by conference telephone. Any
meeting held by conference telephone shall require the participation of a
majority of the Shareholders, present by telephone or represented on the
telephone by proxy, to constitute a quorum of the Shareholders. In addition,
for non-telephone conference
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meetings, at the discretion of a majority of the Shareholders present in
person, or represented by proxy, any one or more of the Shareholders may
participate in any regular or special meeting of the Shareholders by conference
telephone in lieu of physically attending the meeting.
ARTICLE IV.
INFORMAL ACTION BY SHAREHOLDERS
SECTION 1. Any action required to be taken at a meeting of the Shareholders may
be taken without a meeting, if a consent in writing setting forth the action so
taken shall be signed by all Shareholders who would be entitled to vote at a
meeting for such purposes and the consent shall be filed with the Secretary of
the Corporation.
ARTICLE V.
DIRECTORS
SECTION 1. The number of Directors which shall constitute the Board of
Directors shall be three (3). Directors shall be natural persons of full age
and need not be Shareholders of the corporation. Except as hereinafter provided
in the case of vacancies, Directors other than those constituting the first
Board of Directors shall be elected by the Shareholders, and each Director
shall be elected to serve for the term of one year and/or until his successor
shall be elected and shall qualify.
SECTION 2. Vacancies in the Board of Directors shall be filled by a majority of
the remaining members of the Board, though less than a quorum and each person
so elected shall be a Director until his successor is elected by the
Shareholders, who may make such election at the next annual meeting of the
Shareholders, or at any special meeting duly called for the purpose and held
prior thereto.
SECTION 3. The business and affairs of the Corporation shall be managed by its
Board of Directors which may exercise all such powers of the Corporation and do
all such lawful acts and
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things as are not by statute, or by the Articles of
Incorporation or by these By-Laws directed or required to be exercised and done
by the Shareholders.
SECTION 4. The Board of Directors shall exercise such powers as are expressly
given them by the Articles of Incorporation and these By-Laws, together with
such powers as will enable them to do all such lawful acts as are necessary,
proper and expedient for the welfare of this Corporation, and are not directed
or required to be exercised by the Shareholders by statute, the Articles of
Incorporation, or these By-Laws; and without prejudicing the general powers of
the Board of Directors, as hereinafter stated, it is expressly declared that
the Directors shall have the following powers:
(a) To make and change regulations not inconsistent
with these By-Laws for the management of the Corporation's business and
affairs;
(b) To have full power, from time to time, to purchase or
otherwise acquire for the Corporation any property, rights or privileges which
the Corporation is authorized by law to purchase, or otherwise acquire, at such
prices and considerations and upon such terms and conditions as the Board may
consider advisable, and in its discretion, may pay therefor, in whole or in
part, in money, or in stocks, bonds, or both, or other securities of the
Corporation;
(c) To sell, or otherwise dispose of, transfer or convey,
any property of the Corporation, at such prices and considerations and upon
such terms and conditions as the Board may consider advisable, and in its
discretion they may accept in payment or exchange therefore, in whole, or in
part, money or stocks, or bonds, or other securities of any Corporation or
Corporations, except as otherwise provided by law, or by the Articles of
Incorporation;
(d) To borrow money, and to make and issue notes, bonds,
and other negotiable and transferrable instruments, mortgages, deeds of trust,
and trust agreements, and do every act and thing necessary to effectuate the
same;
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(e) To appoint and remove, or suspend, such employees,
agents or factors as they may deem necessary; to determine their duties, to
fix, and from time to time, to change their salaries or remuneration, and to
require security as and when they think fit;
(f) To manage the property, business and affairs of the
Corporation and the Directors, as a Board, are hereby invested in such
management with all the powers which the Corporation itself possesses so far as
such delegation of power is not incompatible with the provisions of these
By-Laws, or the laws of the State of Florida.
SECTION 5. Any Director shall be subject to removal by the majority vote of the
holders of the common voting stock, at a special meeting called for that
purpose, with or without cause.
SECTION 6. If the office of any Director shall become vacant by reason of
death, resignation, removal, or other reason, the remaining Directors, by a
majority vote may, at a meeting of the Board of Directors specially called,
elect a successor who shall hold office for the unexpired term and until his
successor is elected and qualifies, unless a special meeting of the holders of
the common voting stock is duly called for the purpose of filling the vacancy
and is actually held prior to the annual meeting.
SECTION 7. Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board of Directors, a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board, provided that nothing herein contained shall be construed
to preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE VI.
MEETINGS OF THE BOARD
SECTION 1. The meetings of the Board of Directors may be held at such place
within the State of Florida as a majority of the Directors may from time to
time appoint or as may be
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designated in the notice calling the meeting. If no
place is so appointed or designated, the meeting shall be held at the principal
place of business of the Corporation.
SECTION 2. The first meeting of each newly elected Board may be held at such
time and place as shall be fixed by the Shareholders at the meeting at which
such Directors were elected and no notice shall be necessary to the newly
elected Directors in order to legally constitute the meeting, provided a
majority of the whole Board shall be present; or it may convene at such time
and place as may be fixed by the consent in writing of all the Directors.
SECTION 3. Regular meetings of the Board shall be held at such time as shall
from time to time be determined by a majority of the Directors, on five (5)
days notice to each Director, given personally or by mail or by telegram.
SECTION 4. Special meetings of the Board may be called by the President on
three (3) days' notice to each Director, either personally or by mail or by
telegram, said notice specifying the purpose(s) of the special meeting; special
meetings shall be called by the President or Secretary in a like manner and on
like notice on the written request of two (2) Directors.
SECTION 5. At all meetings of the Board, a majority of the Directors in office
shall be necessary to constitute a quorum for the transaction of business, and
the acts of a majority of the Directors present at a meeting at which a quorum
is present, shall be the acts of the Board of Directors, except as otherwise
specifically provided by statute or by the Articles of Incorporation, or by
these By-Laws. If a quorum shall not be present at any meeting of Directors,
the Directors present thereat may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 6. If all the Directors shall severally or collectively consent in
writing to any action to be taken by the Corporation, such action shall be as
valid a corporate action as though it had been authorized at a meeting of the
Board of Directors. All consents shall be filed with the Secretary of the
Corporation.
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SECTION 7. If set forth in the notice calling a regular or special meeting of
the Board of Directors, or if consented to by all of the Board of Directors,
the regular or special meeting of the Board of Directors may be held by
conference telephone, with a majority of the Directors present by telephone to
constitute a quorum of the meeting. In addition, at the discretion of a
majority of the Board of Directors present at a duly called and noticed regular
or special meeting of the Board of Directors, one or more of the Directors may
participate in the meeting by conference telephone in lieu of physically
attending the meeting.
ARTICLE VII.
OFFICERS
SECTION 1. The officers of the Corporation shall be chosen by the Directors and
shall be a president, a vice-president, a secretary, and a treasurer. In
addition, the Board of Directors may appoint any such other vice-presidents,
assistant secretaries, or assistant treasurers it deems necessary to
efficiently operate the Corporation. The president, secretary, treasurer, vice
president and any other vice-presidents, assistant secretaries, or assistant
treasurers shall be natural persons of full age. Any or all of the foregoing
offices may be held by the same person.
SECTION 2. The Board of Directors, at their first meeting of each calendar year
commencing in 1993 shall elect a president, secretary and treasurer and shall
appoint such vice-presidents, assistant secretaries and assistant treasurers as
necessary.
SECTION 3. The Board of Directors may also choose such other officers and
assistant officers and agents as the needs of the corporation may require, who
shall hold their offices for such terms and shall have such authority and shall
perform such duties as from time to time shall be determined by resolution of
the Board.
SECTION 4. The salaries of all officers and agents of the Corporation shall be
fixed by the Board of Directors.
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SECTION 5. The officers of the Corporation shall hold office for one year and
until their successors are chosen and have qualified. An officer or agent,
elected or appointed by the Board of Directors, may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will
be served thereby. If the office of any officer becomes vacant for any reason,
the vacancy shall be filled by the Board of Directors.
SECTION 6. The President shall be the chief executive officer of the
Corporation; he shall preside at all meetings of the Shareholders and
Directors; shall have general and active management of the business of the
Corporation, and shall see that all orders and resolutions of the Board are
carried into effect.
SECTION 7. The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
SECTION 8. The Vice-President, if one is appointed, shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as shall from time to time be
imposed by the Board of Directors.
SECTION 9. The Secretary shall attend all meetings of the Shareholders and of
the Board of Directors, and shall act as clerk thereof. He shall record the
minutes of all transactions at each meeting in a book to be kept for that
purpose, wherein shall also be a record of all the votes of the Corporation.
The Secretary shall give or cause to be given notice of all meetings of the
Shareholders or the Board of Directors, where notice is required by statute or
these By-Laws, and shall, in addition thereto, perform such other duties as may
be prescribed by the Board of Directors or the President under whose
supervision he shall be. The Secretary shall keep in his custody the corporate
seal, and shall affix it to any instrument when authorized so to do by the
Board of Directors or the President, and when so affixed it shall be attested
by his signature or by the signature of the Treasurer or an Assistant
Secretary. The Assistant Secretary, if one is
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elected, shall perform all the duties of the Secretary in the event the
Secretary is absent for any reason and shall assist the Secretary in the
performance of his duties.
SECTION 10. The Treasurer shall have the care and custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as shall be designated by the Board of
Directors. The Assistant Treasurer, if one is elected, shall perform all the
duties of the Treasurer in the event the Treasurer is absent for any reason and
shall assist the Treasurer in the performance of his duties.
SECTION 11. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meeting of the Board of
Directors, or whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the corporation. In addition,
the Treasurer shall render an annual statement as to the financial condition of
the Corporation; he shall have charge and custody of the original stock books,
the stock transfer books and stock ledgers, shall act as the stock transfer
agent, and perform such other duties as may be incident to the office of
Treasurer.
SECTION 12. The Treasurer shall, if required by the Board of Directors, give
the Corporation a bond, in such sum, and with such surety or sureties as maybe
satisfactory to the Board of Directors for the faithful discharge, of the
duties of his office, and for the restoration of the Corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession
or under his control belonging to the Corporation.
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ARTICLE VIII.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. Litigation Brought by Third Parties. Each individual who was or is a
party or is threatened to be a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, or other than an action by or in the right of the Corporation,
by reason of the fact that he is or was a Director, officer, employee or agent
of the Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation
against all expenses, including attorney's fees, judgments, fines, amounts paid
in settlement, and all other liabilities actually and reasonably incurred or
imposed upon him in connection with or arising from such action, suit, or
proceeding: PROVIDED, HOWEVER, that the Corporation shall not indemnify any
such person, whose actions or failure to act on behalf of the Corporation which
gives rise to the claim for indemnification, is determined by a court to
constitute wilful misconduct or recklessness.
SECTION 2. Litigation by or in the Right of the Corporation. Each person, his
heirs, executors or administrators, who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Corporation only
as to the litigation expenses, including attorney's fees, actually and
reasonably is incurred or imposed upon him in connection with the defense or
settlement of such action or suit; PROVIDED, HOWEVER, that the corporation
shall not indemnify any person whose actions or failure to act has been
determined by a court to constitute willful misconduct or recklessness.
SECTION 3. Indemnification as of Right. To the extent that a Director, officer,
employee, or agent of the Corporation has been successful on the merits or
otherwise in defense of any
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action, suit or proceeding referred to in Section 1 and 2, or in defense of any
claim, issue or matter therein, he shall have the absolute right to be
indemnified against expenses, including attorney fees, actually or reasonably
incurred by him in connection therewith. The determination of what expenses are
actually or reasonably incurred shall be determined by the Board of Directors,
but in the event of disagreement, the person making the request may apply to
the Circuit Court of Lee County, Florida, or in any other state court of
appropriate jurisdiction for such determination.
SECTION 4. Advances for Expenses. Expenses incurred defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by
the Board of Directors after making a determination upon the basis of the facts
then available that the person making the request for an advance is entitled
thereto under the standards of the applicable Section 1 or 2. Such advance
shall be granted only upon receipt of an undertaking by or on behalf of the
Director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article.
SECTION 5. Non-Exclusivity and Non-Duplication. The indemnification provided by
this Article shall not be deemed exclusive of any rights to which any person
seeking indemnification may be entitled under any other By-Law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to actions in
his official capacity and as to actions in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person. The indemnification provided by
this Article shall not be exclusive of any powers, rights, agreements, or
undertaking which may be legally permissible or authorized by or under any
applicable law. Notwithstanding any other provision set forth in this Article,
the indemnification authorized and provided hereby shall be applicable only to
the extent that any such indemnification shall not duplicate any
indemnification or reimbursement which such person has received or shall
receive otherwise than under this Article.
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SECTION 6. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability asserted against him and incurred by him in any such capacity
under the provisions of this Article or otherwise, upon such terms and
conditions as the Corporation may deem requisite, including a requirement that
any such person must contribute a portion or all of the cost of maintaining
such insurance.
ARTICLE IX.
PERSONAL LIABILITY OF DIRECTORS
SECTION 1. A Director of the Corporation shall not be personally liable for
monetary damages to the Corporation or any other person for any action taken,
or any failure to take any action, regarding corporate management or policy,
unless: (a) the Director has breached or failed to perform the duties of his
office as set forth under the laws of the State of Florida; and (b) the breach
of, or failure to perform, those duties constitutes (1) a violation of any
criminal statute, unless the director had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (2) self-dealing resulting in a direct or indirect personal benefit;
(3) an unlawful distribution; (4) conscious disregard for the best interest of
the corporation; (5) willful misconduct; or (6) recklessness.
ARTICLE X.
CERTIFICATE OF SHARES
SECTION 1. The certificates of shares of the Corporation shall be numbered and
registered in the share register as they are issued. They shall exhibit the
registered holder's name and the number and class of shares represented thereby
and the par value, if any, of each share.
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SECTION 2. Every share certificate shall be signed by the President and the
Secretary, or the Treasurer and shall be sealed with the corporate seal. In
case any officer who has signed shall have ceased to be such officer because of
death, resignation, or otherwise, before the certificate is issued, it may be
issued by the Corporation with the same effect as if the officer had not ceased
to be such at the date of its issue.
SECTION 3. In the event of dissolution, the distribution of the assets shall
inure only to the benefit of the owners of the outstanding shares of stock;
said distribution of the assets to the owners of the outstanding shares shall
be in the same proportion which the number of shares of outstanding stock held
by each person bears to the total of shares outstanding.
SECTION 4. When the holder of any stock certificate, or his personal
representative shall allege and represent to the Treasurer of the Corporation
that a certificate of stock has been lost or destroyed or mutilated, the
Directors may direct that a duplicate certificate be issued, provided, however,
that the Board of Directors shall have the right to demand that the said
holder, or his personal representative, first give to the Corporation a bond
with sufficient surety in a sum equal to double the book value of the stock
represented by said certificate, to indemnify it against any loss which it may
in the future sustain by reason of the issuance of said duplicate certificate,
while the original certificate remains outstanding.
SECTION 5. (a) Provided that the terms of any shareholders agreement
which may be in effect from time to time are complied with, and all applicable
securities laws are complied with, Shares of the stock of this Corporation may
be transferred upon surrender of the certificate thereof to the Treasurer of
the Corporation endorsed by the holder named therein, or his attorney, lawfully
appointed or constituted in writing, which transfer shall immediately be
entered upon the proper books of the Corporation by the Treasurer thereof.
(b) Upon compliance with these terms, the Treasurer shall
cancel the surrendered certificate by an appropriate marking across its face,
and shall issue a new certificate
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therefore, indicating the new holder, and, in the event that he had only a
special interest in said stock, the nature of the special interest.
SECTION 6. The Board of Directors may fix a time, not less than ten (10) nor
more than thirty (30) days prior to the date of any meeting of Shareholders, as
a record date for the determination of the Shareholders entitled to receive
payment of any such dividend or distribution, or to receive any such allotment
of rights, or to exercise their rights in respect to any such change,
conversion or exchange of shares. In such case, only such Shareholders as shall
be Shareholders of record on the date so fixed shall be entitled to notice of,
and to vote at, such meeting, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights as the case may
be, notwithstanding any transfer of any shares on the books of the Corporation
after any record date so fixed. The Board of Directors may close the books of
the Corporation against transfers of shares during the whole or any part of
such period and, in such case, written or printed notice thereof shall be
mailed at least five (5) days before the closing thereof to each Shareholder of
record at the address appearing on the records of the Corporation or supplied
by said Shareholder to the Corporation for the purpose of notice.
SECTION 7. (a) Any stock acquired by the Corporation shall be held in
the name of the Corporation, subject to the control of the Board of Directors,
which may, offer it for sale at such price as it may deem proper to such entity
or entities as it may select. The Shareholders shall not have any preemptive
rights in the issuance of treasury stock nor in the issuance of authorized but
unissued stock.
(b) Any purchaser shall be subject to these By-Laws and
any provisions of a Shareholders Agreement that may be in effect at the time of
purchase.
SECTION 8. When issued, all certificates of stock shall be conspicuously noted
that they are issued subject to all limitations imposed by these By-Laws, any
Shareholders Agreement that may be in effect from time to time, and any
applicable Federal and State Securities Laws.
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ARTICLE XI.
DIVIDENDS
SECTION 1. Dividends or distributions upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation
relating thereto, if any, may be declared by the Board of Directors at any
regular or special meeting pursuant to law. Dividends may be paid in cash, in
property or in shares of the Corporation.
SECTION 2. Before payment of any dividend or distribution to Shareholders,
there may be set aside out of any funds of the Corporation available for
dividends or distributions, such sum or sums as the Directors from time to time
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends or distributions, or for repairing
or -maintaining the property of the Corporation, or for such other purpose as
the Directors shall think conducive to the interests of the Corporation;
PROVIDED, HOWEVER, that the Board of Directors may abolish any reserve in the
same manner as it was created.
ARTICLE XII.
FINANCIAL REPORT TO SHAREHOLDERS
SECTION 1. The Directors shall, at their sole discretion, provide the
Shareholders all financial reports prepared for the Corporation at the end of
the fiscal year or at any time during the fiscal year. Said financial reports
may include, without limitation, a profit and loss statement, a balance sheet
and a statement of change in retained earnings. If provided, said financial
reports shall be provided within one Hundred Twenty (120) days of the close of
the Corporation's fiscal year. Any Shareholder shall have the right to demand
copies of any or all financial reports, if not provided by the Board of
Directors.
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ARTICLE XIII.
CHECKS AND NOTES
SECTION 1. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers as the Board of Directors may from time
to time designate. If not specifically designated, the foregoing shall be
signed by the President and attested by the Secretary.
ARTICLE XIV.
FISCAL YEAR
SECTION 1. The fiscal year shall begin the first day of January in each year.
ARTICLE XV.
NOTICES
SECTION 1. Whenever under the provisions of the statutes, or of the Articles of
Incorporation, or of these By-Laws, notice is required to be given to any
person, it may be given to such person either personally or by sending a copy
thereof through the mail, or by telegram (charges prepaid), to his address
appearing on the books of the Corporation or supplied by him to the Corporation
for the purpose of notice, or, in default of other address, to such person at
the General Post Office in Cape Coral, Florida. If notice is sent by mail or by
telegram, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States Mail or with a telegraph office for
transmission to such person.
SECTION 2. Any notice required to be given to any person may be waived in
writing signed by the person entitled to such notice whether before or after
the time stated therein. Attendance of any person entitled to notice, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting.
- 18 -
<PAGE>
ARTICLE XVI.
AMENDMENTS TO BY-LAWS
SECTION 1. Amendments to these By-Laws may be made by a vote of the
Shareholders representing a majority of all the stock issued and outstanding,
at any annual Shareholders' meeting when the proposed amendment has been set
forth in the notice of such meeting.
SIGNATURE AND CERTIFICATION
I certify that the foregoing are the true and correct By-Laws
(together with all amendments thereto) of MAGIC PROMOTIONS, INC.
DATED: March , 1993
-------------------------------
LEE D. MARSHALL, VICE-PRESIDENT
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<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation of MAGICWORKS TRANSPORTATION, INC., a corporation organized under
the laws of the State of Florida, filed on January 7, 1998, as shown by the
records of this office.
The document number of this corporation is P98000001635.
Given under my hand and the
Great Seal of the State of Florida at
Tallahassee, the Capitol, this the
Fifteenth day of October, 1998
/s/ Sandra B. Mortham
------------------------------------
Sandra B. Mortham
Secretary of State
<PAGE>
H98000000395 FILED 98 JAN-7 AM 8:12
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF INCORPORATION
Article I. Name
The name of this Florida corporation is:
Magicworks Transportation, Inc.
Article II. Address
The mailing address of the Corporation is:
Magicworks Transportation, Inc.
930 Washington Avenue, 5th Floor
Miami Beach FL 33139
Article III. Registered Agent
The name and address of the registered agent of the Corporation is:
Corporate Creations Enterprises Inc.
4521 PGA Boulevard #211
Palm Beach Gardens FL 33418
Article IV. Board of Directors
The name of each member of the Corporation's Board of Directors is:
Glenn Bechdel
Lee D. Marshall
Joe Marsh
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time, in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the fullest
extent permitted by applicable law.
Article V. Capital Stock
The Corporation shall have the authority to issue 2,000 shares of common stock,
par value $.01 per share.
Article VI. Incorporator
The name and address of the incorporator is:
Corporate Creations International Inc.
8995 North Military Trail o Suite 202D
Palm Beach Gardens FL 33410-6266
<PAGE>
Article VII. Corporate Existence
These Articles of Incorporation shall become effective and the corporate
existence will begin on January 7, 1998.
The undersigned incorporator executed these Articles of Incorporation on
January 7, 1998.
/s/ Frank A. Rodriguez
- ----------------------------------------
CORPORATE CREATIONS INTERNATIONAL INC
Frank A. Rodriguez President
Corporate Creations International Inc.
8895 North Military Trail o Suite 202D
Palm Beach Gardens FL 33410-6266
(561) 694-8107
H98000000395
-2-
<PAGE>
CERTIFICATE OF DESIGNATION
REGISTERED AGENT/OFFICE
CORPORATION:
Magicworks Transportation, Inc.
REGISTERED AGENT/OFFICE:
Corporate Creations Enterprises Inc.
4521 PGA Boulevard #211
Palm Beach Gardens FL 33418
I agree to act as registered agent to accept service of process for the
corporation named above at the place designated in this Certificate. I agree to
comply with the provisions of all statutes relating to the proper and complete
performance of the registered agent duties. I am familiar with and accept the
obligations of the registered agent position.
/s/ Frank A. Rodriguez
- ---------------------------------------------
CORPORATE CREATIONS ENTERPRISES, INC.
Frank A. Rodriguez, President
Date: January 7, 1998
Corporate Creations International Inc.
8895 North Military Trail o Suite 202D
Palm Beach Gardens FL 33410-6266
(561) 694-8107
H98000000395
<PAGE>
Bylaws
of
Magicworks Transportation, Inc.
ARTICLE I. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or
under the authority of the Board of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
Directors must be natural persons who are at least 18 years of age but need not
be shareholders of the Corporation. Residents of any state may be, directors.
The shareholders shall have authority to fix the compensation of directors.
Section 2. Compensation. The shareholders shall have authority to fix
the compensation of directors. Unless specifically authorized by a resolution
of the shareholders, the directors shall serve in such capacity without
compensation.
Section 3. Presumption of Assent. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless he objects at the beginning of the meeting
(or promptly upon arriving) to the holding of the meeting or transacting the
specified business at the meeting, or if the director votes against the action
taken or abstains from voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum
number of directors required by law. The number of directors may be increased
or decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders,
the shareholders shall elect directors to hold office until the next annual
meeting or until their earlier resignation, removal from office or death.
Directors shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled by the shareholders or by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders. If there are no remaining directors,
the vacancy shall be filled by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any
director or the entire Board of Directors may be removed, with or without
cause, provided the notice of the meeting states
<PAGE>
that one of the purposes of the meeting is the removal of the director. A
director may be removed only if the number of votes cast to remove him exceeds
the number of votes cast against removal.
Section 8. Quorum and Voting. A majority of the number of directors
fixed by these Bylaws shall constitute a quorum for the transaction of
business. The act of a majority of directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
Section 9. Executive and other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members one or more committees each of which must have at least
two members. Each committee shall have the authority set forth in the
resolution designating the committee.
Section 10. Place Of Meeting. Regular and special meetings of the
Board of Directors shall be held at the principal place of business of the
Corporation or at another place designated by the person or persons giving
notice or otherwise calling the meeting.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the
Board of Directors shall be held without notice at the time and on the date
designated by resolution of the Board of Directors. Written notice of the time,
date and place of special meetings of the Board of Directors shall be given to
each director by mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, unless a
director objects to the transaction of business (promptly upon arrival at the
meeting) because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors must be specified in the notice or waiver of
notice of the meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of an adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors. Meetings of the Board of Directors may be called by the President or
the chairman of the Board of Directors. Members of the Board of Directors and
any committee of the Board may participate in a meeting by telephone conference
or similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation by these means constitutes
presence in person at a meeting.
Section 12. Action by Written Consent. Any action required or
permitted to be taken at a meeting of directors may be taken without a meeting
if a consent in writing setting forth the action to be taken and signed by all
of the directors is filed in the minutes of the proceedings of the Board.
- 2 -
<PAGE>
The action taken shall be deemed effective when the last director signs the
consent, unless the consent specifies otherwise.
ARTICLE II. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of the shareholders of
the Corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall
be held when directed by the President or when requested in writing by
shareholders holding at least 10% of the Corporation's stock having the right
and entitled to vote at such meeting. A meeting requested by shareholders shall
be called by the President for a date not less than 10 nor more than 60 days
after the request is made. Only business within the purposes described in the
meeting notice may be conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the
principal place of business of the Corporation or at such other place as is
designated by the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders
shall be mailed to each shareholder having the right and entitled to vote at
the meeting at the address as it appears on the records of the Corporation. The
meeting notice shall be mailed not less than 10 nor more than 60 days before
the date set for the meeting. The record date for determining shareholders
entitled to vote at the meeting will be the close of business on the day before
the notice is sent. The notice shall state the time and place the meeting is to
be held. A notice of a special meeting shall also state the purposes of the
meeting. A notice of meeting shall be sufficient for that meeting and any
adjournment of it. If a shareholder transfers any shares after the notice is
sent, it, shall not be necessary to notify the transferee. All shareholders may
waive notice of a meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative
vote of a majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders. Each
outstanding share shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders. An alphabetical list of all shareholders who
are entitled to notice of a shareholders' meeting along with their addresses
and the number of shares held by each shall be produced at a shareholders,
meeting upon the request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the
- 3 -
<PAGE>
shareholder or his attorney-in-fact. The appointment of proxy will be effective
when received by the Corporation's officer or agent authorized to tabulate
votes. No proxy shall be valid more than 11 months after the date of its
execution unless a longer term is expressly stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the
voting stock entitled to vote at a meeting are present at the meeting, and sign
a written consent to the meeting on the record, the acts of the meeting shall
be valid, even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
shareholders may be taken without a meeting if written consents, setting forth
the action taken, are signed by at least a majority of shares entitled to vote
and are delivered to the officer or agent of the Corporation having custody of
the Corporation's records within 60 days after the date that the earliest
written consent was delivered. Within 10 days after obtaining an authorization
of an action by written consent, notice shall be given to those shareholders
who have not consented in writing or who axe not entitled to vote on the
action. The notice shall fairly summarize the material features of the
authorized action. If the action creates dissenters rights, the notice shall
contain a clear statement of the right of dissenting shareholders to be paid
the fair value of their shares upon compliance with and as provided for by the
state law governing corporations.
ARTICLE III. OFFICERS
Section 1. Officers; Election; Resignation; Vacancies. The Corporation
shall have the officers and assistant officers that the Board of Directors
appoint from time to time. Except as otherwise provided in an employment
agreement which the Corporation has with an officer, each officer shall serve
until a successor is chosen by the directors at a regular or special meeting of
the directors or until removed. Officers and agents shall be chosen, serve 'for
the terms, and have the duties determined by the directors. A person may hold
two or more offices.
Any officer may resign at any time upon written notice to the
Corporation. The resignation shall be effective upon receipt, unless the notice
specifies a later date. If the resignation is effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date provided the successor officer
does not take office until the future effective date. Any vacancy occurring in
any office of the Corporation by death, resignation, removal or otherwise may
be filled for the unexpired portion of the term by the Board of Directors at
any regular or special meeting.
Section 2. Powers and Duties of Officers. The officers of the
Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board of Directors.
Section 3. Removal of officers. An officer or agent or member of a
Committee elected or appointed by the Board of Directors may be removed by the
Board with or without cause whenever
- 4 -
<PAGE>
in its judgment the best interests of the Corporation will be served thereby,
but such removal shall be without prejudice to the contract rights, if any, of
the person so removed. Election or appointment of an officer, agent or member
of a committee shall not of itself create contract rights. Any officer, if
appointed by another officer, may be removed by that officer.
Section 4. Salaries. The Board of Directors may cause the Corporation
to enter into employment agreements with any officer of the Corporation. Unless
provided for in an employment agreement between the Corporation and an officer,
all officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with
financial institutions as determined by the Board of Directors.
ARTICLE IV. DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions
to its shareholders in cash, property, or its own shares, unless the
distribution would cause (i) the Corporation to be unable to pay its debts as
they become due in the usual course of business, or (ii) the Corporation's
assets to be less than its liabilities plus the amount necessary, if the
Corporation were dissolved at the time of the distribution, to satisfy the
preferential rights of Shareholders whose rights are superior to those
receiving the distribution. The shareholders and the Corporation may enter into
an agreement requiring the distribution of corporate profits, subject to the
provisions of law.
ARTICLE V. CORPORATE RECORDS
Section 1. Corporate Records. The Corporation shall maintain its
records in written form or in another form capable of conversion into written
form within a reasonable time. The Corporation shall keep as permanent records
minutes of all meetings of its shareholders and Board of Directors, a record of
all actions taken by the shareholders or Board of Directors without a meeting,
and a record of all actions taken by a committee of the Board of Directors on
behalf of the Corporation. The Corporation shall maintain accurate accounting
records and a record of its shareholders in a form that permits preparation of
a list of the names and addresses of all shareholders in alphabetical order by
class of shares showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles
of incorporation and all amendments to them currently in effect; these Bylaws
or restated Bylaws and all amendments currently in effect; resolutions adopted
by the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders,
meetings and records of all actions taken by shareholders without a meeting for
the past three years; written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including
the financial statements furnished for the last three years; a list of names
and business
- 5 -
<PAGE>
street addresses of its current directors and officers; and its most recent
annual report delivered to the Department of State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled
to inspect and copy, during regular business hours at a reasonable location
specified by the Corporation, any books and records of the Corporation. The
shareholder must give the Corporation written notice of this demand at least
five business days before the date on which he wishes to inspect and copy the
records(s). The demand must be made in good faith and for a proper purpose. The
shareholder must describe with reasonable particularity the purpose and the
records he desires to inspect, and the records must be directly connected with
this purpose. This Section does not affect the right of a shareholder to
inspect and copy the shareholders' list described in this Article if the
shareholder is in litigation with the Corporation. In such a case, the
shareholder shall have the same rights as any other litigant to compel the
production of corporate records for examination.
The Corporation may deny any demand for inspection if the demand was
made for an improper purpose, or if the demanding shareholder has within the
two years preceding his demand, sold or offered for sale any list of
shareholders of the Corporation or of any other corporation, has aided or
abetted any person in procuring any list of shareholders for that purpose, or
has improperly used any information secured through any prior examination of
the records of this Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by
resolution of the shareholders within 120 days after the close of each fiscal
year, the Corporation shall furnish its shareholders with annual financial
statements which may be consolidated or combined statements of the Corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and
a statement of cash flows for that year. If financial statements are prepared
for the Corporation on the basis of generally accepted accounting principles,
the annual financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the President or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The Corporation
shall mail the annual financial statements to each shareholder within 120 days
after the close of each fiscal year or within such additional time thereafter
as is reasonably necessary to enable the Corporation to prepare its financial
statements. Thereafter, on written request from a shareholder who was not
mailed the statements, the Corporation shall mail him the latest annual
financial statements.
Section 4. Other Reports to Shareholders. If the Corporation
indemnifies or advances expenses to any director, officer, employee or agent
otherwise than by court order or action by the
- 6 -
<PAGE>
shareholders or by an insurance carrier pursuant to insurance maintained by the
Corporation, the Corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next annual
shareholders' meeting, or prior to the meeting if the indemnification or
advance occurs after the giving of the notice but prior to the time the annual
meeting is held. This report shall include a statement specifying the persons
paid, the amounts paid, and the nature and status at the time of such payment
of the litigation or threatened litigation.
If the Corporation issues or authorizes the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the Corporation, with or before the notice of the
next shareholders, meeting.
ARTICLE VI. STOCK CERTIFICATES
Section 1. Issuance. The Board of Directors may authorize the issuance
of some or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for
any share until the share is fully paid. The Corporation shall be entitled to
treat the holder of record of shares as the holder in fact and, except as
otherwise provided by law, shall not be bound to recognize any equitable or
other claim to or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be
transferred on its books only after the surrender to the Corporation of the
share certificates duly endorsed by the holder of record or attorney-in-fact.
If the surrendered certificates are canceled, new certificates shall be issued
to the person entitled to them, and the transaction recorded on the books of
the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. If a shareholder
claims to have lost or destroyed a certificate of shares issued by the
Corporation, a new certificate shall be issued upon the delivery to the
Corporation of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed, and, at the discretion of the Board
of Directors, upon the deposit of a bond or other indemnity as the Board
reasonably requires.
ARTICLE VII. INDEMNIFICATION
Section 1. Right to Indemnification. The Corporation hereby
indemnifies each person (including the heirs, executors, administrators, or
estate of such person) who is or was a director or officer of the Corporation
to the fullest extent permitted or authorized by current or future legislation
or judicial or administrative decision against all fines, liabilities, costs
and expenses, including attorneys' fees, arising out of his or her status as a
director, officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to which
- 7 -
<PAGE>
those seeking an indemnification may be entitled. The Corporation may maintain
insurance, at its expense, to protect itself and all officers and directors
against fines, liabilities, costs and expenses, whether or not the Corporation
would have the legal power to indemnify them directly against such liability.
Section 2. Advances. Costs, charges and expenses (including attorneys'
fees) incurred by a person referred to in Section 1 of this Article in
defending a civil or criminal proceeding shall be paid by the Corporation in
advance of the final disposition thereof upon receipt of an undertaking to
repay all amounts advanced if it is ultimately determined that the person is
not entitled to be indemnified by the Corporation as authorized by this
Article, and upon satisfaction of other conditions required by current or
future legislation.
Section 3. Savings Clause. If this Article or any portion of it is
invalidated on any ground by a court of competent jurisdiction, the Corporation
nevertheless indemnifies each person described in Section 1 of this Article to
the fullest extent permitted by all portions of this Article that have not been
invalidated and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws
adopted, by a majority vote of the directors or by a vote of the shareholders
holding a majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors
of the Corporation.
--------------------------------
Secretary
Date:
--------------------------------
- 8 -
<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation, as amended to date, of MAGICWORKS WEST, INC., a corporation
organized under the laws of the State of Florida, as shown by the records of
this office.
The document number of this corporation is P97000000470.
Given under my hand and the
Great Seal of the State of Florida at
Tallahassee, the Capitol, this the
Twelfth day of October, 1998
/s/ Sandra B. Mortham
-------------------------------------
Sandra B. Mortham
Secretary of State
<PAGE>
FILED - 96 DEC 31 PM 1:14
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF INCORPORATION
OF
MAGICSPACE CORPORATION
ARTICLE I
The name of the corporation is MAGICSPACE CORPORATION (the
"Corporation").
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is 930 Washington Avenue, 5th Floor, Miami Beach, Florida 33139.
ARTICLE III
This Corporation shall have authority to issue One Thousand (1,000)
shares of Common Stock having a par value of $0.01 per share.
ARTICLE IV
The Corporation shall hold a special meeting of shareholders only:
(1) On call of the Board of Directors or persons authorized to do
so by the Corporation's Bylaws; or
(2) If the holders of not less than 50 percent of all votes
entitled to be cast on any issue proposed to be considered at
the proposed special meeting sign, date, and deliver to the
Corporation's secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to
be held.
ARTICLE V
The street address of the Corporation's initial registered office is
1201 Hays Street, City of Tallahassee, County of Leon, State of Florida 32301
and the name of its initial registered agent at such office is Corporation
Service Company.
ARTICLE VI
The Board of Directors of the Corporation shall consist of at least
one director, with the exact number to be fixed from time to time in the manner
provided in the Corporation's Bylaws.
<PAGE>
ARTICLE VII
The name of the Incorporator is Joseph A. Marinello and the address of
the Incorporator is 1221 Brickell Avenue, Miami, Florida 33131.
ARTICLE VIII
This Corporation shall indemnify and shall advance expenses on behalf
of its officers and directors to the fullest extent not prohibited by law in
existence either now or hereafter.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named
above, for the purpose of forming a corporation pursuant to the Florida
Business Corporation Act of the State of Florida has signed these Articles of
Incorporation this 29th day of December, 1996.
/s/ Joseph A. Marinello
------------------------------------
Joseph A. Marinello, Incorporator
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
The undersigned, having been named the Registered Agent of
MAGICSPACE CORPORATION hereby accepts such designation and is familiar with,
and accepts, the obligations of such position, as provided in Florida Statutes
ss.607.0505.
CORPORATION SERVICE COMPANY
/s/ Karen Rozar
-----------------------------------
Karen Rozar,
as Agent for the Registered Agent
Dated: December ___, 1996
-2-
<PAGE>
FILED - 96 DEC 31 PM 4:16
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF MERGER
OF
SPACE AGENCY, INC., A UTAH CORPORATION
INTO
MAGICSPACE CORPORATION, A FLORIDA CORPORATION
Pursuant to the provisions or 607.1101, 607.1105 and 607.1107 of the
Florida Business Corporation Act (the "Act"), SPACE AGENCY, INC., a Utah
corporation ("Space Agency") and MAGICSPACE CORPORATION, a Florida corporation
(the "Survivor") adopt the following Articles of Merger for the purpose or
merging SPACE AGENCY with and into the Survivor.
FIRST: The Plan of Merger is attached hereto as Exhibit A.
SECOND: The Plan of Merger was adopted by the Board of Directors and
shareholders of each of Space Agency and the Survivor by unanimous written
consent in accordance with the provisions of Section 607.1103 of the Act as of
December 30, 1996.
IN WITNESS WHEREOF, these Articles of Merger have been executed on
behalf of the parties hereto as of the 30th day of December, 1996.
SPACE AGENCY, INC.
By: /s/ John W. Ballard
---------------------------------
John W. Ballard, President
MAGICSPACE CORPORATION
By: /s/ Brad Krassner
---------------------------------
Brad Krassner, President
<PAGE>
H97000016073 FILED - 97 OCT 10 PM 4:29
TALLAHASSEE, FLORIDA
ARTICLES OF AMENDMENT
ARTICLE I. NAME
The name of this Florida corporation is Magicspace Corporation.
ARTICLE II. AMENDMENT
The Articles of Incorporation of the Corporation are amended so that the name
of the Corporation is changed from Magicspace Corporation to Magicworks West,
Inc.
ARTICLE III. DATE AMENDMENT ADOPTED
The amendment set forth in these Articles of Amendment was adopted on the date
shown below.
ARTICLE IV. SHAREHOLDER APPROVAL OF AMENDMENT
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
The undersigned executed this document on the date shown below.
Magicspace Corporation
By:/s/ Steve Chaby (?)
- ---------------------------------------
Print Name: Steve Chaby (?)
Print Title: Vice President
Date: 10-7-97
- ---------------------------------------
Corporate Creations International Inc.
8896 North Military Trail o Suite 2020
Palm Beach Gardens FL 33410-6266
(661) 694-8107
H97000016073
<PAGE>
BYLAWS
OF
MAGICSPACE CORPORATION
(A FLORIDA CORPORATION)
<PAGE>
INDEX
[table of contents deleted]
<PAGE>
MAGICSPACE CORPORATION
BYLAWS
ARTICLE ONE
OFFICES
1. Registered Office. The registered office of MAGICSPACE CORPORATION,
a Florida corporation (the "Corporation"), shall be located in the City of
Tallahassee, State of Florida, unless otherwise designated by the Board of
Directors.
2. Other Offices. The Corporation may also have offices at such other
places, either within or without the State of Florida, as the Board of
Directors of the Corporation (the "Board of Directors") may from time to time
determine or as the business of the Corporation may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
1. Place. All annual meetings of shareholders shall be held at such
place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Special meetings of shareholders may be held
at such place, with or without the State of Florida, and at such time as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2. Time of Annual Meeting. Annual meetings of shareholders shall be
held on such date and at such time fixed, from time to time, by the Board of
Directors, provided that there shall be an annual meeting held every year at
which the shareholders shall elect a Board of Directors and transact such other
business as may properly be brought before the meeting.
3. Call of Special Meetings. Special meetings of the shareholders
shall be held if called by the Board of Directors, the President, or if the
holders of not less than fifty percent (50%) of all the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting,
sign, date, and deliver to the Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held.
4. Conduct of Meetings. The Chairman of the Board (or in his absence,
the President or such other designee of the Chairman of the Board) shall
preside at the annual and special meetings of shareholders and shall be given
full discretion in establishing the rules and procedures to be followed in
conducting the meetings, except as otherwise provided by law or in these
Bylaws.
5. Notice and Waiver of Notice. Except as otherwise provided by law,
written or printed notice stating the place, day and hour of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before the day of the meeting, either personally or by first-class
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mail, by or at the direction of the President, the Secretary, or the officer or
person calling the meeting, to each shareholder of record entitled to vote at
such meeting. If the notice is mailed at least thirty (30) days before the date
of the meeting, it may be done by a class of United States mail other than
first-class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation, with postage
thereon prepaid. If a meeting is adjourned to another time and/or place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fixes a new record date for the adjourned
meeting. Whenever any notice is required to be given to any shareholder, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether signed before, during or after the time of the meeting stated
therein, and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records, shall be equivalent to the giving of such
notice. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the shareholders need be specified in any written
waiver of notice. Attendance of a person at a meeting shall constitute a waiver
of (a) lack of or defective notice of such meeting, unless the person objects
at the beginning to the holding of the meeting or the transacting of any
business at the meeting, or (b) lack of defective notice of a particular matter
at a meeting that is not within the purpose or purposes described in the
meeting notice, unless the person objects to considering such matter when it is
presented.
6. Business of Special Meeting. Business transacted at any special
meeting shall be confined to the purposes stated in the notice thereof.
7. Quorum. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of these shares exists with
respect to that matter. Except as otherwise provided in the Articles of
Incorporation or by law, a majority of the shares entitled to vote on the
matter by each voting group, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders, but in no event shall a
quorum consist of less than one-third (1/3) of the shares of each voting group
entitled to vote. If less than a majority of outstanding shares entitled to
vote are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. After a quorum
has been established at any shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity
of any action taken at the meeting or any adjournment thereof. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
8. Voting Per Share. Except as otherwise provided in the Articles of
Incorporation or by law, each shareholder is entitled to one (1) vote for each
outstanding share held by him on each matter voted at a shareholders' meeting.
9. Voting of Shares. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation,
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domestic or foreign, may be voted by the officer, agent or proxy designated by
the bylaws of such corporate shareholder or, in the absence of any applicable
bylaw, by such person or persons as the board of directors of the corporate
shareholder may designate. In the absence of any such designation, or, in case
of conflicting designation by the corporate shareholder, the chairman of the
board, the president, any vice president, the secretary and the treasurer of
the corporate shareholder, in that order, shall be presumed to be fully
authorized to vote such shares. Shares held by an administrator, executor,
guardian, personal representative, or conservator may be voted by him, either
in person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name or the name of his nominee. Shares held
by or under the control of a receiver, a trustee in bankruptcy proceedings, or
an assignee for the benefit of creditors may be voted by such person without
the transfer thereof into his name. If shares stand of record in the names of
two or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, tenants by the entirety or otherwise, or if two or
more persons have the same fiduciary relationship respecting the same shares,
unless the Secretary of the Corporation is given notice to the contrary and is
furnished with a copy of the instrument or order appointing them or creating
the relationship wherein it is so provided, then acts with respect to voting
shall have the following effect: (a) if only one votes, in person or by proxy,
his act binds all; (b) if more than one vote, in person or by proxy, the act of
the majority so voting binds all; (c) if more than one vote, in person or by
proxy, but the vote is evenly split on any particular matter, each faction is
entitled to vote the share or shares in question proportionally; or (d) if the
instrument or order so filed shows that any such tenancy is held in unequal
interest, a majority or a vote evenly split for purposes hereof shall be a
majority or a vote evenly split in interest. The principles of this paragraph
shall apply, insofar as possible, to execution of proxies, waivers, consents,
or objections and for the purpose of ascertaining the presence of a quorum.
10. Proxies. Any shareholder of the Corporation, other person entitled
to vote on behalf of a shareholder pursuant to law, or attorney-in-fact for
such persons may vote the shareholder's shares in person or by proxy. Any
shareholder of the Corporation may appoint a proxy to vote or otherwise act for
him by signing an appointment form, either personally or by his
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the Corporation to
accept the proxy's authority unless notice of the death or incapacity is
received by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his authority under the appointment. An
appointment of a proxy is revocable by the shareholder unless the appointment
is coupled with an interest.
11. Shareholder List. After fixing a record date for a meeting of
shareholders, the Corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class
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and series, if any, of shares held by each. The shareholders' list must be
available for inspection by any shareholder for a period of ten (10) days prior
to the meeting or such shorter time as exists between the record date and the
meeting and continuing through the meeting at the Corporation% principal
office, at a place identified in the meeting notice in the city where the
meeting will be held, or at the office of the Corporation's transfer agent or
registrar. Any shareholder of the Corporation or his agent or attorney is
entitled on written demand to inspect the shareholders' list (subject to the
requirements of law), during regular business hours and at his expense, during
the period it is available for inspection. The Corporation shall make the
shareholders' list available at the meeting of shareholders, and any
shareholder or his agent or attorney is entitled to inspect the list at any
time during the meeting or any adjournment.
12. Action Without Meeting. Any action required by law to be taken at
a meeting of shareholders, or any action that may be taken at a meeting of
shareholders, may be taken without a meeting or notice if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted with respect to the subject
matter thereof, and such consent shall have the same force and effect as a vote
of shareholders taken at such a meeting.
13. Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
sixty (60) days, and, in case of a meeting of shareholders, not less than ten
(10) days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 13, such
determination shall apply to any adjournment thereof, except where the Board of
Directors fixes a new record date for the adjourned meeting or as required by
law.
14. Inspectors and Judges. The Board of Directors in advance of any
meeting may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment(s)
thereof If any inspector or inspectors, or judge or judges, are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who maybe appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by the Board of
Directors in advance of the meeting, or at the meeting by the person presiding
thereat. The inspectors or judges, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots and consents, hear and determine
all challenges and questions
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arising in connection with the right to vote, count and tabulate votes, ballots
and consents, determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all shareholders. On request of the
person presiding at the meeting, the inspector or inspectors or judge or
judges, if any, shall make a report in writing of any challenge, question or
matter determined by him or them, and execute a certificate of any fact found
by him or them.
15. Voting for Directors. Unless otherwise provided in the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast by
the shares entitled to vote in the election at a meeting at which a quorum is
present.
ARTICLE THREE
DIRECTORS
1. Number, Election and Term. The number of directors of the
Corporation shall be fixed from time to time, within the limits specified by
the Articles of Incorporation, by resolution of the Board of Directors;
provided, however, no director's term shall be shortened by reason of a
resolution reducing the number of directors. The directors shall be elected at
the annual meeting of the shareholders, except as provided in Section 2 of this
Article, and each director elected shall hold office for the term for which he
is elected and until his successor is elected and qualified or until his
earlier resignation, removal from office or death. Directors must be natural
persons who are 18 years of age or older but need not be residents of the State
of Florida, shareholders of the Corporation or citizens of the United States.
Any director may be removed at any time, with or without cause, at a special
meeting of the shareholders called for that purpose.
2. Vacancies. A director may resign at any time by giving written
notice to the Corporation, the Board of Directors or the Chairman of the Board.
Such resignation shall take effect when the notice is delivered unless the
notice specifies a later effective date, in which event the Board of Directors
may fill the pending vacancy before the effective date if they provide that the
successor does not take office until the effective date. Any vacancy occurring
in the Board of Directors and any directorship to be filled by reason of an
increase in the size of the Board of Directors shall be filled by the
affirmative vote of a majority of the current directors though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
or special meeting of the shareholders called for that purpose, unless
otherwise provided by law. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office, or until the next
election of one or more directors by shareholders if the vacancy is caused by
an increase in the number of directors.
3. Powers. Except as provided in the Articles of Incorporation and by
law, all corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the
direction of, its Board of Directors.
4. Place of Meetings. Meetings of the Board of Directors, regular or
special, may be held either with or without the State of Florida.
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5. Annual Meeting. The first meeting of each newly elected Board of
Directors shall be held, without call or notice, immediately following each
annual meeting of shareholders.
6. Regular Meeting. Regular meetings of the Board of Directors may
also be held without notice at such time and at such place as shall from time
to time be determined by the Board of Directors.
7. Special Meetings and Notice. Special meetings of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
Written notice of special meetings of the Board of Directors shall be given to
each director at least forty-eight (48) hours before the meeting. Except as
required by statute, neither the business to be transacted at, nor the purpose
of any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting. Notices to directors shall
be in writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall be
deemed to be given at the time when the same shall be received. Notice to
directors may also be given by telegram, teletype or other form of electronic
communication. Notice of a meeting of the Board of Directors need not be given
to any director who signs a written waiver of notice before, during or after
the meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting and a waiver of any and all objections to the place of
the meeting, the time of the meeting and the manner in which it has been called
or convened, except when a director states, at the beginning of the meeting or
promptly upon arrival at the meeting, any objection to the transaction of
business because the meeting is not lawfully called or convened.
8. Quorum; Required Vote; Presumption of Assent. A majority of the
number of directors fixed by, or in the manner provided in, these bylaws shall
constitute a quorum for the transaction of business; provided, however, that
whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum
shall consist of a majority of the remaining directors until the vacancy has
been filled. The act of a majority of the directors present at a meeting at
which a quorum is present when the vote is taken shall be the act of the Board
of Directors. A director of the Corporation who is present at a meeting of the
Board of Directors or a committee of the Board of Directors when corporate
action is taken shall be presumed to have assented to the action taken, unless
he objects at the beginning of the meeting, or promptly upon his arrival, to
holding the meeting or transacting specific business at the meeting, or he
votes against or abstains from the action taken.
9. Action Without Meeting. Any action required or permitted to be
taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if a consent in writing, setting forth the action
taken, is signed by all of the members of the Board of Directors or the
committee, as the case may be, and such consent shall have the same force and
effect as a unanimous vote at a meeting. Action taken under this section is
effective when the last director signs the consent, unless the consent
specifies a different effective date. A consent signed under this Section 9
shall have the effect of a meeting vote and may be described as such in any
document.
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10. Conference Telephone or Similar Communications Equipment Meetings.
Members of the Board of Directors may participate in a meeting of the Board by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation in such a meeting shall constitute presence in person at
the meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground the
meeting is not lawfully called or convened.
11. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate from among its members
an executive committee and one or more other committees, each of which, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full Board of Directors is required
by statute. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies in the membership of a committee shall be filled by the Board of
Directors at a regular or special meeting of the Board of Directors. The
executive committee shall keep regular minutes of its proceedings and report
the same to the Board of Directors when required. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
13. Chairman of the Board. The Board of Directors may, in its
discretion, choose a chairman of the board who shall preside at meetings of the
shareholders and of the directors and shall be an ex officio member of all
standing committees. The Chairman of the Board shall have such other powers and
shall perform such other duties as shall be designated by the Board of
Directors. The Chairman of the Board shall be a member of the Board of
Directors but no other officers of the Corporation need be a director. The
Chairman of the Board shall serve until his successor is chosen and qualified,
but he may be removed at any time by the affirmative vote of a majority of the
Board of Directors.
ARTICLE FOUR
OFFICERS
1. Positions. The officers of the Corporation shall consist of a
President, a Secretary and a Treasurer, and, if elected by the Board of
Directors by resolution, a Chairman of the Board and/or one or more Vice
Presidents. Any two or more offices may be held by the same person.
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2. Election of Specified Officers by Board. The Board of Directors at
its first meeting after each annual meeting of shareholders shall elect a
President, a Secretary, a Treasurer and may elect one or more Vice Presidents.
3. Election or Appointment of Other Officers. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors, or, unless otherwise specified herein,
appointed by the President of the Corporation. The Board of Directors shall be
advised of appointments by the President at or before the next scheduled Board
of Directors meeting.
4. Salaries. The salaries of all officers of the Corporation to be
elected by the Board of Directors pursuant to Article Four, Section 2 hereof
shall be fixed from time to time by the Board of Directors or pursuant to its
discretion. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the President of the
Corporation or pursuant to his direction.
5. Term; Resignation. The officers of the Corporation shall hold
office until their successors are chosen and qualified. Any officer or agent
elected or appointed by the Board of Directors or the President of the
Corporation may be removed, with or without cause, by the Board of Directors.
Any officers or agents appointed by the President of the Corporation pursuant
to Section 3 of this Article Four may also be removed from such officer
positions by the President, with or without cause. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise shall be
filled by the Board of Directors, or, in the case of an officer appointed by
the President of the Corporation, by the President or the Board of Directors.
Any officer of the Corporation may resign from his respective office or
position by delivering notice to the Corporation. Such resignation is effective
when delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date and the Corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board provides that the successor does not
take office until the effective date.
6. President. The President shall be the Chief Executive Officer of
the Corporation, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. In the absence of the Chairman of the Board
or in the event the Board of Directors shall not have designated a chairman of
the board, the President shall preside at meetings of the shareholders and the
Board of Directors.
7. Vice Presidents. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President. They shall perform such other duties and have such
other powers as the Board of Directors shall prescribe or as the President may
from time to time delegate.
8. Secretary. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the shareholders and of the Board of Directors in a book to
be kept for that purpose and shall
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perform like duties for the standing committees when required. He shall give,
or cause to be given, notice of all meetings of the shareholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or President, under whose supervision
he shall be. He shall keep in safe custody the seal of the Corporation and,
when authorized by the Board of Directors, affix the same to any instrument
requiring it.
9. Treasurer. The Treasurer shall have the custody of corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors at its regular
meetings or when the Board of Directors so requires an account of all his
transactions as treasurer and of the financial condition of the Corporation
unless otherwise specified by the Board of Directors, the Treasurer shall be
the Corporation's Chief Financial Officer.
10. Other Officers, Employees and Agents. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to him by the Board of Directors, the officer so appointing
him and such officer or officers who may from time to time be designated by the
Board of Directors to exercise such supervisory authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
1. Issue of Certificates. The Corporation shall deliver certificates
representing all shares to which shareholders are entitled; and such
certificates shall be signed by the Chairman of the Board, President or a Vice
President, and by the Secretary or an Assistant Secretary of the Corporation,
and may be sealed with the seal of the Corporation or a facsimile thereof
2. Legends for Preferences and Restrictions on Transfer. The
designations, relative fights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the Corporation will furnish the
shareholder a full statement of this information on request and without charge.
Every certificate representing shares that are restricted as to the sale,
disposition, or transfer of such shares shall also indicate that such shares
are restricted as to transfer and there shall be set forth or fairly summarized
upon the certificate, or the certificate shall indicate that the Corporation
will furnish to any shareholder upon request and without charge, a full
statement of such restrictions. If the Corporation issues any shares that are
not registered under the Securities Act of 1933, as amended, and registered or
qualified under the applicable state securities laws, the transfer of any such
shares shall be restricted substantially in accordance with the following
legend:
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"THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME."
3. Facsimile Signatures. The signatures of the Chairman of the Board,
the President or a Vice President and the Secretary or Assistant Secretary upon
a certificate may be facsimiles, if the certificate is manually signed by a
transfer agent, or registered by a registrar, other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of the
issuance.
4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
5. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6. Registered Shareholders. The Corporation shall be entitled to
recognize the exclusive rights of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Florida.
7. Redemption of Control Shares. As provided by the Florida Business
Corporation Act, if a person acquiring control shares of the Corporation does
not file an acquiring person statement with the Corporation, the Corporation
may redeem the control shares at fair market value at any time during the
60-day period after the last acquisition of such control shares. If a person
acquiring control shares of the Corporation files an acquiring person statement
with the
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Corporation, the control shares may be redeemed by the Corporation only if such
shares are not accorded full voting rights by the shareholders as provided by
law.
ARTICLE SIX
GENERAL PROVISIONS
1. Dividends. The Board of Directors may from time to time declare,
and the Corporation may pay, dividends on its outstanding shares in cash,
property, or its own shares pursuant to law and subject to the provisions of
the Articles of Incorporation.
2. Reserves. The Board of Directors may by resolution create a reserve
or reserves out of earned surplus for any proper purpose or purposes, and may
abolish any such reserve in the same manner.
3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
4. Fiscal Year. The fiscal year of the Corporation shall be fixed by
the Board of Directors and may be otherwise changed from time to time by
resolution of the Board of Directors.
5. Seal. The corporate seal shall have inscribed thereon the name and
state of incorporation of the Corporation. The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
6. Gender. All words used in these Bylaws in the masculine gender
shall extend to and shall include the feminine and neuter genders.
ARTICLE SEVEN
AMENDMENTS OF BYLAWS
Unless otherwise provided by law, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted by action of the Board of Directors.
-11-
<PAGE>
772242
OFFICE OF RECORDER OF DEEDS
Corporation Division
Sixth and D Streets, N. W.
Washington, D. C. 20001
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the District of Columbia
Business Corporation Act have been complied with and ACCORDINGLY this
Certificate of Incorporation is hereby issued to MICHAEL A. ROSENBERG &
ASSOCIATES, INC.
as of July 22, 1977.
PETER S. RIDLEY,
Recorder of Deeds, D.C.
-4-
<PAGE>
By:/s/ Margurite C. Stokes
Margurite C. Stokes
Assistant Superintendent of Corporations
-5-
<PAGE>
FILING FEE...........$28.00
INDEXING FEE...........2.00
INT. LIC. FEE....... 20.00
$42.00
FILED JUL 22 1977
ARTICLES OF INCORPORATION
OF
MICHAEL A. ROSENBERG & ASSOCIATES, INC.
The undersigned natural persons of the age of twenty one
years or more, acting as incorporators of a corporation under the District of
Columbia Business Corporation Act of 1954, as amended, adopt the following
Articles of Incorporation for such corporation:
FIRST: The name of the corporation is
MICHAEL A. ROSENBERG & ASSOCIATES, INC.
SECOND: The period of its duration is perpetual.
THIRD: The business, objects and purposes for which the corporation is
organized are:
Primarily, to provide personal services for the promotion of
and arrangement for various types of public entertainment programs and shows.
The corporation shall have the power to do any and all acts
and things necessary or useful to its business and purposes, and shall have the
general, specific and incidental powers and privileges granted to it by
statute, including:
To enter into and perform contracts; to acquire and exploit
patents, trade marks, trade names, rights of all kinds and related and other
interests; to acquire, use, deal in and with, encumber and dispose of real and
personal property without limitation including obligations
<PAGE>
and/or securities; to borrow and lend money and to guarantee the obligations of
others for its corporate purposes; to invest and reinvest its funds, and take
hold and deal with real and personal property as security for the payment of
funds loaned or invested, or otherwise; to vary any investment or employment of
capital of the corporation from time to time; and to create and/or participate
with other corporations and entities for the performance of all undertakings,
as partner, joint venturer, or otherwise, and to share or delegate control
therewith or thereto.
To pay pensions and establish and carry out, pension, profit
sharing, stock option, stock purchase, stock\ bonus, retirement, benefit,
incentive or commission plans, and/or other provisions for any or all of its
directors, officers and employees, and for any or all of the directors,
officers and employees of its subsidiaries; and to purchase insurance for its
benefit on the life of any of its directors, officers or employees, or on the
life of any shareholder for the purpose of acquiring at his death shares of its
stock owned by such shareholder.
To invest in and merge or consolidate with any corporation in
such manner as may be permitted by law to aid in any manner any corporation
whose stocks, bonds or other obligations are held or in any manner guaranteed
by this corporation, or in which this corporation is in any way interested; and
to do any other acts or things for the preservation, protection, improvement or
enhancement of the value of any such stock, bonds or other securities; and
while owner of any such stock, bonds or other securities to exercise all the
rights, powers and privileges of ownership thereof, and to exercise any and all
voting powers thereon; and to guarantee the payment of dividends upon any
stock, the principal or interest or both, of any bonds or other securities, and
the performance of any contracts.
To do all and everything necessary, suitable and proper for
the accomplishment of any of the purposes or the attainment of any of the
objects or the furtherance of any of the powers hereinbefore set forth, either
alone or in association with other corporations, firms or individuals, and to
do every other act or acts, thing or things incidental or appurtenant to or
growing out of or connected with the aforesaid business or powers or any part
or parts thereof, provided the same be not inconsistent with the District of
Columbia Business Corporation Act, and to do all such acts and things and
conduct business and have one or more offices and exercise its corporate powers
in any and all places, without limitation.
FOURTH: The aggregate number of shares which the corporation
is authorized to issue is Fifty Thousand (50,000).
All of such shares are Common shares, and the par value of
each of such shares is One Dollar ($1.00).
FIFTH: (1) The corporation is hereby empowered to issue from
time to time its authorized shares, and securities, options, warrants and/or
other rights convertible thereinto, for such lawful consideration, whether
money or otherwise, as the Board of Directors shall determine, and any shares
issued for which the consideration so fixed has been paid or delivered shall be
fully paid stock and the holder of such shares shall not be liable for any
further call or assessments or any other payment thereon, provided that the
actual value of such consideration is not less than the par value of the shares
so issued.
-2-
<PAGE>
(2) The shareholders of the corporation do not have any
preemptive or preferential right to subscribe to or purchase unissued shares of
any class of stock of the corporation whether such shares are now or hereafter
authorized, or any Treasury shares to be sold by the corporation.
SIXTH: The minimum amount of capital with which the
corporation shall commence business shall be not less than $1,000, which may be
paid in money or other lawful consideration.
SEVENTH: Provisions for the regulation of the internal
affairs of the corporation are:
(1) The corporation shall indemnify any and all of its
directors or officers or former directors or officers, or any persons who may
have served at its request as a director or officer of another corporation in
which it owns shares of capital stock or of which it is a creditor, against
expenses actually and necessarily incurred by them in connection with the
defense of any action, suit or proceeding in which they, or any of them, are
made parties, or a party, by reason of being or having been directors or
officers or a director or officer of this corporation or of such other
corporation, except in relation to matters as to which any such director or
officer or former director or officer or persons shall be adjudged in such
action, suit or proceeding to be liable for negligence or misconduct in the
performance of duty. Such indemnification shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of shareholders, or otherwise.
(2) The power to make, alter, amend and repeal bylaws is
vested in the directors, but the directors may by resolution from time to time
grant any or all of said power to the shareholders to such extent as said
resolution shall provide.
(3) The private property of the incorporators, shareholders,
directors and officers shall not be subject to the payment of corporate debts.
(4) No director shall be disqualified from voting or acting
on behalf of the corporation in contracting with any other corporation in which
he or she may be a director, officer or a shareholder, nor shall any director
of the corporation be disqualified from voting or acting in its behalf by
reason of any personal interest.
Further provisions for the regulation of the internal affairs
of the corporation are as provided in the by-laws.
EIGHTH: The name of the initial registered agent of the
corporation in the District of Columbia at its initial registered offices and
the address thereof, are United States Corporation Company, National Press
Buildings 529 - 14th Street, N.W., Washington, D.C.
20045.
NINTH: The number of directors constituting the full initial
board of directors of the corporation is three (3) and the names and addresses,
including street and number, of the
-3-
<PAGE>
persons who are to serve as directors until
the first annual meeting of shareholders or until their successors are elected
and shall qualify are:
NAME ADDRESS
Michael A. Rosenberg 3512 Cameron Mills Road
Alexandria, Virginia 22035
Pamela J. Rosenberg 3512 Cameron Mills Road
Alexandria, Virginia 22035
Andrew F. Oehmann, Jr. 1054 31st Street, N.W.
Washington, D.C. 20007
TENTH: The name and address including street and number of
each incorporator is:
NAME ADDRESS
Katherine Dunoisin 895 National Press Bldg.
Washington, D.C. 20045
Leif Tonnessen 895 National Press Bldg.
Washington, D.C. 20045
Sharon M. Andrews 895 National Press Bldg.
Washington, D.C. 20045
ELEVENTH: The corporation reserves the right to amend, alter,
change or repeal any provisions contained in the foregoing articles of
incorporation in the manner now or hereafter prescribed by law, and all rights
and powers conferred herein on shareholders, directors and officers are subject
to this reserved power.
Dated: July 15, 1977 INCORPORATORS
/s/ Katherine Dunoisin
-----------------------------------
/s/ Leif Tonnessen
-----------------------------------
/s/ Sharon M. Andrews
-----------------------------------
-4-
<PAGE>
GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the DISTRICT
OF COLUMBIA BUSINESS CORPORATION ACT have been complied with and accordingly,
this CERTIFICATE of MERGER is hereby issued to
MAGICSPORTS - MARCO MANAGEMENT, INC.
(DC CORP.)
MERGED INTO
MARCO ENTERTAINMENT INC.
(DC CORP.)
as of AUGUST 11TH, 1998
Lloyd J. Jordan
Director
Patricia A. Montgomery
Administrator
Business Regulation Administration
/s/ William L. Ables, Jr.
-------------------------------------
William L. Ables, Jr.
Act. Asst. Corporate Program Manager
Corporations Division
Marion Barry, Jr.
Mayor
<PAGE>
FILE
AUG 11 1998
WLA
ARTICLES OF MERGER
OF
MARCO ENTERTAINMENT, INC.
AND
MAGICSPORTS-MARCO MANAGEMENT, INC.
To the Department of Consumer
and Regulatory Affairs
District of Columbia
Pursuant to the provisions of the District of Columbia
Business Corporation Act, the corporations hereinafter named do hereby adopt
the following articles of merger:
1. Annexed hereto and made a part hereof is the Plan of
Merger for merging Magicsports-Marco Management,
Inc. ("Magicsports"), a business corporation of the
District of Columbia, with and into Marco
Entertainment, Inc. ("Marco"), a business
corporation of the District of Columbia, as approved
by the Board of Directors and the shareholders of
said parties to the Plan of Merger.
2. The Plan of Merger was advised by the Board of
Directors of Marco and approved by the sole
shareholder of Marco in accordance with Marco's
Articles of Incorporation and applicable law.
3. The Plan of Merger was advised by the Board of
Directors of Magicsports and approved by the sole
shareholder of Magicsports in accordance with
Magicsports' Articles of Incorporation and
applicable
<PAGE>
law.
4. Marco will continue its existence as the surviving
corporation under its present name pursuant to the
provisions of the District of Columbia Business
Corporation Act.
Executed as of this 10th day of August, 1998.
MARCO ENTERTAINMENT
INC.
By:/s/ Michael A. Rosenberg
-------------------------------------
Michael A. Rosenberg, President
MAGICSPORTS-MARCO
MANAGEMENT INC.
By:/s/ Brad Krassner
-------------------------------------
Brad Krassner
Vice President
<PAGE>
PLAN OF MERGER
This PLAN OF MERGER approved on June 1, 1998 by MARCO ENTERTAINMENT,
INC. ("Marco"), a business corporation of the District of Columbia, and by
resolution adopted by a unanimous vote of the members of its Board of
Directors, and approved on June 1, 1998 by MAGICSPORTS-MARCO MANAGEMENT, INC.
("Magicsports"), a business corporation of the District of Columbia, and by
resolution adopted by a unanimous vote of the members of its Board of
Directors.
1. The corporations parties hereto, Marco and Magicsports,
shall, pursuant to the provisions of the District of Columbia
Business Corporations Act, be merged with and into a single
corporation, to wit, Marco, which shall be the surviving
corporation upon the effective date of the merger and which
is sometimes hereinafter referred to as the "surviving
corporation," and which shall continue to exist as said
surviving corporation under its present name pursuant to the
provisions of the District of Columbia Business Corporation
Act. The separate existence of Magicsports, which is
sometimes hereinafter referred to as the "terminating
corporation," shall cease upon the effective date of the
merger in accordance with the provisions of the said District
of Columbia Business Corporation Act.
2. The Articles of Incorporation of Magicsports as of the
effective date of the merger shall be in the Articles of
Incorporation of the surviving corporation and shall continue
in full force and effect until sooner amended or changed as
permitted by the provisions of the District of Columbia
Business Corporation Act.
3. The bylaws of Magicsports upon the effective date of the
merger will be the bylaws of the surviving corporation and
will continue in full force and effect until changed, altered
or amended as therein provided and in the manner prescribed
by the provisions of the District of Columbia Business
Corporation Act.
4. The directors and officers in office of Magicsports upon the
effective date of the merger shall be the members of the
first Board of Directors and the first officers of the
surviving corporation, all of whom shall hold their
directorships and offices until the election and
qualification of their respective successors or until their
tenure is otherwise terminated in accordance with the bylaws
of the surviving corporation.
5. Each issued and outstanding share of the terminating
corporation shall, upon the effective date of the merger, be
converted in one share of the surviving corporation. The
issued shares of the surviving corporation shall not be
converted
<PAGE>
in any manner, but each said share which is issued as of the
effective date of the merger shall continue to represent one
issued share of the surviving corporation.
6. The Plan of Merger herein made and approved was submitted to
the sole shareholder of the terminating corporation and the
sole shareholder of the surviving corporation for their
approval in the manner prescribed by the provisions of the
District of Columbia Business Corporation Act.
7. The terminating corporation and the surviving corporation
hereby stipulate that they will cause to be executed and
filed and/or recorded any document or documents prescribed by
the laws of the District of Columbia, and that they will
cause to be performed all necessary acts therein and
elsewhere to effectuate the merger.
8. The Board of Directors and the proper officers of the
terminating corporation and of the surviving corporation,
respectively, are hereby authorized, empowered and directed
to do any and all acts and things, and to make, execute,
deliver, file and/or record any and all instruments, papers
and documents which shall be or become necessary, proper or
convenient to carry out or put into effect any of the
provisions of this Plan of Merger or of the merger herein
provided for.
<PAGE>
FILING FEE
.................
INDEXING FEE
2.00
INT. LIC. FEE
FILED NOV 23 1984
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
(After acceptance of subscription to shares)
TO: The Recorder of Deeds, D.C.
Washington, D.C.
Pursuant to the provisions of Title 29, Chapter 9 of the Code of Laws
of the District of Columbia, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Marco, Incorporated. \
SECOND: The following amendment of the Articles of Incorporation was
adopted by
<PAGE>
the shareholders of the corporation on October 29, 1981 in the manner
prescribed by the Code of Laws of the District of Columbia.
RESOLVED, that the Certificate of Incorporation of Marco, Incorporated
be amended by changing the Article thereof numbered "FIRST" so that,
as amended said Article shall read:
"FIRST: The name of the corporation is MARCO ENTERTAINMENT,
INCORPORATED."
THIRD: The number of shares of the corporation outstanding at the time
of such adoption was one thousand five hundred and eighty-eight (1588) and the
number of shares entitled to vote thereon was one thousand five hundred and
eighty-eight (1588).
FOURTH: The description and number of outstanding shares of each class
entitled to vote thereon as a class were as follows:
CLASS NUMBER OF SHARES
----- ----------------
Common 1588
FIFTH: The number of shares voted for such amendment was one thousand
five hundred and eight- eight (1588), and the number of shares voted against
such amendment was none.
<PAGE>
SIXTH: The number of shares of each class entitled to vote thereon as
a class voted for and against such amendment, respectively, was: None.
SEVENTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: No change.
EIGHTH: The manner in which such amendment effects a change in the
amount of stated capital, or paid in surplus, or both, and the amount of stated
capital and the amount of paid in surplus as changed by such amendment, are as
follow: None.
DATE: November 18, 1981 MARCO, INCORPORATED
By:/s/ Michael A. Rosenberg
-------------------------
President
Attest:
/s/ Nancy G. Pond
- --------------------------
Secretary
<PAGE>
OFFICE OF RECORDER OF DEEDS
Corportion Division
Sixth and D Streets, N.W.
Washington, D.C. 20001
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the District of
Columbia Business Corporation Act have been complied with and ACCORDINGLY this
Certificate of Amendment is hereby issued to MICHAEL A. ROSENBERG & ASSOCIATES,
INC.
changed to MARCO, INCORPORATED
as of April 18, 1978.
PETER S. RIDLEY,
Recorder of Deeds, D.C.
By: /s/ David H. Cole
------------------------------
David H. Cole
Superintendent of Corporations
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
To: The Recorder of Deeds, D.C.
Washington, D.C.
Pursuant to the provisions of Title 29, Chapter 9 of the Code of Laws of
the District of Columbia, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Michael A. Rosenberg & Associates, Inc.
SECOND: The following amendment of the Articles of Incorporation was adopted
by the shareholders of the corporation on April 13, 1973 in the manner
prescribed by the Code of Laws of the District of Columbia.
RESOLVED, that the Certificate of Incorporation of Michael A.
Rosenberg & Associates, Inc. be amended by changing the Article
thereof numbered "FIRST" so that, as amended, said Article
shall read:
"FIRST: The name of the corporation is MARCO, Incorporated."
THIRD: The number of shares of the corporation outstanding at the time of such
adoption was
<PAGE>
one thousand five hundred and eighty-eight (1588) and the number of shares
entitled to vote thereon was one thousand five hundred and eighty-eight (1588).
FOURTH: The designation and number of outstanding shares of each class entitled
to vote thereon as a class were as follwos:
Class Number of Shares
----- ----------------
Common 1588
FIFTH: The number of shares voted for such amendment was one thousand five
hundred and eighty-eight (1588), and the number of shares voted against such
amendment was none.
SIXTH: The number of shares of each class entitled to vote thereon as a class
voted for and against such amendment, respectively, was: None.
SEVENTH: The manner, if not set forth in such amendment, in which any exchange,
reclassification or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: No change.
EIGHT: The manner in which such amendment effects a change in the amount of
stated capital, or paid in surplus, or both, and the amount of stated capital
and the amount of paid in surplus as changed by such amendment, are as
follows: None.
Dated: April 13, 1978 Michael A. Rosenberg & Associates, Inc.
By: /s/ Michael A. Rosenberg
--------------------------------
President
Attest:
/s/ illegible
- ----------------------------
Secretary
<PAGE>
BY-LAWS
OF
MARCO ENTERTAINMENT, INC.
(pursuant to merger of Magicsports-Marco Management, Inc.
into Marco Entertainment, Inc.)
<PAGE>
Bylaws
of
Magicsports - Marco Management, Inc.
ARTICLE I. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or
under the authority of the Board of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
Directors must be natural persons who are at least 18 years of age but need not
be shareholders of the Corporation. Residents of any state may be directors.
Section 2. Compensation. The shareholders shall have authority to fix
the compensation of directors. Unless specifically authorized by a resolution
of the shareholders, the directors shall serve in such capacity without
compensation.
Section 3. Presumption of Assent. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless he objects at the beginning of the meeting
(or promptly upon arriving) to the holding of the meeting or transacting the
specified business at the meeting, or if the director votes against the action
taken or abstains from voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum
number of directors required by 1aw. The number of directors may be increased
or decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders,
the shareholders shall elect directors to hold office until the next annual
meeting or until their earlier resignation, removal from office or death.
Directors shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled by the shareholders or by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders. If there are no remaining directors,
the vacancy shall be filled by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any
director or the entire Board of Directors may be removed, with or without
cause, provided the notice of the meeting states that one of the purposes of
the meeting is the removal of the director. A director may be removed only if
the number of votes cast to remove him exceeds the number of votes cast against
removal.
<PAGE>
Section 8. Quorum and Voting. A majority of the number of directors
fixed by these Bylaws shall constitute a quorum for the transaction of
business. The act of a majority of directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members one or more committees each of which must have at least
two members. Each committee shall have the authority set forth in the
resolution designating the committee.
Section 10. Place of Meeting. Regular and special meetings of the
Board of Directors shall be held at the principal place of business of the
Corporation or at another place designated by the person or persons giving
notice or otherwise calling the meeting.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the
Board of Directors shall be held without notice at the time and on the date
designated by resolution of the Board of Directors. Written notice of the time,
date and place of special meetings of the Board of Directors shall be given to
each director by mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, unless a
director objects to the transaction of business (promptly upon arrival at the
meeting) because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors must be specified in the notice or waiver of
notice of the meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of an adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors. Meetings of the Board of Directors may be called by the President or
the Chairman of the Board of Directors. Members of the Board of Directors and
any committee of the Board may participate in a meeting by telephone conference
or similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation by these means constitutes
presence in person at a meeting.
Section 12. Action By Written Consent. Any action required or
permitted to be taken at a meeting of directors ray be taken without a meeting
if a consent in writing setting forth the action to be taken and signed by all
of the directors is filed in the minutes of the proceedings of the Board. The
action taken shall be deemed effective when the last director signs the
consent, unless the consent specifies otherwise.
- 2 -
<PAGE>
ARTICLE II. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of
the corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall
be held when directed by the President or when requested in writing by
shareholders holding at least 10% of the Corporation's stock having the right
and entitled to vote at such meeting. A meeting requested by shareholders shall
be called by the President for a date not less than 10 nor more than 60 days
after the request is made. Only business within the purposes described in the
meeting notice may be conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the
principal place of business of the Corporation or at such other place as is
designated by the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders
shall be mailed to each shareholder having the right and entitled to vote at
the meeting at the address as it appears on the records of the Corporation. The
meeting notice shall be mailed not less than 10 nor more than 60 days before
the date set for the meeting. The record date for determining shareholders
entitled to vote at the meeting will be the close of business on the day before
the notice is sent. The notice shall state the time and place the meeting is to
be held. A notice of a special meeting shall also state the purposes of the
meeting. A notice of meeting shall be sufficient for that meeting and any
adjournment of it. If a shareholder transfers any shares after the notice is
sent, it shall not be necessary to notify the transferee. All shareholders may
waive notice of a meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative
vote of a majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders. Each
outstanding share shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders. An alphabetical list of all shareholders who
are entitled to notice of a shareholders' meeting along with their addresses
and the number of shares held by each shall be produced at a shareholders'
meeting upon the request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any
meeting of shareholders or any adjournment thereof may vote in person or by
proxy executed in writing and signed by the shareholder or his attorney- in-
fact. The appointment of proxy will be effective when received by the
Corporation's officer or agent authorized to tabulate votes. No proxy shall be
valid more than 11 months after the date of its execution unless a longer term
is expressly stated in the proxy.
- 3 -
<PAGE>
Section 8. Validation. If shareholders who hold a majority of the
voting stock entitled to vote at a meeting are present at the meeting, and sign
a written consent to the meeting on the record, the acts of the meeting shall
be valid, even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
shareholders may be taken without a meeting if written consents, setting forth
the action taken, are signed by at least a majority of shares entitled to vote
and are delivered to the officer or agent of the Corporation having custody of
the Corporation's records within 60 days after the date that the earliest
written consent was delivered. Within 10 days after obtaining an authorization
of an action by written consent, notice shall be given to those shareholders
who have not consented in writing or who are not entitled to vote on the
action. The notice shall fairly summarize the material features of the
authorized action. If the action creates dissenters' rights, the notice shall
contain a clear statement of the right of dissenting shareholders to be paid
the fair value of their shares upon compliance with and as provided for by the
state law governing corporations.
ARTICLE III. OFFICERS
Section 1. Officers, Election; Resignation; Vacancies. The Corporation
shall have the officers and assistant officers that the Board of Directors
appoint from time to time. Except as otherwise provided in an employment
agreement which the Corporation has with an officer, each officer shall serve
until a successor is chosen by the directors at a regular or special meeting of
the directors or until removed officers and agents shall be chosen, serve for
the terms, and have the duties determined by the directors. A person may hold
two or more offices.
Any officer may resign at any time upon written notice to the
Corporation. The resignation shall be effective upon receipt, unless the notice
specifies a later date. If the resignation is effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date provided the successor officer
does not take office until the future effective date. Any vacancy occurring in
any office of the Corporation by death, resignation, removal or otherwise may
be filled for the unexpired portion of the term by the Board of Directors at
any regular or special meeting.
Section 2. Powers and Duties of Officers. The officers of the
Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a
committee elected or appointed by the Board of Directors may be removed by the
Board with or without cause whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an officer, agent or member of a committee shall not of itself
create contract rights. Any officer, if appointed by another officer, may be
removed by that officer.
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Section 4. Salaries. The Board of Directors may cause the Corporation
to enter into employment agreements with any officer of the Corporation. Unless
provided for in an employment agreement between the Corporation and an officer,
all officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with
financial institutions as determined by the Board of Directors.
ARTICLE IV. DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions
to its shareholders in cash, property, or its own shares, unless the
distribution would cause (i) the Corporation to be unable to pay its debts as
they become due in the usual course of business, or (ii) the Corporation's
assets to be less than its liabilities plus the amount necessary, if the
Corporation were dissolved at the time of the distribution, to satisfy the
preferential rights of shareholders whose rights are superior to those
receiving the distribution. The shareholders and the Corporation may enter into
an agreement requiring the distribution of corporate profits, subject to the
provisions of law.
ARTICLE V. CORPORATE RECORDS
Section 1. Corporate Records. The corporation shall maintain its
records in written form or In another form capable of conversion into written
form within a reasonable time. The Corporation shall keep as permanent records
minutes of all meetings of its shareholders and Board of Directors, a record of
all actions taken by the shareholders and Board of Directors, a record of all
actions taken by the shareholders or Board of Directors without a meeting, and
a record of all actions taken by a committee of the Board of Directors on
behalf of the Corporation. The Corporation shall maintain accurate accounting
records and a record of its shareholders in a form that permits preparation of
a list of the names and addresses of all shareholders in alphabetical order by
class of shares showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles
of incorporation and all amendments to them currently in effect; these Bylaws
or restated Bylaws and all amendments currently in effect; resolutions adopted
by the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders'
meetings and records of all actions taken by shareholders without a meeting for
the past three years; written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including
the financial statements furnished for the last three years; a list of names
and business street addresses of its current directors and officers; and its
most recent annual report delivered to the Department of State.
Section 2. Shareholders, Inspection Rights. A shareholder is entitled
to inspect and copy, during regular business hours at a reasonable location
specified by the Corporation, any books and
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records of the Corporation. The shareholder must give the Corporation written
notice of this demand at least five business days before the date on which he
wishes to inspect and copy the record(s). The demand must be made in good faith
and for a proper purpose. The shareholder must describe with reasonable
particularity the purpose and the records he desires to inspect, and the
records must be directly connected with this purpose. This Section does not
affect the right of a shareholder to inspect and copy the shareholders' list
described in this Article if the shareholder is in litigation with the
Corporation. In such a case, the shareholder shall have the same rights as any
other litigant to compel the production of corporate records for examination.
The Corporation may deny any demand for inspection if the demand was
made for an improper purpose, or if the demanding shareholder has within the
two years preceding his demand, sold or offered for sale any list of
shareholders of the Corporation or of any other corporation, has aided or
abetted any person in procuring any list of shareholders for that purpose, or
has improperly used any information secured through any prior examination of
the records of this Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by
resolution of the shareholders within 120 days after the close of each fiscal
year, the Corporation shall furnish its shareholders with annual financial
statements which may be consolidated or combined statements of the Corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and
a statement of cash flows for that year. If financial statements are prepared
for the Corporation on the basis of generally accepted accounting principles,
the annual financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the President or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The Corporation
shall mail the annual financial statements to each shareholder within 120 days
after the close of each fiscal year or within such additional time thereafter
as is reasonably necessary to enable the Corporation to prepare its financial
statements. Thereafter, on written request from a shareholder who was not
mailed the statements, the Corporation shall mail him the latest annual
financial statements.
Section 4. Other Reports to Shareholders. If the Corporation
indemnifies or advances expenses to any director, officer, employee or agent
otherwise than by court order or action by the shareholders or by an insurance
carrier pursuant to insurance maintained by the Corporation, the Corporation
shall report the indemnification or advance in writing to the shareholders with
or before the notice of the next annual shareholders, meeting, or prior to the
meeting if the indemnification or advance occurs after the giving of the notice
but prior to the time the annual meeting is held. This
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<PAGE>
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
If the Corporation issues or authorizes the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the
next shareholders, meeting.
ARTICLE VI. STOCK CERTIFICATES
Section 1. Issuance. The Board of Directors may authorize the issuance
of some or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for
any share until the share is fully paid. The Corporation shall be entitled to
treat the holder of record of shares as the holder in fact and, except as
otherwise provided by law, shall not be bound to recognize any equitable or
other claim to or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be
transferred on its books only after the surrender to the Corporation of the
share certificates duly endorsed by the holder of record or attorney-in-fact.
If the surrendered certificates are canceled, new certificates shall be issued
to the person entitled to them, and the transaction recorded on the books of
the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. If a shareholder
claims to have lost or destroyed a certificate of shares issued by the
Corporation, a new certificate shall be issued upon the delivery to the
Corporation of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed, and, at the discretion of the Board
of Directors, upon the deposit of a bond or other indemnity as the Board
reasonably requires.
ARTICLE VII. INDEMNIFICATION
Section 1. Right to Indemnification. The Corporation hereby
indemnifies each person (including the heirs, executors, administrators, or
estate of such person) who is or was a director or officer of the Corporation
to the fullest extent permitted or authorized by current or future legislation
or judicial or administrative decision against all fines, liabilities, costs
and expenses, including attorneys' fees, arising out of his or her status as a
director, officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to which those seeking
an indemnification may be entitled. The Corporation may maintain insurance, at
its expense, to protect itself and all officers and directors against fines,
liabilities, costs and expenses, whether or not the Corporation would have the
legal power to indemnify them directly against such liability.
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<PAGE>
Section 2. Advances. Costs, charges and expenses (including attorneys'
fees) incurred by a person referred to in Section 1 of this Article in
defending a civil or criminal proceeding shall be paid by the Corporation in
advance of the final disposition thereof upon receipt of an undertaking to
repay all amounts advanced if it is ultimately determined that the person is
not entitled to be indemnified by the Corporation as authorized by this
Article, and upon satisfaction of other conditions required by current or
future legislation.
Section 3. Savings Clause. If this Article or any portion of it is
invalidated on any ground by a court of competent jurisdiction, the Corporation
nevertheless indemnifies each person described in Section 1 of this Article to
the fullest extent permitted by all portions of this Article that have not been
invalidated and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws
adopted, by a majority vote of the directors or by a vote of the shareholders
holding a majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors
of the Corporation.
------------------------------------
Secretary
Date:
------------------------------------
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
Department of State
CERTIFICATE OF INCORPORATION
To All to Whom These Presents Shall come, Greetings:
WHEREAS; under the provisions of the Laws of the Commonwealth, the Secretary of
the Commonwealth is authorised and required to issue a "Certificate of
Incorporation" evidencing the incorporation of an entity.
WHEREAS, the stipulations and conditions of the Law have been fully complied
with by
D.S.& W., INC.
Given under my Hand and the Great
Seal of the Commonwealth, at the
City of Harrisburg, this 26th day
of February in the year of our Lord
one thousand nine hundred and
eighteight and of the Commonwealth
the two hundred twelfth.
/s/ illegible
Secretary of the Commonwealth
REED SMITH SHAW & MCCLAY ESQS
ATTN: CHRISTOPHER ZETTLEMOYER
P.O. BOX 11844
HARRISBURG, PA 17108
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<PAGE>
88141671
Applicant's Acct. No. _____ Filed FEB 26 1988
Commonwealth of Pennsylvania
Department of State
- ----------------------------
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE /s/ illegible
CORPORATION BUREAU Secretary of the Commonwealth
- ----------------------------
ARTICLES OF INCORPORATION
of
D.S.& W., INC.
In compliance with the requirements of Section 204 of the
Business Corporation Law, Act of May 5, 1933, P.L. 364, as amended (15 P.S.
ss.1204), the undersigned, desiring to incorporate a business corporation,
hereby certifies that:
9. Corporate Name. The name of the Corporation is D.S. & W.,
Inc.
10. Registered Office. The location and post office address of
the initial registered office of the Corporation in this Commonwealth is 512
Foreland Street, Pittsburgh, Pennsylvania 15212.
11. Purpose. The Corporation is incorporated under the
Pennsylvania Business Corporation Law to have unlimited power to engage in and
to do any lawful act concerning any or all lawful business for which
corporations may be incorporated under the Act of May 5, 1933, P.L. 364, as
amended.
12. Corporate Existence. The term for which the Corporation is
to exist is perpetual.
13. Stock. The aggregate number of shares which the
Corporation shall have authority to issue is 100 shares of Common Stock, par
value $1.00 per share.
14. Incorporator. The name and post office address of the
incorporator is Carol A. Soltes, 435 Sixth Avenue, Pittsburgh, Pennsylvania
15219, and the number and class of shares subscribed for by such incorporator
is one share of Common Stock, par value $1.00 per share.
15. Personal Liability of Directors.
(a) Elimination of Liability. To the fullest extent
that the laws of the Commonwealth of Pennsylvania, as now in effect or as
hereafter amended, permit elimination or limitation of the liability of
directors, no director of the Corporation shall be personally liable for
monetary damages as such for any action taken, or any failure to take any
action, as a director.
<PAGE>
(b) Nature and Extent of Rights. The provisions of
this Article shall be deemed to be a contract with each director of the
corporation who serves as such at any time while this Article is in effect and
each such director shall be deemed to be so serving in reliance on the
provisions of this Article. Any amendment or repeal of this Article or adoption
of any ByLaw or provision of the Articles of the Corporation which has the
effect of increasing director liability shall operate prospectively only and
shall not have any effect with respect to any action taken, or any failure to
act, by a director prior thereto.
16. Indemnification of, and Advancement of Expenses to,
Directors, Officers and Others.
(a) Right to Indemnification. Except as prohibited
by law, every director and officer of the Corporation shall be entitled as of
right to be indemnified by the Corporation against expenses and any liabilities
paid or incurred by such person in connection with any actual or threatened
claim, action, suit or proceeding, civil, criminal, administrative,
investigative or other, whether brought by or in the right of the Corporation
or otherwise, in which he or she may be involved in any manner, as a party,
witness or otherwise, or is threatened to be made so involved, by reason of
such person being or having been a director or officer of the Corporation or of
a subsidiary of the corporation or by reason of the fact that such person is or
was serving at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another company, partnership, joint
venture, trust, employee benefit plan or other entity (such claim, action, suit
or proceeding hereinafter being referred to as "Action"); provided, that no
such right of indemnification shall exist with respect to an Action initiated
by an indemnitee (as hereinafter defined) against the Corporation (an
"Indemnitee Action") except as provided in the last sentence of this Section
(a). Persons who are not directors or officers of the Corporation may be
similarly indemnified in respect of service to the Corporation or to another
such entity at the request of the Corporation to the extent the Board of
Directors at any time denominates any of such persons as entitled to the
benefits of this Article. As used in this Article, "indemnitee" shall include
each director and officer of the Corporation and each other person denominated
by the Board of Directors as entitled to the benefits of this Article,
"expenses" shall mean all expenses actually and reasonably incurred, including
fees and expenses of counsel selected by an indemnitee, and "liabilities" shall
mean amounts of judgments, excise taxes, fines, penalties and amounts paid in
settlement. An indemnitee shall be entitled to be indemnified pursuant to this
Section (a) for expenses incurred in connection with any Indemnitee Action only
(i) if the Indemnitee Action is instituted under Section (c) of this Article
and the indemnitee is successful in whole or in part in such Action, (ii) if
the indemnitee is successful in whole or in part in another Indemnitee Action
for which expenses are claimed or (iii) if the indemnification for expenses is
included in a settlement of, or is awarded by a court in, such other Indemnitee
Action.
(b) Right to Advance of Expenses. Every indemnitee
shall be entitled as of right to have his or her expenses in defending any
Action, or in initiating and pursuing any Indemnitee Action for indemnity or
advancement of expenses under Section (c) of this Article, paid in advance by
the Corporation prior to final disposition of such Action or Indemnitee Action,
provided that the Corporation receives a written undertaking by or on behalf of
the
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<PAGE>
indemnitee to repay the amount advanced if it should ultimately be determined
that the indemnitee is not entitled to be indemnified for such expenses.
(c) Right of Indemnitee to Initiate Action. If a
written claim under Section (a) or Section (b) of this article is not paid in
full by the Corporation within thirty days after such claim has been received
by the Corporation, the indemnitee may at any time thereafter initiate an
Indemnitee Action to recover the unpaid amount of the claim and, if successful
in whole or in part, the indemnitee shall also be entitled to be paid the
expense of prosecuting such Indemnitee Action. The only defense to an
Indemnitee Action to recover on a claim for indemnification under Section (a)
of this article shall be that the indemnitee's conduct was such that under
Pennsylvania law the corporation is prohibited from indemnifying the indemnitee
for the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors, independent legal counsel and its shareholders) to have made a
determination prior to the commencement of such Indemnitee Action that
indemnification of the indemnitee is proper in the circumstances, nor an actual
determination by the Corporation (including its board of directors, independent
legal counsel or its shareholders) that the indemnitee's conduct was such that
indemnification is prohibited by Pennsylvania law, shall be a defense to such
Indemnitee Action or create a presumption that the indemnitee's conduct was
such that indemnification is prohibited by Pennsylvania law. The only defense
to an Indemnitee Action to recover on a claim for advancement of expenses under
Section (b) of this Article shall be the indemnitee's failure to provide the
undertaking required by Section (b) of this Article.
(d) Insurance and Funding. The Corporation may
purchase and maintain insurance to protect itself and any person eligible to be
indemnified hereunder against any liability or expense asserted or incurred by
such person in connection with any Action, whether or not the Corporation would
have the power to indemnify such person against such liability or expense by
law or under the provisions of this Article. The Corporation may create a trust
fund, grant a security interest, cause a letter of credit to be issued or use
other means (whether or not similar to the foregoing) to ensure the payment of
such sums as may become necessary to effect indemnification as provided herein.
(e) Non-Exclusivity; Nature and Extent of Rights.
The rights to indemnification and advancement of expenses provided for in this
Article shall (i) not be deemed exclusive of any other rights, whether now
existing or hereafter created, to which any indemnitee may be entitled under
any agreement or by-law, charter provision, vote of shareholders or directors
or otherwise, (ii) be deemed to create contractual rights in favor of each
indemnitee who serves the Corporation at any time while this Article is in
effect (and each such indemnitee shall be deemed to be so serving in reliance
on the provisions of this Article), and (iii) continue as to each indemnitee
who serves the Corporation at any time while this Article is in effect (and
each such indemnitee shall be deemed to be so serving in reliance on the
provisions of this Article), and (iii) continue as to each indemnitee who has
ceased to have the status pursuant to which he or she was entitled or was
denominated as entitled to indemnification under this Article and shall inure
to the benefit of the heirs and legal representatives of each indemnitee. Any
amendment or repeal of this Article or adoption of any By-Law or provision of
the Articles of the
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<PAGE>
Corporation which has the effect of limiting in any way the rights to
indemnification or advancement of expenses provided for in this Article shall
operate prospectively only and shall not affect any action taken, or failure to
act, by an indemnitee prior to the adoption of such amendment, repeal, By-Law
or other provision.
(f) Partial Indemnity. If an indemnitee is entitled
under any provision of this Article to indemnification by the Corporation for
some or a portion of the expenses or liabilities paid or incurred by the
indemnitee in the preparation, investigation, defense, appeal or settlement of
any Action or Indemnitee Action but not, however, for the total amount thereof,
the Corporation shall indemnify the indemnitee for the portion of such expenses
or liabilities to which the indemnitee is entitled.
IN TESTIMONY WHEREOF, the incorporator has signed and sealed
these Articles of Incorporation this 25th day of February, 1988.
/s/ Carol A. Soltes (SEAL)
Carol A. Soltes,
Sole Incorporator
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<PAGE>
90261449
Filed in the Department of
State on MAY 14, 1990
Secretary of the Commonwealth
4220F
ARTICLES OF AMENDMENT
DOMESTIC BUSINESS CORPORATION
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
In compliance with the requirement of Section 1911(a)(1) of the
Business Corporation Law, act of December 21, 1988, (P.L. 1444 No. 177), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is:
D.S. & W., Inc.
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following
statement to conform to the records of the Department):
512 Foreland Street
Pittsburgh, PA 15213
3. This statute by or under which it was incorporated is:
Business Corporation Law of the Commonwealth of Pennsylvania, as
approved May 5, 1933, P.L. 364, as amended.
4. The date of its incorporation is:
2/6/88
5. The amendment was adopted by a consent in writing setting forth the
action so taken signed by all the shareholders entitled to vote
thereon and filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
<PAGE>
(a) The total number of shares outstanding was: 100
(b) The total s hares entitled to vote was: 100
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendment was: 100
8. The amendment adopted by the shareholders, set forth in full, is as
follows:
RESOLVED, that Paragraph 1 of the Articles of Incorporation of D. S. &
W., Inc. are hereby amende to read as follows: "The name of the
Corporation is Melody Tent and Amphitheater, Inc." The new location of
the registered office is 4423 Bigelow Boulevard, Pittsburgh, PA 15213.
ATTEST: D. S. & W., INC.
/s/ Richard A. Engler 4-1-90 By:/s/ Patrick J. DiCesare
Richard A. Engler Patrick J. DiCesare, President
Secretary
(Corporate Seal)
<PAGE>
BYLAWS
OF
MELODY TENT AND AMPHITHEATER, INC.
<PAGE>
[TABLE OF CONTENTS DELETED]
<PAGE>
BYLAWS
OF
MELODY TENT AND AMPHITHEATER, INC.
ARTICLE I
OFFICES
Section 1.1 Registered Office. The initial registered office shall be
located at 2825 Penn Avenue, Pittsburgh, Allegheny County, Pennsylvania 15222.
Section 1.2 Other Offices. The Corporation may also have offices at
such other places as the Board of Directors may from time to time determine or
the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1 Place of Meetings. Meetings of the shareholders shall be
held at the office of the Corporation or at such other place or places, either
within or without the Commonwealth of Pennsylvania, as may from time to time be
fixed or determined by the Board of Directors, or the person or persons calling
the meeting.
Section 2.2 Annual Meetings. An annual meeting of the shareholders
shall be held May 15 if not a legal holiday, and if a legal holiday, then on the
next succeeding business day following, at 5:00 P.M., when they shall elect a
Board of Directors and transact such other business as may properly be brought
before the meeting.
Section 2.3 Special Meetings. Special meetings of the shareholders may
be called at any time by any Officer of the Corporation, by a majority of the
Board of Directors or the shareholders entitled to cast at least 20% of the
votes which all shareholders are entitled to cast at the particular meeting,
upon written request delivered to the Secretary of the Corporation. Such request
shall state the purpose or purposes of the proposed meeting. Upon receipt of any
such request it shall be the duty of the secretary to call a special meeting of
the shareholders to be held at such a time, not more than sixty days thereafter,
as the Secretary may fix. If the Secretary shall neglect to issue such a call,
the person or persons making the request may issue the call.
Section 2.4 Notice. Written notice of any meeting of shareholders,
stating the place, the date and hour and any other information required by law,
shall be given to the shareholder
<PAGE>
entitled to vote thereat either personally; by first class or express mail,
postage prepaid; by telegram, telex with answerback received, or by telecopier
with answerback received to his or her address or telex, telecopier or telephone
number, appearing on the books of the corporation at least five days before such
meeting unless a greater period of notice is required by statute in a particular
case. If notice is mailed, then such notice will be deemed to be given when
deposited in the United States mail properly addressed with proper postage
thereon. If by telegram, then when delivered to the telegraph company and if by
telex or telecopier when transmitted or sent by the telex or telecopier machine
at least five days before such meeting, unless a greater period of notice is
required by statute in a particular case.
Section 2.5 Quorum and Adjournment. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares entitled to vote
shall constitute a quorum for the transaction of business at all meetings of the
shareholders, except as otherwise provided by law, by the Articles of
Incorporation or by these bylaws. The shareholders present at a duly organized
meeting can continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. If, however, any
meeting of the shareholders cannot be organized because a quorum has not
attended, the shareholders entitled to vote thereat, present in person or by
proxy, shall have power, except as otherwise provided by statute, to adjourn the
meeting to such time and place as they may determine, and (a) shareholders who
attend a meeting called for the election of directors, which has been previously
adjourned for lack of a quorum, although less than a quorum, shall nevertheless
constitute a quorum for the purpose of electing directors; and (b) those
shareholders entitled to vote who attend a meeting which has been previously
adjourned for one (1) or more periods aggregating fifteen (15) days because of
the absence of a quorum, shall although less than a quorum, nevertheless
constitute a quorum for the purpose of acting on any matter set forth in the
notice of the meeting if the notice stated that those shareholders who attend
the adjourned meeting shall constitute a quorum for the purpose of acting on the
matter. At any adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 2.6 Vote Required. (a) When a quorum is present or represented
at any meeting, a majority of the votes cast shall decide any question brought
before such meeting, unless the question is one upon which, by express provision
of the statutes or of the Articles of Incorporation or by these bylaws, a
different vote is required in which case such express provision shall govern and
control the decision of such question.
(b) At each shareholder's meeting, every shareholder entitled
to vote shall have the right of one vote for every share having voting power
standing in his or her name on the books of the corporation.
(c) In all elections for Directors, every shareholder entitled
to vote shall have the right, in person or by proxy, to cumulate his or her vote
for Directors; that is, to multiply the number of votes to which he or she may
be entitled by the number of Directors to be elected, and
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<PAGE>
he or she may cast the whole number of such votes for one candidate or he or she
may distribute them among any two or more candidates. The candidates receiving
the highest number of votes up to the number of Directors to be elected shall be
elected.
(d) Upon demand, made by a shareholder at any election for
Directors before voting begins, the election shall be by ballot.
Section 2.7 Record Date. (a) The Board of Directors may fix a time, not
more than ninety (90) days, prior to the date of any meeting of or action by the
shareholders or the date fixed for payment of any dividend or distribution or
the date for the allotment of rights or the date when any change or conversion
or exchange of shares will be made or go into effect, as a record date for the
determination of the shareholders entitled to notice of and to vote at any such
meeting or to express consent or dissent to action in writing without a meeting
or entitled to receive payment of any such dividend or distribution or to
receive any such allotment of rights or to exercise the rights in respect to any
such change, conversion or exchange of shares. In such case, only such
shareholders as shall be shareholders of record on the date so fixed shall be
entitled to notice of and to vote at such meeting or to express consent or
dissent to action in writing without a meeting or to receive payment of such
dividend or to receive such allotment or to exercise such rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date so fixed.
(b) In the event that no such record date is fixed, then the
record date for all of such purposes shall be thirty (30) days (i) next
preceding the date of such meeting, (ii) prior to the day on which the first
written consent or dissent is filed with the Secretary of the Corporation, (iii)
prior to the date fixed for payment of such dividend, distribution or allotment
of rights.
Section 2.8 Proxies. (a) Every shareholder entitled to vote or to
express consent or dissent to any corporate action may authorize another person
to act for him by proxy vote. Every proxy shall be executed in writing by the
shareholder or by his or her duly authorized attorney-in-fact and filed with the
Secretary of the Corporation. A proxy, unless coupled with an interest, shall be
revocable at will, notwithstanding any other agreement or any provision in proxy
to the contrary, but the revocation of a proxy shall not be effective until
notice thereof has been given to the Secretary of the Corporation. No unrevoked
proxy shall be valid after three (3) years from the date of execution, unless a
longer time is expressly provided therein. A proxy shall not be revoked by the
death or incapacity of the maker, unless, before the vote is counted or the
authority is exercised, written notice of such death or incapacity is given to
the Secretary of the Corporation.
(b) The term "coupled with an interest" refers to an interest
in the share itself or an interest in the Corporation generally and includes (1)
vote pooling or similar arrangement among shareholders, (ii) agreements among
shareholders or between the Corporation and one or
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more shareholders regarding the voting of shares and (iii) unrevoked proxies in
favor of existing or potential creditors of a shareholder.
Section 2.9 Voting Lists. The Officer or Agent having charge of the
transfer books for the shares of the Corporation shall make a complete list of
the shareholders entitled to vote at the meeting, arranged in alphabetical
order, with the address of and number of shares held by each. Such list shall be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting.
Section 2.10 Judges of Election. In advance of any meeting of the
shareholders, the Board of Directors may appoint judges of election, who need
not be shareholders, to act at such meeting or any adjournment thereof. If
judges of election are not so appointed, the Chairman of any such meeting may
and, upon request of any shareholder or his or her proxy, shall make such
appointment at the meeting. The number of judges shall be one or three. No
person who is a candidate for office shall act as judge. The judges of the
election shall determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, receive votes or ballots, hear and
determine all challenges and questions arising in any way in connection with the
right to vote, count and tabulate all votes, determine the results and do such
acts as may be proper to conduct the election or vote with fairness to all
shareholders. If there be three judges of an election, the decision, act or
certificate of a majority shall be effective in all respects as the decision,
act or certificate of all. On request of the Chairman of the meeting or of any
shareholder or his or her proxy, the judges shall make a report in writing of
any question or matter determined by them and execute a certificate of fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 2.11 Unanimous and Partial Consent of Shareholders. (a) Any
action required to be taken at a meeting of the shareholders may be taken
without a meeting, if prior to or subsequent to the action, a consent in writing
setting forth the action so taken shall be signed by all of the shareholders who
would be entitled to vote at a meeting for such purpose and shall be filed with
the Secretary of the Corporation.
(b) Any action required or permitted to be taken at a meeting
of shareholders or a class of shareholders of the Corporation may be taken
without a meeting upon the written consent of shareholders who would have been
entitled to cast the minimum number of votes that would be necessary to
authorize the action at a meeting at which all shareholders entitled to vote
were present and voting. The consents shall be filed with the Secretary of the
Corporation. The action shall not become effective until after ten (10) days
written notice of the action has been given to each shareholder entitled to vote
thereon who has not consented thereto.
Section 2.12 Telephone Participation. One or more shareholders shall be
considered present and may participate in any meeting of the shareholders by
means of any communications equipment whereby all persons in the meeting can
hear each other.
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ARTICLE III
DIRECTORS
Section 3.1 Number of Directors. The number of Directors which shall
constitute the whole Board shall be a minimum of one (1) and a maximum of five
(5), as determined by the Shareholders either at their Annual Meeting or at a
Special Meeting. Directors shall be natural persons of full age and need not be
residents of Pennsylvania or shareholders in the Corporation. Except as
hereinafter provided in the case of vacancies, Directors, other than those
constituting the first Board of Directors, shall be elected by the shareholders.
Section 3.2 Term. Each Director shall be elected to serve for the term
of one year and until his or her successor shall be elected and shall qualify,
or until his or her earlier death, resignation or removal.
Section 3.3 Vacancies. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of Directors, shall be filled
by a majority of the remaining members of the Board, though less than a quorum
or by a sole remaining Director, and each person so elected shall be a Director
to serve for the balance of the unexpired term of the Director whose seat is
vacant.
Section 3.4 Power of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors which
may exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
bylaws directed or required to be exercised and done by the shareholders.
Section.3.5 Place of Meeting. The meetings of the Board of Directors
may be held at such a place within the Commonwealth of Pennsylvania or elsewhere
as a majority of the Directors may from time to time appoint or as may be
designated in the notice calling the meeting.
Section 3.6 Annual Meeting. The first meeting of each newly elected
Board may be held immediately after the annual meeting of Shareholders or at
such time and place as shall be fixed by the shareholders at the meeting at
which such Directors were elected and no notice shall be necessary to the newly
elected Directors in order legally to constitute the meeting, provided a
majority of the whole Board shall be present; or it may convene at such time and
place as may be fixed by the consent of all the Directors.
Section 3.7 Regular Meetings. Regular meetings of the Board may be held
at such time and place as shall be determined from time to time, by Resolution
of at least a majority of the Board at a duly convened meeting, or by unanimous
written consent. Notice of regular meetings
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of the Board shall be given each Director at least two (2) days before each
meeting, either personally or by mail or by telegram.
Section 3.8 Special Meetings. Special meetings of the Board may be
called by any officer of the corporation or by any two (2) Directors of the
Corporation on three (3) days notice to each Director, either personally; by
first class or express mail, postage prepaid; by telegram, telex with answerback
received, or by telecopier with answerback received to his or her address or
telex, telecopier or telephone number. If notice is mailed, then such notice win
be deemed to be given when deposited in the United States mail properly
addressed with proper postage thereon. If by telegram, then when delivered to
the telegraph company and if by telex or telecopier when transmitted or sent by
the telex or telecopier machine.
Section 3.9 Quorum and Adjournment. At all meetings of the Board, a
majority of the Directors in office shall be necessary to constitute a quorum
for the transaction of business and the acts of the majority of the Directors
present and voting at a meeting at which a quorum is present shall be the acts
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Articles of Incorporation or by these bylaws. If a quorum
shall not be present at any meeting of the Directors, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 3.10 Actions by Consent. If all the Directors shall severally
or collectively consent in writing prior to or subsequent to any action to be
taken by the Corporation, and that writing is filed with the Secretary of the
Corporation, such action shall be valid as a corporate action as though it had
been authorized at a meeting of the Board of Directors.
Section 3.11 Telephone Meetings. One or more Directors shall be
considered present and may participate in any meeting of the Board by means of
any communications equipment whereby all persons participating at the meeting
can hear each other.
Section 3.12 Removal of Directors. The Board of Directors may declare
vacant the office of a director who has been judicially declared of unsound mind
or who has been convicted of an offense punishable by imprisonment for a term of
more than one year or for dishonesty, conflict of interest, actions injurious to
the Corporation, misconduct in office or substantial nonperformance or failure
to perform with the standard of care established in these bylaws.
Section 3.13 Presumption of Assent. A Director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken will be presumed to have assented to the action taken
unless his or her dissent is entered in the minutes of the meeting or he or she
files his or her written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof, or forwards such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent will not apply to a
Director who voted in favor of such action.
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Section 3.14 Personal Liability. Except for the responsibility or
liability of a director pursuant to any criminal statute or the liability of a
director for the payment of taxes pursuant to local, state or Federal law, a
Director of the Corporation shall not be personally liable for monetary damages
for any action taken or any failure to take any action, unless (a) such Director
has breached or failed to perform his or her duties as a director, including his
or her duties as a member of any Committee of the Board of Directors upon which
he or she may serve, pursuant to the standard of care set forth below, and (b)
such breach or failure to perform constitutes self-dealing, willful misconduct
or recklessness.
Section 3.15 Standard of Care. (a),Each Director of the Corporation
shall stand in a fiduciary relation to the Corporation and shall perform his or
her duties as a Director, including his or her duties as a member of any
Committee of the Board upon which he or she may serve, in good faith, in a
manner he or she reasonably believes to be in the best interest of the
Corporation, and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. In performing his or her duties, a Director shall be entitled to
rely in good faith on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by any of the following:
(1) One or more Officers or employees of the Corporation whom
the Director reasonably believes to be reliable and competent in the
matters presented.
(2) Counsel, public accountants or other persons as to matters
which the Director reasonably believes to be within the professional or
expert competence of such person.
(3) A Committee of the Board upon which he or she does not
serve, duly designated in accordance with the law, as to matters within
its designated authority, which Committee the Director reasonably
believes to merit confidence.
A Director shall not be considered to be acting in good faith if he or she has
knowledge concerning the matter in question that would cause his or her reliance
to be unwarranted.
(b) In discharging the duties of their respective positions,
the Board of Directors, Committees of the Board and individual Directors may, in
considering the best interests of the Corporation, consider the effects of any
action upon employees, upon suppliers and customers of the Corporation and upon
communities in which offices or other establishments of the Corporation are
located, and all other pertinent factors. The consideration of those factors
shall not constitute a violation of subsection (a) of this Section 3.15.
(c) Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the corporation.
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Section 3.16 Executive and Other Committees. The Board of Directors
may, by Resolution adopted by a majority of the whole Board, designate two or
more of its number to constitute an Executive Committee or other Committees
which, to the extent provided in such Resolution, shall have and exercise the
authority of the Board of Directors in the management of the business of the
Corporation except that such Committee shall have no authority to (i) submit
action to the shareholders; (ii) create or fill vacancies in the Board of
Directors; (iii) adapt, amend or repeal bylaws; (iv) amend resolutions of the
Board; (v) act on matters committed in these bylaws or by resolution to another
Committee of the Board. Vacancies in the membership of any Committee shall be
filled by the Board of Directors at a regular or special meeting of the Board of
Directors. Each Committee shall keep regular minutes of its proceedings and
report the same to the Board when required. In the absence or disqualification
of any member of a Committee, if no alternates have been designated by the
Board, the member or members thereof present at any meeting and not disqualified
from voting, whether or not he, she or they constitute a quorum, may unanimously
appoint another Director to act at the meeting in the place of such absent or
disqualified member.
Section 3.17 Compensation of Directors. Directors may be compensated
for their services by Resolution of the Board and a fixed sum, and expenses of
attendance if any, may be allowed for attendance at each regular or special
meeting of the Board or at meetings of the Executive Committee or other
Committee established by the Board of Directors; provided, that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
OFFICERS
Section 4.1 Designation of Officers. The Officers of the Corporation
shall be chosen by the Board of Directors and shall be a President, Secretary
and Treasurer. The Board of Directors may also choose one or more Vice
Presidents and such other Officers and Assistant Officers and Agents as the
needs of the Corporation may require, who shall hold their offices for such
terms and shall have such authority and shall perform such duties as from time
to time shall be determined by Resolution of the Board. The Officers of the
Corporation need not be Directors.
Section 4.2 Qualification. The President and Secretary shall be natural
persons of full age; the Treasurer may be a corporation, but, if a natural
person, shall be of full age. Any number of offices may be held by the same
person.
Section 4.3 Compensation. The salaries of all Officers and Agents of
the corporation shall be fixed by the Board of Directors.
Section 4.4 Term and Removal. The Officers of the Corporation shall
hold office until their successors are chosen and have qualified. Any Officer or
Agent, elected or appointed by
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the Board of Directors, may be removed by the Board of Directors, with or
without cause, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 4.5 Vacancies. If the office of any Officer becomes vacant for
any reason, the vacancy shall be filled by the Board of Directors.
Section 4.6 Chairman of the Board. The Board of Directors may elect a
Chairman of the Board. If a Chairman has been elected, the Chairman of the Board
of Directors, shall preside at all meetings of the shareholders and of the
Directors at which he or she is present and shall have such authority and
perform such duties as the Board of Directors may designate.
Section 4.7 The President. The President shall be the chief executive
officer of the Corporation. He or she shall preside at all meetings of the
shareholders and directors in the absence of or in the event of a vacancy in the
office of Chairman of the Board, shall be ex officio a member of the Executive
Committee, and subject to the control of the Board of Directors, shall have
general and active management of the business of the Corporation and shall see
that all orders and Resolutions of the Board are carried into effect. He or she
shall execute bonds, mortgages and other contracts and instruments which the
Board of Directors has authorized, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
Officer or Agent of the Corporation.
Section 4.8 Vice-President. The Vice-President shall, in the absence,
disability, inability or refusal to act of the President, perform the duties and
exercise the powers of the President, and shall perform such other 'duties as
shall from time to time be imposed by the Board of Directors.
Section 4.9 Secretary. The Secretary of the Corporation will: (a) keep
the minutes of the shareholders and Board of Directors meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation, and see
that the seal of the Corporation is affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder furnished to the
Secretary by such shareholder; (e) have general charge of the stock transfer
books of the Corporation; and (f) in general perform all duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors.
Section 4.10 Treasurer. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation, and shall
deposit all moneys and other valuable effects in the name and credit of the
Corporation in such depositories as shall be designated by the Board of
Directors.
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(b) He shall disburse the funds of the Corporation as may be
ordered by the Board, and shall render to the President and Directors, at the
regular meetings of the Board, or whenever they may require it, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
(c) If required by the Board of Directors, he or she shall
give the Corporation a bond in such sum, and with such surety or sureties as may
be satisfactory to the Board of Directors for the faithful discharge of the
duties of his or her office.
Section 4.11 Standard of Care. An Officer shall perform his or her
duties as an officer in good faith in a manner he or she reasonably believes to
be in the best interests of the Corporation and with such care, including
reasonable inquiry, skill and diligence, as a person of ordinary prudence would
use under similar circumstances. A person who so performs his or her duties
shall not be liable by reason of being an Officer of the Corporation.
ARTICLE V
CERTIFICATES OF SHARES
Section 5.1 Certificates. The certificates of shares of the Corporation
shall be numbered and registered in a share register of the Corporation as they
are issued. The share register shall give the names and addresses of all
shareholders and the number and class of shares held by each. The certificate
shall state that the Corporation is incorporated under the laws of Pennsylvania
the name of the registered holder and the number and class of shares and the
series, if any, represented thereby.
Section 5.2 Signature. Every share certificate shall be signed by the
President or Vice-President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, but where such certificate is signed by a
transfer agent or by a transfer clerk of the Corporation and/or a registrar, the
signature of any corporate officer upon such certificate may be a facsimile,
engraved or printed. In case any Officer who has signed or whose facsimile
signature has been placed upon any share certificate shall have ceased to be
such Officer because of death, resignation, or otherwise, before such
certificate is issued, it may be issued by the Corporation with the same effect
as if the Officer had not ceased to be such at the date of its issue.
Section 5.3 Transfer of Shares. Upon surrender to the Corporation or
its transfer agent of a share certificate duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, a new certificate
shall be issued to the person entitled thereto and the old certificate canceled
and the transaction recorded upon the books of the Corporation.
Section 5.4 Registered Shareholders. The Corporation shall be entitled
to treat the holder of record of any share or shares as the holders in fact
thereof, and accordingly, shall not be
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bound to recognize any equitable or other claim to or interest in such share on
the part of any other person, and shall not be liable for any registration or
transfer of shares which are registered or to be registered in the name of the
fiduciary or the nominee of a fiduciary unless made with actual knowledge that a
fiduciary or nominee of a fiduciary is committing a breach of trust in
requesting such registration or transfer, or with knowledge of such facts that
its participation therein amounts to bad faith. Notwithstanding the foregoing,
the Board of Directors may adopt, if it, in its sole discretion, deems it
advisable, a procedure whereby a shareholder of the Corporation may certify in
writing to the Corporation that all or a portion of the shares registered in his
or her name are held for the account of a specific person, whereupon the persons
specified shall be deemed the holders of record.
Section 5.5 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an Affidavit of that fact by the person claiming
the share certificate to be lost or destroyed. When authorizing such issuance of
a new certificate or certificates, the Board of Directors may in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his or her legal
representative, to advertise the same in such manner as it shall require and/or
give the Corporation a bond or other indemnification in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate or certificates alleged to have been lost or
destroyed.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 6.1 Contracts. The Board of Directors may authorize any Officer
or Officers, Agent or Agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 6.2 Loans. No loans can be contracted on behalf of the
Corporation and no evidences of indebtedness issued in its name unless
authorized by a Resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 6.3 Other Documents. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation will be signed by such Officer or Officers, Agent or
Agents of the Corporation and in such manner as the Board of Directors, from
time to time by resolution, may designate.
Section 6.4 Deposits. All funds of the Corporation not otherwise
employed will be deposited from time to time to the credit of the Corporation in
such banks, trust companies or other depositories as the Board of Directors may
designate.
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ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Section 7.1 Declaration of Dividends and Distributions. Unless
otherwise limited by law, or by the Articles of Incorporation or these bylaws,
dividends and distributions upon the capital stock of the Corporation, if any,
may be declared by the Board of Directors at any regular or special meeting
pursuant to law. Dividends or distributions may be paid in cash, in property, or
in shares of the Corporation.
ARTICLE VIII
INDEMNIFICATIONS OF DIRECTORS, OFFICERS AND OTHERS
Section 8.1 Indemnification Rights of Directors and Officers. Every
Director and Officer of the Corporation shall be entitled as of right to be
indemnified by the Corporation against expenses and any liability actually and
in good faith paid or incurred by such Director or Officer in connection with
any threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative (including any investigation,
claim, action, suit or proceeding brought by or in the right of the Corporation)
in which he or she may be involved, as a party, witness or otherwise, by reason
of such Director or Officer being or having been a Director or Officer of the
Corporation or by reason of the fact that such Director or Officer is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity (such investigation,
claim, action, suit or proceeding hereinafter being referred to as "Action");
provided, however, that no such right or indemnification shall exist where
prohibited by law or where the Director's or Officer's act(s) or failure to act
giving rise to an Action and claim for indemnification is determined by a court
to have constituted self-dealing, a breach of statutory standards of care and
justifiable reliance of and for his or her office, or to have constituted
willful misconduct or recklessness; nor shall any such right of indemnification
exist in an action by (but not in the right of) the corporation against an
Officer unless such Officer has been successful on the merits or otherwise in
defense of an Action, in which event he or she shall be indemnified against
expenses actually and reasonably incurred in connection therewith. FURTHER
PROVIDED, that no such right of indemnification shall exist with respect to an
Action brought by a Director as such against the Corporation unless (i) such
action is brought to enforce a claim for indemnification for expenses legally
cognizable under the bylaws or under any agreement or vote of shareholders or
Directors providing for indemnification of the Director as such; or (ii) such
action is other than a claim for indemnification for expenses and the Director
is successful in whole or in part upon the merits in such Action, or (iii) the
indemnification is included in a settlement of, or is awarded by a court in,
such Action.
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Section 8.2 Indemnification of Others. Persons who are not directors or
officers of the Corporation may be similarly indemnified in respect of service
to the Corporation or to another such entity at the request of the Corporation
to the extent the Board of Directors at any time denominates any of such persons
as entitled to the benefits of this Article.
Section 8.3 Certain Definitions. As used in this Article, "indemnitee"
shall include each Director and Officer of the Corporation and each other person
denominated by the Board of Directors as entitled to the benefits of
indemnification as provided above; "expenses" shall mean fees and expenses of
counsel for a party to an Action, and all other expenses (except any liability)
including disbursements, travel expenses, fees and expenses for expert
witnesses, costs of investigation, discovery, preparation for trial, trial and
appeal; and "liability" shall include amounts of judgments, excise taxes, fines,
penalties and amounts paid in settlement.
Section 8.4 Right to Advancement of Expenses. All expenses incurred in
good faith by or on behalf of an indemnitee is defending an Action (including a
derivative Action brought in the right of the Corporation, but not including an
Action brought by the Corporation alleging self-dealing, willful misconduct,
recklessness or breach of fiduciary standards of conduct) shall upon written
request submitted to the Secretary of the Corporation, be paid by the
Corporation in advance of the final disposition of such Action. Any such written
request for advancement of expenses shall be accompanied by such supporting
documentation as is reasonably available to the indemnitee and reasonably
necessary for a determination of whether and to what extent the indemnitee is
entitled to indemnification and advancement of expenses. Any such written
request for advancement of expenses shall further be accompanied by a written
undertaking by or on behalf of such claiming indemnitee to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation.
Section 8.5 Right of Indemnitee to Initiate Action. If a written claim
for indemnification or for advancement of expenses under this Article is not
paid-in-full by the Corporation within thirty (30) days after such claim has
been received by the Corporation, the indemnitee may at any time thereafter
initiate an Action against the Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the indemnitee shall also be
entitled to be paid the expense of prosecuting such Action. The indemnitee shall
not be entitled to recover punitive or exemplary damages for failure or refusal
by the Corporation to honor a request for indemnification or for advancement of
expenses.
Section 8.6 Insurance and Funding. The Corporation may purchase and
maintain insurance to protect itself and any indemnitee, against expenses and
liability asserted or incurred by any indemnitee in connection with any Action,
whether or not the Corporation would have the power to indemnify such person
against such expense or liability by law, under an agreement, or under this
Article or otherwise. The Corporation may create a trust fund, grant a security
interest, cause a letter of credit to be issued or use other means (whether or
not similar to the foregoing) to ensure the payment of such amounts as may be
necessary to effect indemnification.
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Section 8.7 Indemnity Agreements. The Corporation may enter into
agreements with any Director, Officer, employee, agent or representative of the
Corporation, which agreements may grant rights to the indemnitee or create
obligations of the Corporation in furtherance of, different from, or in addition
to, but not in limitation of, those provided in this Article and, unless
required by law, without shareholder approval of any such agreement. Without
limitation of the foregoing, the Corporation may obligate itself (i) to maintain
insurance on behalf of the indemnitee against certain expenses and liabilities
and (ii) to contribute to expenses and liabilities incurred by the indemnitee in
accordance with the application of relevant equitable considerations to the
relative benefits to, and the relative fault of, the Corporation.
Section 8.8 Non-Exclusivity, Nature and Extent of Rights. The right of
indemnification and advancement of expenses provided for in this Article (i)
shall not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement
or bylaws, charter provision, vote of shareholders or directors or otherwise,
(ii) shall be deemed to create contractual rights in favor of each indemnitee,
and (iii) shall continue as to each person who has ceased to have the status
pursuant to which he or she or she was entitled or was denominated as entitled
to indemnification and advancement of expenses hereunder and shall inure to the
benefit of the heirs and legal representatives of each indemnitee. The rights
provided for in this Article may not be amended or repealed so as to limit in
any way the indemnification or the right to advancement of expenses provided for
herein with respect to any acts or omissions occurring prior to the adoption of
any such amendment or repeal.
Section 8.9 Validity; Legality, Enforceability. If any provision of
this Article shall be held to be invalid, illegal or unenforceable for any
reason (i) such provision shall be invalid, illegal or unenforceable only to the
extent of such prohibition, and the validity, legality and enforceability of the
remaining provision of this Article shall not in any way be affected or impaired
thereby, and (ii) to the fullest extent possible, the remaining provisions of
this Article shall be construed so as to give effect to the intent manifested by
the provision held invalid, illegal or unenforceable.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Financial Report to the Shareholders. Unless otherwise
agreed between the Corporation and a shareholder, the Corporation shall cause to
be sent to the shareholders, within one hundred twenty days after the close of
the fiscal year, a financial report as of the closing date of the preceding
fiscal year. Such report shall include a balance sheet as of the end of each
fiscal year and a statement of income and expenses for the fiscal year. Such
statements shall be accompanied by a report of the accountant if audited or
reviewed by a public accountant and shall be prepared in accordance with
generally accepted accounting principles if financial statements are prepared
for the fiscal year on that basis for any purpose. If the statements are not
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<PAGE>
audited or reviewed by a public accountant, they shall be accompanied by a
statement of the person in charge of the financial records stating his or her
reasonable belief as to whether or not the statements were prepared in
accordance with generally accepted accounting principles, and if not, describing
the basis of presentation and describing any material respects in which the
financial statements were not prepared on a basis consistent with those prepared
for the previous year.
Section 9.2 Fiscal Year. The fiscal year of the corporation shall be
fixed by Resolution of the Board of Directors.
Section 9.3 Seal. In the event the Board of Directors determines to
adopt a seal for the Corporation, the corporate seal shall have inscribed
thereon the name of the corporation, the state of incorporation, the year of its
organization and the words "Corporate Seal". Said seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any manner reproduced.
Section 9.4 Notices. (a) Whenever, under the provisions of the statutes
or of the Articles of Incorporation or of these bylaws, notice is required to be
given to any person, it may be given to such person either personally or by
sending a copy thereof through the mail or by telegram, charges prepaid, or by
telex or telecopier transmission to his or her address appearing on the books of
the Corporation or to his or her telex, telephone or telecopier number supplied
by him to the corporation for the purpose of notice. If the notice is sent by
mail or telegram, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office for
transmission to such person.
(b) Any notice required to be given to any person may be
waived in writing signed by the person entitled to such notice whether before or
after the time stated therein. Attendance of any person entitled to notice,
either in person or by proxy, at any meeting shall constitute a waiver of notice
of such meeting, except where any person attends a meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting was not lawfully called or convened.
Section 9.5 Number and Gender. For the purposes of these By-laws, the
masculine or the feminine shall be deemed to include the other gender and the
neuter, and the singular shall be deemed to include the plural, and the plural
the singular, as the context may require.
ARTICLE X
AMENDMENTS
Section 10.1 Amendments. These bylaws may be altered, amended or
repealed by a majority vote of the shareholders entitled to vote thereon at any
regular or special meeting duly convened after notice to the shareholders of
that purpose or one of the purposes or by a majority
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vote of the members of the Board of Directors at any regular or special meeting
duly convened, subject always to the power of the shareholders to change such
action by the Directors.
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<PAGE>
[State of California Office of the Secretary of State]
I, MARCH FONG EU, Secretary of State of the State Of California,
hereby certify:
That the annexed transcript has been compared with the record on file
in this office, of which it purports to be a copy, and that same is full, true
and correct.
IN WITNESS WHEREOF, I
execute this
certificate and affix
the Great Seal of the
State of California this
[October 22, 1982]
/s/ March Fong Eu
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
NEW AVALON, INC.
I
The name of this corporation is New Avalon, Inc.
II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California, other than the banking business, the trust company business,
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The name and address in the state of California of this corporation's
initial agent for service of process is Robert H. Bretz, Bretz and Hennigan,
10350 Santa Monica Boulevard, Suite 130, Los Angeles, California 90025.
<PAGE>
IV
This corporation is authorized to issue only one class of shares of
capital stock; and the total number of shares of capital stock which this
corporation is authorized to issue is one hundred thousand (100,000).
Dated: October 21, 1982
/s/ Robert H. Bretz
Robert H. Bretz
I hereby declare that I am the person who executed the foregoing
Articles of Incorporation, which execution is my act and deed.
/s/ Robert H. Bretz
Robert H. Bretz
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<PAGE>
I, MARCH FONG EU, Secretary of State of the State of California,
hereby certify:
That the annexed transcript has been compared with the record on file
in this office, of which it purports to be a copy, and that same is full, true
and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great
Seal of the State of California
this [September 10, 1985]
/s/ March Fong Eu
Secretary of State
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
NEW AVALON, INC.
Brian Murphy and Thomas Miserendino certify that:
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
NEW AVALON, INC.
Brian Murphy and Thomas Miserendino certify that:
1. They are the President and the Secretary, respectively of New
Avalon, Inc.
2. The Board of Directors of New Avalon, Inc., has approved the
amendment of the Articles of Incorporation of said corporation to add the
following as Article V:
"The corporation's issued shares shall be held of record by
not more than five (5) persons. This corporation is a close
corporation."
3. The amendment has been approved by the required vote of the
shareholders in accordance with Section 902 of the California Corporations
Code. The corporation has only one class of shares. Each outstanding share is
entitled to vote. The total number of shares issued and outstanding is 12,500
shares. The number of shares voting in favor of the amendment equaled the vote
required. The amendment was approved by the affirmative vote of 12,500 shares.
Each of the undersigned declares under penalty of perjury that the
matters set forth in the following going certificate are true and correct of
his own knowledge.
DATE: August 27 , 1985 /s/ Brian Murphy
-----------------------
BRIAN MURPHY
/s/ Thomas Miserendino
-----------------------
THOMAS MISERENDINO
<PAGE>
BY-LAWS
OF
NEW AVALON, INC.
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office for the
transaction of business of the corporation is hereby fixed and located at 17835
Ventura Boulevard, Suite 208, City of Encino, County of Los Angeles, State of
California. The location may be changed by approval of a majority of the
authorized Directors, and additional offices may be established and maintained
at such other place or places, either within or without California, as the Board
of Directors may from time to time designate.
Section 2. OTHER OFFICES. Branch or subordinate offices may at
any time be established by the Board of Directors at any place or places where
the corporation is qualified to do business.
ARTICLE II
DIRECTORS - MANAGEMENT
Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to
the provisions of the General Corporation Law and to any limitations in the
Articles of Incorporation of the corporation relating to action required to be
approved by the Shareholders, as that term is defined in Section 153 of the
California Corporations Code, or by the outstanding shares, as that term is
defined in Section 152 of the Code, the business and affairs of the corporation
shall be managed and all corporate powers shall be exercised by or under the
direction of the Board of Directors. The Board may delegate the management of
the day-to-day operation of the business of the corporation to a management
company or other person, provided that the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised under
the ultimate direction of the Board.
Section 2. STANDARD OF CARE. Each Director shall perform the
duties of a Director, including the duties as a member of any committee of the
Board upon which the Director may serve, in good faith, in a manner such
Director believes to be in the best interests of the corporation, and with such
care, including reasonable inquiry, as an ordinary prudent person in a like
position would use under similar circumstances. (Sec. 309)
<PAGE>
Section 3. EXCEPTION FOR CLOSE CORPORATION. Notwithstanding
the provisions of Section 1, in the event that this corporation shall elect to
become a close corporation as defined in Sec. 186, its Shareholders may enter
into a Shareholders' Agreement as provided in Sec. 300 (b). Said agreement may
provide for the exercise of corporate powers and the management of the business
and affairs of this corporation by the Shareholders, provided, however, such
agreement shall, to the extent and so long as the discretion or the powers of
the Board in its management of corporate affairs is controlled by such
agreement, impose upon each Shareholder who is a party thereof, liability for
managerial acts performed or omitted by such person pursuant thereto otherwise
imposed upon Directors as provided in Sec. 300 (d).
Section 4. NUMBER AND QUALIFICATION OF DIRECTORS. The
authorized number of Directors shall be four (4 ) until changed by a duly
adopted amendment to the Articles of Incorporation or by an amendment to this
by-law adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote, as provided in Sec.
212.
Section 5. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors
shall be elected at each annual meeting of the Shareholders to hold office until
the next annual meeting. Each Director, including a Director elected to fill a
vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
Section 6. VACANCIES. Vacancies in the Board of Directors may
be filled by a majority of the remaining Directors, though less than a quorum,
or by a sole remaining Director, except that a vacancy created by the removal of
a Director by the vote or written consent of the Shareholders or by court order
may be filled only by the vote of a majority of the shares entitled to vote
represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of a majority of the outstanding shares entitled to
vote. Each Director so elected shall hold office until the next annual meeting
of the Shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be
deemed to exist in the event of the death, resignation, or removal of any
Director, or if the Board of Directors by re solution declares vacant the office
of a Director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of Directors is increased, or
if the shareholders fail, at any meeting of shareholders at which any Director
or Directors are elected, to elect the number of Directors to be voted for at
that meeting.
The Shareholders may elect a Director or Directors at any time
to fill any vacancy or vacancies not filled by the Directors, but any such
election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote.
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<PAGE>
Any Director may resign effective on giving written notice to
the Chairman of the Board, the President, the Secretary, or the Board of
Directors, unless the notice specifies a later time for that resignation to
become effective. If the resignation of a Director is effective at a future
time, the Board of Directors may elect a successor to take office when the
resignation becomes effective.
No reduction of the authorized number of Directors shall have
the effect of removing any Director before that Director's term of office
expires.
Section 7. REMOVAL OF DIRECTORS. The entire Board of Directors
or any individual Director may be removed from office as provided by Secs. 302,
303 and 304 of the Corporations Code of the State of California. In such case,
the remaining Board members may elect a successor Director to fill such vacancy
for the remaining unexpired term of the Director so removed.
Section 8. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of
the Board of Directors may be called by the Chairman of the Board, or the
President, or any Vice President, or the Secretary, or any two (2) Directors and
shall be held at the principal executive office of the corporation, unless some
other place is designated in the notice of the meeting. Members of the Board may
participate in a meeting through use of a conference telephone or similar
communications equipment so long as all members participating in such a meeting
can hear one another. Accurate minutes of any meeting of the Board or any
committee thereof, shall be maintained as required by Sec. 312 of the Code by
the Secretary or other Officer designated for that purpose.
Section 9. ORGANIZATION MEETINGS. The organization meetings of
the Board of Directors shall be held immediately following the adjournment of
the annual meetings of the Shareholders.
Section 10. OTHER REGULAR MEETINGS. Regular meetings of the
Board of Directors shall be held at the corporate offices, or such other place
as may be designated by the Board of Directors, as follows:
Time of Regular Meeting: 10:00 a.m.
Date of Regular Meeting: June lst
If said day shall fall upon a holiday, such meetings shall be
held on the next succeeding business day thereafter. No notice need be given of
such regular meetings.
Section 11. SPECIAL MEETINGS - NOTICES - WAIVERS. Special
meetings of the Board may be called at any time by the President or, if he or
she is absent or unable or refuses to act, by any Vice President or the
Secretary or by any two (2) Directors, or by one (1) Director if only one is
provided.
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<PAGE>
At least forty-eight (48) hours notice of the time and place
of special meetings shall be delivered personally to the Directors or personally
communicated to them by a corporate Officer by telephone or telegraph. If the
notice is sent to a Director by letter, it shall be addressed to him or her at
his or her address as it is shown upon the records of the corporation, or if it
is not so shown on such records or is not readily ascertainable, at the place in
which the meetings of the Directors are regularly held. In case such notice is
mailed, it shall be deposited in the United States mail, postage prepaid, in the
place in which the principal executive office of the corporation is located at
least four (4) days prior to the time of the holding of the meeting. Such
mailing, telegraphing, telephoning or delivery as above provided shall be due,
legal and personal notice to such Director.
When all of the Directors are present at any Directors'
meeting, however called or noticed, and either (i) sign a written consent
thereto on the records of such meeting, or, (ii) if a majority of the Directors
are present and if those not present sign a waiver of notice of such meeting or
a consent to holding the meeting or an approval of the minutes thereof, whether
prior to or after the holding of such meeting, which said waiver, consent or
approval shall be filed with the Secretary of the corporation, or, (iii) if a
Director attends a meeting without notice but without protesting, prior thereto
or at its commencement, the lack of notice, then the transactions thereof are as
valid as if had at a meeting regularly called and noticed.
Section 12. SOLE DIRECTOR PROVIDED BY ARTICLES OF
INCORPORATION OR BY-LAWS. In the event only one (1) Director is required by the
By-Laws or Articles of Incorporation, then any reference herein to notices,
waivers, consents, meetings or other actions by a majority or quorum of the
Directors shall be deemed to refer to such notice, waiver, etc., by such sole
Director, who shall have all the rights and duties and shall be entitled to
exercise all of the powers and shall assume all the responsibilities otherwise
herein described as given to a Board of Directors.
Section 13. DIRECTORS ACTION BY UNANIMOUS WRITTEN CONSENT. Any
action required or permitted to be taken by the Board of Directors may be taken
without a meeting and with the same force and effect as if taken by a unanimous
vote of Directors, if authorized by a writing signed individually or
collectively by all members of the Board. Such consent shall be filed with the
regular minutes of the Board.
Section 14. QUORUM. A majority of the number of Directors as
fixed by the Articles of Incorporation or By-Laws shall be necessary to
constitute a quorum for the transaction of business, and the action of a
majority of the Directors present at any meeting at which there is a quorum,
when duly assembled, is valid as a corporate act; provided that a minority of
the Directors, in the absence of a quorum, may adjourn from time to time, but
may not transact any business. A meeting at which a quorum is initially present
may continue to transact business, notwithstanding the withdrawal of Directors,
if any action taken is approved by a majority of the required quorum for such
meeting.
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<PAGE>
Section 15. NOTICE OF ADJOURNMENT. Notice of the time and
place of holding an adjourned meeting need not be given to absent Directors if
the time and place be fixed at the meeting adjourned and held within twenty-four
(24) hours, but if adjourned more than twenty-four (24) hours, notice shall be
given to all Directors not present at the time of the adjournment.
Section 16. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but by resolution of the
Board a fixed sum and expense of attendance, if any, may be allowed for
attendance at each regular and special meeting of the Board; provided that
nothing herein contained shall be construed to preclude any Director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 17. COMMITTEES. Committees of the Board may be
appointed by resolution passed by a majority of the whole Board. Committees
shall be composed of two (2) or more members of the Board, and shall have such
powers of the Board as may be expressly delegated to it by resolution of the
Board of Directors, except those powers expressly made non-delegable by Sec.
311.
Section 18. ADVISORY DIRECTORS. The Board of Directors from
time to time may elect one or more persons to be Advisory Directors who shall
not by such appointment be members of the Board of Directors. Advisory Directors
shall be available from time to time to perform special assignments specified by
the President, to attend meetings of the Board of Directors upon invitation and
to furnish consultation to the Board. The period during which the title shall be
held may be prescribed by the Board of Directors. If no period is prescribed,
the title shall be held at the pleasure of the Board.
Section 19. RESIGNATIONS. Any Director may resign effective
upon giving written notice to the Chairman of the Board, the President, the
Secretary or the Board of Directors of the corporation, unless the notice
specifies a later time for the effectiveness of such resignation. If the
resignation is effective at a future time, a successor may be elected to take
office when the resignation becomes effective.
ARTICLE III
OFFICERS
Section 1. OFFICERS. The Officers of the corporation shall be
a President, a Secretary, and a Chief Financial Officer. The corporation may
also have, at the discretion of the Board of Directors, a Chairman of the Board,
one or more Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other Officers as may be appointed in accordance
with the provisions of Section 3 of this Article III. Any number of offices may
be held by the same person.
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<PAGE>
Section 2. ELECTION. The Officers of the corporation, except
such Officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article, shall be chosen annually by the Board of
Directors, and each shall hold office until he or she shall resign or shall be
removed or otherwise disqualified to serve, or a successor shall be elected and
qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors
may appoint such other Officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority and perform
such duties as are provided in the By-Laws or as the Board of Directors may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the
rights, if any, of an officer under any contract of employment, any Officer may
be removed, either with or without cause, by the Board of Directors, at any
regular or special meeting of the Board, or, except in case of an Officer chosen
by the Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to
the corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Officer is a
party.
Section 5. VACANCIES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in the ByLaws for regular appointments to that office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board,
if such an officer be elected, shall, if present, preside at meetings of the
Board of Directors and exercise and perform such other powers and duties as may
be from time to time assigned by the Board of Directors or prescribed by the
By-Laws. If there is no President, the Chairman of the Board shall in addition
be the Chief Executive officer of the corporation and shall have the powers and
duties prescribed in Section 7 of this Article III.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the Board of Directors to the Chairman of the Board, if
there be such an Officer, the President shall be the Chief Executive Officer of
the corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and Officers of
the corporation. He or she shall preside at all meetings of the Shareholders and
in the absence of the Chairman of the Board, or if there be none, at all
meetings of the Board of Directors. The President shall be ex officio a member
of all the standing committees, including the Executive Committee, if any, and
shall have the general powers and duties of management
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usually vested in the office of President of a corporation, and shall have such
other powers and duties as may be prescribed by the Board of Directors or the
By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors, or if not ranked, the Vice President designated by the Board
of Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to, all the restric tions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the By-Laws.
Section 9. SECRETARY. The Secretary shall keep, or cause to be
kept, a book of minutes at the principal office or such other place as the Board
of Directors may order, of all meetings of Directors and Shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at Directors'
meetings, the number of shares present or represented at Shareholders' meetings
and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the
principal office or at the office of the corporation's transfer agent, a share
register, or duplicate share register, showing the names of the Shareholders and
their addresses; the number and classes of shares held by each; the number and
date of certificates issued for the same; and the number and date of
cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
the meetings of the Shareholders and of the Board of Directors required by the
By-Laws or by law to be given. He or she shall keep the seal of the corporation
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by the By-Laws.
Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep and maintain, or cause to be kept and maintained in
accordance with generally accepted accounting principles, adequate and correct
accounts of the properties and business transactions of the corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, earnings (or surplus) and shares. The books of account shall at
all reasonable times be open to inspection by any Director.
This Officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He or she shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
President and Directors, whenever they request it, an account of all of his or
her transactions and of the financial condition of the corporation, and shall
have such other powers and perform such other duties as may be prescribed by the
Board of Directors or the By-Laws.
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ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. All meetings of the Shareholders
shall be held at the principal executive office of the corporation unless some
other appropriate and convenient location be designated for that purpose from
time to time by the Board of Directors.
Section 2. ANNUAL MEETINGS. The annual meetings of the
Shareholders shall be held, each year, at the time and on the day following:
Time of Meeting: 10:00 a.m.
Date of Meeting: June lst
If this day shall be a legal holiday, then the meeting shall
be held on the next succeeding business day, at the same hour. At the annual
meeting, the Shareholders shall elect a Board of Directors, consider reports of
the affairs of the corporation and transact such other business as may be
properly brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the
Shareholders may be called at any time by the Board of Directors, the Chairman
of the Board, the President, a Vice President, the Secretary, or by one or more
Shareholders holding not less than one-tenth (1/10) of the voting power of the
corporation. Except as next provided, notice shall be given as for the annual
meeting.
Upon receipt of a written request addressed to the Chairman,
President, Vice President, or Secretary, mailed or delivered personally to such
officer by any person (other than the Board) entitled to call a special meeting
of Shareholders, such Officer shall cause notice to be given, to the
Shareholders entitled to vote, that a meeting will be held at a time requested
by the person or persons calling the meeting, not less than thirty-five (35) nor
more than sixty (60) days after the receipt of such request. If such notice is
not given within twenty (20) days after receipt of such request, the persons
calling the meeting may give notice thereof in the manner provided by these
By-Laws or apply to the Superior Court as provided in Sec. 305 (c).
Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings,
annual or special, shall be given in writing not less than ten (10) nor more
than sixty (60) days before the date of the meeting to Shareholders entitled to
vote thereat. Such notice shall be given by the Secretary or the Assistant
Secretary, or if there be no such Officer, or in the case of his or her neglect
or refusal, by any Director or Shareholder.
Such notices or any reports shall be given personally or by
mail or other means of written communication as provided in Sec. 601 of the Code
and shall be sent to the Shareholder's address appearing on the books of the
corporation, or supplied by him or her to the corporation for the purpose of
notice, and in the absence thereof, as provided in Sec. 601 of the Code.
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Notice of any meeting of Shareholders shall specify the place, the day and the
hour of meeting, and (1) in case of a special meeting, the general nature of the
business to be transacted and no other business may be transacted, or (2) in the
case of an annual meeting, those matters which the Board at date of mailing,
intends to present for action by the Shareholders. At any meetings where
Directors are to be elected, notice shall include the names of the nominees, if
any, intended at date of notice to be presented by management for election.
If a Shareholder supplies no address, notice shall be deemed
to have been given if mailed to the place where the principal executive office
of the corporation, in California, is situated, or published at least once in
some newspaper of general circulation in the County of said principal office.
Notice shall be deemed given at the time it is delivered
personally or deposited in the mail or sent by other means of written
communication. The officer giving such notice or report shall prepare and file
an affidavit or declaration thereof.
When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which such adjournment is taken.
Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
The transactions of any meeting of Shareholders, however called and noticed,
shall be valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the Shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting. Attendance shall constitute a waiver of
notice, unless objection shall be made as provided in Sec. 601 (e).
Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING DIRECTORS.
Any action which may be taken at a meeting of the Shareholders, may be taken
without a meeting or notice of meeting if authorized by a writing signed by all
of the Shareholders entitled to vote at a meeting for such purpose, and filed
with the Secretary of the corporation, provided, further, that while ordinarily
Directors can only be elected by unanimous written consent under Sec. 603 (d),
if the Directors fail to fill a vacancy, then a Director to fill that vacancy
may be elected by the written consent of persons holding a majority of shares
entitled to vote for the election of Directors.
Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise
provided in the GCL or the Articles, any action which may be taken at any annual
or special meeting of Shareholders may be taken without a meeting and without
prior notice, if a consent in
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writing, setting forth the action so taken, signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
Unless the consents of all Shareholders entitled to vote have
been solicited in writing,
(1) Notice of any Shareholder approval pursuant to
Secs. 310, 317, 1201 or 2007 without a meeting by less than
unanimous written consent shall be given at least ten (10)
days before the consummation of the action authorized by such
approval, and
(2) Prompt notice shall be given of the taking of any
other corporate action approved by Shareholders without a
meeting by less than unanimous written consent, to each of
those Shareholders entitled to vote who have not consented in
writing.
Any Shareholder giving a written consent, or the Shareholder's
proxyholders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxy holders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the corporation.
Section 8. QUORUM. The holders of a majority of the shares
entitled to vote thereat, present in person, or represented by proxy, shall
constitute a quorum at all meetings of the Shareholders for the transaction of
business except as otherwise provided by law, by the Articles of Incorporation,
or by these By-Laws. If, however, such majority shall not be present or
represented at any meeting of the Shareholders, the Shareholders entitled to
vote thereat, present in person, or by proxy, shall have the power to adjourn
the meeting from time to time, until the requisite amount of voting shares shall
be present. At such adjourned meeting at which the requisite amount of voting
shares shall be represented, any business may be transacted which might have
been transacted at a meeting as originally notified.
If a quorum be initially present, the Shareholders may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum, if any action taken is
approved by a majority of the Shareholders required to initially constitute a
quorum.
Section 9. VOTING. Only persons in whose names shares entitled
to vote stand on the stock records of the corporation on the day of any meeting
of Shareholders, unless some other day be fixed by the Board of Directors for
the determination of Shareholders of record, and then on such other day, shall
be entitled to vote at such meeting.
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Provided the candidate's name has been placed in nomination
prior to the voting and one or more Shareholder has given notice at the meeting
prior to the voting of the Shareholder's intent to cumulate the Shareholder's
votes, every Shareholder entitled to vote at any election for Directors of any
corporation for profit may cumulate their votes and give one candidate a number
of votes equal to the number of Directors to be elected multiplied by the number
of votes to which his or her shares are entitled, or distribute his or her votes
on the same principle among as many candidates as he or she thinks fit.
The candidates receiving the highest number of votes up to the
number of Directors to be elected are elected.
The Board of Directors may fix a time in the future not
exceeding thirty (30) days preceding the date of any meeting of Shareholders or
the date fixed for the payment of any dividend or distribution, or for the
allotment of rights, or when any change or conversion or exchange of shares
shall go into effect, as a record date for the determination of the Shareholders
entitled to notice of and to vote at any such meeting, or entitled to receive
any such dividend or distribution, or any allotment of rights, or to exercise
the rights in respect to any such change, conversion or exchange of shares. In
such case only Shareholders of record on the date so fixed shall be entitled to
notice of and to vote at such meeting, or to receive such dividends, dis
tribution or allotment of rights, or to exercise such rights, as the case may be
notwithstanding any transfer of any share on the books of the corporation after
any record date fixed as aforesaid. The Board of Directors may close the books
of the corporation against transfers of shares during the whole or any part of
such period.
Section 10. PROXIES. Every Shareholder entitled to vote, or to
execute consents, may do so, either in person or by written proxy, executed in
accordance with the provisions of Secs. 604 and 705 of the Code and filed with
the Secretary of the corporation.
Section 11. ORGANIZATION. The President, or in the absence of
the President, any Vice President, shall call the meeting of the Shareholders to
order, and shall act as chairman of the meeting. In the absence of the President
and all of the Vice Presidents, Shareholders shall appoint a chairman for such
meeting. The Secretary of the corporation shall act as Secretary of all meetings
of the Shareholders, but in the absence of the Secretary at any meeting of the
Shareholders, the presiding officer may appoint any person to act as Secretary
of the meeting.
Section 12. INSPECTORS OF ELECTION. In advance o-f any meeting
of Shareholders the Board of Directors may, if they so elect, appoint inspectors
of election to act at such meeting or any adjournment thereof. If inspectors of
election be not so appointed, or if any persons so appointed fail to appear or
refuse to act, the chairman of any such meeting may, and on the request of any
Shareholder or his or her proxy shall, make such appointment at the meeting in
which case the number of inspectors shall be either one (1) or three (3) as
determined by a majority of the Shareholders represented at the meeting.
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<PAGE>
Section 13. (A) SHAREHOLDERS' AGREEMENTS. Notwithstanding the
above provisions, in the event this corporation elects to become a close
corporation, an agreement between two (2) or more Shareholders thereof, if in
writing and signed by the parties thereof, may provide that in exercising any
voting rights the shares held by them shall be voted as provided therein or in
Sec. 706, and may otherwise modify these provisions as to Share holders'
meetings and actions.
(B) EFFECT OF SHAREHOLDERS' AGREEMENTS. Any
Shareholders' Agreement authorized by Sec. 300 (b), shall only be effective to
modify the terms of these By-Laws if this corporation elects to become a close
corporation with appropriate filing of or amendment to its Articles as required
by Sec. 202 and shall terminate when this corporation ceases to be a close
corporation. Such an agreement cannot waive or alter Secs. 158, (defining close
corporations), 202 (requirements of Articles of Incorporation), 500 and 501
relative to distributions, 111 (merger), 1201 (e) (reorganization) or Chapters
15 (Records and Reports), 16 (Rights of Inspection), 18 (Involuntary
Dissolution) or 22 (Crimes and Penalties). Any other provisions of the Code or
these By-Laws may be altered or waived thereby, but to the extent they are not
so altered or waived, these By-Laws shall be applicable.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
Section 1. CERTIFICATES FOR SHARES. Certificates for shares
shall be of such form and device as the Board of Directors may designate and
shall state the name of the record holder of the shares represented thereby; its
number; date of issuance; the number of shares for which it is issued; a
statement of the rights, privileges, preferences and restrictions, if any; a
statement as to the redemption or conversion, if any; a statement of liens or
restrictions upon transfer or voting, if any; if the shares be assessable or, if
assessments are collectible by personal action, a plain statement of such facts.
All certificates shall be signed in the name of the
corporation by the Chairman of the Board or Vice Chairman of the Board or the
President or vice President and by the Chief Financial Officer or an Assistant
Treasurer or the Secretary or any Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the Shareholder.
Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed on a certificate shall have ceased to
be that Officer, transfer agent, or registrar before that certificate is issued,
it may be issued by the corporation with the same effect as if that person were
an officer, transfer agent, or registrar at the date of issue.
Section 2. TRANSFER ON THE BOOKS. Upon surrender to the
Secretary or transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by
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proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming
a certificate of stock to be lost or destroyed shall make an affidavit or
affirmation of that fact and shall, if the Directors so require, give the
corporation a bond of indemnity, inform and with one or more sureties
satisfactory to the Board, in at least double the value of the stock represented
by said certificate, whereupon a new certificate may be issued in the same tenor
and for the same number of shares as the one alleged to be lost or destroyed.
Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of
Directors may appoint one or more transfer agents or transfer clerks, and one or
more registrars, which shall be an incorporated bank or trust company, either
domestic or foreign, who shall be appointed at such times and places as the
requirements of the corporation may necessitate and the Board of Directors may
designate.
Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. In
order that the corporation may determine the Shareholders entitled to notice of
any meeting or to vote or entitled to receive payment of any dividend or other
distribution or allotment of any rights or entitled to exercise any rights in
respect of any other lawful action, the Board may fix, in advance, a record
date, which shall not be more than sixty (60) nor less than ten (10) days prior
to the date of such meeting nor more than sixty (60) days prior to any other
action.
If no record date is fixed; the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of business on the business day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held. The record
date for determining Shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board is necessary,
shall be the day on which the first written consent is given.
The record dat e for determining Shareholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
Section 6. LEGEND CONDITION. In the event any shares of this
corporation are issued pursuant to a permit or exemption therefrom requiring the
imposition of a legend condition, the person or persons issuing or transferring
said shares shall make sure said legend appears on the certificate and shall not
ne required to transfer any shares free of such legend unless an amendment to
such permit or a new permit be first issued so authorizing such a deletion.
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<PAGE>
Section 7. CLOSE CORPORATION CERTIFICATES. All certificates
representing shares of this corporation, in the event it shall elect to become a
close corporation, shall contain the legend required by Sec. 418 (c).
ARTICLE VI
RECORDS - REPORTS - INSPECTION
Section 1. RECORDS. The corporation shall maintain, in
accordance with generally accepted accounting principles, adequate and correct
accounts, books and records of its business and properties. All of such books,
records and accounts shall be kept at its principal executive office in the
State of California, as fixed by the Board of Directors from time to time.
Section 2. INSPECTION OF BOOKS AND RECORDS. All books and
records provided for in Sec. 1500 shall be open to inspection of the Directors
and Shareholders from time to time and in the manner provided in said Sec. 1600
- - 1602.
Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The
original or a copy of these By-Laws, as amended or otherwise altered to date,
certified by the Secretary, shall be kept at the corporation's principal
executive office and shall be open to inspection by the Shareholders of the
corporation at all reasonable times during office hours, as provided in Sec. 213
of the Corporations Code.
Section 4. CHECKS, DRAFTS, ETC. All checks, drafts, or other
orders for payment of money, notes or other evidences of indebtedness, issued in
the name of or payable to the corporation, shall be signed or endorsed by such
person or persons and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
Section 5. CONTRACTS, ETC. -- HOW EXECUTED. The Board of
Directors, except as in the By-Laws otherwise provided, may authorize any
Officer or Officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation. Such authority may
be general or confined to specific instances. Unless so authorized by the Board
of Directors, no Officer, agent or employee shall have any power or authority to
bind the corporation by any contract or agreement, or to pledge its credit, or
to render it liable for any purpose or to any amount, except as provided in Sec.
313 of the Corporations Code.
ARTICLE VII
ANNUAL REPORTS
Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of
Directors shall cause an annual report to be sent to the Shareholders not later
than one hundred
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twenty (120) days after the close of the fiscal or calendar year adopted by the
corporation. This report shall be sent at least fifteen (15) days before the
annual meeting of Shareholders to be held during the next fiscal year and in the
manner specified in Section 4 of Article IV of these By-Laws for giving notice
to Shareholders of the corporation. The annual report shall contain a balance
sheet as of the end of the fiscal year and an income statement and statement of
changes in financial position for the fiscal year, accompanied by any report of
independent accountants or, if there is no such report, the certificate of an
authorized Officer of the corporation that the statements were prepared without
audit from the books and records of the corporation.
Section 2. WAIVER. The annual report to Shareholders referred
to in Section 1501 of the California General Corporation Law is expressly
dispensed with so long as this corporation shall have less than one hundred
(100) Shareholders. However, nothing herein shall be interpreted as prohibiting
the Board of Directors from issuing annual or other periodic reports to the
Shareholders of the corporation as they consider appropriate.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be
adopted or these By-Laws may be amended or repealed by the vote or written
consent of holders of a majority of the outstanding shares entitled to vote;
provided, however, that if the Articles of Incorporation of the corporation set
forth the number of authorized Directors of the corporation, the authorized
number of Directors may be changed only by an amendment of the Articles of
Incorporation.
Section 2. POWERS OF DIRECTORS. Subject to the right of the
Shareholders to adopt, amend or repeal By-Laws, as provided in Section 1 of this
Article VIII, and the limitations of Sec. 204 (a) (5) and Sec. 212, the Board of
Directors may adopt, amend or repeal any of these By-Laws other than a By-Law or
amendment thereof changing the authorized number of Directors.
Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new
By-Law is adopted, it shall be copied in the book of By-Laws with the original
By-Laws in the appropriate place. If any By-Law is repealed, the fact of repeal
with the date of the meeting at which the repeal was enacted or written assent
was filed shall be stated in said book.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have
inscribed thereon the name of the corporation, the date of its incorporation,
and the word "California."
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<PAGE>
ARTICLE X
MISCELLANEOUS
Section 1. REFERENCES TO CODE SECTIONS. "Sec." references
herein refer to the equivalent Sections of the General Corporation Law effective
January 1, 1977, as amended.
Section 2. REPRESENTATION OF SHARES IN OTHER CORPORATIONS.
Shares of other corporations standing in the name of this corporation may be
voted or represented and all incidents thereto may be exercised on behalf of the
corporation by the Chairman of the Board, the President or any Vice President
and the Secretary or an Assistant Secretary.
Section 3. SUBSIDIARY CORPORATIONS. Shares of this corporation
owned by a subsidiary shall not be entitled to vote on any matter. A subsidiary
for these purposes is defined as a corporation, the shares of which possessing
more than 25% of the total combined voting power of all classes of shares
entitled to vote, are owned directly or indirectly through one (1) or more
subsidiaries.
Section 4. INDEMNITY. The corporation may indemnify any
Director, Officer, agent or employee as to those liabilities and on those terms
and conditions as are specified in Sec. 317 of the Code. In any event, the
corporation shall have the right to purchase and maintain insurance on behalf of
any such persons whether or not the corporation would have the power to
indemnify such person against the liability insured against.
Section 5. ACCOUNTING YEAR. The accounting year of the
corporation shall be fixed by resolution of the Board of Directors.
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<PAGE>
CERTIFICATE OF ADOPTION OF BY-LAWS
ADOPTION BY INCORPORATOR OR FIRST DIRECTOR(S).
The undersigned person appointed in the Articles of
Incorporation to act as the Incorporator or First Director(s) of the above named
corporation hereby adopt the same as the By-Laws of said corporation.
Executed this 21 day of October, 1982
- ------------------------------
Name: ROBERT BRETZ
CERTIFICATE BY SECRETARY.
I DO HEREBY CERTIFY AS FOLLOWS:
That I am the duly elected, qualified and acting Secretary of
the above named corporation, that the foregoing By-Laws were adopted as the
By-Laws of said corporation on the date set forth above by the person(s)
appointed in the Articles of Incorporation to act as the Incorporator(s) or
First Director(s) of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and affixed, the
corporate seal this 21 day of October, 1982.
/s/ Thomas Miserendino
Secretary: THOMAS MISERENDINO
CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE.
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of
the above named corporation and that the above and foregoing Code of By-Laws was
submitted to the Shareholders at their first meeting and recorded in the minutes
thereof, was ratified by the vote of Shareholders entitled to exercise the
majority of the voting power of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 21 day of
October, 1982.
/s/ Thomas Miserendino
Secretary: THOMAS MISERENDINO
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<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF "OAKDALE THEATER CONCERTS, INC." FILED IN THIS
OFFICE ON THE THIRTIETH DAY OF MARCH, A.D. 1998 AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
<PAGE>
CERTIFICATE OF INCORPORATION
OF
OAKDALE THEATER CONCERTS, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware
Code and the acts amendatory thereof and supplemental thereto, and known,
identified, and referred to as the "General Corporation Law of the State of
Delaware"), hereby certifies that:
FIRST: The name of the Corporation (Hereinafter Called the
"Corporation") is Oakdale Theater Concerts, Inc.
SECOND: The address, including street, number, city and
county, of the registered office of the corporation in the State of Delaware is
1013 Centre Road, City of Wilmington 19805, County of New Castle; and the name
of the registered agent of the corporation in the State of Delaware at such
address is Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one thousand. The par value of each
of such shares is one cent. All such shares are of one class and are shares of
Common Stock.
FIFTH: The name and the mailing address of the incorporator is
as follows:
NAME MAILING ADDRESS
---- ---------------
Deborah Goldman-Levi 650 Madison Avenue, l6th Floor
New York, NY 10022
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this corporation
under ss. 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or
<PAGE>
receivers appointed for this corporation under ss. 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct
of the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its
Board of Directors. The number of directors which
shall constitute the whole Board of Directors shall
be fixed by, or in the manner provided in, the
Bylaws. The phrase "whole Board" and the phrase
"total number of directors" shall be deemed to have
the same meaning, to wit, the total number of
directors which the corporation would have if there
were no vacancies. No election of directors need be
by written ballot.
2. After the original or other Bylaws of the corporation
have been adopted, amended, or repealed, as the case
may be, in accordance with the provisions ofss.109 of
the General Corporation Law of the State of Delaware,
and, after the corporation has received any payment
for any of its stock, the power to adopt, amend, or
repeal the Bylaws of the corporation may be exercised
by the Board of Directors of the corporation;
provided, however, that any provision for the
classification of directors of the corporation for
staggered terms pursuant to the provisions of
subsections (d) ofss.141 of the General Corporation
Law of the State of Delaware shall be set forth in an
initial Bylaw or in a Bylaw adopted by the
stockholders entitled to vote of the corporation
unless provisions for such classification shall be
set forth in the certificate of incorporation.
3. Whenever the corporation shall be authorized to issue
only one class of stock, each outstanding share shall
entitle the holder thereof to notice of, and the
right to vote at, any meeting of stockholders.
Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of
any class of stock which is denied voting power under
the provisions of the certificate of incorporation
shall entitle the holder thereof to the right to vote
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<PAGE>
at any meeting of stockholders except as the
provisions of paragraph (2) of subsection (b) of ss.
242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no
share of any such class which is otherwise denied
voting power shall entitle the holder thereof to vote
upon the increase to decrease in the number of
authorized shares of said class.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of ss. 102 of the General
Corporation Law of the State of Delaware, as the same may be amended and
supplemented.
TENTH: The corporation shall, to the fullest extent permitted
by the provision of ss. 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on March 30,1998
----------------------------------
Deborah Goldman-Levi, Incorporator
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BY-LAWS
OF
OAKDALE THEATER CONCERTS, INC.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be
established and maintained at and shall be the registered agent of the
Corporation in charge hereof.
1.2 Other Offices: The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require, provided, however, that the corporation's books and
records shall be maintained at such place within the continental United States
as the Board of Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the
stockholders of the corporation shall be held at such place or places, within or
outside the State of Delaware as may be fixed by the Board of Directors from
time to time or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An
annual meeting of stockholders shall be held each year within five months after
the close of the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
<PAGE>
2
<PAGE>
2.5 Notice of Meetings of Stockholders: Except as otherwise
expressly required or permitted by law, not less than ten days nor more than
sixty days before the date of every stockholders' meeting the Secretary shall
give to each stockholder of record entitled to vote at such meeting, written
notice, served personally by mail or by telegram, stating the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Such notice, if mailed shall be deemed
to be given when deposited in the United States mail, postage prepaid, directed
to the stockholder at his address for notices to such stockholder as it appears
on the records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by
the Certificate of Incorporation or by law, at any meeting of the stockholders,
the presence in person or by proxy of stockholders entitled to cast a majority
of the votes thereat shall constitute a quorum. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a
quorum shall be present, a majority of voting stockholders, present in person or
by proxy, may adjourn the meeting from time to time without notice other than
announcement at the meeting. In the absence of a quorum, the officer presiding
thereat shall have power to adjourn the meeting from time to time until a quorum
shall be present. Notice of any adjourned meeting, other than announcement at
the meeting, shall not be required to be given except as provided in paragraph
(d) below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting originally called but only those stockholders entitled to vote at
the meeting as originally noticed shall be entitled to vote at any adjournment
or adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.7 Chairman and Secretary of Meeting: The President, shall
preside at meetings of the stockholders. The Secretary shall act as secretary of
the meeting or if he is not present, then the presiding officer may appoint a
person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise
provided by the Certificate of Incorporation or these by-laws, at every meeting
of the stockholders each stockholder shall be entitled to one vote for each
share of voting stock standing in his name on the books of the corporation on
the record date for the meeting. Except as otherwise provided by these by-laws,
all elections and questions shall be decided by the vote of a majority in
interest of the stockholders present in person or represented by proxy and
entitled to vote at the meeting.
3
<PAGE>
2.9 Proxies: Any stockholder entitled to vote at any meeting
of stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, sealed, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote
by ballot at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed shall refuse to serve
or shall not be present, such appointment shall be made by the officer presiding
at the meeting.
2.11 List of Stockholders: (a) At least ten days before every
meeting of stockholders, the Secretary shall prepare and make a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) During ordinary business hours, for a period of
at least ten days prior to the meeting, such list shall be open to examination
by any stockholder for any purpose germane to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held.
(c) The list shall also be produced and kept at the
time and place of the meeting during the whole time of the meeting, and it may
be inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this Section 2.11 or the books of the corporation, or to vote in person or by
proxy at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise
provided by these by-laws or any resolutions adopted by the stockholders or
Board of Directors, the order of business and all other matters of procedure at
every meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the
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<PAGE>
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of
the corporation shall be managed by its Board of Directors which may exercise
all the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors:
The number of directors which shall constitute the Board of Directors shall be (
) unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors; Removal: (a) Any director
may resign his office at any time by delivering his resignation in writing to
the Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors
may be filled by majority vote of the stockholders and any director so chosen
shall hold office until the next annual election of directors by the
stockholders and until his successor is duly elected and qualified or until his
earlier resignation or removal.
(c) Any director may be removed with or without cause
at any time by the majority vote of the stockholders given at a special meeting
of the stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of
Directors may hold their meetings, both regular and special, either within or
outside the State of Delaware.
(b) Regular meetings of the Board of Directors may be
held at such time and place as shall from time to time be determined by
resolution of the Board of Directors. No notice of such regular meetings shall
be required. If the date designated for any regular meeting be a legal holiday,
then the meeting shall be held the next day which is not a legal holiday.
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(c) The first meeting of each newly elected Board of
Directors shall be held immediately following the annual meeting of the
stockholders for the election of officers and the transaction of such other
business as may come before it. If such meeting is held at the place of the
stockholders' meeting, no notice thereof shall be required.
(d) Special meetings of the Board of Directors shall
be held whenever called by direction of the Chairman of the Board or the
President or at the written request of any one director.
(e) The Secretary shall give notice to each director
of any special meeting of the Board of Directors by mailing the same at least
three days before the meeting or by telegraphing, telexing, or delivering the
same not later than the date before the meeting.
Unless required by law, such notice need not include
a statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board of
Directors. No notice of any adjourned meeting need be given. No notice to or
waiver by any director shall be required with respect to any meeting at which
the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by
the Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall be
less than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The
President, or, in his absence a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board. The Secretary shall act
as secretary of the meeting, but in his absence the presiding officer may
appoint a secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of
Directors, or any committee designated by such board, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting.
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3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such committees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such
reasonable compensation for their service on the Board of Directors or any
committees thereof, whether in the form of salary or a fixed fee for attendance
at meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers. Title, Elections, Terms: (a) The elected
officers of the corporation shall be a President, a Treasurer and a Secretary,
and such other officers as the Board of Directors shall deem advisable. The
officers shall be elected by the Board of Directors at its annual meeting
following the annual meeting of the stockholders, to serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election and until their successors are elected and qualified.
(b) The Board of Directors may elect or appoint at
any time, and from time to time, additional officers or agents with such duties
as it may deem necessary or desirable. Such additional officers shall serve at
the pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein or, if no time has been specified, at the time of its receipt
by the corporation. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation
shall be fixed by the Board of Directors.
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4.2 Removal of Elected Officers: Any elected officer may be
removed at any time, either with or without cause, by resolution adopted at any
regular or special meeting of the Board of Directors by a majority of the
Directors then in office.
4.3 Duties: (a) President: The President shall be the
principal executive officer of the corporation and, subject to the control of
the Board of Directors, shall supervise and control all the business and affairs
of the corporation. He shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect (unless any such
order or resolution shall provide otherwise), and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (2) receive and give receipts for moneys due and payable to the
corporation from any source whatsoever; (3) deposit all such moneys in the name
of the corporation in such banks, trust companies, or other depositories as
shall be selected by resolution of the Board of Directors; and (4) in general
perform all duties incident to the office of treasurer and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors. He shall, if required by the Board of Directors, give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the
minutes of the meetings of the stockholders, the Board of Directors, and all
committees, if any, of which a secretary shall not have been appointed, in one
or more books provided for that purpose; (2) see that all notices are duly given
in accordance with the provisions of these by-laws and as required by law; (3)
be custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal, is duly authorized; (4) keep
a register of the post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (5) have general charge of stock
transfer books of the Corporation; and (6) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President and by the Treasurer or the Secretary,
certifying the number of shares owned by him.
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(b) If such certificate is countersigned by a
transfer agent other than the corporation or its employee, or by a registrar
other than the corporation or its employee, the signatures of the officers of
the corporation may be facsimiles, and, if permitted by law, any other signature
may be a facsimile.
(c) In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.
(d) Certificates of stock shall be issued in such
form not inconsistent with the Certificate of Incorporation as shall be approved
by the Board of Directors, and shall be numbered and registered in the order in
which they were issued.
(e) All certificates surrendered to the corporation
shall be canceled with the date of cancellation, and shall be retained by the
Secretary, together with the powers of attorney to transfer and the assignments
of the shares represented by such certificates, for such period of time as shall
be prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the
holder of such certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the corporation's books. The corporation
shall be entitled to treat the holder of any share of stock as the holder in
fact thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person, whether
or not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be
made on the books of the corporation only by direction of the person named in
the certificate or his attorney, lawfully constituted in writing, and only upon
the surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost. Stolen or Destroyed Certificates: Certificates
representing shares of the stock of the corporation shall be issued in place of
any certificate alleged to have been lost, stolen or destroyed in such manner
and on such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent, Registrar, Rules Respecting Certificates:
The corporation may maintain one or more transfer offices or agencies where
stock of the corporation shall be transferable. The corporation may also
maintain one or more registry offices where such
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<PAGE>
stock shall be registered. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of
Record: The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of the stockholders or any adjournment thereof, or the
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting of the stockholders, nor more than sixty days prior to any other
action requiring such determination of the stockholders. A determination of
stockholders of record entitled to notice or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise
order, the President, the Secretary or the Treasurer shall have full power and
authority, on behalf of the corporation, to attend, act and vote at any meeting
of the stockholders of any corporation in which the corporation may hold stock,
and at such meeting to exercise any or all rights andpowers incident to the
ownership of such stock, and to execute on behalf of the corporation a proxy or
proxies empowering another or others to act as aforesaid. The Board of Directors
from time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation
(a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock
10
<PAGE>
purchase warrants, evidence of indebtedness, or other securities now or
hereafter standing in the name of or owned by the corporation, and to make,
execute and deliver, under the seal of the corporation, any and all written
instruments of assignment and transfer necessary or proper to effectuate the
authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly transferred, endorsed, sold, assigned, set over and delivered
by the corporation, and that with respect to such securities the authority of
these provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form
and shall have such content as the Board of Directors shall from time to time
determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the
time, place or purpose of any meeting of the stockholders, directors or a
committee is required to be given under the law of the State of Delaware, the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the holding thereof, or actual attendance at the meeting in person or, in the
case of any stockholder, by his attorney-in-fact, shall be deemed equivalent to
the giving of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors,
officers and employees to the fullest extent allowed by law, provided, however,
that it shall be within the discretion of the Board of Directors whether to
advance any funds in advance of disposition of any action, suit or proceeding,
and provided further that nothing in this section 7.4 shall be deemed to obviate
the necessity of the Board of Directors to make any determination that
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indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year Except as from time to time otherwise
determined by the Board of Directors, the fiscal year of the corporation shall
end on .
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THE FOLLOWING ELECTIVE RESOLUTIONS ARE SIGNED BY THE HOLDERS OF ALL
ISSUED SHARES IN THE CAPITAL OF PACE (UK) ("THE COMPANY") CONFERRING A
RIGHT TO VOTE THEREON HAD THE RESOLUTIONS BEEN PROPOSED AT A
GENERAL MEETING OF THE COMPANY PURSUANT TO SECTION 381A OF THE
COMPANIES ACT 1985.
- -------------------------------------------------------------------------------
ELECTIVE RESOLUTIONS
Ernst & Young
1. That the appointment of Ernst & Young as the auditors of the Company be
ratified.
2. That, in accordance with Section 252 of the Companies Act 1985, the
Company elects to dispense with the laying of accounts and reports
before the Company in general meeting.
3. That, in accordance with Section 366A of the Companies Act 1985, the
Company elects to dispense with the holding of an Annual General
Meeting.
4. That, in accordance with Section 386 of the Companies Act 1985, the
Company elects to dispense with the obligation to reappoint auditors
annually.
SIGNED: /s/Illegible DATE: September 12, 1994
----------------------------------------
for and on behalf of PACE MILTON KEYNES INC,
SIGNED: /s/Illegible DATE: September 12, 1994
----------------------------------------
for and on behalf of PACE UK HOLDING CORPORATION
Note: These resolutions hall take affect on the date of the last signature
to them.
13
<PAGE>
CERTIFICATE OF INCORPORATION
OF A PRIVATE UNLIMITED COMPANY
No. 2819572
I hereby certify that
PACE (UK)
is this day incorporated under the Companies Act 1985 as a private company and
that the Company is unlimited.
Given under my hand at the Companies Registration Office, Cardiff the 19 MAY
1993
[illegible]
an authorized officer
<PAGE>
The Companies Acts 1985 to 1989
Unlimited Company Having A Share Capital
MEMORANDUM
and
ARTICLES OF ASSOCIATION
of
PACE (UK)
-------------------
Incorporated on 19 May 1993
Company Number : 2819572
<PAGE>
The Companies Acts 1985 to 1989
Unlimited Company Having A Share Capital
MEMORANDUM OF ASSOCIATION
of
PACE (UK)
- --------------------------------------------------------------------------------
1. The Company's name is Pace (UK).
2. The Company's registered office is to be situated in England and Wales.
3. The Company's objects are:
(a) (i) to carry on the businesses of promoters, producers, and
organizers of theatrical entertainments of every description; to
promote and organize amusements and pastimes of all kinds; to
carry on the businesses of proprietors and managers of places of
entertainment and amusement of all kinds; to carry on businesses
as agent, proprietors and managers of entertainers generally; to
hire the services of all types of entertainers and to supply the
services of all types of entertainers on such terms as may be
thought fit; to act as proprietors and operators of all
businesses connected with gramophone records, record sleeves and
covers, sound and visual recording equipment and all related
appliances of all kinds; to present, produce, manage, conduct
and represent, such musical and other entertainments as the
Company from time to time thinks fit; to purchase or otherwise
acquire and obtain exclusive and other interests in all forms of
intellectual property including without limitation copyrights
and rights of representation, and any other rights of or in
songs, plays, music, cinematograph and other films, operas, and
other works, and to licence, sale or otherwise dispose of or
deal with all or any of the same;
(ii) to acquire by any means for investment, development, resale or
otherwise and to deal in all forms of property and any buildings
thereon of any tenure or of any interest therein and to create,
sell, reserve and deal in freehold and leasehold ground rents,
and to make advances upon the security of such property and/or
buildings or any interest therein and whether erected or in the
course of erection and whether on first mortgage or subject to a
prior mortgage or mortgages; and generally by any means to deal
in all types of property and buildings (whether real or
personal) and to turn the same to account and deal with in any
way as may seem expedient; and manage any buildings, land or
other property as aforesaid, and to collect income whether
<PAGE>
by way of rent or otherwise and to supply to occupiers and
tenants services of any description and all conveniences and
amenities commonly \ required therewith; to acquire and
take-over undertakings or businesses of all kinds and to carry
on or dispose of, remove or put an end to the same or otherwise
deal with the same as may seem expedient; and to carry on all or
any of the businesses of mortgage and insurance brokers and
agents, estate agents and managers, land, estate and property
developers, repairers and jobbers, building and civil
engineering contractors, surveyors, valuers and auctioneers,
builders merchants, plant hire specialist and contractors,
general farmers, merchants of, and dealers in plant, vehicles,
machinery and appliances of all kinds, plumbers, decorators and
painters, haulage and transport contractors, electricians and
general engineers;
(b) to carry on any other trade or business whatever, which can in the
opinion of the Directors be advantageously carried on in connection
with or ancillary to any of the businesses of the Company;
(c) to purchase, take on lease or in exchange, hire or otherwise acquire
and hold for any estate or interest any lands, buildings, easements,
rights, privileges, concessions, patents, patent rights, licences,
secret processes, machinery, plant, stock-in-trade, and any real or
personal property of any kind necessary or convenient for the purposes
of or in connection with the Company's business or any branch or
department thereof;
(d) to erect, construct, lay down, enlarge, alter and maintain any roads,
railways, tramways, sidings, bridges, reservoirs, shops, stores,
factories buildings, works, plant and machinery necessary or convenient
for the Company's business, and to contribute to or subsidize the
erection, construction and maintenance of any of the above;
(e) to borrow or raise or secure the payment of money for the purposes of
or in connection with the Company's business, and for the purposes of
or in connection with the borrowing or raising of money by the Company
to become a member of any building society;
(f) to issue and deposit any securities which the Company has power to
issue by way of mortgage, and also by way of security for the
performance of any contracts or obligations of the Company or of its
customers or other persons or corporations having dealings with the
Company, or in whose businesses or undertakings the Company is
interested, whether directly or indirectly;
(g) to receive money on deposit or loan upon such terms as the Company may
approve, and to guarantee the obligations and contracts of customers
and others;
(h) to establish and maintain or procure the establishment and maintenance
of any non-contributory or contributory pension or superannuation funds
for the benefit of,
- 4 -
<PAGE>
and give or procure the giving of donations, gratuities, pensions,
allowances, or emoluments to any persons who are or were at any time in
the employment or service of the Company, or of any company which is
for the time being the Company's holding or subsidiary company as
defined by Section 736 of the Companies Act 1985 or otherwise
associated with the Company in business or who are or were at the time
directors or officers of the Company or of any such other company as
aforesaid, and the wives, widows, families and dependants of any such
persons, and also to establish and subsidize or subscribe to any
institutions, associations, clubs or fund calculated to be for the
benefit of or to advance the interests and well-being of the Company or
of any such other company as aforesaid, or of any such persons as
aforesaid, and to make payments for or towards the insurance of any
such persons as aforesaid, and to subscribe or guarantee money for
charitable or benevolent objects or for any exhibition or for any
public, general or useful object; and to establish, set up, support and
maintain share purchase schemes or profit-sharing schemes for the
benefit of any employees of the Company or of any company which is for
the time being the Company's holding or subsidiary company as defined
by Section 736 of the Companies Act 1985 and to do any of the matters
aforesaid, either alone or in conjunction with any such other company
as aforesaid;
(i) to draw, make, accept, endorse, negotiate, discount and execute
promissory notes, bills of exchange and other negotiable instruments;
(j) to invest and deal with the moneys of the Company not immediately
required for the purposes of its business in or upon such investments
or securities and in any such manner as may from time to time be
determined;
(k) to purchase or otherwise acquire and undertake all or any part of the
business, property, assets, liabilities and transactions of any person,
firm or company carrying on any business which this Company is
authorized to carry on;
(l) to sell, improve, manage, develop, turn to account, exchange, let on
rent, royalty, share of profits or otherwise, grant licences, easements
and other rights in or over, and in any other manner deal with or
dispose of all or any of the property and assets for the time being of
the Company for such consideration as the Company may think fit;
(m) to subscribe or guarantee money for or organize or assist any national,
local, charitable, benevolent, public, general or useful object, or for
any exhibition or for any purpose which may be considered likely
directly or indirectly to further the objects of the Company or the
interests of its members;
(n) to distribute among the members in specie any property of the Company,
or any proceeds of sale or disposal of any property of the Company;
- 5 -
<PAGE>
(o) to do all or any of the above things in any part of the world, and
either as principals, agents, trustees, contractors or otherwise, and
either alone or in conjunction with others, and either by or through
agents, trustees, subcontractors or otherwise;
(p) to do all such things as are incidental or conducive to the above
objects or any of them.
And it is hereby declared that the objects of the Company as specified in each
of the foregoing paragraphs of this clause (except only if and so far as
otherwise expressly provided in any paragraphs) shall be separate and distinct
objects of the Company and shall not be in any way limited by reference to any
other paragraph or the name of the Company.
- 6 -
<PAGE>
WE, the several persons whose names, addresses and descriptions are
subscribed are desirous of being formed into a Company in pursuance of
this Memorandum of Association and we respectively agree to take the
number of shares in the capital of the Company set opposite our
respective names.
- --------------------------------------------------------------------------------
Names, Addresses and Descriptions Number of Shares
of Subscribers taken by each Subscriber
- --------------------------------------------------------------------------------
Pace Milton Keynes Inc One
515 Post Oak Boulevard
Suite 300
Houston
Texas 77027
USA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Face U.K. Holding Corporation One
515 Post Oak Boulevard
Suite 300
Houston
Texas 77027
USA
- --------------------------------------------------------------------------------
DATED 21 April 1993
WITNESS to the above signatures:-
DEBORAH A. DARBY
1819 Augusta, No. 341
Houston, Texas 77057
Legal Assistant
- 7 -
<PAGE>
The Companies Acts 1985 to 1989
Unlimited Company Having A Share Capital
ARTICLES OF ASSOCIATION
of
PACE (UK)
- --------------------------------------------------------------------------------
1. Regulations 3, 32, 34 and 35 of Table A shall not apply to the Company, but
the articles hereinafter contained and, subject to the modification
hereinafter expressed, the remaining regulations of Table A shall constitute
the Articles of Association of the Company.
2. The words "at least seven clear days' notice" shall be substituted for the
words "at least fourteen clear days' notice" in Regulation 38 of Table A.
3. The share capital of the company is $1,000 divided into 1,000 shares of $1
each.
4. The Company may by Special Resolution:-
(a) increase the share capital by such sum to be divided into shares of
such amount as the resolution may prescribe;
(b) consolidate and divide all or any of its share capital into shares of a
larger amount than its existing shares;
(c) sub-divide its shares, or any of them, into shares of a smaller amount
than its existing shares;
(d) cancel any shares which at the date of the passing of the resolution
have not been taken or agreed to be taken by any person;
(e) reduce its share capital and any share premium account in any way.
5. Regulations 23, 24, 25, 26, 27 and 28 of Table A shall not apply to the
Company, and the following shall instead be substituted
TRANSFER OF SHARES
No transfer of any share or any interest therein may be made by any member
of the Company."
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<PAGE>
6. Upon the dissolution, bankruptcy or insolvency of any member or upon the
occurrence of a similar or analogous event with respect to any member under
the laws of any jurisdiction including, without limitation, under the
Bankruptcy Code of the United States (a "Bankruptcy Event"), each member
shall do all things necessary to bring about the voluntary winding-up of the
Company and, in this regard, the members appoint each other to be their
attorney for the purpose of executing such documents (including proxy forms)
as may be necessary to give effect to this section; provided , however, that
if, for any reason, the Company or any successor to the Company, as the case
may be, shall not be placed into voluntary liquidation within 60 days of the
occurrence of the relevant Bankruptcy Event, each of the members agrees that
the Company, or any such successor, as the case may be, shall be wound-up by
the Court and consents to the other petitioning the High Court of Justice of
England and Wales for this purpose and further agrees not to oppose any such
petition.
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
Names, Addresses and Descriptions of Subscribers
- --------------------------------------------------------------------------------
Pace Milton Keynes Inc
515 Post Oak Boulevard
Suite 300
Houston
Texas 77027
USA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Face U.K. Holding Corporation
515 Post Oak Boulevard
Suite 300
Houston
Texas 77027
USA
- --------------------------------------------------------------------------------
DATED 21 April 1993
WITNESS to the above signatures:-
DEBORAH A. DARBY
1819 Augusta, No. 341
Houston, Texas 77057
Legal Assistant
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<PAGE>
PACE (UK)
THE FOLLOWING ELECTIVE RESOLUTIONS ARE SIGNED BY THE HOLDERS OF ALL ISSUED
SHARES IN THE CAPITAL OF PACE (UK) ("THE COMPANY") CONFERRING A RIGHT TO VOTE
THEREON HAD THE RESOLUTIONS BEEN PROPOSED AT A GENERAL MEETING OF THE COMPANY
PURSUANT TO SECTION 381A OF THE COMPANIES ACT 1985.
- --------------------------------------------------------------------------------
ELECTIVE RESOLUTIONS
1. That the appointment of Ernst & Young as the auditors of the Company be
ratified.
2. That, in accordance with Section 252 of the Companies Act 1985, the Company
elects to dispense with the laying of accounts and reports before the
Company in general meeting.
3. That, in accordance with Section 366A of the Companies Act 1985, the Company
elects to dispense with the holding of an Annual General Meeting.
4. That, in accordance with Section 386 of the Companies Act 1985, the Company
elects to dispense with the obligation to reappoint auditors annually.
SIGNED: [illegible] DATE: September 12, 1994
---------------------------------------- ----------------------
for and on behalf of PACE MILTON KEYNES INC.
SIGNED: [illegible] DATE: September 12, 1994
---------------------------------------- ----------------------
for and on behalf of PACE UK HOLDING CORPORATION
Note: These resolutions shall take effect on the date of the last signature to
them.
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<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation of PERFORMING ARTS MANAGEMENT OF NORTH MIAMI, INC., a corporation
organized under the laws of the State of Florida, filed on January 15, 1991, as
shown by the records of this office.
The document number of this corporation is S 25389.
Given under my hand and the
Great Seal of the State of
Florida at Tallahassee, the
Capitol, this the Twelfth day
of October, 1998
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
PERFORMING ARTS MANAGEMENT OF NORTH MIAMI, INC.
The undersigned subscribers to these Articles of
Incorporation, natural persons competent to contract, hereby form a corporation
under the laws of the State of Florida.
ARTICLE I
The name of the corporation shall be: PERFORMING ARTS
MANAGEMENT OF NORTH MIAMI, INC. Its business shall be carried on in the State of
Florida, in the United States of America, and elsewhere, as may be authorized by
its Board of Directors.
ARTICLE II
The general nature of the business to be transacted by the
corporation shall be that provided below:
(a) To engage in to buy and sell real estate, build and
develop unimproved land and conduct a general
brokerage business on all forms or kinds of
securities and to act as agents in the buying and
selling of mortgages, equities, securities and other
forms of negotiable instruments and evidences of
indebtedness, and to buy and sell personal property,
either wholesale or retail, to purchase, own, sell,
rent, lease, mortgage and to act as the agent in the
buying, owning, selling, renting, leasing and
mortgaging of property, whether real or personal or
otherwise; to manufacture, acquire or dispose of real
estate or personal properties, equities and
securities of whatever nature or kind for both cash
and credit; to buy and sell bonds, stock notes,
mortgages or other indebtedness of security; to loan
money, either for itself or acting as agents in
loaning money, either for itself or acting as agents
in loaning and buying securities; to borrow money and
to secure the same in whatever manner in which a
corporation might do and in permissible under the
laws of the State of Florida.
(b) To apply for, hold, purchase, acquire or otherwise
deal in letters patent or copy rights of the United
States or other countries; to work, operate or
develop the same or to carry on any business,
manufacturing or otherwise, which may directly or
indirectly affect those objects or any of them; to
<PAGE>
guarantee, purchase, hold, sell, assign, transfer,
mortgage, pledge or otherwise acquire or dispose of
the shares of capital stock or any bonds, securities
or other evidences of indebtedness created by any
person or corporation of this state or any other
state, nation, country, or government, and while
owner of said stock, may exercise all the rights and
privileges of, ownership, including the right to vote
thereon as natural persons might or could do.
(c) To loan money on real estate and personal property.
(d) To enter into, make or perform contracts of any kind
with any person, association, corporation,
municipality body politic, county, country,
territory, state, government or colony, or any
dependency thereof, and without limit as to amount,
draw, make, accept, endorse, discount, execute, and
issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and all other negotiable
instruments and evidence of indebtedness whether
secured by mortgage, bond or otherwise, as well as to
secure the same mortgage, bond or otherwise.
(e) To do any and all of the things herein set forth and
all other things permissible by law to the same
extent as natural persons might or could do and in
any part of the world as principals, agents,
contractors, or otherwise, and either alone or in
company with others, purchase, hold and re-issue any
of the shares of its capital stock.
(f) To act as a Trustee for any form of property, claim
or right.
(g) To operate, manage and engage in the business of the
development, management and promotion of the business
of cultural performance centers, and to do any and
all things relevant to the management and operation
of facilities used for the purposes of promotion of
the performing arts and other cultural endeavors.
ARTICLE III
The maximum number of shares that the corporation is authorized to have
outstanding at any time shall be 500 shares of common stock at a par value of
$1.00 per share.
ARTICLE IV
The amount of capital with which the corporation will begin
business shall be $500.
- 2 -
<PAGE>
ARTICLE V
The principal office of this corporation will be 930
Washington Avenue, Fifth Floor, Miami Beach, Dade County, Florida 33140.
ARTICLE VI
The names and post office addresses of the first Board of
Directors, who shall hold office for the first year of the corporation's
existence, or until their successors are elected and have qualified, are as
follows:
NAME: ADDRESS:
----- --------
Richard Shack 151 S.E. 15th Road
Miami, FL 33129
Brad Krassner 2040 North Day Road
Miami Beach, Florida 33140
CERTIFICATE DESIGNATING PLACE OF BUSINESS FOR DOMICILE FOR
THE SERVICES OF PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM
PROCESS MAY BE SERVED.
ARTICLE VII
In pursuance of Chapter 48.091, Florida Statutes the following
is submitted, in compliance with said Act:
First. That PERFORMING ARTS MANAGEMENT OF NORTH MIAMI, INC.,
desiring to organize under the laws of the State of Florida with its principal
office indicated in the Articles of Incorporation at 930 Washington Avenue,
Fifth Floor, City of Miami Beach, County of Dade, State of Florida, has named
Michael Colodny, whose office in located at 11900 Biscayne Boulevard, Suite 620,
North Miami, FL 33181, as its agent to accept service of process within this
state.
- 3 -
<PAGE>
ACKNOWLEDGMENT:
Having been named to accept service of process for the above
stated corporation, at place designated in this Certificate, I hereby accept to
act in this capacity, and agree to comply with the provisions of said Act
relative to keep open said office.
/s/ Michael Colodny
MICHAEL COLODNY
Resident Agent
ARTICLE VIII
The name and address of the subscribers to the Articles of
Incorporation and the amount of stock they agree to take are as follows:
NAME ADDRESS NO. OF SHARES
Richard Shack 151 S.E. 15th Road 250
Miami# FL 33129
Brad Krassner 2040 North Bay Road 250 250
Miami Beach, Florida 33140
ARTICLE IX
The Articles of Incorporation may be amended in the manner
provided by law. Every amendment shall be approved by the Board of Directors,
proposed by them to the Stockholders, and approved at a Stockholders' Meeting by
a majority of the stockholders entitled to vote thereon, unless all the
Directors and all the Stockholders sign a written statement manifesting their
intention that a certain amendment of these Articles of incorporation be made.
- 4 -
<PAGE>
IN WITNESS WHEREOF, We have hereunto set our hands and seals
this 8th day of January , 1991.
/s/ Brad Krassner
BRAD KRASSNER, President
/s/ Richard Shack
RICHARD SHACK, Secretary
STATE OF FLORIDA )
) ss.:
COUNTY OF DADE )
I HEREBY CERTIFY that on this day, before me, a Notary Public
duly authorized in the State and County above named to take acknowledgments,
personally appeared BRAD KRASSNER and RICHARD SHACK, as the President and
Secretary/Treasurer, respectively of Performing Arts Management of North Miami,
Inc. to me known to be the persons described as subscribers in and who executed
the foregoing Articles of Incorporation.
WITNESS my hand and official seal in the County and State
named above, this 8th day of January , 1999.
L.E.C.
Notary Public
State of Florida at Large
My Commission Expires:
[deleted]
- 5 -
<PAGE>
BY-LAWS OF
PERFORMING ARTS MANAGEMENT OF NORTH MIAMI, INC.
ARTICLE I - OFFICES
The principal office of the Corporation shall be established and
maintained at 930 Washington Avenue, 5th Floor, in the City of Miami Beach,
County of Dade, State of Florida. The Corporation may also have offices at such
places within or without the State of Florida as the board my from time to time
establish.
ARTICLE II - SHAREHOLDERS
1. MEETINGS
The annual meeting of the Shareholders of this Corporation shall be
held on the 1st day of February of each year or at such other time and place
designated by the Board of Directors of the Corporation. Business transacted at
the annual meeting shall include the election of Directors of the Corporation
and all other matters properly before the Board. If the designated day shall
fall on a Sunday or legal holiday, then the meeting shall be held on the first
business day thereafter.
2. SPECIAL MEETINGS
Special meetings of the Shareholders shall be held when directed by the
President or the Board of Directors, or when requested in writing by the holders
of not less than 10% of all the shares entitled to vote at the meeting. A
meeting requested by Shareholders shall be called for a date not less than 10
nor more than 60 days after the request is made unless the Shareholders
requesting the meeting designate a later date. The call for the meeting shall be
issued by the Secretary, unless the President, Board of Directors, or
Shareholders requesting the meeting shall designate another person to do so.
<PAGE>
3. PLACE
Meetings of Shareholders shall be held at the principal place of
business of the Corporation or at such other place as may be designated by the
Board of Directors.
4. NOTICE
Written notice to each Shareholder entitled to vote stating the place,
day and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less than 10
nor more than 60 days before the meeting. If any Stockholder shall transfer his
stock after notice, it shall not be necessary to notify the transferee. Any
Stockholder may waive notice of any meeting either before, during or after the
meeting.
5. QUORUM
The majority of the Shares entitled to vote, represented in person or
by Proxy, shall constitute a Quorum at a meeting of Shareholders, but in no
event shall a Quorum, consist of less than 1/3 of the shares entitled to vote at
the meeting.
After a Quorum has been established at a Shareholders meeting, the
subsequent withdrawal of Shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a Quorum, shall
not effect the validity of any action taken at the meeting or any adjournment
thereof.
6. PROXY
Every Shareholder entitled to vote at a meeting of Shareholders, or to
express consent or dissent without a meeting, or his duly authorized attorney
in-fact, may authorize another person or persons to act for him by Proxy. The
Proxy must be signed by the Shareholder or his attorney-in-fact. No Proxy shall
be valid after the expiration of eleven months from the date thereof, unless
otherwise provided in the Proxy.
- 2 -
<PAGE>
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business of the Corporation shall be managed and its corporate
powers exercised by a Board of Directors, each of whom shall be of full age. It
shall not be necessary for Directors to be Stockholders.
2. ELECTION AND TERM OF DIRECTORS
Directors shall be elected at the annual meeting of Stockholders and
each Director elected shall hold office until his successor has been elected and
qualified, or until his prior resignation or removal.
3. VACANCIES
If the office of any Director, member of a committee or other officer
becomes vacant, the remaining Directors in office, by a majority vote, may
appoint any qualified person to fill such vacancy, who shall hold office for the
unexpired term and until his successor shall be duly chosen.
4. REMOVAL OF DIRECTORS
Any or all of the Directors may be removed with or without cause by
vote of a majority of all of the stock outstanding and entitled to vote at a
special meeting of Stockholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIPS
The number of Directors may be increased by amendment of these By-Laws,
by the affirmative vote of a majority in interest of the Stockholders, at the
annual meeting or at a special meeting called for that purpose, and by like vote
the additional Directors may be chosen at such meeting to hold office until the
next annual election and until their successors are elected and qualify.
- 3 -
<PAGE>
6. RESIGNATION
A Director may resign at any time by giving written notice to the
Board, the President or the Secretary of the Corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the Board of such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
7. QUORUM OF DIRECTORS
A majority of the Directors shall constitute a quorum for the
transaction of business. If at any meeting of the board there shall be less than
a quorum present, a majority of those present may adjourn the meeting from time
to time until a quorum is obtained, and no further notice thereof need be given
other than by announcement at the meeting which shall be so adjourned.
8. PLACE AND TIM OF BOARD MEETINGS
The board way hold its meeting at the office of the Corporation or at
such other places, either within or without the State of Florida as it may from,
time to time determine.
9. NOTICE OF MEETINGS OF THE BOARD
A regular annual meeting of the Board may be held without notice at
such time and place as it shall from time to time determine. Special meetings of
the Board shall be held upon notice to the Directors and may be called by the
President upon three days notice to each Director either personally or by mail
or by wire; special meetings shall be called by the President or by the
Secretary in a like manner on written request of two Directors. Notice of a
meeting need not be given to any Director who submits a waiver of notice whether
before or after the meeting or who attends the meeting without protesting prior
thereto or at its commencement, the lack of notice to him.
10. REGULAR ANNUAL MEETING
A regular annual meeting of the Board shall be held immediately
following the annual meeting of Stockholders at the place of such annual meeting
of Stockholders.
- 4 -
<PAGE>
11. EXECUTIVE AND OTHER COMMITTEES
The Board, by resolution, may designate two or more of their members to
any committee. To the extent provided in said resolution or these By-Laws, said
committee may exercise the powers of the Board concerning the management of the
business of the Corporation.
12. COMPENSATION
No compensation shall be paid to Directors, as such, for their
services, but by resolution of the Board, a fixed sum and expenses for actual
attendance, at each regular or special meeting of the Board may be authorized.
Nothing herein contained shall be construed to preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV - OFFICERS
1. OFFICERS, ELECTION AND TERM
a) The Board may elect or appoint a Chairman, a President, one or more
Vice Presidents, a Secretary and a Treasurer, and such other officers as it may
determine, who shall have such duties and powers as hereinafter provided.
2. REMOVAL OF OFFICERS
An officer or agent elected or appointed by the Board of Directors may
be removed by the Board whenever in its judgment, the best interests of the
Corporation will be served thereby. Any vacancy in any office may be filled by
the Board of Directors.
ARTICLE V - STOCK CERTIFICATES
1. ISSUANCE
Every holder of shares in this Corporation shall be entitled to have a
certificate representing all shares of which he is entitled. No certificate
shall be issued for any share until such share is full paid.
- 5 -
<PAGE>
2. FORM
Certificates representing shares in this Corporation shall be signed by
the President or Vice President and the Secretary or an Assistant Secretary and
may be sealed with the seal of this Corporation or a facsimile thereof.
3. TRANSFER OF STOCK
The Corporation shall register a stock certificate presented to it for
transfer if the certificate is properly endorsed by the holder of record or by
his duly authorized attorney.
4. LOST, STOLEN OR DESTROYED CERTIFICATES
If the Shareholder shall claim to have lost or destroyed a certificate
of shares issued by the Corporation, a new certificate shall be issued upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed, and at the discretion of the Board of
Directors, upon the deposit of a bond or other indemnity in such amount and with
such sureties, if any, as the Board may reasonably require.
ARTICLE VI - BOOKS AND RECORDS
1. BOOKS AND RECORDS
This Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its Shareholders, Board of
Director and committees of Directors.
This Corporation shall keep at its registered office or principal place
of business a record of its Shareholders, giving the names and addresses of all
Shareholders and the number of the shares held by each.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
- 6 -
<PAGE>
2. SHAREHOLDERS' INSPECTION RIGHTS
Any person who shall have been a holder of record or shares or of
voting trust certificates therefor at least six months immediately preceding his
demand or shall be the holder of record of, or the holder of record of voting
trust certificates for, at least five percent of the outstanding shares of the
Corporation, upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any reasonable time, for
any proper purpose, its relevant books and records of accounts, minutes and
records of Shareholders and to make extracts therefrom.
3. FINANCIAL INFORMATION
Not later than four months after the close of each fiscal year, this
Corporation shall prepare a balance sheet showing in reasonable detail the
financial condition of the Corporation as of the close of its fiscal year, and a
profit and loss statement showing the results of the operations of the
Corporation during its fiscal year.
Upon the written request of any Shareholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to each
Shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in the
registered office of the Corporation of this state, shall be kept for at least
five years, and shall be subject to inspection during business hours by any
Shareholder or holder of voting trust certificates, in person or by agent.
ARTICLE VII - DIVIDEND
The Board may out of funds legally available therefor, at any regular
or special meeting, declare dividends upon the capital stock of the Corporation
as and when it deems expedient. Before declaring any dividend there may be set
apart out of any funds of the Corporation
- 7 -
<PAGE>
available for dividends, such sum or sums as the Board from time to tine in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board shall deem conducive to the interests of the Corporation.
ARTICLE VIII - CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear the name
of the Corporation, the year of its organization and the words "CORPORATE SEAL,
FLORIDA." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be facsimile, engraved or printed.
ARTICLE IX - EXECUTION
All corporate instruments and documents shall be signed or
countersigned, executed, verified or acknowledged by such officer or officers or
other person or persons as the Board may from time to time designate.
ARTICLE X - FISCAL YEAR
The fiscal year shall begin the first day _____________________ in each
year.
ARTICLE XI - NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these By-Laws to be given, personal
notice is not meant unless expressly so stated, and any notice so required shall
be deemed to be sufficient if given by depositing the same in the post office
box in a sealed post-paid wrapper, addressed to the person entitled thereto at
his last known post office address, and such notice shall be deemed
- 8 -
<PAGE>
to have been given on the day of such mailing. Stockholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by statute.
Whenever any notice is required to be given under the provisions of any
law, or, under the provisions of the Certificate of Incorporation of the
Corporation, or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE XII - CONSTRUCTION
Whenever a conflict arises between the language of these By-Laws and
the Certificate of Incorporation, the Certificate of Incorporation shall govern.
ARTICLE XIII - BUSINESS
1. CONDUCT OF BUSINESS WITHOUT MEETINGS
Any action of the Stockholders, Directors and committee may be taken
without a meeting if consent in writing, setting forth the action so taken,
shall be signed by all persons who would be entitled to vote on such action at a
meeting and filed with the Secretary of the Corporation as part of the
proceedings of the Stockholders, Directors or committees as the case way be.
2. MANAGEMENT BY STOCKHOLDER
In the event the Stockholders are named in the Articles of
Incorporation and are empowered therein to manage the affairs of the Corporation
in lieu of Directors, the Stockholders of the Corporation shall be deemed
Directors for the purposes of these By-Laws and wherever the words "directors",
"board of directors" or "board" appear in these By-Laws those words shall be
taken to mean Stockholders.
- 9 -
<PAGE>
The Shareholders may, by majority vote, create a board of directors to
manage the business of the Corporation and exercise its corporate powers.
ARTICLE XIV - AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at any
annual meeting of the Stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal to be made be contained in the notice of
such special meeting, by the affirmative vote of a majority of the stock issued
and outstanding and entitled to vote thereat, or by the affirmative vote of a
majority of the board at any regular meeting of the board or at any special
meeting of the board if notice of the proposed alteration or repeal to be made,
be contained in the notice of such special meeting.
- 10 -
<PAGE>
The State of Texas
SECRETARY OF STATE
IT IS HEREBY CERTIFIED that the attached is/are true and correct
copies of the following described document(s) on file in this office:
RUGRATS AMERICAN TOUR, LTD.
File No. 100955-10
CERTIFICATE OF LIMITED PARTNERSHIP SEPTEMBER 04, 1997
[seal]
IN TESTIMONY WHEREOF, I
have hereunto signed my
name officially and caused
to be impressed hereon the
Seal of State at my office
in the City of Austin, on
June 11, 1998.
/s/ Albert R. Gonzales
--------------------------
Alberto R. Gonzales
Secretary of State
<PAGE>
CERTIFICATE OF FORMATION OF
A LIMITED PARTNERSHIP
Pursuant to the provisions of the Texas Revised Limited Partnership
Act, V.A.T.S. art. 6132a-1, the undersigned persons certify that the statements
hereinafter made are provisions of our agreement of limited partnership, which
is to be effective when this certificate of limited partnership is filed by the
Secretary of State of Texas.
The name of the limited partnership is RUGRATS AMERICAN TOUR, LTD.
The address of the registered office of the limited partnership in
Texas is 515 Post Oak Boulevard, Suite 300, Houston, Texas 77027 and
the name and address of registered agent of the limited partnership
for the service of process on the partnership is Jeffry B. Lewis, 515
Post Oak Boulevard, Suite 300, Houston, Texas 77027.
The address of the principal office of the limited partnership in the
United States where records of the limited partnership are to be kept
or made available under ss.1.07 of the Act is 515 Post Oak Boulevard,
Suite 300, Houston, Texas 77027.
The name, mailing address, and the street address of the business or
residence of the sole general partner is:
Name Mailing Address Street Address
---- --------------- --------------
PACE Variety 515 Post Oak Boulevard 515 Post Oak Boulevard
Entertainment, Inc. Suite 300 Suite 300
Houston, Texas 77027 Houston, Texas 77027
IN WITNESS WHEREOF. this certificate has been duly executed by the
following partners, who include all of the general partners of the limited
partnership.
PACE Variety Entertainment, Inc.
By: /s/ Michael F. Rogers
-------------------------------
Name: Michael F. Rogers
Title: Assistant Secretary
- 2 -
<PAGE>
CERTIFICATE OF INCORPORATION
OF
SFX ACQUISITION CORP.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is SFX ACQUISITION CORP.
SECOND: The address, including street, number, city and county, of the
registered office of the corporation in the State of Delaware is 1013 Centre
Road, City of Wilmington 19805, County of New Castle; and the name of the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is one thousand (1,000). The par value of each of such
shares is one cent. All such shares are of one class and are shares of Common
Stock.
FIFTH: The name and the mailing address of the incorporator is as
follows:
NAME MAILING ADDRESS
---- ---------------
Michael J. Principe 650 Madison Avenue
New York, NY 10022
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
ss. 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or
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<PAGE>
receivers appointed for this corporation under ss. 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement mid to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the
Bylaws. The phrase "whole Board" and the phrase "total number of
directors" shall be deemed to have the same meaning, to wit, the
total number of directors which the corporation would have if
there were no vacancies. No election of directors need be by
written ballot.
2. After the original or other Bylaws of the corporation have been)
adopted, amended, or repealed, as the case may be, in accordance
with the provisions ofss.109 of the General Corporation Law of the
State of Delaware, and, after the corporation has received any
payment for any of its stock, the power to adopt, amend, or repeal
the Bylaws of the Corporation may be exercised by the Board of
Directors of the corporation; provided, however, that any
provision for the classification of directors of the corporation
for staggered terms pursuant to the provisions of subsections (d)
ofss.141 of the General. Corporation Law of the State of Delaware
shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders entitled to vote of the corporation unless
provisions for such classification shall be set forth in this
certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to
issue more than one class of stock, no outstanding share of any
class of stock which is denied voting power under the provisions
of the certificate of incorporation shall entitle the holder
thereof to the right to vote
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at any meeting of stockholders as the provisions of paragraph (2)
of subsection (b) of ss. 242 of the General Corporation Law of the
State of Delaware shall otherwise require; provided, that to share
of any such class which is otherwise denied voting power shall
entitle the holder thereof to vote upon the increase to decrease
in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss.102 of the general Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided fro herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this certificate
of incorporation maybe amended, altered, or repealed, and other provisions
authorized by the laws of the State Of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on July 6, 1998
/s/ Michael J. Principe
---------------------------------
Michael J. Principe, Incorporator
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City of New York
County of New York
July 6, 1998
ORGANIZATION ACTION IN WRITING OF INCORPORATOR
OF
SFX ACQUISITION CORP.
-----------------------
(Organized July 6, 1998)
The following action is taken this day through this instrument by the
incorporator of the above corporation:
1. The adoption of the initial Bylaws of the corporation.
2. The election of the following persons to serve as the directors
of the corporation until the first annual meeting of stockholders and
until their successors are elected and qualify or until their earlier
resignation or removal:
Robert F.X. Sillerman
Michael G. Ferrel
David Falk
/s/ Michael J. Principe
---------------------------------
Michael J. Principe, Incorporator
<PAGE>
By-Laws - 1
<PAGE>
BY-LAWS
OF
SFX ACQUISITION CORP.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be established and
maintained at and shall be the registered agent of the Corporation in charge
hereof.
1.2 Other Offices: The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require, provided, however, that the corporation's books and records shall be
maintained at such place within the continental United States as the Board of
Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the stockholders
of the corporation shall be held at such place or places, within or outside the
State of Delaware as may be fixed by the Board of Directors from time to time or
as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual meeting
of stockholders shall be held each year within five months after the close of
the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
common stock issued and outstanding voting shares of common of the corporation.
<PAGE>
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly
required or permitted by law, not less than ten days nor more than sixty days
before the date of every stockholders' meeting the Secretary shall give to each
stockholder of record entitled to vote at such meeting, written notice, served
personally by mail or by telegram, stating the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. Such notice, if mailed shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by the
Certificate of Incorporation or by law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of voting stockholders, present in person or by proxy, may
adjourn the meeting from time to time without notice other than announcement at
the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
originally called but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof, unless a new record date is fixed by the Board of Directors.
(d) If an adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting
2.7 Chairman and secretary of Meeting: The President, shall preside at
meetings of the stockholders. The Secretary shall act as secretary of the
meeting or if he is not present, then the presiding officer may appoint a person
to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on the books of the corporation on the record
date for the meeting. Except as otherwise provided by these by-laws, all
elections and questions shall be decided by the vote of a majority in interest
of the stockholders present in person or represented by proxy and entitled to
vote at the meeting.
By-Laws - 2
<PAGE>
2.9 Proxies: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, sealed, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote by ballot
at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed shall refuse to serve
or shall not be present, such appointment shall be made by the officer presiding
at the meeting.
2.11 List of Stockholders: (a) At least ten days before every meeting
of stockholders, the Secretary shall prepare and make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder.
(b) During, ordinary business hours, for a period of at least ten
days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held.
(c) The list shall also be produced and kept at the time and place
of the meeting during the whole time of the meeting, and it may be inspected by
any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise provided
by these by-laws or any resolutions adopted by the stockholders or Board of
Directors, the order of business and all other matters of procedure at every
meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise provided by
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking, of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
By-Laws - 3
<PAGE>
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the
corporation shall be managed by its Board of Directors which may exercise all
the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The
number of directors which shall constitute the Board of Directors shall be ( )
unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors; Removal: (a) Any director may
resign his office at any time by delivering, his resignation in writing to the
Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any time
by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of Directors may
hold their meetings, both regular and special, either within or outside the
State of Delaware.
(b) Regular meetings of the Board of Directors may be held at such
time and place as shall from time to time be determined by resolution of the
Board of Directors. No notice of such regular meetings shall be required. If the
date designated for any regular meeting be a legal holiday, then the meeting
shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting, no
notice thereof shall be required.
By-Laws - 4
<PAGE>
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or at
the written request of any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telephone, or delivering the same
not later than the date before the meeting.
Unless required by law, such notice need not include a statement of the
business to be transacted at, or the purpose of, any such meeting. Any and all
business may be transacted at any meeting of the Board of Directors. No notice
of any adjourned meeting need be given. No notice to or waiver by any director
shall be required with respect to any meeting at which the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by the
Certificate of Incorporation or these by-laws, a majority of the Director; shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The President, or,
in his absence a member of the Board of Directors selected by the members
present, shall preside at meetings of the Board. The Secretary shall act as
secretary of the meeting, but in his absence the presiding officer may appoint a
secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing and the writing or writings are filed
with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of Directors,
or any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such committees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of ally committee, who may replace any
absent or disqualified member at any meeting of such committee.
By-Laws - 5
<PAGE>
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board of Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected officers of the
corporation shall be a President, a Treasurer and a Secretary, and such other
officers as the Board of Directors shall deem advisable. The officers shall be
elected by the Board of Directors at its annual meeting following the annual
meeting of the stockholders, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified. (b) The Board of Directors may elect or
appoint at any time, and from time to time, additional officers or agents with
such duties as it may deem necessary or desirable. Such additional officers
shall serve at the pleasure of the Board or otherwise as shall be specified by
the Board at the time of such election or appointment. Two or more offices may
be held by the same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be fixed
by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be removed at
any time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then in
office.
4.3 Duties: (a) President: The President shall be the principal
executive officer of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of the
corporation. He shall, when present, preside at all meetings of the stockholders
and of the Board of Directors. He shall see that all orders and resolutions of
the Board of Directors are carried into effect (unless any such order or
resolution shall provide otherwise), and
By-Laws - 6
<PAGE>
in general shall perform all duties incident to the office of president and such
other duties as may be prescribed by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody of
and be responsible for all funds and securities of the Corporation; (2) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever; (3) deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositories as shall be selected by resolution
of the Board of Directors; and (4) in general perform all duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors. He shall, if required by
the Board of Directors, give a bond for the faithful discharge of his duties in
such sum and with such surety or sureties as the Board of Directors shall
determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly given in accordance
with the provisions of these by-laws and as required by law; (3) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents, the execution of which on behalf
of the corporation under its seal, is duly authorized; (4) keep a register of
the post office address of each stockholder which shall be furnished to the
Secretary by such stockholder; (5) have general charge of stock transfer books
of the Corporation; and (6) in general perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the corporation
shall be entitled to have a certificate signed by, or in the name of, the
corporation by the President and by the Treasurer or the Secretary, certifying
the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent other
than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
By-Laws - 7
<PAGE>
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the holder of
such certificate, the number of shares represented thereby and the date of issue
thereof shall be made on the corporation's books. The corporation shall be
entitled to treat the holder of any share of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be made on
the books of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates representing
shares of the stock of the corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent: Registrar; Rules Respecting Certificates: The
corporation may maintain one or more transfer offices or agencies where stock of
the corporation shall be transferable. The corporation may also maintain one or
more registry offices where such stock shall be registered. The Board of
Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of Record: The
Board of Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at, any
meeting of the stockholders or any adjournment thereof, or the stockholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting
By-Laws - 8
<PAGE>
of the stockholders, nor more than sixty days prior to any other action
requiring such determination of the stockholders. A determination of
stockholders of record entitled to notice or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the
President, the Secretary or the Treasurer shall have full power and authority,
on behalf of the corporation, to attend, act and vote at any meeting of the
stockholders of any corporation in which the corporation may hold stock, and at
such meeting to exercise any or all rights and powers incident to the ownership
of such stock, and to execute on behalf of the corporation a proxy or proxies
empowering another or others to act as aforesaid. The Board of Directors from
time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation: (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly
By-Laws - 9
<PAGE>
transferred, endorsed, sold, assigned, set over and delivered by the
corporation, and that with respect to such securities the authority of these
provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of
money notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form and shall
have such content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place
or purpose of any meeting of the stockholders, directors or a committee is
required to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the holding thereof,
or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors, officers
and employees to the fullest extent allowed by law, provided, however, that it
shall be within the discretion of the Board of Directors whether to advance any
funds in advance of disposition of any action, suit or proceeding, and provided
further that nothing in this section 7.4 shall be deemed to obviate the
necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise determined by
the Board of Directors, the fiscal year of the corporation shall end on
By-Laws - 10
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/09/1998
981474966 - 2757193
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SFX BROADCASTING OF THE MIDWEST, INC.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the
"Corporation") is SFX BROADCASTING OF THE MIDWEST, INC. The date of
incorporation is May 30, 1997.
2. The certificate of incorporation of the Corporation is
hereby amended by striking out Article FIRST thereof and by substituting in
lieu of said Article the following new Article:
"FIRST: The name of the corporation (hereinafter called the
"corporation") is SFX CONCERTS OF THE MIDWEST, INC."
3. The amendment of the certificate of incorporation herein
certified has been duly adopted and written consent has been given in
accordance with the provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Corporation has caused this
certificates to be signed by Howard J. Tytel, its Secretary on this 9th day of
December, 1995.
By: /s/ Howard J. Tytel
---------------------------
Howard J. Tytel
Secretary
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF DELAWARE, DO HEREBY CERTIFY
THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF
"SFX SPORTS GROUP, INC.", FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF
APRIL, A.D. 1998, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 9072.791
DATE: 05-11-98
<PAGE>
CERTIFICATE OF INCORPORATION
OF
SFX SPORTS GROUP, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the Corporation (Hereinafter Called the
"Corporation") is SFX Sports Group, Inc.
SECOND: The address, including street, number, city and county, of the
registered office of the corporation in the State of Delaware is 10 13 Centre
Road, City of Wilmington 19805, County of New Castle; and the name of the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is one thousand. The par value of each of such shares is
one cent. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator is as
follows:
NAME MAILING ADDRESS
---- ---------------
Deborah Goldman-Levi 650 Madison Avenue, 16th Floor
New York, NY 10022
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
ss. 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or
<PAGE>
receivers appointed for this corporation under ss.279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the
Bylaws. The phrase "whole Board" and the phrase "total number of
directors" shall be deemed to have the same meaning, to wit, the
total number of directors which the corporation would have if
there were no vacancies. No election of directors need be by
written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance
with the provisions ofss.109 of the General Corporation Law of the
State of Delaware, and, after the corporation has received any
payment for any of its stock, the power to adopt, amend, or repeal
the Bylaws of the corporation may be exercised by the Board of
Directors of the corporation; provided, however, that any
provision for the classification of directors of the corporation
for staggered terms pursuant to the provisions of subsections (d)
ofss.141 of the General Corporation Law of the State of Delaware
shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders entitled to vote of the corporation unless
provisions for such classification shall be set forth in this
certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to
issue more than one class of stock, no outstanding share of any
class of stock which is denied voting power under the provisions
of the certificate of incorporation shall entitle the holder
thereof to the right to vote
- 2 -
<PAGE>
at any meeting of stockholders except as the provisions of
paragraph (2) of subsection (b) of ss.242 of the General
Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise
denied voting power shall entitle the holder thereof to vote upon
the increase to decrease in the number of authorized shares of
said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss. 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of Delaware,
as the same maybe amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this certificate
of incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on April 28, 1998
/s/ Deborah Goldman-Levi
----------------------------------
Deborah Goldman-Levi, Incorporator
- 3 -
<PAGE>
BY-LAWS
OF
SFX SPORTS GROUP, INC.
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be established and
maintained at and shall be the registered agent of the Corporation in charge
hereof
1.2 Other Offices: The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require, provided, however, that the corporation's books and records shall be
maintained at such place within the continental United States as the Board of
Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the stockholders
of the corporation shall be held at such place or places, within or outside the
State of Delaware as may be fixed by the Board of Directors from time to time or
as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual meeting
of stockholders shall be held each year within five months after the close of
the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
<PAGE>
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly
required or permitted by law, not less man ten days nor more than sixty days
before the date of every stockholders' meeting the Secretary shall give to each
stockholder of record entitled to vote at such meeting, written notice, served
personally by mail or by telegram, stating the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. Such notice, if mailed shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by the
Certificate of Incorporation or by law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of voting stockholders, present in person or by proxy, may
adjourn the meeting from time to time without notice other than announcement at
the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
originally called but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof, unless a new record date is fixed by the Board of Directors.
(d) If an adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
2.7 Chairman and Secretary of Meeting: The President shall preside at
meetings of the stockholders. The Secretary shall act as secretary of the
meeting or if he is not present, then the presiding officer may appoint a person
to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on the books of the corporation on the record
date for the meeting. Except as otherwise provided by these by-laws, all
elections and questions shall be decided by the vote of a majority in interest
of the stockholders present in person or represented by proxy and entitled to
vote at the meeting.
By-Laws - 2
<PAGE>
2.9 Proxies: Any stockholders may vote either in person or by proxy.
Every proxy shall be in writing, subscribe by the stockholder or his duly
authorized attorney-in-fact, but need not be dated, sealed witnessed or
acknowledged.
2.10 Inspectors: The election of directors and any other vote by ballot
at an meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors s appointed shall refuse to serve
or shall not be present, such appointment shall be made by the officer presiding
at the meeting.
2.11 List of Stockholders: (a) At least ten days before every meeting
of stockholders, the Secretary shall prepare and make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder.
(b) During ordinary business hours, for a period of at least ten
day prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held.
(c) The list shall also be produced and kept at the time and place
of the meeting during the whole time of the meeting, and it may be inspected by
any stockholder which is present.
(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise provided
by these by-laws or any resolutions adopted by the stockholders or Board of
Directors, the order of business and all other matters of procedure at every
meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise provided by
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
By-Laws - 3
<PAGE>
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the
corporation shall be managed by its Board of Directors which may exercise all
the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The
number of directors which shall constitute the Board of Directors shall be ( )
unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors; Removal: (a) Any director may
resign his office at any time by delivering his resignation in writing to the
Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any time
by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of Directors may
hold their meetings, both regular and special, either within or outside the
State of Delaware.
(b) Regular meetings of the Board of Directors may be held at such
time and place as shall from time to time be determined by resolution of the
Board of Directors. No notice of such regular meetings shall be required. If the
date designated for any regular meeting be a legal holiday, then the meeting
shall be held on the next day which is not a legal boliday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting, no
notice thereof shall be required.
By-Laws - 4
<PAGE>
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or at
the written request or any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a statement of the
business to be transacted at, or the purpose of, any such meeting. Any and all
business may be transacted at any meeting of the Board of Directors. No notice
of any adjourned meeting need be given. No notice to or waiver by any director
shall be required with respect to any meeting at which the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by the
Certificate of Incorporation or these by-laws, a majority of the Directors shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The President, or,
in his absence a member of the Board of Directors selected by the members
present, shall preside at meetings of the Board. The Secretary shall act as
secretary of the meeting, but in his absence the presiding officer may appoint a
secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of Directors,
or any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such committees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee.
By-Laws - 5
<PAGE>
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board or Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected officers of the
corporation shall be a President, a Treasurer and a Secretary, and such other
officers as the Board of Directors shall deem advisable. The officers shall be
elected by the Board of Directors at its annual meeting following the annual
meeting of the stockholders, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time, and
from time to time, additional officers or agents with such duties as it may deem
necessary or desirable. Such additional officers shall serve at the pleasure of
the Board or otherwise as shall be specified by the Board at the time of such
election or appointment. Two or more offices may be held by the same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be fixed
by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be removed at
any time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then in
office.
4.3 Duties: (a) President: The President shall be the principal
executive officer of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of the
corporation. He shall, when present, preside at all meetings of the stockholders
and of the Board of Directors. He shall see that all orders and resolutions of
the Board
By-Laws - 6
<PAGE>
of Directors are carried into effect (unless any such order or resolution shall
provide otherwise), and in general shall perform all duties incident to the
office of president and such other duties as may be prescribed by the Board of
Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody of
and be responsible for all funds and securities of the Corporation; (2) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever; (3) deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositories as shall be selected by resolution
of the Board of Directors; and (4) in general perform all duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors. He shall, if required by
the Board of Directors, give a bond for the faithful discharge of his duties in
such sum and with such surety or sureties as the Board of Directors shall
determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly given in accordance
with the provisions of these by-laws and as required by law; (3) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents, the execution of which on behalf
of the corporation under its seal, is duly authorized; (4) keep a register of
the post office address of each stockholder which shall be furnished to the
Secretary by such stockholder; (5) have general charge of stock transfer books
of the Corporation; and (6) in general perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the corporation
shall be entitled to have a certificate signed by, or in the name of, the
corporation by the President and by the Treasurer or the Secretary, certifying
the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent other
than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
By-Laws - 7
<PAGE>
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board or Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the holder of
such certificate, the number of shares represented thereby and the date of issue
thereof shall be made on the corporation's books. The corporation shall be
entitled to treat the holder of any share of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be made on
the books of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates representing
shares of the stock of the corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent, Registrar, Rules Respecting Certificates: The
corporation may maintain one or more transfer offices or agencies where stock of
the corporation shall be transferable. The corporation may also maintain one or
more registry offices where such stock shall be registered. The Board of
Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of Record: The
Board of Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at, any
meeting of the stockholders or any adjournment thereof, or the stockholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting
By-Laws - 8
<PAGE>
of the stockholders, nor more than sixty days prior to any other action
requiring such determination of the stockholders. A determination of
stockholders of record entitled to notice or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Director, shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the
President, the Secretary or the Treasurer shall have full power and authority,
on behalf of the corporation, to attend, act and vote at any meeting of the
stockholders of any corporation in which the corporation may hold stock, and at
such meeting to exercise any or all rights and powers incident to the ownership
of such stock, and to execute on behalf of the corporation proxy or proxies
empowering another or others to act as aforesaid. The Board of Directors from
time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation: (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly
By-Laws - 9
<PAGE>
transferred, endorsed, sold, assigned, set over and delivered by the
corporation, and that with respect to such securities the authority of these
provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form and shall
have such content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place
or purpose of any meeting of the stockholders, directors or a committee is
required to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the holding
thereof, or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors, officers
and employees to the fullest extent allowed by law, provided, however, that it
shall be within the discretion of the Board of Directors whether to advance any
funds in advance of disposition of any action, suit or proceeding, and provided
further that nothing in this section 7.4 shall be deemed to obviate the
necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise determined by
the Board of Directors, the fiscal year of the corporation shall end on .
By-Laws - 10
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "SFX TOURING, INC.", FILED IN THIS OFFICE ON THE ELEVENTH DAY
OF MARCH, A.D. 1998, AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8965248
DATE: 03-11-98
<PAGE>
CERTIFICATE OF INCORPORATION
OF
SFX TOURING, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is SFX Touring, Inc.
SECOND: The address, including street, number, city and county, of the
registered office of the corporation in the State of Delaware is 10 13 Centre
Road, City of Wilmington 19805, County of New Castle; and the name of the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is one thousand. The par value of each of such shares is
one cent. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator is as
follows:
NAME MAILING ADDRESS
---- ---------------
Deborah Goldman-Levi 150 East 58th Street, 19th Floor
New York, NY 10155
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
ss.291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or
<PAGE>
receivers appointed for this corporation under ss.279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the
Bylaws. The phrase "whole Board" and the phrase "total number of
directors" shall be deemed to have the same meaning, to wit, the
total number of directors which the corporation would have if
there were no vacancies. No election of directors need be by
written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance
with the provisions ofss.109 of the General Corporation Law of the
State of Delaware, and, after the corporation has received any
payment for any of its stock, the power to adopt, amend, or repeal
the Bylaws of the corporation may be exercised by the Board of
Directors of the corporation; provided, however, that any
provision for the classification of directors of the corporation
for staggered terms pursuant to the provisions of subsections (d)
ofss.141 of the General Corporation Law of the State of Delaware
shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders entitled to vote of the corporation unless
provisions for such classification shall be set forth in this
certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to
issue more than one class of stock, no outstanding share of any
class of stock which is denied voting power under the provisions
of the certificate of incorporation shall entitle the holder
thereof to the right to vote
- 2 -
<PAGE>
at any meeting of stockholders except as the provisions of
paragraph (2) of subsection (b) of ss.242 of the General
Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise
denied voting power shall entitle the holder thereof to vote upon
the increase to decrease in the number of authorized shares of
said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss. 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this certificate
of incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on March 11, 1998
/s/ Deborah Goldman-Levi
----------------------------------
Deborah Goldman-Levi, Incorporator
- 3 -
<PAGE>
BY-LAWS
OF
SFX TOURING, INC.
---------------------------------
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be established and
maintained at and shall be the registered agent of the Corporation in charge
hereof.
1.2 Other Offices: The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require, provided, however, that the corporation's books and records shall be
maintained at such place within the continental United States as the Board of
Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the stockholders
of the corporation shall be held at such place or places, within or outside the
State of Delaware as may be fixed by the Board of Directors from time to time or
as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual meeting
of stockholders shall be held each year within five months after the close of
the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings Of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly
required or permitted by law, not less than ten days nor more than sixty days
before the date of every stockholders' meeting the Secretary shall give to each
stockholder of record entitled to vote at such meeting, written notice, served
personally by mail or by telegram, stating the place, date and hour
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of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Such notice, if mailed shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by the
Certificate of Incorporation or by law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of voting stockholders, present in person or by proxy, may
adjourn the meeting from time to time without notice other than announcement at
the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
originally called but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof, unless a new record date is fixed by the Board of Directors.
(d) If an adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
2.7 Chairman and Secretary of Meeting: The President, shall preside at
meetings of the stockholders. The Secretary shall act as secretary of the
meeting or if he is not present, then the presiding officer may appoint a person
to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on the books of the corporation on the record
date for the meeting. Except as otherwise provided by these by-laws, all
elections and questions shall be decided by the vote of a majority in interest
of the stockholders present in person or represented by proxy and entitled to
vote at the meeting.
2.9 Proxies: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, sealed, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote by ballot
at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed shall
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<PAGE>
refuse to serve or shall not be present, such appointment shall be made by the
officer presiding at the meeting.
2.11 List of Stockholders: (a) At least ten days before every meeting
of stockholders, the Secretary shall prepare and make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder.
(b) During ordinary business hours, for a period of at least ten
days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held.
(c) The list shall also be produced and kept at the time and place
of the meeting during the whole time of the meeting, and it may be inspected by
any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise provided
by these by-laws or any resolutions adopted by the stockholders or Board of
Directors, the order of business and all other matters of procedure at every
meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise provided by
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all sham entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the
corporation shall be managed by its Board of Directors which may exercise all
the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The
number of directors which shall constitute the Board of Directors shall be ( )
unless and until otherwise determined
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<PAGE>
by a vote of a majority of the entire Board of Directors. Each Director shall
hold office until the next annual meeting of stockholders and until his
successor is elected and qualified, provided, however, that a director may
resign at any time. Directors need not be stockholders.
3.3 Vacancies on Board of Directors; Removal: (a) Any director may
resign his office at any time by delivering his resignation in writing to the
Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any time
by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of Directors may
hold their meetings, both regular and special, either within or outside the
State of Delaware.
(b) Regular meetings of the Board of Directors may be held at such
time and place as shall from time to time be determined by resolution of the
Board of Directors. No notice of such regular meetings shall be required. If the
date designated for any regular meeting be a legal holiday, then the meeting
shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting, no
notice thereof shall be required.
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or at
the written request of any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a statement
of the business to be transacted at, or the purpose of, any such meeting. Any
and all business may be transacted at any meeting of the Board of Directors. No
notice of any adjourned meeting need be given. No notice to or waiver by any
director shall be required with respect to any meeting at which the director is
present.
3.5 Quorum and Action: Unless provided otherwise by law or by the
Certificate of Incorporation or these by-laws, a majority of the Directors shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum at any meeting of the Board, a
4
<PAGE>
majority of those present may adjourn the meeting from time to time. The vote of
a majority of the Directors present at any meeting at which a quorum is present
shall be necessary to constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The President, or,
in his absence a member of the Board of Directors selected by the members
present, shall preside at meetings of the Board. The Secretary shall act as
secretary of the meeting, but in his absence the presiding officer may appoint a
secretary of the meeting.
3.7 Action by Consent Without Meeting:Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of Directors,
or any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a ntecting shall constitute presence in
person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such committees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified. member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board of Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected officers of the
corporation shall be a President, a Treasurer and a Secretary, and such other
officers as the Board of Directors shall deem advisable. The officers shall be
elected by the Board of Directors at its annual meeting following the annual
meeting of the stockholders, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time, and
from time to time, additional officers or agents with such duties as it may deem
necessary or desirable. Such additional officers shall serve at the pleasure of
the Board or otherwise as shall be specified by the
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Board at the time of such election or appointment. Two or more offices may be
held by the same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be fixed
by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be removed at
any time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then in
office.
4.3 Duties: (a) President: The President shall be the principal
executive officer of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of the
corporation. He shall, when present, preside at all meetings of the stockholders
and of the Board of Directors. He shall see that all orders and resolutions of
the Board of Directors are carried into effect (unless any such order or
resolution shall provide otherwise), and in general shall perform all duties
incident to the office of president and such other duties as may be prescribed
by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody of
and be responsible for all funds and securities of the Corporation; (2) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever; (3) deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositories as shall be selected by resolution
of the Board of Directors; and (4) in general perform all duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors. He shall, if required by
the Board of Directors, give a bond for the faithful discharge of his duties in
such sum and with such surety or sureties as the Board of Directors shall
determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly given in accordance
with the provisions of these by-laws and as required by law; (3) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents, the execution of which on behalf
of the corporation under its seal, is duly authorized; (4) keep a register of
the post office address of each stockholder which shall be furnished to the
Secretary by such stockholder; (5) have general charge of stock transfer books
of the Corporation; and (6) in general perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
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ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the corporation
shall be entitled to have a certificate signed by, or in the name of, the
corporation by the President and by the Treasurer or the Secretary, certifying
the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent other
than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the holder of
such certificate, the number of shares represented thereby and the date of issue
thereof shall be made on the corporation's books. The corporation shall be
entitled to treat the holder of any share of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be made on
the books of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates representing
shares of the stock of the corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent; Registrar, Rules Respecting Certificates: The
corporation may maintain one or more transfer offices or agencies where stock of
the corporation shall be
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transferable. The corporation may also maintain one or more registry offices
where such stock shall be registered. The Board of Directors may make such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of Record: The
Board of Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at, any
meeting of the stockholders or any adjournment thereof, or the stockholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting of the stockholders, nor more than sixty days prior to any other
action requiring such determination of the stockholders. A determination of
stockholders of record entitled to notice or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the
President, the Secretary or the Treasurer shall have full power and authority,
on behalf of the corporation, to attend, act and vote at any meeting of the
stockholders of any corporation in which the corporation may hold stock, and at
such meeting to exercise any or all rights and powers incident to the ownership
of such stock, and to execute on behalf of the corporation a proxy or proxies
empowering another or others to act as aforesaid. The Board of Directors from
time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation (a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written
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<PAGE>
instruments of assignment and transfer necessary or proper to effectuate the
authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly transferred, endorsed, sold, assigned, set over and delivered
by the corporation, and that with respect to such securities the authority of
these provisions of the by-laws and of such officers is still in full force and
effect.
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such forrn and shall
have such content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place
or purpose of any meeting of tne stockholders, directors or a committee is
required to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the holding
thereof, or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors, officers
and employees to the fullest extent allowed by law, provided, however, that it
shall be within the discretion of the Board of Directors whether to advance any
funds in advance of disposition of any action, suit or proceeding, and provided
further that nothing in this section 7.4 shall be deemed to obviate the
necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise determined by
the Board of Directors, the fiscal year of the corporation shall end on
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<PAGE>
STATE OF CALIFORNIA
SECRETARY OF STATE
CORPORATION DIVISION
I, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the annexed transcript was prepared by and in this office from the
record on file, of which it purports to be a copy, and that it is full, true and
correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of
the State of California this
June 08 1998
------------------------
/s/ Bill Jones
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
SHELLI MEADOWS, INC.
The undersigned Incorporator hereby executes the following Articles of
Incorporation for the purpose of forming a corporation under the General
Corporation Law of the State of California:
I.
The Name of the Corporation shall be:
SHELLI MEADOWS, INC.
II.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
The name and address in this state of the Corporation's initial agent
for service of process in accordance with subdivision (b) of Section 1502 of the
General Corporation Law is:
Irving Azoff
c/o Breslauer, Jacobson, Rutman & Sherman
10345 West Olympic Boulevard
Los Angeles, California 90064
IV.
The Corporation is authorized to issue only one class of shares, which
shall be common stock without par value, and the total number of shares of
common stock which the corporation is authorized to issue is one million
(1,000,000).
V.
Section 1. Elimination of Directors' Liability. The liability of the
directors of this corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law.
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<PAGE>
Section 2. Indemnification of Corporate Agents. This corporation is
authorized to provide indemnification of agents (as defined in Section 317 of
the California General Corporation Law) through bylaw provisions, agreements
with agents, vote of shareholders or disinterested directors or otherwise, in
excess of the indemnification otherwise permitted by Section 317 of the
California General Corporation Law, subject only to the applicable limits set
forth in Section 204 of the California General Corporation Law with respect to
actions for breach of duty to the corporation and its shareholders.
Section 3. Insurance from a Subsidiary. This corporation is authorized
to purchase and maintain insurance on behalf of its agents against any liability
asserted against or incurred by the agent in such capacity or arising out of the
agent's status as such from a company, the shares of which are owned in whole or
in part by this corporation, provided that any policy issued by such company is
limited to the extent required by applicable law.
Section 4. Reveal or Modification. Any repeal or modification of the
foregoing provisions of this Article V by the shareholders of this corporation
shall not adversely affect any right or protection of an agent of this
corporation existing at the time of that repeal or modification.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on September 10, 1990.
/s/ Lilliana Montero
------------------------------
Lilliana Montero, Incorporator
3
<PAGE>
SHELLI MEADOWS, INC.
BY LAWS
ARTICLE ONE
CAPITAL STOCK
SECTION ONE: Share certificates, as approved by the Board of Directors, shall be
issued to shareholders specifying the name of the owner, number of shares, and
date of issue. Each certificate shall be signed by the President and Secretary
with the corporate seal affixed thereon. Each certificate shall be numbered in
the order in which it is issued.
SECTION TWO: Each shareholder shall be entitled to one vote per share of common
stock, unless otherwise stated in Article of Incorporation.
SECTION THREE: Transfer of shares of stock shall be in the transfer ledger of
the corporation. Such transfers shall be done in person or by power of attorney.
Transfers shall be completed on the surrender of the old certificate, duly
assigned.
ARTICLE TWO
SHAREHOLDER'S MEETINGS
SECTION ONE: The annual meeting of the shareholders shall be from time to time,
at the time fixed by the directors held at a place from time to time fixed by
the directors. If the stated day is
<PAGE>
a weekend day or a legal holiday, the meeting shall be held on the next
succeeding day not a weekend day or a holiday.
SECTION TWO: The place of the annual meeting may be changed by the Board of
Directors within or without the State of incorporation for any given year upon
days notice to the shareholders. Special meetings may be held within or without
of the State of incorporation and at such time as the Board of Directors may
fix.
SECTION THREE: Special meetings of the shareholders may be called at any time by
the President or any holder(s) of a majority of the outstanding shares of stock
entitled to vote.
SECTION FOUR: Notice of any special meeting of the shareholders shall be given
to all shareholders to their last known address by registered mail. Notice of
any special meeting of the shareholders shall state the purpose of such meeting.
Notice of a special meeting may be waived in writing either before or after such
meeting.
SECTION FIVE: Unless otherwise provided by law or the Articles of incorporation,
all meetings of the shareholders, action may be taken by a majority vote of the
number of shares entitled to vote as represented by the shareholders present at
such meeting. Directors shall be elected by a plurality vote. A quorum shall
constitute one share over fifty percent of the outstanding shares entitled to
vote as represented by the shareholders present at such meeting. No business may
be transacted without the presence of a quorum. At any time during any
2
<PAGE>
shareholders meeting, if it is determined that a quorum is no longer present,
the meeting shall be then adjourned.
SECTION SIX: Action may be taken by the shareholders without a formal meeting by
consent, if such consent is executed in writing by all of the shareholders
entitled to vote and if allowed under the laws of the State of incorporation.
ARTICLE THREE
DIRECTORS
SECTION ONE: The Board of Directors shall control the full and entire management
of the affairs and business of the corporation. The Board of Directors shall
adopt rules and regulations to manage the affairs and business of the
corporation by resolution at special or the annual meeting. A quorum shall
consist of a majority of the directors. Resolutions adopted and all business
transacted by the Board of Directors shall be done by a majority vote of the
directors present at such meetings.
SECTION TWO: The Board of Directors shall consist of 1 member to be elected by
the shareholders at an annual meeting. The term of office shall be one year.
Vacancies may be filled by the Board of Directors prior to the expiration of the
term. Such appointment shall continue until the next annual meeting of
shareholders.
3
<PAGE>
SECTION THREE: The Board of Directors shall meet annually at the same place of
the shareholders meetings immediately following the annual meeting of the
shareholders, special meetings of the Board of Directors may be called by the
President or any two (2) directors on ten (10) days notice, or such other and
further notice as required by the laws of the State of incorporation.
SECTION FOUR: Notice of special or regular meetings of the Board of Directors
other than the annual meeting of the Board of Directors, shall be made by mail
to the last known address of each director. Such notice shall be mailed ten (10)
days prior to such meeting and shall include time and place and reasons for the
meeting. All other requirements of the laws of the State of incorporation for
notices shall be followed.
SECTION FIVE: All directors of the corporation who are present at a meeting of
the Board of Directors shall be deemed to have assented to action taken at such
meeting as to any corporate action taken, unless a director who did not vote in
favor on such action goes on record in the minutes as dissenting. In such a
case, the dissenting director will not be deemed to having assented to the
action taken.
SECTION SIX: Directors may be removed for cause by a majority vote at a meeting
of the shareholders or Directors. Directors may be removed without cause by a
majority vote at a meeting of the shareholders.
4
<PAGE>
ARTICLE FOUR
OFFICERS
SECTION ONE: The officers of the corporation shall consist of a President,
Secretary and Treasurer. All officers shall be elected by the Board of Directors
and shall serve a term for compensation as fixed by the Board of Directors. The
Board of Directors may establish other offices as it may be deem fit.
SECTION TWO: The chief executive officer shall be the President. The President
shall have management powers of the corporation. His duties shall include but
are not limited to administration of the corporation presiding over shareholders
meeting including general supervision of the policies of the corporation as well
as general management. The President shall execute contracts, mortgages, loans
and bonds under the seal of the corporation. The President shall have other
powers as determined by the Board of Directors by resolution.
SECTION THREE: The secretary shall keep the minutes of meetings of the Board of
Directors and shareholder meetings. The Secretary shall have charge of the
minute books, seal and stock books of the corporation. The Secretary shall have
other powers as delegated by the President.
SECTION FOUR: The Treasurer shall have the power to manage the financial affairs
of the corporation. The Treasurer shall keep books and records of the financial
affairs and make such
5
<PAGE>
available to the President and Board of Directors upon request. The Treasurer
may make recommendations to the officers and directors in regard to the
financial affairs of the corporation.
SECTION FIVE: The Vice-President, if one is appointed by the Board of Directors,
shall have such powers as delegated to him by the President. Upon the inability
to perform by the President, the Vice-President shall serve as President until
such time as the President shall be able to perform or further action by the
Board of Directors. The President shall be deemed unable to perform his duties
upon written notification by the President of such inability or resignation to
the Board of Directors that the President is unable to perform.
SECTION SIX: Vacancies shall be filled by the Board of Directors. Until such
time as vacancies are filled the following rules of succession shall apply
without regard to Section Five of this Article. The vice-President shall act as
President, the Treasurer shall act as Secretary, and the Secretary shall act as
Treasurer.
SECTION SEVEN: Assistants to officers may be appointed by the President. These
duties shall be those delegated to them by the President or the Board of
Directors.
SECTION EIGHT: Compensation of the officers shall be determined by the Board of
Directors.
6
<PAGE>
ARTICLE FIVE
CONTRACTS AND INSTRUMENTS OF INDEBTEDNESS
SECTION ONE: No contracts or any instrument of indebtedness shall be executed
without approval by the Board of Directors by resolution. Upon such resolution,
the President shall be authorized to execute contracts or instruments of
indebtedness as specified in the resolution.
SECTION TWO: All checks, drafts or other instruments of indebtedness shall be
executed in the manner as determined by the Board of Directors by resolution.
ARTICLE SIX
CORPORATE SEAL
The seal of the corporation shall be provided by the Board of Directors by
resolution. The seal shall be used by the President or other officers of the
corporation as provided for in these By-Laws.
ARTICLE SEVEN
AMENDMENT
These By-Laws may be amended from time to time by a majority vote of
the Board of Directors or by a majority vote of the shareholders. These By-Laws
may be repealed
7
<PAGE>
and new By-Laws established in the same manner as amendments. These By-Laws will
continue in full force and effect until amended or repealed and replaced by new
By-Laws.
ARTICLE EIGHT
DIVIDENDS
The Board of Directors may from time to time declare dividends to the
shareholders. These distributions may be in cash or property. No such dividends
may be made out of the capital of the corporation.
8
<PAGE>
Microfilm Number Filed with the Department of State on
------------ -----------
Entity Number
--------------- ------------------------------------------------
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
In compliance with the requirement of 15 Pa.C.S. ss. 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: SJS ENTERTAINMENT CORPORATION
2. The (a) address of this corporation's current registered office in
this Commonwealth or (b) name or its commercial registered office
provider and the county of venue is (the Department is hereby
authorized to correct the following information to conform to the
records of the Department):
(a) 319 Market Street, Harrisburg PA 17101 Dauphin
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the country in which the
corporation is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is
4. The date of its incorporation is: 11/30/95
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles
of Amendment in the Department of State.
The amendment shall be effective on:
6. (Check one of the following):
The amendment was adopted by the shareholders (or members )
pursuant to 16 Pa.C.S. ss. 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant
to Pa.C.S. ss. 1914(C)
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full,
is as follows:
X The amendment adopted by the corporation is set forth in full
in Exhibit A attached hereto and made a part hereof.
8. (Check if the amendment restates the Articles):
The restated Articles of Incorporated supersede the original
Articles and all amendments thereto.
<PAGE>
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
29th day of October 1998.
SJS ENTERTAINMENT CORPORATION
By:/s/ [illegible]
-------------------------------------
Title: Vice President
- 2 -
<PAGE>
UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF
SJS ENTERTAINMENT CORPORATION
(the "Company")
WHEREAS, the Company, a corporation duly organized and
validly existing under the laws of the State of Pennsylvania, desires to change
the name of the company by amending its certificate in incorporation; and
WHEREAS, the undersigned, being all of the Directors of the
Company, in compliance with section 15 Pa.C.S. ss. 1914(c), do hereby adopt the
following resolutions by unanimous written consent; now therefore be it
RESOLVED, that the certificate of incorporation of the
Company is hereby amended by striking out Article FIRST thereof, and be it
FURTHER RESOLVED, that Article FIRST will be replaced with
the following "FIRST: The name of the corporation (hereinafter called the
"corporation") is SFX RADIO NETWORK, INC."
The Unanimous Written Consent may be executed in one or more
counterparts which, taken together, shall constitute the original action of the
Board of Directors of the Company and shall be filed with the proceedings of
the Board of Directors of the Company.
IN WITNESS WHEREOF; the undersigned Board of Directors of the
Company has executed this Written Consent as of the 29th day of October, 1998.
/s/ Robert F.X. Sillerman
-------------------------
Robert F.X. Sillerman
/s/ Howard J. Tytel
-------------------------
Howard J. Tytel
/s/ Michael G. Ferrel
-------------------------
Michael G. Ferrel
<PAGE>
(CHANGES) BUREAU USE ONLY:
DOCKETING STATEMENT DSCS 15-1348
(Rev 95) ___REVENUE ___LABOR & INDUSTRY
___OTHER
FILING FEE: NONE FILE CODE
FILED DATE
This form (title in triplicate) and all accompanying documents shall be mailed
to:
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Part I. COMPLETE FOR EACH FILING:
Current name of entity or registrant affected by the submittal to which this
statement relates: (survivor or ____ entity if merger or consolidation)
SJS ENTERTAINMENT CORPORATION
Entity number, if known: NOTE: ENTITY NUMBER is the computer index number
assigned to an entity upon initial filing in the Department of State.
Incorporation/qualification date in Pa.: 11/30/95 State of Incorporation: Pa.
Federal identification Number: 23-2828323
Specified effective date, if any: n/a
Part II. COMPLETE FOR EACH FILING This statement is being submitted with (check
proper box):
X Amendment: complete Section A only
<PAGE>
X Section A. CHANGES TO BE MADE TO THE ENTITY NAMED IN Part I: (Check
box/boxes which pertain)
X Name: to be changed to SFX RADIO NETWORK, INC.
- 2 -
<PAGE>
Ontario Corporation Number
1198694
Certificate
This is to certify that these ??? are effective on
September 9, 1996
ARTICLES OF INCORPORATION
1. Name:
STEP ENTERTAINMENT SERVICES INC.
2. Address:
1220 YONGE STREET, SUITE 300
TORONTO, ONTARIO M4T 1W1
3. Number (or minimum and maximum number) of directors is:
A MINIMUM OF ONE (1) -- A MAXIMUM OF TWENTY (20).
4. The first director(s) is/are:
WILLIAM O.S. BALLARD 36 MAPLE AVENUE YES
TORONTO, ONTARIO
M4W 2T7
5. Restrictions, if any
None.
6. Classes and no. of shares corp. authorized to issue:
The Corporation is authorized to issue an unlimited number of common
shares.
7. Rights, privileges, restrictions and conditions (if any) attaching to each
class of shares and directors authority with respect to any class of shares
which may be issued in series:
None.
<PAGE>
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows:
No share or shares of the capital of the Corporation shall be
transferred without the consent of:
(a) all of the directors of the Corporation expressed by a unanimous
resolution passed at a meeting of the board of directors at which
all directors are present or by an instrument or instruments in
writing signed by all of the directors; or
(b) the holders of more than 50% of the outstanding common shares of
the Corporation expressed by a resolution passed at a meeting of
such shareholders or by an instrument or instruments in writing
signed by the holders of more than 50% of such shares.
9. Other provisions, if any, are:
(1) the number of shareholders of the Corporation, exclusive of persons who
are in its employment and exclusive of persons who, having been
formerly in the employment of the Corporation, were, while in that
employment, and have continued after the termination of that employment
to be, shareholders of the Corporation, is limited to not more than 50,
two or more persons who are the joint registered owners of one or more
shares being counted as one shareholder;
(2) any invitation to the public to subscribe for securities of the
Corporation is prohibited; and
(3) the directors may:
(a) borrow money on the credit of the Corporation;
(b) issue, sell or pledge debt obligations of the Corporation;
(c) charge, mortgage, hypothecate or pledge all or any currently owned
or subsequently acquired real or personal, moveable or immoveable
property of the Corporation, including book debts, rights, powers,
franchises and undertakings, to secure any present or future
indebtedness, liabilities or other obligations of the Corporation;
and
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<PAGE>
(d) subject to the Business Corporations Act (Ontario), give a
guarantee on behalf of the Corporation to secure performance of an
obligation of any person.
10. The names and addresses of the incorporators are
WILLIAM O.S. BALLARD 36 MAPLE AVENUE
TORONTO, ONTARIO
M4W 2T7
These articles are signed in duplicate.
/s/ William O.S. Ballard
----------------------------
WILLIAM O.S. BALLARD
3
<PAGE>
BY-LAW NO. 1
A by-law relating generally to the conduct of the affairs of STEP
ENTERTAINMENT SERVICES INC., a company incorporated under the laws of the
Province of Ontario.
BE IT ENACTED AND IT IS HEREBY ENACTED a by-law of STEP ENTERTAINMENT
SERVICES INC. (hereinafter called the "Corporation") as follows:
DIRECTORS
1. Quorum. A majority of the number of directors or minimum number of
directors required by the articles shall constitute a quorum for the transaction
of business at any meeting of directors.
2. Meetings. Meetings of directors and of any committee of directors
may be held at any place within or outside Ontario and in any financial year a
majority of the meetings of the board of directors need not be held at a place
within Canada.
The Chair of the Board, if any, the President or any director of the
Corporation may call a meeting of directors at such time and place as they may
determine.
Notice of a meeting of directors shall be sent to each director not
less than 48 hours before the time of the meeting; provided that, meetings of
the directors may be held at any time without notice if all the directors are
present or if all the absent directors have waived notice. Notice of any meeting
of directors or any irregularity in any meeting or in the notice thereof may be
waived by any director before, during or after the meeting.
For the first meeting of directors to be held following the election of
directors at a meeting of the shareholders, no notice of such meeting need be
given in order for the meeting to be duly constituted, provided a quorum of the
directors is present.
3. Voting. Questions arising at any meeting of directors shall be
decided by a majority of votes. In case of an equality of votes, the chair of
the meeting shall not have a second or casting vote in addition to his or her
original vote.
<PAGE>
OFFICERS
4. Appointment of officers. The directors shall annually, or as often
as may be required, designate such offices of the Corporation and appoint such
officers as they may consider advisable. None of such officers, other than the
Chair of the Board, if any, need be a director of the Corporation.
5. Duties of officers. The officers shall perform such duties as may be
specified from time to time by the directors, or pursuant to a delegation of
authority from the directors.
6. Removal of officers. All officers shall be subject to removal by the
directors at any time, with or without cause.
SHAREHOLDERS
7. Votes. Every question submitted to any meeting of shareholders shall
be decided in the first instance on a show of hands and, in case of an equality
of votes, the chair of the meeting shall both on a show of hands and at a poll
have a second or casting vote in addition to the vote or votes to which the
chair may be entitled as a shareholder or proxy nominee.
For the purposes of subsections 100(2) and (3) of the Business
Corporations Act (Ontario) (the "Act"), a transferee of the ownership of shares
from a person named in a list of shareholders entitled to receive notice of a
meeting which is prepared pursuant to subsection 100(l) of the Act may demand up
to the time of the commencement of the meeting of shareholders to which the list
relates that the shareholder's name be included in such list of shareholders.
8. Quorum. A quorum for any meeting of shareholders shall be persons
present not being less than two in number and holding or representing by proxy
not less than 25 per cent of the total number of the issued shares of the
Corporation for the time being enjoying voting rights at such meeting.
GENERAL
9. Limitation of liability. No director, officer or employee shall be
liable for the acts, receipts, neglects or defaults of any other director,
officer or employee, or for joining in any receipt or other act for conformity,
or for any loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired for or on behalf
of the Corporation, or for the insufficiency or deficiency of any security in or
upon which any of the moneys of the Corporation shall be invested, or for any
loss or damage arising from the bankruptcy, insolvency or tortious acts of any
person with whom any of the moneys, securities or effects of the Corporation
shall be invested, or for any loss or damage arising from the bankruptcy,
insolvency or tortious acts of any person with whom any of the moneys,
2
<PAGE>
securities or effects of the Corporation shall be deposited, or for any loss
occasioned by any error in judgment or oversight on such person's part, or for
any other loss, damage or misfortune whatever which shall happen in the
execution of the duties of his or her office or employment or in relation
thereto, unless the same are occasioned by such person's own negligence or
wilful default; provided that nothing herein shall relieve any director, officer
or employee from the duty to act in accordance with the Act or from liability
for any breach thereof.
10. Indemnification. The Corporation shall indemnify a director,
officer, former director, former officer or a person who acts or acted at the
Corporation's request as a director or officer or other similar executive for
another body corporate or other organization of which the Corporation is or was
a shareholder (or other type of equity holder) or creditor, and such person's
heirs and legal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by such person in respect of any civil, criminal or administrative
action or proceeding to which such person is made a party by reason of being or
having been a director, officer or other similar executive of such body
corporate or other organization, to the full extent permitted by law. The
Corporation is authorized to enter into agreements evidencing its indemnity in
favour of the foregoing persons to the full extent permitted by law and may
purchase and maintain insurance against the risk of its liability to indemnify
pursuant to this provision.
11. Voting securities in other issuers. All securities of any other
body corporate or issuer of securities held from time to time by the Corporation
may be voted at all meetings of shareholders, bondholders, debenture holders or
holders of such securities, as the case may be, of such other body corporate or
issuer and in such manner and by such person or persons as the directors of the
Corporation shall from time to time determine.
12. Execution of contracts, etc. Contracts, documents or other
instruments in writing requiring execution by the Corporation may be signed by
any one of the directors or officers and all contracts, documents or other
instruments in writing so signed shall be binding upon the Corporation without
any further authorization or formality. Notwithstanding this provision, the
directors are authorized from time to time, by resolution, to appoint any
officer or officers, director or directors, or any other person or persons on
behalf of the Corporation either to sign contracts, documents or instruments in
writing generally or to sign specific contracts, documents or instruments in
writing.
13. Financial year. The financial year of the Corporation shall
terminate on such day in each year as the directors may from time to time by
resolution determine.
14. Banking arrangements. The banking business of the Corporation
including, without limitation, the borrowing of money and the giving of security
therefor, shall be transacted with such banks, trust companies or other bodies
corporate or organizations and under such agreements, instructions and
delegations of powers as the board, or the chair, president, chief financial
officer or any executive vice-president and any one other officer, may from time
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to time prescribe, and the foregoing persons shall have the authority to appoint
bankers, authorize facsimile signatures on cheques, authorize signing officers
to sign, endorse or deposit cheques, bills of exchange and similar documents,
and attend to any other matters related to the Corporation's dealings with its
bankers.
15. Effective date. This by-law shall become effective immediately upon
its enactment by the directors, but is subject to confirmation or rejection at
the next meeting of shareholders.
The undersigned certifies that the foregoing by-law was enacted by the
sole director of the Corporation and confirmed by the sole shareholder of the
Corporation as of the 9th day of September, 1996.
Dated as of the 9th day of September, 1996.
/s/ William O.S. Ballard
---------------------------------
President -- William O.S. Ballard
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The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
ARTICLE I
The name of the corporation is:
TAP Productions, Inc.
ARTICLE II
The purpose of the corporation is to engage in the following
business activities:
the production of off-Broadway and Broadway productions
and to carry on any business or other activity which may be carried on
by a corporation organized under the Business Corporation law of the
Commonwealth of Massachusetts, whether or not related to those referred
hereinabove.
<PAGE>
CONTINUATION SHEET 5A
Any stockholder, including the heirs, assigns, executors or
administrators of a deceased stockholder, desiring to sell or transfer such
stock owned by him or them, shall first offer it to the corporation through the
Board of Directors, in the manner following:
He shall notify the Directors of his desire to sell or transfer by
notice in writing, which notice shall contain the price at which he is willing
to sell or transfer and the name of one arbitrator. The directors shall, within
thirty days thereafter, either accept the offer or by notice to him in writing
name a second arbitrator, and these two shall name a third. it shall then be the
duty of the arbitrators to ascertain the value of the stock, and if any
arbitrator shall neglect or refuse to appear at any meeting appointed by the
arbitrators, a majority may act in the absence of such arbitrator.
After the acceptance of the offer, or the report of the arbitrators as
to the value of the stock, the directors shall have thirty days to purchase the
same at such valuation, but if at the expiration of thirty days, the corporation
shall not have exercised the right so to purchase, the owner of the stock shall
be at liberty to dispose of the same in any manner he may see fit.
No shares of stock shall be sold or transferred on the books of the
corporation until these provisions have been complied with, but the Board of
Directors may in any particular instance waive the requirement.
<PAGE>
CONTINUATION SHEET 6A
OTHER LAWFUL PROVISIONS
1. Meetings of the stockholders may be held within the Commonwealth and
elsewhere in the United States to the extent permitted by the By-Laws.
2. The corporation may be a partner in any business enterprise which the
corporation would have power to conduct by itself.
3. The corporation shall, to the extent legally permissible, indemnify each of
its present or former directors and officers and any person who may be then
serving or who may have previously served at its request as a director or
officer of any other organization in which it owns or owned shares or of
which it is or was a creditor and it may, to the extent authorized by the
directors, indemnify present or former employees and other agents or any
person who may be ten serving or who may have previously served at its
request as an employee or agent or any other organization in which it
directly or indirectly owns or owned shares or of which it is or was a
creditor against all liabilities, expenses and attorneys' fees, including
amounts incurred or paid by him (a) in connection with the defense or
disposition of any action, suit or proceeding, civil or criminal, and any
appeal therein, in which he is made a party or involved by reason of being
or having been such director, officer, employee or other agent, (b) in
connection with any proceeding in advance of the final disposition of such
action, suit or proceeding, (c) in satisfaction of judgments or as fines and
penalties, or (d) in connection with any compromise or settlement first
approved by (i) a disinterested majority of the directors then in office, or
(ii) a majority of the disinterested directors then in office, provided that
there has been obtained an opinion in writing of independent legal counsel
to the effect that such director, officer, employee or other agent appears
to have acted in good faith in the reasonable belief that his action was in
the best interests of the corporation, or (iii) by the holders of a majority
o the outstanding stock at the time entitled to vote for directors, voting
as a single class, exclusive of any stock owned by any interests director or
officer, upon receipt of an undertaking by the person indemnified to repay
such amount if he shall be adjudicated to be not entitled to
indemnification. An "interested" directors is one against whom in such
capacity the proceedings in question or another proceeding on the same or
similar grounds is then pending.
Such indemnification may include payment by the corporation of expenses
incurred in defending a civil or criminal action or proceeding in advance of
the final disposition of such action or proceeding, upon receipt of an
undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be not entitled to indemnification under this section.
<PAGE>
Notwithstanding the foregoing, indemnification shall not be provided for any
person with respect to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interests of the corporation.
Any right to indemnification arising hereunder shall inure to the benefit of
the heirs, executors or administrators of any such officer or director,
employee or other agent and shall be in addition to all other rights to
which such officer, director, employee or other agent may be entitled as a
matter of law.
The corporation may purchase and maintain insurance on behalf of any such
director, officer, employee or other agent above-mentioned against any
liability incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have the power to indemnify
him against such liability.
4. The Board of Directors of the corporation may make, amend, or repeal the
By-Laws of the corporation, in whole or in part, except with respect to any
provision thereof which, by law, the Articles of organization, or the
By-Laws, require action exclusively by the stockholders entitled to vote
thereon; but any By-Law adopted by the Board of Directors may be amended or
repealed by the stockholders.
5. The directors shall have the power to fix, from time to time, their own
compensation and the compensation of officers and employees of the
corporation.
6. No contract or other transaction between this corporation and any other
firm or corporation shall be affected or invalidated by reason of the fact
that any one or more of the directors or officers of this corporation is
or are interested in, or is a member, stockholder, director, or officer,
or are members, stockholders, directors, or officers of such other firm or
corporation; any director or officer of officers, individually or jointly,
may be a party or parties to, or may be interested in, any contract
transaction of this corporation or in which this corporation is
interested, and no contract, act or transaction of this corporation with
any person or persons, firm, association or corporation shall be affected
or invalidated by reason of the fact that any director or directors of
officer or officers of this corporation is a party or are parties to, or
interested in, such contract, act or transaction, or in any way connected
with such person or persons, firm, association or corporation, and each
and every person, firm, association or corporation, and each and every
person who may become a director or officer of this corporation is hereby
relieved from any liability that might otherwise exist from thus
contracting with this corporation for the benefit of himself or any firm,
association or corporation which he may be anyway interested.
7. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director notwithstanding any provision of laws imposing such liability;
provided, however, that this provision shall not affect the liability
<PAGE>
of a director, to the extent that such liability is imposed by applicable
law, (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 61 or 62 or successor provisions of the Massachusetts Business
Corporation Law, or (iv) for any transaction from which the director derived
an improper personal benefit. In addition, to the fullest extent that the
Business Corporation Law may hereafter be amended to enlarge upon the
ability of the hereafter be amended to enlarge upon the ability of the
Corporation to provide herein for the elimination or limitation of the
liability of directors, no director shall be personally liable to the
Corporation or its stockholders for breach of his fiduciary duty as a
director. No amendment to or repeal of this provision shall apply to or have
any effect upon the liability or alleged liability of any director for or
with respect to any acts or omissions of such director occurring prior to
the effective date of such amendment or repeal.
ARTICLE VII
The effective date of organization of the corporation shall be the date approved
and filed by the Secretary of the Commonwealth. If a later effective date is
desired, specify such date which shall not be more than thirty days after the
date of filing.
The information contained in ARTICLE VIII is NOT a PERMANENT part of the
Articles of Organization and may be changed ONLY by filing the appropriate form
provided therefor.
ARTICLE VIII
a. The street address of the corporation IN MASSACHUSETTS is: (post office boxes
are not acceptable)
120 Boylston Street Boston 02116
b. The name, residence and post office address (if different) of the directors
and officers of the corporation are as follows:
NAME RESIDENCE POST OFFICE ADDRESS
President: Jon B. Platt 6 Chilton Street Brookline, MA 02146
Treasurer: Jon B. Platt 6 Chilton Street Brookline, MA 02146
Clerk: Jon B. Platt 6 Chilton Street Brookline, MA 02146
Directors: Jon B. Platt 6 Chilton Street Brookline, MA 02146
<PAGE>
c. The fiscal year (i.e., tax year) of the corporation shall end on the last day
of the month of: December 31
d. The name and BUSINESS address of the RESIDENT AGENT of the corporation, if
any, is:
N/A
ARTICLE IX
By-laws of the corporation have been duly adopted and the president, treasurer,
clerk and directors whose names are set forth above, have been duly elected.
IN WITNESS WHEREOF and under the pains and penalties of perjury, I/WE, whose
signature(s) appear below as incorporator(s) and whose names and business or
residential address(es) ARE CLEARLY TYPED OR PRINTED beneath each signature do
hereby associate with the intention of forming this corporation under the
provisions of General Laws Chapter 156B and do hereby sign these Articles of
Organization as incorporator(s) this 26th day of January 1993
Jay F. Theise, Esq.
- --------------------------------------------------------------------------------
Jay F. Theise and Associates
50 Rowes Wharf
- --------------------------------------------------------------------------------
Boston, MA 02110
(617) 330-7140
- --------------------------------------------------------------------------------
NOTE: If an already-existing corporation is acting as incorporator, type in the
exact name of the corporation, the state or other jurisdiction where it was
incorporated, the name of the person signing on behalf of said corporation and
the title he/she holds or other authority by which such action is taken.
<PAGE>
BYLAWS
OF
TAP PRODUCTIONS, INC.
Article I
Offices
Section 1. Registered Office. The registered office of the Corporation
required by the Massachusetts Business Corporation Law to be maintained in the
Commonwealth of Massachusetts, shall be the registered office named in the
original Certificate of Incorporation of the Corporation, or such other office
as may be designated from time to time by the Board of Directors in the manner
provided by law. Should the Corporation maintain a principal office within the
Commonwealth of Massachusetts such registered office need not be identical to
such principal office of the Corporation.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the Commonwealth of Massachusetts as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
Article II
Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the Commonwealth of Massachusetts as shall be specified or fixed in
the notices or waivers of notice thereof.
Section 2. Quorum: Adjournment of Meetings. Unless otherwise required
by law or provided in the Certificate of Incorporation or these bylaws, the
holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum at
any meeting of stockholders for the transaction of business and the act of a
majority of such stock so represented at any meeting of stockholders at which a
quorum is present shall constitute the act of the meeting of stockholders. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Notwithstanding the other provisions of the Certificate of
Incorporation or these bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy, at any meeting of stockholders, whether or not a quorum is present,
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of
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record entitled to vote at such meeting. At such adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally called.
Section 3. Annual Meetings. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, within or without the Commonwealth of
Massachusetts, on such date, and at such time as the Board of Directors shall
fix and set forth in the notice of the meeting, which date shall be within
thirteen (13) months subsequent to the later of the date of incorporation or the
last annual meeting of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board (if
any), by the President or by a majority of the Board of Directors, or by a
majority of the executive committee (if any), and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent (10
%) of the issued and outstanding stock entitled to vote at such meeting.
Section 5. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors of the Corporation
may fix, in advance, a date as the record date for any such determination of
stockholders, which date shall not be more than sixty (60) days nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the Board of Directors does not fix a record date for any meeting of
the stockholders, the record date for determining stockholders entitled to
notice of or to vote at such meeting shall be at the close of business on the
day next preceding the day on which notice is given, or, if in accordance with
Article VIII, Section 3 of these bylaws notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. If, in
accordance with Section 12 of this Article 11, corporate action without a
meeting of stockholders is to be taken, the record date for determining
stockholders entitled to express consent to such corporate action in writing,
when no prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Notice of Meetings. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by or at the direction of the
Chairman of the Board (if any) or the President, the Secretary or
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the other person(s) calling the meeting to each stockholder entitled to vote
thereat not less than ten (10) nor more than sixty (60) days before the date of
the meeting. Such notice may be delivered either personally or by mail. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the records
of the Corporation.
Section 7. Stock List. A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in the name of such stockholder, shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The stock list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to time
determine by resolution, before or at the time of the meeting. All proxies shall
be received and taken charge of and all ballots shall be received and canvassed
by the secretary of the meeting who shall decide all questions touching upon the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless an inspector or inspectors shall have been appointed
by the chairman of the meeting, in which event such inspector or inspectors
shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless the
proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless
such instrument shall provide the contrary, a majority of such persons present
at any meeting at which their powers thereunder are to be exercised shall have
and may exercise all the powers of voting or giving consents thereby conferred,
or if only one be present, then such powers may be exercised by that one; or, if
an even number attend and a majority do not agree on any particular issue, each
proxy so attending shall be entitled to exercise such powers in respect of the
same portion of the shares as he is of the proxies representing such shares.
Section 9. Voting; Elections; Inspectors. Unless otherwise required by
law or provided in the Certificate of Incorporation, each stockholder shall have
one vote for each share of stock entitled to vote which is registered in his
name on the record date for the meeting. Shares registered in the name of
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the bylaw (or comparable instrument) of such corporation may prescribe,
or in the absence of such provision, as the Board of Directors (or comparable
body) of such corporation may determine.
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Shares registered in the name of a deceased person may be voted by his executor
or administrator, either in person or by proxy.
All voting, except as required by the Certificate of Incorporation or
where otherwise required by law, may be by a voice vote; provided, however, that
upon demand therefor by stockholders holding a majority of the issued and
outstanding stock present in person or by proxy at any meeting a stock vote
shall be taken. Every stock vote shall be taken by written ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
All elections of directors shall be by ballot, unless otherwise provided in the
Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of the
meeting may appoint one or more inspectors, each of whom shall subscribe an oath
or affirmation to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. Such
inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation,
cumulative voting for the election of directors shall be prohibited.
Section 10. Conduct of Meetings. The meetings of the stockholders shall
be presided over by the Chairman of the Board (if any), or if he is not present,
by the President, or if neither the Chairman of the Board (if any), nor
President is present, by a chairman elected at the meeting. The Secretary of the
Corporation, if present, shall act as secretary of such meetings, or if he is
not present, an Assistant Secretary shall so act; if neither the Secretary nor
an Assistant Secretary is present, then a secretary shall be appointed by the
chairman of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
in order. Unless the chairman of the meeting of stockholders shall otherwise
determine, the order of business shall be as follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting called
for that purpose.
(h) Unfinished business.
(i) New business.
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(j) Adjournment.
Section 11. Treasury Stock. The Corporation shall not vote, directly or
indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes.
Section 12. Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action permitted or required by law, the
Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
Article III
Board of Directors
Section 1. Power; Number; Term of Office. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the Certificate of
Incorporation, they may exercise all the powers of the Corporation.
The number of directors which shall constitute the whole Board of
Directors, shall be determined from time to time by resolution of the
stockholders (provided that no decrease in the number of directors which would
have the effect of shortening the term of an incumbent director may be made by
the stockholders). If the stockholders make no such determination, the number of
directors shall be the number set forth in the Certificate of Incorporation.
Each director shall hold office for the term for which he is elected, and until
his successor shall have been elected and qualified or until his earlier death,
resignation or removal.
Unless otherwise provided in the Certificate of Incorporation,
directors need not be stockholders nor residents of the Commonwealth of
Massachusetts.
Section 2. Quorum. Unless otherwise provided in the Certificate of
Incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote of
a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 3. Place of Meetings: Order of Business. The directors may hold
their meetings and may have an office and keep the books of the Corporation,
except as otherwise provided by law, in such place or places, within or without
the Commonwealth of Massachusetts, as the Board of Directors may from time to
time determine by resolution. At all meetings of the Board of Directors business
shall be transacted in such order as shall from time to time be determined by
the Chairman of the Board (if any), or in his absence by the President, or by
resolution of the Board of Directors.
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Section 4. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which a
quorum shall be present, held next after the annual meeting of stockholders, the
Board of Directors shall proceed to the election of the officers of the
Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Directors. Notice of such regular meetings shall
not be required.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board (if any), the President or, on the
written request of any two directors, by the Secretary, in each case on at least
twenty-four (24) hours personal, written, telegraphic, cable or wireless notice
to each director. Such notice, or any waiver thereof pursuant to Article VIII,
Section 3 hereof, need not state the purpose or purposes of such meeting, except
as may otherwise be required by law or provided for in the Certificate of
Incorporation or these bylaws.
Section 7. Removal. Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided that, if the
Certificate of Incorporation expressly grants to stockholders the right to
cumulate votes for the election of directors and if less than the entire board
is to be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which such director is a
part.
Section 8. Vacancies: Increases in the Number of Directors. Unless
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or a sole remaining director; and any director so chosen
shall hold office until the next annual election and until his successor shall
be duly elected and shall qualify, unless sooner displaced.
If the directors of the Corporation are divided into classes, any
directors elected to fill vacancies or newly created directorships shall hold
office until the next election of the class for which such directors shall have
been chosen, and until their successors shall be duly elected and shall qualify.
Section 9. Compensation. Unless otherwise restricted by the Certificate
of Incorporation, the Board of Directors shall have the authority to fix the
compensation of directors.
Section 10. Action Without a Meeting: Telephone Conference Meeting.
Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of
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the Board of Directors or committee. Such consent shall have the same force and
effect as a unanimous vote at a meeting, and may be stated as such in any
document or instrument filed with the Secretary of State of Massachusetts.
Unless otherwise restricted by the Certificate of Incorporation,
subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors, may
participate in a meeting of such Board of Directors or committee, as the case
may be, by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Section 11. Approval or Ratification of Acts or Contracts by
Stockholders. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the stockholders,
or at any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any act or contract that shall be
approved or be ratified by the vote of the stockholders holding a majority of
the issued and outstanding shares of stock of the Corporation entitled to vote
and present in person or by proxy at such meeting (provided that a quorum is
present), shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it has been approved or ratified by every stockholder of the
Corporation. In addition, any such act or contract may be approved or ratified
by the written consent of stockholders holding a majority of the issued and
outstanding shares of capital stock of the Corporation entitled to vote and such
consent shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it had been approved or ratified by every stockholder of the
Corporation.
Article IV
Committees
Section 1. Designation: Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that no
such committee shall have the power or authority of the Board of Directors in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution of the Corporation, or amending, altering or
repealing the bylaws or adopting new bylaws for the Corporation and, unless such
resolution or the Certificate of Incorporation expressly so provides, no such
committee shall have the power of authority to declare a dividend or to
authorize the issuance of stock. Any such designated committee may authorize the
seal of the Corporation to be affixed to all papers which may require it. In
addition to the above such committee or committees shall have such other powers
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and limitations of authority as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 2. Procedure; Meetings;.Quorum. Any committee designated
pursuant to Section I of this Article shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of Directors
when requested, shall fix its own rules or procedures, and shall meet at such
times and at such place or places as may be provided by such rules, or buy
resolution of such committee or resolution of the Board of Directors. At every
meeting of any such committee, the presence of a majority of all the members
thereof shall constitute a quorum and the affirmative vote of a majority of the
members present shall be necessary for the adoption by it of any resolution.
Section 3. Substitution of Members. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
Article V
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a President, a Secretary and, if the Board of Directors so
elects, a Chairman of the Board and such other officers as the Board of
Directors may from time to time elect or appoint. Each officer shall hold office
until his successor shall be duly elected and shall qualify or until his death
or until he shall resign or shall have been removed in the manner hereinafter
provided. Any number of offices may be held by the same person, unless the
Certificate of Incorporation provides otherwise. Except for the Chairman of the
Board, if any, no officer need be a director.
Section 2. Salaries. The salaries or other compensation of the officers
and agents of the Corporation shall be fixed from time to time by the Board of
Directors.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed, either with or without cause, by the vote of
a majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors.
Section 5. Powers and Duties of the Chief Executive Officer. The
President shall be the chief executive officer of the Corporation unless the
Board of Directors designates the Chairman of
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<PAGE>
the Board as chief executive officer. Subject to the control of the Board of
Directors and the executive committee (if any), the chief executive officer
shall have general executive charge, management and control of the properties,
business and operations of the Corporation with all such powers as may be
reasonably incident to such responsibilities; he may agree upon and execute all
leases, contracts~ evidences of indebtedness and other obligations in the name
of the Corporation and may sign all certificates for shares of capital stock of
the Corporation; and shall have such other powers and duties as designated in
accordance with these bylaws and as from time to time may be assigned to him by
the Board of Directors.
Section 6. Powers and Duties of the Chairman of the Board. If elected,
the Chairman of the Board shall preside at all meetings of the stockholders and
of the Board of Directors; and he shall have such other powers and duties as
designated in these bylaws and as from time to time may be assigned to him by
the Board of Directors.
Section 7. Powers and Duties of the President. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, he shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should he be a director) of the Board of Directors; and he
shall have such other powers and duties as designated in accordance with these
bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 8. Vice Presidents. In the absence of the President, or in the
event of his inability or refusal to act, a Vice President designated by the
Board of Directors shall perform the duties of the President, and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President. In the absence of a designation by the Board of Directors of a Vice
President to perform the duties of the President, or in the event of his absence
or inability or refusal to act, the Vice President who is present and who is
senior in terms of time as a Vice President of the Corporation shall so act. The
Vice Presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall have responsibility for the
custody and control of all the funds and securities of the Corporation, and he
shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors. He shall
perform all acts incident to the position of Treasurer, subject to the control
of the chief executive officer and the Board of Directors; and he shall, if
required by the Board of Directors, give such bond for the faithful discharge of
his duties in such form as the Board of Directors may require.
Section 10. Assistant Treasurers. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
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Section 11. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the seal
of the Corporation to all contracts of the Corporation and attest the affixation
of the seal of the Corporation thereto; he may sign with the other appointed
officers all certificates for shares of capital stock of the Corporation; he
shall have charge of the certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors may direct, all of
which shall at all reasonable times be open to inspection of any director upon
application at the office of the Corporation during business hours; he shall
have such other powers and duties as designated in these bylaws and as from time
to time may be assigned to him by the Board of Directors; and he shall in
general perform all acts incident to the office of Secretary, subject to the
control of the chief executive officer and the Board of Directors.
Section 12. Assistant Secretaries. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Secretaries shall exercise the powers of the Secretary during that
officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the chief executive officer
shall have power to vote and otherwise act on behalf of the Corporation, in
person or by proxy, at any meeting of security holders of or with respect to any
action of security holders of any other corporation in which this Corporation
may hold securities and otherwise to exercise any and all rights and powers
which this Corporation may possess by reason of its ownership of securities in
such other corporation.
Article VI
Indemnification of Directors,
Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was or has agreed to become
a director or officer of the Corporation or is or was serving or has agreed to
serve at the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving or having agreed to serve as a
director or officer, shall be indemnified and held harmless by the Corporation
to the fullest extent authorized by the Massachusetts Business Corporation Law,
as the same exists or may hereafter be amended, (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment) against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines,
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ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to serve in the
capacity which initially entitled such person to indemnity hereunder and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
board of directors of the Corporation. The right to indemnification conferred in
this Article VI shall be a contract right and shall include the right to be paid
by the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Massachusetts
Business Corporation Law requires, the payment of such expenses incurred by a
current, former or proposed director or officer in his or her capacity as a
director or officer or proposed director or officer (and not in any other
capacity in which service was or is or has been agreed to be rendered by such
person while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnified person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified person is not entitled to be
indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in this
Article.
Section 3. Right of Claimant to Bring Suit. If a written claim received
by the Corporation from or on behalf of an indemnified party under this Article
VI is not paid in full by the Corporation within ninety days after such receipt,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Massachusetts Business Corporation
Law for the Corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Massachusetts Business Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
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Section 4. Nonexclusivity of Rights. The right to indemnification and
the advancement and payment of expenses conferred in this Article VI shall not
be exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Massachusetts Business Corporation Law.
Section 6. Savings Clause. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director and
officer of the Corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Article VII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Certificate of Incorporation, as shall,be approved
by the Board of Directors. The Chairman of the Board (if any), President or a
Vice President shall cause to be issued to each stockholder one or more
certificates, under the seal of the Corporation or a facsimile thereof if the
Board of Directors shall have provided for such seal, and signed by the Chairman
of the Board (if any), President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer certifying the
number of shares (and, if the stock of the Corporation shall be divided into
classes or series, the class and series of such shares) owned by such
stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures shall
have been placed upon any such certificate or certificates shall have ceased to
be such officer, transfer agent or registrar before such certificate is issued
by the Corporation, such certificate may nevertheless be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue. The stock certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and number of shares.
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Section 2. Transfer of Shares. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal representatives
upon surrender and cancellation of certificates for a like number of shares.
Upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the Commonwealth of
Massachusetts.
Section 4. Regulations Regarding Certificates. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of Directors may
determine the conditions upon which a new certificate of stock may be issued in
place of a certificate which is alleged to have been lost, stolen or destroyed;
and may, in their discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety, to indemnify the
Corporation and each transfer agent and registrar against any and all losses or
claims which may arise by reason of the issue of a new certificate in the place
of the one so lost, stolen or destroyed.
Article VIII
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
such as established from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation. The Secretary shall have
charge of the seal (if any). If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by the Assistant Secretary or Assistant Treasurer.
Section 3. Notice and Waiver of Notice. Whenever any notice is required
to be given by law, the Certificate of Incorporation or under the provisions of
these bylaws, said notice shall be deemed to be sufficient if given (i) by
telegraphic, cable or wireless transmission or (ii) by deposit of the same in a
post office box in a sealed prepaid wrapper addressed to the person entitled
thereto at his post office address, as it appears on the records of the
Corporation, and such notice shall be deemed to have been given on the day of
such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the Certificate of
Incorporation or under any of the provisions of these bylaws, a written waiver
thereof, signed by the person entitled to notice,
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whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or the bylaws.
Section 4. Resignations. Any director, member of a committee or officer
may resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time of
its receipt by the chief executive officer or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Section 5. Facsimile Signatures. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
Section 6. Reliance upon Books, Reports and Records. Each director and
each member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
Article IX
Amendments
If provided in the Certificate of Incorporation of the Corporation, the
Board of Directors shall have the power to adopt, amend and repeal from time to
time bylaws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto to amend or repeal such bylaws as adopted
or amended by the Board of Directors.
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State of California
OFFICE OF THE SECRETARY OF STATE
I, MARCH FONG EU; Secretary of State of the State of California, hereby
certify:
That the annexed transcript has been compared with the record on file
in this office, of which it purports to be a copy, and that same is full, true
and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of the
State of California this
Mar 4, 1983
--------------------------------
[/s/ March Fong Eu]
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
TBA MEDIA, INC.
I
The name of this Corporation is TBA MEDIA, INC.
II
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Laws of the State of California, other than the banking business, the trust
company business, or the practice of a profession permitted to be incorporated
by the California Corporations Code.
III
The name and address of the person appointed to act as initial
incorporator of this Corporation is:
THOMAS MISERENDINO
17835 Ventura Boulevard Suite 211
Encino, California 91316
IV
The name and address of the person appointed to act as initial agent for service
of process in this State is:
RICHARD M. ROSENTHAL
5900 Sepulveda Boulevard Suite 321
Van Nuys, California 91411
<PAGE>
V
This Corporation is authorized to issue only one class of shares of
stock and the number of shares this Corporation is authorized to issue is
50,000.
IN WITNESS WHEREOF, the undersigned, who is the above named initial
incorporator of this Corporation, has executed these Articles of Incorporation
on this 3rd day of March, 1983.
/s/ Thomas Miserendino
----------------------
THOMAS MISERENDINO
The undersigned, being the above named initial incorporator of' this
Corporation, declares that he is the person who executed the foregoing Articles
of Incorporation, which execution is his act and deed.
Dated: March 31, 1983
Thomas Miserendino
----------------------
THOMAS MISERENDINO
3
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BY-LAWS OF
TBA MEDIA, INC.
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office for the transaction
of business of the corporation is hereby fixed and located at 17835 Ventura
Boulevard, Suite 211 City of Encino , County of Los Angeles , State of
California. The location may be changed by approval of a majority of the
authorized Directors, and additional offices may be established and maintained
at such other place or places, either within or without California, as the Board
of Directors may from time to time designate.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
corporation is qualified to do business.
ARTICLE II
DIRECTORS - MANAGEMENT
Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to the
provisions of the General Corporation Law and to any limitations in the Articles
of Incorporation of the corporation relating to action required to be approved
by the Shareholders, as that term is defined in Section 153 of the California
Corporations Code, or by the outstanding shares, as that term is defined in
Section 152 of the Code, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction of
the Board of Directors. The Board may delegate the management of the day-to-day
operation of the business of the corporation to a management company or other
person, provided that the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised under the ultimate direction
of the Board.
Section 2. STANDARD OF CARE. Each Director shall perform the duties of
a Director, including the duties as a member of any committee of the Board upon
which the Director may serve, in good faith, in a manner such Director believes
to be in the best interests of the corporation, and with such care, including
reasonable inquiry, as an ordinary prudent person in a like position would use
under similar circumstances. (Sec. 309)
Section 3. EXCEPTION FOR CLOSE CORPORATION. Notwithstanding the
provisions of Section 1, in the event that this corporation shall elect to
become a close corporation as defined in Sec. 186, its Shareholders may enter
into a Shareholders' Agreement as provided in Sec. 300 (b). Said agreement may
provide for the exercise of corporate powers and the management of the business
and affairs of this corporation by the Shareholders, provided,
<PAGE>
however, such agreement shall, to the extent and so long as the discretion or
the powers of the Board in its management of corporate affairs is controlled by
such agreement, impose upon each Shareholder who is a party thereof, liability
for managerial acts performed or omitted by such person pursuant thereto
otherwise imposed upon Directors as provided in Sec. 300 (d).
Section 4. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number
of Directors shall be four ( 4) until changed by a duly adopted amendment to the
Articles of Incorporation or by an amendment to this by-law adopted by the vote
or written consent of holders of a majority of the outstanding shares entitled
to vote, as provided in Sec. 212.
Section 5. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting of the Shareholders to hold office until the next
annual meeting. Each Director, including a Director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
Section 6. VACANCIES. Vacancies in the Board of Directors may be filled
by a majority of the remaining Directors, though less than a quorum, or by a
sole remaining Director, except that a vacancy created by the removal of a
Director by the vote or written consent of the Shareholders or by court order
may be filled only by the vote of a majority of the shares entitled to vote
represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of a majority of the outstanding shares entitled to
vote. Each Director so elected shall hold office until the next annual meeting
of the Shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in the event of the death, resignation, or removal of any Director, or if
the Board of Directors by re solution declares vacant the office of a Director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of Directors is increased, or if the
shareholders fail, at any meeting of shareholders at which any Director or
Directors are elected, to elect the number of Directors to be voted for at that
meeting.
The Shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any Director may resign effective on giving written notice to the
Chairman of the Board, the President, the Secretary, or the Board of Directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a Director is effective at a future time, the
Board of Directors may elect a successor to take office when the resignation
becomes effective.
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No reduction of the authorized number of Directors shall have the
effect of removing any Director before that Director's term of office expires.
Section 7. REMOVAL OF DIRECTORS. The entire Board of Directors or any
individual Director may be removed from office as provided by Secs. 302, 303 and
304 of the Corporations Code of the State of California. In such case, the
remaining Board members may elect a successor Director to fill such vacancy for
the remaining unexpired term of the Director so removed.
Section 8. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board
of Directors may be called by the Chairman of the Board, or the President, or
any vice President, or the Secretary, or any two (2) Directors and shall be held
at the principal executive office of the corporation, unless some other place is
designated in the notice of the meeting. Members of the Board may participate in
a meeting through use of a conference telephone or similar communications
equipment so long as all members participating in such a meeting can hear one
another. Accurate minutes of any meeting of the Board or any committee thereof,
shall be maintained as required by Sec. 312 of the Code by the Secretary or
other Officer designated for that purpose.
Section 9. ORGANIZATION MEETINGS. The organization meetings of the
Board of Directors shall be held immediately following the adjournment of the
annual meetings of the Shareholders.
Section 10. OTHER REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at the corporate offices, or such other place as may be
designated by the Board of Directors, as follows:
Time of Regular Meeting: 10:00 a.m.
Date of Regular Meeting: June 1st
If said day shall fall upon a holiday, such meetings shall be held on
the next succeeding business day thereafter. No notice need be given of such
regular meetings.
Section 11. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of
the Board may be called at any time by the President or, if he or she is absent
or unable or refuses to act, by any Vice President or the Secretary or by any
two (2) Directors, or by one (1) Director if only one is provided.
At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the Directors or personally
communicated to them by a corporate Officer by telephone or telegraph. If the
notice is sent to a Director by letter, it shall be addressed to him or her at
his or her address as it is shown upon the records of the corporation, or if it
is not so shown on such records or is not readily ascertainable, at the place in
which the meetings of the
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Directors are regularly held. In case such notice is mailed, it shall be
deposited in the United States mail, postage prepaid, in the place in which the
principal executive office of the corporation is located at least four (4) days
prior to the time of the holding of the meeting. Such mailing, telegraphing,
telephoning or delivery as above provided shall be due, legal and personal
notice to such Director.
When all of the Directors are present at any Directors' meeting,
however called or noticed, and either (i) sign a written consent thereto on the
records of such meeting, or, (ii) if a majority of the Directors are present and
if those not present sign a waiver of notice of such meeting or a consent to
holding the meeting or an approval of the minutes thereof, whether prior to or
after the holding of such meeting, which said waiver, consent or approval shall
be filed with the Secretary of the corporation, or (iii) if a Director attends a
meeting without notice but without protesting, prior thereto or at its
commencement, the lack of notice, then the transactions thereof are as valid as
if had at a meeting regularly called and noticed.
Section 12. SOLE DIRECTOR PROVIDED BY ARTICLES OF INCORPORATION OR
BY-LAWS. In the event only one (1) Director is required by the By-Laws or
Articles of Incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the Directors
shall be deemed to refer to such notice, waiver, etc., by such sole Director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to a Board of Directors.
Section 13. DIRECTORS ACTION BY UNANIMOUS WRITTEN CONSENT. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting and with the same force and effect as if taken by a unanimous vote of
Directors, if authorized by a writing signed individually or collectively by all
members of the Board. Such consent shall be filed with the regular minutes of
the Board.
Section 14. QUORUM. A majority of the number of Directors as fixed by
the Articles of Incorporation or By-Laws shall be necessary to constitute a
quorum for the transaction of business, and the action of a majority of the
Directors present at any meeting at which there is a quorum, when duly
assembled, is valid as a corporate act; provided that a minority of the
Directors, in the absence of a quorum, may adjourn from time to time, but may
not transact any business. A meeting at which a quorum is initially present may
continue to transact business, notwithstanding the withdrawal of Directors, if
any action taken is approved by a majority of the required quorum for such
meeting.
Section 15. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent Directors if the time
and place be fixed at the meeting adjourned and held within twenty-four (24)
hours, but if adjourned more than twenty-four (24) hours, notice shall be given
to all Directors not present at the time of the adjournment.
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Section 16. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but by resolution of the Board a
fixed sum and expense of attendance, if any, may be allowed for attendance at
each regular and special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 17. COMMITTEES. Committees of the Board may be appointed by
resolution passed by a majority of the whole Board. Committees shall be composed
of two (2) or more members of the Board, and shall have such powers of the Board
as may be expressly delegated to it by resolution of the Board of Directors,
except those powers expressly made non-delegable by Sec. 311.
Section 18. ADVISORY DIRECTORS. The Board of Directors from time to
time may elect one or more persons to be Advisory Directors who shall not by
such appointment be members of the Board of Directors. Advisory Directors shall
be available from time to time to perform special assignments specified by the
President, to attend meetings of the Board of Directors upon invitation and to
furnish consultation to the Board. The period during which the title shall be
held may be prescribed by the Board of Directors. If no period is prescribed,
the title shall be held at the pleasure of the Board.
Section 19. RESIGNATIONS. Any Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors of the corporation, unless the notice specifies a later time
for the effectiveness of such resignation. If the resignation is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.
ARTICLE III
OFFICERS
Section 1. OFFICERS. The Officers of the corporation shall be a
President, a Secretary, and a Chief Financial Officer. The corporation may also
have, at the discretion of the Board of Directors, a Chairman of the Board, one
or more Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other Officers as may be appointed in accordance
with the provisions of Section 3 of this Article III. Any number of offices may
be held by the same person.
Section 2. ELECTION. The Officers of the corporation, except such
Officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the Board of Directors,
and each shall hold office until he or she shall resign or shall be removed or
otherwise disqualified to serve, or a successor shall be elected and qualified.
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Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may
appoint such other Officers as the business of the corporation may require, each
of whom shall hold office for such period, have such authority and perform such
duties as are provided in the By-Laws or as the Board of Directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights,
if any, of an Officer under any contract of employment, any Officer may be
removed, either with or without cause, by the Board of Directors, at any regular
or special meeting of the Board, or, except in case of an Officer chosen by the
Board of Directors, by any Officer upon whom such power of removal may be
conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Officer is a
party.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the ByLaws for regular appointments to that office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of Directors or prescribed by the By-Laws. If
there is no President, the Chairman of the Board shall in addition be the Chief
Executive Officer of the corporation and shall have the powers and duties
prescribed in Section 7 of this Article III.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the Board of Directors to the Chairman of the Board, if there be
such an Officer, the President shall be the Chief Executive Officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and Officers of the
corporation. He or she shall preside at all meetings of the Shareholders and in
the absence of the Chairman of the Board, or if there be none, at all meetings
of the Board of Directors. The President shall be ex officio a member of all the
standing committees, including the Executive Committee, if any, and shall have
the general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors, or if not ranked, the Vice President designated by the Board
of Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to, all the restrictions
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upon, the President. The Vice Presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board of Directors or the By-Laws.
Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a
book of minutes at the principal office or such other place as the Board of
Directors may order, of all meetings of Directors and Shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at Directors'
meetings, the number of shares present or represented at Shareholders' meetings
and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office
or at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the Shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the Shareholders and of the Board of Directors required by the
By-Laws or by law to be given. He or she shall keep the seal of the corporation
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by the By-Laws.
Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained in accordance with
generally accepted accounting principles, adequate and correct accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
earnings (or surplus) and shares. The books of account shall at all reasonable
times be open to inspection by any Director.
This Officer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the Board of Directors. He or she shall disburse the funds of the corporation
as may be ordered by the Board of Directors, shall render to the President and
Directors, whenever they request it, an account of all of his or her
transactions and of the financial condition of the corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors or the By-Laws.
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ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. All meetings of the Shareholders shall be
held at the principal executive office of the corporation unless some other
appropriate and convenient location be designated for that purpose from time to
time by the Board of Directors.
Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders
shall be held, each year, at the time and on the day following:
Time of Meeting: 10:00 a.m.
Date of Meeting: June lst
If this day shall be a legal holiday, then the meeting shall be held on
the next succeeding business day, at the same hour. At the annual meeting, the
Shareholders shall elect a Board of Directors, consider reports of the affairs
of the corporation and transact such other business as may be properly brought
before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may
be called at any time by the Board of Directors, the Chairman of the Board, the
President, a Vice President, the Secretary, or by one or more Shareholders
holding not less than one-tenth (1/10) of the voting power of the corporation.
Except as next provided, notice shall be given as for the annual meeting.
Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board) entitled to call a special meeting of
Shareholders, such Officer shall cause notice to be given, to the Shareholders
entitled to vote, that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the manner provided by these By-Laws or apply
to the Superior Court as provided in Sec. 305 (c).
Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or
special, shall be given in writing not less than ten (10) nor more than sixty
(60) days before the date of the meeting to Shareholders entitled to vote
thereat. Such notice shall be given by the Secretary or the Assistant Secretary,
or if there be no such Officer, or in the case of his or her neglect or refusal,
by any Director or Shareholder.
Such notices or any reports shall be given personally or by mail or
other means of written communication as provided in Sec. 601 of the Code and
shall be sent to the Shareholder's address appearing on the books of the
corporation, or supplied by him or her to the corporation for the purpose of
notice, and in the absence thereof, as provided in Sec. 601 of the Code.
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Notice of any meeting of Shareholders shall specify the place, the day
and the hour of meeting, and (1) in case of a special meeting, the general
nature of the business to be transacted and no other business may be transacted,
or (2) in the case of an annual meeting, those matters which the Board at date
of mailing, intends to present for action by the Shareholders. At any meetings
where Directors are to be elected, notice shall include the names of the
nominees, if any, intended at date of notice to be presented by management for
election.
If a Shareholder supplies no address, notice shall be deemed to have
been given if mailed to the place where the principal executive office of the
corporation, in California, is situated, or published at least once in some
newspaper of general circulation in the County of said principal office.
Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
Officer giving such notice or report shall prepare and file an affidavit or
declaration thereof.
When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in case of an original meeting save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which such adjournment is taken.
Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of Shareholders, however called and noticed, shall
be valid as though had at a meeting duly held after regular call and notice, if
a quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the Shareholders entitled to vote, not present in person or
by proxy, sign a written waiver of notice, or a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance shall constitute a waiver of notice, unless
objection shall be made as provided in Sec. 601 (e).
Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING DIRECTORS. Any action
which may be taken at a meeting of the Shareholders, may be taken without a
meeting or notice of meeting if authorized by a writing signed by all of the
Shareholders entitled to vote at a meeting for such purpose, and filed with the
Secretary of the corporation, provided, further, that while ordinarily Directors
can only be elected by unanimous written consent under Sec. 603 (d), if the
Directors fail to fill a vacancy, then a Director to fill that vacancy may be
elected by the written consent of persons holding a majority of shares entitled
to vote for the election of Directors.
Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided
in the GCL or the Articles, any action which may be taken at any annual or
special meeting of Shareholders may be taken without a meeting and without prior
notice, if a consent in
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writing, setting forth the action so taken, signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
Unless the consents of all Shareholders entitled to vote have been
solicited in writing,
(1) Notice of any Shareholder approval pursuant to Secs. 310, 317, 1201
or 2007 without a meeting by less than unanimous written consent shall be
given at least ten (10) days before the consummation of the action
authorized by such approval, and
(2) Prompt notice shall be given of the taking of any other corporate
action approved by Shareholders without a meeting by less than unanimous
written consent, to each of those Shareholders entitled to vote who have not
consented in writing.
Any Shareholder giving a written consent, or the Shareholder's
proxyholders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxy holders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the corporation.
Section 8. QUORUM. The holders of a majority of the shares entitled to
vote thereat, present in person, or represented by proxy, shall constitute a
quorum at all meetings of the Shareholders for the transaction of business
except as otherwise provided by law, by the Articles of Incorporation, or by
these By-Laws. If, however, such majority shall not be present or represented at
any meeting of the Shareholders, the Shareholders entitled to vote thereat,
present in person, or by proxy, shall have the power to adjourn the meeting from
time to time, until the requisite amount of voting shares shall be present. At
such adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
a meeting as originally notified.
If a quorum be initially present, the Shareholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken is approved by a
majority of the Shareholders -required to initially constitute a quorum.
Section 9. VOTING. Only persons in whose names shares entitled to vote
stand on the stock records of the corporation on the day of any meeting of
Shareholders, unless some other day be fixed by the Board of Directors for the
determination of Shareholders of record, and then on such other day, shall be
entitled to vote at such meeting.
Provided the candidate's name has been placed in nomination prior to
the voting and one or more Shareholder has given notice at the meeting prior to
the voting of the
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Shareholder's intent to cumulate the Shareholder's votes, every Shareholder
entitled to vote at any election for Directors of any corporation for profit may
cumulate their votes and give one candidate a number of votes equal to the
number of Directors to be elected multiplied by the number of votes to which his
or her shares are entitled, or distribute his or her votes on the same principle
among as many candidates as he or she thinks fit.
The candidates receiving the highest number of votes up to the number
of Directors to be elected are elected.
The Board of Directors may fix a time in the future not exceeding
thirty (30) days preceding the date of any meeting of Shareholders or the date
fixed for the payment of any dividend or distribution, or for the allotment of
rights, or when any change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the Shareholders entitled to
notice of and to vote at any such meeting, or entitled to receive any such
dividend or distribution, or any allotment of rights, or to exercise the rights
in respect to any such change, conversion or exchange of shares. In such case
only Shareholders of record on the date so fixed shall be entitled to notice of
and to vote at such meeting, or to receive such dividends, dis tribution or
allotment of rights, or to exercise such rights, as the case may be
notwithstanding any transfer of any share on the books of the corporation after
any record date fixed as aforesaid. The Board of Directors may close the books
of the corporation against transfers of shares during the whole or any part of
such period.
Section 10. PROXIES. Every Shareholder entitled to vote, or to execute
consents, may do so, either in person or by written proxy, executed in
accordance with the provisions of Secs. 604 and 705 of the Code and filed with
the Secretary of the corporation.
Section 11. ORGANIZATION. The President, or in the absence of the
President, any Vice President, shall call the meeting of the Shareholders to
order, and shall act as chairman of the meeting. In the absence of the President
and all of the Vice Presidents, Shareholders shall appoint a chairman for such
meeting. The Secretary of the corporation shall act as Secretary of all meetings
of the Shareholders, but in the absence of the Secretary at any meeting of the
Shareholders, the presiding Officer may appoint any person to act as Secretary
of the meeting.
Section 12. INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders the Board of Directors may, if they so elect, appoint inspectors of
election to act at such meeting or any adjournment thereof. If inspectors of
election be not so appointed, or if any persons so appointed fail to appear or
refuse to act, the chairman of any such meeting may, and on the request of any
Shareholder or his or her proxy shall, make such appointment at the meeting in
which case the number of inspectors shall be either one (1) or three (3) as
determined by a majority of the Shareholders represented at the meeting.
Section 13. (A) SHAREHOLDERS' AGREEMENTS. Notwithstanding the above
provisions, in the event this corporation elects to become a close corporation,
an
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agreement between two (2) or more Shareholders thereof, if in writing and signed
by the parties thereof, may provide that in exercising any voting rights the
shares held by them shall be voted as provided therein or in Sec. 706, and may
otherwise modify these provisions as to Share holders, meetings and actions.
(B) EFFECT OF SHAREHOLDERS' AGREEMENTS. Any Shareholders' Agreement
authorized by Sec. 300 (b), shall only be effective to modify the terms of these
By-Laws if this corporation elects to become a close corporation with
appropriate filing of or amendment to its Articles as required by Sec. 202 and
shall terminate when this corporation ceases to be a close corporation. Such an
agreement cannot waive or alter Secs. 158, (defining close corporations), 202
(requirements of Articles of Incorporation), 500 and 501 (relative to
distributions), 111 (merger), 1201 (e) (reorganization) or Chapters 15 (Records
and Reports), 16 (Rights of Inspection), 18 (Involuntary Dissolution) or 22
(Crimes and Penalties). Any other provisions of the Code or these By-Laws may be
altered or waived thereby, but to the extent they are not so altered or waived,
these By-Laws shall be applicable.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of
such form and device as the Board of Directors may designate and shall state the
name of the record holder of the shares represented thereby; its number; date of
issuance; the number of shares for which it is issued; a statement of the
rights, privileges, preferences and restrictions, if any; a statement as to the
redemption or conversion, if any; a statement of liens or restrictions upon
transfer or voting, if any; if the shares be assessable or, if assessments are
collectible by personal action, a plain statement of such facts.
All certificates shall be signed in the name of the corporation by the
Chairman of the Board or Vice Chairman of the Board or the President or Vice
President and by the Chief Financial Officer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
class or series of shares owned by the Shareholder.
Any or all of the signatures on the certificate may be facsimile. In
case any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an officer,
transfer agent, or registrar at the date of issue.
Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the
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corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit or
affirmation of that fact and shall, if the Directors so require, give the
corporation a bond of indemnity, in form and with one or more sureties
satisfactory to the Board, in at least double the value of the stock represented
by said certificate, whereupon a new certificate may be issued in the same tenor
and for the same number of shares as the one alleged to be lost or destroyed.
Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint one or more transfer agents or transfer clerks, and one or more
registrars, which shall be an incorporated bank or trust company, either
domestic or foreign, who shall be appointed at such times and places as the
requirements of the corporation may necessitate and the Board of Directors may
designate.
Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. in order that
the corporation may determine the Shareholders entitled to notice of any meeting
or to vote or entitled to receive payment of any dividend or other distribution
or allotment of any rights or entitled to exercise any rights in respect of any
other lawful action, the Board may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days prior to the date of
such meeting nor more than sixty (60) days prior to any other action.
If no record date is fixed; the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of business on the business day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held. The record
date for determining Shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board is necessary,
shall be the day on which the first written consent is given.
The record date for determining Shareholders for any other purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
Section 6. LEGEND CONDITION. In the event any shares of this
corporation are issued pursuant to a permit or exemption therefrom requiting the
imposition of a legend condition, the person or persons issuing or transferring
said shares shall make sure said legend appears on the certificate and shall not
be required to transfer any shares free of such legend unless an amendment to
such permit or a new permit be first issued so authorizing such a deletion.
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Section 7. CLOSE CORPORATION CERTIFICATES. All certificates
representing shares of this corporation, in the event it shall elect to become a
close corporation, shall contain the legend required by Sec. 418 (c).
ARTICLE VI
RECORDS - REPORTS - INSPECTION
Section 1. RECORDS. The corporation shall maintain in accordance with
generaily accepted accounting principles, adequate and correct accounts, books
and records of its business and properties. All of such books, records and
accounts shall be kept at its principal executive office in the state of
California, as fixed by the Board of Directors from time to time.
Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records
provided for in Sec. 1500 shall be open to inspection of the Directors and
Shareholders from time to time and in the manner provided in said Sec. 1600 -
1602.
Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a
copy of these By-Laws, as amended or otherwise altered to date, certified by the
Secretary, shall be kept at the corporation's principal executive office and
shall be open to inspection by the Shareholders of the corporation at all
reasonable times during office hours, as provided in Sec. 213 of the
Corporations Code.
Section 4. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
Section 5. CONTRACTS, ETC. -- HOW EXECUTED. The Board of Directors,
except as in the By-Laws otherwise provided, may authorize any officer or
Officers, agent or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the corporation. Such authority may be general
or confined to specific instances. Unless so authorized by the Board of
Directors, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or agreement, or to pledge its credit, or
to render it liable for any purpose or to any amount, except as provided in Sec.
313 of the Corporations Code.
ARTICLE VII
ANNUAL REPORTS
Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of Directors
shall cause an annual report to be sent to the Shareholders not later than one
hundred
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twenty (120) days after the close of the fiscal or calendar year adopted by the
corporation. This report shall be sent at least fifteen (15) days before the
annual meeting of Shareholders to be held during the next fiscal year and in the
manner specified in Section 4 of Article IV of these By-Laws for giving notice
to Shareholders of the corporation. The annual report shall contain a balance
sheet as of the end of the fiscal year and an income statement and statement of
changes in financial position for the fiscal year, accompanied by any report of
independent accountants or, if there is no such report, the certificate of an
authorized Officer of the corporation that the statements were prepared without
audit from the books and records of the corporation.
Section 2. WAIVER. The annual report to Shareholders referred to in
Section 1501 of the California General Corporation Law is expressly dispensed
with so long as this corporation shall have less than one hundred (100)
Shareholders. However, nothing herein shall be interpreted as prohibiting the
Board of Directors from issuing annual or other periodic reports to the
Shareholders of the corporation as they consider appropriate.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or
these By-Laws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the Articles of Incorporation of the corporation set forth the
number of authorized Directors of the corporation, the authorized number of
Directors may be changed only by an amendment of the Articles of Incorporation.
Section 2. POWERS OF DIRECTORS. Subject to the right of the
Shareholders to adopt, amend or repeal By-Laws, as provided in Section 1 of this
Article VIII, and the limita tions of Sec. 204 (a) (5) and Sec. 212, the Board
of Directors may adopt, amend or repeal any of these By-Laws other than a By-Law
or amendment thereof changing the authorized number of Directors.
Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is
adopted, it shall be copied in the book of By-Laws with the original By-Laws, in
the appropriate place. If any By-Law is repealed, the fact of repeal with the
date of the meeting at which the repeal was enacted or written assent was filed
shall be stated in said book.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the corporation, the date of its incorporation, and the word
"California."
15
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ARTICLE X
MISCELLANEOUS
Section 1. REFERENCES TO CODE SECTIONS. "Sec." references herein refer
to the equivalent Sections of the General Corporation Law effective January 1,
1977, as amended.
Section 2. REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of
other corporations standing in the name of this corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
corporation by the Chairman of the Board, the President or any Vice President
and the Secretary or an Assistant Secretary.
Section 3. SUBSIDIARY CORPORATIONS. Shares of this corpcration owned by
a subsidiary shall not be entitled to vote on any matter. A subsidiary for these
purposes is defined as a corporation, the shares of which possessing more than
25% of the total combined voting power of all classes of shares entitled to
vote, are owned directly or indirectly through one (1) or more subsidiaries.
Section 4. INDEMNITY. The corporation may indemnify any Director,
officer, agent or employee as to those liabilities and on those terms and
conditions as are specified in Sec. 317 of the Code. In any event, the
corporation shall have the right to purchase and maintain insurance on behalf of
any such persons whether or not the corporation would have the power to
indemnify such person against the liability insured against.
Section 5. ACCOUNTING YEAR. The accounting year of the corporation
shall be fixed by resolution of the Board of Directors.
16
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CERTIFICATE OF ADOPTION OF BY-LAWS
ADOPTION BY INCORPORATOR(S) OR FIRST DIRECTOR(S).
The undersigned person(s) appointed in the Articles of Incorporation to
act as the Incorporator(s) or First Director(s) of the above named corporation
hereby adopt the same as the By-Laws of said corporation.
Executed this lst day of April 1983.
/s/ Thomas Miserendino
- ----------------------------------
Name THOMAS MISERENDINO
CERTIFICATE BY SECRETARY.
I DO HEREBY CERTIFY AS FOLLOWS:
That I am the duly elected, qualified and acting Secretary of the above
named corporation, that the foregoing By-Laws were adopted as the By-Laws of
said corporation on the date set forth above by the person(s) appointed in the
Articles of Incorporation to act as the Incorporator(s) or First Director(s) of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal this lst day April, 1983.
/s/ Thomas Miserendino
------------------------------
Secretary THOMAS MISERENDINO
CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE.
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of the above
named corporation and that the above and foregoing Code of By-Laws was submitted
to the Shareholders at their first meeting and recorded in the minutes thereof,
was ratified by the vote of Shareholders entitled to exercise the majority of
the voting power of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of April,
1983.
/s/ Thomas Miserendino
------------------------------
Secretary THOMAS MISERENDINO
17
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STATE OF FLORIDA
ARTICLES OF INCORPORATION
OF
TENNIS EVENTS, INC.
FIRST: The corporate name that satisfies the requirements of Section
607.0401 is: Tennis Events, Inc.
SECOND: The address of the principal office, and the mailing address of
the Corporation is: 20533 Biscayne Boulevard, Suite 4163, Aventura, Florida
33180.
THIRD: The number of shares the Corporation is authorized to issue is:
One Thousand (1,000) shares of common stock, par value One Dollar ($1.00) per
share.
FOURTH: (a) If the shares are to be divided into classes, the
designation of each class is: Not applicable.
(b) Statement of the preferences. limitations and relative
rights in respect of the shares of each class: Not applicable.
FIFTH: (a) If the Corporation is to issue the shares of any preferred
or special class in series, the designation of each series is: Not applicable.
(b) Statement of the variations in the relative rights and
preferences as between series insofar as the same are to be fixed in the
Articles of Incorporation: Not applicable.
(c) Statement of any authority to be vested in the Board of
Directors to establish series and fix and determine the variations in the
relative rights and preferences between series: Not applicable.
SIXTH: Provisions granting preemptive rights are: None.
SEVENTH: Provisions for the regulation of the internal affairs of the
Corporation are: None.
EIGHTH: The street address of the initial registered office of the
Corporation is 20533 Biscayne Boulevard, Suite 4163, Aventura, Florida 33180,
and the name of its initial registered agent at such address is John Lehmann.
<PAGE>
NINTH: The number of Directors constituting the initial Board of
Directors of the Corporation is one (1), and the name and address of the person
who is to serve as such Director until the first annual meeting of shareholders
or until his successor is elected and qualified is:
John Lehmann
20533 Biscayne Boulevard, Suite 4163
Aventura, Florida 33188
TENTH: The name and address of the Incorporator is:
John Lehmann
20533 Biscayne Boulevard, Suite 4163
Aventura, Florida 33188
The undersigned has executed these Articles of Incorporation this 15th
day of January, 1996
/s/ John Lehman
---------------------------------------
John Lehmann, Incorporator
Acceptance by the Registered Agent as Required in Section 607.0501 (3) F.S.: I
am familiar with and accept the obligations provided for in Section 607.0505.
/s/ John Lehman
---------------------------------------
John Lehmann, Initial Registered Agent
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TENNIS EVENTS, INC.
(A FLORIDA CORPORATION)
BY-LAWS
ARTICLE I
SHAREHOLDERS
1. SHARE CERTIFICATES. Certificates representing shares of the
corporation shall set forth thereon the statements prescribed by Sections
607.0601, 607.0625, and 607.0731 of the Florida General Corporation Act
("General Corporation Act") and by any other applicable provision of law, and
which shall be signed by the President or a Vice President and the Secretary or
an Assistant Secretary of the corporation and may be sealed with the seal of the
corporation or a facsimile thereof. The signatures of the President or a Vice
President and the Secretary or an Assistant Secretary upon a certificate may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar, other than the corporation itself or an employee of the
corporation. In case any officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issuance.
No certificate shall be issued for any share until such share is
fully-paid.
2. FRACTIONAL SHARE INTERESTS OR SCRIP. The corporation may, when
necessary or desirable in order to effect share transfers, share distributions
or reclassifications, mergers, consolidations or reorganizations, issue a
fraction of a share, make arrangements or provide reasonable opportunity for any
person entitled to a fractional interest in a share to sell such fractional
interest or to purchase such additional fractional interests as may be necessary
to acquire a full share, pay in cash the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined, or
issue scrip in registered or bearer form, over the manual or facsimile signature
of an officer of the corporation or its agent, which shall entitle the holder to
receive a certificate for a full share upon the surrender of such scrip
aggregating a full share. A certificate for a fractional share shall, but scrip
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights, to receive dividends thereon and to participate in any of the
assets of the corporation in the event of liquidation.
The Board of Directors may cause scrip to be issued subject to the
conditions that it shall become void if not exchanged for certificates
representing full shares before a specified date, or subject to the condition
that the shares for which scrip is exchangeable may be sold by
<PAGE>
the corporation and the proceeds thereof distributed to the holders of scrip, or
subject to any other conditions which the Board of Directors may deem advisable,
Such conditions shall be stated or fairly summarized on the face of the
certificate.
3. SHARE TRANSFERS. Upon compliance with any provisions restricting the
transferability of shares that may be set forth in the Articles of
Incorporation, these By-Laws, or any written agreement in respect thereof,
transfers of shares of the corporation shall be made only on the books of the
corporation by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, or with a transfer agent or a registrar and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon, if any. Except as may be otherwise provided by law, the
person in whose name shares stand on the books of the corporation shall be
deemed the owner thereof for all purposes as regards the corporation; provided
that whenever any transfer of shares shall be made for collateral security, and
not absolutely, such fact, if known to the Secretary of the corporation, shall
be so expressed in the entry of transfer.
4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting, of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other purpose, the Board
of Directors of the corporation may provide that the stock transfer books shall
be closed for a stated period but not to exceed, in any case, sixty days. If the
stock transfer books shall be closed for the purpose of determining the
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for the determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, the determination shall
apply to any adjournment thereof, unless the Board of Directors fixes a new
record date under this section for the adjourned meeting.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of shareholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "shareholder" or "shareholders"
refers to an outstanding share or shares and to a holder or holders of record of
outstanding shares when the corporation is authorized to issue only one class
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<PAGE>
of shares, and said reference is also intended to include any outstanding share
or shares and any holder or holders of record of outstanding shares of any class
upon which or upon whom the Articles of Incorporation confer such rights where
there are two or more classes or series of shares or upon which or upon whom the
General Corporation Act confers such rights notwithstanding that the Articles of
Incorporation may provide for more than one class or series of shares, one or
more of which are limited or denied such rights thereunder.
6. SHAREHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date fixed from time to
time by the directors. A special meeting shall be held on the date fixed from
time to time by the directors except when the General Corporation Act confers
the right to call a special meeting upon the shareholders.
PLACE. Annual meetings and special meetings shall be held at such place
within or without the State of Florida as shall be stated in the notice of any
such meeting.
CALL. Annual meetings may be called by the directors or the President
or the Secretary or by any officer instructed by the directors or the President
to call the meeting. Special meetings may be called in like manner or by the
holders of at least one-tenth of the shares.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days (or not less than any such other minimum period
of days as may be prescribed by the General Corporation Act) nor more than sixty
days before the date of the meeting, either personally or by first class mail,
by or at the direction of the President, the Secretary, or the officer or
persons calling the meeting to each shareholder. The notice of any annual or
special meeting shall also include, or be accompanied by, any additional
statements, information, or documents prescribed by the General Corporation Act.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid. When
a meeting is adjourned to another time or place, it shall not be necessary to
give any notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted on the original date of the meeting. If, however, the Board
of Directors shall fix a new record date for the adjourned meeting, notice of
the adjourned meeting shall be given each shareholder of record on the new
record date. Whenever any notice is required to be given to any shareholder, a
waiver thereof in writing signed by him, whether before or after the time stated
therein, shall be the equivalent to the giving of such notice. Attendance of a
shareholder at a meeting shall constitute a waiver of notice of the meeting,
except where the shareholder attends the meeting for the express purpose of
objecting, at the
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<PAGE>
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
VOTING LIST. The officer or agent having charge of the stock transfer
books for shares of the corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, with the address of and the number and
class and series, if any, of shares held by, each. Such list, for a period of
ten days prior to such meeting, shall be kept on file at the registered office
of the corporation in the State of Florida, at the principal place of business
of the corporation or at the office of the transfer agent or registrar of the
corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder at arty time during the meeting. The original stock transfer books
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or transfer books or to vote at any meeting of shareholders.
CONDUCT OF MEETING. Meetings of the shareholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - the Chairman of the Board, if any, the Vice Chairman of the Board, if
any, the President, a Vice President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the shareholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but, if neither the Secretary nor an
Assistant Secretary is present, the Chairman of the meeting shall appoint a
secretary of the meeting.
PROXY REPRESENTATION. Every shareholder or his duly authorized
attorney-in-fact may authorize another person or persons to act for him by proxy
in all matters in which a shareholder is entitled to participate, whether for
the purposes of determining his presence at a meeting, or whether by waiving
notice of any meeting, voting or participating at a meeting, or expressing
consent or dissent without a meeting, or otherwise. Every proxy shall be signed
by the shareholder or by his duly authorized attorney-in-fact, and filed with
the Secretary of the corporation. No proxy shall be valid after eleven months
from the date thereof, unless otherwise provided in the proxy. Except as may
otherwise be provided by the General Corporation Act, any proxy may be revoked.
QUORUM. A majority of the shares shall constitute a quorum
VOTING. Except as the General Corporation Act, the Articles of
Incorporation, or these By-Laws shall otherwise provide, the affirmative vote of
the majority of the shares represented at the meeting, a quorum being present,
shall be the act of the shareholders. After a quorum has been established at a
shareholders' meeting, the subsequent withdrawal of shareholders, so as to
reduce the number of shareholders at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting or any
adjournment thereof.
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<PAGE>
7. WRITTEN ACTION. Any action required to be taken or which may be
taken at a meeting of the shareholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by all of the shareholders and shall be filed
with the Secretary of the corporation. Less than all shareholders may act in
like manner upon compliance with the provisions of Section 607.0704 of the
General Corporation Act.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS GENERALLY - COMPENSATION. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of its Board of Directors. The
Board may fix the compensation of directors.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person
of full age. A director need not be a shareholder, a citizen of the United
States, or a resident of the State of Florida. The initial Board of Directors
shall consist of one person, which is the number of directors fixed in the
Articles of Incorporation, and which shall be the fixed number of directors
until changed. The number of directors may be increased or decreased by an
amendment of these By-Laws or by the directors or shareholders, but no decrease
in the number of directors shall have the effect of shortening the term of any
incumbent director. The number of directors shall never be less than one. The
full Board of Directors shall consist of the number of directors fixed herein or
by resolution of the directors or shareholders.
3. ELECTION AND TERM. The initial Board of Directors shall consist of
the director or directors named in the Articles of Incorporation, whom or each
of whom shall hold office until the first annual meeting of shareholders and
until his successor has been elected and qualified or until his earlier
resignation, removal from office or death. Thereafter, each director who is
elected at an annual meeting of shareholders; and any director who is elected in
the interim to fill a vacancy or a newly created directorship, shall hold office
until the next succeeding annual meeting of shareholders and until his successor
has been elected and qualified or until his earlier resignation, removal from
office or death in the interim between annual meetings of shareholders or of
special meetings of shareholders called for the election of directors, any
vacancies in the Board of Directors, including vacancies created by reason of an
increase in the number of directors, and including vacancies resulting from the
removal of directors by the shareholders which have not been filled by said
shareholders, may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum exists.
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4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
PLACE. Meetings shall be held at such place within or without the State
of Florida as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by the Chairman of the
Board, if any, the Vice Chairman of the Board, if any, or the President, or by
any two directors.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the directors
thereat. The notice or waiver of notice of any meeting need not specify the
business to be transacted or the purpose of the meeting. Any requirement of
furnishing a notice shall be waived by any director who signs a waiver of notice
before or after the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and a waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting, any objection to the transaction of business because
the meeting is not lawfully called or convened.
QUORUM AND ACTION. A majority of the full Board of Directors shall
constitute a quorum except as may be otherwise provided in the Articles of
Incorporation. Except as herein otherwise provided, and except as may be
otherwise provided by the General Corporation Act or the Articles of
Incorporation, the act of the Board shall be the act of a majority of the
directors present at a meeting at which a quorum is present.
Members of the Board of Directors may participate in a meeting of said
Board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time, and participation by such means shall be deemed to constitute
presence in person as a meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
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<PAGE>
CHAIRMAN OF THE MEETING. Meetings of the Board of Directors shall be
presided over by the following directors in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice Chairman of the
Board, if any, the President, or any other director chosen by the Board.
5. REMOVAL OF DIRECTORS. At a meeting of shareholders called expressly
for that purpose, the entire Board of Directors or any individual director may
be removed from office with or without cause by the vote of the shareholders
holding at least a majority of the shares. In case the entire Board or any one
or more directors be so removed, new directors may be elected at the same
meeting.
6. COMMITTEES. Whenever the number of directors shall consist of three
or more, the Board of Directors, may, by resolution adopted by a majority of the
full Board, designate from among its members an Executive Committee and one or
more other committees, each of which, to the extent provided in the resolution,
shall have and may exercise all of the authority of the Board of Directors
except such authority as may not be delegated under the General Corporation Act.
7. WRITTEN ACTION. Any action required to be taken at a meeting of
directors, or any action which may be taken at a meeting of directors or of a
committee thereof, if any, may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all of the
directors or all of the members of the committee, as the case may be.
ARTICLE III
OFFICERS
The corporation shall have a President, a Secretary, and a Treasurer,
each of whom shall be elected by the directors from time to time, and may have
one or more Vice Presidents and such other officers and assistant officers and
agents as may be deemed necessary, each or any of whom may be elected or
appointed by the directors or may be chosen in such manner as the directors
shall determine. Any two or more offices may be held by the same person.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of shareholders and until his successor has
been elected and qualified.
The officers and agents of the corporation shall have the authority and
perform the duties in the management of the corporation as determined by the
resolution electing or appointing them, as the case may be.
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<PAGE>
The Board of Directors may remove any officer or agent whenever in its
judgment the best interests of the corporation will be served thereby.
ARTICLE IV
REGISTERED OFFICE AND AGENT - SHAREHOLDERS RECORD
The address of the initial registered office of the corporation and the
name of the initial registered agent of the corporation, whose address is the
same as that of the registered office, is set forth in the original articles of
incorporation.
The corporation shall keep at its registered office in the State of
Florida or at its principal place of business, or at the office of its transfer
agent or registrar, a record of its shareholders, giving the names and addresses
of all shareholders and the number, class and series, if any, of the shares held
by each shareholder and shall keep on file at said registered office the voting
list of shareholders for a period of at least ten days prior to any meeting of
shareholders.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and shall be in such form and contain such other words and/or
figures as the Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The Board of Directors shall have power to adopt, alter, amend or
repeal the By-Laws. Any provisions for the classification of directors for
staggered terms shall be authorized by the Articles of Incorporation or by
specific provisions of a By-Law adopted by the shareholders. By-Laws adopted by
the Board of Directors or by the shareholders may be repealed or changed and new
By-Laws may be adopted by the shareholders. The shareholders
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may prescribe in any By-Law made by them that such By-Law shall not be altered,
amended or repealed by the Board of Directors.
* * *
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JOINT VENTURE AGREEMENT
AGREEMENT made as of this 10th day of April, 1998, by and among NIK0
INTERNATIONAL ENTERTAINMENT CORP. ("Niko"), a Florida Corporation, 100 Lincoln
Road, Suite PH3, Miami Beach 33139, and MAGICWORKS ENTERTAINMENT, INC.
("MagicWorks"), an Ohio Corporation, 199 East Garfield Road, Aurora, Ohio 44202.
Each of Niko and MagicWorks is hereinafter sometimes referred to as a "Venturer"
and both together are collectively referred to as the "Venturers".
The parties hereto desire to form a joint venture to produce and
present, upon the terms and conditions stated below, a national tour of the
National Actors Theatre production of the dramatic stage play entitled "THE GIN
GAME" (the "Play"), written by D.L. Coburn ("the Author").
Accordingly, the parties hereto hereby agree as follows:
1. Formation of Joint Venture.
1.1 The Venturers hereby form a Florida joint venture (the "Joint
Venture") to be called "The Gin Touring Company" to produce and cause the
production of an Equity bus and truck touring production of the Play and to
exploit any and all other rights in the Play granted to it or to either of the
Venturers by the Author and/or the National Actors Theatre, including without
limitation non-Equity rights, if any, commercial sponsorships, merchandising and
the sale of commercial use products.
<PAGE>
2. Decisions; Contracts.
2.1 All decisions (including budget, routing, creative staffing and
selection of personnel, including attorney and accountant) shall require mutual
approval of the parties hereto, not to be unreasonably withheld.
Decisions affecting the day-to-day operations of the touring company
are hereby delegated to Niko Associates in its capacity as general manager.
2.2 The production budget attached hereto as Exhibit 2.2 is hereby
approved.
2.3 The following personnel are hereby approved:
2.3.1 Charles Nelson Reilly - director
2.3.2 Julie Harris - star
2.3.3 Charles Durning - star
2.3.4 Franklin, Weinrib, Rudell & Vaesallo
(Elliot H. Brown) - attorney
2.4 All contracts with respect to the production and presentation of
the Play may be signed by either of the parties hereto. All day to day contracts
may also be signed on behalf of the Joint Venture by Niko or its authorized
representative.
3. Agreements with Venturers. The Venturers agree that if the Play is to be
presented at any theatre owned or controlled by either of them, or is to be
presented or promoted in any location by either of them, including, for this
purpose, any corporation or other entity controlled by or under common control
with such Venturer or its principals, the terms for booking the Play at such
theatre and the terms for such presentation or promotion shall be as set forth
in Exhibit 3 annexed hereto.
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<PAGE>
4. Assignment of Rights.
Both of the Venturers shall assign, or cause to be assigned, all rights
and interest that it now has or may hereafter acquire in the Play to the Joint
Venture upon its formation.
5. Production Contract. The parties are in the process of negotiating a
production contract (the "Production Contract") with the National Actors Theatre
which will permit the parties to produce and present the Play. The Venturers
shall have mutual approval of the final form of the Production Contract, and the
parties shall assign the Production Contract to the Joint Venture and the Joint
Venture shall assume all obligations thereunder.
6. Term. The term of this Agreement and of the Joint Venture shall commence
on the date hereof and shall continue for as long as rights in the Play,
including the right to receive income, either (a) continue to be held by any
Venturer or (b) are reacquired by any Venturer during the period concluding five
years after the termination of the Joint Venture.
7. Bank Account; Checks.
The parties have agreed to open bank accounts in New York in the name
of the Joint Venture at Republic Bank, 11 West 51st Street, New York, New York.
Checks on said account may be signed by either joint venturer.
8. Pre-Production Expenses. The Venturers have heretofore contributed
certain pre-production expenses in connection with the production of the Play as
set forth in Exhibit 8 attached hereto, which also reflects how such funds have
been expended. Such expenses shall be included as part of the production budget
of the Play and shall be credited to the Venturers' respective obligations to
contribute funds to the Joint Venture pursuant to Paragraph 9.2 below.
- 3 -
<PAGE>
9. Financing Production of the Play.
9.1 The Venturers agree that the initial capitalization required for
the initial production of the Play (the "Capitalization") inclusive of all
required bonds shall be as set forth on the production budget attached hereto as
Exhibit 2.2.
9.2 MagicWorks shall be responsible for providing one hundred percent
(100%) of the Capitalization. Any third party deposits in the form of advances
shall reduce the share due from MagicWorks. The aforesaid contribution shall be
provided to the Joint Venture, as mutually agreed.
9.3 The Capitalization shall not be increased without unanimous
approval of the Venturers. The foregoing shall in no way derogate from any
Venturer's liability for losses and liabilities beyond the Capitalization, as
set forth in Paragraph 10.3 below.
9.4 If, in obtaining any monies hereunder, the parties are required to
take any actions to comply with the Securities Act of 1933, as amended, or any
rules or regulations promulgated thereunder, or to comply with Article 23 of the
Arts and Cultural Affairs Law of the State of New York, or any rules and
regulations promulgated thereunder, or the laws of any other state or
jurisdiction relating to the sale of securities, they shall take, or cause to be
taken, such action as may be required to comply therewith. Each Venturer shall
indemnify and hold harmless the Joint Venture and the other Venturer against any
and all liability resulting from the breach by it of this Paragraph 9.4.
10. Allocation of Profits and Losses.
10.1 Any and all net profits of the Joint Venture shall first be
distributed equally to the parties until any sums contributed by the parties in
excess of the Capitalization
- 4 -
<PAGE>
have been recovered by the parties, then to MagicWorks until the entire
Capitalization has been recouped by MagicWorks.
10.2 Following recoupment, any and all net profits of the Joint Venture
shall be divided, as follows:
NIKO - 25%
MagicWorks - 75%
10.3 All losses and liabilities of the Joint Venture in excess of
Capitalization, including without limitation any costs, expenses or other
liability pursuant to the bonds, shall be borne and paid equally by the parties
hereto.
10.4 The profits and losses of the Joint Venture shall be defined in
accordance with generally accepted accounting principles, consistently applied.
The receipts of the Joint Venture shall include all receipts of any kind or
nature directly or indirectly received by the Joint Venture or any Venturer,
arising from, relating to, or connected with the Play, including without
limitation receipts from commercial sponsorships, merchandising, and the sale of
commercial use products, but specifically not including receipts of any Venturer
as general manager, theater owner, local presenter or promoter, booking agent,
or as a result of any interest it may have in any merchandising company,
publishing company or similar entity.
10.5 Any and all profits of the Joint Venture shall be distributed to
the Venturers at such time as the parties may agree provided that the Joint
Venture shall always have the right to retain sufficient monies to cover any
liabilities and to maintain adequate reserve.
- 5 -
<PAGE>
10.6 The books and records of the Joint Venture shall be kept at the
offices of the General Manager, as defined in Paragraph 13 below, in New York
City. Each Venturer or its authorized representative shall have the right, at
reasonable times, during regular business hours, to inspect such books and
records.
11. Credit. Subject to the terms of the Production Agreement, the
production of the Play shall be announced substantially as follows:
MAGICWORKS ENTERTAINMENT
AND MANNY KLADITIS
Present
THE NATIONAL ACTORS THEATRE
(TONY RANDALL, FOUNDER AND ARTISTIC DIRECTOR)
PRODUCTION OF
"THE GIN GAME"
The names of the Venturers shall be of equal size, style and prominence.
12. Producer's Fee.
12.1 The producer's weekly royalty (the "Producer's Fee") shall be two
percent (2%) of the gross weekly box office receipts of each company of the Play
presented by the Joint Venture. The Producer's Fee shall be shared as follows:
- 6 -
<PAGE>
NIKO - 50%.
MagicWorks - 50%
12.2 The Producer's Fee shall be calculated and paid in the same manner
as the royalty payable to National Actors Theatre pursuant to the Production
Contract.
13. General Management. The Venturers agree to engage Franklin,
Weinrib, Rudell & Vassallo, to act as legal counsel. The Venturers further agree
that Niko Associates, Inc. ("the General Manager") shall provide general
management services in connection with all productions of the Play produced
hereunder, on the following basic financial terms:
13.1 Production Fee - $25,000
13.2 Weekly Fee - $2,500
13.3 Office Charge - $500
The Venturers intend to enter into a more formal agreement with Niko on
terms usual in the United States touring industry.
14. Other Activities. Each of the Venturers shall devote such time and
effort as may be necessary or advisable for the furtherance of the production of
the Play. Each of the Venturers shall have the right to engage in other business
activities during the continuation of this Agreement, including, without
limitation, the production of other plays.
15. Abandonment. Notwithstanding anything to the contrary contained in
Paragraph 9, at any time after a company of the Play has presented at least two
full weeks of paid public performances, either Venturer may request, by notice
in writing delivered to the other Venturers, that such company (the "Closing
Company") be closed on the following Saturday (the "Effective
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<PAGE>
Date"). Such notice shall be given no later than twelve o'clock noon on the
Monday preceding the Effective Date. If either Venturer shall desire to close a
Closing Company (the "Closing Party"), and the other Venturer shall desire to
continue to run such Closing Company (the "Running Party") , then the Running
Party shall have the right to do so, and the Closing Party shall (i) have no
further participation or interest in any proceeds or profits including, without
limitation, any operating profits of, and management fees and office charges,
relating to such Closing Company following the Effective Date, and (ii) have no
further liability with respect to any operating losses of such Closing Company
following the Effective Date, provided that the Retiring Party shall remain
liable for any accrued obligations. For purposes of the foregoing sentence, the
proceeds derived from all companies of the Play shall be computed on a
company-by-company basis. In the event that a Closing Party withdraws from a
Closing Company, the Running Party shall indemnify the Closing Party against any
operating losses of such Loss Company of the Play incurred following the
Effective Date.
If the performance week of the Play shall close after the Sunday
matinee, then, for the purposes of this Paragraph 15, references to "Saturday"
hereinabove shall be deemed changed to "Sunday" and the reference to "Monday" in
the second sentence hereof shall be deemed changed to "Tuesday".
16. Assignment. This Agreement shall bind and inure to the benefit of
each of the Venturers and their respective executors, administrators, successors
and personal representatives. No Venturer hereto shall have the right to assign
this Agreement or any of its rights hereunder or herein without the prior
written consent of the other Venturer, except that:
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<PAGE>
16.1 NIKO may assign this Agreement to Manny Kladitis, to any
corporation of which it or any of the foregoing individual is a controlling
shareholder, or to any partnership of which it or any of the foregoing
individual is a general partner, provided that such assignee assumes in writing
all of the obligations of the assignor.
16.2 MagicWorks may assign this Agreement to any of Lee Marshall and/or
Joe Marsh, to any corporation of which it or any of the foregoing individuals is
a controlling shareholder, or to any partnership of which it or any of the
foregoing individuals is a general partner, provided that such assignee assumes
in writing all of the obligations of the assignor.
17. Governing Law. This contract is made in the State of [Florida] and
shall be construed in accordance with, and governed by, the laws of that state
applicable to contracts made and performed entirely therein.
18. Notices. All notices ("Notices") which any Venturer is required or
may desire to give to any other party under this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail
(postage prepaid) or by telegraph, telex, telecopy or cable (toll prepaid) to
such party at the address of such party given above, or at such other address as
such party shall have designated by notice daily given in the manner above
provided. All such notices shall be deemed given on receipt.
19. Arbitration. Any controversy, claim, dispute or question arising
out of, or in connection with, or in relation to, the validity, interpretation,
performance or nonperformance of this Agreement, or any breach thereof, shall be
determined and settled by arbitration in New York City before a single
arbitrator in accordance with the then existing rules of the American
- 9 -
<PAGE>
Arbitration Association, and judgment upon any award, which may include an award
of damage, may be entered in the highest court, of the forum, state or federal,
having jurisdiction.
20. Miscellaneous
20.1 Both of the parties hereto agrees to sign such further instruments
in writing as may be required to effectuate the purpose and intent of this
Agreement.
20.2 The failure of any party hereto to enforce at any time any of the
provisions hereof shall not be construed to be a waiver of such provisions or of
such party's rights thereafter to enforce such provisions.
20.3 This Agreement constitutes the entire understanding between the
parties hereto and replaces all prior understandings and agreements between the
parties with respect to the Play. It may not be modified except by a written
instrument signed by all of the parties.
20.4 Paragraph headings are inserted for convenience only and shall not
be deemed part of this Agreement for any purpose whatsoever.
20.5 This Agreement may be executed in several counterparts, and all
counterparts so executed by both the parties hereto and affixed to this
Agreement shall constitute a valid and binding agreement, even though all the
parties have not signed the same counterpart.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the parties have affixed their hands as of the day
and year first above written.
NIKO INTERNATIONAL
ENTERTAINMENT CORP.
By
---------------------------------
MAGICWORKS ENTERTAINMENT INC.
By
---------------------------------
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<PAGE>
EXHIBIT 2.2
[Production Budget]
- 12 -
<PAGE>
EXHIBIT 3
[Booking Terms]
- 13 -
<PAGE>
EXHIBIT 8
[Preproduction Expenses]
- 14 -
<PAGE>
JOINT VENTURE AGREEMENT
AGREEMENT made as of this 27th day of August, 1997, by and between
BROADWAY SERIES ASSOCIATES, INC., ("BSA"), 611 Main Street, Louisville,
Kentucky, 40202 and PACE VARIETY ENTERTAINMENT, INC. ("PACE"), 515 Post Oak
Boulevard, Suite 300, Houston, Texas 77027. Each of BSA and PACE is hereinafter
sometimes referred to as a "Venturer" and both together are collectively
referred to as the "Venturers".
The parties hereto desire to form a joint venture to produce and
present, upon the terms and conditions stated below, a production of the musical
play entitled TONY 'N TINA'S WEDDING (the "Play"), created by Artificial
Intelligence (authors), the rights in which are controlled by TNT Company
("TNT").
Accordingly, the parties hereto hereby agree as follows:
1. Formation of Joint Venture.
1.1 The Venturers hereby form a Texas joint venture (the "Joint
Venture") to be called "The Wedding Tour Company" to produce and cause the
production of a non-union bus and truck touring production of the Play and to
exploit any and all other rights in the Play granted to it or to any of the
Venturers by TNT and/or the authors, including commercial sponsorships,
merchandising and the sale of commercial use products.
2. Decisions; Contracts.
2.1 All decisions (including budget, routing, creative staffing
and selection of personnel, including attorney and accountant) shall require
approval of the parties hereto, not to be unreasonably withheld.
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The Venturers agree to engage Franklin, Weinrib, Rudell Vassallo
to act as legal counsel.
The Venturers further agree that 101 Productions Inc. ("General
Manager") shall provide general management services in connection with all
productions of the Play produced hereunder for a production fee of five thousand
dollars ($5,000) plus seven hundred fifty ($750) weekly starting two weeks prior
to the first public performance.
Decisions affecting the day-to-day operations of the touring
company are hereby delegated to 101 Productions in its capacity as general
manager.
2.2 The production budget attached hereto as Exhibit "A" is hereby
approved.
2.3 The following personnel are hereby approved:
2.3.1 Larry Pelligrini - director
2.3.2 Joe Corcoran - executive producer
2.3.3 Franklin Weinrib Rudell Vassallo - legal counsel
2.3.4 (to be determined) - accountant
2.3.5 The Booking Group - booking agent for non-PACE markets.
2.4 All major contracts with respect to the production and
presentation of the Play shall be signed by each of the parties hereto. All day
to day contracts shall be signed on behalf of the Joint Venture by 101
Productions or its authorized representative.
3. Agreements with Venturers.
3.1 The Venturers hereby agree to co-present the production in
Louisville, Columbus, Cincinnati, and Indianapolis.
2
<PAGE>
3.2 The Venturers hereby agree that PACE shall be the local
presenter for the production of the Play hereunder in certain cities, as set
forth on Exhibit "B" attached hereto, on the terms and conditions set forth on
Exhibit "C". PACE shall be entitled to retain all payments it receives as local
presenter, and the other Venturers shall not share therein.
3.3 The Venturers hereby agree that BSA may elect to be the local
presenter for the production of the Play hereunder in certain cities to be
agreed upon between the parties on the terms and conditions set forth in Exhibit
"C" annexed hereto. BSA shall be entitled to retain all payments payable to BSA
as local presenter, and the other Venturers shall not share therein.
4. Assignment of Rights.
Each of the Venturers shall assign, or cause to be assigned, all rights
and interest that it now has or may hereafter acquire in the Play to the Joint
Venture upon its formation.
5. Agreements in Connection with the Play.
5.1 License Agreement. PACE has negotiated a license contract (the
"License Contract") with TNT which permits PACE to produce and present
productions of the Play. The Venturers hereby approve the License Contract, and
PACE hereby assigns the License Contract to the Joint Venture and the Joint
Venture hereby assumes all obligations thereunder.
5.2 Joe Corcoran Agreement. PACE has entered into an agreement
(the "Corcoran Agreement") with Joe Corcoran Productions to serve as executive
producer for its productions of the Play. The Venturers hereby acknowledge
receipt of a copy of the Corcoran Agreement, approve the Corcoran Agreement and
PACE hereby assigns the Corcoran Agreement to the Joint Venture and the Joint
Venture hereby assumes all obligations thereunder.
3
<PAGE>
6. Term.
The term of this Agreement and of the Joint Venture shall commence on
the date hereof and shall continue for as long as rights in the Play, including
the right to receive income, either (a) continue to be held by any joint
venturer or (b) are reacquired by any joint venturer during the period currently
five years after the termination of the Joint Venture.
7. Bank Account; Checks.
The parties have agreed to open bank accounts in New York in the name
of the Joint Venture at Chase Bank, 600 Fifth Avenue, New York, New York. Checks
on said account may be signed by any joint venturer or general manager.
8. Pre-Production Expenses.
The Venturers have heretofore contributed certain pre-production
expenses in connection with the production of the Play as set forth in Exhibit
"A" attached hereto, which also reflects how such funds have been expended. Such
expenses shall be included as part of the production budget of the Play and
shall be credited to the Venturers' respective obligations to contribute funds
to the Joint Venture pursuant to Paragraph 9.2 below.
9. Financing Productions of the Play.
9.1 The Venturers agree that the initial capitalization required
for the initial production of the Play (the "Capitalization") inclusive of all
required bonds shall be as set forth on the production budget attached hereto as
Exhibit "A".
9.2 The Venturers agree that each of them shall provide one-half
(1/2) of the Capitalization, to be provided on an "as needed" basis as presenter
deposits from the initial cities on the tour. Any third party deposits in the
form of advances shall be credited equally to reduce
4
<PAGE>
the share due from each of the Venturers. The aforesaid contributions of the
Venturers shall be provided to the Joint Venture, on a pari passu and pro rata
basis, as mutually agreed.
9.3 The Capitalization shall not be increased without unanimous
approval of the Venturers. The foregoing shall in no way derogate from any
Venturer's liability for losses and liabilities beyond the Capitalization, as
set forth in Paragraph 10.3 below.
9.4 If, in obtaining any monies hereunder, the parties are
required to take any actions to comply with the Securities Act of 1933, as
amended, or any rules or regulations promulgated thereunder, or to comply with
Article 23 of the Arts and Cultural Affairs Law of the State of New York, or any
rules and regulations promulgated thereunder, or the laws of any other state or
Jurisdiction relating to the sale of securities, they shall take, or cause to be
taken, such action as may be required to comply therewith. Each Venturer shall
indemnify and hold harmless the Joint Venture and the other Venturers against
any and all liability resulting from the breach by it of this Paragraph 9.4.
10. Allocation of Profits and Losses.
10.1 Any and all operating profits of the Joint Venture shall
first be distributed to the Venturers equally until the entire Capitalization
has been recouped by the Venturers.
10.2 Following recoupment, any and all net profits of the Joint
Venture shall be divided, as follows:
PACE - 60%
BSA - 40%
5
<PAGE>
10.3 All losses and liabilities of the Joint Venture in excess of
Capitalization, including without limitation any costs, expenses or other
liability pursuant to the Bonds, shall be borne and paid equally by the parties
hereto.
10.4 The profits and losses of the Joint Venture shall be defined
in accordance with generally accepted accounting principles, consistently
applied. The receipts of the Joint Venture shall include all receipts of any
kind or nature directly or indirectly received by the Joint Venture or any
Venturer, arising from, relating to, or connected with the Play, including
without limitation receipts from commercial sponsorships, merchandising, and the
sale of commercial use products, but specifically not including receipts of any
Venturer as general manager, theater owner, local presenter or promoter, booking
agent, or as a result of any interest it may have in any merchandising company,
publishing company or similar entity.
10.5 Any and all profits of the Joint Venture shall be distributed
to the Venturers at such time as the parties may agree provided that the Joint
Venture shall always have the right to retain sufficient monies to cover any
liabilities and to maintain adequate reserves.
10.6 The books and records of the Joint Venture shall be kept at
the offices of the General Manager in New York City. Each Venturer or its
authorized representative shall have the right, at reasonable times, during
regular business hours, to inspect such books and records.
11. Credit.
Subject to the terms of the Production Agreement and the Corcoran
Agreements, the production of the Play shall be announced substantially as
follows:
6
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PACE VARIETY ENTERTAINMENT, INC. & BROADWAY SERIES ASSOCIATES, INC.
IN ASSOCIATION WITH JOE CORCORAN PRODUCTIONS
PRESENT
The names of the Venturers shall be of equal size, style and prominence.
12. Fees
PACE shall receive a cash office charge of two hundred fifty dollars
($250) per week commencing three weeks prior to the commencement of rehearsals
of each company presented by the Joint Venture and continuing until two weeks
after the close of each such company.
13. Producer's Fee.
13.1 The producer's weekly royalty (the "Producer's Fee") shall be
two percent (2%), increasing to three percent (3%) at 150% recoupment, of the
gross weekly box office receipts of each company of the Play presented by the
Joint Venture. The Producer's Fee shall be shared as follows:
PACE 1.0% pre-recoupment; 1.5% at 150% recoupment
BSA 1.0% pre-recoupment; 1.5% at 150% recoupment
13.2 The Producer's Fee shall be calculated and paid in the same
manner as the royalty payable to Author pursuant to the Production Contract.
14. Other Activities.
Each of the Venturers shall devote such time and effort as may be
necessary or advisable for the furtherance of the production of the Play. Each
of the Venturers shall have the right to engage in other business activities
during the continuation of this Agreement, including, without limitation, the
production of other plays.
7
<PAGE>
15. Abandonment.
The parties may abandon the venture at any time upon mutual consent. At
any time after at least two full weeks of paid public performances have been
presented, any Venturer may request, by notice in writing delivered to the other
Venturers, that such company (the "Closing Company") be closed the second
following Sunday (the "Effective Date"). Such notices shall be given no later
than twelve o'clock noon on the Monday two weeks prior to the Effective Date. If
any Venturer (the "Closing Party") shall desire to close the production, and the
other Venturer (the "Running Party") shall desire to continue to run the
production, then the Running Party shall have the right to do so, and the
Closing Party shall (i ) have no further participation or interest in any
proceeds or profits of, and management fees and office charges, relating to the
production following the Effective Date, and (ii) have no further liability with
respect to any operating losses of the production following the Effective Date.
In the event that the Closing Party withdraws from the production, the Running
Party shall indemnify the Closing Party against any operating losses of the
production incurred following the Closing Date. The Closing Party shall forfeit
all right, title and interest in and to the Tour and all proceeds thereof
commencing with the Effective Date, but this shall not affect the Closing
Party's interest in any proceeds accrued prior thereto but not distributed.
16. Assignment.
This Agreement shall bind and inure to the benefit of each of the
Venturers and their respective executors, administrators, successors and
personal representatives. No Venturer hereto shall have the right to assign this
Agreement or any of its rights hereunder or herein without the prior written
consent of the other Venturers, except that:
8
<PAGE>
(a) PACE may assign this Agreement to any of Allen Becker, Brian Becker
and/or Miles Wilkin, to any corporation of which it or any of the foregoing
individuals is a controlling shareholder, to a limited liability company of
which any of the foregoing individuals is a managing member, or to any
partnership of which it or any of the foregoing individuals is a general
partner, provided that such assignee assumes in writing all of the obligations
of the assignor.
(b) BSA may assign this Agreement to Leslie Broecker, Amy Kessler, or
Sue Vierling, to any corporation of which it or any of the foregoing individuals
is a controlling shareholder, to a limited liability company of which it or any
of the foregoing individuals is a managing member, or to any partnership of
which it or any of the foregoing individuals is a general partner, provided that
such assignee assumes in writing all of the obligations of the assignor.
17. Governing Law.
This contract is made in the State of Texas and shall be construed in
accordance with, and governed by, the laws of that state applicable to contracts
made and performed entirely therein.
18. Notices.
18.1 All notices ("Notices") which any Venturer is required or may
desire to give to any other party under this Agreement shall be in writing and
shall be delivered personally or sent by registered or certified mail (postage
prepaid) or fax to such party at the address of such party given below, or at
such other address as such party shall have designated by notice duly given in
the manner above provided. All such notices shall be deemed given on receipt.
18.2 Copies of such notices shall be sent to:
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<PAGE>
for PACE: Elliot Brown, c/o Franklin Weinrib Rudell Vassallo
488 Madison Ave, 18th floor, NY NY 10022-5761
for BSA: Amy Kessler, c/o Broadway Series Associates
611 Main Street, Louisville, KY 40202
19. Arbitration.
Any controversy, claim, dispute or question arising out of, or in
connection with, or in relation to, the validity, interpretation, performance or
nonperformance of this Agreement, or any breach thereof, shall be determined and
settled by arbitration in New York City before a single arbitrator in accordance
with the then existing rules of the American Arbitration Association, and
judgment upon any award, which may include an award of damage, may be entered in
the highest court, of the forum, state or federal, having jurisdiction.
20. Miscellaneous.
20.1 Each of the parties hereto agrees to sign such further
instruments in writing as may be required to effectuate the purpose and intent
of this Agreement.
20.2 The failure of any party hereto to enforce at any time any of
the provisions hereof shall not be construed to be a waiver of such provisions
or of such party's rights thereafter to enforce such provisions.
20.3 This Agreement constitutes the entire understanding between
the parties hereto and replaces all prior understandings and agreements between
the parties with respect to production of the Play. It may not be modified
except by a written instrument signed by all of the parties.
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<PAGE>
20.4 Paragraph headings are inserted for convenience only and
shall not be deemed part of this Agreement for any purpose whatsoever.
20.5 This Agreement may be executed in several counterparts, and
all counterparts so executed by all the parties hereto and affixed to this
Agreement shall constitute a valid and binding agreement, even though all the
parties have not signed the same counterpart.
IN WITNESS WHEREOF, the parties have affixed their hands as of the
day and year first above written.
PACE VARIETY ENTERTAINMENT, INC. BROADWAY SERIES ASSOCIATES, INC.
By: /s/ Michael Gayler By: /s/ B. L Broecker
------------------------------ ------------------------------
Michael Gayler, Secretary B. L. Broecker, President
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<PAGE>
EXHIBIT "A" - PRODUCTION BUDGET
<PAGE>
TONY 'N TINA'S WEDDING NATIONAL TOUR 10/03/97
*********FOR DISCUSSION ONLY**********SUBJECT TO CHANGE********
PRELIMINARY ESTIMATED PRODUCTION BUDGET 5th Draft PAGE 1 OF 2
PHYSICAL PRODUCTION
Costumes and Hair 8,350
Lighting/Sound/Pops 2,500
Musical Instruments 0
Miscellaneous 500
FEES $11,350.00
Author 0
Director (Larry Pelligrini 0
Costume Designer (Juan DeArmas) 2,000
NY Costume Supervisor ($15 x 20hr) 300
General Manager 5,000
Casting 0
Legal 10,000
Executive Producer Fee (Joe Corcoran Prod) 5,000
Choreographer (Hal Simons) 500
$22,800.00
REHEARSAL SALARIES AND EXPENSES
Actors - 26 @ $350 x 1 week 9,100
Asst Dir/Actor @ $400 x 1 week 400
Stage Manager - $750 x 1 week 750
Musical Director - $500 x 1 week 500
Musicians - $350 x 2 x 1 week 700
General Manager - $750 x 2 weeks 1,500
Company Manager - $600 x 2 weeks 1,200
Press Agent 0
Marketing (Lourdes) 1,500
Wardrobe & Hair Supervisor 400
Audition Expenses 500
Rehearsal Space 500
Misc. Rehearsal Expenses 300
$17,350.00
LOAD-IN & RENOVATION
Wardrobe/Hair 750
Hauling 750
Departmental Bills 750
<PAGE>
$2,250.00
TONY 'N TINA'S WEDDING NATIONAL TOUR 9/26/97
*********FOR DISCUSSION ONLY**********SUBJECT TO CHANGE********
PRELIMINARY ESTIMATED PRODUCTION BUDGET 5th Draft PAGE 2 OF 2
ADVERTISING & PUBLICITY
TV/Radio Commercials 0
Photos and Print 1,000
Signs/Posters/Fliers 5,000
Front of House 0
Group Sales Materials 1,000
Opening Night Party 0
Press Agent Misc. Expenses 1,000
$8,000.00
ADMINISTRATIVE & GENERAL
Accountants Fee (Matt Farrell) 2,000
Office - $750 x 4 weeks (Joe Corcoran Prod.) 3,000
Office - $250 x 4 weeks (PACE) 1,000
Office - $250 x 4 weeks (BSMG) 1,000
Payroll Taxes 2,035
Insurance 6,000
Transportation 6,500
Per Diem 17,800
Prelim. Box Office 0
Development (PACE Conference) 17,213
Copying/Messenger/FedEx 2,000
Miscellaneous 1,000
$59,547.50
ADVANCE ROYALTIES
The TNT Company 20,000
Artificial Intelligence 1,000
Director's Advance / Pellegrini Royalties 1,000
$22,000.00
SUBTOTAL CAPITALIZATION $143,297.50
CONTINGENCY $31,702.50
<PAGE>
TOTAL MAXIMUM CAPITALIZATION $175,000.00
TONY 'N TINA'S WEDDING NATIONAL TOUR 10/03/97
*********FOR DISCUSSION ONLY**********SUBJECT TO CHANGE********
PRELIMINARY ESTIMATED PRODUCTION BUDGET 5th Draft PAGE 1 OF 2
SALARIES
Cast - 26 @ $400 10,400
Asst Dir/Actor 500
Stage Manager 600
General Manager 750
Company Manager 600
Press Agent 0
Musical Director/Actor 600
Wardrobe & Hair 500
Musicians - 2 @ $400 800
$14,750.00
ADVERTISING & PUBLICITY
Newspaper & Radio 0
Photos/Signs, etc 0
Special Promotions 0
Press Agent Expenses 0
Playbills/Misc 150
$150.00
DEPARTMENTAL EXPENSES
General/Tour/Stage Mgr. Exps 250
Wardrobe & Hair 850
Electrics/Sound 100
Music Department/Keyboard Rental 150
$1,350.00
THEATRE EXPENSES
Space Renovation & Scenery 0
Props and Furniture 0
Reception Space Rental 0
Ceremony Space Rental 0
Cleaning 0
Utilities/Maintenance 0
Catering 0
Miscellaneous 200
$200.00
<PAGE>
TONY 'N TINA'S WEDDING NATIONAL TOUR 10/03/97
*********FOR DISCUSSION ONLY**********SUBJECT TO CHANGE********
PRELIMINARY ESTIMATED PRODUCTION BUDGET 5th Draft PAGE 2 OF 2
GENERAL AND ADMINISTRATIVE
Accounting 350
Legal 200
Insurance 500
Payroll Taxes 1,814
Per Diems/Living Expenses 13,800
Transportation 1,200
Layoff 1,750
Telephone/Messenger 250
Payroll Service 75
Box Office Operations 0
Office Fee
(750.00 JCP, 250.00 PACE, 250.00 BSMG) 1,250
Miscellaneous 262
$21,450.00
TOTAL FIXED WEEKLY $37,900.00
PRODUCTION AMORTIZATION/PROFIT $9,600.00
TOTAL FIXED WEEKLY WITH AMORTIZATION $47,500.00
<PAGE>
EXHIBIT "B" - CITIES FOR PRESENTATION
PTG - SOLO
- ----------
Atlanta
Austin
Baltimore
Chicago / Rosemont
Costa Mesa
Dallas
Edmonton
Fort Lauderdale
Green Bay, Wisconsin
Houston
Long Beach
Miami
Milwaukee
Minneapolis
Myrtle Beach, SC
Nashville
New Orleans
Omaha
Ottawa
Orlando
Palm Beach
Pittsburgh
Portland, OR
San Antonio
Seattle
Tampa
Tempe / Phoenix
Washington, DC
BSA / PTG CO-PRESENT
- --------------------
Cincinnati
Columbus
Indianapolis
Louisville
BSA - SOLO
- ----------
Lexington, KY
Ashland, KY
Dayton, OH
Owensboro, KY
Bowling Green, KY
<PAGE>
EXHIBIT "C" - CITIES FOR PRESENTATION
GUARANTEE $47,500.00
ROYALTY GUARANTEE 10% of Gross
LOCAL PROMOTER COSTS Estimated at 20,000.00
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/09/1998
981474966 - 2757193
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SFX BROADCASTING OF THE MIDWEST, INC.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the "Corporation")
is SFX BROADCASTING OF THE MIDWEST, INC. The date of incorporation is May 30,
1997.
2. The certificate of incorporation of the Corporation is hereby
amended by striking out Article FIRST thereof and by substituting in lieu of
said Article the following new Article:
"FIRST: The name of the corporation (hereinafter called the
"corporation") is SFX CONCERTS OF THE MIDWEST, INC."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted and written consent has been given in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, said Corporation has caused this certificates to be
signed by Howard J. Tytel, its Secretary on this 9th day of December, 1995.
By: /s/ Howard J. Tytel
--------------------------
Howard J. Tytel
Secretary
<PAGE>
Microfilm Number ____________ Filed with the Department of State on __________
Entity Number ________________ Secretary of the Commonwealth __________________
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
In compliance with the requirement of 15 Pa.C.S. ss. 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: SJS ENTERTAINMENT CORPORATION
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name or its commercial registered office provider
and the county of venue is (the Department is hereby authorized to
correct the following information to conform to the records of the
Department):
(a) 319 Market Street, Harrisburg PA 17101 Dauphin
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the country in which the
corporation is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is
4. The date of its incorporation is: 11/30/95
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
The amendment shall be effective on:
6. (Check one of the following):
The amendment was adopted by the shareholders (or members )
pursuant to 16 Pa.C.S. ss. 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to
Pa.C.S. ss. 1914(C)
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full,
is as follows:
X The amendment adopted by the corporation is set forth in full in
Exhibit A attached hereto and made a part hereof.
8. (Check if the amendment restates the Articles):
The restated Articles of Incorporated supersede the original
Articles and all amendments thereto.
<PAGE>
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
29th day of October 1998.
SJS ENTERTAINMENT CORPORATION
By: /s/ [illegible]
--------------------------------
Title: Vice President
<PAGE>
UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF
SJS ENTERTAINMENT CORPORATION
(the "Company")
WHEREAS, the Company, a corporation duly organized and validly existing
under the laws of the State of Pennsylvania, desires to change the name of the
company by amending its certificate in incorporation; and
WHEREAS, the undersigned, being all of the Directors of the Company, in
compliance with section 15 Pa.C.S. ss. 1914(c), do hereby adopt the following
resolutions by unanimous written consent; now therefore be it
RESOLVED, that the certificate of incorporation of the Company is
hereby amended by striking out Article FIRST thereof, and be it
FURTHER RESOLVED, that Article FIRST will be replaced with the
following "FIRST: The name of the corporation (hereinafter called the
"corporation") is SFX RADIO NETWORK, INC."
The Unanimous Written Consent may be executed in one or more
counterparts which, taken together, shall constitute the original action of the
Board of Directors of the Company and shall be filed with the proceedings of the
Board of Directors of the Company.
IN WITNESS WHEREOF; the undersigned Board of Directors of the Company
has executed this Written Consent as of the 29th day of October, 1998.
/s/ [illegible]
---------------------------------
Robert F.X. Sillerman
/s/ [illegible]
---------------------------------
Howard J. Tytel
/s/ [illegible]
---------------------------------
Michael G. Ferrel
<PAGE>
(CHANGES) BUREAU USE ONLY:
DOCKETING STATEMENT DSCS 15-1348 (Rev 95) ___REVENUE ___LABOR & INDUSTRY
___OTHER
FILING FEE: NONE FILE CODE
FILED DATE
This form (title in triplicate) and all accompanying documents shall be mailed
to:
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Part I. COMPLETE FOR EACH FILING:
Current name of entity or registrant affected by the submittal to which this
statement relates: (survivor or ____ entity if merger or consolidation)
SJS ENTERTAINMENT CORPORATION
Entity number, if known: NOTE: ENTITY NUMBER is the computer index number
assigned to an entity upon initial filing in the Department of State.
Incorporation/qualification date in Pa.: 11/30/95 State of Incorporation: Pa.
Federal identification Number: 23-2828323
Specified effective date, if any: n/a
Part II. COMPLETE FOR EACH FILING This statement is being submitted with (check
proper box):
X Amendment: complete Section A only
<PAGE>
X Section A. CHANGES TO BE MADE TO THE ENTITY NAMED IN Part I: (Check
box/boxes which pertain)
X Name: to be changed to SFX RADIO NETWORK, INC.
- 2 -
<PAGE>
CERTIFICATE OF INCORPORATION...
Whereas, The stipulations and conditions of the Law have been fully complied
with by TICKET SERVICE, INC. ...
Given under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 20th Day of July in the year of our Lord one thousand nine
hundred and eighty-seven and of the Commonwealth the two hundred twelfth
/s/ illegible
- ----------------------------------
Secretary of the Commonwealth
<PAGE>
ARTICLES OF INCORPORATION PLEASE INDICATE (CHECK ONE) TYPE CORPORATION
|X| Domestic Business Corporation
TICKET SERVICE, INC.
4423 Bigelow Boulevard
Pittsburgh, Allegheny County, Pennsylvania 15213
EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION:
to have unlimited power to engage in and to do any lawful act concerning any and
all lawful business for which a corporation may be incorporated under the Act of
May 5, 1933 P.L. 364 as amended, under which Act this corporation is
incorporated
The Aggregate Number Shares, Classes of Shares and Par Value of Shares Which the
Corporation shall have Authority to Issue:
Number and Class of Shares: 10,000 Stated Par Value Per Share if Any: none
Total Authorized Capital: $10,000 Term of Existence: perpetual
The Name and Address of Each Incorporator and the Number and Class of Shares:
Spencer D. Hirshberg, Thirteenth Floor, One Oxford Centre, Pittsburgh, PA 15219
- -- 1 share common
IN TESTIMONY WHEREOF, THE INCORPORATOR(S) HAS (HAVE) SIGNED AND SEALED THE
ARTICLES OF INCORPORATION this 16th DAY OF July 1987.
/s/ Spencer D. Hirshberg
- -----------------------------
SPENCER D. HIRSHBERG
<PAGE>
TICKET SERVICE, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 2825 Penn Avenue,
Pittsburgh, in the county of Allegheny, Commonwealth of Pennsylvania.
Section 2. The Corporation may also have offices at such other places
as the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of the shareholders shall be held at the office of
the Corporation at 2825 Penn Avenue, Pittsburgh, PA 15222 or at such other place
or places, either within or without the Commonwealth of Pennsylvania, as may
from time to time be fixed or determined by the Board of Directors.
Section 2. The annual meeting of the shareholders shall be held each
year on such date within three (3) months following the close of the fiscal year
as shall be determined from time to time by the Board of Directors and shall be
held at a time and place determined by a resolution of the Board of Directors.
At such annual meeting, the shareholders shall elect the Board of Directors,
review reports of the affairs of the Corporation and transact any other business
which is within the powers of the shareholders.
Section 3. Notice of the annual meeting specifying the place, date and
hour of the meeting shall be given at least ten (10) days prior to the meeting,
to each shareholder entitled to vote thereat, being on record on the date fixed
as a record date, or, if no record date be fixed, then of record thirty days
next preceding the date of the meeting.
Section 4. Special meetings of the shareholders, for any purpose or
purposes, other than those regulated by statute or by the Articles of
Incorporation, may be called at any time by the President or by a majority of
the Board of Directors or by the holders of not less than twenty (20%) percent
of all shares issued and outstanding and entitled to vote at the particular
meeting which are provided with such right under the Pennsylvania Business
Corporation Law, upon written request delivered to the Secretary of the
Corporation. Such request shall state the purpose or purposes of the proposed
meeting. Upon receipt of any such request it shall be the duty of the Secretary
to call a special meeting of the shareholders to be held at such time, not less
than ten nor more than sixty (60) days thereafter, as the Secretary may fix. If
the Secretary shall neglect to issue such a call, the person or persons making
the request may issue the call.
1
<PAGE>
Section 5. Notice of any special meeting of shareholders shall be given
by, or at the direction of, the Secretary or other authorized person, stating
the place, the date and hour and the general nature of the business to be
transacted thereat, shall be given to each shareholder entitled to vote thereat
at least ten (10) days prior to the date named for a meeting called to consider
a fundamental change or five (5) days prior to the day named for the meeting and
other case. If the Secretary or other authorized person neglects or refuses to
give notice of a meeting, the person or persons calling the meeting may do so.
In the case of a special meeting of shareholders, the notice shall specify the
general nature of the business to be transacted.
Section 6. Business transacted at all special meetings shall be
confined to the purposes stated in the call and matters germane thereto unless
all shareholders entitled to vote consent to the consideration of additional
business.
Section 7. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares entitled to vote shall constitute a quorum
for the transaction of business at all meetings of the shareholders, except as
otherwise provided by law, by the Articles of Incorporation or by these Bylaws.
The shareholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum to conduct business which might have been transacted at
the meeting as originally notified provided notification of the meeting states
that those shareholders who attended the adjourned meeting shall constitute a
quorum for the purpose of acting upon the matter. If, however, any meeting of
the shareholders cannot be organized because a quorum has not attended, the
shareholders entitled to vote thereat, present in person or by proxy, shall have
power, except as otherwise provided by statute, to adjourn the meeting to such
time and place as they may determine, but in the case of any meeting called for
the election of Directors, such meeting may be adjourned only from day to day,
or for such longer periods not exceeding fifteen days each as the holders of a
majority of the shares present in person or by proxy shall direct, and those who
attend the second of such adjourned meetings, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing Directors. At any
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified provided notification is given of such quorum.
Section 8. When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the stock having voting power, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of the
statutes or of the Articles of Incorporation or by these Bylaws, a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Section 9. At each shareholders' meeting, every shareholder entitled to
vote shall have the right of one vote for every share having voting power
standing in his or her name on the books of the Corporation. Unless a record
date shall have been fixed for the determination of the shareholders entitled to
vote at a shareholders' meeting, transferees of the shares which are next
preceding the date of such meeting shall not be entitled to vote at such
meeting. Unless demanded by a shareholder of the Corporation present in person
or by proxy at any meeting of the shareholders and entitled to vote thereat or
so directed by the Chairman of such meeting or required by law, the vote thereat
on any
2
<PAGE>
question need not be by written ballot. On a vote by written ballot, each ballot
shall be signed by the shareholder voting or in his or her name by his or her
proxy, if there be such a proxy, and shall state the number of shares voted by
him or her and the number of votes to which each share is entitled.
Section 10. Every shareholder entitled to vote may vote either in
person or by proxy. Every proxy shall be executed in writing by the shareholder
or by his or her duly authorized attorney in fact and filed with the Secretary
of the Corporation. A proxy, unless coupled with an interest, shall be revocable
at will, notwithstanding any other agreement or any provision in the proxy to
the contrary, but the revocation of a proxy shall not be effective until notice
thereof has been given to the Secretary of the Corporation. An unrevoked proxy
shall not be valid after three years from the date of its execution unless a
longer time is expressly provided for. A proxy shall not be revoked by the death
or incapacity of the maker unless, before the vote is counted or the authority
is exercised, written notice of such death or incapacity is given to the
Secretary of the Corporation.
Section 11. The officer or agent having charge of the transfer books
for shares of the Corporation shall make a complete list of the shareholders
entitled to vote at any meeting of shareholders, arranged in alphabetical order,
with the address of and number of shares held by each, which list shall be kept
on file at the registered office of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
Section 12. Except for the action required by state law to be taken at
a meeting of the shareholders held after proper notice, any action required to
be taken at a meeting of the shareholders or a class of shareholders may be
taken without a meeting if, a consent in writing setting forth the action so
taken shall be signed by all of the shareholders who would be entitled to vote
at a meeting for such purpose and shall be filed with the Secretary of the
Corporation.
Section 13. One or more persons may participate in a meeting of the
shareholders of a business corporation by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 14. Shares of the Corporation standing in the name of a trustee
or other fiduciary and shares held by an assignee for the benefit of creditors
or by a receiver may be voted by the trustee, fiduciary, assignee or receiver. A
shareholder whose shares are pledged shall be entitled to vote the shares until
the shares have been transferred into the name of the pledgee, or a nominee of
the pledgee, but nothing herein shall affect the validity of a proxy given to a
pledgee or nominee.
Section 15. Where shares of the Corporation are held jointly or as
tenants in common by two or more persons, as fiduciaries or otherwise: (1) if
only one or more of such persons is present in person or by proxy, all of the
shares standing in the names of such persons shall be deemed to be represented
for the purpose of determining a quorum and the Corporation shall accept as the
vote of all the shares the vote cast by him or her or a majority of them; and
(2) if the persons are equally divided upon whether the shares held by them
shall be voted or upon the manner of voting the shares, the voting of the shares
shall be divided equally among the persons without prejudice to the
3
<PAGE>
rights of the joint owners or the beneficial owners thereof among themselves. If
there has been filed with the Secretary of the Corporation a copy, certified by
an attorney at law to be correct, of the relevant portions of the agreement
under which the shares are held or the instrument by which the trust or estate
was created or the order of court appointing them or of an order of court
directing the voting of the shares, the person specified as having such voting
power in the latest document so filed, and only those persons, shall be entitled
to vote the shares but only in accordance therewith.
Section 16. At every meeting of the shareholders, the president, or, in
the president's absence, the officer designated by a majority in interest of the
shareholders of the Corporation present in person or by proxy and entitled to
vote, shall act as chairman. The secretary of the Corporation shall act as
secretary of all meetings of the shareholders and in the absence of the
secretary, the chairman of the meeting may appoint another person to so act as
secretary of the meeting.
ARTICLE III
DIRECTORS
Section 1. The number of Directors shall consist of one or more members
as shall be determined from time to time by the Board of Directors. Directors
shall be a natural person of full age who, need not be a resident of this
Commonwealth or a shareholder of the Corporation. Except as hereinafter provided
in the case of vacancies, Directors, other than those constituting the first
Board of Directors, shall be elected by the shareholders, and each Director
shall be elected to serve for the term of one year and until his or her
successor shall be elected and qualified or until his or her earlier death,
resignation or removal. Any Director may resign at anytime upon written notice
to the Corporation. The resignation shall be effective upon receipt thereof by
the Corporation or at such subsequent time as shall be specified in the notice
of resignation. A decrease in the number of Directors shall not have the effect
of shortening the term of any incumbent Director.
Section 2. Vacancies in the Board of Directors, including vacancies
resulting from an increase in the number of Directors, may be filled by a
majority vote of the remaining members of the Board though less than a quorum,
or by the sole remaining Director, and each person so elected shall be a
Director until his or her successor is elected by the shareholders at an
election at the next annual meeting of the shareholders or any special meeting
duly called for that purpose and held prior thereto.
When one or more Directors resign from the Board effective at a future
date, the Directors then in office, including those who have so resigned, shall
have power by the applicable vote to fill the vacancies, the vote thereon to
take effect when the resignations become effective.
Section 3. The business and affairs of the Corporation shall be managed
by its Board of Directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by these Bylaws directed or required to be exercised and
done by the shareholders.
4
<PAGE>
Section 4. The meetings of the Board of Directors may be held at such
place within or without this Commonwealth as the Board of Directors may from
time to time appoint or as may be designated in the notice of the meeting.
Written notice of every meeting of the Board of Directors shall be given to each
Director at least five days before the day named for the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board need be specified in the notice of the meeting.
Section 5. The first meeting of each newly elected Board may be held at
such time and place as shall be fixed by the shareholders at the meeting at
which such Directors were elected and no notice shall be necessary to the newly
elected Directors in order legally to constitute the meeting, provided a
majority of the whole Board shall be present; or it may convene at such time and
place as may be fixed by the consent in writing of all the Directors.
Section 6. Regular meetings of the Board may be held at such time and
place as shall be determined from time to time, by Resolution of at least a
majority of the Board at a duly convened meeting, or by unanimous written
consent. Notice of regular meetings of the Board shall be given to each Director
at least five days before each meeting.
Section 7. Special meetings of the Board may be called by the President
on one day's notice to each Director. Special meetings may be called on the
written request of two Directors.
Section 8. At all meetings of the Board, the presence of a majority of
the Directors in office shall be necessary to constitute a quorum for the
transaction of business and the acts of a majority of the Directors present and
voting at a meeting at which a quorum is present shall be the acts of the Board
of Directors, except as may be otherwise specifically provided by statute or by
the Articles of Incorporation or by these Bylaws. If a quorum shall not be
present at any meeting of the Directors, the Directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Any action required or permitted to be taken at a meeting of
the Directors may be taken without a meeting if, prior or subsequent to the
action, a consent or consents thereto by all of the Directors in office is filed
with the Secretary of the Corporation.
Section 10. One or more Directors may participate in a meeting of the
Board of Directors of the Corporation by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
Section shall constitute presence in person at the meeting.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 11. The Board of Directors may, by resolution adopted by a
majority of the Directors in office, establish an Executive Committee to consist
of one or more Directors of the Corporation. The Executive Committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all of the powers and authority of the Board of Directors except that
the Executive Committee shall not have the power or authority as to the
following:
5
<PAGE>
(1) The submission to shareholders of any action requiring approval of
shareholders under this subpart.
(2) The creation or filling of vacancies in the Board of Directors.
(3) The adoption, amendment or repeal of the Bylaws.
(4) The amendment or repeal of any resolution of the Board that by its
terms is amendable or repealable only by the Board.
(5) Action on matters committed by the Bylaws or resolution of the
Board of Directors to another committee of the Board.
The Board may designate one or more Directors as alternate members of
the Executive Committee who may replace any absent or disqualified member at any
meeting of the Executive Committee or for the purposes of written action by the
Executive Committee. In the absence or disqualification of a member, an
alternate member or members of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or she or they constitute a quorum, may unanimously appoint another Director
to act at the meeting in the place of the absent or disqualified member. The
Executive Committee of the Board shall serve for a term at the pleasure of the
Board.
The Board of Directors may, by resolution adopted by a majority of the
Directors in office, establish such other committees as the Board of Directors
may deem fit; provided, however, that no such committee shall have any power or
authority as to the matters set forth in subparagraphs 1 through and including 5
above.
COMPENSATION OF DIRECTORS
Section 12. Directors may be compensated for their services by
Resolution of the Board and a fixed sum, and expenses of attendance if any, may
be allowed for attendance at each regular or special meeting of the Board or at
meetings of the committees, provided, that nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
LIABILITY AND INDEMNIFICATION
Section 13. Except for responsibility or liability of a Director
pursuant to any criminal statute or for payment of taxes pursuant to local,
state or Federal law, a Director of the Corporation shall not be personally
liable for monetary damages for any action taken or any failure to take any
action unless (a) such director has breached or failed to perform his or her
fiduciary duties as provided herein and (b) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness.
Section 14. (A) A Director of the Corporation shall stand in a
fiduciary relation to the Corporation and shall perform his or her duties as a
Director, including his or her duties as a member
6
<PAGE>
of any committee of the Board upon which he or she may serve, in good faith, in
a manner he or she reasonably believes to be in the best interests of the
Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. In performing his or her duties, a Director shall be entitled to
rely in good faith on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by any of the following:
(1) one or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the
matters presented;
(2) Counsel, public accountants or other persons as to matters which
the Director reasonably believed to be within the professional or
expert competence of such person.
(3) A committee of the Board upon which he or she does not serve, duly
designated in accordance with law, as to matter within its
designated authority, which committee the Director reasonably
believes to merit confidence.
A Director shall not be considered to be acting in good faith if he or
she has knowledge concerning the matter in question that would cause his or her
reliance to be unwarranted.
(B) In discharging the duties of their respective positions, the Board
of Directors, committees of the Board and individual Directors may, in
considering the best interest of the Corporation, consider the effects of any
action upon employees, upon suppliers and customers of the Corporation and upon
communities in which offices or other establishments of the Corporation are
located, and all other pertinent factors. The consideration of those factors
shall not constitute a violation of Subsection A.
(C) Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a Director or any failure to take any action
shall be presumed to be in the best interest of the corporation.
The standard of care recited herein shall comply with the requirements
of the Directors, Liability Act, 42 Pa. C.S.A. 8361, et seq., and the
Associations Code, 15 Pa.C.S.A. 1721, as the same may be amended from time to
time.
Section 15. The Corporation shall indemnify each person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he or she is or was a representative of the Corporation,
or is or was serving at the request of the Corporation as a representative of
another domestic or foreign corporation for-profit, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the action or proceeding if
he or she acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interest of the Corporation and, with respect
to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action or proceeding by judgment,
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order, settlement or conviction, or upon the plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not act
in good faith and in a manner that he or she reasonably believed to be in, or
not opposed to, the best interest of the Corporation and, with respect to any
criminal proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
Section 16. The Corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a representative of the
Corporation is or was serving at the request of the Corporation as a
representative of another domestic or foreign Corporation for profit or
not-for-profit, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of the action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Corporation. Indemnification shall not be made under this section in respect of
any claim, issue or matter as to which the person has been adjudged to be liable
to the Corporation unless and only to the extent that the court of common pleas
of the judicial district embracing the county in which the registered office of
the Corporation is located or the court in which the action was brought
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for the expenses that the court of common pleas or other
court deems proper.
Section 17. To the extent that a Director, Officer, employee or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 15 and 16 above, or in
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
or imposed upon him or her in connection therewith.
Section 18. Unless ordered by a Court, any indemnification under
Sections 15 or 16 above shall be made by the Corporation only as authorized in
the specific case upon a determination that the indemnification of the Director,
officer, employee or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in those sections. Such
determination shall be made:
(1) By the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to the action or
proceeding;
(2) If such quorum is not obtainable, or if obtainable and a majority
vote of a quorum of disinterested directors so directs, by
independent legal counsel in written opinion; or
(3) By the shareholders.
Section 19. Expenses (including attorneys' fees) incurred by a
Director, officer, employee or agent in defending any action or proceeding
referred to in Sections 15 or 16 above may be paid by the Corporation in advance
of the final disposition of the action or proceeding upon receipt of an
undertaking by or on behalf of the Director, officer, employee or agent to repay
the amount if it is
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ultimately determined that he or she is not entitled to be indemnified by the
Corporation as authorized in this Article.
Section 20. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article, shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding that office.
Indemnification pursuant to this paragraph shall not be made in any case where
the act or failure to act giving rise to the claim from indemnification is
determined by a Court to have constituted willful misconduct or recklessness.
Section 21. No amendment or repeal of this Article shall adversely
affect any right or protection extended to a Director, Officer, employee or
agent hereunder for an act or failure to act occurring prior to the time of such
amendment or repeal. Each Director, officer, employee and agent shall be deemed
to act in such capacity in reliance upon the rights of indemnification and
advancement of expenses hereunder shall continue as to a person who has ceased
to be a Director, Officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person.
Section 22. The Corporation may create a fund of any nature, which may,
but need not be, under the control of a trustee, or otherwise secure or insure
in any manner its indemnification obligations, whether arising under or pursuant
to this section or otherwise. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a Director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this article or otherwise.
Section 23. No contract or transaction between the Corporation and one
or more of its Directors or officers or between the Corporation and any other
corporation, partnership, association or other organization in which one or more
of its Directors or Officers are Directors or officers or have a financial
interest, shall be void or voidable solely for such reason, or solely because
the Director or Officer is present at or participates in the meeting of the
Board of Directors which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if: (a) the
material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors and the Board
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested Directors even though the disinterested
Directors are less than a quorum; (b) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Stockholders entitled to vote thereon, if any, and the contract
or transaction is specifically approved in good faith by vote of such
stockholders; or (c) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors
or the
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Stockholders. Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board which authorizes a contract or
transaction specified above.
Section 24. Any payments made to an officer or employee of the
Corporation, such as salary, commission, bonus, interest or rent or
entertainment or travel expense, which shall be disallowed to the Corporation in
whole or in part as a deductible expense by the Internal Revenue Service shall
be reimbursed by such officer or employee to the Corporation to the full extent
of such disallowance. It shall be the duty of the Board of Directors, as a
Board, to enforce payment of each such amount disallowed.
Section 25. Anything set forth in these Bylaws to the contrary
notwithstanding, it is the intent that the indemnification provisions hereof
shall be to the full extent permitted by the Associations Code (effective
generally October 1, 1989), 15 Pa.C.S. 51741, et seq. To the extent that the
indemnification provisions set forth in these Bylaws does not go to the length
permitted by said Associations Code, said indemnification provisions are hereby
deemed to be incorporated by reference.
ARTICLE IV
OFFICERS
Section 1. The Officers of the Corporation shall be chosen by the Board
of Directors and shall be a President, Secretary and Treasurer. The Board of
Directors may also choose a Chairman or one or more Vice Presidents. The
Officers of the Corporation need not be Directors.
Section 2. The President and Secretary shall be natural persons of full
age. The Treasurer may be a Corporation, but if a natural person shall be of
full age. Any number of offices may be held by the same person.
Section 3. The Board of Directors may also choose such other officers
and Assistant Officers and agents as the needs of the Corporation may require,
who shall hold their officers for such terms and shall have such authority and
shall perform such duties as from time to time shall be determined by Resolution
of the Board.
Section 4. The salaries of all Officers and agents of the Corporation
shall be fixed by the Board of Directors.
Section 5. The Officers of the Corporation shall hold office until
their successors are chosen and have qualified. Any Officer or agent of the
Corporation may be removed by the Board of Directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
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THE PRESIDENT
Section 6. The President shall be the chief executive officer of the
Corporation. He or she shall preside at all meetings of the shareholders and
Directors, shall be ex officio a member of the Executive Committee, if any. He
or she shall also have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board are
carried into effect.
Section 7. The President shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, if any, except
where required or permitted by law to be otherwise signed and executed, and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other Officer or agent of the Corporation.
THE VICE-PRESIDENT
Section 8. The Vice-President shall, in the absence or disability of
the President, perform the duties and exercise the powers of the President, and
shall perform such other duties as shall from time to time be imposed by the
Board of Directors.
THE SECRETARY
Section 9. The Secretary shall attend all sessions of the Board and all
meetings of the shareholders and record all the votes of the Corporation and the
minutes of all its transactions in a book to be kept for that purpose; and shall
perform like duties for the Executive Committee of the Board of Directors when
required. The Secretary, if any, shall give, or cause to be given, notice of all
meetings of the shareholders and of special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he or she shall be. The
Secretary shall keep in safe custody the corporate seal of the Corporation, and
when authorized by the Board, shall affix the same to any instrument requiring
it, and, when so affixed, it shall be attested by his or her signature or by the
signature of the Treasurer or an Assistant Secretary.
THE TREASURER
Section 10. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation in such depositories as
shall be designated by the Board of Directors.
Section 11. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the President and Directors, at the regular meetings of the
Board, or whenever they require it, an account of all his or her transactions as
Treasurer and of the financial condition of the Corporation.
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Section 12. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum, and with such surety or sureties as may
be satisfactory to the Board of Directors for the faithful discharge of the
duties of his or her office, and for the restoration of the Corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his or her control belonging to the Corporation.
STANDARD OF CARE
Section 13. An officer shall perform his or her duties as an officer in
good faith, in a manner he or she reasonably believes to be in the best interest
of the Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his or her duties shall not be liable by
reason of having been an officer of the Corporation.
ARTICLE V
CERTIFICATES OF SHARES
Section 1. The certificate of shares of the Corporation shall be
numbered and registered in a share register of the Corporation as they are
issued. They shall exhibit the name of the registered holder and the number and
class of shares and the series, if any, represented thereby and the par value of
each share or a statement that such shares are without par value, as the case
may be.
Section 2. Every share certificate shall be signed by the President or
Vice-President and the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer, but where such certificate is signed by a transfer agent
or by a transfer clerk of the Corporation and a registrar, the signature of any
corporate officer upon such certificate may be a facsimile, engraved or printed.
In case any officer who has signed or whose facsimile signature has been placed
upon any share certificate shall have ceased to be such Officer because of
death, resignation, or otherwise, before such certificate is issued, it may be
issued by the Corporation with the same effect as if the Officer had not ceased
to be such at the date of its issue.
Section 3. Neither shares nor certificates representing such shares may
be issued by the Corporation until the full amount of the consideration has been
paid. The consideration for the issuance of the shares may be paid, in whole or
in part, in money, obligations (including an obligation of a shareholder,
services performed whether or not contracted for, contracts for services to be
performed or other tangible or intangible property). Neither promissory notes
nor future services shall constitute payment, or part payment, for the shares of
the Corporation.
Section 4. The Corporation may issue one (1) or more classes or series
of shares, or both, any of which classes or series may be with par value or
without par value, and with such other designations, preferences,
qualifications, privileges, limitations, options, conversion rights and such
other special or relative rights as are stated in the Articles of Incorporation
or resolution of the Board
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of Directors. All shares of any one class shall have the same conversion,
redemption and other rights, preferences, qualifications, limitations and
restrictions. If the Corporation is authorized to issue shares of more than one
class, the certificate shall set forth a full summary or statement or
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued.
TRANSFER OF SHARES
Section 5. Upon surrender to the Corporation or its transfer agent of a
share certificate duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, a new certificate shall be issued to the
person entitled thereto and the old certificate cancelled and the transaction
recorded upon the books of the Corporation.
FIXING RECORD DATE
Section 6. The Board of Directors may fix a time, not more than one
hundred twenty (120) days, prior to the date of any meeting of shareholders or
the date fixed for payment of any dividend or distribution or the date for the
allotment of rights or the date when any change or conversion or exchange of
shares will be made or go into effect, as a record date for the determination of
the shareholders entitled to notice of and to vote at any such meeting or
entitled to receive payment of any such dividend or distribution or to receive
any such allotment of rights or to exercise the rights in respect to any such
change, conversion or exchange of shares. In such case, only such shareholders
as shall be shareholders of record on the date so fixed shall be entitled to
notice of and to vote at such meeting or to receive payment of such dividend or
to receive such allotment or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date so fixed. The Board of Directors may close the books of the
Corporation against transfer of shares during the whole or any part of such
period and in such case, written or printed notice shall be mailed at least ten
days before the closing thereof to each shareholder of record at the address
appearing on the records of the Corporation or supplied by him or her to the
Corporation for the purpose of this notice.
REGISTERED SHAREHOLDERS
Section 7. The Corporation shall be entitled to treat the holder of
record of any share or shares as the holders in fact thereof, and accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, and shall not be liable for any
registration or transfer of shares which are registered or to be registered in
the name of the fiduciary or the nominee of a fiduciary unless made with actual
knowledge that a fiduciary or nominee of a fiduciary is committing a breach of
trust in requesting such registration or transfer, or with knowledge of such
facts that its participation therein amounts to bad faith.
LOST CERTIFICATE
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Section 8. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost or destroyed,
upon the making of an Affidavit of that fact by the person claiming the share
certificate to be lost or destroyed. When authorizing such issuance of a new
certificate or certificates, the Board of Directors may in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his or her legal representative, to
advertise the same in such manner as it shall require and/or give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost or destroyed.
ARTICLE VI
GENERAL PROVISIONS
CHECKS AND NOTES
Section 1. All checks and demands for money and notes of the
Corporation shall be signed by such Officer or Officers as the Board of
Directors may from time to time designate.
FISCAL YEAR
Section 2. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 3. The corporate seal, if any, shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Pennsylvania". Said seal may be used by causing it or a facsimile thereof
to be impressed or fixed or in any manner reproduced. The affixation of the
corporate seal shall not be necessary to the valid execution, assignment or
endorsement by the Corporation of any instrument or other document.
NOTICES
Section 4. Whenever written notice is required to be given to any
person under the provisions of these Bylaws, it may be given to the person
either personally or by sending a copy thereof by first class or express mail,
postage prepaid, or by telegram (with messenger service specified), telex or TWX
(with answer back received) or courier service, charges prepaid, or by
telecopier to his or her address (or to his or her telex), TWX, telecopier or
telephone number, appearing on the books of the Corporation or in the case of
Directors, supplied by him or her to the Corporation for the purpose of notice,
if the notice is sent by mail, telegraph or courier service, it shall be deemed
to have been given to the person entitled thereto when deposited in the United
States
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mail or with a telegraph office or courier service for delivery to that person
or, in the case of telex or TWX, when dispatched.
Section 5. Any notice required to be given to any person may be waived
in writing signed by the person entitled to such notice whether before or after
the time stated therein. Attendance of any person entitled to notice, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting, except where any person attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting was not
lawfully called or convened.
CORPORATE RECORDS
Section 6. The Corporation shall keep complete and accurate books and
records of account, minutes of the proceedings of the incorporators,
shareholders and directors and a share register giving the names and addresses
of all shareholders and the number and class of shares held by each. The share
register shall be kept at either the registered office of the Corporation in
this Commonwealth or at its principal place of business wherever situated or at
the office of its registrar or transfer agent. Any books, minutes or other
records may be in written form or any other form capable of being converted into
written form within a reasonable time.
RIGHT OF INSPECTION
Section 7. Every shareholder shall, upon written verified demand
stating the purpose thereof, have a right to examine, in person or by agent or
attorney, during the usual hours for business for any proper purpose, the share
register, books and records of account, and records of the proceedings of the
incorporators, shareholders and directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the shareholder. The demand shall
be directed to the Corporation at its registered office in this Commonwealth or
at its principal place of business wherever situated.
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Except as provided in Section 1504 of the Associations Code,
15 Pa.C.S.A. ss.1504, amendments to these Bylaws may be made by a vote of the
members of the Board of Directors at any regular meeting of the Board, or at any
special meeting of the Board if notice of the proposed amendment be contained in
the notice of such meeting, or by a unanimous consent in writing of the members
of the Board of Directors; subject, however, to the power of the shareholders to
change such action.
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STATE OF FLORIDA
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of TOURING ARTISTS GROUP, INC., a corporation organized under the
laws of the State of Florida, filed on March 16, 1993, as shown by the records
of this office.
The document number of this corporation is P93000019754.
Given under my hand and the
Great Seal of the State of
Florida at Tallahassee, the
Capitol, this the Twelfth
day of October, 1998
/s/ Sandra R. Mortham
---------------------
Sandra R. Mortham
Secretary of State
<PAGE>
STATE OF FLORIDA
ARTICLES OF INCORPORATION
OF
TOURING ARTISTS GROUP, INC.
THE UNDERSIGNED, ACTING AS THE INCORPORATOR OF A CORPORATION UNDER THE
FLORIDA GENERAL CORPORATION ACT, ADOPTS THE FOLLOWING ARTICLES OF INCORPORATION:
FIRST: THE NAME OF THE CORPORATION IS TOURING ARTISTS GROUP, INC.
SECOND: THE PERIOD OF ITS DURATION IS PERPETUAL.
THIRD: THE DATE AND TIME OF THE COMMENCEMENT OF THE CORPORATE
EXISTENCE IF OTHER THAN THE TIME OF FILING OF ARTICLES BY THE
DEPARTMENT OF STATE IS IMMEDIATELY UPON FILING BY THE
DEPARTMENT OF STATE.
FOURTH: THE PURPOSE OR PURPOSES FOR WHICH THE CORPORATION IS ORGANIZED
ARE:
TO ENGAGE IN THE TRANSACTION OF ANY OR ALL LAWFUL BUSINESS FOR WHICH
CORPORATIONS MAY BE INCORPORATED UNDER THE PROVISIONS OF THE FLORIDA GENERAL
CORPORATION ACT.
FIFTH: THE AGGREGATE NUMBER OF SHARES WHICH THE CORPORATION SHALL
HAVE AUTHORITY TO ISSUE IS:
One Thousand (1,000) common shares at a par value of One Dollar ($1.00)
per share.
SIXTH: PROVISIONS GRANTING PREEMPTIVE RIGHTS ARE: None
SEVENTH: PROVISIONS FOR THE REGULATION OF THE INTERNAL AFFAIRS OF THE
CORPORATION ARE: None.
EIGHTH: THE PRINCIPAL OFFICE, MAILING ADDRESS AND THE STREET ADDRESS
OF THE INITIAL REGISTERED OFFICE OF THE CORPORATION IS 1117
Floridian Court, Cape Coral, Florida 33904
AND THE NAME OF ITS INITIAL REGISTERED AGENT AT SUCH ADDRESS IS Glenn
Bechdel.
NINTH: THE NUMBER OF DIRECTORS CONSTITUTING THE INITIAL BOARD OF
DIRECTORS OF THE CORPORATION IS FIVE (5), AND THE NAMES AND
ADDRESSES OF THE PERSONS WHO ARE TO SERVE AS DIRECTORS UNTIL
THE FIRST ANNUAL MEETING OF SHAREHOLDERS OR UNTIL THEIR
SUCCESSORS ARE ELECTED AND SHALL QUALIFY ARE:
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<PAGE>
NAME STREET ADDRESS
---- --------------
Lee D. Marshall 9265 Olds Eight Road, Northfield, OH 44067
Joseph Marsh 930 Washington Avenue, Miami Beach, FL
Brad Nrassner 930 Washington Avenue, Miami Beach, FL
Larry M. Turk 930 Washington Avenue, Miami Beach, FL
Glenn Bechdal 1117 Floridian Court, Cape Coral, FL 33904
TENTH: THE NAME AND ADDRESS OF EACH INCORPORATOR IS:
NAME STREET ADDRESS
---- --------------
Thomas M. Zwilling Suite 700, 322 Boulevard of the Allies,
Pittsburgh, PA 152222
DATED: March 2, 1993
/s/ Thomas M. Zwilling, Incorporator
------------------------------------
Thomas M. Zwilling, Incorporator
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF ALLEGHENY
THE FOREGOING INSTRUMENT WAS ACKNOWLEDGED BEFORE ME THIS 2nd DAY OF
March, 1993, BY THOMAS M. ZWILLING OF TOURING ARTISTS GROUP, INC.
(NAME OF INCORPORATOR)
/s/ Shirley A. Minshull
-----------------------
Shirley A. Minshull
NOTARY PUBLIC
GLENN BECHDEL, having been designated to act as registered agent for
TOURING ARTISTS GROUP, INC., hereby agrees to act in this capacity.
/s/ Glenn Bechdel
-----------------
GLENN BECHDEL
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<PAGE>
BY-LAWS
ARTICLE I.
GENERAL
SECTION 1. The name of this Corporation shall be the TOURING ARTISTS GROUP, INC.
SECTION 2. The principal office of this Corporation shall be located at 1117
Floridian Court, Cape Coral, Florida 33904.
SECTION 3. The Corporation may, in addition to its principal office, establish
and maintain such other offices, at such place or places as the Board of
Directors may deem necessary, desirable or expedient from time to time.
Moreover, the Board of Directors shall have the authority to change the
principal office of the Corporation so long as proper notice and such filing of
documents as is required is made with the Department of State of the State of
Florida.
ARTICLE II.
CORPORATE SEAL
SECTION 1. The corporate seal of this Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization, and the word
"FLORIDA."
SECTION 2. The said seal may be used by any of the officers of the Corporation
by causing an impression or facsimile thereof to be impressed or affixed to any
paper or document necessary and proper to the conduct of the business of the
Corporation.
ARTICLE III.
SHAREHOLDERS AND THEIR RIGHTS
SECTION 1. All meetings of the Shareholders and of the Board of Directors, if
any, shall be held at the principal office of the Corporation, within the State
of Florida, or at such other place or places as the directors may, from time to
time determine.
SECTION 2. The annual meeting of the Shareholders, commencing with the year
1994, shall be held on the first Friday of April of each year at 1:00 o'clock,
P.M., at which time they shall elect a Board of Directors, if required, and
transact any other business as may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting, specifying the location, day
and hour of the meeting, shall, at least ten (10) days prior to the meeting, be
served upon or mailed, postage prepaid, to each Shareholder entitled to vote
thereat, being of record ten (10) days next preceding the date of the meeting,
at such address as appears on the transfer books of the corporation by the
Secretary.
<PAGE>
SECTION 4. Special meetings of the Shareholders for any purpose or purposes,
other than those regulated by statute, may be called at any time by the
President, or a majority of the Board of Directors, or the holders of not less
than one-half of all the shares issued and outstanding and entitled to vote at
the particular meeting, upon written request identifying the purpose (s) of the
meeting and delivered to the Secretary of the Corporation. Upon receipt of any
such request, it shall be the duty of the Secretary to call a special meeting of
the Shareholders to be held at such time, not less than ten (10) days nor more
than thirty (30) days thereafter, as the Secretary may fix.
SECTION 5. Written notice of any special meeting of the Shareholders shall be
given to each Shareholder entitled to vote thereat, at such address as appears
on the transfer books of the Corporation, at least ten (10) days before such
meeting, unless a greater period of notice is required by statute in a
particular case. Identification of the purpose(s) of the special meeting shall
be provided in the notice.
SECTION 6. Business transacted at all special meetings shall be confined to the
purpose(s) stated in the call and matters germane thereto.
SECTION 7. Those Shareholders present in person, or represented by proxy, at any
annual meeting of shareholders or at any duly called and properly noticed
special meeting of Shareholders shall be requisite and shall constitute a quorum
at all such meetings of Shareholders for the transaction of business, except as
otherwise provided by statute, by the Articles of Incorporation or by these
By-Laws.
SECTION 8. When a quorum is present, or represented at any meeting, the vote of
the holders of a majority of the stock having voting power, present in person,
or represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
the Articles of Incorporation or these By-Laws, a different vote is required, in
which case, such express provision shall govern and control the decision of such
question.
SECTION 9. At every Shareholders' meeting, every Shareholder entitled to vote
shall have the right to one (1) vote for every share of voting stock standing in
his name on the books of the Corporation. Unless a record date shall have been
fixed for the determination of Shareholders entitled to vote at a Shareholders'
meeting, transferees of shares which are transferred on the books of the
Corporation within ten (10) days next preceding the date of such meeting shall
not be entitled to vote at such meeting. Upon demand made by a Shareholder
before the voting begins, at any election for Directors, the election shall be
by written ballot.
SECTION 10. Every Shareholder entitled to vote may vote either in person or by
proxy. Every proxy shall be executed in writing by the Shareholder or his duly
authorized attorney- in-fact and filed with the Secretary of the Corporation. A
proxy, unless coupled with an interest explicitly set forth in the proxy, shall
be revocable at will, notwithstanding any other agreement
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<PAGE>
or any provision in the proxy to the contrary, but the revocation of a proxy
shall not be effective until notice thereof has been given to the Secretary of
the Corporation. No unrevoked proxy shall be valid after thirty (30) days from
the date of its execution, unless a longer time is expressly provided therein,
but in no event shall a proxy, unless coupled with an interest, be voted on
after ninety (90) days from the date of its execution. A proxy shall not be
revoked by the death or incapacity of the maker, unless, before the vote is
counted or the authority is exercised, written notice of such incapacity is
given to the Secretary of the Corporation.
SECTION 11. The officer or agent having charge of the transfer books for shares
of the Corporation shall make, at least ten (10) days before each meeting of
Shareholders, a complete list of the Shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address and the number of
shares held by each, which list shall be kept on file at the registered office
of the Corporation and shall be subject to inspection by any Shareholder at any
time during usual business hours. Such list shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting. If, at any time, there are
three (3) or less Shareholders of the Corporation, the duties imposed by this
section shall be waived.
SECTION 12. In advance of any meeting of Shareholders, the Board of Directors
may appoint judges of the election, who shall be Shareholders, to act at such
meeting or any adjournment thereof. If judges of election be not so appointed,
the Chairman of any such meeting, on the request of any Shareholder or proxy,
shall make such appointment at the meeting. The number of judges shall be three
(3). No person who is a candidate for office shall act as a judge. The judges of
election shall do all such acts as may be proper to conduct the election or vote
with fairness to all Shareholders and shall make a report of any matter
determined by them and execute a certificate of any fact found by them, if
requested by the Chairman of the meeting or any Shareholder or his proxy. The
decision on the act, or certificate of a majority of the judges of the election
shall be effective in all respects as the decision, act or certificate of all
Shareholders.
SECTION 13. If set forth in the notice calling a regular or special meeting of
the Shareholders, or if consented to by all of the Shareholders, any regular or
special meeting of shareholders may be held by conference telephone. Any meeting
held by conference telephone shall require the participation of a majority of
the Shareholders, present by telephone or represented on the telephone by proxy,
to constitute a quorum of the Shareholders. In addition, for non-telephone
conference meetings, at the discretion of a majority of the Shareholders present
in person, or represented by proxy, any one or more of the Shareholders may
participate in any regular or special meeting of the Shareholders by conference
telephone in lieu of physically attending the meeting.
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ARTICLE IV.
INFORMAL ACTION BY SHAREHOLDERS
SECTION 1. Any action required to be taken at a meeting of the Shareholders may
be taken without a meeting, if a consent in writing setting forth the action so
taken shall be signed by all Shareholders who would be entitled to vote at a
meeting for such purposes and the consent shall be filed with the Secretary of
the Corporation.
ARTICLE V.
DIRECTORS
SECTION 1. The number of Directors which shall constitute the Board of Directors
shall be five (5). Directors shall be natural persons of full age and need not
be shareholders of the Corporation. Except as hereinafter provided in the case
of vacancies, Directors other than those constituting the first Board of
Directors shall be elected by the Shareholders, and each Director shall be
elected to serve for the term of one year and/or until his successor shall be
elected and shall qualify.
SECTION 2. Vacancies in the Board of Directors shall be filled by a majority of
the remaining members of the Board, though less than a quorum and each person so
elected shall be a Director until his successor is elected by the Shareholders,
who may make such election at the next annual meeting of the Shareholders, or at
any special meeting duly called for the purpose and held prior thereto.
SECTION 3. The business and affairs of the Corporation shall be managed by its
Board of Directors which may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by statute, or by the Articles of
Incorporation or by these By-Laws directed or required to be exercised and done
by the Shareholders.
SECTION 4. The Board of Directors shall exercise such powers as are expressly
given them by the Articles of Incorporation and these By-Laws, together with
such powers as will enable them to do all such lawful acts as are necessary,
proper and expedient for the welfare of this Corporation, and are not directed
or required to be exercised by the Shareholders by statute, the Articles of
Incorporation, or these By-Laws; and without prejudicing the general powers of
the Board of Directors, as hereinafter stated, it is expressly declared that the
Directors shall have the following powers:
(a) To make and change regulations not inconsistent
with these By-Laws for the management of the Corporation's business and affairs;
(b) To have full power, from time to time, to
purchase or otherwise acquire for the Corporation any property, rights or
privileges which the Corporation is authorized by law to purchase, or otherwise
acquire, at such prices and considerations and upon such terms and conditions as
the Board may consider advisable, and in its discretion, may pay therefor, in
whole or in part, in money, or in stocks, bonds, or both, or other securities of
the Corporation;
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(c) To sell, or otherwise dispose of, transfer or
convey, any property of the Corporation, at such prices and considerations and
upon such terms and conditions as the Board may consider advisable, and in its
discretion they may accept in payment or exchange therefore, in whole, or in
part, money or stocks, or bonds, or other securities of any Corporation or
Corporations, except as otherwise provided by law, or by the Articles of
Incorporation;
(d) To borrow money, and to make and issue notes,
bonds, and other negotiable and transferrable instruments, mortgages, deeds of
trust, and trust agreements, and do every act and thing necessary to effectuate
the same;
(e) To appoint and remove, or suspend, such
employees, agents or factors as they may deem necessary; to determine their
duties, to fix, and from time to time, to change their salaries or remuneration,
and to require security as and when they think fit;
(f) To manage the property, business and affairs of
the Corporation and the Directors, as a Board, are hereby invested in such
management with all the powers which the Corporation itself possesses so far as
such delegation of power is not incompatible with the provisions of these
By-Laws, or the laws of the State of Florida.
SECTION 5. Any Director shall be subject to removal by the majority vote of the
holders of the common voting stock, at a special meeting called for that
purpose, with or without cause.
SECTION 6. If the office of any Director shall become vacant by reason of death,
resignation, removal, or other reason, the remaining Directors, by a majority
vote may, at a meeting of the Board of Directors specially called, elect a
successor who shall hold office for the unexpired term and until his successor
is elected and qualifies, unless a special meeting of the holders of the common
voting stock is duly called for the purpose of filling the vacancy and is
actually held prior to the annual meeting.
SECTION 7. Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board of Directors, a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board, provided that nothing herein contained shall be construed
to preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE VI.
MEETINGS OF THE BOARD
SECTION 1. The meetings of the Board of Directors may be held at such place
within the State of Florida as a majority of the Directors may from time to time
appoint or as may be designated in the notice calling the meeting. If no place
is so appointed or designated, the meeting shall be held at the principal place
of business of the Corporation.
SECTION 2. The first meeting of each newly elected Board may be held at such
time and place as shall be fixed by the Shareholders at the meeting at which
such Directors were
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elected and no notice shall be necessary to the newly elected Directors in order
to legally constitute the meeting, provided a majority of the whole Board shall
be present; or it may convene at such time and place as may be fixed by the
consent in writing of all the Directors.
SECTION 3. Regular meetings of the Board shall be held at such time as shall
from time to time be determined by a majority of the Directors, on five (5) days
notice to each Director, given personally or by mail or by telegram.
SECTION 4. Special meetings of the Board may be called by the President on three
(3) days' notice to each Director, either personally or by mail or by telegram,
said notice specifying the purpose(s) of the special meeting; special meetings
shall be called by the President or Secretary in a like manner and on like
notice on the written request of two (2) Directors.
SECTION 5. At all meetings of the Board, a majority of the Directors in office
shall be necessary to constitute a quorum for the transaction of business, and
the acts of a majority of the Directors present at a meeting at which a quorum
is present, shall be the acts of the Board of Directors, except as otherwise
specifically provided by statute or by the Articles of Incorporation, or by
these By-Laws. If a quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 6. If all the Directors shall severally or collectively consent in
writing to any action to be taken by the Corporation, such action shall be as
valid a corporate action as though it had been authorized at a meeting of the
Board of Directors. All consents shall be filed with the Secretary of the
Corporation.
SECTION 7. If set forth in the notice calling a regular or special meeting of
the Board of Directors, or if consented to by all of the Board of Directors, the
regular or special meeting of Board of Directors may be held by conference
telephone, with a majority of the Directors present by telephone to constitute a
quorum of the meeting. In addition, at the discretion of a majority of the Board
of Directors present at a duly called and noticed regular or special meeting of
the Board of Directors, one or more of the Directors may participate in the
meeting by conference telephone in lieu of physically attending the meeting.
ARTICLE VII.
OFFICERS
SECTION 1. The officers of the Corporation shall be chosen by the Directors and
shall be a president, a vice-president, a secretary, and a treasurer. In
addition, the Board of Directors may appoint any such other vice-presidents,
assistant secretaries, or assistant treasurers it deems necessary to efficiently
operate the Corporation. The president, secretary, treasurer, vice-president and
any other vice-presidents, assistant secretaries, or assistant treasurers shall
be natural persons of full age. Any or all of the foregoing offices may be held
by the same person.
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SECTION 2. The Board of Directors, at their first meeting of each calendar year
commencing in 1993 shall elect a president, secretary and treasurer and shall
appoint such vice-presidents, assistant secretaries and assistant treasurers as
necessary.
SECTION 3. The Board of Directors may also choose such other officers and
assistant officers and agents as the needs of the Corporation may require, who
shall hold their offices for such terms and shall have such authority and shall
perform such duties as from time to time shall be determined by resolution of
the Board.
SECTION 4. The salaries of all officers and agents of the Corporation shall be
fixed by the Board of Directors.
SECTION 5. The officers of the Corporation shall hold office for one year and
until their successors are chosen and have qualified. An officer or agent,
elected or appointed by the Board of Directors, may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby. If the office of any officer becomes vacant for any reason, the
vacancy shall be filled by the Board of Directors.
SECTION 6. The President shall be the chief executive officer of the
Corporation; he shall preside at all meetings of the Shareholders and Directors;
shall have general and active management of the business of the Corporation, and
shall see that all orders and resolutions of the Board are carried into effect.
SECTION 7. The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
SECTION 8. The Vice-President, if one is appointed, shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as shall from time to time be
imposed by the Board of Directors.
SECTION 9. The Secretary shall attend all meetings of the Shareholders and of
the Board of Directors, and shall act as clerk thereof. He shall record the
minutes of all transactions at each meeting in a book to be kept for that
purpose, wherein shall also be a record of all the votes of the corporation. The
Secretary shall give or cause to be given notice of all meetings of the
Shareholders or the Board of Directors, where notice is required by statute or
these By-Laws, and shall, in addition thereto, perform such other duties as may
be prescribed by the Board of Directors or the President under whose supervision
he shall be. The Secretary shall keep in his custody the corporate seal, and
shall affix it to any instrument when authorized so to do by the Board of
Directors or the President, and when so affixed it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary. The
Assistant Secretary, if one is elected,
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shall perform all the duties of the Secretary in the event the Secretary is
absent for any reason and shall assist the Secretary in the performance of his
duties.
SECTION 10. The Treasurer shall have the care and custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as shall be designated by the Board of
Directors. The Assistant Treasurer, if one is elected, shall perform all the
duties of the Treasurer in the event the Treasurer is absent for any reason and
shall assist the Treasurer in the performance of his duties.
SECTION 11. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meeting of the Board of
Directors, or whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the Corporation. In addition, the
Treasurer shall render an annual statement as to the financial condition of the
Corporation; he shall have charge and custody of the original stock books, the
stock transfer books and stock ledgers, shall act as the stock transfer agent,
and perform such other duties as may be incident to the office of Treasurer.
SECTION 12. The Treasurer shall, if required by the Board of Directors, give the
Corporation a bond, in such sum, and with such surety or sureties as may be
satisfactory to the Board of Directors for the faithful discharge of the duties
of his office, and for the restoration of the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
ARTICLE VIII.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. Litigation Brought by Third Parties. Each individual who was or is a
party or is threatened to be a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, or other than an action by or in the right of the Corporation, by
reason of the fact that he is or was a Director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation
against all expenses, including attorney's fees, judgments, fines, amounts paid
in settlement, and all other liabilities actually and reasonably incurred or
imposed upon him in connection with or arising from such action, suit, or
proceeding: PROVIDED, HOWEVER, that the Corporation shall not indemnify any such
person, whose actions or failure to act on behalf of the Corporation which gives
rise to the claim for indemnification, is determined by a court to constitute
wilful misconduct or recklessness.
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SECTION 2. Litigation by or in the Right of the Corporation. Each person, his
heirs, executors or administrators, who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Corporation only
as to the litigation expenses, including attorney's fees, actually and
reasonably incurred or imposed upon him in connection with the defense or
settlement of such action or suit; PROVIDED, HOWEVER, that the Corporation shall
not indemnify any person whose actions or failure to act has been determined by
a court to constitute willful misconduct or recklessness.
SECTION 3. Indemnification as of Right. To the extent that a Director, officer,
employee, or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section 1
and 2, or in defense of any claim, issue or matter therein, he shall have the
absolute right to be indemnified against expenses, including attorney fees,
actually or reasonably incurred by him in connection therewith. The
determination of what expenses are actually or reasonably incurred shall be
determined by the Board of Directors, but in the event of disagreement, the
person making the request may apply to the Circuit Court of Lee County, Florida,
or in any other state court of appropriate jurisdiction for such determination.
SECTION 4. Advances for Expenses. Expenses incurred defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors after making a determination upon the basis of the facts then
available that the person making the request for an advance is entitled thereto
under the standards of the applicable Section 1 or 2. Such advance shall be
granted only upon receipt of an undertaking by or on behalf of the Director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
SECTION 5. Non-Exclusivity and Non-Duplication. The indemnification provided by
this Article shall not be deemed exclusive of any rights to which any person
seeking indemnification may be entitled under any other By-Law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to actions in
his official capacity and as to actions in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person. The indemnification provided by
this Article shall not be exclusive of any powers, rights, agreements, or
undertaking which may be legally permissible or authorized by or under any
applicable law. Notwithstanding any other provision set forth in this Article,
the indemnification authorized and provided hereby shall be applicable only to
the extent that any such indemnification shall not duplicate any indemnification
or reimbursement which such person has received or shall receive otherwise than
under this Article.
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SECTION 6. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of the
Corporation or is or was serving at the request of the corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability asserted against him and incurred by him in any such capacity under
the provisions of this Article or otherwise, upon such terms and conditions as
the Corporation may deem requisite, including a requirement that any such person
must contribute a portion or all of the cost of maintaining such insurance.
ARTICLE IX.
PERSONAL LIABILITY OF DIRECTORS
SECTION 1. A Director of the Corporation shall not be personally liable for
monetary damages to the Corporation or any other person for any action taken, or
any failure to take any action, regarding corporate management or policy,
unless: (a) the Director has breached or failed to perform the duties of his
office as set forth under the laws of the State of Florida; and (b) the breach
of, or failure to perform, those duties constitutes (1) a violation of any
criminal statute, unless the director had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (2) self-dealing-resulting in a direct or indirect personal benefit;
(3) an unlawful distribution; (4) conscious disregard for the best interest of
the corporation; (5) willful misconduct; or (6) recklessness.
ARTICLE X.
CERTIFICATE OF SHARES
SECTION 1. The certificates of shares of the Corporation shall be numbered and
registered in the share register as they are issued. They shall exhibit the
registered holder's name and the number and class of shares represented thereby
and the par value, if any, of each share.
SECTION 2. Every share certificate shall be signed by the President and the
Secretary, or the Treasurer and shall be sealed with the corporate seal. In case
any officer who has signed shall have ceased to be such officer because of
death, resignation, or otherwise, before the certificate is issued, it may be
issued by the Corporation with the same effect as if the officer had not ceased
to be such at the date of its issue.
SECTION 3. In the event of dissolution, the distribution of the assets shall
inure only to the benefit of the owners of the outstanding shares of stock; said
distribution of the assets to the owners of the outstanding shares shall be in
the same proportion which the number of shares of outstanding stock held by each
person bears to the total of shares outstanding.
SECTION 4. When the holder of any stock certificate, or his personal
representative shall allege and represent to the Treasurer of the Corporation
that a certificate of stock has been
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lost or destroyed or mutilated, the Directors may direct that a duplicate
certificate be issued, provided, however, that the Board of Directors shall have
the right to demand that the said holder, or his personal representative, first
give to the Corporation a bond with sufficient surety in a sum equal to double
the book value of the stock represented by said certificate, to indemnify it
against any loss which it may in the future sustain by reason of the issuance of
said duplicate certificate, while the original certificate remains outstanding.
SECTION 5.
(a) Provided that the terms of any shareholders agreement which may
be in effect from time to time are complied with, and all applicable
securities laws are complied with, Shares of the stock of this Corporation
may be transferred upon surrender of the certificate thereof to the
Treasurer of the Corporation endorsed by the holder named therein, or his
attorney, lawfully appointed or constituted in writing, which transfer
shall immediately be entered upon the proper books of the Corporation by
the Treasurer thereof.
(b) Upon compliance with these terms, the Treasurer shall cancel the
surrendered certificate by an appropriate marking across its face, and
shall issue a new certificate therefore, indicating the new holder, and,
in the event that he had only a special interest in said stock, the nature
of the special interest.
SECTION 6. The Board of Directors may fix a time, not less than ten (10) nor
more than thirty (30) days prior to the date of any meeting of Shareholders, as
a record date for the determination of the Shareholders entitled to receive
payment of any such dividend or distribution, or to receive any such allotment
of rights, or to exercise their rights in respect to any such change, conversion
or exchange of shares. In such case, only such Shareholders as shall be
Shareholders of record on the date so fixed shall be entitled to notice of, and
to vote at, such meeting, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date so fixed. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of such
period and, in such case, written or printed notice thereof shall be mailed at
least five (5) days before the closing thereof to each shareholder of record at
the address appearing on the records of the Corporation or supplied by said
Shareholder to the Corporation for the purpose of notice.
SECTION 7.
(a) Any stock acquired by the Corporation shall be held in the name
of the Corporation, subject to the control of the Board of Directors,
which may, offer it for sale at such price as it may deem proper to such
entity or entities as it may select. The Shareholders shall not have any
preemptive rights in the issuance of treasury stock nor in the issuance of
authorized but unissued stock.
(b) Any purchaser shall be subject to these By-Laws and any
provisions of a Shareholders Agreement that may be in effect at the time
of purchase.
SECTION 8. When issued, all certificates of stock shall be conspicuously noted
that they are issued subject to all limitations imposed by these By-Laws, any
Shareholders
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Agreement that may be in effect from time to time, and any applicable Federal
and State Securities Laws.
ARTICLE XI.
DIVIDENDS
SECTION 1. Dividends or distributions upon the capital stock of the Corporation,
subject to the provisions of the Articles of Incorporation relating thereto, if
any, may be declared by the Board of Directors at any regular or special meeting
pursuant to law. Dividends may be paid in cash, in property or in shares of the
Corporation.
SECTION 2. Before payment of any dividend or distribution to Shareholders, there
may be set aside out of any funds of the Corporation available for dividends or
distributions, such sum or sums as the Directors from time to time in their
absolute discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends or distributions, or for repairing or maintaining the
property of the Corporation, or for such other purpose as the Directors shall
think conducive to the interests of the Corporation; PROVIDED, HOWEVER, that the
Board of Directors may abolish any reserve in the same manner as it was created.
ARTICLE XII.
FINANCIAL REPORT TO SHAREHOLDERS
SECTION 1. The Directors shall, at their sole discretion, provide the
Shareholders all financial reports prepared for the Corporation at the end of
the fiscal year or at any time during the fiscal year. Said financial reports
may include, without limitation, a profit and loss statement, a balance sheet
and a statement of change in retained earnings. If provided, said financial
reports shall be provided within One Hundred Twenty (120) days of the close of
the Corporation's fiscal year. Any Shareholder shall have the right to demand
copies of any or all financial reports, if not provided by the Board of
Directors.
ARTICLE XIII.
CHECKS AND NOTES
SECTION 1. All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers as the Board of Directors may from time to
time designate. If not specifically designated, the foregoing shall be signed by
the President and attested by the Secretary.
ARTICLE XIV.
FISCAL YEAR
SECTION 1. The fiscal year shall begin the first day of January in each year.
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ARTICLE XV.
NOTICES
SECTION 1. Whenever under the provisions of the statutes, or of the Articles of
incorporation, or of these By-Laws, notice is required to be given to any
person, it may be given to such person either personally or by sending a copy
thereof through the mail, or by telegram (charges prepaid), to his address
appearing on the books of the Corporation or supplied by him to the Corporation
for the purpose of notice, or, in default of other address, to such person at
the General Post Office in Cape Coral, Florida. If notice is sent by mail or by
telegram, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States Mail or with a telegraph office for
transmission to such person.
SECTION 2. Any notice required to be given to any person may be waived in
writing signed by the person entitled to such notice whether before or after the
time stated therein. Attendance of any person entitled to notice, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting.
ARTICLE XVI.
AMENDMENTS TO BY-LAWS
SECTION 1. Amendments to these By-Laws may be made by a vote of the Shareholders
representing a majority of all the stock issued and outstanding, at any annual
Shareholders' meeting when the proposed amendment has been set forth in the
notice of such meeting.
SIGNATURE AND CERTIFICATION
I certify that the foregoing are the true and correct By-Laws (together
with all amendments thereto) of TOURING ARTISTS GROUP, INC.
DATED: March 16, 1993 /s/ Lee D. Marshall
LEE D. MARSHALL, PRESIDENT
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[revoked 12/29/97]
Prescribed by
Bob Taft, Secretary of State
30 East Broad Street, 14th Floor
Columbus, Ohio 43266-0418
Form ARF (December 1990)
ARTICLES OF INCORPORATION
(Under Chapter 1701 of the Ohio Revised Code)
Profit Corporation
The undersigned, desiring to form a corporation, for profit, under
Sections 1701.01 et seq. of the Ohio Revised Code, do hereby state the
following:
FIRST. The name of said corporation shall be Touring Artists Group,
Inc.
SECOND. The place in Ohio where its principal office is to be located
is-9265 Olde Eight Road, Northfield Summit, County, Ohio.
(city, village or township)
THIRD. The purpose(s) for which this corporation is formed is:
To engage in any lawful act or activity for which a corporation
may be formed in Ohio
<PAGE>
FOURTH. The number of shares which the corporation is authorized to
have outstanding is: Please state whether shares are common or preferred, and
their par value, it any. Shares will be recorded common with no par value unless
otherwise indicated.)
500 common shares, no par value
IN WITNESS HEREOF, we have hereunto subscribed our names, this 7th day of May
1992.
By: /s/ Lee Marshall, incorporated
Lee Marshall
By: __________________ , incorporated
By: __________________ , incorporated
Print or type incorporators' names below
their signatures.
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Prescribed by
Bob Taft, Secretary of State
30 East Broad Street, 14th Floor
Columbus, Ohio 43266-0418
Form AGO (December 1990)
ORIGINAL APPOINTMENT OF STATUTORY AGENT
The undersigned, being at least a majority of the incorporators of
Touring Artists Group, Inc., hereby appoint Lee Marshall to be statutory agent
upon whom any process, notice or demand required or permitted by statute to be
served upon the corporation may be served. The complete address of the agent is:
9265 Olde Eight Road
Northfield, Ohio 44067
NOTE: P.O. Box addresses are not acceptable for cities with
populations over 2.000.
/s/ Lee Marshall
Lee Marshall (Incorporator)
(Incorporator)
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REGULATIONS
ARTICLE I.
GENERAL
SECTION 1. The name of this Corporation shall be the TOURING ARTISTS GROUP, INC.
SECTION 2. The principal office of this Corporation shall be located at 9265
Olde Eight Road, Northfield, OH 44067.
SECTION 3. The Corporation may, in addition to its principal office, establish
and maintain such other offices, at such place or places as the Board of
Directors may deem necessary, desirable or expedient from time to time.
Moreover, the Board of Directors shall have the authority to change the
principal office of the Corporation so long as proper notice and such filing of
documents as is required is made with the Department of State of the State of
Ohio.
ARTICLE II.
CORPORATE SEAL
SECTION 1. The corporate seal of this Corporation shall have inscribed thereon
the name of the Corporation, the year of its organization, and the word "OHIO."
SECTION 2. The said seal may be used by any of the officers of be impressed or
affixed to any paper or document necessary and proper to the conduct of the
business of the Corporation.
ARTICLE III.
SHAREHOLDERS AND THEIR RIGHTS
SECTION 1. All meetings of the Shareholders and of the Board of Directors, if
any, shall be held at the principal office of the Corporation, within the State
of Ohio, or at such other place or places as the directors may, from time to
time determine.
SECTION 2. The annual meeting of the Shareholders, commencing with the year
1993, shall be held on the first Friday of April of each year at 1:00 o'clock,
P.M., at which time they shall elect a Board of Directors, if required, and
transact any other business as may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting, specifying the location, day
and hour of the meeting, shall, at least ten (10) days prior to the meeting, be
served upon or mailed, postage prepaid, to each Shareholder entitled to vote
thereat, being of record ten (10) days next preceding the date of the meeting,
at such address as appears on the transfer books of the Corporation by the
Secretary.
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SECTION 4. Special meetings of the Shareholders for any purpose or purposes,
other than those regulated by statute, may be called at any time by the
President, or a majority of the Board of Directors, or the holders of not less
than one-half of all the shares issued and outstanding and entitled to vote at
the particular meeting, upon written request identifying the purpose (s) of the
meeting and delivered to the Secretary of the Corporation. Upon receipt of any
such request, it shall be the duty of the Secretary to call a special meeting of
the Shareholders to be held at such time, not less than ten (10) days nor more
than thirty (30) days thereafter, as the Secretary may fix.
SECTION 5. Written notice of any special meeting of the Shareholders shall be
given to each Shareholder entitled to vote thereat, at such address as appears
on the transfer books of the Corporation, at least ten (10) days before such
meeting, unless a greater period of notice is required by statute in a
particular case. Identification of the purpose(s) of the special meeting shall
be provided in the notice.
SECTION 6. Business transacted at all special meetings shall be confined to the
purpose(s) stated in the call and matters germane thereto.
SECTION 7. Those Shareholders present in person, or represented by proxy, at any
annual meeting of Shareholders or at any duly called and properly noticed
special meeting of Shareholders shall be requisite and shall constitute a quorum
at all such meetings of Shareholders for the transaction of business, except as
otherwise provided by statute, by the Articles of incorporation or by these
Regulations.
SECTION 8. When a quorum is present, or represented at any meeting, the vote of
the holders of a majority of the stock having voting power, present in person,
or represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
the Articles of Incorporation or these Regulations, a different vote is
required, in which case, such express provision shall govern and control the
decision of such question.
SECTION 9. At every Shareholders' meeting, every Shareholder entitled to vote
shall have the right to one (1) vote for every share of voting stock standing in
his name on the books of the Corporation. Unless a record date shall have been
fixed for the determination of Shareholders entitled to vote at a Shareholders'
meeting, transferees of shares which are transferred on the books of the
Corporation within ten (10) days next preceding the date of such meeting shall
not be entitled to vote at such meeting. Upon demand made by a Shareholder
before the voting begins, at any election for Directors, the election shall be
by written ballot.
SECTION 10. Every Shareholder entitled to vote may vote either in person or by
proxy. Every proxy shall be executed in writing by the Shareholder or his duly
authorized attorney-in-fact and filed with the Secretary of the Corporation. A
proxy, unless coupled with an interest explicitly set forth in the proxy, shall
be revocable at will, notwithstanding any other
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agreement or any provision in the proxy to the contrary, but the revocation of a
proxy shall not be effective until notice thereof has been given to the
Secretary of the Corporation. No unrevoked proxy shall be valid after thirty
(30) days from the date of its execution, unless a longer time is expressly
provided therein, but in no event shall a proxy, unless coupled with an
interest, be voted on after ninety (90) days from the date of its execution. A
proxy shall not be revoked by the death or incapacity of the maker, unless,
before the vote is counted or the authority is exercised, written notice of such
incapacity is given to the Secretary of the Corporation.
SECTION 11. The officer or agent having charge of the transfer books for shares
of the Corporation shall make, at lest ten (10) days before each meeting of
Shareholders, a complete list of the Shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address and the number of
shares held by each, which list shall be kept on file at the registered office
of the corporation and shall be subject to inspection by any Shareholder at any
time during usual business hours. Such list shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting. If, at any time, there are
three (3) or less Shareholders of the Corporation, the duties imposed by this
section shall be waived.
SECTION 12. In advance of any meeting of Shareholders, the Board of Directors
may appoint judges of the election, who shall be Shareholders, to act at such
meeting or any adjournment thereof. If judges of election be not so appointed,
the Chairman of any such meeting, on the request of any Shareholder or proxy,
shall make such appointment at the meeting. The number of judges shall be three
(3). No person who is a candidate for office shall act as a judge. The judges of
election shall do all such acts as may be proper to conduct the election or vote
with fairness to all Shareholders and shall make a report of any matter
determined by them and execute a certificate of any fact found by them, if
requested by the Chairman of the meeting or any Shareholder or his proxy. The
decision on the act, or certificate of a majority of the judges of the election
shall be effective in all respects as the decision, act or certificate of all
Shareholders.
SECTION 13. If set forth in the notice calling a regular or special meeting of
the Shareholders, or if consented to by all of the Shareholders, any regular or
special meeting of Shareholders may be held by conference telephone. Any meeting
held by conference telephone shall require the participation of a majority of
the Shareholders, present by telephone or represented on the telephone by proxy,
to constitute a quorum of the Shareholders. In addition, for non-telephone
conference meetings, at the discretion of a majority of the Shareholders present
in person, or represented by proxy, any one or more of the Shareholders may
participate in any regular or special meeting of the Shareholders by conference
telephone in lieu of physically attending the meeting.
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ARTICLE IV.
INFORMAL ACTION BY SHAREHOLDERS
SECTION 1. Any action required to be taken at a meeting of the shareholders may
be taken without a meeting, if a consent in writing setting forth the action so
taken shall be signed by all Shareholders who would be entitled to vote at a
meeting for such purposes and the consent shall be filed with the Secretary of
the Corporation.
ARTICLE V.
DIRECTORS
SECTION 1. The number of Directors which shall constitute the Board of Directors
shall be five (5). Directors shall be natural persons of full age and need not
be Shareholders of the Corporation. Except as hereinafter provided in the case
of vacancies, Directors other than those constituting the first Board of
Directors shall be elected by the Shareholders, and each Director shall be
elected to serve for the term of one year and/or until his successor shall be
elected and shall qualify.
SECTION 2. Vacancies in the Board of Directors shall be filled by a majority of
the remaining members of the Board, though less than a quorum and each person so
elected shall be a Director until his successor is elected by the Shareholders,
who may make such election at the next annual meeting of the Shareholders, or at
any special meeting duly called for the purpose and held prior thereto.
SECTION 3. The business and affairs of the Corporation shall be managed by its
Board of Directors which may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by statute, or by the Articles of
Incorporation or by these Regulations directed or required to be exercised and
done by the Shareholders.
SECTION 4. The Board of Directors shall exercise such powers as are expressly
given them by the Articles of Incorporation and these Regulations, together with
such powers as will enable them to do all such lawful acts as are necessary,
proper and expedient for the welfare of this Corporation, and are not directed
or required to be exercised by the Shareholders by statute, the Articles of
incorporation, or these Regulations; and without prejudicing the general powers
of the Board of Directors, as hereinafter stated, it is expressly declared that
the Directors shall have the following powers:
(a) To make and change regulations not inconsistent
with these Regulations for the management of the Corporation's business and
affairs;
(b) To have full power, from time to time, to
purchase or otherwise acquire for the Corporation any property, rights or
privileges which the Corporation is authorized by law to purchase, or otherwise
acquire, at such prices and considerations and upon such terms and conditions as
the Board may consider advisable, and in its discretion, may pay therefor, in
whole or in part, in money, or in stocks, bonds, or both, or other securities of
the Corporation;
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(c) To sell, or otherwise dispose of, transfer or
convey, any; property of the Corporation, at such prices and considerations and
upon such terms and conditions as the Board may consider advisable, and in its
discretion they may accept in payment or exchange therefore, in whole, or in
part, money or stocks, or bonds, or other securities of any Corporation or
Corporations, except as otherwise provided by law, or by the Articles of
Incorporation;
(d) To borrow money, and to make and issue notes,
bonds, and other negotiable and transferrable instruments, mortgages, deeds of
trust, and trust agreements, and do every act and thing necessary to effectuate
the same;
(e) To appoint and remove, or suspend, such
employees, agents or factors as they may deem necessary; to determine their
duties, to fix, and from time to time, to change their salaries or remuneration,
and to require security as and when they think fit;
(f) To manage the property, business and affairs of
the Corporation and the Directors, as a Board, are hereby invested in such
management with all the powers which the Corporation itself possesses so far as
such delegation of power is not incompatible with the provisions of these
Regulations, or the laws of the State of Ohio.
SECTION 5. Any Director shall be subject to removal by the majority vote of the
holders of the common voting stock, at a special meeting called for that
purpose, with or without cause.
SECTION 6. If the office of any Director shall become vacant by reason of death,
resignation, removal, or other reason, the remaining Directors, by a majority
vote may, at a meeting of the Board of Directors specially called, elect a
successor who shall hold office for the unexpired term and until his successor
is elected and qualifies, unless a special meeting of the holders of the common
voting stock is duly called for the purpose of filling the vacancy and is
actually held prior to the annual meeting.
SECTION 7. Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board of Directors, a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board, provided that nothing herein contained shall be construed
to preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE VI.
MEETINGS OF THE BOARD
SECTION 1. The meetings of the Board of Directors may be held at such place
within the State of Ohio as a majority of the Directors may from time to time
appoint or as may be designated in the notice calling the meeting. If no place
is so appointed or designated, the meeting shall be held at the principal place
of business of the Corporation.
SECTION 2. The first meeting of each newly elected Board may be held at such
time and place as shall be fixed by the Shareholders at the meeting at which
such Directors were
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elected and no notice shall be necessary to the newly elected Directors in order
to legally constitute the meeting, provided a majority of the whole Board shall
be present; or it may convene at such time and place as may be fixed by the
consent in writing of all the Directors.
SECTION 3. Regular meetings of the Board shall be held from at such time as
shall from time to time be determined by a majority of the Directors, on five
(5) days notice to each Director, given personally or by mail or by telegram.
SECTION 4. Special meetings of the Board may be called by the President on three
(3) days' notice to each Director, either personally or by mail or by telegram,
said notice specifying the purpose(s) of the special meeting; special meetings
shall be called by the President or Secretary in a like manner and on like
notice on the written request of two (2) Directors.
SECTION 5. At all meetings of the Board, a majority of the Directors in office
shall be necessary to constitute a quorum for the transaction of business, and
the acts of a majority of the Directors present at a meeting at which a quorum
is present, shall be the acts of the Board of Directors, except as otherwise
specifically provided by statute or by the Articles of Incorporation, or by
these Regulations. If a quorum shall not be present at any meeting of Directors,
the Directors present thereat may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 6. If all the Directors shall severally or collectively consent in
writing to any action to be taken by the Corporation, such action shall be as
valid a corporate action as though it had been authorized at a meeting of the
Board of Directors. All consents shall be filed with the Secretary of the
Corporation.
SECTION 7. If set forth in the notice calling a regular or special meeting of
the Board of Directors, or if consented to by all of the Board of Directors, the
regular or special meeting of Board of Directors may be held by conference
telephone, with a majority of the Directors present by telephone to constitute a
quorum of the meeting. In addition, at the discretion of a majority of the Board
of Directors present at a duly called and noticed regular or special meeting of
the Board of Directors, one or more of the Directors may participate in the
meeting by conference telephone in lieu of physically attending the meeting.
ARTICLE VII.
OFFICERS
SECTION 1. The officers of the Corporation shall be chosen by the Directors and
shall be a president, a vice-president, a secretary, and a treasurer. In
addition, the Board of Directors may appoint any such other vice-presidents,
assistant secretaries, or assistant treasurers it deems necessary to efficiently
operate the Corporation. The president, secretary, treasurer, vice-president and
any other vice-presidents, assistant secretaries, or assistant treasurers shall
be natural persons of full age. Any or all of the foregoing offices may be held
by the same person.
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SECTION 2. The Board of Directors, at their first meeting of each calendar year
commencing in 1992 shall elect a president, secretary and treasurer and shall
appoint such vice-presidents, assistant secretaries and assistant treasurers as
necessary.
SECTION 3. The Board of Directors may also choose such other officers and
assistant officers and agents as the needs of the corporation may require, who
shall hold their offices for such terms and shall have such authority and shall
perform such duties as from time to time shall be determined by resolution of
the Board.
SECTION 4. The salaries of all officers and agents of the Corporation shall be
fixed by the Board of Directors.
SECTION 5. The officers of the Corporation shall hold office for one year and
until their successors are chosen and have qualified. An officer or agent,
elected or appointed by the Board of Directors, may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby. If the office of any officer becomes vacant for any reason, the
vacancy shall be filled by the Board of Directors.
SECTION 6. The President shall be the chief executive officer of the
Corporation; he shall preside at all meetings of the Shareholders and Directors;
shall have general and active management of the business of the Corporation, and
shall see that all orders and resolutions of the Board are carried into effect.
SECTION 7. The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be Otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
SECTION 8. The Vice-President, if one is appointed, shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as shall from time to time be
imposed by the Board of Directors.
SECTION 9. The Secretary shall attend all meetings of the shareholders and of
the Board of Directors, and shall act as clerk thereof. He shall record the
minutes of all transactions at each meeting in a book to be kept for that
purpose, wherein shall also be a record of all the votes of the Corporation. The
Secretary shall give or cause to be given notice of all meetings of the
shareholders or the Board of Directors, where notice is required by statute or
these Regulations, and shall, in addition thereto, perform such other duties as
may be prescribed by the Board of Directors or the President under whose
supervision he shall be. The Secretary shall keep in his custody the corporate
seal, and shall affix it to any instrument when authorized so to do by the Board
of Directors or the President, and when so affixed it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary. The
Assistant Secretary,
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if one is elected, shall perform all the duties of the Secretary in the event
the Secretary is absent for any reason and shall assist the Secretary in the
performance of his duties.
SECTION 10. The Treasurer shall have the care and custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as shall be designated by the Board of
Directors. The Assistant Treasurer, if one is elected, shall perform all the
duties of the Treasurer in the event the Treasurer is absent for any reason and
shall assist the Treasurer in the performance of his duties.
SECTION 11. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meeting of the Board of
Directors, or whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the corporation. In addition, the
Treasurer shall render an annual statement as to the financial condition of the
Corporation; he shall have charge and custody of the original stock books, the
stock transfer books and stock ledgers, shall act as the stock transfer agent,
and perform such other duties as may be incident to the office of Treasurer.
SECTION 12. The Treasurer shall, if required by the Board of Directors, give the
Corporation a bond, in such sum, and with such surety or sureties as may be
satisfactory to the Board of Directors for the faithful discharge of the duties
of his office, and for the restoration of the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
ARTICLE VIII.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. Litigation Brought by Third Parties. Each individual who was or is a
party or is threatened to be a party to any threatened, pending or completed
action, suit or proceeding, Whether civil, criminal, administrative or
investigative, or other than an action by or in the right of the corporation, by
reason of the fact that he is or was a Director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation
against all expenses, including attorney's fees, judgments, fines, amounts paid
in settlement, and all other liabilities actually and reasonably incurred or
imposed upon him in connection with or arising from such action, suit, or
proceeding: PROVIDED, HOWEVER, that the Corporation shall not indemnify any such
person, whose actions or failure to act on behalf of the Corporation which gives
rise to the claim for indemnification, is determined by a court to constitute
wilful misconduct or recklessness.
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SECTION 2. Litigation by or in the Right of the Corporation. Each person, his
heirs, executors or administrators, who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Corporation only
as to the litigation expenses, including attorney's fees, actually and
reasonably incurred or imposed upon him in connection with the defense or
settlement of such action or suit; PROVIDED, HOWEVER, that the Corporation shall
not indemnify any person whose actions or failure to act has been determined by
a court to constitute willful misconduct or recklessness.
SECTION 3. Indemnification as of Right. To the extent that a Director, officer,
employee, or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section 1
and 2, or in defense of any claim, issue or matter therein, he shall have the
absolute right to be indemnified against expenses, including attorney fees,
actually or reasonably incurred by him in connection therewith. The
determination of what expenses are actually or reasonably incurred shall be
determined by the Board of Directors, but in the event of disagreement, the
person making the request may apply to the Court of Common Pleas of Summit
County, Ohio for such determination.
SECTION 4. Advances for Expenses. Expenses incurred defending civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors after making a determination upon the basis of the facts then
available that the person making the request for an advance is entitled thereto
under the standards of the applicable Section 1 or 2. Such advance shall be
granted only upon receipt of an undertaking by or on behalf of the Director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
SECTION 5. Non-Exclusivity and Non-Duplication. The indemnification provided by
this Article shall not be deemed exclusive of any rights to which any person
seeking indemnification may be entitled under any other By-Law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to actions in
his official capacity and as to actions in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person. The indemnification provided by
this Article shall not be exclusive of any powers, rights, agreements, or
undertaking which may be legally permissible or authorized by or under any
applicable law. Notwithstanding any other provision set forth in this Article,
the indemnification authorized and provided hereby shall be applicable only to
the extent that any such indemnification shall not duplicate any indemnification
or reimbursement which such person has received or shall receive otherwise than
under this Article.
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SECTION 6. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him against such
liability asserted against him and incurred by him in any such capacity under
the provisions of this Article or otherwise, upon such terms and conditions as
the Corporation may deem requisite, including a requirement that any such person
must contribute a portion or all of the cost of maintaining such insurance.
ARTICLE IX.
PERSONAL LIABILITY OF DIRECTORS
SECTION 1. A Director of the Corporation shall not be personally liable for
monetary damages as such for any action taken, or any failure to take any
action, unless: (a) the Director has breached or failed to perform the duties of
his office as set forth in the Ohio Code; and (b) the breach or failure to
perform constitutes self-dealing, wilful misconduct or recklessness.
SECTION 2. The provisions of Section 1 above shall not apply to: (a) the
responsibility or liability of a director pursuant to any criminal statute; or
(b) the liability of a director for the payment of taxes pursuant to local,
State or Federal law.
ARTICLE X.
CERTIFICATE OF SHARES
SECTION 1. The certificates of shares of the Corporation shall be numbered and
registered in the share register as they are issued. They shall exhibit the
registered holder's name and the number and class of shares represented thereby
and the par value, if any, of each share.
SECTION 2. Every share certificate shall be signed by the President and the
Secretary, or the Treasurer and shall be sealed with the corporate seal. In case
any officer who has signed shall have ceased to be such officer because of
death, resignation, or otherwise, before the certificate is issued, it may be
issued by the Corporation with the same effect as if the officer had not ceased
to be such at the date of its issue.
SECTION 3. In the event of dissolution, the distribution of the assets shall
inure only to the benefit of the owners of the outstanding shares of stock; said
distribution of the assets to he owners of the outstanding shares shall be in
the same proportion which the number of shares of outstanding stock held by each
person bears to the total of shares outstanding.
SECTION 4. When the holder of any stock certificate, or his personal
representative shall allege and represent to the Treasurer of the Corporation
that a certificate of stock has been lost or destroyed or mutilated, the
Directors may direct that a duplicate certificate be issued,
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provided, however, that the Board of Directors shall have the right to demand
that the said holder, or his personal representative, first give to the
Corporation a bond with sufficient surety in a sum equal to double the book
value of the stock represented by said certificate, to indemnify it against any
loss which it may in the future sustain by reason of the issuance of said
duplicate certificate, while the original certificate remains outstanding.
SECTION 5. (a) Provided that the terms of Shareholders Agreement
which may be in effect from time to time are complied with, and all applicable
securities laws are complied with, Shares of the stock of this Corporation may
be transferred upon surrender of the certificate thereof to the Treasurer of
the Corporation endorsed by the holder named therein, or his attorney, lawfully
appointed or constituted in writing, which transfer shall immediately be
entered upon the proper books of the Corporation by the Treasurer thereof.
(b) Upon compliance with these terms, the Treasurer
shall cancel the surrendered certificate by an appropriate marking across its
face, and shall issue a new certificate therefore, indicating the new holder,
and, in the event that he had only a special interest in said stock, the nature
of the special interest.
SECTION 6. The Board of Directors may fix a time, not less than ten (10) nor
more than thirty (30) days prior to the date of any meeting of Shareholders, as
a record date for the determination of the Shareholders entitled to receive
payment of any such dividend or distribution, or to receive any such allotment
of rights, or to exercise their rights in respect to any such change, conversion
or exchange of shares. In such case, only such Shareholders as shall be
Shareholders of record on the date so fixed shall be entitled to notice of, and
to vote at, such meeting, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date so fixed. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of such
period and, in such case, written or printed notice thereof shall be mailed at
least five (5) days before the closing thereof to each Shareholder of record at
the address appearing on the records of the Corporation or supplied by said
Shareholder to the Corporation for the purpose of notice.
SECTION 7. (a) Any stock acquired by the Corporation shall be
held in the name of the Corporation, subject to the control of the Board of
Directors, which may, offer it for sale at such price as it may deem proper to
such entity or entities as it may select. The Shareholders shall not have any
preemptive rights in the issuance of treasury stock nor in the issuance of
authorized but unissued stock.
(b) Any purchaser shall be subject to these
Regulations and any provisions of a Shareholders Agreement that may be in
effect at the time of purchase.
SECTION 8. When issued, all certificates of stock shall be conspicuously noted
that they are issued subject to all limitations imposed by these Regulations,
any Shareholders Agreement that may be in effect from time to time, and any
applicable Federal and. State Securities Laws.
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ARTICLE XI.
DIVIDENDS
SECTION 1. Dividends or distributions upon the capital stock of the Corporation,
subject to the provisions of the Articles of Incorporation relating thereto, if
any, may be declared by the Board of Directors at any regular or special meeting
pursuant to Law. Dividends may be paid in cash, in property or in shares of the
Corporation.
SECTION 2. Before payment of any dividend or distribution to shareholders, there
may be set aside out of any funds of the Corporation available for dividends or
distributions, such sum or sums as the Directors from time to time in their
absolute discretion, think proper as a reserve Fund to meet contingencies, or
for equalizing dividends or distributions, or for repairing or maintaining the
property of the Corporation, or for such other purpose as the Directors shall
think conducive to the interests of the Corporation; PROVIDED, HOWEVER, that the
Board of Directors may abolish any reserve in the same manner as it was created.
ARTICLE XII.
FINANCIAL REPORT TO SHAREHOLDERS
SECTION 1. The Directors shall, at their sole discretion, provide the
shareholders all financial reports prepared for the Corporation at the end of
the fiscal year or at any time during the fiscal year. Said financial reports
may include, without limitation, a profit and loss statement, a balance sheet
and a statement of change in retained earnings. If provided, said financial
reports shall be provided within One Hundred Twenty (120) days of the close of
the Corporation's fiscal year. Any Shareholder shall have the right to demand
copies of any or all financial reports, if not provided by the Board of
Directors.
ARTICLE XIII.
CHECKS AND NOTES
SECTION 1. All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers as the Board of Directors may from time to
time designate. If not specifically designated, the foregoing shall be signed by
the President and attested by the Secretary.
ARTICLE XIV.
FISCAL YEAR
SECTION 1. The fiscal year shall begin the first day of January in each year.
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<PAGE>
ARTICLE XV.
NOTICES
SECTION 1. Whenever under the provisions of the statutes, or of the Articles of
Incorporation, or of these Regulations, notice is required to be given to any
person, it may be given to such person either personally or by sending a copy
thereof through the mail, or by telegram (charges prepaid), to his address
appearing on the books of the Corporation or supplied by him to the Corporation
for the purpose of notice, or, in default of other address, to such person at
the General Post Office in Cleveland, Ohio. If notice is sent by mail or by
telegram, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States Mail or with a telegraph office for
transmission to such person.
SECTION 2. Any notice required to be given to any person may be waived in
writing signed by the person entitled to such notice whether before or after the
time stated therein. Attendance of any person entitled to notice, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting.
ARTICLE XVI.
AMENDMENTS TO REGULATIONS
SECTION 1. Amendments to these Regulations may be made by a vote of the
Shareholders representing a majority of all the stock issued and outstanding, at
any annual Shareholders' meeting when the proposed amendment has been set forth
in the notice of such meeting.
SIGNATURE AND CERTIFICATION
I certify that the foregoing are the true and correct Regulations
(together with all amendments thereto) of TOURING ARTISTS GROUP, INC.
DATED: May 15, 1992 /s/ Lee D. Marshall
------------ --------------------------
LEE D. MARSHALL, PRESIDENT
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<PAGE>
The Commonwealth of Massachusetts
WILLIAM FRANCIS GALVIN
secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
ARTICLE I The name of the
corporation is:
American Playhouse Realty, Inc.
ARTICLE II
The purpose of the corporation is to engage in the following
business activities:
To own and operate a theater for public and private performances.
To carry on any other business, transaction or activity which may be lawfully
carried on by a corporation organized under Massachusetts General Laws, Ch.
156B, as amended.
<PAGE>
CONTINUATION SHEET 2B
Article VI Continuation
The other lawful provisions for the conduct and regulation of business and
affairs of the corporation, for its voluntary dissolution, or for limiting,
defining or regulating the powers of the corporation, or of its directors or
stockholders, or any class of stockholders, are set forth in this Article VI.
(a) By-laws. The By-laws may provide that the directors may make, amend
or repeal the By-laws in whole or in part, except with respect to any provision
thereof which by law or the By-laws requires action by the stockholders.
(b) Meetings. Meetingsof the stockholders of the corporation may be
held anywhere in the United States.
(c) Acting as Partner. The corporation may be a general or limited
partner in any business enterprise it would have power to conduct by itself.
(d) Indemnification. The corporation may provide, either in the
corporation's By-laws or by contract, for the indemnification of directors,
officers, employees and agents, by whomever elected or appointed, to the full
extent presently permitted by law; provided, however, that if applicable law is
hereafter modified to permit indemnification in situations where it was not
theretofore permitted, then such indemnification may be permitted to the full
extent permitted by such law as amended.
(e) Transactions with Interested Persons. The By-laws may contain
provisions providing that no contract or transaction of the corporation shall be
void or voidable by reason of the fact that any officer, director or stockholder
of the corporation may have held an interest therein.
(f) Vote Required for Certain Transactions. The vote of a majority of
the outstanding shares of each class of stock outstanding and entitled to vote
thereon shall be sufficient to approve any agreement of merger or consolidation
of the corporation with or into another corporation or of another corporation
into the corporation, or to approve any sale, lease or exchange of substantially
all of the assets of the corporation, notwithstanding any provision of law that
would otherwise require a greater vote in the absence of this provision of
Article VI.
(g) Elimination of Directors' Personal Liability. No director shall be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director notwithstanding any provision of law
imposing such liability; provided, however, that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section sixty-one or sixty-two of Chapter
156B of the Massachusetts General Laws, or (iv) for any transaction from which
the director derived an improper personal benefit. No amendment to or repeal of
this paragraph shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to the date of such amendment or
repeal.
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<PAGE>
ARTICLE VII
The effective date of organization of the corporation shall be the date approved
and filed by the Secretary of the Commonwealth. If a later EFFECTIVE DATE is
desired, specify such date which shall not be more than thirty days after the
date of filing.
The information contained in ARTICLE VIII is NOT a PERMANENT part of the
Articles of Organization and may be changed ONLY by filing the form provided
therefor.
ARTICLE VIII
a. The street address of the corporation IN MASSACHUSETTS is: (post office
boxes are not acceptable)
120 Boylston Street, Suite 502
Boston, MA 02116
b. The name, residence and post office address (if different) of the directors
and officers of the corporation are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
NAME RESIDENCE POST OFFICE ADDRESS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRESIDENT: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- ---------------------------------------------------------------------------------------
TREASURER: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- ---------------------------------------------------------------------------------------
CLERK: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- ---------------------------------------------------------------------------------------
DIRECTORS: Jon B. Platt 220 Boylston Street Same
Boston, MA 02116
- ---------------------------------------------------------------------------------------
</TABLE>
c. The fiscal year (i.e., tax year) of the corporation shall end on the Last
day of the month of December
d. The name and BUSINESS address of the RESIDENT AGENT of the corporation, if
any, is:
ARTICLE IX
By-laws of the corporation have been duly adopted and the president, treasurer,
clerk and directors whose names are set forth above, have been duly elected.
IN WITNESS WHEREOF and under the pains and penalties of perjury, I/WE, whose
signature(s) appear below as incorporator(s) and whose names and business or
residential address(es) ARE
- 3 -
<PAGE>
CLEARLY TYPED OR PRINTED beneath each signature do hereby associate with the
intention of forming this corporation under the provisions of General Laws
Chapter 156B and do hereby sign these Articles of Organization as
incorporator(s) this 27th day of June 1995
/s/ Carol R. Newman
Carol R. Newman
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<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B, SECTION 12
I hereby certify that, upon examination of these
articles of organization, duly submitted to me, it appears
that the provisions of the General Laws relative to the
organization of corporations have been complied with, and I
hereby approve said articles; and the filing fee in the amount
of $200.00 having been paid, said articles are deemed to have
been filed with me this 28th dayof June 1995
/s/ William Francis Galvin
Secretary of the Commonwealth
WILLIAM FRANCIS GALVIN
FILING FEE: One tenth of one percent of the total authorized
capital stock, but not less than $200.00. For the purpose of
filing, shares of stock with a par value less than one dollar,
or no par stock, shall be deemed to have a par value of one
dollar per share.
PHOTOCOPY OF ARTICLES OF ORGANIZATION TO BE SENT TO:
Jay F. Theise, Esquire
Cherwin & Glickman
One International Place
Boston, MA 02110
Telephone: (617) 330-1625
- 5 -
<PAGE>
Received June 11, 1998
Cherwin, Glickman & Theise, LLP
FEDERAL IDENTIFICATION NO. 04-3279828
000505577
/s/ [illegible]
Examiner
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
/s/ [illegible]
Name
Approved
I, Jon B. Platt, President and Jon B. Platt, Clerk of American
Playhouse Realty, Inc., located at 120 Boylston Street, Boston, MA 02116 certify
that these Articles of Amendment affecting articles numbered: 1 of the Articles
of Organization were duly adopted at a meeting held on May 24, 1996, by vote of:
100 shares of Common of 100 shares outstanding, being at least a majority of
each type, class or series outstanding and entitled to vote thereon:/or
See Exhibit A attached hereto.
<PAGE>
CHARLES PLAYHOUSE VENDORS, INC.
120 Boylston Street, #502
Boston, MA 02116
May 31, 1996
To Whom It May Concern:
The undersigned Charles Playhouse Vendors, Inc., formerly known as
Tremont Street Theatre Corp. (federal identification number: 04-3095503) hereby
consents to the use of the name of TREMONT STREET THEATRE CORPORATION II, INC.
by another corporation.
Very truly yours,
CHARLES PLAYHOUSE VENDORS,
INC.
By /s/ Jon B. Platt
John B. Platt, President
<PAGE>
Exhibit "A"
To Articles of Amendment
That the name of the Corporation bet and hereby is, changed from AMERICAN
PLAYHOUSE REALTY, INC. to TREMONT STREET THEATRE CORPORATION II, INC. to take
effect upon filing of Articles of Amendment to the Articles of Organization with
the Secretary of State of the Commonwealth of Massachusetts.
That the appropriate officers of the Corporation be and hereby are authorized
and directed to prepare, execute and file with the Secretary of State of the
Commonwealth of Massachusetts Articles of Amendment to the Articles of
Organization to effect the change referred to above, and to take such other
action and execute such other documents, instruments and agreements as may be
desired or appropriate to effectuate the foregoing.
<PAGE>
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Chapter 156B, Section 6 unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later effective date:
Later effective date: ________________________________
SIGNED UNDER THE PENALTIES OF PERJURY, this 24th day of May, 1996.
/s/ Jon B. Platt , President
- ------------------------------------------
/ s/ Jon B. Platt , Clerk
- ------------------------------------------
<PAGE>
539206
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
21080
Secretary of
the Commonwealth
96 Jun-3 PM 12:05
===============================================================================
I hereby approve the within Articles of Amendment, and the filing fee in the
amount of $100 having been paid, said article is deemed to have been filed with
me this 3rd day of June, 1996.
Effective date: __________________________
/s/ William Francis Galvin
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILED IN CORPORATION
Photocopy of document to be sent to:
Douglas L. Jones, Esquire
Cherwin, Glickman & Theise, LLP
One International Place
Boston, Massachusetts 02110
(617) 330-1625
<PAGE>
BY-LAWS
OF
AMERICAN PLAYHOUSE REALTY, INC.
Date Adopted: June 27, 1995 /s/ Jon B. Platt
-------------------
Jon B. Platt, Clerk
<PAGE>
BY-LAWS
OF
AMERICAN PLAYHOUSE REALTY, INC.
TABLE OF CONTENTS
[text deleted]
<PAGE>
BY-LAWS
OF
AMERICAN PLAYHOUSE REALTY, INC.
(A Massachusetts Corporation)
ARTICLE I.
Stockholders
Section 1.1. Annual Meeting. The annual meeting of the stockholders of
the corporation shall be held on the second Tuesday in the month of February of
each year. The annual meeting shall be held at such place within the United
States as may be designated in the notice of meeting. If the day fixed for the
annual meeting shall fall on a legal holiday, the meeting shall be held on the
next succeeding day not a legal holiday. In the event that no date for the
annual meeting is established, a special meeting may be held in place thereof,
and any business transacted at such special meeting in lieu of annual meeting
shall have the same effect as if transacted or held at the annual meeting.
Section 1.2. Special Meetings. Special meetings of the stockholders may
be called at any time by the president or by the Board of directors and shall be
called by the clerk upon written application of one or more stockholders who
hold shares representing at least ten percent (10%) of the capital stock
entitled to vote at such meeting. Special meetings of the stockholders shall be
held at such time, date and place within or without the United States as may be
designated in the notice of such meeting.
Section 1.3. Notice of Meeting. A written notice stating the place,
date, and hour of each meeting of the stockholders, and, in the case of a
special meeting, the purposes for which the meeting is called, shall be given to
each stockholder entitled to vote at such meeting, and to each stockholder who,
under the Articles of Organization or these By-laws, is entitled to such notice,
by delivering such notice to such person or leaving it at their residence or
usual place of business, or by mailing it, postage prepaid, and addressed to
such stockholder at his address as it appears upon the books of the corporation,
at least seven (7) days and not more than sixty (60) before the meeting. Such
notice shall be given by the clerk, an assistant clerk, or any other officer or
person designated either by the clerk or by the person or persons calling the
meeting.
The requirement of notice to any stockholder may be waived by a written
waiver of notice, executed before or after the meeting by the stockholder or his
attorney thereunto duly authorized, and filed with the records of the meeting,
or if communication with such stockholder is unlawful, or by attendance at the
meeting without protesting prior thereto or at its commencement the lack of
notice. Except as otherwise provided herein, the notice to the stockholders need
not specify the purposes of the meeting.
If a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place are announced at the
meeting at which the adjournment is taken, except that if the adjournment is for
more than thirty days, or if after the adjournment a new record date is
<PAGE>
fixed for the adjourned meeting, notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.
Section 1.4. Quorum. The holders of a majority in interest of all stock
issued, outstanding and entitled to vote at a meeting shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority of the votes
properly cast upon the question, whether or not a quorum is present.
Section 1.5. Voting and Proxies. Each stockholder shall have one vote
for each share of stock entitled to vote owned by such stockholder of record
according to the books of the corporation, unless otherwise provided by law or
by the Articles of Organization. Stockholders may vote either in person or by
written proxy. No proxy dated more than six months prior to the date of the
meeting shall be valid although, unless otherwise limited therein, proxies shall
entitle the persons authorized thereby to vote at any adjournment of such
meeting. Proxies shall be filed with the clerk of the meeting, or of any
adjournment thereof. A proxy purporting to be executed by or on behalf of a
stockholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger. A proxy with
respect to stock held in the name of two or more person shall be valid if
executed by one of them unless at or prior to exercise of the proxy the
corporation receives a specific written notice to the contrary from any one of
them.
Section 1.6. Action at Meeting. When a quorum is present at any
meeting, a plurality of the votes properly cast for election to any office shall
elect to such office, and a majority of the votes properly cast upon any
question other than election to an office shall decide such question, except
where a larger vote is required by law, the Articles of Organization or these
by-laws. No ballot shall be required for any election unless requested by a
stockholder present or represented at the meeting and entitled to vote in the
election.
Section 1.7. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the stockholders may be taken without a meeting if
all stockholders entitled to vote on the matter consent to the action in writing
and the consent shall be treated for all purposes as a vote at a meeting.
Section 1.8. Voting of Shares of Certain Holders. Shares of stock of
the corporation standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine.
Shares of stock of the corporation standing in the name of a deceased
person, a minor ward or an incompetent person, may be voted by his
administrator, executor, court-appointed guardian or conservator without a
transfer of such shares into the name of such administrator, executor, court
appointed guardian or conservator. Shares of capital stock of the corporation
standing in the name of a trustee may be voted by him.
Shares of stock of the corporation standing in the name of a receiver
may be voted by such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without
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<PAGE>
the transfer thereof into his name if authority so to do be contained in an
appropriate order of the court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by the corporation in a fiduciary capacity may be voted
and shall be counted in determining the total number of outstanding shares.
ARTICLE II
Board of Directors
Section 2.1. Powers. Except as reserved to the stockholders by law, by
the Articles of Organization or by these By-laws, the business of the
corporation shall be managed under the direction of the board of directors, who
shall have and may exercise all of the powers of the corporation. In particular,
and without limiting the foregoing, the board of directors shall have the power
to issue or reserve for issuance from time to time the whole or any part of the
capital stock of the corporation which may be authorized from time to time to
such person, for such consideration and upon such terms and conditions as they
shall determine, including the granting of options, warrants or conversion or
other rights to stock.
Section 2.2. Number of Directors; Qualifications. The board of
directors shall consist of such number of directors (which shall not be less
than three or less than the number of stockholders, if less than three) as shall
be fixed initially by the incorporator(s) and thereafter by the stockholders.
No director need be a stockholder.
Section 2.3. Nomination of Directors.
(a) Nominations for the election of directors may be made by the board
of directors or by any stockholder entitled to vote for the election of
directors. Nominations by stockholders shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
clerk of the corporation not less than 14 days nor more than 50 days prior to
any meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed,
to the clerk of the corporation not later than the close of the seventh day
following the day on which notice of the meeting was mailed to stockholders.
(b) Each notice under subsection (a) shall set forth the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of stock of the corporation which are
beneficially owned by each such nominee.
(c) The chairman of the meeting of stockholders may, if the acts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure,
- 3 -
<PAGE>
and if he should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 2.4. Election of Directors. The initial board of directors
shall be elected by the incorporator(s) at the first meeting thereof and
thereafter by the stockholders at their annual meeting or at any special meeting
the notice of which specifies the election of directors as an item of business
for such meeting.
Section 2.5. Vacancies; Reduction of the Board. Any vacancy in the
board of directors, however occurring, including a vacancy resulting from the
enlargement of the board of directors, may be filled by the stockholders or by
the directors then in office or by a sole remaining director. In lieu of filling
any such vacancy the stockholders or board of directors may reduce the number of
directors, but not to a number less than the minimum number required by Section
2.2. When one or more directors shall resign from the board of directors,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective.
Section 2.6. Enlargement of the Board. The board of directors may be
enlarged by the stockholders at any meeting or by vote of a majority of the
directors then in office.
Section 2.7. Tenure and Resignation. Except as otherwise provided by
law, by the Articles of Organization or by these Bylaws, directors shall hold
office until the next annual meeting of stockholders and thereafter until their
successors are chosen and qualified. Any director may resign by delivering or
mailing postage prepaid a written resignation to the corporation at its
principal office or to the president, clerk or assistant clerk, if any. Such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
Section 2.8. Removal. A director, whether elected by the stockholders
or directors, may be removed from office with or without cause at any annual or
special meeting of stockholders by vote of a majority of the stockholders
entitled to vote in the election of such director, or for cause by a vote of a
majority of the directors then in office; provided, however, that a director may
be removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him.
Section 2.9. Meetings. Regular meetings of the board of directors may
be held without call or notice at such times and such places within or without
the Commonwealth of Massachusetts as the Board may, from time to time,
determine, provided that notice of the first regular meeting following any such
determination shall be given to directors absent from such determination. A
regular meeting of the board of directors shall be held without notice
immediately after, and at the same place as, the annual meeting of the
stockholders or the special meeting of the stockholders held in place of such
annual meeting, unless a quorum of the directors is not then present. Special
meetings of the board of directors may be held at any time and at any place
designated in the call of the meeting when called by the president, treasurer,
or one or more directors, members of the board of directors or any committee
elected thereby may participate in a meeting of such board or
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<PAGE>
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time, and participation by such means shall constitute presence in
person at the meeting.
Section 2.10. Notice of Meeting. It shall be sufficient notice to a
director to send notice by mail at least seventy-two (72) hours before the
meeting addressed to such person at his usual or last known business or
residence address or to give notice to such person in person or by telephone at
least twenty-four (24) hours before the meeting. Notice shall be given by the
clerk, assistant clerk, if any, or by the officer or directors calling the
meeting. The requirement of notice to any director may be waived by a written
waiver of notice, executed by such person before or after the meeting or
meetings, and filed with the records of the meeting, or by attendance at the
meeting without protesting prior hereto or at its commencement the lack of
notice. A notice or waiver of notice of a directors, meeting need not specify
the purposes of the meeting.
Section 2.11. Agenda. Any lawful business may be transacted at a
meeting of the board of directors, notwithstanding the fact hat the nature of
the business may not have been specified in the notice or waiver of notice of
the meeting.
Section 2.12. Quorum At any meeting of the board of directors, a
majority of the directors then in office shall constitute a quorum for the
transaction of business. Any meeting may be adjourned by a majority of the votes
cast upon the question, whether or not a quorum is present, and the meeting may
be held as adjourned without further notice.
Section 2.13. Action at Meeting. Any motion adopted by vote of the
majority of the directors present at a meeting at which a quorum, is present
shall be the act of the board of directors, except where a different vote is
required by law, by the Articles of Organization or by these By-laws. The assent
in writing of any director to any vote or action of the directors taken at any
meeting, whether or not a quorum was present and whether or not the director had
or waived notice of the meeting, shall have the same effect as if the director
so assenting was present at such meeting and voted in favor of such vote or
action.
Section 2.14. Action Without Meeting. Any action by the directors may
be taken without a meeting if all of the directors consent to the action in
writing and the consents are filed with the records of the directors meetings.
Such consent shall be created for all purposes as a vote of the directors at a
meeting.
Section 2.15. Committees. The board of directors may, by the
affirmative vote of a majority of the directors then in office, appoint an
executive committee or other committees consisting of one or more directors and
may by vote delegate to any such committee some or all of their powers except
those which by law, the Articles of Organization or these By-laws they may not
delegate. Unless the board of directors shall otherwise provide, any such
committee may make rules for the conduct of its business, but unless otherwise
provided by the board of directors or such rules, its meetings shall be called,
notice given or waived, its business conducted or its action taken as nearly as
may be in the same manner as is provided in these By-laws with respect to
meetings or for the conduct of business or the taking of actions by the board of
directors. The board of directors shall have power at any time to fill vacancies
in, change the membership of, or discharge any such committee
- 5 -
<PAGE>
at any time. The board of directors hall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
ARTICLE III
Officers
Section 3.1. Enumeration. The officers shall consist of a resident, a
treasurer, a clerk and such other officers and agents including one or more vice
- -presidents, assistant treasurers assistant clerks, secretaries and assistant
secretaries), with such duties and powers, as the board of directors may, in
their discretion, determine.
Section 3.2. Election. The president, treasurer and clerk shall be
elected annually by the directors at their first meeting following the annual
meeting of the stockholders. Other officers may be chosen by the directors at
such meeting or at any other meeting.
Section 3.3. Qualification. An officer may, but need not, be director
or stockholder and no officer shall be a director solely by virtue of being an
officer. Any two or more offices may be held by the same person. The clerk shall
be a resident of Massachusetts unless the corporation has a resident agent
appointed for the purpose of service of process. Any officer may be required by
the directors to give bond for the faithful performance of his duties to the
corporation in such amount and with such sureties as the directors may
determine. The premiums for such bonds may be paid by the corporation.
Section 3.4. Tenure. Except as otherwise provided by the Articles of
Organization or these By-laws, the term of office of each officer shall be for
one year or until his successor is elected and qualified or until his earlier
resignation or removal.
Section 3.5. Removal. Any officer may be removed from office, with or
without cause, by the affirmative vote of a majority of the directors then in
office; provided, however, that an officer may be removed for cause only after
reasonable notice and opportunity to be heard by the board of directors prior to
action thereon.
Section 3.6. Resignation. Any officer may resign by delivering or
mailing postage prepaid a written resignation to the corporation at its
principal office or to the president, clerk, or assistant clerk, if any, and
such resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some event.
Section 3.7. Vacancies. A vacancy in any office arising from any cause
may be filled for the unexpired portion of the term by the board of directors.
Section 3.8. President. The president shall be the chief executive
officer of the corporation. Except as otherwise voted by the board or directors,
the president shall preside at all meetings of the stockholders and of the board
of directors at which present. The president shall have such duties and powers
as are commonly incident to the office and such duties and powers as the board
of directors shall from time to time designate.
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Section 3.9. Vice -Presidents. Vice -presidents, if any, shall have
such powers and perform such duties as the board of directors may from time to
time determine.
Section 3.10. Treasurer and Assistant Treasurers. The treasurer,
subject to the direction and under the supervision and control of the board of
directors, shall have general charge of the financial affairs of the
corporation. The treasurer shall have custody of all funds, securities and
valuable papers of the corporation, except as the board of directors may
otherwise provide. The treasurer shall keep or cause to be kept full and
accurate records of account which shall be the property of the corporation, and
which shall be always open to the inspection of each elected officer and
director of the corporation. The treasurer shall deposit or cause to be
deposited all funds of the corporation in such depository or depositories as may
be authorized by the board of directors. The treasurer shall have the power to
endorse for deposit or collection all notes, checks, drafts, and other
negotiable instruments payable to the corporation. The treasurer shall have the
power to borrow money and enter into and execute arrangements as to advances,
loans and credits to the corporation. The treasurer shall perform such other
duties as are incidental to the office, and such other duties as may be assigned
by the board of directors.
Assistant treasurers, if any, shall have such powers and perform such
duties as the board of directors may from time to time determine.
Section 3.11. Clerk and Assistant Clerks. The clerk shall record, or
cause to be recorded, all proceedings of the meetings of the stockholders and
directors (including committees thereof) in the book of records of this
corporation. The record books shall be open at reasonable times to the
inspection of any stockholder, director, or officer. The clerk shall notify the
stockholders and directors, when required by law or by these By-laws, of their
respective meetings, and shall perform such other duties as the directors and
stockholders may from time to time prescribe. The clerk shall have the custody
and charge of the corporate seal, and shall affix the seal of the corporation to
all instruments requiring such seal, and shall certify under the corporate seal
the proceedings of the directors and of the stockholders, when required. In the
absence of the clerk at any such meeting, a temporary clerk shall be chosen who
shall record the proceedings of the meeting in the aforesaid books.
Assistant clerk, if any, shall have such powers and perform such duties
as the board of directors may from time to time designate.
Section 3.12. Other Powers and Duties. Subject to these Bylaws and to
such limitations as the board of directors may from time to time prescribe, the
officers of the corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the board of directors.
ARTICLE IV
Capital Stock
Section 4.1. Stock Certificates. Each stockholder shall be entitled to
a certificate representing the number of shares of the capital stock of the
corporation owned by such person in such form as shall, in conformity to law, be
prescribed from time to time by the board of directors.
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Each certificate shall be signed by the resident or vice-president and treasurer
or assistant treasurer or such other officers designated by the board of
directors from time to time as permitted by law, shall bear the seal of the
corporation, and shall express on its face its number, date of issue, class, the
number of shares for which, and the name of the person to whom, it is issued.
The corporate seal and any or all of the signatures of corporation officers may
be facsimile if the stock certificate is manually counter-signed by an
authorized person on behalf of a transfer agent or registrar other than the
corporation or its employee.
If an officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed on, a certificate shall have ceased to be
such before the certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at the
time of its issue.
Section 4.2. Transfer of Shares. Title to a certificate of stock and to
the shares represented thereby shall be transferred only on the books of the
corporation by delivery to the corporation or its transfer agent of the
certificate properly endorsed, or by delivery of the certificate accompanied by
a written assignment of the same, or a properly executed written power of
attorney to sell, assign or transfer the same or the shares represented thereby.
Upon surrender of a certificate for the shares being transferred, new
certificate or certificates shall be issued according to the interests of the
parties.
Section 4.3. Record Holders. Except as otherwise may be required by
law, by the Articles of Organization or by these Bylaws, the corporation shall
be entitled to treat the record holder of stock as shown on its books as the
owner of such stock for all purposes, including the payment of dividends and the
right to vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the corporation in accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the corporation of
his post office address.
Section 4.4. Record Date. In order that the corporation may determine
the stockholders entitled to receive notice of or to vote at any meeting of
stockholders or any adjournments thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty (60) days prior to
any other action. In such case only stockholders of record on such record date
shall be so entitled, notwithstanding any transfer of stock on the books of the
corporation after the record date.
If no record date is fixed: (i) the record date for determining
stockholders entitled to receive notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (ii) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is necessary, shall be the day on which the first written consent
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is expressed; and (iii) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 4.5. Transfer Agent and Registrar for Shares of Corporation.
The board of directors may appoint a transfer agent and a registrar of the
certificates of stock of the corporation. any transfer agent so appointed shall
maintain, among other records, a stockholders' ledger, setting forth the names
and addresses of the holders of all issued shares of stock of the corporation,
the number of shares held by each, the certificate numbers representing such
shares, and the date of issue of the certificates representing such shares. Any
registrar so appointed shall maintain, among other records, a share register,
setting forth the total number of shares of each class of shares which the
corporation is authorized to issue and the total number of shares actually
issued. The stockholders, ledger and the share register are hereby identified as
the stock transfer books of the corporation; but as between the stockholders'
ledger and the share register, the names and addresses of stockholders, as they
appear on the stockholders,'ledger maintained by the transfer agent shall be the
official list of stockholders of record of the corporation. The name and address
of each stockholder of record, as they appear upon the stockholders' ledger,
shall be conclusive evidence of who are the stockholders entitled to receive
notice of the meetings of stockholders, to vote at such meetings, to examine a
complete list of the stockholders entitled to vote at meetings, and to own,
enjoy and exercise any other property or rights deriving from such shares
against the corporation. Stockholders, but not the corporation, its directors,
officers, agents or attorneys, shall be responsible for notifying the transfer
agent, in writing, of any changes in their names or addresses from time to time,
and failure to do so will relieve the corporation, its other stockholders,
directors, officers, agents and attorneys, and its transfer agent and registrar,
of liability for failure to direct notices or other documents, or pay over or
transfer dividends or other property or rights, to a name or address other than
the name and address appearing in the stockholders' ledger maintained by the
transfer agent.
Section 4.6. Loss of Certificates. In case of the loss, destruction or
mutilation of a certificate of stock, a replacement certificate may be issued in
place thereof upon such terms as the board of directors may prescribe,
including, in the discretion of the board of directors, a requirement of bond
and indemnity to the corporation.
Section 4.7. Restrictions on Transfer. Every certificate for shares of
stock which are subject to any restriction on transfer, whether pursuant to the
Articles of Organization, the By-laws or any agreement to which the corporation
is a party, shall have the fact of the restriction noted conspicuously on the
certificate and shall also set forth on the face or back either the full text of
the restriction or a statement that the corporation will furnish a copy to the
holder of such certificate upon written request and without charge.
Section 4.8. Multiple Classes of Stock. The amount and classes of the
capital stock and the par value, if any, of the shares, shall be as fixed in the
Articles of Organization. At all times when there are two or more classes of
stock, the several classes of stock shall conform to the description and the
terms and have the respective preferences, voting powers, restrictions and
qualifications set forth in the Articles of Organization and these By-laws.
Every certificate issued when the
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corporation is authorized to issue more than one class or series of stock shall
set forth on its face or back either (i) the full text of the references, voting
powers, qualifications and special and relative rights of the shares of each
class and series authorized to be issued, or (ii) a statement of the existence
of such preferences, powers, qualifications and rights, and a statement that the
corporation will furnish a copy thereof to the holder of such certificate upon
written request and without charge.
ARTICLE V
Dividends
Section 5.1. Declaration of Dividends. Except as otherwise required by
law or by the Articles of Organization the board of directors may, in its
discretion, declare what, if any, dividends shall be paid by the corporation.
Dividends may be paid in cash, in property, in shares of the corporation's
stock, or in any combination thereof. Dividends shall be payable upon such dates
as the board of directors may designate.
Section 5.2. Reserves. Before the payment of any dividend before making
any distribution of profits, the board of directors, from time to time and in
its absolute discretion, shall have power to set aside out of the surplus or net
profits of the corporation such sum or sums as the board of directors deems
proper and sufficient as a reserve fund to meet contingencies or for such other
purpose as the board of directors shall deem to be in the best interests of the
corporation, and the board of directors may modify or abolish any such reserve.
ARTICLE VI
Powers of Officers to Contract
With the Corporation
Any and all of the directors and officers of the corporation,
notwithstanding their official relations to it, may enter into and perform any
contract or agreement of any nature between the corporation and themselves, or
any and all of the individuals from time to time constituting the board of
directors of the corporation, or any firm or corporation in which any such
director may be interested, directly or indirectly, whether such individual,
firm or corporation thus contracting with the corporation shall hereby derive
personal or corporate profits or benefits or otherwise; provided, that (i) the
material facts of such interest are disclosed or are known to the board of
directors or committee hereof which authorizes such contract or agreement; (ii)
if the material facts as to such person's relationship or interest are disclosed
or are known to the stockholders entitled to vote hereon, and the contract is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or agreement is fair as to the corporation as of the time it is
authorized, approved or ratified by the board of directors, a committee hereof,
or the stockholders. Any director of the corporation who is interested in any
transaction as aforesaid may nevertheless be counted in determining the
existence of a quorum at any meeting of the board of directors which shall
authorize or ratify any such transaction. This Article shall not be construed to
invalidate any contract or other transaction which would otherwise be valid
under the common or statutory law applicable thereto.
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ARTICLE VII
Indemnification
Section 7.1. Definitions. For purposes of this Article VII the
following terms shall have the meanings indicated:
"Corporate Status" describes the status of a person who is or was a
director, officer, employee, agent, trustee or fiduciary of the corporation or
of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the express
written request of the corporation.
"Court" means the court in which the Proceeding in respect of which
indemnification is sought by a Covered Person shall have been brought or is
pending, or another court having subject matter jurisdiction and personal
jurisdiction over the parties.
"Covered Person" means a person who is a present or former director or
Officer of the corporation and shall include such person's legal
representatives, heirs, executors and administrators.
"Disinterested" describes any individual, whether or not that
individual is a director, officer, employee or agent of the corporation, who is
not and was not and is not threatened to be made a party to the Proceeding in
respect of which indemnification, advancement of Expenses or other action is
sought by a Covered person.
"Expenses" shall include, without limitation, all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating or being or preparing to be a
witness in a Proceeding.
"Good Faith" shall mean a Covered Person having acted in good faith and
in a manner such Covered Person reasonably believed to be in the best interests
of the corporation or, in the case of an employee benefit plan, the best
interests of the participants or beneficiaries of said plan, as the case may be,
and, with respect to any Proceeding which is criminal in nature, having had no
reasonable cause to believe such Covered Person's conduct was unlawful.
"Improper Personal Benefit" shall include, but not be limited to, the
personal gain in fact by reason of a person's Corporate Status of a financial
profit, monies or other advantage not also accruing to the corporation or to the
stockholders generally and which is unrelated to his usual compensation
including, but not limited to, (i) in exchange for the exercise of influence
over the corporation's affairs, (ii) as a result of the diversion of corporate
opportunity, or (iii) pursuant to the use or communication of confidential or
inside information for the purpose of generating a profit from trading in the
corporation's securities. Notwithstanding the foregoing, "Improper Personal
Benefit" shall not include any benefit, directly or indirectly, related to
actions taken in order to evaluate, discourage, resist, prevent or negotiate any
transaction with or proposal from any person or entity seeking control of, or a
controlling interest in, the corporation.
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"Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and may include law firms or
members thereof that are regularly retained by the corporation but not by any
other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the standards of professional conduct then
prevailing and applicable to such counsel, would have a conflict of interest in
representing either the corporation or Covered Person in an action to determine
the Covered Person's rights under this article.
"Officer" means the president, vice presidents, treasurer, assistant
treasurer (s) , secretary, assistant secretary and such other executive officers
as are appointed by the board of directors of the corporation and explicitly
entitled to indemnification hereunder.
"Proceeding" includes any actual, threatened or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation (including
any internal corporate investigation) , administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, other than
one initiated by the Covered Person, but including one initiated by a Covered
person for the purpose of enforcing such Covered Person's rights under this
Article to the extent provided in Section 7.14 of this article. "Proceeding"
shall not include any counterclaim brought any Covered Person other than one
arising out of the same transaction or occurrence that is the subject matter of
the underlying claim.
Section 7.2. Right to Indemnification in General.
(a) Covered Persons. The corporation may indemnify, and may advance
Expenses, to each Covered Person who is, was or is threatened to be made a party
or otherwise involved in any Proceeding, as provided in this Article and to the
fullest extent permitted by applicable law in effect on the date hereof and to
such greater extent as applicable law may hereafter from time to time permit.
The indemnification provisions in this Article shall be deemed to be a
contract between the corporation and each Covered Person who serves in any
Corporate Status at any time while these provisions as well as the relevant
provisions of the Massachusetts Business Corporation Law are in effect, and any
repeal or modification thereof shall not affect any right or obligation then
existing with respect to any state of facts then or previously existing or any
Proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a contract right may not be modified
retroactively without the consent of such Covered Person.
(b) Employees and Agents. The corporation may, to the extent authorized
from time to time by the board of directors, grant indemnification and the
advancement of Expenses to any employee or agent of the corporation to the
fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of Covered Persons.
(c) Adverse Adjudication. Notwithstanding any provision of this Article
to the contrary, no indemnification shall be provided for any Covered Person
with respect to any matter as to which he shall have been adjudicated in any
Proceeding not to have acted in good Faith.
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Section 7.3. Proceedings Other Than Proceedings by or in the Right of
the Corporation. Each Covered Person may be entitled to the rights of
indemnification provided in this Section 7.3 if, by reason of such Covered
Person's Corporate Status, such Covered Person is, was or is threatened to be
made, a party to or is otherwise involved in any Proceeding, other than a
Proceeding by or in the right of the corporation. Each Covered Person may be
indemnified against Expenses, judgments, penalties, fines and amounts paid in
settlements, actually and reasonably incurred by such Covered Person or on such
Covered Person's behalf in connection with such Proceeding or any claim, issue
or matter therein, if such Covered Person acted in Good Faith and such Covered
Person has not been adjudged during the course of such proceeding to have
derived an Improper Personal Benefit from the transaction or occurrence forming
the basis of such Proceeding.
Section 7.4. Proceedings by or in the Right of the Corporation. Each
Covered Person may be entitled to the rights of indemnification provided in this
Section 7.4 if, by reason of such covered Person's Corporate Status, such
Covered Person is, or is threatened to be made, a party to or is otherwise
involved in any proceeding brought by or in the right of the corporation to
procure judgment in its favor. Such Covered Person may be indemnified against
Expenses, judgments, penalties, and amounts paid in settlement, actually and
reasonably incurred by such Covered Person or on such Covered Person's behalf in
connection with such proceeding if such Covered Person acted in Good Faith and
such covered Person has not been adjudged during the course of such proceeding
to have derived an Improper Personal Benefit from the transaction or occurrence
forming the basis of such Proceeding. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any claim, issue or matter in such
Proceeding as to which such Covered Person shall have been adjudged to be liable
to the corporation if applicable law prohibits such indemnification; provided,
however, that, if applicable law so permits, indemnification shall nevertheless
be made by the corporation in such event if and only to the extent that the
Court which is considering the matter shall so determine.
Section 7.5. Indemnification of a Party Who is Wholly or Partly
Successful. Notwithstanding any provision of this Article to the contrary, to
the extent that a Covered Person is, by reason of such Covered Person's
Corporate Status, a party to or is otherwise involved in and is successful, on
the merits or otherwise, in any Proceeding, such Covered Person may be
indemnified to the maximum extent permitted by law, against all expenses,
judgments, penalties, fines, and amounts paid in settlement, actually and
reasonably incurred by such Covered Person or on such Covered Person's behalf in
connection therewith. If such Covered Person is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the corporation may
indemnify such Covered Person to the maximum extent permitted by law, against
all Expenses, judgments, penalties, fines, and amounts paid in settlement,
actually and reasonably incurred by such Covered Person or on such Covered
Person's behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 7.5 and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
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Section 7.6. Indemnification for Expenses of a Witness. Notwithstanding
any provision of this Article to the contrary, to the extent that a Covered
Person is, by reason of such Covered Persons's Corporate Status, a witness in
any Proceeding, such Covered Person shall be indemnified against all Expenses
actually and reasonably incurred by such Covered Person or on such Covered
Person's behalf in connection therewith.
Section 7.7. Advancement of Expenses. Notwithstanding any provision of
this Article to the contrary, the corporation may advance all reasonable
Expenses which, by reason of a Covered Person's Corporate Status, were incurred
by or on behalf of such Covered Person in connection with any Proceeding, within
thirty (30) days after the receipt by the corporation of a statement or
statements from such Covered Person requesting such advance or advances, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence he Expenses incurred by the Covered Person
and shall include or be receded or accompanied by an undertaking by or on behalf
of the Covered Person to repay any Expenses if such Covered Person shall be
adjudged to be not entitled to be indemnified against such expenses. Any advance
and undertaking to repay pursuant to this section 7.7 shall be interest-free and
made without reference to the financial ability of the Covered Person to make
such repayment, above and such conclusion shall have been so confirmed by the
corporation's said outside counsel.
[PAGE MISSING]
Section 7.8.
(c) Notwithstanding any provision of this Article to the contrary, the
corporation shall not be obligated to indemnify the Covered Person under this
Article for any amounts paid in settlement of any Proceeding effected without
its written consent. The corporation shall not settle any Proceeding or claim in
any manner which would impose any penalty, limitation or disqualification of the
Covered Person for any purpose without such Covered Person's written consent.
Neither the corporation nor the Covered Person will unreasonably withhold their
consent to any proposed settlement.
(d) If it is determined that the Covered Person is entitled to
indemnification other than as afforded under subparagraph (b) above, payment to
the Covered Person of the additional amounts for which he is to be indemnified
shall be made within ten (10) days after such determination.
Section 7.9. Procedures.
(a) Method of Determination. A determination (as provided for by this
Article or if required by applicable law in the specific case) with respect to a
Covered Person's entitlement to indemnification shall be made either (a) by the
board of directors by a majority vote of a quorum consisting of Disinterested
directors, or (b) in the event that a quorum of the board of directors
consisting of Disinterested directors is not obtainable or, even if obtainable,
such quorum of Disinterested directors so directs, by Independent Counsel in a
written determination to the board of directors, a copy of which shall be
delivered to the Covered Person seeking indemnification, or (c) by the vote of
the holders of a majority of the corporation's capital stock outstanding at the
time entitled to vote thereon.
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(b) Initiating Request. A Covered Person who seeks indemnification
under this Article shall submit a Request for indemnification, including such
documentation and information as is reasonably available to such Covered Person
and is reasonably necessary to determine whether and to what extent such Covered
Person is entitled to indemnification.
(c) Presumptions. In making a determination with respect to entitlement
to indemnification hereunder, the person or persons or entity making such
determination shall not presume that the Covered Person is or is not entitled to
indemnification under this Article.
(d) Burden of Proof. Each Covered Person shall bear the burden of going
forward and demonstrating sufficient facts to support his claim for entitlement
to indemnification under this Article. That burden shall be deemed satisfied by
the submission of an initial Request for Indemnification pursuant to section
7.9(b) above.
(e) Effect of Other Proceedings. The termination of any proceeding or
of any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of guilty or of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Article) of itself
adversely affect the right of a Covered Person to indemnification or create a
presumption that a Covered Person did not act in Good Faith.
Section 7.10. Action by the Corporation. Any action, payment, advance
determination other than a determination made pursuant to Section 7.9 (a) above,
authorization, requirement, grant of indemnification or other action taken by
the Corporation pursuant to this Article shall be effected exclusively through
any Disinterested person so authorized by the board of directors of the
corporation, including the president or any vice president of the corporation.
Section 7.11. Non-Exclusivity. The rights of indemnification and to
receive advancement of Expenses as provided by this Article shall not be deemed
exclusive of any other rights to which a Covered Person may at any time be
entitled under applicable law, the Articles of Organization, these By-Laws, any
agreement, a vote of stockholders or a resolution of the board of directors, or
otherwise. No amendment, alteration, rescission or replacement of this Article
or any provision hereof shall be effective as to a Covered Person with respect
to any action taken or omitted by such Covered Person in such Covered Person's
Corporate Status or with respect to any state of facts then or previously
existing or any proceeding previously or thereafter brought or threatened based
in whole or to the extent based in part upon any such state of facts existing
prior to such amendment, alteration, rescission or replacement.
Section 7.12. Insurance. The corporation may maintain, at its expense,
an insurance policy or policies to protect itself and any Covered Person,
officer, employee or agent of the corporation or another enterprise against
liability arising out of this Article or otherwise, whether or not the
corporation would have the power to indemnify any such person against such
liability under the Massachusetts Business Corporation Law.
Section 7.13. No Duplicative Payment. The corporation shall not be
liable under this Article to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that a
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Covered Person has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 7.14. Expenses of Adjudication. In the event that any Covered
Person seeks a judicial adjudication, or an award in arbitration, to enforce
such Covered Person's rights under, or to recover damages for breach of, this
Article, such Covered Person shall be entitled to recover from the corporation,
and shall be indemnified by the corporation against, any and all expenses (of
the types described in the definition of Expenses in Section 7.1 of his Article)
actually and reasonably incurred by such Covered Person in seeking such
adjudication or arbitration, but only if such Covered Person prevails therein.
If it shall be determined in such adjudication or arbitration that the Covered
Person is entitled to receive part but not all of the indemnification of
expenses sought, the expenses incurred by such Covered Person in connection with
such adjudication or arbitration shall be appropriately prorated.
Section 7.15. Severability. If any provision or provisions of this
Article shall be held to be invalid, illegal or unenforceable for any reason
whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Article (including without limitation, each portion of any
Section of this Article containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this article
(including, without limitation, each portion of any Section of this Article
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the content manifested by the provision held invalid, illegal or
unenforceable.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1. Articles of Organization. All references in these By-laws
to the Articles of Organization shall be deemed to refer to the Articles of
Organization of the corporation, as amended and in effect from time to time.
Section 8.2. Fiscal Year. Except as from time to time otherwise
provided by the board of directors, the fiscal year of the corporation shall end
on the last day of December of each year.
Section 8.3. Corporate Seal. The board of directors shall have the
power to adopt and alter the seal of the corporation.
Section 8.4. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes, and other obligations authorized to be executed by an
officer of the corporation on its behalf shall be signed by the president or the
treasurer except as the board of directors may generally or in particular cases
otherwise determine.
Section 8.5. Voting of Securities. Unless the board of directors
otherwise provides, the president or the treasurer may waive notice of and act
on behalf of this corporation, or appoint
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another person or persons to act as proxy or attorney in fact for this
corporation with or without discretionary power and/or power of substitution, at
any meeting of stockholders or shareholders of any other corporation or
organization, any of whose securities are held by this corporation.
Section 8.6. Evidence of Authority. A certificate by the clerk or any
assistant clerk as to any action taken by the stockholders, directors or any
officer or representative of the corporation shall, as to all persons who rely
thereon in good faith, be conclusive evidence of such action. The exercise of
any power which by law, by the Articles of Organization or by these Bylaws, or
under any vote of the stockholders or the board of directors, may be exercised
by an officer of the corporation only in the event of absence of another officer
or any other contingency shall bind the corporation in favor of anyone relying
thereon in good faith, whether or not such absence or contingency existed.
Section 8.7. Corporate Records. The original, or attested copies, of
the Articles of Organization, By-laws, records of all meetings of the
incorporators and stockholders, and the stock transfer books (which shall
contain the names of all stockholders and the record address and the amount of
stock held by each) shall be kept in Massachusetts at the principal office of
the corporation, or at an office of its resident agent, transfer agent or of the
clerk or of the assistant clerk, if any. Said copies and records need not all be
kept in the same office. They shall be available at all reasonable times to
inspection of any stockholder for any purpose but not to secure a list of
stockholders for the purpose of selling said list or copies thereof or of using
the same or a purpose other than in the interest of the applicant, as a
stockholder, relative to the affairs of the corporation.
Section 8.8. Charitable Contributions. The board of directors from time
to time may authorize contributions to be made by the corporation in such
amounts as it may determine to be reasonable to corporations, trusts, funds or
foundations organized and operated exclusively for charitable, scientific or
educational purposes, no part of the net earning of which inures to the private
benefit of any stockholder or individual.
ARTICLE IX
Amendments
Section 9.1. Amendment by Stockholders. Prior to the issuance of stock,
these By-laws may be amended, altered or repealed by the incorporator(s) by
majority vote. After stock has been issued, these By-laws may be amended,
altered or repealed by the stockholders at any annual or special meeting by vote
of a majority of all shares outstanding and entitled to vote, except that where
the effect of the amendment would be to reduce any voting requirement otherwise
required by law, the Articles of Organization or these By-laws, such amendment
shall require the vote that would have been required by such other provision.
Notice and a copy of any proposal to amend these By-laws must be included in the
notice of meeting of stockholders at which action is taken upon such amendment.
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<PAGE>
Section 9.2. Amendment by Board of Directors.
(a) These By-laws may be amended, altered or repealed by the board of
directors at a meeting duly called for the purpose by majority vote of the
directors then in office, except that directors shall not amend the By-laws in a
manner which:
(i) changes the stockholder voting requirements for any action;
(ii) alters or abolishes any preferential right or right of redemption
applicable to a class or series of stock with shares already outstanding;
(iii) alters the provisions of Articles VII or IX hereof; or
(iv) permits the board of directors to take any action which under law,
the Articles of Organization or these By-laws is required to be taken by the
stockholders.
(b) If the By-laws are amended or altered by the board of directors,
notice of the amendment, alteration or repeal shall be given to all stockholders
entitled to vote not later than the time of giving notice of the next meeting of
stockholders following such amendment, alteration or repeal.
(c) Any amendment of these By-laws by the board of directors may be
altered or repealed by the stockholders at any annual or special meeting of
stockholders.
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<PAGE>
Client Copy
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL J. CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON. MASSACHUSETTS 02108
ARTICLES OF ORGANIZATION (Under G.L. Ch. 156B)
ARTICLE I
The name of the corporation is:
THE NEW DAWNING COMPANY, INC.
ARTICLE II
The purpose of the corporation is to engage in the following
business activities:
To engage in, conduct and carry on a business involving the financing,
production, promotion and presentation of theatrical plays and shows, anywhere
in the world, and all matters incidental and related thereto.
To carry on any business or other activity which may be lawfully
carried on by a corporation organized under the Business Corporation Law of the
Commonwealth, whether or not related to those referred to in the foregoing
paragraph.
<PAGE>
ARTICLE III
The type and classes of stock and the total number of shares and par value, if
any, of each type and class of stock which the corporation is authorized to
issue is as follows:
WITHOUT PAR VALUE STOCKS
Type Number of Shares
Common 20,000
ARTICLE IV
If more than one type, class or series is authorized, a description of each
with, if any, the preferences, voting powers, qualifications, special or
relative rights or to each type and class thereof and any series now
established.
Not applicable
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are as follows:
See V.A. attached hereto and made a part hereof.
ARTICLE VI
Other lawful provisions, if any. for the conduct and regulation of business and
affairs of the corporation, for its voluntary dissolution, or for limiting,
defining. or regulating the powers of the corporation. or of its directors or
stockholders, or of any class of stockholders: (If there are no provisions state
"None".)
None
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<PAGE>
V.A.
Any stockholder, including the heirs, assigns, executors, or
administrators of a deceased stockholder, desiring to sell or transfer such
stock owned by him or them, shall first offer it to the corporation through the
Board of Directors, in the manner following:
He shall notify the directors of his desire to sell or transfer by
notice in writing, which notice shall contain the price at which he is willing
to sell or transfer and the name of one arbitrator. The directors shall within
thirty days thereafter either accept the offer, or by notice to him in writing
name a second arbitrator, and these two shall name a third. It shall then be the
duty of the arbitrators to ascertain the value of the stock, and if any
arbitrator shall neglect or refuse to appear at any meeting appointed by the
arbitrators, a majority may act in the absence of such arbitrator.
After the acceptance of the offer, or the report of the arbitrators as
to the value of the stock, the Directors shall have thirty days within which to
purchase the same at such valuation, but if at the expiration of thirty days,
the corporation shall not have exercised the right to purchase, the owner of the
stock shall be at liberty to dispose of the same in any manner he may see fit.
No shares of stock shall be sold or transferred on the books of the
corporation until these provisions have been complied with, but the Board of
Directors may, in any particular instance, waive these requirements.
In the event the corporation does not choose to purchase the stock, any
stockholder desiring to sell or transfer such stock owned by him, shall then
offer it to the remaining stockholders in the same manner set out above.
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<PAGE>
ARTICLE VII
The effective date of organization of the corporation shall be the date approved
and filed by the Secretary of the Commonwealth. If a later effective date is
desired, specify such date which shall not be more than thirty days after the
date of filing.
The information contained in ARTICLE VIII is NOT a PERMANENT part of the
Articles of Organization and may be changed ONLY by filing the appropriate form
provided therefor.
ARTICLE VIII
a. The street address of the corporation IN MASSACHUSETTS is: (post office
boxes are no not acceptable)
120 Boylston Street, Suite 502, Boston, MA 02116
b. The name, residence and post office address (if different) of the
directors and officers of the corporation are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C> <C>
PRESIDENT: Jon B. Platt 220 Boylston St. -#1109 220 Boylston St. -#1109
Boston, MA 02116 Boston, MA 02116
TREASURER: Jon B. Platt 220 Boylston St. -#1109 220 Boylston St. -#1109
Boston, MA 02116 Boston, MA 02116
CLERK: Jon B. Platt 220 Boylston St. -#1109 220 Boylston St. -#1109
Boston, MA 02116 Boston, MA 02116
DIRECTORS: Jon B. Platt 220 Boylston St. -#1109 220 Boylston St. -#1109
Boston, MA 02116 Boston, MA 02116
</TABLE>
c. The fiscal year (i.e., tax year) of the corporation shall end on the
last day of the mouth of:
December in each year
d. The name and BUSINESS address of the RESIDENT AGENT of the corporation,
if any, is:
none
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<PAGE>
ARTICLE IX
By-laws of the corporation have been duly adopted and the president, treasurer,
clerk and directors whose times are set forth above. have been duly elected.
IN WITNESS WHEREOF and under the pains and penalties of perjury, I/ WE, whose
signature(s) appear below as incorporator(s) and whose names and business or
residential address(es) ARE CLEARLY TYPED OR PRINTED beneath each signature do
hereby associate with the intention of forming this corporation under the
provisions of General Laws Chapter 156B and do hereby sign these Articles of
Organization as incorporator(s) this 18 day of January 1994.
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<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B SECTION 12
I hereby certify that, upon an examination of these articles of
organization duly submitted to me, it appears that the provisions of the General
Laws relative to the organization of corporations have been complied with and I
hereby approve said articles and the filing fee in the amount of $ having been
paid, said articles are deemed to have been filed with me this day of 19__.
Effective date
MICHAEL J. CONNOLLY
Secretary of State
FILING FEE: 1/10 of 1% of the total amount of the authorized capital stock but
not less than $200.00. For the purpose of filing, shares of stock with a par
value less than one dollar or no par stock shall be deemed to have a par value
of one dollar per share.
PHOTOCOPY OF ARTICLES OF ORGANIZATION TO BE SENT
Arthur M. White
BIKOFSKY AND WHITE
281 Pleasant Street, Framingham, MA 01701
Telephone: (508) 879-5000
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<PAGE>
The Commonwalth of Massachusetts
William Francis Galvin
Secretary of Commonwealth
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF AMENDMENT FEDERAL IDENTIFICATION
General Laws, Chapter 156B, Section 72 NO. 13 3749267
000453060
I, JON B. PLATT, President and Clerk of THE NEW DAWNING COMPANY, INC.,
located at 120 Poylston Street, Suite 502, Boston, MA 02116, do hereby certify
that these ARTICLES OF AMENDMENT affecting Articles NUMBERED: 1 of the
Articles of Organization were duly adopted at a meeting held on January 3, 1995,
by vote of:
1,000 shares of common stock out of 1,000 shares outstanding, being at
least a majority of each type, class or series outstanding and entitled to
vote thereon:
To change the name of the corporation from The New Dawning Company, Inc. to
Warrenton Street Theatre Corp.
- -------------
1 For amendments adopted pursuant to Chapter 156B, Section 70.
<PAGE>
BYLAWS
OF
WARRENTON STREET THEATER CORP.
Article I
Offices
Section 1. Registered Office. The registered office of the Corporation
required by the Massachusetts Business Corporation Law to be maintained in the
Commonwealth of Massachusetts, shall be the registered office named in the
original Certificate of Incorporation of the Corporation, or such other office
as may be designated from time to time by the Board of Directors in the manner
provided by law. Should the Corporation maintain a principal office within the
Commonwealth of Massachusetts such registered office need not be identical to
such principal office of the Corporation.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the Commonwealth of Massachusetts as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
Article II
Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the Commonwealth of Massachusetts as shall be specified or fixed in
the notices or waivers of notice thereof.
Section 2. Quorum; Adjournment of Meetings. Unless otherwise required
by law or provided in the Certificate of Incorporation or these bylaws, the
holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum at
any meeting of stockholders for the transaction of business and the act of a
majority of such stock so represented at any meeting of stockholders at which a
quorum is present shall constitute the act of the meeting of stockholders. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Notwithstanding the other provisions of the Certificate of
Incorporation or these bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy, at any meeting of stockholders, whether or not a quorum is present,
shall have the power to adjourn such meeting from time to time, without any
adjourned meeting. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date
<PAGE>
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at such meeting. At such
adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting as originally
called.
Section 3. Annual Meetings. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, within or without the Commonwealth of
Massachusetts, on such date, and at such time as the Board of Directors shall
fix and set forth in the notice of the meeting, which date shall be within
thirteen (13) months subsequent to the later of the date of incorporation or the
last annual meeting of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time the Chairman of the Board (if
any), by the President or by a majority of the Board of Directors, or by a
majority of the executive committee (if any), and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent (10%)
of the issued and outstanding stock entitled to vote at such meeting.
Section 5. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors of the Corporation
may fix, in advance, a date as the record date for any such determination of
stockholders, which date shall not be more than sixty (60) days nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the Board of Directors does not fix a record date for any meeting of
the stockholders, the record date for determining stockholders entitled to
notice of or to vote at such meeting shall be at the close of business on the
day next preceding the day on which notice is given, or, if in accordance with
Article VIII, Section 3 of these bylaws notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. If, in
accordance with Section 12 of this Article II, corporate action without a
meeting of stockholders is to be taken, the record date for determining
stockholders entitled to express consent to such corporate action in writing,
when no prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
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<PAGE>
Section 6. Notice of Meetings. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by or at the direction of the
Chairman of the Board (if any) or the President, the Secretary or the other
person(s) calling the meeting to each stockholder entitled to vote thereat not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
Such notice may be delivered either personally or by mail. If mailed, notice is
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Section 7. Stock List. A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in the name of such stockholder, shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The stock list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to time
determine by resolution, before or at the time of the meeting. All proxies shall
be received and taken charge of and all ballots shall be received and canvassed
by the secretary of the meeting who shall decide all questions touching upon the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless an inspector or inspectors shall have been appointed
by the chairman of the meeting, in which event such inspector or inspectors
shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless the
proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless
such instrument shall provide the contrary, a majority of such persons present
at any meeting at which their powers thereunder are to be exercised shall have
and may exercise all the powers of voting or giving consents thereby conferred,
or if only one be present, then such powers may be exercised by that one; or, if
an even number attend and a majority do not agree on any particular issue, each
proxy so attending shall be entitled to exercise such powers in respect of the
same portion of the shares as he is of the proxies representing such shares.
Section 9. Voting: Elections; Inspectors. Unless otherwise required by
law or provided in the Certificate of Incorporation, each stockholder shall have
one vote for each share of stock entitled to vote which is registered in his
name on the record date for the meeting. Shares registered in the name
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<PAGE>
of another corporation, domestic or foreign, may be voted by such officer, agent
or proxy as the bylaw (or comparable instrument) of such corporation may
prescribe, or in the absence of such provision, as the Board of Directors (or
comparable body) of such corporation may determine. Shares registered in the
name of a deceased person may be voted by his executor or administrator, either
in person or by proxy.
All voting, except as required by the Certificate of Incorporation or
where otherwise required by law, may be by a voice vote; provided, however, that
upon demand therefor by stockholders holding a majority of the issued and
outstanding stock present in person or by proxy at any meeting a stock vote
shall be taken. Every stock vote shall be taken by written ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
All elections of directors shall be by ballot, unless otherwise provided in the
Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of the
meeting may appoint one or more inspectors, each of whom shall subscribe an oath
or affirmation to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. Such
inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation,
cumulative voting for the election of directors shall be prohibited.
Section 10. Conduct of Meetings. The meetings of the stockholders shall
be presided over by the Chairman of the Board (if any), or if he is not present,
by the President, or if neither the Chairman of the Board (if any), nor
President is present, by a chairman elected at the meeting. The Secretary of the
Corporation, if present, shall act as secretary of such meetings, or if he is
not present, an Assistant Secretary shall so act; if neither the Secretary nor
an Assistant Secretary is present, then a secretary shall be appointed by the
chairman of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
in order. Unless the chairman of the meeting of stockholders shall otherwise
determine, the order of business shall be as follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
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<PAGE>
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting called
for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
Section 11. Treasury Stock. The Corporation shall not vote, directly or
indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes.
Section 12. Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action permitted or required by law, the
Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
Article III
Board of Directors
Section 1. Power; Number; Term of Office. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the Certificate of
Incorporation, they may exercise all the powers of the Corporation.
The number of directors which shall constitute the whole Board of
Directors, shall be determined from time to time by resolution of the
stockholders (provided that no decrease in the number of directors which would
have the effect of shortening the term of an incumbent director may be made by
the stockholders). If the stockholders make no such determination, the number of
directors shall be the number set forth in the Certificate of Incorporation.
Each director shall hold office for the term for which he is elected, and until
his successor shall have been elected and qualified or until his earlier death,
resignation or removal.
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<PAGE>
Unless otherwise provided in the Certificate of Incorporation,
directors need not be stockholders nor residents of the Commonwealth of
Massachusetts.
Section 2. Quorum. Unless otherwise provided in the Certificate of
Incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote of
a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 3. Place of Meetings; Order of Business. The directors may hold
their meetings and may have an office and keep the books of the Corporation,
except as otherwise provided by law, in such place or places, within or without
the Commonwealth of Massachusetts, as the Board of Directors may from time to
time determine by resolution. At all meetings of the Board of Directors business
shall be transacted in such order as shall from time to time be determined by
the Chairman of the Board (if any), or in his absence by the President, or by
resolution of the Board of Directors.
Section 4. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which a
quorum shall be present, held next after the annual meeting of stockholders, the
Board of Directors shall proceed to the election of the officers of the
Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Directors. Notice of such regular meetings shall
not be required.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board (if any), the President or, on the
written request of any two directors, by the Secretary, in each case on at least
twenty-four (24) hours personal, written, telegraphic, cable or wireless notice
to each director. Such notice, or any waiver thereof pursuant to Article VI,
Section 3 hereof, need not state the purpose or purposes of such meeting, except
as may otherwise be required by law or provided for in the Certificate of
Incorporation or these bylaws.
Section 7. Removal. Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided that, if the
Certificate of Incorporation expressly grants to stockholders the right to
cumulate votes for the election of directors and if less than the entire board
is to be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which such director is a
part.
Section 8. Vacancies; Increases in the Number of Directors. Unless
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any
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<PAGE>
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or a sole remaining
director; and any director so chosen shall hold office until the next annual
election and until his successor shall be duly elected and shall qualify, unless
sooner displaced.
If the directors of the Corporation are divided into classes, any
directors elected to fill vacancies or newly created directorships shall hold
office until the next election of the class for which such directors shall have
been chosen, and until their successors shall be duly elected and shall qualify.
Section 9. Compensation . Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors.
Section 10. Action Without a Meeting; Telephone Conference Meeting.
Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee. Such consent
shall have the same force and effect as a unanimous vote at a meeting, and may
be stated as such in any document or instrument filed with the Secretary of
State of Massachusetts.
Unless otherwise restricted by the Certificate of Incorporation,
subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors, may
participate in a meeting of such Board of Directors or committee, as the case
may be, by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Section 11. Approval or Ratification of Acts or Contracts by
Stockholders. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the stockholders,
or at any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any act or contract that shall be
approved or be ratified by the vote of the stockholders holding a major of the
issued and outstanding shares of stock of the Corporation entitled to vote and
present in person or by proxy at such meeting (provided that a quorum is
present), shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it has been approved or ratified by every stockholder of the
Corporation. In addition, any such act or contract may be approved or ratified
by the written consent of stockholders holding a majority of the issued and
outstanding shares of capital stock of the Corporation entitled to vote and such
consent shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it had been approved or ratified by every stockholder of the
Corporation.
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<PAGE>
Article IV
Committees
Section 1. Designation; Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that no
such committee shall have the power or authority of the Board of Directors in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution of the Corporation, or amending, altering or
repealing the bylaws or adopting new bylaws for the Corporation and, unless such
resolution or the Certificate of Incorporation expressly so provides, no such
committee shall have the power of authority to declare a dividend or to
authorize the issuance of stock. Any such designated committee may authorize the
seal of the Corporation to be affixed to all papers which may require it. In
addition to the above such committee or committees shall have such other powers
and limitations of authority as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 2. Procedure; Meetings; Quorum. Any committee designated
pursuant to Section 1 of this Article shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of Directors
when requested, shall fix its own rules or procedures, and shall meet at such
times and at such place or places as may be provided by such rules, or by
resolution of such committee or resolution of the Board of Directors. At every
meeting of any such committee, the presence of a majority of all the members
thereof shall constitute a quorum and the affirmative vote of a majority of the
members present shall be necessary for the adoption by it of any resolution.
Section 3. Substitution of Members. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at a meeting of such committee. In the
absence or disqualification of a member of a committee, the member or members
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
Article V
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a President, a Secretary and, if the Board of Directors so
elects, a Chairman of the Board and such
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other officers as the Board of Directors may from time to time elect or appoint.
Each officer shall hold office until his successor shall be duly elected and
shall qualify or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided. Any number of offices may be held by
the same person, unless the Certificate of Incorporation provides otherwise.
Except for the Chairman of the Board, if any, no officer need be a director.
Section 2. Salaries. The salaries or other compensation of the officers
and agents of the Corporation shall be fixed from time to time by the Board of
Directors.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed, either with or without cause, by the vote of
a majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors.
Section 5. Powers and Duties of the Chief Executive Officer. The
President shall be the chief executive officer of the Corporation unless the
Board of Directors designates the Chairman of the Board as chief executive
officer. Subject to the control of the Board of Directors and the executive
committee (if any), the chief executive officer shall have general executive
charge, management and control of the properties, business and operations of the
Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts, evidences
of indebtedness and other obligations in the name of the Corporation and may
sign all certificates for shares of capital stock of the Corporation; and shall
have such other powers and duties as designated in accordance with these bylaws
and as from time to time may be assigned to him by the Board of Directors.
Section 6. Powers and Duties of the Chairman of the Board. If elected,
the Chairman of the Board shall preside at all meetings of the stockholders and
of the Board of Directors; and he shall have such other powers and duties as
designated in these bylaws and as from time to time may be assigned to him by
the Board of Directors.
Section 7. Powers and Duties of the President. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, he shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should he be a director) of the Board of Directors; and he
shall have such other powers and duties as designated
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in accordance with these bylaws and as from time to time may be assigned to him
by the Board of Directors.
Section 8. Vice Presidents. In the absence of the President, or in the
event of his inability or refusal to act, a Vice President designated by the
Board of Directors shall perform the duties of the President, and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President. In the absence of a designation by the Board of Directors of a Vice
President to perform the duties of the President, or in the event of his absence
or inability or refusal to act, the Vice President who is present and who is
senior in terms of time as a Vice President of the Corporation shall so act. The
Vice Presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall have responsibility for the
custody and control of all the funds and securities of the Corporation, and he
shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors. He shall
perform all acts incident to the position of Treasurer, subject to the control
of the chief executive officer and the Board of Directors; and he shall, if
required by the Board of Directors, give such bond for the faithful discharge of
his duties in such form as the Board of Directors may require.
Section 10. Assistant Treasurers. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
Section 11. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the seal
of the Corporation to all contracts of the Corporation and attest the affixation
of the seal of the Corporation thereto; he may sign with the other appointed
officers all certificates for shares of capital stock of the Corporation; he
shall have charge of the certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors may direct, all of
which shall at all reasonable times be open to inspection of a director upon
application at the office of the Corporation during business hours; he shall
have such other powers and duties as designated in these bylaws and as from time
to time may be assigned to him by the Board of Directors; and he shall in
general perform all acts incident to the office of Secretary, subject to the
control of the chief executive officer and the Board of Directors.
Section 12. Assistant Secretaries. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board
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of Directors. The Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the chief executive officer
shall have power to vote and otherwise act on behalf of the Corporation, in
person or by proxy, at any meeting of security holders of or with respect to any
action of security holders of any other corporation in which this Corporation
may hold securities and otherwise to exercise any and all rights and powers
which this Corporation may possess by reason of its ownership of securities in
such other corporation.
Article VI
Indemnification of Directors, Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was or has agreed to become
a director or officer of the Corporation or is or was serving or has agreed to
serve at the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving or having agreed to serve as a
director or officer, shall be indemnified and held harmless by the Corporation
to the fullest extent authorized by the Massachusetts Business Corporation Law,
as the same exists or may hereafter be amended, (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment) against all expense, liability and loss
(including, without imitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to serve in the
capacity which initially entitled such person to indemnity hereunder and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
board of directors of the Corporation. The right to indemnification conferred in
this Article VI shall be a contract right and shall include the right to be paid
by the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Massachusetts
Business Corporation Law requires, the payment of such expenses incurred by a
current, former or proposed director or officer in his or her capacity as a
director or officer or proposed director or officer (and not in any other
capacity in which service was or is or has been agreed to be rendered by such
person while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
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behalf of such indemnified person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified person is not entitled to be
indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in this
Article.
Section 3. Right of Claimant to Bring Suit. If a written claim received
by the Corporation from or on behalf of an indemnified party under this Article
VI is not paid in full by the Corporation within ninety days after such receipt,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Massachusetts Business Corporation
Law for the Corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Massachusetts Business Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
Section 4. Nonexclusivity of Rights. The right to indemnification and
the advancement and payment of expenses conferred in this Article VI shall not
be exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
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Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Massachusetts Business Corporation Law.
Section 6. Savings Clause. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director and
officer of the Corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fees, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Article VII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board (if any), President or a
Vice President shall cause to be issued to each stockholder one or more
certificates, under the seal of the Corporation or a facsimile thereof if the
Board of Directors shall have provided for such seal, and signed by the Chairman
of the Board (if any), President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer certifying the
number of shares (and, if the stock of the Corporation shall be divided into
classes or series, the class and series of such shares) owned by such
stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures shall
have been placed upon any such certificate or certificates shall have ceased to
be such officer, transfer agent or registrar before such certificate is issued
by the Corporation, such certificate may nevertheless be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue. The stock certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and number of shares.
Section 2. Transfer of Shares. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal representatives
on surrender and cancellation of certificates for a like number of shares. Upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for
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shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the Commonwealth of
Massachusetts.
Section 4. Regulations Regarding Certificates. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of Directors may
determine the conditions upon which a new certificate of stock may be issued in
place of a certificate which is alleged to have been lost, stolen or destroyed;
and may, in their discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety, to indemnify the
Corporation and each transfer agent and registrar against any and all losses or
claims which may arise by reason of the issue of a new certificate in the place
of the one so lost, stolen or destroyed.
Article VIII
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
such as established from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation. The Secretary shall have
charge of the seal (if any). If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by the Assistant Secretary or Assistant Treasurer.
Section 3. Notice and Waiver of Notice. Whenever any notice is required
to be given by law, the Certificate of Incorporation or under the provisions of
these bylaws, said notice shall be deemed to be sufficient if given (i) by
telegraphic, cable or wireless transmission or (ii) by deposit of the same in a
post office box in a sealed prepaid wrapper addressed to the person entitled
thereto at his post office address, as it appears on the records of the
Corporation, and such notice shall be deemed to have been given on the day of
such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the Certificate of
Incorporation or under any of the provisions of these bylaws, a written waiver
thereof, signed by the person entitled to notice,
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whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified n any written waiver of notice unless so required by the Certificate
of Incorporation or the bylaws.
Section 4. Resignations. Any director, member of a committee or officer
may resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified herein, or if no time be specified, at the time of
its receipt by the chief executive officer or secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Section 5. Facsimile Signatures. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
Section 6. Reliance upon Books, Reports and Records. Each director and
each member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or relying
in good faith upon other records of the Corporation.
Article IX
Amendments
If provided in the Certificate of Incorporation of the Corporation, the
Board of Directors all have the power to adopt, amend and repeal from time to
time bylaws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto to amend or repeal such laws as adopted or
amended by the Board of Directors.
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State of California
SECRETARY OF STATE
I, BILL JONES, Secretary of State of, the State of California, hereby
certify:
That the attached transcript has been compared with the record on file
in this office, of which it purports to be a copy, and that it is full, true and
correct.
IN WITNESS WHEREOF, I execute
this certificate and affix
the Great Seal of the State
of California this
JUL 30, 1997
[The Great Seal of the State of California]
/s/ Bill Jones
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
WEST COAST AMPHITHEATER CORP.
I
The name of this Corporation is WEST COAST AMPHITHEATER CORP.
II
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Laws of the State of California, other than the banking business, the trust
company business, or the practice of a profession permitted to be incorporated
by the California Corporations Code.
III
The name and address of the person appointed to act as initial agent
for service of process in this State is:
Richard M. Rosenthal
6345 Balboa Boulevard, Suite 330
Encino, California 91316
IV
This Corporation is authorized to issue only one class of shares of
stock and the number of shares this Corporation is authorized to issue is one
hundred thousand (100,000).
IN WITNESS WHEREOF, I, the undersigned have executed these Articles of
Incorporation on July 29, 1997, at Encino, California.
/s/ Thomas Miserendino
THOMAS MISERENDINO, Incorporator
<PAGE>
BYLAWS
OF
WEST COAST AMPHITHEATER CORP.
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE.
The principal office for the transaction of business of the Corporation
is hereby fixed and located at 17815 Ventura Boulevard, Suite 300 Encino,
California. The location may be changed by approval of a majority of the
authorized Directors, and additional offices may be established and maintained
at such other place or places, either within or without California, as the Board
of Directors may from time to time designate.
SECTION 2. OTHER OFFICES.
Branch or subordinate offices may at any time be established by the
Board of Directors at any place or places where the Corporation is qualified to
do business.
ARTICLE II
DIRECTORS-MANAGEMENT
SECTION 1. RESPONSIBILITY OF BOARD OF DIRECTORS.
Subject to the provisions of the General Corporation Law and to any
limitations in the Articles of Incorporation of the Corporation relating to
action required to be approved by the Shareholders, as that term is defined in
Section 153 of the California Corporations Code, or by the outstanding shares,
as that term is defined in Section 152 of the Code, the business and affairs of
the Corporation shall be managed and all corporate powers shall be exercised by
or under the direction of the Board of Directors. The Board may delegate the
management of the day-to-day operation of the business of the Corporation to a
management company or other person, provided that the business and affairs of
the Corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board.
<PAGE>
SECTION 2. STANDARD OF CARE.
Each Director shall perform the duties of a Director, including the
duties as a member of any committee of the Board upon which the Director may
serve, in good faith, in a manner such Director believes to be in the best
interests of the Corporation, and with such care, including reasonable inquiry,
as any ordinary prudent person in a like position would use under similar
circumstances. (Sec. 309)
SECTION 3. EXCEPTION FOR CLOSE CORPORATION.
Notwithstanding the provisions of Section 1, in the event that this
Corporation shall elect to become a close corporation as defined in Sec. 158,
its Shareholders may enter into a Shareholders' Agreement as defined in See.
186. Said agreement may provide for the exercise of corporate powers and the
management of the business and affairs of this Corporation by the Shareholders;
provided, however, that such agreement shall, to the extent and so long as the
discretion or the powers of the Board in its management of corporate affairs is
controlled by such agreement, impose upon each Shareholder who is a party
thereof, liability for managerial acts performed or omitted by such person
pursuant thereto otherwise imposed upon directors as provided in Sec. 300(d);
and the Directors shall be relieved to that extent from such liability.
SECTION 4. NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors shall be three (3) until changed by
a duly adopted amendment to the Articles of Incorporation or by an amendment to
this Bylaw adopted by the vote or written consent of holders of a majority of
the outstanding shares entitled to vote, as provided in Sec. 212.
SECTION 5. ELECTION AND TERM OF OFFICE OF DIRECTORS.
Directors shall be elected at each annual meeting of the shareholders
to hold office until the next annual meeting. Each Director, including a
director elected to fill a vacancy, shall hold office until the expiration of
the term for which elected and until a successor has been elected and qualified.
SECTION 6. VACANCIES.
Vacancies in the Board of Directors may be filled by a majority of the
remaining Directors, though less than a quorum, or by a sole remaining Director,
except that a vacancy created by the removal of a Director by the vote or
written consent of the Shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of a majority of
the outstanding shares entitled to vote. Each Director so elected shall hold
office until the next annual meeting of the shareholders and until a successor
has been elected and qualified.
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A vacancy or vacancies in the Board of Directors shall be deemed to
exist in the event of the death, resignation, or removal of any Director, or if
the Board of Directors by resolution declares vacant the office of a Director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of Directors is increased, or if the
Shareholders fail, at any meeting of Shareholders at which any Director or
Directors are elected, to elect the number of directors to be voted for at that
meeting.
The Shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the
Chairman of the Board, the President, the Secretary, or the Board of Directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a Director is effective at a future time, the
Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any Director before that Director's term of office expires.
SECTION 7. REMOVAL OF DIRECTORS.
The entire Board of Directors or any individual director may be removed
from office as provided by Secs. 302, 303 and 304 of the Corporations Code of
the State of California. In such case, the remaining Board members may elect a
successor Director to fill such vacancy for the remaining unexpired term of the
Director so removed.
SECTION 8. NOTICE, PLACE AND MANNER OF MEETINGS.
Meetings of the Board of Directors may be called by the Chairman of the
Board, the President, any Vice President, the Secretary or any two (2) Directors
and shall be held at the principal executive office of the Corporation, unless
some other place is designated in the notice of the meeting. Members of the
Board may participate in a meeting through use of a conference telephone or
similar communications equipment so long as all members participating in such a
meeting can hear one another. Accurate minutes of any meeting of the Board, or
any committee thereof, shall be maintained as required by Sec. 1500 of tile Code
by the Secretary or other Officer designed for that purpose.
SECTION 9. ANNUAL MEETINGS.
The annual meetings of the Board of Directors shall be held immediately
following the adjournment of the annual meetings of the Shareholders.
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<PAGE>
SECTION 10. OTHER REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at the
corporate offices, or such other place as may be designated by the Board of
Directors, as follows:
Time of Regular Meeting: NONE
Date of Regular Meeting: NONE
If said day shall fall upon a holiday, such meetings shall be held on
the next succeeding business day thereafter. No notice need be given of such
regular meetings.
SECTION 11. SPECIAL MEETINGS.
(a) Authority to Call. Special meetings of the Board may be called at
any time by the President or, if he or she is absent or unable or refuses to
act, by any Vice President, the Secretary, or any two (2) Directors, or by one
(1) Director if only one is provided.
(b) Notice.
(i) Manner of Giving Notice. Notice of the time and place of
special meetings shall be given or sent to each Director (to the address and/or
telephone number as shown on the records of the Corporation) by one of the
following methods:
[A] By personal delivery of written notice;
[B] By first-class mail, postage pre-paid;
[C] By telephone, either directly to the
Director or to a person at the Director's
office who would reasonably be expected to
communicate that notice promptly to the
Director; or
[D] by telegram, charges prepaid.
(ii) Time Requirements. Notices sent by first-class mail shall
be deposited in the United States mails at least four (4) days before the time
set for the meeting. Notices given by personal delivery, telephone or telegraph
shall be delivered, telephoned or given to the telegraph company at least
forty-eight (48) hours before the time set for the meeting.
(iii) Notice Contents. The notice shall state the time of the
meeting, as well as the place of the meeting, if the place is other than the
principal office of the Corporation. It need not specify the purpose of the
meeting.
(iv) Waiver of Notice. The transactions of a meeting of the
Board are as valid as if had at a meeting regularly called and noticed when (1)
all of the Directors are present at any Directors' meeting, however called or
noticed, and sign a written consent thereto on the records of such meeting, (2)
a majority of the Directors are present, and those not present sign a waiver
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<PAGE>
of notice of such meeting or a consent to holding the meeting or an approval of
the minutes thereof, whether prior to or after the holding of such meeting,
which said waiver, consent or approval shall be filed with the Secretary of the
Corporation, or (3) a Director attends a meeting without notice but without
protesting, prior thereto or at its commencement, the lack of notice.
SECTION 12. SOLE DIRECTOR PROVIDED BY ARTICLE OF
INCORPORATION OR BYLAWS.
In the event only one (1) Director is required by the Bylaws or
Articles of Incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the Directors
shall be deemed to refer to such notice, waiver, etc., by such sole Director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to a Board of Directors.
SECTION 13. DIRECTORS' ACTION BY UNANIMOUS WRITTEN CONSENT.
Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting and with the same force and effect as if taken by
a unanimous vote of Directors, if authorized by a writing signed individually or
collectively by all members of the Board. Such consent shall be filed with the
regular minutes of the Board.
SECTION 14. QUORUM.
A majority of the number of Directors as fixed by the Articles of
Incorporation or Bylaws shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the Directors present
at any meeting at which there is a quorum, when duly assembled, is valid as a
corporation act; provided that a minority of the Directors, in the absence of a
quorum, may adjourn from time to time, but may not transact any business. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of directors, if any action taken is
approved by a majority of the required quorum for such meeting.
SECTION 15. ADJOURNMENT.
A majority of the Directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the time
and place of holding an adjourned meeting need not be given to absent Directors
if the time and place be fixed at the meeting if adjourned and held within
twenty-four (24) hours, but if adjourned more than twenty-four (24) hours,
notice shall be given to all Directors not present at the time of the
adjournment.
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SECTION 16. COMPENSATION OF DIRECTORS.
Directors, as such, shall not receive any stated salary for their
services but, by resolution of the Board, a fixed sum and expense of attendance,
if any, may be allowed for attendance at each regular and special meeting of the
Board; provided that nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 17. COMMITTEES.
Committees of the Board may be appointed by resolution passed by a
majority of the whole Board. Committees shall be composed of two (2) or more
members of the Board and shall have such powers of the Board as may be expressly
delegated to it by resolution of the Board of Directors, except those powers
expressly made non-delegable by See. 311.
SECTION 18. ADVISORY DIRECTORS.
The Board of Directors from time to time may elect one or more persons
to be Advisory Directors who shall not by such appointment be members of the
Board of Directors. Advisory Directors shall be available from time to time to
perform special assignments specified by the President, to attend meetings of
the Board of Directors upon invitation and to furnish consultation to the Board.
The period during which the title shall be held may be prescribed by the Board
of Directors. If no period is prescribed, the title shall be held at the
pleasure of the Board.
SECTION 19. RESIGNATIONS.
Any Director may resign effective upon giving written notice to the
Chairman of the Board, the President, the Secretary or the Board of Directors of
the Corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes effective.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS.
The Officers of the Corporation shall be a President, a Secretary, and
a Chief Financial Officer. The Corporation may also have, at the discretion of
the Board of Directors, a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other Officers as may be appointed in accordance with the provisions of Section
3 of this Article III. Any number of offices may be held by the same person.
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SECTION 2. ELECTION.
Except as to such Officers as may be appointed in accordance with the
provisions of Sections 4 or 5 of this Article, the Officers of the Corporation
shall be chosen annually by the Board of Directors, and each shall hold office
until he or she shall resign or shall be removed or otherwise disqualified to
serve, or replaced with an elected and qualified successor.
SECTION 3. SUBORDINATE OFFICERS.
The Board of Directors may appoint such other Officers as the business
of the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the Bylaws or as
the Board of Directors may from time to time determine.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an Officer under any contract of
employment, any Officer may be removed, either with or without cause, by the
Board of Directors at any regular or special meeting of the Board or, except in
case of an Officer chosen by the Board of Directors, by any Officer upon whom
such power of removal may be conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the Officer is a
party.
SECTION 5. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the Bylaws for regular appointments to that office.
SECTION 6. RESPONSIBILITIES OF OFFICERS.
(a) Chairman of the Board. The Chairman of the Board, if such an
Officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of Directors or prescribed by the Bylaws. If
there is no President, the Chairman of the Board shall also be the Chief
Executive Officer of the Corporation, having the powers and duties prescribed in
Section 6(b) of this Article III.
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(b) President. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, if there be such
an Officer, the President shall be the Chief Executive Officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and Officers of the
Corporation. He or she shall preside at all meetings of the Shareholders and, in
the absence of the Chairman of the Board, or if there be none, at all meetings
of the Board of Directors. The President shall be ex officio a member of all the
standing committees, including the Executive Committee, if any, and shall have
the general powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and duties as may be
prescribed by the Board of Directors or the Bylaws.
(c) Vice President. In the absence or disability of the President, the
Vice Presidents, if any, in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice President shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or by the Bylaws.
(d) Secretary
(i) Book of Minutes and Share Register. The Secretary
shall keep, or cause to be kept:
[A] At the principal office, or such other place as
the Board of Directors may order, a book of minutes of all meetings and actions
of Directors and Shareholders, with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present at Directors' meetings, the number of shares present
or represented at Shareholders' meetings and the proceedings thereof,
[B] At the principal office in the State of
California, a copy of the Articles of Incorporation and Bylaws, as amended to
date. If the corporation is one having members, the Secretary shall also
maintain a complete and accurate record of the membership of the corporation, as
well as a record of the proceedings of all meetings of the membership; and
[C] At the principal office or at the office of the
Corporation's transfer agent, a share register, or duplicate share register,
showing the names of the Shareholders and their addresses; the number and
classes of shares held by each; the number and date of certificates issued for
the same; and the number and date of cancellation of every certificate
surrendered for cancellation.
(ii) Notices, Seal and other Duties. The Secretary shall give,
or issue cause to be given, a notice of all the meetings of the Shareholders and
of the Board of Directors required
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by the Bylaws or by law to be given. He or she shall keep the seal of the
Corporation in safe custody and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or by the Bylaws.
(e) Chief Financial Officer. The Chief Financial Officer shall:
(i) Keep and maintain, or cause to be kept and maintained in
accordance with generally accepted accounting principles, adequate and correct
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, earnings (or surplus) and shares. The books of account shall at
all reasonable times be open to inspection by any Director.
(ii) Deposit all moneys and other valuables in the name and to
the credit of the Corporation with such depositories as may be designated by the
Board of Directors. He or she shall disburse the funds of the corporation as may
be ordered by the Board of Directors; shall render to the President and
Directors, whenever requested, an account of all his or her transactions and of
the financial condition of the Corporation; and shall have such other powers and
perform such other duties as may be prescribed by the Board of Director or the
Bylaws.
ARTICLE IV
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS.
All meetings of the Shareholders shall be held at the principal
executive office of the Corporation unless some other appropriate and convenient
location be designated for that purpose from time to time by the Board of
Directors.
SECTION 2. ANNUAL MEETINGS.
The annual meetings of the Shareholders shall be held, each year, at
the time and on the day following:
Time of Meeting: 10:00 a.m.
Date of Meeting: October 1
If this day shall be a legal holiday, then the meeting shall be held on the next
succeeding business day, at the same hour. At the annual meeting, the
Shareholder shall elect a Board of Directors, consider reports of the affairs of
the Corporation and transact such other business as may be properly brought
before the meeting.
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SECTION 3. SPECIAL MEETINGS.
Special meetings of the Shareholders may be called at any time by the
Board of Directors, the Chairman of the Board, the President, a Vice President,
the Secretary, or by one or more Shareholders holding not less than one-tenth
(1/10) of the voting power of the Corporation. Except as next provided, notice
shall be given as for the annual meeting.
Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board) entitled to call a special meeting of
Shareholders, such Officer shall cause notice to be given to the Shareholders
entitled to vote that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than thirty-five (35), nor more than
sixty (60), days after the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the manner provided by these Bylaws or apply
to the Superior Court as provided in Sec. 305(c).
SECTION 4. NOTICE OF MEETING - REPORTS.
Notice of meetings, annual or special, shall be given in writing not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to Shareholders entitled to vote thereat. Such notice shall be given by the
Secretary or the Assistant Secretary, or if there be no such Officer, or in the
case of his or her neglect or refusal, by any Director or Shareholder.
Such notices or any reports shall be given personally or by mail or
other means of written communication as provided in Sec. 601 of the Code and
shall be sent to the Shareholder's address appearing on the books of the
Corporation, or supplied by him or her to the Corporation for the purpose of
notice, and in the absence thereof, as provided in Sec. 601 of the Code.
Notice of any meeting of Shareholders shall specify the place, the day
and the hour of those matters which the Board at date of mailing, intends to
present for action by the Shareholders. At any meetings where Directors are to
be elected, notice shall include the names of the nominees, if any, intended at
date of notice to be presented by management for election.
If a Shareholder supplies no address, notice shall be deemed to have
been given if mailed to the place where the principal executive office of the
Corporation in California is situated, or published at least once in some
newspaper of general circulation in the county of said principal office.
Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
Officer giving such notice or report shall prepare and file an affidavit or
declaration thereof.
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When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which such adjournment is taken.
SECTION 5. WAIVER OF NOTICE OR CONSENT BY ABSENT
SHAREHOLDERS.
The transaction of any meeting of Shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting each of the Shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting. Attendance shall constitute a waiver of
notice, unless objection shall be made as provided in Sec.
601(e).
SECTION 6. ACTIONS WITHOUT A MEETING - DIRECTORS.
Any action which may be taken at a meeting of the Shareholders, may be
taken without notice of meeting if authorized by a writing signed by all of the
Shareholders entitled to vote at a meeting for such purpose and filed with the
Secretary of the Corporation, provided, further, that while ordinary directors
can only be elected by unanimous written consent under Sec. 601(d), if the
Directors fail to fill a vacancy, then a Director to fill that vacancy may be
elected by the written consent of person holding a majority of shares entitled
to vote for the election of Directors.
SECTION 7. OTHER ACTIONS WITHOUT A MEETING.
Unless otherwise provided in the California Corporations Code or the
Articles, any action which may be taken at any annual or special meeting of
Shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
Unless the consents of all Shareholders entitled to vote have been
solicited in writing:
(1) Notice of any Shareholder approval pursuant to Secs. 310,
317, 1201 or 2007 without a meeting by less tan unanimous written consent shall
be given at least ten (10) days before the consummation of the action authorized
by such approval, and
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(2) Prompt notice shall be given of the taking of any other
corporate action approved by Shareholders without a meeting by less than
unanimous written consent, to each of those Shareholders entitled to vote who
have not consented in writing.
Any Shareholders giving written consent, or the Shareholder's proxy
holders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxy holders, may revoke the consent by a
writing received by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the Corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the Corporation.
SECTION 8. QUORUM.
The holders of a majority of the shares entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the Shareholders for the transaction of business, except as
otherwise provided by law, the Articles of Incorporation, or these Bylaws. If,
however, such majority shall not be present or represented at any meeting of the
Shareholders, the Shareholders entitled to vote thereat, present in person or by
proxy, shall have the power to adjourn the meeting from time to time, until the
requisite amount of voting shares shall be present. At such adjourned meeting at
which the requisite amount of voting share shall be represented, any business
may be transacted which might have been transacted at a meeting as originally
notified.
If a quorum be initially present, the Shareholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken is approved by a
majority of the Shareholders required to initially constitute a quorum.
SECTION 9. VOTING.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the day of any meeting of Shareholders, unless
other day be fixed by the Board of Directors for the determination of
Shareholders of record, and then on such other day, shall be entitled to vote at
such meeting.
Provided the candidate's name has been placed in nomination prior to
the voting and one or more Shareholders has given notice at the meeting prior to
the voting of the Shareholder's intent to cumulate the Shareholder's votes,
every Shareholder entitled to vote at any election for directors of any
corporation for profit may cumulate their votes and give one candidate a number
of votes equal to the number of Directors to be elected multiplied by the number
of votes to which his or her shares are entitled, or distribute his or her votes
on the same principle among as many candidates as he or she thinks fit.
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The candidates receiving the highest number of votes up to the number
of directors to be elected are elected.
The Board of Directors may fix a time in the future not exceeding
thirty (30) days preceding the date of any meeting of Shareholders or the date
fixed for the payment of any dividend or distribution, or for the allotment of
rights, or when any change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the Shareholders entitled to
notice of and to vote at any such meeting, or entitled to receive any such
dividend or distribution, or any allotment of rights, or to exercise the rights
in respect to such dividends, distribution or allotment of rights, or to
exercise such rights, as the case may be notwithstanding any transfer of any
share on the books of the Corporation against transfers of shares during the
whole or any part of such period.
SECTION 10. PROXIES.
Every Shareholder entitled to vote or execute consents may do so,
either in person or by written proxy, executed in accordance with the provisions
of Ses. 604 and 705 of the Code and filed with the Secretary of the Corporation.
SECTION 11. ORGANIZATION.
The President, or in the absence of the President, any Vice President,
shall call the meeting of the Shareholders to order, and shall act as Chairman
of the meeting. In the absence of the President and all of the Vice Presidents,
Shareholders shall appoint a chairman for such meeting. The Secretary of the
Corporation shall act as Secretary of all meetings of the Shareholders, but in
the absence of the Secretary at any meeting of the Shareholders, the presiding
Officer may appoint any person to act as Secretary of the meeting.
SECTION 12. INSPECTORS OF ELECTION.
In advance of any meeting of Shareholders the Board of Directors may,
if they so elect, appoint inspectors of election to act at such meeting or any
adjournment thereof. If inspectors of election be not so appointed, or if any
persons so appointed fall to appear or refuse to act, the chairman of any such
meeting may, and on the request of any Shareholders or his or her proxy shall,
make such appointment at the meeting in which case the number of inspectors
shall be either one (1) or three (3) as determined by a majority of the
Shareholders represented at the meeting.
SECTION 13. SHAREHOLDERS' AGRE EMENTS
(a) In General. Notwithstanding the above provisions, in the event this
Corporation elects to become a close corporation, an agreement between two (2)
or more Shareholders thereof, if in writing and signed by the parties thereof,
may provide that in exercising any voting
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rights the shares held by them shall be voted as provided therein or in Sec.
706, and may otherwise modify these provisions as to Shareholders' meetings and
actions.
(a) Effect of Shareholders' Agreements. Any Shareholders' Agreement
authorized by Sec. 300(b), shall only be effective to modify the terms of these
Bylaws if this Corporation elects to become a close corporation with appropriate
filing of or amendment to its Articles as required by Sec. 202 and shall
terminate when this Corporation ceases to be a close corporation. Such an
agreement cannot waive or alter Secs. 158, (defining close corporations), 202
(requirements of Articles of Incorporation), 500 and 501 (relative to
distributions), 111 (merger), 1201(e) (reorganization) or Chapters 15 (records
and reports), 16 (rights of inspection), 18 (involuntary dissolution) or 22
(crimes and penalties). Any other provisions of the Codes or these Bylaws may be
altered or waived thereby, but to the extent they are not so altered or waived,
these Bylaws shall be applicable.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
SECTION 1. CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the Board
of Directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a statement of the rights, privileges, preferences and
restrictions, if any; a statement as to the redemption or conversion, if any; a
statement of liens or restrictions upon transfer or voting, if any; if the
shares be assessable or, if assessments are collectible by personal action, a
plain statement of such facts.
All certificates shall be signed in the name of the Corporation by the
Chairman of the Board or Vice Chairman of the Board or the President or Vice
President and by the Chief Financial Officer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
class or series of shares owned by the Shareholders.
Any or all of the signatures on the certificate may be facsimile. In
case any Officer, transfer agent, or register who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the Corporation with the same effect as if that person were an Officer,
transfer agent, or registrar at the date of issue.
SECTION 2. TRANSFER ON THE BOOKS.
Upon surrender to the Secretary or transfer agent of the Corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority
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to transfer, it shall be the duty of the Corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 3. LOST OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation of that fact and shall, if the directors
so require, give the Corporation a bond of indemnity, in form and with one or
more sureties satisfactory to the Board, in at least double the value of the
stock represented by said certificate, whereupon a new certificate may be issued
in the same tenor and for the same number of shares as the one alleged to be
lost or destroyed.
SECTION 4. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint one or more agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company, either domestic or foreign, who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the Board of
Directors may designate.
SECTION 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE.
In order that the Corporation may determine the Shareholders entitled
to notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the Board may fix in
advance a record date which shall not be more than sixty (60) nor less than ten
(10) days prior to the date of such meeting nor more than sixty (60) days prior
to any other action.
If no record date is fixed, the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of business on the business day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held. The record
date for determining Shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board is necessary,
shall be the day on which the first written consent is given.
The record date for determining Shareholders for any other purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
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SECTION 6. LEGEND CONDITION.
In the event any shares of this Corporation are issued pursuant to a
permit or exemption therefrom requiring the imposition of a legend condition
thereon, the person or persons issuing or transferring said shares shall make
sure said legend appears on the certificate and shall not be required to
transfer any shares free of such legend unless an amendment to such permit or
new permit be first issued so authorizing such a deletion.
SECTION 7. CLOSE CORPORATION CERTIFICATES.
All certificates representing shares of this Corporation, in the event
it shall elect to become a close corporation, shall contain the legend required
by Sec. 418(c).
SECTION 8. PLEDGED OR HYPOTHECATED SHARES.
Any Shareholders desiring to borrow money on or hypothecate any or all
of the shares of stock held by such Shareholder shall first mail notice in
writing to the Secretary of this Corporation of his or her intention to do so.
Said notice shall specify the number of shares to be pledged or hypothecated,
the amount to be borrowed per share, the terms, rate of interest, and other
provisions upon which each Shareholder intends to make such loan or
hypothecation. The Secretary shall, within five (5) days thereafter, mail or
deliver a copy of said notice to each of the other Shareholders of record of
this Corporation. Such notice may be delivered to such Shareholder personally,
or may be mailed to the last known addresses of such Shareholders as the same
may appear on the books of this Corporation. Within fifteen (15) days after the
mailing or delivering of said notice to said Shareholders, any such Shareholder
or Shareholders desiring to lend any part or all of the amount sought to be
borrowed, as set forth in said notice, at the terms therein specified, shall
deliver by mail, or otherwise, to the Secretary of this Corporation a written
offer or offers to lend a certain amount of money for the term, at the rate of
interest, and upon other provisions specified in said notice.
If the total amount of money subscribed in such offers exceeds the
amount sought to be borrowed, specified in said notice, each offering
Shareholder shall be entitled to lend such proportion of the amount sought to be
borrowed, as set forth in said notice, as the number of shares which he or she
holds bears to the total number of shares held by all such Shareholders desiring
to lend all or part of the amount specified in said notice.
If the entire amount of monies sought to be borrowed, as specified in
said notice, is not subscribed as set forth in the preceding paragraphs, each
Shareholder desiring to lend an amount in excess of his or her proportionate
share as specified in the preceding paragraph, entitled under such
apportionment. If there be but one Shareholder so desiring to lend, such
Shareholder shall be entitled to lend up to the full amount sought to be
borrowed.
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If none, or only a part of the amount sought to be borrowed, as
specified in said notice, is subscribed as aforesaid, in accordance with offers
made within said fifteen (15) day period, the Shareholder desiring to borrow may
borrow from any person or persons he or she may so desire as to any or all
shares of stock held by him or her which have not been covered by lending
Shareholders; provided, however, that said Shareholders shall not borrow any
lesser amount, or any amount on term less favorable to the borrower, than those
specified in said notice to the Secretary.
Any pledge or hypothecation, or other purported transfer as security
for a loan of the shares of this Corporation, shall be null and void unless the
terms, conditions and provisions of these Bylaws are strictly observed and
followed.
ARTICLE VI
RECORDS - REPORTS - INSPECTION
SECTION 1. RECORDS.
The Corporation shall maintain, in accordance with generally accepted
accounting principles, adequate and correct accounts, books and records of its
business and properties. All of such books, records and accounts shall be kept
at its principal executive office in the State of California, as fixed by the
Board Directors from time to time.
SECTION 2. INSPECTION OF BOOKS AND RECORDS.
All books and records provided for in Sec. 1500 shall be open to
inspection of the Directors and Shareholders from time to time and in the manner
provided in said Secs. 1600 to 1602.
SECTION 3. CERTIFICATION AND INSPECTION OF BYLAWS.
The original or a copy of these Bylaws, as amended or otherwise altered
to date, certified by the Secretary, shall be kept at the Corporation's
principal executive office and shall be open to inspection by the Shareholders
of the Corporation at all reasonable times during office hours, as provided in
Sec. 213 of the Corporations Code.
SECTION 4. CHECKS, DRAFTS, ETC.
All checks, drafts, or other orders for payment of money, notes or
other evidence of indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as shall be determined from time to time by resolution of the Board of
Directors.
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SECTION 5. CONTRACTS, ETC. - HOW EXECUTED.
The Board of Directors, except as in the Bylaws otherwise provided, may
authorize any Officer or Officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no Officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or agreement, or to pledge its
credit or to render it liable for any purpose or to any amount, except as
provided in Sec. 313 of the Corporations Code.
ARTICLE VII
ANNUAL REPORTS
SECTION 1. REPORTS TO SHAREHOLDERS, DUE DATE.
The Board of Directors shall cause an annual report to be sent to the
Shareholders not later than one hundred twenty (120) days after the close of the
fiscal or calendar year by the Corporation. This report shall be sent at least
fifteen (15) days before the annual meeting of Shareholders to be held during
the next fiscal year and in the manner specified in Section 4 of Article IV of
these Bylaws for giving notice to Shareholders of the Corporation. The annual
report shall contain a balance sheet as of the end of the fiscal year and an
income statement and statement of changes in financial position for the fiscal
year, accompanied by any report of independent accountants or, if there is no
such report, the certificate of an authorized Officer of the Corporation that
the statements were prepared without audit from the books and records of the
Corporation.
SECTION 2. WAIVER.
The annual report to Shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with so long as this
Corporation shall have less than one hundred (100) Shareholders. However,
nothing herein shall be interpreted as prohibiting the Board of Directors from
issuing annual or other periodic reports to the Shareholders of the Corporation
as they consider appropriate.
ARTICLE VIII
AMENDMENTS TO BYLAWS
SECTION 1. AMENDMENTS BY SHAREHOLDERS.
New Bylaws may be adopted or these Bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the Corporation set forth the number of
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authorized Directors of the Corporation, the authorized number of Directors may
be changed only by an amendment of the Articles of Incorporation.
SECTION 2. POWERS OF DIRECTORS.
Subject to the right of the Shareholders to adopt, amend or repeal
Bylaws, as provided in Section 1 of this Article VIII and the limitations of
Sec. 204(a)(5) and Sec. 212, the Board of Directors may adopt, amend or repeal
any of these Bylaws other than a Bylaw or amendment thereof changing the
authorized number of Directors.
SECTION 3. RECORD OF AMENDMENTS.
Whenever an amendment or new Bylaw is adopted, it shall be copied in
the book of Bylaws with the original Bylaws, in the appropriate place. If any
Bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of its incorporation, and the word
"California".
ARTICLE X
MISCELLANEOUS
SECTION 1. REFERENCES TO CODE SECTIONS.
The term "Section" or "Sec." referenced herein shall refer to the
equivalent sections of the California Corporations Code effective January 1,
1977, as amended.
SECTION 2. REPRESENTATION OF SHARES IN OTHER CORPORATIONS.
Shares of other corporations standing in the name of this Corporation
may be voted or represented, and all incidents thereto may be exercised on
behalf of the Corporation, by the Chairman of the Board, the President or any
Vice President, or the Secretary or an Assistant Secretary.
SECTION 3. SUBSIDIARY CORPORATIONS.
Shares of this Corporation owned by a subsidiary shall not be entitled
to vote on any matter. A subsidiary for these purposes is defined as a
corporation, the shares of which
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possessing more than twenty-five percent (25%) of the total combined voting
power of all classes of shares entitled to vote, are owned directly or
indirectly through one (1) or more subsidiaries.
SECTION 4. INDEMNITY.
(a) Right of Indemnity. To the full extent permitted by law, this
Corporation shall indemnify its Directors, officers, employees and other persons
described in Sec. 317(a), including persons formerly occupying any such
position, against all expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any "proceeding", as that
term is used in such Section and including an action by or in the right of the
Corporation, by reason of the fact that such person is or was a person described
by such Section.
(i) An agent may not, in any circumstance, be indemnified for
acts or omissions that constitute intentional misconduct, the knowing and
culpable violation of the law, the absence of good faith, the receipt of an
improper personal benefit, a reckless disregard or unexcused inattention to the
agent's duty to act in the best interests of the Corporation and its
Shareholders. In addition, an agent also may not be indemnified for any act or
omission which falls under Sec. 310 or Sec. 16, or where indemnification is
expressly prohibited under Sec.
317.
(ii) "Expenses", as used in these Bylaws, shall have the same
meaning as in Sec. 317(a).
(b) Approval of Indemnity. Upon written request to the Board by any
person seeking indemnification under Sec. 317(b) or (c) the Board shall promptly
determine in the Board cannot authorize indemnification because the number of
Directors who are parties to the proceeding with respect to which
indemnification is sought is such as to prevent the formation of a quorum of
Directors who are not parties to such proceeding, the Board or the attorney or
other person rendering services in connection with the defense shall apply to
the court in which such proceeding is or was pending to determine whether the
applicable standard of conduct set forth in Sec. 317(b) or Sec. 317(c) has been
met.
(c) Advancement of Expenses. To the full extent permitted by law and
except as is otherwise determined by the Board in a specific instance, expenses
incurred by a person seeking indemnification under these Bylaws in defending any
proceeding covered by these Bylaws shall be advanced by the Corporation prior to
the final disposition of the proceeding upon receipt by the Corporation of an
undertaking by or on behalf of such person that the advance will be repaid
unless it is ultimately determined that such person is entitled to be
indemnified by the Corporation therefor.
(d) Insurance. The Corporation shall have the right to purchase and
maintain insurance to the full extent permitted by law on behalf of its
officers, Directors, employees and other agents of the Corporation, against any
liability asserted against or incurred by an officer,
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Director, employee or agent in such capacity or arising out of the officer's,
Director's, employee's or agent's status as such.
SECTION 5. ACCOUNTING YEAR.
The accounting year of the Corporation shall be fixed by resolution of
the Board of Directors.
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CERTIFICATE OF ADOPTION OF BYLAWS BY INCORPORATOR
The undersigned, named in the Articles of Incorporation as the
Incorporator of the above-named Corporation, hereby adopts the same as the
Bylaws of said Corporation.
Executed this 31st day of July, 1997.
/s/ Thomas Miserendino
THOMAS MISERENDINO, Incorporator
CERTIFICATE BY SECRETARY OF ADOPTION BY FIRST DIRECTORS
THIS IS TO CERTIFY THAT:
That I am the duly elected, qualified and acting Secretary of the
above-named Corporation, that the foregoing Bylaws were adopted as the Bylaws of
said Corporation on the date set forth above by the person named in the Articles
of Incorporation as the Incorporator or first Directors of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July,
1997.
/s/ Thomas Miserendino
THOMAS MISERENDINO, Secretary
CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE
THIS IS TO CERTIFY THAT:
I am the duly elected, qualified and acting Secretary of the
above-named Corporation, and the above and foregoing code of Bylaws is a true
and correct copy of the Bylaws which were submitted to the Shareholders at their
first meeting and recorded in the minutes thereof, was ratified by the vote of
the Shareholders entitled to exercise the majority of the voting power of said
Corporation.
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<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July,
1997.
/s/ Thomas Miserendino
THOMAS MISERENDINO, Secretary
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PARTNERSHIP AGREEMENT
FOR
WESTERN AMPHITHEATER PARTNERS
This Partnership Agreement ("Agreement") is made and entered into
effective as of this 4th day of April , 1997 by and between PAVILION PARTNERS,
a Delaware general partnership, and IRVINE MEADOWS AMPHITHEATER, a California
general partnership. For and in consideration of the mutual covenants herein
contained, the parties to this Agreement hereby form and create a general
partnership, under and pursuant to the Partnership Act for the purposes and
upon the terms, provisions, and conditions as hereinafter set forth:
ARTICLE I
Definitions
Capitalized terms used in this Agreement shall have the respective
meanings indicated in the glossary of terms attached hereto as Exhibit "A".
ARTICLE II
Name of Business: Offices
2.01 Partnership Name. The name of the Partnership shall be Western
Amphitheater Partners. In addition to the foregoing name, the activities and
business of the Partnership may be conducted under such other name or names as
may be designated from time to time by the Executive Committee. The Partners
shall execute and file such certificates, if any, as are required by the
provisions of any assumed name law or statute in any jurisdiction in which the
Partnership conducts business, as may be required to reflect the Partnership's
operation under such names.
2.02 Partnership Offices. The principal places of business of the
Partnership shall be at 515 Post Oak Blvd., Suite 300, Houston, Texas 77027 and
at 17835 Ventura Blvd., Suite 300, Encino, California 91316. The Partnership
shall also maintain an office at each of the Subject Amphitheaters.
ARTICLE III
Purpose and Power of the Partnership
3.01 Purposes. As the owners of the Subject Amphitheaters, each of the
Partners agrees that the integration of the resources and management of the
Subject Amphitheaters will result in substantial and significant operating
efficiencies by, among other things, eliminating unnecessary duplication of
efforts in the area of marketing, sponsorship sales, management
<PAGE>
oversight, facility maintenance and other essential operations necessary for
the proper use, operation and maintenance of the Subject Amphitheaters.
Accordingly, the character and purposes of the specific business to be
conducted by the Partnership are (i) to operate, use and exploit each of the
Subject Amphitheaters and (ii) to perform and fulfill all obligations and
duties imposed upon the Partnership pursuant to the terms and provisions
contained in each of the Amphitheater Contribution Agreements and (iii) to take
any and all other actions which may be incidental to or otherwise reasonably
related to the foregoing business and purposes. Notwithstanding anything to the
contrary contained herein, reference is made to the fact that the Underlying
Owner of each of the Subject Amphitheater has retained the right to make the
following major decisions with respect to such Subject Amphitheater:
(a) selling, transferring, conveying or otherwise disposing
of such Subject Amphitheater (subject to the provisions of Section
14.01 hereof);
(b) creating a mortgage, lien or other encumbrance upon the
Underlying Owner's interest in such Subject Amphitheater (subject to
the provisions of the Amphitheater Contribution Agreement which make
the Underlying Owner solely and exclusively obligated to discharge all
indebtedness and obligations secured by any such mortgage, lien or
other encumbrance); and
(c) making capital improvements at the Subject Amphitheaters
(subject to the provisions of the Amphitheater Contribution Agreement
which requires the Underlying Owner to be solely and exclusively
obligated to pay the costs of any such capital improvements).
Accordingly, the Partnership shall not have the authority to effect any of the
foregoing major decisions.
3.02 Powers. The Partnership shall have the power, in fulfilling the
purposes set forth in Section 3.01, to conduct any business or take any action
which is lawful and which is not prohibited by the Partnership Act.
ARTICLE IV
Term of Partnership
The term of the Partnership shall begin on the date first set forth
above and shall continue until November 30, 2016, unless sooner dissolved
pursuant to Section 17.01 or by operation of law.
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ARTICLE V
Contributions to Partnership
5.01 Pavilion's Initial Contribution.
(a) Pavilion shall hereafter contribute to the capital of the
Partnership on the Closing Date certain rights, licenses, assets and
other benefits relating to Glen Helen Amphitheater on, subject to and
pursuant to the terms and provisions contained in the Amphitheater
Contribution Agreement for Glen Helen Amphitheater.
(b) The Partners hereby agree that the combined fair market
value of the rights, licenses, assets and other benefits to be
hereafter contributed by Pavilion to the capital of the Partnership
(net of liabilities assumed by the Partnership or to which such
rights, licenses, assets and other benefits are subject) pursuant to
the Amphitheater Contribution Agreement for Glen Helen Amphitheater is
$5,000,000 ("Initial Contribution Amount") and that the initial
balance of Pavilion's Capital Account shall therefore equal the
Initial Contribution Amount.
5.02 IMA's Initial Contribution.
(a) IMA shall hereafter contribute to the capital of the
Partnership on the Closing Date certain rights, licenses, assets and
other benefits relating to Irvine Meadows Amphitheater on, subject to
and pursuant to the terms and provisions contained in the Amphitheater
Contribution Agreement for Irvine Meadows Amphitheater.
(b) The Partners hereby agree that the combined fair market
value of the rights, licenses, assets and other benefits to be
hereafter contributed by IMA to the capital of the Partnership (net of
liabilities assumed by the Partnership or to which such rights,
licenses, assets and other benefits are subject) pursuant to the
Amphitheater Contribution Agreement for Irvine Meadows Amphitheater is
equal to the Initial Contribution Amount and that the initial balance
of IMA's Capital Account shall therefore equal the Initial
Contribution Amount.
5.03 Operational Shortfalls. If an Operational Shortfall occurs at any
time and a Deficit Loan is not made by one or both of the Partners pursuant to
the provisions of Article VI hereof in an amount sufficient to cover such
Operational Shortfall, then each Partner shall be obligated to contribute to
the capital of the Partnership its Percentage Interest of the amount of funds
needed to cover such Operational Shortfall.
5.04 No Other Capital Contribution Obligations. Except for the
specific obligations to make contributions to the capital of the Partnership as
expressly set forth in this Article V and in
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Section 17.03 hereof, neither Partner shall have any other obligation to make
contributions to capital of the Partnership.
ARTICLE VI
Deficit Loans
If an Operational Shortfall occurs at any time, then any Partner shall
have the right, but not the obligation, to extend a loan ("Deficit Loan") to
the Partnership in the amount of such Operational Shortfall. If both Partners
elect to extend a Deficit Loan to the Partnership upon the occurrence of an
Operational Shortfall, then each shall fund its Percentage Interest of the
amount of such Operational Shortfall. If one of the Partners elects to refrain
from extending a Deficit Loan with respect to any Operational Shortfall, then
the other Partner shall have the right to extend a Deficit Loan up to the full
amount thereof. Each Deficit Loan shall bear interest at a variable rate of
interest per annum equal to the Permitted Rate and shall be repayable as soon
as the Partnership has funds available therefor. No distributions shall be made
to the Partners pursuant to Article IX hereof at any time during which any
Deficit Loan remains outstanding.,
ARTICLE VII
Tax Matters and
Maintenance of Capital Accounts
7.01 Generally. For each taxable year of the Partnership, the income,
gains, losses, credits and deductions of the Partnership shall be allocated
between the Partners in accordance with each Partner's Percentage Interest.
7.02 Section 704(c). Income, gain, loss and deduction with respect to
any item of property contributed to the Partnership shall, solely for federal
income tax purposes, be allocated between the Partners so as to take into
account any difference between the Gross Asset Value of such item of property
and its adjusted basis for federal income tax purposes on the date of such
contribution, in accordance with the requirements of Section 704(c) of the
Code. All allocations under this Section 7.02 shall be made in such a manner as
the Executive Committee shall determine reasonably reflects the requirements of
Section 704(c) of the Code. No allocations pursuant to this Section 7.02 shall
be reflected as an adjustment to any Partner's Capital Account.
7.03 Maintenance of Capital Accounts. A Capital Account shall be
established and maintained for each Partner in accordance with the following
provisions:
(a) Increases in Capital Accounts. Each Partner's Capital
Account shall be increased by (i) the amount of cash and the fair
market value of all property contributed by such Partner to the
Partnership (net of liabilities assumed by the Partnership or to which
the contributed property is subject) and (ii) that Partner's allocable
share of income
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and gain for federal income tax purposes (excluding any allocations
made pursuant to Section 7.02 hereof).
(b) Decreases in Capital Accounts. Each Partner's Capital
Account shall be decreased by (i) the amount of cash and the fair
market value of all property distributed to such Partner (net of
liabilities assumed by the Partner or to which the property is
subject) and (ii) that Partner's allocable share of losses and other
items of deduction for federal income tax purposes (excluding any
allocations made pursuant to Section 7.02 hereof).
(c) Use of Gross Asset Value. For purposes of computing the
amount of any item of income, gain, loss, or deduction to be reflected
in the Partners' Capital Accounts, the determination, recognition and
classification of such items shall be the same as their determination,
recognition and classification for federal income tax purposes, except
that (i) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed with reference to the Gross
Asset Value of the property disposed of, rather than its adjusted
basis, and (ii) depreciation, amortization, or other cost recovery
deductions with respect to an item of Partnership property shall be
computed with reference to the Gross Asset Value of such property
rather than its adjusted basis.
(d) Compliance with Treasury Regulations. The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with the
Treasury Regulations issued pursuant to Section 704(b) of the Code,
and shall be interpreted and applied in a manner consistent with such
regulations. If the Partners shall determine that it is prudent to
modify the manner in which the Capital Accounts are computed or
maintained in order to comply with such regulations, the Partners may
make such modification.
7.04 Taxes Attributable to Post-1996 Receipts.
(a) All Post-1996 Receipts received prior to the Closing Date
shall be, for purposes of federal, state and local income tax, the
income of the recipient thereof. Accordingly, the recipient of all
Post-1996 Receipts received prior to the Closing Date shall be
responsible for payment of, and shall indemnify the Partnership with
respect to, all federal, state and local taxes payable on account of
such Post-1996 Receipts.
(b) All Post-1996 Receipts received after the Closing Date
shall be, for purposes of federal, state and local income tax, the
income of the Partnership and allocated to the Partners pursuant to
the provisions of Section 7.01 hereof.
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ARTICLE VIII
Fees
8.01 Generally. Except as specifically provided in Section 8.02
hereof, neither Partner shall be entitled to receive any fees from the
Partnership without the express prior written approval of both Partners.
8.02 Pavilion's Fee for Sponsorship Services. In consideration for the
services to be rendered by Pavilion in respect of the solicitation and
procurement of sponsors for the Subject Amphitheaters (as described in Section
12.09(a)(i) hereof), the Partnership shall pay a fee to Pavilion, within 30
days following the completion of each Amphitheater Fiscal Year, in an amount
equal to 20% of the amount (if any) by which (i) the Net Sponsorship Revenue
for such Amphitheater Fiscal Year exceeds (ii) the Net Sponsorship Revenue for
the Amphitheater Fiscal Year which ended on December 31, 1996. If the Executive
Committee should, at any time hereafter, elect to remove Pavilion as the party
primarily responsible for directing the efforts of soliciting, procuring and
obtaining sponsors for each of the Subject Amphitheaters pursuant to the
provisions of Section 12.09(c) hereof, then the fee provided for in this
Section 8.02 shall not be payable to Pavilion for any Amphitheater Fiscal Year
thereafter.
ARTICLE IX
Rent Obligations and Cash Distributions
9.01 Advance of Rental Payments. Reference is made to the fact that
pursuant to the provisions of each of the Amphitheater Contribution Agreements,
(i) Pavilion is responsible for payment of all lease payments and rental
obligations due under and pursuant to its Lease Agreement with the County of
San Bernardino at the Glen Helen Amphitheater and (ii) IMA is responsible for
the payment of all lease payments and rental obligations due under and pursuant
to its Lease Agreement with The Irvine Company at the Irvine Meadows
Amphitheater. To the extent that the Executive Committee determines that the
Partnership has cash available which is not required for a reasonable working
capital reserve for the obligations or business needs of the Partnership, the
Partnership shall fund the lease payments and rental obligations due in respect
of the Lease Agreements at each of the Subject Amphitheaters as and when due
and payable. All amounts so advanced by the Partnership shall be deemed to be a
loan made by the Partnership to (x) Pavilion with respect to all amounts so
funded in respect of the Glen Helen Amphitheater and (y) IMA with respect to
all amounts so funded in respect of the Irvine Meadows Amphitheater (such loans
being herein collectively called the "Rental Loans").
9.02 Annual Distribution of Available Cash. All Available Cash of the
Partnership, as of December 31 of each calendar year, shall be distributed by
the Partnership to the Partners on
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or before January 31 of the next succeeding calendar year in the amounts
determined in accordance with the following provisions:
(a) Subject to the other provisions of this Section 9.02, the
Partnership shall distribute to each Partner an amount equal to its
Percentage Interest of the amount of Available Cash being distributed.
(b) Prior to making the distribution of the amount specified
in clause (a) of this Section 9.02, the Partnership shall reduce,
deduct and offset against such distribution to each Partner the then
amount (if any) of the Rental Loan owed by such Partner to the
Partnership.
(c) All amounts withheld by the Partnership pursuant to
clause (b) of this Section 9.02 in repayment of the then outstanding
Rental Loans shall then be distributed to each of the Partners in
proportion to their respective Percentage Interests.
If a Partner's distributable share of Available Cash determined pursuant to
Section 9.02(a) hereof is less than the then amount of the Rental Loan owed by
such Partner, then such Partner shall immediately be obligated to pay to the
Partnership a cash sum to be applied against such Partner's Rental Loan in the
amount by which the then balance of such Rental Loan exceeds such Partner's
distributable share of Available Cash. All amounts received by the Partnership
pursuant to the immediately preceding sentence shall immediately thereafter be
distributed to the Partners in proportion to their respective Percentage
Interests.
ARTICLE X
Ownership of Partnership Property
All real or personal property acquired by the Partnership shall be
owned by the Partner ship, such ownership being subject to the other terms and
provisions of this Agreement. Each Partner hereby expressly waives the right to
require partition of any Partnership property or any part thereof.
ARTICLE XI
Fiscal Matters
11.01 Fiscal Year. The fiscal year of the Partnership for tax purposes
shall end at such time as is required pursuant to the application of the
provisions of the Code or the U.S. Treasury Regulations promulgated thereunder.
The fiscal year of the Partnership for accounting purposes shall end on
December 31; provided, however, the Partnership's Accounting Staff shall
provide to Pavilion such data and information as may be reasonably necessary to
permit Pavilion to incorporate the operating results of the Partnership into
Pavilion's financial reports and
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statements as of the end of each of Pavilion's fiscal years (which currently
ends on September 30 of each year).
11.02 Books and Records.
(a) Proper books and records shall be kept by the staff at
each of the Subject Amphitheaters reflecting all financial
transactions, receipts and expenditures relating to the operation,
use, maintenance and exploitation of such Subject Amphitheater. The
Executive Committee shall establish certain financial reporting
requirements from time to time that shall apply equally to each of the
Subject Amphitheaters. The staff at each Subject Amphitheater, under
the direction of the general manager of such Subject Amphitheater,
shall be responsible for complying with such financial reporting
requirements, and all reports so generated will be provided
simultaneously to both of the Partners.
(b) Pursuant to the provisions of Section 12.05 hereof,
certain accounting personnel employed by an Affiliate of a partner of
IMA will be loaned to the Partnership ("Partnership's Accounting
Staff"), upon terms consistent with the Operating Budget or otherwise
approved by the Executive Committee, who will be responsible for
consolidating the books and records of the Partnership, and each
Partner shall at all reasonable times during business hours have
access to those consolidated books and records. The Partnership's
Accounting Staff shall prepare (in a form and manner promulgated by
Pavilion) and distribute to each of the Partners (1) monthly financial
statements within 20 days after the end of each calendar month and
(ii) annual financial statements within 45 days after the end of each
fiscal year of the Partnership. All financial reports prepared by the
Partnership's Accounting Staff (and the underlying accounting data)
shall be made available to the Partners, upon the request of either
Partner, in a manner enabling such Partner to load the information on
a computer.
(c) All items of income and deductions recognized during a
fiscal year shall be allocated as of the end of each fiscal year,
based on the facts and circumstances existing as of the end of that
year. Interim monthly reports may be based on the facts and
circumstances existing at the time of those reports subject to
year-end adjustments.
11.03 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at a national or
state bank selected by the Executive Committee. Checks shall be drawn upon the
Partnership and may be signed by such persons as may be designated from time to
time by the Executive Committee.
11.04 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for federal income tax purposes, each of the Partners
hereby recognizes that the Partnership will be subject to all provisions of
Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the
filing of U.S. Partnership Returns of Income shall not be construed
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to extend the purposes of the Partnership or expand the obligations or
liabilities of the Partners. Pavilion shall be the "Tax Matters Partner" for
all purposes related to federal, state and local income tax laws.
11.05 Tax Returns. The Partnership's Accounting Staff shall prepare,
or cause to be prepared, all tax returns and statements, if any, which must be
filed on behalf of the Partnership with any taxing authority, and shall submit
copies of all such returns and statements to the Partners. To the extent
provided for in the then effective Operating Budget or otherwise approved by
the Executive Committee, the fees, charges and other expenses payable to third
party professionals such as attorneys or accountants relating to the
preparation and filing of tax returns and statements or otherwise reporting of
financial results of the Partnership, shall be properly chargeable as expenses
of the Partnership.
11.06 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership shall file an election
under Section 754 of the Code in accordance with the procedures set forth in
the applicable Treasury Regulations upon the request of any Partner if such
requesting Partner agrees to pay all costs incurred by the Partnership in
connection with the making of such election.
11.07 No Interest. No Partner shall be entitled to be paid interest on
either the balance of its Capital Account or any contributions made by it to
the Partnership.
11.08 Operational Audits. Each Partner shall have the right, at any
time and from time to time, without prior notice to the other Partner, to cause
one or more employees or other representative of the auditing Partner, at the
sole cost and expense of the auditing Partner, to enter into and go upon the
premises of one or both of the Subject Amphitheaters to conduct audits of the
operational procedures and practices of the Subject Amphitheaters. Each Partner
hereby covenants and agrees with the Partnership and with the other Partner,
that no such audit of the operational procedures and practices of either of the
Subject' Amphitheaters shall be conducted in a manner which is disruptive to
the business of the Partnership or either of the Subject Amphitheaters.
11.09 Complimentary Tickets. Each Partner shall have the right to
receive up to 48 complimentary tickets, subject to availability, for each Event
presented at the Subject Amphitheaters. If either Partner (or any of such
Partner's constituent partners or any Affiliate of any of much Partner's
constituent partners) should sell, or knowingly permit to be sold, any such
complimentary tickets (unless the sales price does not exceed the face value of
equivalent non-complimentary tickets and the proceeds are immediately remitted
to the Partnership), then such Partner shall be obligated and required to pay
to the Partnership, as liquidated damages and not as a penalty, the sum of (i)
125% of all proceeds of such sales and (ii) interest on the amounts
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so owed from the date of such sales until payment at a daily compounded rate of
interest equal to 4% over the national prime rate.
11.10 Prohibition Against Scalping. If either Partner (or any of such
Partner's constituent partners or any Affiliate of any of such Partner's
constituent partners) should sell, or knowingly permit to be sold, without
Executive Committee approval, any ticket to an Event being presented at either
of the Subject Amphitheaters for an amount that exceeds the face value thereof
and any applicable service charge, then such Partner shall be obligated and
required to pay to the Partnership, as liquidated damages and not as a penalty,
the sum of (i) 125% of all proceeds of such sales in excess of the face value
thereof and (ii) interest on the amounts so owed from the date of such sales
until payment at a daily compounded rate of interest equal to 4% over the
national prime rate.
11.11 Formation Costs. The Partners agree that the legal fees incurred
by each of the Partners in connection with the negotiation, preparation and
execution of this Agreement, the Amphitheater Contribution Agreements, the
Promotion Agreement and the T.B.A. Marketing Agreement are reasonable and
necessary costs related to the formation of the Partnership and shall be
reimbursed by the Partnership to each of the Partners.
ARTICLE XII
Management of Partnership Affairs
12.01 Management. The management and control of the Partnership's
business shall be vested in the Partners, who shall exercise such management
and control exclusively through and by virtue of their respective selection of
the Representatives to serve on the Executive Committee in accordance with the
provisions of this Article XII.
12.02 Executive Committee.
(a) Executive Committee's Authority. The Executive Committee
shall have (i) full, exclusive and complete authority and discretion
to manage and control, and shall make all decisions affecting, the
Partnership's business; (ii) full authority to effectuate the purposes
of the Partnership and to take any action required, permitted or
authorized pursuant to the terms of this Agreement; and (iii) full
power to exercise all rights and powers generally inferred or
conferred by law in connection therewith. Notwithstanding the
foregoing, the Executive Committee shall not have the right to make
the major decisions referenced in Section 3.01 hereof, it being agreed
that the authority to make such major decisions with respect to each
of the Subject Amphitheaters has been retained by the Underlying Owner
of such Subject Amphitheater.
(b) Unanimous Approval Required. Actions and decisions to be
taken by the Executive Committee shall require the unanimous approval
of the Representatives of the
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Executive Committee attending a duly called and held meeting of the
Executive Committee at which a quorum of the Representatives are in
attendance.
(c) Selection of Representatives on Executive Committee. The
Executive Committee shall be comprised of six (6) individual
Representatives. Pavilion shall have the right, at any time, and from
time to time, to designate and select three (3) out of the six (6)
Representatives who shall serve on the Executive Committee. IMA shall
have the right, at any time, and from time to time, to designate and
select three (3) out of the six (6) Representatives who shall serve on
the Executive Committee. Each Partner's Representatives on the
Executive Committee may be removed or replaced at any time, for any
reason, temporarily or permanently, by such Partner upon notice
thereof to the other Partner.
(d) Meetings of the Executive Committee.
(1) Meetings of the Executive Committee may be held
at such regular times as may be specified by the Executive
Committee and, in addition, may be called by any
Representative by giving at least ten (10) days prior notice
thereof to each of the Representatives. Notice of each
meeting shall be in writing and shall state the date, time,
and place at which such meeting is to be held (which must be
a place in either Houston, Texas or Los Angeles, California)
and the purposes for which such meeting is called. The
attendance of a Representative at a meeting shall constitute
a waiver of notice of such meeting.
(2) An annual meeting of the Executive Committee
shall be held on the last Monday of March in each year
(unless such date is a holiday, in which event such meeting
shall be held on the next business day thereafter) or at such
other time and place as the Executive Committee may
designate.
(3) Any action required or permitted to be taken at
a meeting of the Executive Committee may be taken (i) by
means of a telephone conference in which all Representatives
participating in the meeting and constituting a quorum can
hear and speak to each other or (ii) by means of unanimous
written consent executed by all of the Representatives. All
action taken pursuant to the immediately preceding sentence
shall be deemed for all purposes to have been taken at a
meeting of the Executive Committee.
(4) The presence at a meeting of at least four (4)
of the Representatives shall constitute a quorum for the
transaction of all business of the Executive Committee. Any
meeting of the Executive Committee which is properly called
and at which a quorum is present may be adjourned to a date
which is no later than twenty-one (21) days from the date
upon which the initial meeting was called.
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12.03 Annual Operating Budgets. Attached hereto as Exhibit "B" is the
Operating Budget for the Amphitheater Fiscal Year ending on December 31, 1997.
On or before November 30 of each calendar year, commencing on November 30,
1997, the Partnership's Accounting Staff shall prepare and provide to the
Representatives (i) a proposed Operating Budget for the forthcoming
Amphitheater Fiscal Year setting forth in reasonable detail the various
categories of Budgeted Operating Expenses and the amounts for each such
category to be incurred by the Partnership during the forthcoming Amphitheater
Fiscal Year and (ii) such information and materials related to the proposed
Operating Budget as may be requested by any of the Representatives so long as
such information and materials can be generated in the ordinary course of
business. To be adopted, a proposed Operating Budget must be approved by the
Executive Committee; however, if no Operating Budget is approved by the
Executive Committee for any Amphitheater Fiscal Year prior to the commencement
of such Amphitheater Fiscal Year, then the Operating Budget for such
Amphitheater Fiscal Year shall be deemed to be, until a different Operating
Budget is approved by the Executive Committee, the Operating Budget for the
prior Amphitheater Fiscal Year with each line item increased by the greater of
(i) 5% or (ii) the percentage increase in the CPI Index during the immediately
preceding Amphitheater Fiscal Year.
12.04 Transactions with Partners and Affiliates of Partners. Each
Partner hereby agrees that, with respect to any and all contracts and
agreements entered into by and between the Partnership (on the one hand) and
any Partner, the constituent partner of any Partner or any Affiliate of a
constituent partner of any Partner (on the other hand), (i) the existence of
such affiliation shall be disclosed to the other Partner prior to such
agreement or contract being made and entered into, (ii) copies thereof shall be
made available to such other Partner upon its request along with any details
and other information related thereto and (iii) the execution of each such
contract and agreement shall require the prior written consent of the other
Partner (which consent shall not be unreasonably withheld or delayed).
12.05 Partnership Staffing. Subject to the provisions hereof relating
to the Partnership's Operating Budget and the approval of the Executive
Committee, the staffing needs of the Partnership shall be filled by having
employees of the Partners, the constituent partners of the Partners, and
Affiliates of the constituent partners of the Partners, loaned to the
Partnership on a full or part-time basis. Each such employee who is so loaned
to the Partnership shall have all or such appropriate portion of his or her
salary and benefit costs reimbursed by the Partnership to the actual employer
of such employee. If the Executive Committee is unable to reach agreement
concerning the staffing needs of the Partnership at any time, then (i)
Pavilion's designated Representatives shall have the right to select and
appoint the employees who provide services in respect of the operation,
maintenance and use of the Glen Helen Amphitheater, subject to the limitations
of the Partnership's Operating Budget, and (ii) IMA's designated
Representatives shall have the right to select and appoint the employees who
provide services in respect of the operation, maintenance and use of the Irvine
Meadows Amphitheater, subject to the limitations of the Partnership's Operating
Budget.
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12.06 Special Right to Enforce Rights under Amphitheater Contribution
Agreement. Notwithstanding anything to the contrary contained in this Article
XII, (A) Pavilion shall have the exclusive right, power and authority, for and
on behalf of the Partnership, to (i) enforce all of the Partnership's rights,
benefits and privileges created under, by or pursuant to the Amphitheater
Contribution Agreement for Irvine Meadows Amphitheater, including, without
limitation, the right to make elections thereunder on behalf of the Partnership
and to enforce any remedies available to the Partnership thereunder and (ii)
conduct and direct the defense of any claims made by IMA against the
Partnership for any alleged breach by the Partnership of the provisions thereof
and (B) IMA shall have the exclusive right, power and authority, for and on
behalf of the Partnership, to (i) enforce all of the Partnership's rights,
benefits and privileges created under, by or pursuant to the Amphitheater
Contribution Agreement for Glen Helen Amphitheater, including, without
limitation, the right to make elections thereunder on behalf of the Partnership
and to enforce any remedies available to the Partnership thereunder and (ii)
conduct and direct the defense of any claims made by Pavilion against the
Partnership for any alleged breach by the Partnership of the provisions
thereof.
12.07 Promotion Agreement. Notwithstanding anything to the contrary
contained in this Article XII:
(a) The Partnership shall delegate the booking and logistical
production of all Events to be presented at the Subject Amphitheaters
to the Promoter on, subject to and in accordance with the terms,
provisions and conditions contained in the Promotion Agreement.
(b) Either Partner (acting alone or together with the other
Partner) shall have the right, power and authority, for and on behalf
of the Partnership, to (i) enforce all of the Partnership's rights,
benefits and privileges created under, by or pursuant to the Promotion
Agreement including, without limitation, the right to make elections
thereunder on behalf of the Partnership and to enforce any remedies
available to the Partnership thereunder and (ii) conduct and direct
the defense of any claims made by the Promoter against the Partnership
for any alleged breach by the Partnership of the provisions thereof.
Without limiting the generality of the foregoing, it is specifically
recognized, agreed and acknowledged that either Partner (acting alone
or together with the other Partner) shall have the right and
authority, for and on behalf of the Partnership, to (A) exercise the
right, if available, to terminate the Promotion Agreement pursuant to
the provisions of Section 4(b), (c) or (d) thereof and (B) elect to
exercise the right, if available, to send a Probationary Notice (as
defined in the Promotion Agreement) pursuant to the provisions of
Section 4(c) thereof.
(c) Notwithstanding the provisions of clause (b) of this
Section 12.07, only the Executive Committee, acting unanimously, shall
have the right and authority, for and on behalf of the Partnership, to
(i) accept any offer made by the Promoter pursuant to the provisions
of Section 5(a) of the Promotion Agreement and (ii) exercise the right
created
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pursuant to the provisions of Section 6(a) of the Promotion Agreement
to approve of booking offers proposed to be made by the Promoter after
a Probationary Notice has been provided pursuant to the provisions of
Section 4(c) of the Promotion Agreement; provided, however, that all
Promoter-Related Representatives shall be excluded from voting on any
matter brought before the Executive Committee which is described in
this Section 12.07(c).
(d) If the Promotion Agreement should be terminated at any
time during the Term, then the selection of a new "booking agent" for
the Partnership shall be made by Pavilion, subject to IMA's consent
(which consent shall not be unreasonably withheld or delayed).
(e) If (i) the Promotion Agreement should be terminated at
any time during the Term pursuant to the provisions of section 4(b),
(c) or (d) of the Promotion Agreement by the unilateral action of
Pavilion without the written approval of Azoff Inc. and (ii) as a
result of such termination, Geddes Inc. exercises the IMA Put Option,
then the following provisions shall thereafter apply and become
effective:
(1) IMA shall (i) deliver, or cause to be delivered,
to Pavilion, within three business days following receipt, a
copy of the notice of the exercise of the IMA Put Option and
(ii) obtain, or cause to be obtained, the consent of Pavilion
(such consent not to be unreasonably withheld or delayed) as
to decisions related to the selection and designation of
appraisers in connection with the IMA Put Option.
(2) At any time within thirty (30) days following
receipt by Azoff Inc. of the "Accountant's Notice" of the
"Purchase Price" (as such terms are defined in Section 3.03
of the Partnership Agreement of IMA), Azoff Inc. may provide
written notice (the "No-Interest Notice") to Pavilion that
Azoff Inc. does not wish to purchase all or its "Percentage
Interest" (as determined under Section 3.03 of the
Partnership Agreement of IMA) of the interest of Geddes Inc.
in IMA pursuant to the IMA Put Option. A No-Interest Notice
given by Azoff Inc. to Pavilion pursuant to the foregoing
provisions shall not be considered to have been received by
Pavilion for purposes hereof until Pavilion has received a
copy of the Accountant's Notice of the Purchase Price.
(3) At any time within ten (10) days after Koll
Inc.'s receipt of a No-Interest Notice from Azoff Inc., but
in no event later than forty (40) days after Azoff Inc.'s
receipt of the Accountant's Notice of the Purchase Price,
Koll Inc. may provide written notice (also a "No-Interest
Notice") to Pavilion that Koll Inc. does not wish to purchase
the interest of Geddes Inc. in IMA pursuant to the IMA Put
Option.
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(4) If Pavilion should receive (A) a No-Interest
Notice from Azoff Inc. within 30 days following receipt by
Azoff Inc. of the Accountant's Notice of the Purchase Price
and (B) a No Interest Notice from Koll Inc. by the earlier of
(i) 10 days after Koll Inc.'s receipt of the No-Interest
Notice from Azoff Inc. or (ii) 40 days following receipt by
Azoff Inc. of the Accountant's Notice of the Purchase Price,
then Pavilion shall provide a written notice to IMA that
Pavilion has elected to do one of the following:
(A) purchase all of the interest of Geddes
Inc. in IMA in accordance with the terms and
provisions of the IMA Put Option; or
(B) terminate the Partnership effective as
of the last day of the Amphitheater Fiscal Year in
which such notice is provided.
If Pavilion fails to fulfill its obligation to provide such
notice to IMA within thirty (30) days after the later of (i)
receipt of the No-Interest Notice from Azoff Inc. or (ii)
receipt of the No-Interest Notice from Koll Inc., then
Pavilion shall be deemed to have elected to terminate the
Partnership pursuant to clause (B) above.
If Azoff Inc. should, at any time hereafter, agree to amend, without the
express prior consent of Pavilion, any of the terms, provisions or conditions
contained in the IMA Put Option which relate to the methodology of calculating
the purchase price, the timing of the payment of the purchase price, the
deadlines for exercising the put option or any other similar provision in a
manner which makes such terms less favorable to Pavilion, then the foregoing
provisions of this Section 12.07(e) shall be of no further force or effect.
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12.08 Marketing Agreement. Not withstanding anything to the contrary
contained in this Article XII:
(a) The Partnership shall delegate the responsibility of
marketing and advertising all Events to be presented at the Subject
Amphitheaters to T.B.A. on, subject to and in accordance with the
terms, provisions and conditions contained in the T.B.A.
Marketing Agreement.
(b) Either Partner (acting alone or together with the other
Partner) shall have the right, power and authority, for and on behalf
of the Partnership, to (i) enforce all of the Partnership's rights,
benefits and privileges created under, by or pursuant to the T.B.A.
Marketing Agreement including, without limitation, the right to make
elections thereunder on behalf of the Partnership and to enforce any
remedies available to the Partnership thereunder and (ii) conduct and
direct the defense of any claims made by T.B.A. against the
Partnership for any alleged breach by the Partnership of the
provisions thereof. If the T.B.A. Marketing Agreement should be
terminated at any time during the Term, then the selection of a new
"marketing agent" for the Partnership shall be made by the Executive
Committee.
12.09 Sponsorship Services.
(a) Notwithstanding the other provisions contained in this
Article XII, it is hereby agreed that (i) Pavilion shall be primarily
responsible for overseeing and directing, for and on behalf of the
Partnership, the solicitation, procurement and obtaining of sponsors
for each of the Subject Amphitheaters, (ii) a mutually approved
employee of Pavilion (or an Affiliate of a partner of Pavilion) shall
be loaned on a part-time or full-time basis to the Partnership
pursuant to Section 12.05 hereof, upon terms consistent with the
Operating Budget or otherwise approved by the Executive Committee, to
assist in the procurement and implementation of sponsorship
arrangements applicable to the Glen Helen Amphitheater and (iii) a
mutually approved employee of IMA, a constituent partner of IMA or an
Affiliate of a constituent partner of IMA will be loaned on a
part-time basis to the Partnership, upon terms approved by the
Executive Committee, to assist in the procurement and implementation
of sponsorship arrangements applicable to the Irvine Meadows
Amphitheater. Except for the employee referenced in clause (ii) of the
immediately preceding sentence, Pavilion shall not be reimbursed for
the cost of any other employees of Pavilion providing the services
referenced in clause (i) of the immediately preceding sentence, it
being agreed that the sole and exclusive compensation to Pavilion for
the fulfillment of such services referenced in clause (i) of the
immediately preceding sentence shall be the fee set forth in Section
8.02 of this Agreement.
(b) Notwithstanding the provisions of clause (a) of this
Section 12.09, no sponsorship arrangement may be accepted on behalf of
the Partnership except in accordance with the following provisions:
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(1) If such sponsorship arrangement is for three or
fewer Events, then such sponsorship arrangement may be approved by the
general manager of the Subject Amphitheater to which such sponsorship
arrangement relates.
(2) For all other sponsorship arrangements not
described in clause (1), the Executive Committee must unanimously
approve the acceptance of such sponsorship arrangement before it is
executed and entered into for and on behalf of the Partnership.
(c) If Pavilion's performance of the services referenced in
Section 12.09(a)(i) hereof during any Amphitheater Fiscal Year results
in sponsorship revenues at the Subject Amphitheaters during such
Amphitheater Fiscal Year which (i) are materially less than the amount
of sponsorship revenues generated at similar outdoor entertainment
facilities or (ii) fails to meet an objective standard hereafter
adopted by the Executive Committee, then IMA shall have the right,
power and authority, for and on behalf of the Partnership, to remove
Pavilion as the party primarily responsible for overseeing and
directing the solicitation, procurement and obtaining of sponsors for
each of the Subject Amphitheaters in which case a successor
"sponsorship person" shall be selected for the Partnership by the
Executive Committee.
(d) Reference is made to the fact that certain existing
sponsorship arrangements applicable to the Irvine Meadows Amphitheater
which will be contributed to the capital of the Partnership by IMA on
the Closing Date are burdened by certain commission obligations
referenced in Exhibit "C" attached hereto. The Partnership hereby
acknowledges such commission obligations and agrees to honor such
commission obligations to the extent identified on Exhibit "C"
attached hereto, as and when the applicable sponsorship revenues are
received by the Partnership. The foregoing provisions shall not apply
to any renewals or replacements of the existing contractual
sponsorship arrangements identified on Exhibit "C" attached hereto.
12.10 Legal Review of Form of Contracts. Pavilion's legal staff and
IMA's legal staff shall each have the right to review and provide input on the
form of contracts to be used for various types of standard arrangements in
connection with the operation, use, management and exploitation of the Subject
Amphitheaters.
12.11 Liability Insurance. Selection and purchase of the Partnership's
liability insurance covering the operations and activities at each of the
Subject Amphitheaters shall be an Executive Committee decision taking into
account the best interest of the Partnership's economic and financial
considerations. If the Executive Committee should so approve, the Partnership's
liability insurance may be separately placed at each of the Subject
Amphitheaters.
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ARTICLE XIII
Other Activities
13.01 Restrictions on Concert Promotion. During the Term, neither
Partner shall Promote an Amphitheater Event in the Restricted Area, or permit
any of such Partner's Related Parties to Promote an Amphitheater Event in the
Restricted Area, unless and except such Partner ("Promoting Partner") has first
offered, or caused to be offered, to the Partnership an option and right to
co-Promote such Amphitheater Event on an equal economic basis with the
Promoting Partner or its Related Party, as applicable. Any offer which a
Promoting Partner is required to make, or cause to be made, pursuant to the
provisions of the immediately preceding sentence with respect to any
Amphitheater Event to be presented in the Restricted Area must (i) be made in
writing to the other Partner ("Non-Promoting Partner"), (ii) include such
information concerning the economic terms and conditions of such Amphitheater
Event as the Non-Promoting Partner may reasonably request and (iii) be open for
acceptance for no less than five (5) business days. The decision on behalf of
the Partnership to accept or reject any offer made pursuant to the foregoing
provisions shall be made, notwithstanding anything to the contrary contained
herein, by the Non-Promoting Partner. If the economic terms and conditions upon
which an Amphitheater Event in the Restricted Area is to be Promoted should
change in any respect after the Non-Promoting Partner has declined on behalf of
the Partnership the offer made by the Promoting Partner pursuant to the
foregoing provisions but prior to the "on-sale" date for such Amphitheater
Event, then another offer ("New Offer") describing the changed terms and
conditions must be made, or caused to be made, by the Promoting Partner to the
Partnership in accordance with the foregoing provisions; provided, however if
the change in economic terms and conditions is not material, then the New Offer
may, by its terms, be open for acceptance for less than five (5) business days
but no less than forty-eight (48) hours.
13.02 Restrictions on Sell-Offs. If, during the Term, either Partner
("Sell Off Partner"), or any of its Related Parties, proposes to sell the right
to Promote an Amphitheater Event to a third party ("Unrelated Promoter") for
presentation in the Restricted Area, then the following provisions shall apply:
(a) Completion of the sale of the right to Promote such
Amphitheater Event in the Restricted Area may not be completed earlier
than five (5) business days following delivery of a notice to the
other Partner ("Non-Sell Off Partner") setting forth the specific
terms of such proposed sale to the Unrelated Promoter and such other
reasonable information related thereto as may be requested by the
Non-Sell Off Partner.
(b) The Non-Sell Off Partner shall have the right and
authority, notwithstanding anything to the contrary contained herein,
to require that the Partnership make a competing offer to the Sell-Off
Partner ("Partnership's Competing Offer") for the purchase from the
Sell-Off Partner of the right to Promote such Amphitheater Event at
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one of the Subject Amphitheaters for an amount up to, but not in
excess of, the amount being offered by the Unrelated Promoter.
(c) If the Non-Sell Off Partner exercises the right to issue
a Partnership's Competing Offer pursuant to the provisions of clause
(b) that matches the economics of the offer made by the Unrelated
Promoter, then the Sell-Off Partner shall exercise its reasonable
efforts to cause the Partnership's Competing Offer to be accepted with
the express understanding that the final decision as to which offer
will be accepted may not belong to the Sell-Off Partner.
13.03 No Other Restrictions. Except as expressly provided in Sections
13.01 and 13.02 above, this Agreement shall not preclude or limit in any
respect the right of any Partner to engage or invest in any business activity
of any nature or description, including those which may be similar to the
business of the Partnership. Neither the Partnership nor any Partner shall have
any right by virtue of this Agreement or any relationships created hereby in or
to such other ventures or activities or to the income or proceeds derived
therefrom. Notwithstanding the foregoing provisions or anything else to the
contrary contained herein or implied hereby, (i) the restrictions, limitations
and prohibitions set forth in the Promotion Agreement shall not be affected,
limited, lessened or otherwise altered in any respect by the provisions of this
Article XIII and all such matters contained in the Promotion Agreement shall
apply independently of, and cumulatively with, the provisions hereof and (ii)
the provisions of this Article XIII shall not limit, restrict or affect the
right of Irving Azoff to serve as an artist manager and to perform the
functions and services customarily performed by him in that capacity.
13.04 Certain Defined Terms. As used in this Article XIII, the
following terms shall have the respective meanings indicated below:
(a) "Amphitheater Event" shall mean any Event which is part
of a tour in which seventy percent (70%) or more of the total number
of dates included in such tour are being played in outdoor
entertainment facilities with a seating capacity of more than 7500 and
less than 30,000.
(b) "Restricted Area" shall mean the geographical area
encompassed by the counties of San Bernardino, California and Orange
County, California.
(c) "Related Parties" shall mean, with respect to either
Partner, the constituent partners of such Partner and the Affiliates
of each constituent partner of such Partner.
(d) "Promote" shall mean, with respect to any Amphitheater
Event, the business activity of (i) acquiring from the artist
appearing in such Amphitheater Event (or his agent or other
representative) the right to present such Amphitheater Event at a
specific venue on a specific date in exchange for an appearance fee
and (ii) taking the risk that
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gross revenues from the presentation of such Amphitheater Event will
exceed the sum of the appearance fee and other costs of presenting
such Amphitheater Event.
ARTICLE XIV
Rights of Refusal
14.01 Subject Amphitheaters. Except as expressly permitted by the
provisions of this Section 14.01, neither Partner shall sell, transfer or
convey the Subject Amphitheater owned by it. If one Partner ("Selling Partner")
receives after December 31, 1999, but not before, a written offer from a third
party ("Proposed Purchaser") to purchase the Subject Amphitheater owned by the
Selling Partner which the Selling Partner desires to accept, then the Selling
Partner shall have the right, to sell all, but not less than all, of its
interest in its Subject Amphitheater if, but only if, the Selling Partner
complies with all of the following provisions:
(a) The Selling Partner shall provide prompt written notice
to the other Partner ("Non-Selling Partner") upon the commencement of
negotiation concerning any proposed sale of the Selling Partner's
Subject Amphitheater to the Proposed Purchaser.
(b) Upon request of the Non-Selling Partner at any time
following the notice given pursuant to clause (a), the Selling Partner
shall provide an oral report as to the status of the negotiations for
the proposed sale of the Selling Partner's Subject Amphitheater to the
Proposed Purchaser.
(c) The Selling Partner shall provide to the Non-Selling
Partner, from time to time after receipt, copies of all written
drafts, letters or other documentation pertaining to such proposed
sale of the Selling Partner's Subject Amphitheater to the Proposed
Purchaser.
(d) Within five (5) days following the execution of a binding
letter of intent or other binding agreement ("Purchase Agreement")
pursuant to which the Selling Partner agrees to sell its Subject
Amphitheater to the Proposed Purchaser, the performance of each party
thereto being conditioned expressly upon the provisions of this
Section 14.01, the Selling Partner shall provide a true, correct,
complete and accurate copy thereof to the Non-Selling Partner.
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(e) Following receipt of a Purchase Agreement, the
Non-Selling Partner shall have the right and option ("Purchase
Option"), exercisable in its sole discretion, to purchase the Selling
Partner's Subject Amphitheater upon the same terms, provisions and
conditions contained in such Purchase Agreement.
(f) The Purchase Option may be exercised by the Non-Selling
Partner at any time within fifteen (15) days after receipt of a
Purchase Agreement by providing written notice thereof to the Selling
Partner. If the Non-Selling Partner should exercise the Purchase
Option in a timely manner, then (A) the closing of the sale of the
Selling Partner's Subject Amphitheater to the Non-Selling Partner
shall occur on or before the later of (i) sixty (60) days following
the exercise of the Purchase Option or (ii) the outside date for
closing the transaction contemplated by the Purchase Agreement which
was the subject of the Purchase Option and (B) the Selling Partner
shall, simultaneously with the closing of the sale of the Subject
Amphitheater to the Non-Selling Partner, sell, transfer, assign and
convey its interest in the Partnership to the Non-Selling Partner for
no additional consideration.
(g) If, at any time after delivery of a Purchase Agreement to
the Non-Selling Partner, whether before or after the deadline for the
Non-Selling Partner's decision to exercise the Purchase Option, any of
the terms or provisions contained in such Purchase Agreement should be
amended by agreement between the Selling Partner and the Proposed
Purchaser in a manner which is favorable to the Proposed Purchaser to
any material extent, then the Selling Partner shall provide prompt
written notice of such modification to the Non-Selling Partner, and
the Purchase Option shall be extended until the date which is fifteen
(15) days after the provision of such notice of such amendment.
(h) If the Non-Selling Partner does not exercise the Purchase
Option within fifteen (15) days after receipt of a Purchase Agreement
(or, if applicable, after receipt of notification pursuant to clause
(g) of an amendment to a Purchase Agreement which is favorable to the
Proposed Purchaser to any material extent), then the Selling Partner
may thereafter complete the proposed sale of its Subject Amphitheater
to the Proposed Purchaser upon the same terms, conditions and
provisions contained in the Purchase Agreement previously provided to
the Non-Selling Partner in accordance with the provisions thereof,
provided that the following provisions are complied with at the
closing of the sale:
(1) The Proposed Purchaser must execute such
reasonable documentation as may be requested or required by
the Non-Selling Partner to indicate the Proposed Purchaser's
agreement that it is acquiring title to the Subject
Amphitheater subject to and burdened by the provisions of the
Amphitheater Contribution Agreement for such Subject
Amphitheater through and until the end of the Amphitheater
Fiscal Year in which such sale occurs.
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(2) The Selling Partner must pay to the Non-Selling
Partner, as a breakup fee, a lump sum amount equal to the
Non-Selling Partner's Percentage Interest of two times the
Average Cash Flow Amount for the most recently completed
Amphitheater Fiscal Year; provided, however, such break-up
fee shall not be payable to the Non-Selling Partner if the
Proposed Purchaser simultaneously acquires and purchases the
Partnership Interest of the Selling Partner and the
Non-Selling Partner consents and agrees, in its sole
discretion, to the admission of the Proposed Purchaser as a
substitute general partner in the Partnership.
If any such sale of the Selling Partner's Subject Amphitheater is
completed to a Proposed Purchaser in accordance with the foregoing
provisions, then, unless the Non-Selling Partner consents and agrees
(in its sole discretion) to the admission of the Proposed Purchaser as
a substitute general partner in the Partnership, the Partnership shall
be dissolved effective as of the last day of the Amphitheater Fiscal
Year in which such sale occurs.
14.02 IMA Partnership Interests. By executing this Agreement on behalf
of IMA, each of the partners of IMA hereby agree, in their respective
individual capacities, that Pavilion shall have a subordinate right and option
("Secondary Refusal Option") to purchase any partnership interest in IMA which
any such partner proposes to sell, transfer, convey or assign. The Secondary
Refusal Option shall be upon the same terms, conditions and provisions as the
right and option that each partner in IMA has to purchase the partnership
interests of the other partners in IMA ("First Refusal Option") but shall only
apply to the extent that any partnership interest proposed to be sold,
transferred, conveyed or assigned by a partner in IMA is not acquired by the
other partners in IMA pursuant to the First Refusal Option. Copies of all
notices given pursuant to the First Refusal Option shall be provided to
Pavilion. If Pavilion wishes to exercise the Secondary Refusal Option, then
Pavilion must conditionally exercise the Secondary Refusal Option within the
time periods granted pursuant to the First Refusal Option; however, any such
exercise shall only be effective to the extent that the partnership interest in
IMA that is then subject to the Secondary Refusal Option is not acquired by the
other partners in IMA pursuant to the First Refusal Option.
14.03 Specific Performance. It is expressly agreed that the remedy at
law for breach of the obligations created in this Article XIV is inadequate in
view of (i) the complexities and uncertainties in measuring the actual damages
that would be sustained by reason of such breach and (ii) the uniqueness of the
Partnership business, the Partnership relationship and the Subject
Amphitheaters. Accordingly, it is agreed that the obligations created by this
Article XIV shall be enforceable by an equitable order of specific performance.
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ARTICLE XV
Defaults and Remedies
15.01 Default by Partner If any Partner ("Defaulting Partner") fails
to timely perform any of its obligations contained in this Agreement, or
materially violates the terms of this Agreement, then the other Partner
("Non-Defaulting Partner") shall have the right to give the Defaulting Partner
a notice ("Default Notice") specifically setting forth the nature of such
failure or violation and stating that the Defaulting Partner shall have a
period of ten (10) days to pay any sums of money specified therein as due and
owing to the Partnership or to any Partner or, if the failure or violation is a
non-monetary default and is capable of being cured, thirty (30) days to cure
such default specified therein. If the monies specified in the Default Notice
are not paid within such ten (10) day period, or if such non-monetary failures
or violations are not capable of being cured or, if capable of being cured,
such Defaulting Partner has not cured such non monetary failures or violations
within such thirty (30) day period, then a "Partner Default" shall be deemed to
have occurred with respect to such Defaulting Partner. If a Defaulting Partner
cures in all material respects all of its failures or violations which are
capable of being cured within the aforesaid notice and cure periods, then such
defaults shall be deemed no longer to exist and such Partner shall be deemed no
longer to constitute a Defaulting Partner.
15.02 Rights and Remedies. Upon the occurrence of a Partner Default,
the Non-Defaulting Partner and the Partnership shall each have the following
rights, options and remedies which shall be cumulative and may be exercised
concurrently or independently in the sole and absolute discretion of the
Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of
the Partnership or the Non-Defaulting Partner in order to recover the
amounts owed, if any, and any damages arising from such default
(including, without limitation, reasonable attorneys' fees and
disbursements incurred or paid by the Partnership or the
Non-Defaulting Partner, as the case may be, in prosecuting any such
action).
(b) The right to bring any proceeding in the nature of
injunction, specific performance or other equitable remedy, it being
acknowledged by each of the Partners that damages at law may be an
inadequate remedy for such default.
(c) If a sum of money is owed to the Partnership, the
Non-Defaulting Partner may advance the sum of money owed to the
Partnership by the Defaulting Partner with the following results:
(i) The sum thus advanced shall be deemed to be a
loan from the Non-Defaulting Partner to the Defaulting
Partner;
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(ii) The principal balance of such deemed loan shall
be due and payable in whole upon written demand from the
Non-Defaulting Partner to the Defaulting Partner;
(iii) The principal balance of such deemed loan
shall bear interest at the Permitted Rate compounded monthly;
and
(iv) All distributions from the Partnership that
would otherwise be made to the Defaulting Partner (whether
before or after dissolution of the Partnership) shall,
instead, be paid to the Non-Defaulting Partner until such
loan and all interest accrued thereon has been repaid in
full.
(d) If a sum of money is owed by the Defaulting Partner to
the Non-Defaulting Partner pursuant to the provisions of this
Agreement, then the Non-Defaulting Partner may require that all
distributions that would otherwise be made to the Defaulting Partner
(whether before or after dissolution of the Partnership) shall,
instead, be paid to the NonDefaulting Partner until all such amounts
owed have been repaid in full.
(e) For purposes of voting or giving any consents or
approvals under any provisions of this Agreement, the right to deny
the Defaulting Partner any of its voting, consent or approval rights
under this Agreement.
ARTICLE XVI
Voluntary Withdrawal
No Partner shall have the fight to, and each Partner agrees that it
will not, withdraw voluntarily from the Partnership. In the event any Partner
withdraws from the Partnership in contravention of this Agreement, such
withdrawing Partner shall remain liable for its Percentage Interest of the
Partnership liabilities in existence at the time of its withdrawal and shall,
in addition, be liable for all damages attributable to its breach of this
Agreement. The withdrawal of a Partner in contravention of this Article XVI
shall not cause the Partnership to be dissolved, and such withdrawing Partner
shall be deemed to be an assignee of a Partner's Partnership Interest and shall
have only the rights provided a Partner's assignee under the provisions of the
Partnership Act.
ARTICLE XVII
Dissolution and Termination
17.01 Dissolution. The Partnership shall be dissolved upon the
occurrence of any of the following:
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(a) the unanimous agreement of the Partners;
(b) expiration of the Term,
(c) a valid termination of the Partnership's exclusive
license for the use, possession and enjoyment of either of the Subject
Amphitheaters created pursuant to the Amphitheater Contribution
Agreement for such Subject Amphitheater;
(d) the election of either Partner by providing a notice of
dissolution to the other Partner within 60 days following the
completion of any Amphitheater Fiscal Year for which one of the
following conditions exist:
(1) the Partnership's Cash Flow for such Amphitheater
Fiscal Year is less than $0.00; or
(2) the Promotion Agreement was terminated at least
three years prior to the end of such Amphitheater Fiscal Year
and the Average Cash Flow Amount for such Amphitheater Fiscal
Year is less than the Cash Flow Target Amount for such
Amphitheater Fiscal Year;
(e) the election of Pavilion by providing a notice of
dissolution to IMA within 60 days following the completion of any
Amphitheater Fiscal Year for which one of the following conditions
exist:
(1) the paid attendance at the Events presented at
Glen Helen Amphitheater during such Amphitheater Fiscal Year
is less than 35% of the total paid attendance at all of the
Events presented at both of the Subject Amphitheaters during
such Amphitheater Fiscal Year; or
(2) the total paid attendance at all of the Events
presented at Glen Helen Amphitheater during such Amphitheater
Fiscal Year and each of the 2 immediately preceding
Amphitheater Fiscal Years is less than 35% of the total paid
attendance at all of the Events presented at both or the
Subject Amphitheaters during such Amphitheater Fiscal Year
and each of the 2 immediately preceding Amphitheater Fiscal
Years.
(f) the election of IMA by providing a notice of dissolution
to Pavilion within sixty (60) days following the completion of any
Amphitheater Fiscal Year for which both of the following conditions
exist:
(1) the Promotion Agreement was terminated prior to
the commencement of such Amphitheater Fiscal Year; and
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<PAGE>
(2) the paid attendance at the Events presented at
Irvine Meadows Amphitheater during such Amphitheater Fiscal
Year is less than 42.5% of the total paid attendance at all
of the Events presented at both of the Subject Amphitheaters
during such Amphitheater Fiscal Year;
(g) the election of Pavilion by providing a notice of
dissolution to IMA at any time following the occurrence of a Use
Termination Event with respect to the Irvine Meadows Amphitheater;
(h) the election of IMA by providing a notice of dissolution
to Pavilion at any time following the occurrence of an Use Termination
Event with respect to the Glen Helen Amphitheater;
(i) the last day of any Amphitheater Fiscal Year during,
which one of the Subject Amphitheaters is sold to a third party
purchaser in accordance with, and as permitted by, the provisions of
Section 14.01 hereof unless the Non-Selling Partner consents and
agrees, in its sole discretion, to the admission of the Proposed
Purchaser as a substitute general partner in the Partnership;
(j) the election or deemed election of Pavilion to terminate
the Partnership pursuant to the provisions of Section 12.07(e)(2)
hereof following receipt of a No Interest Notice given by Azoff Inc.
pursuant to Section 12.07(e)(1) hereof, and
(k) any event or circumstance which requires a dissolution of
the Partnership pursuant to the provisions of the Partnership Act.
The dissolution shall be effective on the day on which the event occurs causing
dissolution ("Effective Date of Dissolution"), but the Partnership shall not
terminate until the assets have been distributed in accordance with the
provisions of this Agreement.
17.02 Distributions Upon Dissolution. On dissolution of the
Partnership, the Partners shall proceed diligently to wind up the affairs of
the Partnership and distribute its assets as soon as reasonably practicable
without causing any interference with the operation of the Subject
Amphitheaters. The assets of the Partnership are to be distributed in kind,
unless expressly approved otherwise by the Executive Committee. The
Partnership's assets shall be applied or distributed (after all adjustments to
the Capital Accounts of the Partners which are required (i) following any sale
of Partnership property or (ii) by the Treasury Regulations upon a distribution
of an item of Partnership property in kind) in the following order of priority:
(a) In payment of all liabilities of the Partnership to
creditors other than Partners. If any liability is contingent or
uncertain in amount, a reserve equal to the maximum amount for which
the Partnership could be reasonably held liable shall be established.
Upon the satisfaction or other discharge of that contingency, the
amount of
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<PAGE>
the reserve not required, if any, will be treated as income to the
extent previously treated as a deduction.
(b) In payment of any loans owed by the Partnership to any
Partner.
(c) (i) A cash sum equal to the amount of Post-Dissolution
Receipts for Glen Helen Amphitheater received prior to the making of
this distribution and all of the then existing Operating Assets of
Glen Helen Amphitheater shall be distributed to Pavilion (subject to
the ordinary course payables, obligations and liabilities related to,
or associated with, the use, operation or maintenance of Glen Helen
Amphitheater, to the extent not then past due) and (ii) a cash sum
equal to the amount of Post-Dissolution Receipts for Irvine Meadows
Amphitheater received prior to the making of this distribution and all
of the then existing Operating Assets of Irvine Meadows Amphitheater
shall be distributed to IMA (subject to the ordinary course payables,
obligations and liabilities related to, or associated with, the use,
operation or maintenance of Irvine Meadows Amphitheater, to the extent
not then past due).
(d) To the Partners in proportion to and to the extent of the
balance in their respective Capital Accounts (after adjustments to the
Capital Account balances for the distributions made pursuant to clause
(c) of this Section 17.02).
(e) To the Partners in proportion to their respective
Percentage Interests.
17.03 Capital Account Make-Up. If a Partner's Capital Account has a
deficit balance following, completion of the liquidating distribution required
to be made by the provisions of Section 17.02(c) hereof (after taking into
account all Capital Account adjustments for the taxable year of the Partnership
in which liquidation occurs), the Partner shall, immediately following the
receipt of such distribution, contribute to the Partnership a cash sum in an
amount necessary to increase the balance in its Capital Account to zero. Any
amount so contributed shall be distributed as provided in Section 17.02(d)
hereof or, if applicable, Section 17.02(e) hereof.
ARTICLE XVIII
Transfer Restrictions
Neither Partner shall have the right to sell, assign, convey,
transfer, pledge or hypothecate, by operation of law or otherwise, all or any
portion of its Partnership Interest without the prior consent of the other
Partner, it being agreed and acknowledged that such consent may be withheld in
such other Partner's sole discretion for any reason whatsoever. Any purported
sale, assignment, conveyance, transfer, pledge or hypothecation of any
Partner's Partnership Interest in violation of the provisions of this Article
XVIII shall be voidable at the option of the other Partner. Notwithstanding the
foregoing, either Partner may pledge its Partnership Interest as security for
borrowed money.
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<PAGE>
ARTICLE XIX
Dispute Resolution
19.01 Generally. In the event of (i) any dispute between the Partners
or assignees of the Partners or the Partnership or (ii) any Major Operational
Deadlock (any such dispute or Major Operational Deadlock being herein
collectively called a "Dispute"), which cannot be otherwise informally resolved
by the Partners, the Partners will utilize the procedures specified in this
Article XIX (the "Procedure") to resolve the Dispute. The Partner seeking to
initiate the Procedure (the "Initiating Party") shall give written notice to
the other Partner and the Partnership, describing in general terms the nature
of the Dispute, the Initiating Party's claim for relief and identifying one or
more individuals with authority to settle the Dispute on such Partner's behalf.
The Partner receiving such notice (the "Responding Party") shall have ten (10)
business days within which to designate by written notice to the Initiating
Party, one or more individuals with authority to settle the Dispute on such
Party's behalf. The individuals so designated shall be known as the "Authorized
Individuals."
19.02 Negotiations. The Authorized Individuals shall be entitled to
make such investigation of the Dispute as they deem appropriate, but agree to
promptly, and in no event later than thirty (30) days from the date of the
Initiating Party's written notice, meet to discuss resolution of the Dispute.
The Authorized Individuals shall meet at such times and places and with such
frequency as they may agree. The Partners agree to participate in good faith in
the direct negotiations to resolve the Dispute. If the Dispute has not been
resolved within thirty (30) days from the date of their initial meeting, the
Partners shall cease direct negotiations and shall submit the Dispute to
arbitration in accordance with the following procedure.
19.03 Arbitration. All Disputes will be settled by arbitration by an
arbitrator mutually acceptable to the Partners in an arbitration proceeding
conducted in (i) Houston, Texas (if IMA is the Initiating Party) or (ii) in Los
Angeles, California (if Pavilion is the Initiating Party), in accordance with
the rules as then in effect of the American Arbitration Association. If the
Partners hereto cannot agree on an arbitrator within ten (10) business days of
the initiation of the arbitration proceeding, an arbitrator with experience in
the live entertainment industry shall be selected for the Partners by the
American Arbitration Association. The decision of such arbitrator shall be
final (except that errors of law shall be subject to appeal) , and judgment
upon the award rendered by the arbitration may be entered in any court having
jurisdiction thereof. The costs (including, without limitation, reasonable fees
and expenses of counsel and experts for the Partners) of such arbitration
(including the costs to enforce or preserve the rights awarded in the
arbitration) shall be borne by the Partners in the amounts and proportions
specified by the arbitrator in his final decision.
19.04 Press Releases. All press releases which are issued by the
Partnership or any Partner (or any constituent partner of a Partner or any
Affiliate of a Partner or a constituent
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<PAGE>
partner of a Partner) concerning the subject matter of this Agreement shall
first be approved by the Executive Committee before the release thereof.
ARTICLE XX
Miscellaneous Provisions
20.01 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to
have been duly given if delivered personally with receipt acknowledged or sent
by registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile, telex or cablegram (which shall be confirmed by a
writing sent by registered or certified mail or equivalent on the same day that
such facsimile, telex or cablegram is sent), or by recognized overnight courier
for next day delivery, addressed or sent to the parties at the following
addresses and facsimile numbers or to such other additional address or
facsimile number as any party shall hereafter specify by Communication to the
other parties:
Pavilion: c/o SM/PACE, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: (713) 693-8660
Attention: Mr. Rodney L. Eckerman
with copies to: c/o SM/PACE, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: (713) 693-8617
Attention: Mr. Jeffry B. Lewis
and Sony Music Entertainment Inc.
550 Madison Avenue
New York, New York 10022-3211
Facsimile No.: (212) 833-8083
Attention: David H. Johnson, Esq.
and
Michael F. Rogers
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
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<PAGE>
Facsimile No.: (713) 308-5555
IMA: Irvine Meadows Amphitheater
17835 Ventura Boulevard, Suite 206
Encino, CA 91316
Facsimile No.: (818) 881-1716
Attention: Mr. Robert Geddes
with a copies to: 5000 Campus Drive
Newport Beach, California 92660-2181
Facsimile No.: (714) 833-0633
Attention: Mr. Paul C. Hegness
and
8900 Wilshire Blvd., Suite 200
Beverly Hills, CA 90211
Facsimile No: (310) 289-5556
Attention: Mr. Irving Azoff
and 4343 Von Karman
Newport Beach, CA 92660
Facsimile No: (714) 250-4344
Attention: Mr. Donald M. Koll
20.02 California Law to Apply. This Agreement shall be construed under
and in accordance with laws of the State of California without giving any
effect to the choice of law principles in the State of California
20.03 Other Instruments. The parties hereto covenant and agree that
they will execute such other and further instruments and documents as are or
may become necessary or convenient to effectuate and carry out the Partnership
created by this Agreement.
20.04 Amendment. This Agreement may be amended or modified by the
Partners from time to time but only upon approval by all of the Partners
contained in a written instrument.
20.05 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
20.06 Parties Bound. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
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<PAGE>
20.07 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof and this
Partnership Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
20.08 Counterparts. This Partnership Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original.
20.09 Gender. Wherever the context shall so require, all words herein
in the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
20.10 Prior Agreements Superseded. This Agreement supersedes any prior
understandings or written or oral agreements between the parties respecting the
within subject matter.
20.11 Attorneys Fees. The prevailing party in any dispute, litigation
or other proceeding between the parties hereto involving the subject matter of
this Agreement shall be entitled to be reimbursed by the other party for all of
its reasonable attorneys' fees incurred in connection with the pursuit of such
dispute, litigation or other proceeding.
ARTICLE XXI
Use Impairments and Use Termination Events
21.01 Use Impairments. If a Use Impairment occurs at either of the
Subject Amphitheaters, then the following provisions shall apply:
(a) The Underlying Owner of such Subject Amphitheater (and
not the Partnership) shall be entitled to receive and retain any
property insurance proceeds or condemnation award payable on account
of the occurrence of such Use Impairment.
(b) The Partnership (and not the Underlying Owner of such
Subject Amphitheater) shall be entitled to receive and retain any
business interruption insurance proceeds payable on account of the
occurrence of such Use Impairment.
(c) The Underlying Owner of such Subject Amphitheater shall
have the option of either (i) agreeing to correct, cure or repair the
event, circumstance or condition giving rise to such Use Impairment
("Cure Option") or (ii) refusing to correct, cure or repair the
condition giving rise to such Use Impairment ("Non-Cure Option"). If
the Underlying Owner of such Subject Amphitheater has not exercised
the option referred to in the immediately preceding sentence by
providing notice thereof to the other Partner
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<PAGE>
within sixty (60) days following written notice from the other Partner
that such Use Impairment is in existence, then the Underlying Owner of
such Subject Amphitheater shall be deemed to have exercised the
Non-Cure Option for all purposes hereof. If the Underlying Owner of
such Subject Amphitheater elects the Cure Option, then such Underlying
Owner shall be obligated pursuant to this Agreement to (x) thereafter
diligently pursue the correction, cure and repair of the event,
circumstance or condition giving rise to such Use Impairment and (y)
in any event to complete such correction, cure and repair within one
(1) year following the electing of the Cure Option.
(d) If the Underlying Owner of such Subject Amphitheater
elects, or is deemed to elect, the Non-Cure Option following the
occurrence of a Use Impairment, then a "Use Termination Event" shall
be deemed to have occurred with respect to such Subject Amphitheater.
21.02 Continue Covenants Following Termination of Partnership as a
Result of a Use Termination Event. If the Partnership should be dissolved
pursuant to the provisions of clauses (g) or (h) of Section 17.01 hereof
following the occurrence of a Use Termination Event with respect to a Subject
Amphitheater, then the Underlying Owner of such Subject Amphitheater shall not
place such Subject Amphitheater back into operation as a venue for the
performance of live entertainment events at any time during the next 10 years
without first offering to the other Partner the right and option of reforming
the Partnership upon the terms and conditions contained in this Agreement. The
right and option referenced in the immediately preceding sentence shall be
available for exercise for a period of sixty (60) days after receipt of written
notice of the offering of such right and option. The covenants and agreements
contained in this Section 21.02 shall survive the dissolution and termination
of the Partnership.
EXECUTED as of the day and year first written above.
Irvine Meadows Amphitheater, a California partnership
By: Irvine Meadows Investment Corp., a
California corporation
By: Name: /s/ Donald M. Koll
-------------------------------
Donald M. Koll
Title: President
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<PAGE>
By: Shelli Meadows, Inc., a California
Corp
By: /s/ Irving Azoff
---------------------------------
Name: Irving Azoff
Title: President
By: Audrey & Jane., a California-
corporation
By: /s/ Robert E. Geddes
---------------------------------
Name: Robert E. Geddes
Title: President
By: Peach Street Partners, L.P., a
California limited partnership
By: Imua, Inc.
By: /s/ Paul C.Hegness
---------------------------------
Name: Paul C. Hegness
Title: President
"IMA"
PAVILION PARTNERS, a
Delaware general partnership
By: SM/P a Texas corporation
By: /s/ Rodney Eckerman
---------------------------------
Name: Rodney Eckerman
Title: Vice President
"PAVILION"
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<PAGE>
Exhibit "A"
GLOSSARY OF TERMS
Affiliate: With respect to any Person, any other Person that directly
or indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Person specified. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and under "common control with") when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
Amphitheater Contribution Agreement: With respect to either of the
Subject Amphitheaters, the Amphitheater Contribution and License Agreement
executed and entered of even date herewith by and between the Partner who owns
title to such Subject Amphitheater and the Partnership.
Amphitheater Fiscal Year: Each twelve month period commencing on
January 1 of a calendar year and ending on December 31 of such calendar year.
Available Cash: After repayment of all outstanding Deficit Loans, cash
held by the Partnership on each December 31st during the Term which, in the
judgment of the Executive Committee, is not required for a reasonable working
capital reserve for the obligations or business needs of the Partnership
through the next revenue generating period.
Avalon: New Avalon, Inc., a California corporation and an Affiliate of
one of the partners of IMA.
Average Cash Flow Amount: (i) With respect to the Amphitheater Fiscal
Year ending on December 31, 1999, the average of the Partnership's Cash Flow
for the Amphitheater Fiscal Years ending on December 31, 1998 and 1999 and (ii)
with respect to the Amphitheater Fiscal Year ending on December 31, 2000 and
each Amphitheater Fiscal Year thereafter, the average of the Partnership's Cash
Flow for such Amphitheater Fiscal Year and the two immediately preceding
Amphitheater Fiscal Years.
Azoff Inc.: Shelli Meadows, Inc., a California corporation wholly
owned by Irving Azoff and one of the constituent partners of IMA.
Budgeted Operating Expenses: The overhead and operating, expenses of
the Partnership which relate to the day-to-day operation and maintenance of the
Subject Amphitheaters such as salaries for employees and staff for the Subject
Amphitheaters, utility costs for the Subject Amphitheaters, insurance costs
relating to the maintenance of casualty and liability insurance for the Subject
Amphitheaters, costs relating to maintenance, repair and upkeep of the Subject
Amphitheaters and the personal property and equipment used in connection with
the operation
A - 1
<PAGE>
of the Subject Amphitheaters and costs for the purchase of office supplies and
equipment. Notwithstanding anything to the contrary implied by the immediately
preceding sentence, Show Expenses shall not be "Budgeted Operating Expenses"
for purposes of this Agreement.
Capital Account: The tax capital account maintained by the Partnership
for each Partner in accordance with, and as required by, the provisions of
Section 7.03 of this Agreement.
Cash Flow: For any Amphitheater Fiscal Year, the amount (if any) by
which (A) the sum of (i) the cash receipts received by the Partnership which
are properly attributable to the use, operation and exploitation of the Subject
Amphitheaters during such Amphitheater Fiscal Year and (ii) the net profit (or
net loss) of the Partnership attributable to the co-promotion of Events during
such Amphitheater Fiscal Year which were offered to it by the Promoter pursuant
to Section 5(a)(ii) of the Promotion Agreement exceeds (B) the cash
expenditures paid or payable by the Partnership which are properly attributable
to the operation, use, maintenance and exploitation of the Subject
Amphitheaters during such Amphitheater Fiscal Year (excluding Rental Loans made
to the Partners pursuant to the provisions of Section 9.01 hereof and
expenditures attributable to capital asset additions or improvements).
Cash Flow Target Amount: With respect to the Amphitheater Fiscal Year
ending, on December 31, 1999, a monetary amount equal to $2,000,000. For each
subsequent Amphitheater Fiscal Year, the Cash Flow Target Amount shall be equal
to the Cash Flow Target Amount for the immediately preceding Amphitheater
Fiscal Year increased in the same percentage amount by which the CPI Index
increased during the twelve (12) calendar months since the beginning of the
immediately preceding Amphitheater Fiscal Year.
Closing Date: The date upon which the capital contributions required
to be made pursuant to the terms of the Amphitheater Contribution Agreements
are made. In accordance with the terms of the Amphitheater Contribution
Agreements, the Closing Date shall be March 3, 1997.
Code: The Internal Revenue Code of 1986, as amended.
CPI Index: Consumer Price Index for All Urban Consumers (all U.S.
cities), 1982 - 84 equals 100 Base, published monthly by the U.S. Department of
Labor's Bureau of Labor Statistics, or any successor publication.
Default Notice: Shall have the meaning assigned to it pursuant to
Section 15.01 hereof.
Defaulting Partner: Shall have the meaning assigned to it pursuant to
Section 15.01 hereof.
Deficit Loan: A loan extended by a Partner to the Partnership pursuant
to the provisions of Article VI hereof.
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<PAGE>
Effective Date of Dissolution: Shall have the meaning assigned to it
pursuant to Section 17.01 hereof.
Event: Any live public performance or concert featuring professional
musicians, performers or artists, including "free" performances or concerts for
which no patron or spectator is required to pay an admission price.
Executive Committee: The committee of individuals selected, from time
to time, by the Partners pursuant to the provisions of Section 12.02(c) of this
Agreement, to whom the responsibility of managing and controlling the
operations of the Partnership is delegated.
Geddes Inc.: Audrey & Jane, Inc., a California corporation
wholly-owned by Robert E. Geddes and one of the constituent partners of IMA.
Glen Helen Amphitheater: Glen Helen Blockbuster Pavilion, an outdoor
entertainment facility located in San Bernardino, California.
Gross Asset Value: Subject to the adjustments described in the next
succeeding sentence, the fair market value of each item of Partnership property
at the time of contribution to the capital of the partnership. The Gross Asset
Value of each item of Partnership property shall be adjusted by depreciation,
amortization or other cost recovery deductions determined pursuant to Section
7.03(c)(ii) of this Agreement.
IMA: Irvine Meadows Amphitheater, a California general partnership.
IMA Put Option: The currently existing provisions contained in Section
3.03 of the Partnership Agreement of IMA whereby Geddes Inc. is given the right
to require Azoff Inc. or Koll Inc. to purchase the partnership interest of
Geddes Inc. in IMA upon the occurrence of certain events specified therein, a
true, correct and complete copy of such provisions being attached to this
Agreement as Exhibit "13".
Initial Contribution Amount: Shall have the meaning assigned to it
pursuant to Section 5.01(b) hereof.
Initial Promoter: Azoff Inc. and Geddes Inc., jointly and severally.
Irvine Meadows Amphitheater: Irvine Meadows Amphitheater, an outdoor
entertainment facility located in Orange County, California.
Koll Inc.: IMA Investment Corp., a California corporation wholly-owned
by Donald M. Koll and one of the constituent partners of IMA.
A - 3
<PAGE>
Major Operational Deadlock: The circumstance of the Executive
Committee or the Partners being unable to reach agreement with respect to an
operational decision (i) which must be made in order to permit the Subject
Amphitheaters to be used and operated consistent with their intended purpose
and (ii) for which another procedure of resolution is not provided for
elsewhere in this Agreement. An example of a "Major Operational Deadlock" would
be failure of the Partners to reach agreement pursuant to Section 12.07(d)
hereof on the selection of a "booking agent" to be engaged by the Partnership
following a termination of the Promotion Agreement.
Net Sponsorship Revenue: With respect to any Amphitheater Fiscal Year,
the excess of (A) all of the sponsorship revenues properly attributable to the
operation of the subject Amphitheaters during such Amphitheater Fiscal Year
over (B) all of the expenses, costs and other charges (i) incurred in
connection with the solicitation, acquisition or implementation of any
sponsorship arrangement at the Subject Amphitheaters (including the costs of
any benefits conferred upon or granted to sponsors and the costs of the
Partnership for the employees referenced in Section 12.09(a)(ii) and (iii)
hereof) and (ii) properly attributable to the operation of the Subject
Amphitheaters during such Amphitheater Fiscal Year.
Non-Defaulting Partnership: Shall have the meaning assigned to it
pursuant to Section 15.01 hereof.
Operating Assets: With respect to either of the Subject Amphitheaters,
as of any time, all concession contracts, sponsorship agreements, service
contracts, maintenance agreements, utility agreements, accounts receivable,
trademarks, trade names, customer lists, price lists, vehicles, sound
equipment, copy machines, phone equipment, computers, facsimile machines,
office supplies, furniture, fixtures, equipment and other intangible assets or
personal property then owned by, or leased or licensed to, the Partnership and
used in connection with, or having been acquired on account of, the use,
operation, maintenance or management of such Subject Amphitheater.
Operating Budget: The budget of Budgeted Operating Expenses of the
Partnership to be prepared for each Amphitheater Fiscal Year in accordance with
and pursuant to the provisions of Section 12.03 hereof.
Operational Shortfall: The occurrence or happening, at any time, of
the circumstance of the Partnership having an insufficient amount of cash to
pay or cover any of its debts, liabilities or obligations as they become due.
Partners: Pavilion and IMA. The term "Partners" shall not include any
assignee of a Partner's Partnership Interest, unless the other Partner agrees
to admit such assignee to the Partnership.
Partnership: The Partnership created by this Agreement.
A - 4
<PAGE>
Partnership Act: The Uniform Partnership Act as set forth in Title 2,
Chapter 1 of the California Corporations Code.
Partnership Interest: All of the interest of any Partner in the
Partnership, including his (i) right to a distributive share of the profits and
losses of the Partnership, (ii) right to a distributive share of the assets of
the Partnership, and (iii) right to participate in the management of the
affairs of the Partnership.
Partnership Purposes: The purposes for which the Partnership is formed
as set forth in Article III of this Agreement.
Partnership's Accounting Staff Shall have the meaning assigned thereto
pursuant to the provisions of Section 11.02(b) hereof.
Pavilion: Pavilion Partners, a Delaware general partnership.
Percentage Interest: The respective Partnership Interest of each
Partner in the Partnership expressed as a percentage of the Partnership
Interests owned by all Partners. The Percentage Interest of Pavilion is fifty
percent (50%) and the Percentage Interest of IMA is fifty (50%).
Permitted Rate: The lesser of (a) two percent (2%) per annum over the
Prime Rate or (b) the maximum non-usurious interest rate permitted by
applicable law from time to time in effect.
Person: Any individual, corporation, partnership, joint venture,
association, Joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other form of
entity.
Post-1996 Receipts: Revenues which are properly attributable to the
operation, use or exploitation of either of the Subject Amphitheaters after the
Closing Date, whether received before or after the Closing Date.
Post-Dissolution Receipts: Revenues which are properly attributable to
the operation, use or exploitation of either of the Subject Amphitheaters after
the Effective Date of Dissolution, whether received before or after the
Effective Date of Dissolution.
Prime Rate: The prime rate of interest per annum announced, from time
to time, by major U.S. money center banks as published daily in the "Money
Rates" column of The Wall Street Journal; provided, however, that if The Wall
Street Journal should ever cease, for any reason, 'to publish such rate on a
daily basis, then the Prime Rate shall be the rate of interest designated, and
in effect from time to time, by Citibank, N.A., in New York, New York as its
prime rate or base rate charged on commercial loans.
A - 5
<PAGE>
Promoter: As of any time, the person or entity then responsible for
performing the booking and promotion services under the Promotion Agreement. As
of the date hereof, the Promoter is Avalon.
Promoter Related Representative: Any Representative on the Executive
Committee who is either (i) selected and designated as a Representative by an
officer, director, constituent partner or shareholder of the Promoter or by an
Affiliate of an officer, director, constituent partner or shareholder of the
Promoter or (ii) an officer, director, constituent partner or shareholder of
the Promoter.
Promotion Agreement: That certain Promotion Agreement being executed
of even date herewith by and between the Partnership and the Initial Promoter
whereby the Partnership has engaged and retained the services of the Initial
Promoter to provide booking and promotion services in respect of all Events to
be presented at the Subject Amphitheaters. Upon execution of the Promotion
Agreement, the Initial Promoter is subcontracting and delegating its
responsibilities thereunder to Avalon.
Representatives: The individuals who serve on the Executive Committee.
Show Expenses: Costs attributable to the production, promotion or
presentation of Events at the Subject Amphitheaters including, without
limitation, (i) fees payable to the performers appearing at such Event, (ii)
advertising costs directly associated with the promotion of such Event, (iii)
marginal costs of staffing which are directly attributable to such Event for
ushers, ticket takers, security personnel, parking attendants and similar
temporary employees and (iv) marginal costs for utilities and insurance which
are directly attributable to such Event.
Subject Amphitheaters: Glen Helen Amphitheater and Irvine Meadows
Amphitheater.
T.B.A.: T.B.A. Media, Inc., a corporation and an Affiliate of one of
the partners of IMA.
T.B.A. Marketing Agreement: That certain Marketing Agreement to be
hereafter executed and entered into by and between the Partnership and T.B.A.
whereby the Partnership shall engage and retain the services of T.B.A. to
provide marketing and advertising services with respect to all Events to be
presented at the Subject Amphitheaters upon terms and provisions to be
hereafter approved and adopted by the Executive Committee.
Term: The term of the Partnership as specified in Article IV hereof.
Treasury Regulations: The Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).
A - 6
<PAGE>
Underlying Owner: With respect to Irvine Meadows Amphitheater, IMA and
with respect to Glen Helen Amphitheater, Pavilion Partners.
Use Impairment: With respect to either of the Subject Amphitheaters,
the occurrence of any event, circumstance or condition which results in the
Partnership suffering a material impairment (or termination) of its right or
ability to book, produce, present and promote Events at such Subject
Amphitheater consistent with past practices and with a maximum capacity of at
least 90% of current maximum capacities. The following are examples (which are
intended to be illustrative and not exclusive) of events or circumstances which
would constitute a "Use Impairment" with respect to one of the Subject
Amphitheaters for purposes of this Agreement:
(a) Loss by the Underlying Owner of such Subject Amphitheater
of its possessory right to such Subject Amphitheater as a result of a
failure of title, a default under the applicable Lease Agreement or
any other reason.
(b) A determination that such Subject Amphitheater is an
unsafe locale for the presentation of public events because of the
presence of toxic or hazardous waste on the site at which such Subject
Amphitheater is located.
(c) A fire, earthquake, flood or other casualty which results
in such Subject Amphitheater no longer being able to be used for its
intended purposes at 90% or more of its current maximum capacity.
(d) Condemnation of all or any portion of such Subject
Amphitheater through the exercise of any governmental authority's
power of eminent domain which results in such Subject Amphitheater no
longer being able to be used for its intended purposes at 90% or more
of its current maximum capacity.
(e) The discovery of any defects in the buildings, structures
or other improvements constituting a part of such Subject Amphitheater
which would materially and adversely interfere with the use of such
Subject Amphitheater as presently operated.
(f) The occurrence of any event or circumstance resulting in
a loss or restriction of access to public roads necessary to satisfy
the current and reasonably anticipated normal transportation
requirements of such Subject Amphitheater's business as presently
operated.
(g) The occurrence of any event or circumstance resulting in
such Subject Amphitheater no longer having parking availability
sufficient to satisfy the parking requirements for an Event at which
the Subject Amphitheater is sold-out at its current maximum capacity.
A - 7
<PAGE>
(h) Loss of the use of necessary utilities (including water,
electricity, natural gas, sewer and telephone) in such quantity and
quality as are necessary to satisfy the current business activities of
such Subject Amphitheater as currently operated.
Use Termination Event: Shall have the meaning assigned thereto
pursuant to the provisions of Section 21.01(d) hereof.
A - 8
<PAGE>
EXHIBIT "B"
- -------------------------------------------------------------------------------
WESTERN AMPHITHEATRE PARTNERS
OPERATING BUDGET 1997
- -------------------------------------------------------------------------------
IMA BBP WAP
- -------------------------------------------------------------------------------
OVERHEAD EXPENSES
SALARIES - ADMINISTRATIVE $399,400 $275,039 $674,439
SALARIES - TEMPORARY HELP 1,800 0 1,800
SALARIES - BOX OFFICE/STAGE 0 0 0
PAYROLL TAXES 53,919 30,231 84,150
EMPLOYEE BENEFITS 13,200 23,261 36,461
WORKERS COMP 5,000 0 5,000
RENT - OFFICE 52,200 0 52,200
EQUIPMENT RENTAL 6,000 0 6,000
ALLOCATED G&A - BOOKING DEPARTMENT 0 0 0
ADVERTISING 24,000 7,374 31,374
ADVERTISING - SPONSORSHIP 6,000 13,000 19,000
BANK CHARGES 200 250 450
BUSINESS ENTERTAINMENT 10,000 6,000 16,000
CONTRIBUTIONS 1,200 4,400 5,600
CONSULTING FEES 15,000 0 15,000
CUSTODIAL SERVICES 6,000 74,999 80,999
DUES & SUBSCRIPTIONS 2,400 2,502 4,902
EQUIPMENT 2,400 4,847 7,247
INSURANCE EXPENSE 26,016 37,199 63,215
LEGAL & PROFESSIONAL 40,000 31,170 71,170
MESSENGER SERVICE 180 0 180
OFFICE EXPENSES 18,000 15,198 33,198
PRINTING 2,000 0 2,000
POSTAGE 6,600 8,748 15,348
FEDERAL EXPRESS 3,000 0 3,000
PROMOTION 10,000 3,000 13,000
REPAIRS & MAINTENANCE - STAGE 20,000 10,000 30,000
REPAIRS & MAINTENANCE - HOUSE 72,000 10,000 82,000
REPAIRS & MAINTENANCE - GENERAL 113,500 49,002 162,502
SECURITY 12,000 2,000 14,000
SERVICE BUREAU 10,800 0 10,800
SMALL TOOLS & EQUIPMENT 2,800 9,999 12,799
TELEPHONE 50,000 24,000 74,000
TRAVEL - OTHER 24,000 17,594 41,594
UTILITIES 124,000 74,881 198,881
TAXES & LICENSES 2,400 6,000 8,400
MISCELLANEOUS 6,000 500 6,500
TOTAL OVERHEAD EXPENSES $1,142,015 $741,194 $1,883,209
B - 1
<PAGE>
Exhibit "C"
List of Existing Sponsorship Commission Obligations at Irvine Meadows
15% commission due to Eric/Chandler Marketing on each of the following:
Sponsor Sponsorship Revenue
- ------- -------------------
Mission Viejo Imports $40,000
Coors Brewing Company $200,000 (+$25,000 bonus)
Farmer John $2,300
Domino's Pizza $11,000
Round Hill Wineries $2,500
Specialty Coffee Company $9,200
Del Taco $12,500
Ruby's Diner $12,500
Evian $7,077
Baskin Robbins $12,000
Better Beverage $3,500
C - 1
<PAGE>
EXHIBIT "D"
Paragraph 3.03 Appraised Buy-Out of the Partnership Interest of A&J, is hereby
amended and restated in its entirety to read as follows:
3.03 If, and only if SMI and A&J are terminated as the booking agents
for WAP pursuant to the terms of the Promotion Agreement with WAP, as it now
exists or as it may be modified in the future, then for a period of thirty (30)
days following such termination, A&J shall have the right, but not the
obligation, by delivering written notice ("Election Notice") to IMA Corp. and
SMI, to cause the purchase of the entire Partnership Interest of A&J in
accordance with the provisions of this Section 3.03. In the event A&J timely
and validly makes such an election, then except as hereinafter otherwise
provided SMI shall be required to purchase the entire Partnership Interest of
A&J in accordance with the provisions of this Section 3.03; provided, however,
for a period of thirty (30) days following the effective date of the
"Accountant's Notice" of the "Purchase Price" (as such terms are hereinafter
defined), SMI shall have the right, but not the obligation, to elect either (A)
by delivering written notice (the "Pro Rata Notice") to IMA Corp., to cause IMA
Corp. and SMI to each purchase the portion of the Partnership Interest of A&J
that corresponds, in the case of SMI, to the fraction obtained by dividing (i)
the Percentage Interest (as of the effective date of the Accountant's Notice)
of SMI by (ii) the aggregate Percentage Interests (as of the effective date of
the Accountant's Notice) of SMI and the Koll Partners, and, in the case of IMA
Corp., to the fraction found by dividing (i) the aggregate Percentage Interests
(as of the effective date of the Accountant's Notice) of the Koll Partners by
(ii) the aggregate Percentage Interests (as of the effective date of the
Accountant's Notice) of SMI and the Koll Partners; or (B) by written notice
(the "No-Interest Notice") to IMA Corp., A&J and Pavilion Partners, to decline
to purchase any portion of the Partnership Interest of A&J. If SMI fails to
timely make either such election, then SMI shall be required to purchase the
entire Partnership Interest of A&J in accordance with the provisions of this
Section 3.03. If SMI timely gives the No-Interest Notice, then IMA Corp. may,
at any time within ten (10) days after its receipt of SMI Is No-Interest
Notice, provide written notice (also a "No-Interest Notice") to Pavilion
Partners, SMI and A&J that IMA Corp. does not wish to purchase the Partnership
Interest of A&J. If IMA Corp. fails to timely give the No-Interest Notice, then
IMA Corp. shall be required to purchase the entire Partnership Interest of A&J
in accordance with the provisions of this Section 3.03. Any such purchase and
sale of the Partnership Interest of A&J by SMI alone or by SMI and IMA Corp.,
or by IMA Corp. alone (the "Purchasing Partner(s)"), as the case may be, shall
be made in accordance with the following terms and conditions:
(a) The Election Notice shall include the name of an appraiser with at
least five (5) years experience appraising businesses similar in nature to the
Project. Within forty (40) days after the effective date of the Election
Notice, the Purchasing Partner(s) shall either agree to such appraiser or
select a second appraiser (with similar appraisal experience) and notify A&J of
such second appraiser. If two (2) appraisers are selected, then they shall
appoint a third appraiser (with similar appraisal experience) within five (5)
days of the selection of the second appraiser. In the
D - 1
<PAGE>
event A&J, on the one hand, or the Purchasing Partner(s), on the other hand,
fail to appoint an appraiser within the time period specified, and after the
expiration of five (5) days following the effective date of written demand that
an appraiser be appointed, then the appraiser duly appointed by the party
making such demand and appointing such appraiser shall proceed to make the
appraisal as herein set forth and the determination of such appraiser shall be
conclusive. Upon the failure of the two (2) appointed appraisers to timely
appoint a third appraiser within the time period specified therefor, either
A&J, on the one hand, or the Purchasing Partner(s), on the other hand, may
petition a court of competent jurisdiction to appoint a third appraiser, in the
same manner as provided for the appointment of an arbitrator pursuant to Code
of Civil Procedure Section 1281.6.
(b) The appraiser or three (3) appraisers, as the case may be, shall
promptly fix a time for the completion of the appraisal, which shall not be
later than thirty (30) days from the date of appointment of the last appraiser.
Each appraiser shall determine the fair market value of the combined business
and assets of the Partnership which shall be the fairest price estimated in
terms of money which the Partnership could obtain if such business and assets
were sold in the open market as a going concern, allowing a reasonable time to
find a purchaser who purchases with knowledge of the uses which such business
and assets in their then condition are adapted and for which such business and
assets are capable of being used as of the effective date of the Election
Notice.
(c) Upon the submission of the appraisal setting forth the opinions as
to the fair market value of the combined business and assets of the Partnership
(determined by each appraiser in accordance with Section 3.03(b)), the two (2)
such appraisals which are nearest in amount shall be retained, and the third
appraisal shall be discarded. The average of the two (2) retained appraisals
shall constitute the "Appraised Value", provided, however, that if one of the
appraisals is the mean of the other two (2), then that appraisal shall
constitute the "Appraised Value".
(d) Within fifteen (15) days after the determination of the Appraised
Value, the certified public accountants regularly employed by the Partnership
shall determine the purchase price ("Purchase Price") for the Partnership
Interest of A&J. The Purchase Price shall be equal to the greater of (i) the
sum of the balances standing in the Unrecovered Contribution Account and
Unrecovered Additional Contribution Account of A&J, determined as of the
effective date of the Election Notice, or (ii) one hundred percent (100%) of
the aggregate amount of cash that would be distributed to A&J pursuant to
Section 8.02(c) if (A) the combined business and assets of the Partnership were
sold for the Appraised value thereof as of the effective date of the Election
Notice; (B) the liabilities of the Partnership were liquidated pursuant to
Section 8.02(a); (C) a reserve were established for any contingent or
unforeseen liabilities of the Partnership pursuant to Section 8.02(b); and (D)
the Partnership make its required distributions to the Partners pursuant to
Section 8.02(c). Upon the determination by the accountants of the Purchase
Price, such accountants shall give A&J, SMI and IMA Corp. written notice
("Accountant's Notice") of the Purchase Price. The determination by such
accountants of the Purchase Price, and any and all
D - 2
<PAGE>
components thereof (including, without limitation, the amount of any reserve)
shall be deemed conclusive.
(e) The closing of a purchase and sale pursuant to this Section 3.03
shall be held at the principal place of business of the Partnership on such
date as is designated by the Purchasing Partner(s), but in no event later than
the one hundred twentieth (120th) day following the effective date of the
Accountant's Notice. A&J shall transfer to the Purchasing Partner(s) the entire
Partnership Interest of A&J free and clear of all liens, security interests,
and competing claims (other than security interests granted in favor of the
Purchasing Partner(s)) and shall deliver to the Purchasing Partner(s) such
instruments of transfer, and such evidence of due authorization, execution, and
delivery, and of the absence of any such liens, security interests, or
competing claims, as the Purchasing Partner(s) shall reasonably request. The
Purchasing Partner(s) shall pay the Purchase Price to A&J at the closing by
delivering to A&J cash, a certified or bank cashier's check or a confirmed wire
transfer of funds payable to the order of A&J.
(f) The portion of the Purchase Price for the Partnership Interest of
A&J to be paid by any Purchasing Partner shall be offset by the unpaid balance
of any and all Partner Loan(s) (together with all accrued interest thereon)
made by such Purchasing Partner to A&J. Such Partner Loan(s) (together with all
accrued interest thereon) shall be deemed paid to the extent of such offset,
with such deemed payment to be applied first to the accrued interest thereon
and thereafter to the payment of the outstanding principal amount thereof. If
the Purchase Price for the Partnership Interest of A&J is insufficient to fully
offset the outstanding, unpaid balances (including all principal amounts
thereof and all accrued interest thereon) made by any and all of the Purchasing
Partners to A&J, then such loans shall be offset in proportion to their
respective outstanding balances (including all principal amounts thereof and
all accrued, unpaid interest thereon). In addition, the outstanding, unpaid
balances (including all principal amounts thereof and all accrued interest
thereon) made by any one or more non-purchasing Partners to A&J shall be due
and payable at the closing of the transfer of the Partnership Interest of A&J
pursuant to this Section 3.03 and shall be repaid, in proportion to such
respective outstanding balances, out of any and all of the proceeds of the
Purchase Price (after reduction of such price otherwise payable to A&J pursuant
to this Section 3.03 pursuant to the offset described above in this Section
3.03(f)), prior to any payment of such proceeds to A&J pursuant to this Section
3.03. To the extent any portion of any Partner Loan made by a Partner to A&J is
not satisfied pursuant to the foregoing provisions of this Section 3.03(f),
then A&J shall pay the remaining outstanding balance (including all principal
amounts thereof and all accrued, unpaid interest thereon) at the closing. Also,
notwithstanding any provision of this Agreement to the contrary, the
outstanding unpaid balance of any and all Partner Loan(s) (including all
principal amounts thereof and all accrued, unpaid interest thereon) made by A&J
to any Partner shall be due and payable in full to A&J at the closing of the
purchase of the Partnership Interest of A&J pursuant to Section 3.03(e).
(g) All costs (including, without limitation, the costs of
the appraisers and the accountants referenced in Sections 3.03(a)
and/or 3.03(d) of the purchase and sale of the
D - 3
<PAGE>
Partnership Interest of A&J pursuant to this Section 3.03 shall be
paid one half (1/2) by A&J and one-half (1/2) by the Purchasing
Partner(s) (with such costs being divided between such Purchasing
Partners based upon the relative portion of the Partnership Interest
of A&J purchased by each such Purchasing Partner).
(h) on or before the closing of a purchase and sale
transaction held pursuant to this Section 3.03, the Purchasing
Partner(s) shall use such Partner's(s) reasonable, diligent, and good
faith efforts to obtain written releases of A&J and/or any Affiliates
of A&J from all guarantees of liabilities of the Partnership
previously executed by A&J and/or such Affiliates. To the extent such
releases cannot be obtained by the Purchasing Partner(s), the
Purchasing Partner(s) shall severally in proportion to their
respective Percentage Interests as of the effective date of the
Election Notice) indemnify, defend, and hold free and harmless A&J
from and against any and all claims, liabilities, causes of action,
liens, charges, and all other matters arising out of or in connection
with the business and affairs of the Partnership, whether arising
prior to or subsequent to the effective date of such closing, except
for unknown liabilities arising prior to the effective date of such
closing and not taken into account in calculating the Purchase Price
for the Partnership Interest of A&J.
Provided, however, that if IMA Corp. and SMI both timely give their respective
No-Interest Notice, then, pursuant to the terms of the WAP Agreement, Pavilion
Partners shall be obligated either to purchase the entire Partnership Interest
of A&J or to terminate the WAP Agreement. In any event or circumstance where
IMA Corp. and SMI, elect after Determination of the Purchase Price not to
effect the purchase, thereby giving rise to an obligation to Pavilion Partners
to effect such purchase, and in the circumstance where Pavilion Partners, for
any reason fails or refuses to effect such purchase, then the Partnership shall
immediately proceed to dissolve the WAP Partnership, thereby causing,
concurrent with such dissolution, the reinstatement of the Agreement from the
date of dissolution forward, without regard to, the terms or the effects of
this First Amendment which shall, from the date of dissolution forward be null,
void, and without further effect. Moreover, in the event of any such failure or
refusal by Pavilion Partners, A&J acknowledges and agrees that the obligations
of IMA Corp. and/or SMI to effect any purchase of A&J's interest, pursuant to
this paragraph 3.03, shall be null, void, and without effect, and further that
A&J agrees to indemnify and hold IMA Corp., SMI, and their respective
shareholders, officers and agents free and harmless from and against any such
obligation to effect any such purchase.
D - 4
<PAGE>
EXHIBIT 12.1
SFX ENTERTAINMENT, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
PREDECESSOR
------------------------------------------
PRO FORMA
1993 1994 1995 1996 1997 1997
--------- ----------- --------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net income (loss) before
provision for income
taxes ...................... $ 66 $ 1,417 $ 160 $ (409) $4,304 $ (49,837)
Equity income (loss) from
investments, net of
distributions .............. -- 73 2 16 (479) 5,489
Interest expense ............ 148 144 144 60 1,590 70,115
Portion of rents
representative of an
interest factor ............ 258 268 278 291 918 3,641
------ ------- ------ ------ ------ ---------
Total earnings .............. $ 472 $ 1,902 $ 584 $ (42) $6,333 $ 29,408
====== ======= ====== ====== ====== =========
Fixed Charges:
Interest expense ............ $ 148 $ 144 $ 144 $ 60 $1,590 $ 70,115
Portion of rents
representative of an
interest factor ............ 258 268 278 291 918 3,641
------ ------- ------ ------ ------ ---------
Total fixed charges ......... $ 406 $ 412 $ 422 $ 351 $2,508 $ 73,756
====== ======= ====== ====== ====== =========
Ratio of earnings to
combined fixed charges
and preferred stock
dividends (deficiency in
the coverage of
combined fixed charges
by earnings before fixed
charges)(a) ................ 1.2x 4.6x 1.4x $ (393) 2.5x $ (44,348)
====== ======= ====== ====== ====== =========
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
----------------------------------------
PRO FORMA
1997 1998 1998
------------ ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
Earnings:
Net income (loss) before
provision for income
taxes ...................... $ 6,604 $ (26,870) $ (31,942)
Equity income (loss) from
investments, net of
distributions .............. 1,030 458 5,968
Interest expense ............ 956 31,709 52,587
Portion of rents
representative of an
interest factor ............ 2,731 2,317 2,731
-------- --------- ---------
Total earnings .............. $ 11,321 $ 7,614 $ 29,344
======== ========= =========
Fixed Charges:
Interest expense ............ $ 956 $ 31,709 $ 52,587
Portion of rents
representative of an
interest factor ............ 2,731 2,317 2,731
-------- --------- ---------
Total fixed charges ......... $ 3,687 $ 34,026 $ 55,318
======== ========= =========
Ratio of earnings to
combined fixed charges
and preferred stock
dividends (deficiency in
the coverage of
combined fixed charges
by earnings before fixed
charges)(a) ................ 3.1x $ (26,412) $ (25,974)
======== ========= =========
</TABLE>
- ---------
(a) For the purposes of the ratio of earnings to combined fixed charges,
earnings were calculated by adding pretax income, interest expense,
amortization of debt issuance costs, and the portion of rents
representative of an interest factor. Combined fixed charges consist
of interest expense, and the portion of rents representative of an
interest factor. For the periods in which earnings were insufficient
to cover combined fixed charges, the dollar amount of coverage
deficiency, instead of the ratio is disclosed.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated (i) March 5, 1998, except for Notes 1 and 11 as to
which the date is April 27, 1998, with respect to the consolidated financial
statements of SFX Entertainment, Inc., (ii) October 2, 1997 with respect to the
consolidated financial statements of Delsener/Slater Enterprises, Ltd. and
Affiliated Companies, (iii) December 13, 1996 with respect to the consolidated
financial statements of PACE Entertainment Corporation and Subsidiaries, (iv)
May 22, 1998 with respect to the combined financial statements of the
Contemporary Group, (v) November 20, 1997 with respect to the combined
financial statements of The Album Network, Inc. and Affiliated Companies, (vi)
March 20, 1998 with respect to the consolidated financial statements of BG
Presents, Inc. and Subsidiaries, (vii) March 13, 1998 with respect to the
combined financial statements of Concert/Southern Promotions and Affiliated
Companies, (viii) April 10, 1998 with respect to the combined financial
statements of Falk Associates Management Enterprises, Inc., (ix) May 1, 1998
with respect to the combined financial statements of Blackstone Entertainment
LLC, (x) March 5, 1998 with respect to the consolidated financial statements of
The Marquee Group, Inc. and Subsidiaries, (xi) May 21, 1998 with respect to
the combined financial statements of Alphabet City Sports Records, Inc. and
Alphabet City Industries, Inc., (xii) June 3, 1998 with respect to the
consolidated financial statements of Cambridge Holding Corporation, Inc. and
(xiii) July 6, 1998 with respect to the combined financial statements of
Tollin-Robbins Entertainment, all included in the Registration Statement (Form
S-4) and related Prospectus of SFX Entertainment, Inc. for the registration of
$200,000,000 in aggregate principal of 9 1/8% Senior Subordinated Notes due
2008.
/s/ Ernst & Young LLP
-------------------------
ERNST & YOUNG LLP
New York, New York
February 8, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
on the combined financial statements of Connecticut Performing Arts, Inc. and
Connecticut Performing Arts Partners dated March 21, 1997 (and to all
references to our Firm) included in or made a part of this registration
statement on Form S-4.
/s/ ARTHUR ANDERSEN LLP
------------------------------
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 8, 1999
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports on the consolidated financial statements of PACE Entertainment
Corporation and subsidiaries dated December 15, 1997 (except with respect to
the matters discussed in Note 12, as to which the date is December 22, 1997)
and Pavilion Partners dated December 15, 1997 (except with respect to the
matter discussed in Note 11, as to which the date is December 22, 1997), and to
all references to our Firm included in or made a part of this registration
statement of SFX Entertainment, Inc.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
ARTHUR ANDERSEN LLP
Houston, Texas
February 8, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our report included in this registration statement on Form S-4 and to the
incorporation by reference in this registration statement on Form S-4 of SFX
Entertainment, Incorporated of our report dated February 23, 1998 included in
Magicworks Entertainment, Incorporated's Form 10-K for the year ended December
31, 1997 and to all references to our Firm included in this Form S-4.
ARTHUR ANDERSEN LLP
Miami, Florida,
February 10, 1999.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
on the combined financial statements of Deer Creek Partners, L.P. (formerly
Sand Creek Partners, L.P.) and Murat Centre, L.P. dated September 29, 1997 (and
to all references to our firm) included in or made a part of the Registration
Statement of SFX Entertainment, Inc. on Form S-4, to be filed on or about
February 12, 1999.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
February 10, 1999
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 27, 1998 on the financial statements of Riverport Performing
Arts Centre, Joint Venture, as of and for the years ended December 31, 1997 and
1996, included in or made part of this Registration Statement on Form S-4.
/s/ Arthur Andersen LLP
- -----------------------
ARTHUR ANDERSEN LLP
St. Louis, Missouri
February 12, 1999
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of SFX Entertainment, Inc. of our report
dated December 12, 1996, relating to the financial statements of Pavilion
Partners, which appears in such Prospectus. We also consent to the reference to
us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Houston, Texas
February 8, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of SFX
Entertainment, Inc. of our report dated June 25, 1997, on our audits of the
consolidated financial statements of ProServ, Inc. and Subsidiaries. We also
consent to the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
McLean, Virginia
February 10, 1999
<PAGE>
[Grant Thornton Letterhead]
PARK ASSOCIATES LIMITED
We consent to the reference to our firm under the caption "experts" and to the
use of our report dated May 28, 1998 and September 22, 1998 included in the
Registration Statement and related Prospectus of SFX Entertainment, Inc. on
Form S-4.
/s/ Grant Thornton
- ------------------------------
GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
Nottingham
February 10, 1999
<PAGE>
[RICHARD E. WOODHALL & CO. LOGO]
SFX Entertainment Inc.
Dear Sirs,
CONSENT OF INDEPENDENT AUDITORS
Re: TONY STEPHENS ASSOCIATES LIMITED
Audit Year to 30th April 1998
We consent to the reference to our firm under the caption 'Experts' and to
the use of our report dated 14th July 1998 included in the Prospectus that is
made as part of the Prospectus to the Registration Statement on Form S-4 of
SFX Entertainment, Inc.
dated: 11th February 1999
/s/ Richard E. Woodhall & Co.
--------------------------------------
Richard E. Woodhall & Co.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the reference to our firm under the caption "EXPERTS" in
the Prospectus forming a part of this Registration Statement on Form S-4
related to the exchange offer of Senior Subordinated Notes of SFX
Entertainment, Inc., a Delaware corporation, and to the incorporation of our
report, dated June 13, 1997 on the financial statements of QBQ Entertainment,
Inc., a New York corporation, as of December 31, 1996 and for the years ended
December 31, 1995 and 1996.
/s/ David Berdon & Co. LLP
--------------------------------
DAVID BERDON & CO. LLP
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
February 9, 1999
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: Eagle Eye Entertainment Inc.
Dated: February 12, 1999 /s/ Ronald D. Andrew
----------------------------------------
Ronald D. Andrew
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: SFX Entertainment, Inc.
Dated: February 12, 1999 /s/ D. Geoffrey Armstrong
----------------------------------------
D. Geoffrey Armstrong
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: STEP Entertainment Services, Inc.
Dated: February 12, 1999 /s/ William O.S. Ballard
----------------------------------------
William O.S. Ballard
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: American Artists Limited, Inc.
American Artists, Inc.
Boston Playhouse Realty, Inc.
Boylston Street Theatre Corp.
Broadway Series Associates, Inc
Broadway Series Management Group, Inc.
Concerts, Inc.
DiCesare-Engler, Inc.
DiCesare-Engler Promotions, Inc.
Eagle Eye Entertainment USA Inc.
Entertainment Performing Arts, Inc.
Festival Productions, Inc.
Melody Tent and Amphitheater, Inc.
TAP Productions, Inc.
Ticket Service, Inc.
Tremont Street Theatre Corporation
II, Inc.
Warrenton Street Theatre Corp.
Old PCI, Inc.
PACE AEP Acquisition, Inc.
PACE Amphitheater Management, Inc
PACE Amphitheatres, Inc.
<PAGE>
PACE Bayou Place, Inc.
PACE Communications, Inc.
PACE Concerts GP, Inc.
PACE Concerts, Ltd.
PACE Entertainment Corporation
PACE Entertainment GP Corp.
PACE Entertainment Group, Ltd.
PACE Milton Keynes, Inc.
PACE Motor Sports, Inc.
PACE Music Group, Inc.
PACE Productions, Inc.
PACE Theatrical Group, Inc.
PACE Touring, Inc.
PACE U.K. Holding Corporation
PEC Inc.
PTG-Florida, Inc.
Touring Productions, Inc.
Tuneful Company, Inc.
SM/PACE, Inc.
Director PACE (UK)
Dated: February 12, 1999 /s/ Allen J. Becker
----------------------------------------
Allen J. Becker
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: SFX Entertainment, Inc.
Director of: American Artists Limited, Inc.
American Artists, Inc.
Boston Playhouse Realty, Inc.
Boylston Street Theatre Corp.
Broadway Series Associates, Inc.
Broadway Series Management Group, Inc.
DiCesare-Engler, Inc.
DiCesare-Engler Promotions, Inc.
Eagle Eye Entertainment USA Inc.
Entertainment Performing Arts, Inc.
Festival Productions, Inc.
Magicworks Entertainment Incorporated
Melody Tent and Amphitheater, Inc.
TAP Productions, Inc.
Ticket Service Inc.
Tremont Street Theatre Corporation
II, Inc.
Warrenton Street Theatre Corp.
Old PCI, Inc.
PACE AEP Acquisition, Inc.
PACE Amphitheater Management, Inc.
PACE Amphitheatres, Inc.
PACE Bayou Place, Inc.
PACE Communications, Inc.
PACE Concerts GP, Inc.
<PAGE>
PACE Concerts, Ltd.
PACE Entertainment Corporation
PACE Entertainment GP Corp.
PACE Entertainment Group, Ltd.
PACE Milton Keynes, Inc.
PACE Motor Sports, Inc.
PACE Music Group, Inc.
PACE Productions, Inc.
PACE Theatrical Group, Inc.
PACE Touring, Inc.
PACE U.K. Holding Corporation
PEC Inc.
PTG-Florida, Inc.
SFX Entertainment, Inc.
SM/PACE, Inc.
Touring Productions, Inc.
Tuneful Company, Inc.
President, Chief Executive Officer,
Director and principal executive
officer of: Concerts, Inc.
President and principal executive,
financial and accounting officer of: PACE (UK)
Dated: February 12, 1999 /s/ Brian Becker
----------------------------------------
Brian Becker
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
President, Director and principal
executive officer of: American Broadway, Inc.
Director of: PACE Variety Entertainment, Inc.
Dated: February 12, 1999 /s/ Gary Becker
----------------------------------------
Gary Becker
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Vice President, Chief Financial Officer, Treasurer, Vice President of Finance,
principal financial officer or principal accounting officer, or any combination
thereof of:
SFX Entertainment, Inc. Magicworks Exhibitions, Inc.
Magicworks Fashion Management, Inc.
AKG, Inc. Magicworks Merchandising, Inc.
American Artists, Inc. Magicworks Sports Management, Inc.
American Artists Limited, Inc. Magicworks Theatricals, Inc.
Ant Theatrical Productions, Inc. Magicworks Transportation, Inc.
Ardee Festivals N.J., Inc. Magicworks West, Inc.
Atlanta Concerts, Inc. Marco Entertainment, Inc.
Audrey & Jane, Inc. Melody Tent and Amphitheater, Inc.
Avalon Acquisition Corp. Murat Center Concerts, Inc.
Beach Concerts, Inc. New Avalon, Inc.
BG Presents, Inc. NOC, Inc
BGP Denver, Inc. Oakdale Theater Concerts, Inc.
Bill Graham Enterprises, Inc. Old PCI, Inc.
Bill Graham Management, Inc. PACE AEP Acquisition, Inc.
Bill Graham Presents, Inc. PACE Amphitheatres, Inc.
Boston Playhouse Realty, Inc. PACE Amphitheater Management, Inc.
Boylston Street Theatre Corp. PACE Bayou Place, Inc.
Broadway Concerts, Inc. PACE Communications, Inc.
Broadway Series Associates, Inc. PACE Concerts GP, Inc.
Broadway Series Management PACE Concerts, Ltd.
Group, Inc.
PACE Entertainment Corporation
Camarillo Amphitheater Managing
Partners, Inc. PACE Entertainment GP Corp.
Concert Productions (UK) Limited
<PAGE>
Concerts, Inc. PACE Entertainment Group, Ltd.
Connecticut Amphitheater Development PACE Motor Sports, Inc.
Corporation
PACE Music Group, Inc.
Connecticut Concerts Incorporated
PACE Productions, Inc.
Connecticut Performing Arts, Inc.
PACE Theatrical Group, Inc.
Contemporary Group Acquisition Corp.
PACE Touring, Inc.
Contemporary Group, Inc.
PACE U.K. Holding Corporation
Contemporary Marketing, Inc.
PACE Variety Entertainment, Inc.
Contemporary Productions Incorporated
PEC, Inc.
Contemporary Sports Incorporated
Performing Arts Management of North
Cooley and Conlon Management Co.
Miami, Inc.
Deer Creek Amphitheater Concerts, Inc.
Polaris Amphitheatre Concerts, Inc.
DiCesare-Engler, Inc.
PTG-Florida, Inc.
DiCesare-Engler Promotions, Inc.
QN Corp.
DLC Corp.
SFX Acquisition Corp.
DLC Funding Corp.
SFX Concerts of the Midwest, Inc.
Dumb Deal, Inc.
SFX Concerts, Inc.
Eagle Eye Entertainment Inc.
SFX Delaware, Inc.
Eagle Eye Entertainment USA Inc.
SFX Radio Network, Inc.
EMI Acquisition Sub, Inc.
SFX Sports Group, Inc.
Entertainment Performing Arts, Inc.
SFX Touring, Inc.
Event Merchandising, Inc.
Shelli Meadows, Inc.
Exit 116 Revisited, Inc.
Shoreline Amphitheatre, Ltd.
Falk Associates Management
Enterprises, Inc. SM/PACE, Inc.
Festival Productions, Inc. Southeast Ticketing Company
Fillmore Corporation Southern Promotions, Inc.
Fillmore Fingers, Inc. STEP Entertainment Services, Inc.
Financial Advisory Management Sunshine Designs, Inc.
Enterprises, Inc.
Suntex Acquisition, Inc.
Grand Slam Sports Marketing, Inc.
TAP Productions, Inc.
High Cotton, Inc.
TBA Media, Inc.
In House Tickets, Inc.
Tennis Events, Inc.
International Music Ltd.
The Album Network Inc.
International Music Tour I Ltd.
Ticket Service, Inc.
International Music Tour II Ltd
Touring Artists Group, Inc.
International Music (USA) Inc.
Touring Artists Group, Inc.
International Music Tour I (USA) Inc.
Touring Productions, Inc.
International Music Tour II (USA) Inc.
Tremont Street Theatre Corporation
International Music (Canada) Inc. II, Inc.
Irving Plaza Concerts, Inc. Tuneful Company, Inc.
Magicsports-Grand Slam Warrenton Street Theatre Corp.
Management, Inc.
West Coast Amphitheater Corp.
Magicworks Concerts, Inc.
Wolfgang Records
Magicworks Entertainment Incorporated
Magicworks Entertainment
International, Inc.
<PAGE>
PACE Milton Keynes, Inc.
and as a Director of: SFX Entertainment, Inc.
SFX Radio Network, Inc.
Financial Advisory Management
Enterprises, Inc.
The Album Network, Inc.
and as Attorney-in-fact of: Concert Productions International B.V.
Dated: February 12, 1999 /s/ Thomas P. Benson
----------------------------------------
Thomas P. Benson
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: Irving Plaza Concerts, Inc.
Dated: February 12, 1999 /s/ Bill Brusca
----------------------------------------
Bill Brusca
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Managing Director of: Magicworks Entertainment Asia Limited
Dated: February 12, 1999 /s/ Robert Brian Cayne, Jr.
----------------------------------------
Robert Brian Cayne, Jr.
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of:
AKG, Inc.
BG Presents, Inc.
BGP Denver, Inc.
Bill Graham Enterprises, Inc.
Bill Graham Presents, Inc.
Bill Graham Management, Inc.
Fillmore Corporation
Fillmore Fingers, Inc.
Shoreline Amphitheatre, Ltd.
Wolfgang Records
Dated: February 12, 1999 /s/ Nicholas P. Clainos
----------------------------------------
Nicholas P. Clainos
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: International Music (Canada) Inc.
Dated: February 12, 1999 /s/ Michael Cohl
----------------------------------------
Michael Cohl
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: Atlanta Concerts, Inc
Cooley and Conlon Management Co.
High Cotton, Inc.
Southern Promotions, Inc.
Dated: February 12, 1999 /s/ Peter Conlon
----------------------------------------
Peter Conlon
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: Ardee Festivals N.J., Inc.
Beach Concerts, Inc.
Broadway Concerts, Inc.
Connecticut Amphitheater Development
Corporation
Connecticut Concerts Incorporated
Connecticut Performing Arts, Inc.
Dumb Deal, Inc.
Exit 116 Revisited, Inc.
In House Tickets, Inc.
NOC, Inc.
Northesat Ticketing Company
QN Corp.
SFX Concerts, Inc.
Southeast Ticketing Company
Co-President, Co-Chief Executive Delsener/Slater Enterprise, Ltd.
Officer, Director and co-principal
executive officer:
Dated: February 12, 1999 /s/ Ron Delsener
----------------------------------------
Ron Delsener
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: SFX Entertainment, Inc.
Dated: February 12, 1999 /s/ Edward F. Dugan
----------------------------------------
Edward F. Dugan
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director: SFX Entertainment, Inc.
Director, Chairman of the Board,
and principal executive officer of: Falk Associates Management
Enterprises, Inc.
Financial Advisory Management
Enterprises, Inc.
Dated: February 12, 1999 /s/ David B. Falk
----------------------------------------
David B. Falk
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Chief Executive Officer, President, Managing Director, Director or principal
executive officer or any combination thereof of:
SFX Entertainment, Inc.
American Artists, Inc. Cooley and Conlon Management Co.
American Artists Limited, Inc. Deer Creek Amphitheater Concerts, Inc.
Ant Theatrical Productions, Inc. Delsener/Slater Enterprises, Ltd.
Ardee Festivals N.J., Inc. DiCesare-Engler, Inc.
Audrey & Jane, Inc. DiCesare-Engler Promotions, Inc.
Avalon Acquisition Corp. DLC Corp.
Beach Concerts, Inc. DLC Funding Corp.
Boston Playhouse Realty, Inc. Dumb Deal, Inc.
Boylston Street Theatre Corp. Eagle Eye Entertainment USA Inc.
Broadway Series Associates, Inc. EMI Acquisition Sub, Inc.
Broadway Concerts, Inc. Exit 116 Revisited, Inc.
Broadway Series Management Group, Inc. Entertainment Performing Arts, Inc
Camarillo Amphitheater Managing
Partners, Inc. Event Merchandising, Inc.
Concert Productions International B.V. Falk Associates Management
Enterprises, Inc.
Concert Productions (UK) Limited Festival Productions, Inc.
Concerts, Inc. Financial Advisory Management
Enterprises, Inc.
Connecticut Amphitheater Development
Corporation Grand Slam Sports Marketing, Inc.
Connecticut Concerts Incorporated High Cotton, Inc.
Connecticut Performing Arts, Inc. In House Tickets, Inc.
Contemporary Group Acquisition Corp. International Music Ltd.
Contemporary Group, Inc. International Music Tour I Ltd.
Contemporary Marketing, Inc. International Music Tour II Ltd.
<PAGE>
Contemporary Productions Incorporated PACE Motor Sports, Inc.
Contemporary Sports Incorporated PACE Music Group, Inc.
International Music (USA) Inc. PACE Theatrical Group, Inc.
International Music Tour I (USA) Inc. Polaris Amphitheatre Concerts, Inc.
International Music Tour II (USA) Inc. PACE Touring, Inc.
International Music (Canada) Inc. PACE U.K. Holding Corporation
Magicsports-Grand Slam Management,
Inc. PEC, Inc.
Magicworks Concerts, Inc. Performing Arts Management of North
Miami, Inc.
Magicworks Entertainment Incorporated PTG-Florida, Inc.
Magicworks Entertainment
International, Inc. QN Corp.
Magicworks Exhibitions, Inc. SFX Acquisition Corp.
Magicworks Fashion Management, Inc. SFX Concerts of the Midwest, Inc.
Magicworks Merchandising, Inc. SFX Concerts, Inc.
Magicworks Sports Management, Inc. SFX Delaware, Inc.
Magicworks Theatricals, Inc. SFX Radio Network, Inc.
Magicworks Transportation, Inc. SFX Sports Group, Inc.
Magicworks West, Inc. SFX Touring, Inc.
Marco Entertainment, Inc. Shelli Meadows, Inc.
Melody Tent and Amphitheater, Inc. SM/PACE, Inc.
Murat Center Concerts, Inc. Southeast Ticketing Company
New Avalon, Inc. Southern Promotions, Inc.
NOC, Inc. STEP Entertainment Services, Inc.
Northest Ticketing Company Sunshine Designs, Inc.
Oakdale Theater Concerts, Inc. Suntex Acquisition, Inc.
Old PCI, Inc. TAP Productions, Inc.
PACE AEP Acquisition, Inc. TBA Media, Inc.
PACE Amphitheatres, Inc. Tennis Events, Inc.
PACE Amphitheater Management, Inc. The Album Network Inc.
PACE Bayou Place, Inc. Ticket Service, Inc.
PACE Communications, Inc. Tremont Street Theatre Corporation
II, Inc.
PACE Concerts GP, Inc. Touring Artists Group, Inc.
PACE Concerts, Ltd. Touring Artists Group, Inc.
PACE Entertainment Corporation Touring Productions, Inc.
PACE Entertainment GP Corp. Tuneful Company, Inc.
PACE Entertainment Group, Ltd. Warrenton Street Theatre Corp.
PACE Milton Keynes, Inc. West Coast Amphitheater Corp.
PACE Productions, Inc.
Dated: February 12, 1999 /s/ Michael G. Ferrel
----------------------------------------
Michael G. Ferrel
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director of: American Broadway, Inc.
PACE Variety Entertainment, Inc.
Dated: February 12, 1999 /s/ Kraig Fox
----------------------------------------
Kraig Fox
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Treasurer and principal accounting
officer of: American Artists Limited, Inc.
American Artists Inc.
Boston Playhouse Realty, Inc.
Boylston Street Theatre Corp.
DiCesare-Engler, Inc.
DiCesare-Engler Promotions, Inc.
Eagle Eye Entertainment USA Inc.
Festival Productions, Inc.
Melody Tent and Amphitheater, Inc.
TAP Productions, Inc.
Ticket Service, Inc.
Tremont Street Theatre Corporation
II, Inc.
Warrenton Street Theatre Corp.
Dated: February 12, 1999 /s/ Greg Gamble
----------------------------------------
Greg Gamble
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Executive Vice President and
Director of: Falk Associates Management
Enterprises, Inc.
Director of: Financial Advisory Management
Enterprises, Inc.
Dated: February 12, 1999 /s/ G. Michael Higgins
----------------------------------------
G. Michael Higgins
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
President and principal executive
officer of: PACE Variety Entertainment, Inc.
Dated: February 12, 1999 /s/ Jonathan Hochwald
----------------------------------------
Jonathan Hochwald
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director of: SFX Entertainment, Inc.
Dated: February 12, 1999 /s/ Paul Kramer
----------------------------------------
Paul Kramer
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director, Senior Vice President and SFX Entertainment, Inc.
Associate Counsel of:
Vice President, Assistant Secretary,
and Director of: Falk Associate Management
Enterprises, Inc.
Financial Advisory Management
Enterprises, Inc.
Dated: February 12, 1999 /s/ Richard A. Liese
----------------------------------------
Richard A. Liese
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director of: Magicworks Entertainment Asia Limited
Magicworks Entertainment Incorporated
Dated: February 12, 1999 /s/ Joe Marsh
----------------------------------------
Joe Marsh
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Vice President, Secretary, Director
and principal financial and
accounting officer of: Financial Advisory Management
Enterprises, Inc.
Dated: February 12, 1999 /s/ Nina Mitchell
----------------------------------------
Nina Mitchell
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Treasurer and principal financial
officer and principal accounting
officer of: American Broadway, Inc.
PACE Variety Entertainment, Inc.
Dated: February 12, 1999 /s/ Terence Moloney
----------------------------------------
Terence Moloney
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director of: SFX Entertainment, Inc.
Dated: February 12, 1999 /s/ James F. O'Grady, Jr.
----------------------------------------
James F. O'Grady, Jr.
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director of: AKG, Inc.
BG Presents, Inc
BGP Denver, Inc.
Bill Graham Enterprises, Inc.
Bill Graham Presents, Inc.
Bill Graham Management, Inc.
Fillmore Corporation
Fillmore Fingers, Inc.
Shoreline Amphitheatre, Ltd.
Wolfgang Records
Dated: February 12, 1999 /s/ Gregg W. Perloff
----------------------------------------
Gregg W. Perloff
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Executive Chairman, principal executive officer or Director or any comination
thereof of:
SFX Entertainment, Inc.
AKG, Inc. Connecticut Amphitheater Development
Corporation
American Artists, Inc. Connecticut Concerts Incorporated
American Artists Limited, Inc. Connecticut Performing Arts, Inc.
Ant Theatrical Productions, Inc. Contemporary Group Acquisition Corp.
Ardee Festivals N.J., Inc. Contemporary Group, Inc.
Atlanta Concerts, Inc. Contemporary Marketing, Inc.
Audrey & Jane, Inc. Contemporary Productions Incorporated
Avalon Acquisition Corp. Contemporary Sports Incorporated
Beach Concerts, Inc. Deer Creek Amphitheater Concerts, Inc.
BGP Denver, Inc. DiCesare-Engler, Inc.
BG Presents, Inc. DiCesare-Engler Promotions, Inc.
Bill Graham Enterprises, Inc. DLC Corp.
Bill Graham Management, Inc. DLC Funding Corp.
Bill Graham Presents, Inc. Dumb Deal, Inc.
Boston Playhouse Realty, Inc. Eagle Eye Entertainment USA Inc.
Boylston Street Theatre Corp. Event Merchandising, Inc.
Broadway Series Associates, Inc. EMI Acquisition Sub, Inc.
Broadway Concerts, Inc. Exit 116 Revisited, Inc.
Broadway Series Management
Group, Inc. Entertainment Performing Arts, Inc.
<PAGE>
Camarillo Amphitheater Managing
Partners, Inc. Falk Associates Management Enterprises,
Inc.
Concert Productions International
B.V. Festival Productions, Inc.
Concert Productions (UK) Limited PACE Entertainment Corporation
Concerts, Inc. PACE Entertainment GP Corp.
Fillmore Corporation PACE Entertainment Group, Ltd.
Fillmore Fingers, Inc. PACE Milton Keynes, Inc.
Financial Advisory Management PACE Motor Sports, Inc.
Enterprises, Inc.
Grand Slam Sports Marketing, Inc. PACE Music Group, Inc.
In House Tickets, Inc. PACE Productions, Inc.
International Music Ltd. PACE Theatrical Group, Inc.
International Music Tour I Ltd. Polaris Amphitheatre Concerts, Inc.
International Music Tour II Ltd. PACE Touring, Inc.
International Music (USA) Inc. PACE U.K. Holding Corporation
International Music Tour I (USA) Inc. PEC, Inc.
International Music Tour II (USA) Inc. Performing Arts Management of North
Miami, Inc.
Magicsports-Grand Slam Management,
Inc. PTG-Florida, Inc.
Magicworks Concerts, Inc. QN Corp.
Magicworks Entertainment Incorporated SFX Acquisition Corp.
Magicworks Entertainment
International, Inc. SFX Concerts of the Midwest, Inc.
Magicworks Exhibitions, Inc. SFX Concerts, Inc.
Magicworks Fashion Management, Inc. SFX Delaware, Inc.
Magicworks Merchandising, Inc. SFX Sports Group, Inc.
Magicworks Sports Management, Inc. SFX Touring, Inc.
Magicworks Theatricals, Inc. Shelli Meadows, Inc.
Magicworks Transportation, Inc. Shoreline Amphitheatre, Ltd.
Magicworks West, Inc. SM/PACE, Inc.
Marco Entertainment, Inc. Southeast Ticketing Company
Melody Tent and Amphitheater, Inc. Sunshine Designs, Inc.
Murat Center Concerts, Inc. Suntex Acquisition, Inc.
New Avalon, Inc. TAP Productions, Inc.
NOC, Inc. TBA Media, Inc.
Northeast Ticketing Company Tennis Events, Inc.
Oakdale Theater Concerts, Inc. Ticket Service, Inc.
Old PCI, Inc. Touring Artists Group, Inc.
PACE AEP Acquisition, Inc. Touring Artists Group, Inc.
PACE Amphitheatres, Inc. Touring Productions, Inc.
PACE Amphitheater Management, Inc. Tremont Street Theatre Corporation II,
Inc.
<PAGE>
PACE Bayou Place, Inc. Tuneful Company, Inc.
PACE Communications, Inc. Warrenton Street Theatre Corp.
PACE Concerts GP, Inc. West Coast Amphitheater Corp.
PACE Concerts, Ltd. Wolfgang Records.
Dated: February 12, 1999 /s/ Robert F. X. Sillerman
----------------------------------------
Robert F. X. Sillerman
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Robert F. X. Sillerman and Howard J. Tytel or either of them,
each acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in the
capacities stated below, in connection with the Registration Statement on Form
S-4 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the"Securities Act"), including, without limiting the generality of
the foregoing, to sign the Registration Statement, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Director of: Ardee Festivals N.J., Inc.
Beach Concerts, Inc.
Broadway Concerts, Inc.
Connecticut Amphitheater Development
Corporation
Connecticut Concerts Incorporated
Connecticut Performing Arts, Inc.
Dumb Deal, Inc.
Exit 116 Revisited, Inc.
In House Tickets, Inc.
NOC, Inc.
Northeast Ticketing Company
QN Corp.
SFX Concerts, Inc.
Southeast Ticketing Company
Co-President, Co-Chief Executive
Officer, Director and co-principal
executive officer: Delsener/Slater Enterprises, Ltd.
Dated: February 12, 1999 /s/ Mitch Slater
----------------------------------------
Mitch Slater
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: American Broadway, Inc.
PACE Variety Entertainment, Inc.
Dated: February 12, 1999 /s/ Peter Strauss
----------------------------------------
Peter Strauss
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: AKG, Inc.
BG Presents, Inc
BGP Denver, Inc.
Bill Graham Enterprises, Inc.
Bill Graham Presents, Inc.
Bill Graham Management, Inc.
Fillmore Corporation
Fillmore Fingers, Inc.
Shoreline Amphitheatre, Ltd.
Wolfgang Records
Dated: February 12, 1999 /s/ Stephen Welkom
----------------------------------------
Stephen Welkom
<PAGE>
POWER OF ATTORNEY FOR
REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Robert F. X. Sillerman and Howard J. Tytel or
either of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in the capacities stated below, in connection with the Registration
Statement on Form S-4 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the"Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement, to sign any
amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Director of: Eagle Eye Entertainment Inc.
Dated: February 12, 1999 /s/ Miles C. Wilkin
----------------------------------------
Miles C. Wilkin
<PAGE>
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SFX ENTERTAINMENT, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-3977880
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
650 MADISON AVENUE, 16TH FLOOR 10022
NEW YORK, NEW YORK (Zip Code)
(Address of principal executive offices)
-------------------------------------------------------------------
9 1/8% SENIOR SUBORDINATED NOTES DUE 2008
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New
York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 11th day
of February, 1999.
THE CHASE MANHATTAN BANK
By /s/ Francine Springer
------------------------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1998,
in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ........................................... $ 11,951
Interest-bearing balances ................................... 4,551
Securities: .....................................................
Held to maturity securities....................................... 1,740
Available for sale securities..................................... 48,537
Federal funds sold and securities purchased under
agreements to resell ........................................ 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,379
Less: Allowance for loan and lease losses 2,719
Less: Allocated transfer risk reserve ... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve ...................................... 124,660
Trading Assets ................................................... 51,549
Premises and fixed assets (including capitalized
leases)...................................................... 3,009
Other real estate owned .......................................... 272
Investments in unconsolidated subsidiaries and
associated companies......................................... 300
Customers' liability to this bank on acceptances
outstanding ................................................. 1,329
Intangible assets ................................................ 1,429
Other assets ..................................................... 13,563
--------
TOTAL ASSETS ..................................................... $292,620
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .......................................... $98,760
Noninterest-bearing ............................. $39,071
Interest-bearing ................................ 59,689
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ....................................... 75,403
Noninterest-bearing ............................. $ 3,877
Interest-bearing ................................ 71,526
Federal funds purchased and securities sold under agree-
ments to repurchase ............................................... 34,471
Demand notes issued to the U.S. Treasury .......................... 1,000
Trading liabilities ............................................... 41,589
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ................ 3,781
With a remaining maturity of more than one year
through three years........................................ 213
With a remaining maturity of more than three years............ 104
Bank's liability on acceptances executed and outstanding 1,329
Subordinated notes and debentures ................................. 5,408
Other liabilities ................................................. 12,041
TOTAL LIABILITIES ................................................. 274,099
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ...................................................... 1,211
Surplus (exclude all surplus related to preferred stock).......... 10,441
Undivided profits and capital reserves ............................ 6,287
Net unrealized holding gains (losses)
on available-for-sale securities .................................. 566
Cumulative foreign currency translation adjustments ............... 16
TOTAL EQUITY CAPITAL .............................................. 18,521
--------
TOTAL LIABILITIES AND EQUITY CAPITAL .............................. $292,620
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE ALL
OUTSTANDING 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
FOR
REGISTERED 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
Pursuant to the Prospectus, dated , 1999
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999 UNLESS EXTENDED IN THE SOLE
DISCRETION OF THE COMPANY. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- -------------------------------------------------------------------------------
Delivery to: ChaseMellon Shareholder Services, L.L.C., the Exchange Agent (the
"Exchange Agent")
By U.S. Mail:
ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301
South Hackensack, NJ 07606
Attn: Reorganization Department
By Hand:
ChaseMellon Shareholder Services, L.L.C.
120 Broadway, 13th Floor
New York, NY 10271
Attn: Reorganization Department
By Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Mail Drop-Reorg
Ridgefield Park, NJ 07660
Facsimile Number:
(201) 296-4293
Confirm Facsimile Only:
(201) 296-4860
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Georgeson & Company Inc. has been appointed as Information Agent (the
"Information Agent") for the Exchange Offer. Any questions or requests for
assistance or additional copies of the Prospectus (as defined below), this
Letter of Transmittal and/or the Notice of Guaranteed Delivery may be directed
to the Information Agent at its telephone number and address set forth below.
You may also contact your broker, dealer, commercial bank or trust company or
other nominee for assistance concerning the exchange offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New york 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
The undersigned acknowledges that he or she has received the Prospectus,
dated , 1999 (the "Prospectus"), of SFX Entertainment, Inc., a Delaware
corporation (the "Company"), and this Letter of Transmittal (this "Letter"),
which together constitute the Company's offer (the "Exchange Offer") to
exchange $1,000 principal amount of its registered 91/8% Senior Subordinated
Notes due 2008 (the "New Notes") for each $1,000 principal amount of 91/8%
Senior Subordinated Notes due 2008 (the "Old Notes") of which $200.0 million in
aggregate principal amount are outstanding.
With respect to the Old Notes accepted for exchange, the holders of such
Old Notes will receive New Notes which will bear interest at the same rate and
on the same terms as their Old Notes. Consequently, interest on the New Notes
will be payable semi-annually on June 1 and December 1, at the rate of 91/8%
per annum. The New Notes will bear interest from and including December 1,
1998, the last date of interest payment on the Old Notes. Holders whose Old
Notes are accepted for exchange will be deemed to have waived the right to
receive any interest accrued on the Old Notes.
This Letter is to be completed by a holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Old Notes, if available, is to be made by book-entry transfer (the "Book-Entry
Transfer Facility") to the
<PAGE>
account maintained by the Exchange Agent at The Depository Trust Company
("DTC") pursuant to the procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus. Holders of Old Notes whose
certificates are not immediately available, or who are unable to deliver their
certificates or confirmation of the book-entry tender of their Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to 5:00 P.M., New York City time, on , 1999, at which
time the Exchange Offer and withdrawal rights will expire (the "Expiration
Date"), must tender their Old Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures"
section of the Prospectus. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Old Notes promptly and
instruct such registered holder of Old Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter and
delivering its Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such beneficial owner's name or obtain a properly
completed bond power from the registered holder of Old Notes. The transfer of
record ownership may take considerable time.
The undersigned has completed the appropriate boxes below and signed this
letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and the aggregate
principal amount of the Old Notes should be listed on a separate signed
schedule affixed hereto.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES 1 2 3
- -------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
(PLEASE FILL IN, IF BLANK) NUMBERS(S)* AMOUNT AMOUNT TENDERED**
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL
--------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old
Notes represented by the Old Notes indicated in column 2. See Instruction 2.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
----------------------------------------------
Account Number
--------------------------------------
Transaction Code Number
-----------------------------
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s)
--------------------------------------------
Window Ticket Number (if any)
----------------------------------------------
2
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all rights, title
and interest in and to such Old Notes as is being tendered hereby, and hereby
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact
(with full knowledge that the Exchange Agent also acts as agent of the Company)
of such holder of Old Notes, to (i) transfer ownership of such Old Notes on the
account books maintained by DTC (together, in any such case, with all
accompanying evidences of transfer and authenticity), to the Company, (ii)
present and deliver such Old Notes for transfer on the books of the Company and
(iii) receive all benefits and otherwise exercise all rights and incidents of
beneficial ownership with respect to such Old Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim when the same is accepted by the Company.
The undersigned hereby further represents that any New Notes acquired in
exchange for Old Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the undersigned, that neither the holder of such Notes nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such New Notes and that neither the holder of such Notes
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned hereby represents and warrants that (i) the undersigned
has a net long position within the meaning of Rule 14e-4 under the Securities
Exchange Act, as amended ("Rule 14e-4"), equal to or greater than the principal
amount of Old Notes tendered hereby; and (ii) the tender of such Old Notes
complies with Rule 14e-4 (to the extent that Rule 14e-4 is applicable to such
exchange).
The undersigned hereby further represents to the Company that the New
Notes to be acquired by the undersigned in exchange for the Old Notes tendered
hereby and any beneficial owner(s) of such Notes in connection with the
Exchange Offer will be acquired by the undersigned and such beneficial owner(s)
in the ordinary course of business of the undersigned, the undersigned (if not
a broker-dealer referred to in the last sentence of this paragraph) are not
participating and do not intend to participate in the distribution of the New
Notes, the undersigned have no arrangement or understanding with any person to
participate in the distribution of the New Notes, the undersigned and each
beneficial owner acknowledge and agree that any person participating in the New
Offer for the purpose of distributing the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the New Notes acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in certain no-action letters, the undersigned and each beneficial owner
understand that a secondary resale transaction described in clause , above
should be covered by an effective registration statement containing the selling
security holder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and neither the undersigned nor any beneficial
owner is an "affiliate" of the Company, as defined under Rule 405 under the
Securities Act. If the undersigned is a broker-dealer that will receive New
Notes for its own account in exchange for Old Notes that were acquired as a
result of market making activities or other trading activities, it acknowledges
that it will deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such New Notes received in respect of such
Old Notes pursuant to the Exchange Offer however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights"
section of the Prospectus.
3
<PAGE>
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Notes for any Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED -DESCRIPTION OF NOTES-
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
- -------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be issued in the name of and sent to someone other than
the person or persons whose signature(s) appear(s) on this Letter above, or if
Notes delivered by book-entry transfer which is not accepted for exchange is to
be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)........................................................................
(Please type or print)
................................................................................
(Please type or print)
Address........................................................................
................................................................................
(Zip Code)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Old Notes delivered by
Book-Entry Transfer Facility set forth
below.
- -------------------------------------------------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be sent to someone other than the person or persons
whose signature(s) appear(s) on this Letter above, or to such person or persons
at an address other than shown in the box entitled "Description of Notes" on
this Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)........................................................................
(Please type or print)
................................................................................
(Please type or print)
Address........................................................................
................................................................................
(Zip Code)
- -------------------------------------------------------------------------------
IMPORTANT: THIS LETTER (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A
BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M.
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
4
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Dated:.............................................................. 1999
X................................................................... 1999
X................................................................... 1999
Signature(s) of Owner Date
Area Code and telephone Number.............................................
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes, or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If a signature is by a
trustee, executor, administrator, guardian, officer or other person acting
in a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):.................................................................
.........................................................................
(Please Type or Print)
Capacity:................................................................
Address:.................................................................
.........................................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:.................................................
(Authorized Signature)
.........................................................................
(Title)
.........................................................................
(Name and Firm)
Dated: ............................................................, 1999
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF OFFER TO EXCHANGE ALL
OUTSTANDING 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
FOR REGISTERED 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
OF SFX ENTERTAINMENT, INC.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by securityholders either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein or prior to the
Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below.
Securityholders whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through
an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
must receive from such Eligible Institution a properly completed and duly
executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder Old of Notes and the amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes in proper format for transfer, or a Book-Entry Confirmation as the case
may be, and any other documents required by this Letter will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required
by this Letter, are received by the Exchange Agent within three NYSE trading
days after the date or execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes, and all other
required documents is at the election and risk of the tendering holders, but
the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Old Notes are sent by mail, it is suggested that
registered mail, properly insured, with return receipt requested, be used and
that the mailing be made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO SECURITYHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of
Notes--Aggregate Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Old Notes will be sent to such
tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
3. SIGNATURES ON THIS LETTER; POWERS OF ATTORNEY AND ENDORSEMENTS; GUARANTEE
OF SIGNATURES.
If this letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
<PAGE>
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate powers of attorney are required. If, however, the New Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements or any certificates transmitted hereby
or separate powers of attorney are required to be submitted together with the
Certificates for Old Notes. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution as defined below.
If this Letter is signed by a person or persons other than the registered
holder or holders of any certificate(s) specified herein, such certificate(s)
must be endorsed or accompanied by appropriate powers of attorney, in either
case signed exactly as the name or names of the registered holder or holders
appear(s) on the certificate(s) and signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or powers of attorney are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers or
corporations or other acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company or their authority to so act must
be submitted.
Endorsements on certificates for Old Notes or signatures on powers of
attorney required by this Instruction 3 must be guaranteed by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust
company having an office of correspondent in the United States (an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Notes) who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the applicable box above
the name and address to which New Notes issued pursuant to the Exchange Offer
and/or substitute certificates evidencing Old Notes not exchanged are to be
issued or sent, if different from the name or address of the person signing
this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Securityholders tendering Old Notes by book-entry may request that
Old Notes not exchanged be credited to such account maintained at the
Book-Entry Transfer Facility as such securityholder may designate hereon. If no
such instructions are given, such Old Notes not exchanged will be returned to
the name or address of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Old Notes are accepted for exchange must provide the Company (as payor) with
such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form
W-9 below, which in the case of a tendering holder who is an individual, is his
or her social security number. If the Company is not provided with the correct
TIN or an adequate basis for an exemption, such tendering holder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, delivery
to such tendering holder of New Notes
<PAGE>
may be subject to backup withholding in an amount equal to 31% of all
reportable payments made after the exchange. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines")
for additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder
is subject to backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Old Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
New Agent. If the Old Notes are in more than one name or are not in the name of
the actual owner, such holder should consult the W-9 Guidelines for information
on which TIN to report. If such holder does not have a TIN, such holder should
(i) consult the W-9 Guidelines for instructions on applying for a TIN, (ii)
check the box in Part 2 of the Substitute Form W-9 and (iii) write "applied
for" in lieu of its TIN. Note: Checking this box and writing "applied for" on
the form means that such holder has already applied for a TIN or that such
holder intends to apply for one in the near future. If such holder does not
provide its TIN to Holdings within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to holders.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer or Old Notes to it or its order pursuant to the Exchange Offer. If
however, New Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. Of satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE NOTES SPECIFIED IN THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or
all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Old Notes
for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice or any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
<PAGE>
9. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN TIN:________________________________
IN THE BOX AT RIGHT AND CERTIFY Social Security Number or
SUBSTITUTE BY SIGNING AND DATING BELOW Employer Identification Number
FORM W-9 -----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2--TIN Applied for [ ]
INTERNAL REVENUE SERVICE -----------------------------------------------------------------------
11. CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (1) The number shown on this form is my correct Taxpayer Identification
("TIN") AND Number (or I am waiting for a number to be issued to me).
CERTIFICATION
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding
as a result of a failure to report all interest or dividends or (c)
the IRS has notified me that I am no longer subject to backup
withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE................................ DATE.........................
- -------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS that you
are subject to backup withholding because of underreporting of interest or dividends on your tax
return and you have not been notified by the IRS that you are no longer subject to backup withholding.
- -------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF THE SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me will
be withheld until I provide a number.
-------------------------------- -----------------------------
Signature Date
- -------------------------------------------------------------------------------
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR
SFX ENTERTAINMENT, INC.
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer (the "Exchange Offer") of SFX Entertainment, Inc. (the
"Company") made pursuant to the Prospectus, dated , 1999 (the
"Prospectus"), if certificates for outstanding 91/8% Senior Subordinated Notes
due 2008 (the "Notes") of the Company are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Company prior to 5:00 p.m.,
New York City time, on , 1999, at which time the Exchange Offer and
withdrawal rights will expire (the "Expiration Date"). Such form may be
delivered or transmitted by mail, hand or overnight courier to ChaseMellon
Shareholder Services, L.L.C (the "Exchange Agent") as set forth below. In
addition, in order to utilize the guaranteed delivery procedure to tender the
Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal must also be received by the Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date. Capitalized terms not defined herein
are defined in the Prospectus.
Delivery to: ChaseMellon Shareholder Services, L.L.C., the Exchange Agent
<TABLE>
<S> <C> <C>
By U.S. Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, NY 10271 Mail Drop-Reorg
Attn: Reorganization Department Attn: Reorganization Department Ridgefield Park, NJ 07660
Facsimile Number: Confirm Facsimile Only:
(201) 296-4293 (201) 296-4860
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the aggregate principal amount of Notes set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Aggregate Principal Amount of Notes tendered:
$
--------------------------------------------
Certificate Nos. (if available):
- ---------------------------------------------
Aggregate Principal Amount Represented by
Old Certificates(s):
$
--------------------------------------------
If Notes will be delivered by book-entry
transfer to The Depository Trust Company,
provide account number.
Account Number
---------------------------
<PAGE>
- -------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
X , 1999
---------------------------- ----------
X , 1999
---------------------------- ----------
Signature(s) of Owners(s) or Date
Authorized Signatory
Area Code and Telephone
Number:
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Must be signed by the holder(s) of Notes as their name(s) appear(s) on
certificates for Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
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Capacity:
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Address(es):
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GUARANTEE
The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees that the certificates representing the
aggregate principal amount of Notes tendered hereby in proper form for
transfer, or timely confirmation of the book-entry transfer of such Notes into
the Exchange Agent's account at The Depository Trust Company pursuant to the
procedures set forth in "The Exchange Offer-Guaranteed Delivery Procedures"
section of the Prospectus, together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any
required signature guarantee and any other documents required by the Letter of
Transmittal, will be received by the Exchange Agent at the address set forth
above, no later than three New York Stock Exchange trading days after the date
of execution hereof.
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Name of Firm Authorized Signature
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- ------------------------------------- Title
Address
Name:
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City State Zip Code (Please Type or Print)
Area Code and Tel. No. Dated:
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NOTE: DO NOT SEND CERTIFICATES FOR NOTES WITH THIS FORM. CERTIFICATES FOR NOTES
SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
SFX ENTERTAINMENT, INC.
OFFER TO EXCHANGE ALL
OUTSTANDING 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
FOR
REGISTERED 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1999 (the
"Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of SFX
Entertainment, Inc. (the "Company"), to exchange (the "Exchange Offer") $1,000
principal amount of its 91/8% Senior Subordinated Notes due 2008 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as
amended, pursuant to a registration statement of which the Prospectus is part
for each $1,000 principal amount of its outstanding 91/8% Senior Subordinated
Notes due 2008 (the "Notes") of which $200.0 million in aggregate principal
amount are outstanding as of the date hereof. The Exchange Offer is made upon
the terms and subject to the conditions described in the Prospectus and the
Letter of Transmittal. The Exchange Offer is being made in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement dated November 25, 1998, among the Company, the guarantors described
therein, Morgan Stanley & Co. Incorporated, Lehman Brothers Inc., BancBoston
Robertson Stephens Inc. and BNY Capital Markets, Inc. (the "Initial
Purchasers").
This material is being forwarded to you as the beneficial owner of the
Notes carried by us in your account but not registered in your name. A tender
of such Notes may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender
on your behalf the Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on . 1999. Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all of the outstanding Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain Conditions to
the Exchange Offer."
3. Any transfer taxes incident to the transfer of Notes from the holder to
the Company will be paid by the Company, except as otherwise provided in the
Instructions in the Letter of Transmittal.
4. The Exchange Offer and withdrawal rights expire at 5:00 p.m., New York
City time, on , 1999, unless extended by the Company in its sole
discretion.
If you wish to have us tender your Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by SFX
Entertainment, Inc. with respect to the Notes.
This will instruct you to tender the Notes held by you for the account of
the undersigned, upon and subject to the terms and conditions set forth in the
Prospectus and the related Letter of Transmittal.
Please tender the Notes held by you for my account as indicated below:
PRINCIPAL AMOUNT OF NOTES
-------------------------
----------------------------------
9-1/8% Senior Subordinated Notes due
2008.................................
[ ] Please do not tender any Notes
held by you for my account.
Dated: , 1999
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Signature(s)
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Please print name(s) here
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Address(es)
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Area Code and Telephone Number
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Tax Identification or
Social Security No(s).
None of the Notes held by us for your account will be tendered unless we
receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Notes held by us for your
account.
<PAGE>
SFX ENTERTAINMENT, INC.
OFFER TO EXCHANGE ALL
OUTSTANDING 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
FOR
REGISTERED 9-1/8% SENIOR SUBORDINATED NOTES DUE 2008
TO: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEE:
SFX Entertainment, Inc. (the "Company") is offering, upon and subject to
the terms and conditions set forth in the Prospectus, dated , 1999 (the
"Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") $1,000 principal amount of
its 91/8% Senior Subordinated Notes due 2008 (the "Exchange Notes"), which
exchange has been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement of which this
Prospectus is a part (the "Registration Statement") for each $1,000 principal
amount of its outstanding 91/8% Senior Subordinated Notes due 2008 (the
"Notes") of which $200.0 million in aggregate principal amount are outstanding
as of the date hereof. The Exchange Offer is being made in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement dated Nobember 25, 1998 among the Company, the guarantors described
therein, Morgan Stanley & Co. Incorporated, Lehman Brothers Inc., BancBoston
Robertson Stephens Inc. and BNY Capital Markets, Inc. (the "Initial
Purchasers").
We are requesting that you contact your clients for whom you hold Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Notes registered in your name or in the name of your
nominee, or who hold Notes registered in their own names, we are enclosing the
following documents:
1. Prospectus dated , 1999;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer, if certificates for Notes are not immediately available, or time will
not permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below), or if the procedure for book-entry transfer
cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Notes registered in your name or the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Exchange
Offer; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer and withdrawal rights
will expire at
5:00 p.m., New York City time, on , 1999, unless extended by the Company.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent, and certificates representing the Notes should be delivered to
the Exchange Agent, all in accordance with the instructions set forth in the
Letter of Transmittal and the Prospectus.
If holders of Notes wish to tender, but it is impracticable for them to
forward their certificates for Notes prior to the expiration of the Exchange
Offer or to comply with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery procedures
described in the Prospectus under "The Exchange Offer--Guaranteed Delivery
Procedures."
<PAGE>
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Notes held by them as nominee or in a fiduciary capacity.
The Company will pay or cause to be paid all stock transfer taxes applicable to
the exchange of Notes pursuant to the Exchange Offer, except as set forth in
the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to
Georgeson & Company Inc., the information agent for the Exchange Offer, at its
address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
SFX ENTERTAINMENT, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON
AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT OR THE INFORMATION AGENT, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR
STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
