SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 10, 1994
CAROLCO PICTURES INC.
(Exact name of registrant as specified in its
charter)
Delaware 1-9264 95-406437
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number Identification No.)
Incorporation)
8800 Sunset Boulevard, Los Angeles, California 90069
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
(310) 859-8800
N/A
(Former name or former address, if changed since
last report)
Exhibit Index at page 9
Page 1 of 11 pages
<PAGE>
Item 5. Other Events.
a. Proposed Merger with LIVE Entertainment Inc.
Carolco Pictures Inc., a Delaware corporation
("Carolco"), LIVE Entertainment Inc., a Delaware
corporation ("LIVE"), and Carolco Acquisition Corp.,
a wholly owned subsidiary of LIVE ("CAC"), entered
into an Agreement and Plan of Merger dated as of
August 10, 1994 (the "Merger Agreement") providing for
a business combination of Carolco and LIVE. The
Merger Agreement provides, among other things, that
CAC will be merged with and into Carolco (the
"Merger") with Carolco as the surviving corporation
continuing as a wholly owned subsidiary of LIVE. At
the effective date of the Merger, LIVE will be renamed
Carolco Entertainment Inc. ("Carolco Entertainment").
The Merger has been structured with the intent that it
qualify as a tax free reorganization whereby each
Carolco stockholder will receive one share of newly
issued Carolco Entertainment common stock for each 5.5
shares of Carolco common stock held. The exchange
ratio will be adjusted based on the market price of
Carolco common stock prior to the consummation of the
Merger subject to two limitations designed to limit
the effect of market fluctuations on both Carolco and
LIVE stockholders. The number of Carolco shares to be
exchanged for each share of Carolco Entertainment will
be adjusted upward, if necessary, so that the market
value of Carolco shares to be exchanged for one share
of Carolco Entertainment is at least $3.00, but in no
event will more than 6.5 shares of Carolco be
exchanged for each share of Carolco Entertainment.
Likewise, the number will be adjusted downward, if
necessary, so that the market value of Carolco shares
to be exchanged is no more than $4.00, but in no event
will fewer than 4.5 shares of Carolco be exchanged for
each share of Carolco Entertainment. If the Merger
had closed on the date of this report, the exchange
ratio would have been 6.5 to 1. In addition, each
outstanding share of Carolco's Series A Convertible
Preferred Stock will be converted into one share of a
new series of preferred stock to be authorized by
Carolco Entertainment. As a result, immediately upon
consummation of the Merger, the current LIVE
stockholders will own between approximately 21% and
28% of the surviving corporation and the remainder
will be owned by the current Carolco stockholders.
Therefore, the Merger, if consummated, will be treated
as a reverse acquisition of LIVE by Carolco for
accounting and financial reporting purposes and the
purchase method of accounting will be applied to a
portion of the historical values of LIVE's assets and
liabilities. Additionally, to the extent of common
ownership between LIVE and Carolco (54.6% of LIVE's
common stock is owned by significant stockholders of
Carolco), a portion of the transaction will be treated
as a combination of companies under common control,
similar to a pooling.
The Merger is subject to a number of conditions,
including the
Page 2 of 11 pages
redemption of LIVE's Series B Cumulative Convertible
Preferred Stock, certain amendments to various public
and private securities of LIVE and the availability of
certain ongoing financing commitments prior to the
combination. The Merger is also subject to the
approval of the combination by the non-affiliated
stockholders of both companies and other customary
conditions to closing. On June 30, 1994, The Seidler
Companies Incorporated ("Seidler") delivered its
written opinion to the Carolco Board of Directors
that, based on the conditions and assumptions
contained therein, the financial terms of the Merger
are fair to the unaffiliated stockholders of Carolco.
Chemical Securities Inc., an affiliate of Chemical
Bank ("Chemical Securities"), delivered its written
opinion dated as of July 1, 1994 to the LIVE Board of
Directors that, based on the conditions and
assumptions contained therein, the exchange ratio for
the Merger is fair to the unaffiliated stockholders of
LIVE. The opinions of Seidler and Chemical Securities
will be updated to a date just prior to the
consummation of the Merger. There can be no
assurances that the conditions will be met, the Merger
will be consummated, or, if consummated, will be
consummated on the terms set forth above.
In conjunction with the Merger Agreement, Carolco
entered into Investor Representation Agreements dated
as of August 10, 1994 (the "Investor Representation
Agreements") with each of Pioneer LDCA, Inc.
("Pioneer"), Cinepole Productions B.V. ("Cinepole"),
RCS Video International Services B.V. ("RCS"), MGM
Holdings Corporation ("MGM Holdings") and New Carolco
Investments B.V. ("New CIBV"), which in the aggregate
hold approximately 85.3% of the Carolco voting power
which would currently be entitled to vote on the
Merger. LIVE is also a party to the Investor
Representation Agreements of Pioneer, Cinepole and
RCS, which in the aggregate hold approximately 68.4%
of the LIVE voting power which would currently be
entitled to vote on the Merger. The Investor
Representation Agreements provide that, subject to
receipt of definitive proxy materials, such
stockholders will vote all shares of Carolco stock
and, with respect to Pioneer, Cinepole and RCS, all
shares of LIVE stock beneficially owned by them in
favor of the Merger Agreement and the transactions
contemplated thereby. Pioneer, Cinepole, RCS, MGM
Holdings (collectively, the "Strategic Investors") and
New CIBV also entered into a Stockholders Agreement
(the "Stockholders Agreement") which provides for
certain corporate governance procedures relating to
the post-merger company.
To permit Carolco to proceed with certainty with the
transactions contemplated by the Merger Agreement, on
August 11, 1994, Mr. Kassar and Carolco entered into
a new employment agreement dated as of August 10, 1994
(the "1994 Employment Agreement") which amends and
restates the Employment Agreement of Mr. Kassar dated
as of May 3, 1993. Pursuant to the Merger Agreement
and an Assumption Agreement dated as of August 10,
1994 among Carolco, LIVE and Mr. Kassar, as of the
effective date of the
Page 3 of 11 pages
Merger, LIVE will assume each of the obligations of
Carolco under the 1994 Employment Agreement. In
addition, Carolco entered into a related Stock Option
Agreement with Mr. Kassar dated as of August 10, 1994
(the "Stock Option Agreement").
The Merger Agreement, Investor Representation
Agreements, Stockholders Agreement, 1994 Employment
Agreement and Stock Option Agreement are Exhibits to
this Form 8-K.
a. Financial Condition and Operations of Carolco.
Carolco currently has two motion pictures in
pre-production: Cutthroat Island starring Geena Davis
and Matthew Modine and directed by Renny Harlin and
Showgirls directed by Paul Verhoeven. Both pictures
are currently scheduled to commence principal
photography in October 1994 and to be completed and
available for release in mid-1995. Carolco has
reached an agreement regarding the terms and has
accepted the commitment of a group of banks, including
Credit Lyonnais Bank Nederland N.V., to provide an
individual production loan to finance a substantial
portion of the cost of Cutthroat Island. Although
management of Carolco believes it is likely that
Carolco will be able to satisfy all of the conditions
to the funding of such production loan, there can be
no assurance that this will be the case. In the event
Carolco is unable to successfully consummate such
production loan, it will be required to procure
financing from alternative sources in order to
complete the production of Cutthroat Island (although
no assurance can be given that such financing can be
obtained or obtained on terms acceptable to Carolco).
Prior to the commencement of the negotiations
described below to sell Showgirls to an affiliate of
MGM Holdings (such affiliate, "MGM"), a similar
production loan was being negotiated for that motion
picture.
Although agreements in principle have been reached
between Carolco and various distributors with regard
to the pre-sale of a substantial portion of the
distribution rights for both Cutthroat Island and
Showgirls, due to production and casting delays, the
documentation of these pre-sales has not yet been
completed. In addition, due to such delays, Carolco
has not yet obtained a completion bond (also known as
an "over-budget" guaranty) for either film. Carolco
will be unable to access the Cutthroat Island
production loan described above (and would not have
been able to access the Showgirls production loan,
assuming it were to be successfully negotiated) until
such pre-sales and completion bonds have been
finalized and pledged as collateral to secure such
production loans. Carolco recently determined that it
is unlikely that it will be able to access either of
such loans prior to late in the fourth quarter of
1994. In addition to its ongoing overhead expenses,
Carolco is currently funding the pre-production
expenses of both motion pictures from its current
cash balances. At the
Page 4 of 11 pages
current rate of expenditure (including increased
expenditures when principal photography commences for
the two films), Carolco will face an extreme cash
shortage prior to the anticipated funding of the
production loans and will be unable to complete either
film.
Several steps are currently being taken to address
Carolco's liquidity problem. Carolco has entered
into negotiations regarding the sale of its entire
interest in Showgirls to MGM. In addition, Pioneer
has agreed, subject to certain conditions, to advance
certain overage payments anticipated to be due with
respect to Cliffhanger and Terminator 2: Judgment Day
over the next several months from exisiting licenses
in Japan. RCS has agreed to
negotiate certain amendments to the agreement
pursuant to which it is required to purchase Carolco's
7% Convertible Subordinated Notes due 2006 on December
30, 1994 in order to permit Carolco to borrow against
the funds to be received from RCS prior to such date.
Le Studio Canal+ S.A., an affiliate of Cinepole, has
agreed, subject to the sale of Showgirls to MGM and
the performance by Pioneer and RCS of their respective
agreements, to advance approximately $2,000,000 of
commisions which will be due to Carolco in the fourth
quarter of 1994 for serving as the foreign sales agent
for the motion picture Stargate. The agreements of
MGM, Pioneer, RCS and Le Studio Canal+ are subject to
the approvals of their respective boards of directors.
Carolco is continuing to use its best efforts to
complete the steps required to access the Cutthroat
Island production loan as soon as possible. It is
anticipated that a combination of borrowings under the
Cutthroat Island production loan, the funds to be
received from the proposed sale of Showgirls and the
interim financing arrangements described above will be
sufficient to fund the production of Cutthroat Island
and the other operations of Carolco through the
closing of the Cutthroat Island production loan.
There can be no assurance that Carolco will be
successful in its efforts to borrow under the
Cutthroat Island production loan in a timely manner,
complete the sale of Showgirls or consummate the
interim financing arrangements described above. In the
event Carolco is not successful in these efforts, it
is likely that Carolco will be forced to cease
production of Cutthroat Island and, if not sold to
MGM, Showgirls, and Carolco may be unable to meet its
other obligations and may be unable to continue to
operate as a going concern.
The solicitation of votes of stockholders of both
Carolco and LIVE with respect to the Merger will be
made through the distribution of definitive proxy
materials in accordance with the Securities Exchange
Act of 1934. Carolco intends to file preliminary
proxy materials with the Securities and Exchange
Commission in connection with the Merger and in
connection with the preparation of such filing has
been informed by its independent
Page 5 of 11 pages
auditors that because of Carolco's current financial
condition, the Report of Independent Auditors covering
Carolco's financial statements for the year ended
December 31, 1993 will be re-issued with an
explanatory paragraph which indicates that such
financial condition raises substantial doubt about the
ability of Carolco to continue as a going concern.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
The Exhibits listed below are filed as part of this
Report.
Exhibit No. Description of Exhibit
2.1 Agreement and Plan of Merger
dated as of August 10, 1994
among Carolco Pictures Inc.,
LIVE Entertainment Inc. and
Carolco Acquisition Corp.
(including certain exhibits
thereto).
10.1 Investor Representation
Agreement dated as of August
10, 1994 by and between Carolco
Pictures Inc., LIVE
Entertainment Inc. and Pioneer
LDCA, Inc. Incorporated by
reference to Exhibit 10.2 to
LIVE Entertainment Inc.'s
Current Report on Form 8-K
under the Securities and
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
10.2 Investor Representation
Agreement dated as of August
10, 1994 by and between Carolco
Pictures Inc., LIVE
Entertainment Inc. and Cinepole
Productions B.V.
Incorporated by reference to
Exhibit 10.3 to LIVE
Entertainment Inc.'s Current
Report on Form 8-K under the
Securities and
Page 6 of 11 pages
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
10.3 Investor Representation
Agreement dated as of August
10, 1994 by and between Carolco
Pictures Inc., LIVE
Entertainment Inc. and RCS
Video International Services
B.V. Incorporated by reference
to Exhibit 10.4 to LIVE
Entertainment Inc.'s Current
Report on Form 8-K under the
Securities and Exchange Act of
1934 filed with the Commission
on September 15, 1994.
10.4 Investor Representation
Agreement dated August 10, 1994
by and between Carolco Pictures
Inc. and MGM Holdings
Corporation.
10.5 Investor Representation
Agreement dated August 10, 1994
by and between Carolco Pictures
Inc. and New Carolco
Investments B.V. Incorporated
by reference to Exhibit 4 to
Mario F. Kassar and New Carolco
Investments B.V.'s Schedule 13D
(Amendment No. 14) under the
Securities Exchange Act of 1934
filed with the Commission on
August 16, 1994.
10.6 Stockholders Agreement dated as
of August 10, 1994 by and
between New Carolco Investments
B.V., Pioneer LDCA, Inc.,
Cinepole Productions B.V., RCS
Video International Services
B.V. and MGM Holdings
Corporation. Incorporated by
reference to Exhibit 10.5 to
LIVE Entertainment Inc.'s
Current Report on Form 8-K
under the Securities and
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
10.7 Employment Agreement between
Carolco Pictures Inc. and Mario
F. Kassar for the services of
Mario F. Kassar, dated as of
August 10, 1994. Incorporated
by reference to Exhibit 5 to
Mario F. Kassar and New Carolco
Investments B.V.'s Schedule 13D
Page 7 of 11 pages
(Amendment No. 14) under the
Securities Exchange Act of 1934
filed with the Commission on
August 16, 1994.
10.8 Stock Option Agreement of Mario
F. Kassar dated as of August
10, 1994. Incorporated by
reference to Exhibit 8 to Mario
F. Kassar and New Carolco
Investments B.V.'s Schedule 13D
(Amendment No. 14) under the
Securities Exchange Act of 1934
filed with the Commission on
August 16, 1994.
99.1 Press Release dated August 12,
1994. Incorporated by
reference to Exhibit 99.2 to
LIVE Entertainment Inc.'s
Current Report on Form 8-K
under the Securities and
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
Page 8 of 11 pages
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAROLCO PICTURES INC.
By: /s/ Robert W. Goldsmith
Robert W. Goldsmith,
Senior Vice President,
General Counsel and Secretary
Date: September 29, 1994
Page 9 of 11 pages
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
2.1 Agreement and Plan of Merger
dated as of August 10, 1994
among Carolco Pictures Inc.,
LIVE Entertainment Inc. and
Carolco Acquisition Corp.
(including certain exhibits
thereto).
10.1 Investor Representation
Agreement dated as of August
10, 1994 by and between Carolco
Pictures Inc., LIVE
Entertainment Inc. and Pioneer
LDCA, Inc. Incorporated by
reference to Exhibit 10.2 to
LIVE Entertainment Inc.'s
Current Report on Form 8-K
under the Securities and
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
10.2 Investor Representation
Agreement dated as of August
10, 1994 by and between Carolco
Pictures Inc., LIVE
Entertainment Inc. and Cinepole
Productions B.V.
Incorporated by reference to
Exhibit 10.3 to LIVE
Entertainment Inc.'s Current
Report on Form 8-K under the
Securities and Exchange Act of
1934 filed with the Commission
on September 15, 1994.
10.3 Investor Representation
Agreement dated as of August
10, 1994 by and between Carolco
Pictures Inc., LIVE
Entertainment Inc. and RCS
Video International Services
B.V. Incorporated by reference
to Exhibit 10.4 to LIVE
Entertainment Inc.'s Current
Report on Form 8-K under the
Securities and Exchange Act of
1934 filed with the Commission
on September 15, 1994.
10.4 Investor Representation
Agreement dated August 10, 1994
by and between Carolco Pictures
Inc. and MGM Holdings
Corporation.
Page 10 of 11 pages
<PAGE>
10.5 Investor Representation Agreement dated
August 10, 1994
by and between Carolco Pictures
Inc. and New Carolco
Investments B.V. Incorporated
by reference to Exhibit 4 to
Mario F. Kassar and New Carolco
Investments B.V.'s Schedule 13D
(Amendment No. 14) under the
Securities Exchange Act of 1934
filed with the Commission on
August 16, 1994.
10.6 Stockholders Agreement dated as
of August 10, 1994 by and
between New Carolco Investments
B.V., Pioneer LDCA, Inc.,
Cinepole Productions B.V., RCS
Video International Services
B.V. and MGM Holdings
Corporation. Incorporated by
reference to Exhibit 10.5 to
LIVE Entertainment Inc.'s
Current Report on Form 8-K
under the Securities and
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
10.7 Employment Agreement between
Carolco Pictures Inc. and Mario
F. Kassar for the services of
Mario F. Kassar, dated as of
August 10, 1994. Incorporated
by reference to Exhibit 5 to
Mario F. Kassar and New Carolco
Investments B.V.'s Schedule 13D
(Amendment No. 14) under the
Securities Exchange Act of 1934
filed with the Commission on
August 16, 1994.
10.8 Stock Option Agreement of Mario
F. Kassar dated as of August
10, 1994. Incorporated by
reference to Exhibit 8 to Mario
F. Kassar and New Carolco
Investments B.V.'s Schedule 13D
(Amendment No. 14) under the
Securities Exchange Act of 1934
filed with the Commission on
August 16, 1994.
99.1 Press Release dated August 12,
1994. Incorporated by
reference to Exhibit 99.2 to
LIVE Entertainment Inc.'s
Current Report on Form 8-K
under the Securities and
Exchange Act of 1934 filed with
the Commission on September 15,
1994.
Page 11 of 11 pages
[TYPE] 8-K
[DOCUMENT-COUNT] 1
[FILER]
[CIK] 0000801441
[CCC] XXXXXXXX
[PERIOD] 08/10/94
[ITEMS] 1
[DESCRIPTION] MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER
Dated as of August 10, 1994
by and among
LIVE Entertainment Inc.
Carolco Acquisition Corp.
and
Carolco Pictures Inc.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Merger. . . . . . . . . . . . . . 2
Section 1.2 Effective Date of the Merger;
Closing.. . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
THE SURVIVING CORPORATION. . . . . . . . . . . . . . 2
Section 2.1 Certificate of Incorporation. . . . . 2
Section 2.2 Bylaws. . . . . . . . . . . . . . . . 2
Section 2.3 Board of Directors and Officers.. . . 3
ARTICLE 3
CHANGES AT LIVE AT OR BEFORE EFFECTIVE DATE. . . . . 3
Section 3.1 Certificate of Incorporation. . . . . 3
Section 3.2 Bylaws. . . . . . . . . . . . . . . . 3
Section 3.3 Board of Directors and Officers.. . . 4
Section 3.4 LIVE Home Video Inc.. . . . . . . . . 4
ARTICLE 4
CONVERSION AND EXCHANGE OF SHARES AND CERTIFICATES . 4
Section 4.1 Conversion. . . . . . . . . . . . . . 4
Section 4.2 LIVE to Make Certificates Available.. 6
Section 4.3 Dividends; Transfer Taxes.. . . . . . 8
Section 4.4 No Further Ownership Rights in
Carolco Common Stock. . . . . . . . . . . . . . 9
Section 4.5 Closing of Carolco Transfer Books.. . 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIVE . . . . . . . 10
Section 5.1 Organization, Standing and Power. . . 10
Section 5.2 Subsidiaries. . . . . . . . . . . . . 10
Section 5.3 Capital Structure and Commitments.. . 11
Section 5.4 Authority; Non-Contravention. . . . . 12
Section 5.5 LIVE SEC Documents. . . . . . . . . . 14
Section 5.6 No Material Adverse Change. . . . . . 15
Section 5.7 Absence of Undisclosed Liabilities. . 15
Section 5.8 Absence of Certain Events.. . . . . . 15
Section 5.9 No Solicitation . . . . . . . . . . . 15
Section 5.10 Registration Statement and Proxy
Statement.. . . . . . . . . . . . . . . . . . . 16
Section 5.11 Reorganization. . . . . . . . . . . . 16
Section 5.12 Litigation. . . . . . . . . . . . . . 16
Section 5.13 Loan Agreements, Customers and
Suppliers.. . . . . . . . . . . . . . . . . . . 16
Section 5.14 Permits.. . . . . . . . . . . . . . . 17
Section 5.15 Absence of Changes in LIVE Benefit
Plans.. . . . . . . . . . . . . . . . . . . . . 17
Section 5.16 Intellectual Property.. . . . . . . . 18
Section 5.17 Environmental Matters.. . . . . . . . 18
Section 5.18 Taxes.. . . . . . . . . . . . . . . . 18
Section 5.19 Foreign Corrupt Practices Act.. . . . 19
Section 5.20 Brokers.. . . . . . . . . . . . . . . 19
Section 5.21 Officers, Directors and Key
Employees.. . . . . . . . . . . . . . . . . . . 19
Section 5.22 State Takeover Statutes.. . . . . . . 19
Section 5.23 Insurance.. . . . . . . . . . . . . . 20
Section 5.24 Title to Properties and Related
Matters.. . . . . . . . . . . . . . . . . . . . 20
Section 5.25 Accuracy of LIVE Disclosure.. . . . . 20
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CAROLCO. . . . . . 21
Section 6.1 Organization, Standing and Power. . . 21
Section 6.2 Subsidiaries. . . . . . . . . . . . . 21
Section 6.3 Capital Structure and Commitments.. . 21
Section 6.4 Authority; Non-Contravention. . . . . 23
Section 6.5 Carolco SEC Documents.. . . . . . . . 24
Section 6.6 No Material Adverse Change. . . . . . 25
Section 6.7 Absence of Undisclosed Liabilities. . 25
Section 6.8 Absence of Certain Events.. . . . . . 25
Section 6.9 No Solicitation . . . . . . . . . . . 25
Section 6.10 Registration Statement and Proxy
Statement.. . . . . . . . . . . . . . . . . . . 26
Section 6.11 Reorganization. . . . . . . . . . . . 26
Section 6.12 Litigation. . . . . . . . . . . . . . 26
Section 6.13 Loan Agreements, Customers and
Suppliers.. . . . . . . . . . . . . . . . . . . 26
Section 6.14 Permits.. . . . . . . . . . . . . . . 27
Section 6.15 Absence of Changes in Carolco Benefit
Plans.. . . . . . . . . . . . . . . . . . . . . 27
Section 6.16 Intellectual Property.. . . . . . . . 27
Section 6.17 Environmental Matters.. . . . . . . . 28
Section 6.18 Taxes.. . . . . . . . . . . . . . . . 28
Section 6.19 Foreign Corrupt Practices Act.. . . . 28
Section 6.20 Brokers.. . . . . . . . . . . . . . . 28
Section 6.21 Officers, Directors and Key
Employees.. . . . . . . . . . . . . . . . . . . 29
Section 6.22 State Takeover Statutes.. . . . . . . 29
Section 6.23 Insurance.. . . . . . . . . . . . . . 29
Section 6.24 Title to Properties and Related
Matters.. . . . . . . . . . . . . . . . . . . . 29
Section 6.25 Accuracy of Carolco Disclosure. . . . 30
ARTICLE 7
REPRESENTATIONS AND WARRANTIES REGARDING CAC . . . . 30
Section 7.1 Organization and Standing.. . . . . . 30
Section 7.2 Capital Structure.. . . . . . . . . . 30
Section 7.3 Authority.. . . . . . . . . . . . . . 31
ARTICLE 8
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . 31
Section 8.1 Conduct of Business by LIVE Pending
the Merger. . . . . . . . . . . . . . . . . . . 31
Section 8.2 Conduct of Business by Carolco
Pending the Merger. . . . . . . . . . . . . . . 35
Section 8.3 Competing Offers. . . . . . . . . . . 39
Section 8.4 Reorganization. . . . . . . . . . . . 39
Section 8.5 Conduct of Business of CAC Pending
the Merger. . . . . . . . . . . . . . . . . . . 40
Section 8.6 Update of LIVE LETTER and CAROLCO
LETTER. . . . . . . . . . . . . . . . . . . . . 40
Section 8.7 Bringdown of Fairness Opinion.. . . . 40
ARTICLE 9
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . 40
Section 9.1 Carolco and LIVE Stockholder
Approvals.. . . . . . . . . . . . . . . . . . . 40
Section 9.2 Registration Statement and Proxy
Statement . . . . . . . . . . . . . . . . . . . 41
Section 9.3 Amendment to Indentures . . . . . . . 42
Section 9.4 Listing Application.. . . . . . . . . 43
Section 9.5 Access to Information.. . . . . . . . 43
Section 9.6 Affiliates. . . . . . . . . . . . . . 43
Section 9.7 Fees and Expenses.. . . . . . . . . . 43
Section 9.8 Carolco Stock Options.. . . . . . . . 44
Section 9.9 Other Obligations of Carolco and LIVE 45
Section 9.10 Registration Rights.. . . . . . . . . 46
Section 9.11 Best Efforts. . . . . . . . . . . . . 46
Section 9.12 Public Announcements. . . . . . . . . 47
Section 9.13 State Takeover Laws.. . . . . . . . . 47
Section 9.14 Indemnification.. . . . . . . . . . . 47
Section 9.15 [Intentionally Deleted.]. . . . . . . 48
Section 9.16 [Intentionally Deleted.]. . . . . . . 48
Section 9.17 LIVE Rights.. . . . . . . . . . . . . 48
Section 9.18 Continuation of Business or Business
Assets. . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 10
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . 48
Section 10.1 Conditions to Each Party's Obligation
to Effect the Merger. . . . . . . . . . . . . . 48
Section 10.2 Conditions to Obligation of Carolco
to Effect the Merger. . . . . . . . . . . . . . 50
Section 10.3 Conditions to Obligations of LIVE and
CAC to Effect the Merger. . . . . . . . . . . . 52
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . 53
Section 11.1 Termination.. . . . . . . . . . . . . 53
Section 11.2 Effect of Termination.. . . . . . . . 55
Section 11.3 Amendment.. . . . . . . . . . . . . . 55
Section 11.4 Waiver. . . . . . . . . . . . . . . . 55
Section 11.5 Approval by LIVE Special Committee. . 56
ARTICLE 12
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 56
Section 12.1 Non-Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . 56
Section 12.2 Notices.. . . . . . . . . . . . . . . 56
Section 12.3 Interpretation. . . . . . . . . . . . 60
Section 12.4 Counterparts. . . . . . . . . . . . . 60
Section 12.5 Entire Agreement; No Third-Party
Beneficiaries.. . . . . . . . . . . . . . . . . 60
Section 12.6 Governing Law.. . . . . . . . . . . . 60
Section 12.7 Assignment. . . . . . . . . . . . . . 60
Glossary
Amended and Restated Carolco 5% Indenture. . . . . . 45
Amended and Restated Standby Purchase and Investment
Agreement. . . . . . . . . . . . . . . . . . . . . . 45
1986 Plan. . . . . . . . . . . . . . . . . . . . . . 44
1989 Plan. . . . . . . . . . . . . . . . . . . . . . 44
Advisory Committee . . . . . . . . . . . . . . . . . 13
Affiliates . . . . . . . . . . . . . . . . . . . . . 43
Agreement. . . . . . . . . . . . . . . . . . . . . . .1
Amended and Restated Bylaws of Carolco . . . . . . . .3
Amended and Restated Bylaws of LIVE. . . . . . . . . .3
Amended and Restated Certificate of Incorporation of
LIVE . . . . . . . . . . . . . . . . . . . . . . . . .3
Average Trading Price. . . . . . . . . . . . . . . . .5
blue sky . . . . . . . . . . . . . . . . . . . . . . 14
CAC. . . . . . . . . . . . . . . . . . . . . . . . . .1
CAC Common Stock . . . . . . . . . . . . . . . . . . .6
Carolco. . . . . . . . . . . . . . . . . . . . . . . .1
Carolco 5% Notes . . . . . . . . . . . . . . . . . . 22
Carolco 7% Notes . . . . . . . . . . . . . . . . . . 22
Carolco 11.5%/10% Notes. . . . . . . . . . . . . . . 45
Carolco 13% Notes. . . . . . . . . . . . . . . . . . 45
Carolco 13%/12% Notes. . . . . . . . . . . . . . . . 45
Carolco Balance Sheet. . . . . . . . . . . . . . . . 25
Carolco Benefit Plans. . . . . . . . . . . . . . . . 27
Carolco Common Certificates. . . . . . . . . . . . . .6
Carolco Common Stock . . . . . . . . . . . . . . . . .1
Carolco Entertainment Inc. . . . . . . . . . . . . . .3
Carolco Investors. . . . . . . . . . . . . . . . . . 23
CAROLCO LETTER . . . . . . . . . . . . . . . . . . . 21
Carolco Preferred Stock. . . . . . . . . . . . . . . .1
Carolco Proprietary Rights . . . . . . . . . . . . . 27
Carolco Registration Rights Agreements . . . . . . . 23
Carolco SEC Documents. . . . . . . . . . . . . . . . 24
Carolco Series A Preferred Stock . . . . . . . . . . .6
Carolco Stock Plans. . . . . . . . . . . . . . . . . 44
Carolco Stockholder Meeting. . . . . . . . . . . . . 40
Certificate. . . . . . . . . . . . . . . . . . . . . .8
Certificate of Merger. . . . . . . . . . . . . . . . .2
Chemical . . . . . . . . . . . . . . . . . . . . . . 13
Chemical Fairness Opinion. . . . . . . . . . . . . . 13
Cinepole . . . . . . . . . . . . . . . . . . . . . . 13
Closing. . . . . . . . . . . . . . . . . . . . . . . .2
Code . . . . . . . . . . . . . . . . . . . . . . . . .1
competing proposal . . . . . . . . . . . . . . . . . 44
Constituent Corporations . . . . . . . . . . . . . . .1
Contingent Payment Rights. . . . . . . . . . . . . . 12
control share acquisition. . . . . . . . . . . . . . 19
D&O Insurance. . . . . . . . . . . . . . . . . . . . 47
date hereof. . . . . . . . . . . . . . . . . . . . . 60
date of this Agreement,. . . . . . . . . . . . . . . 60
DGCL . . . . . . . . . . . . . . . . . . . . . . . . .2
Effective Date . . . . . . . . . . . . . . . . . . . .2
Environmental Laws . . . . . . . . . . . . . . . . . 18
ERISA. . . . . . . . . . . . . . . . . . . . . . . . 18
Exchange Act . . . . . . . . . . . . . . . . . . . . 14
Exchange Agent . . . . . . . . . . . . . . . . . . . .6
Exchange Ratio . . . . . . . . . . . . . . . . . . . .5
fair price . . . . . . . . . . . . . . . . . . . . . 19
Governmental Entity. . . . . . . . . . . . . . . . . 14
HSR Act. . . . . . . . . . . . . . . . . . . . . . . 14
include. . . . . . . . . . . . . . . . . . . . . . . 60
indebtedness . . . . . . . . . . . . . . . . . . . . 17
Investor Representation Agreement. . . . . . . . . . 13
Letter . . . . . . . . . . . . . . . . . . . . . . . 40
LHV. . . . . . . . . . . . . . . . . . . . . . . . . .4
LHV Bylaws . . . . . . . . . . . . . . . . . . . . . .4
LIVE . . . . . . . . . . . . . . . . . . . . . . . . .1
LIVE 12% Indenture . . . . . . . . . . . . . . . . . 42
LIVE 12% Notes . . . . . . . . . . . . . . . . . . . 32
LIVE Balance Sheet . . . . . . . . . . . . . . . . . 15
LIVE Benefit Plans . . . . . . . . . . . . . . . . . 18
LIVE Common Stock. . . . . . . . . . . . . . . . . . .4
LIVE Credit Facility . . . . . . . . . . . . . . . . 52
LIVE Increasing Rate Notes . . . . . . . . . . . . . 42
LIVE Increasing Rate Notes Indenture . . . . . . . . 42
LIVE Investors . . . . . . . . . . . . . . . . . . . 13
LIVE LETTER. . . . . . . . . . . . . . . . . . . . . 10
LIVE Preferred Stock . . . . . . . . . . . . . . . . .9
LIVE Proprietary Rights. . . . . . . . . . . . . . . 18
LIVE Registration Rights Agreements. . . . . . . . . 12
LIVE Right . . . . . . . . . . . . . . . . . . . . . 11
LIVE Rights Agreement. . . . . . . . . . . . . . . . 11
LIVE SEC Documents . . . . . . . . . . . . . . . . . 14
LIVE Series A Common Stock . . . . . . . . . . . . . 11
LIVE Series D Preferred Stock. . . . . . . . . . . . .6
LIVE Series B Preferred Stock. . . . . . . . . . . . 11
LIVE Series C Preferred Stock. . . . . . . . . . . . .6
LIVE Series R Preferred Stock. . . . . . . . . . . . 11
LIVE Special Committee . . . . . . . . . . . . . . . 13
LIVE Stockholder Meeting . . . . . . . . . . . . . . 41
Mailing. . . . . . . . . . . . . . . . . . . . . . . .8
Material Adverse Change. . . . . . . . . . . . . . . 10
Material Adverse Effect. . . . . . . . . . . . . . . 10
Merger . . . . . . . . . . . . . . . . . . . . . . . .1
MGM. . . . . . . . . . . . . . . . . . . . . . . . . 45
MGM Distribution Agreements. . . . . . . . . . . . . 45
moratorium . . . . . . . . . . . . . . . . . . . . . 19
New Carolco Entertainment Inc. Registration Rights
Agreement. . . . . . . . . . . . . . . . . . . . . . 46
New LIVE Certificates. . . . . . . . . . . . . . . . .7
New Plan . . . . . . . . . . . . . . . . . . . . . . 44
New Stock Option . . . . . . . . . . . . . . . . . . 44
offer. . . . . . . . . . . . . . . . . . . . . . . . 39
Old LIVE Certificates. . . . . . . . . . . . . . . . .7
Option Registration Statement. . . . . . . . . . . . 42
Pay-Per-View Shares. . . . . . . . . . . . . . . . . 22
Pioneer. . . . . . . . . . . . . . . . . . . . . . . 13
Plan Option. . . . . . . . . . . . . . . . . . . . . 44
Proxy Statement. . . . . . . . . . . . . . . . . . . 16
RCS. . . . . . . . . . . . . . . . . . . . . . . . . 13
Registration Statement . . . . . . . . . . . . . . . 16
Restated Certificate of Incorporation of Carolco . . .2
Restated Certificate of Incorporation of LIVE. . . . .3
Securities Act . . . . . . . . . . . . . . . . . . . 14
Seidler. . . . . . . . . . . . . . . . . . . . . . . 23
Seidler Fairness Opinion . . . . . . . . . . . . . . 23
Series A Certificates. . . . . . . . . . . . . . . . .7
Series C Certificate of Designations . . . . . . . . .6
Significant Carolco Employees. . . . . . . . . . . . 29
Significant LIVE Employees . . . . . . . . . . . . . 19
Stockholder Meetings . . . . . . . . . . . . . . . . 41
Strawberries . . . . . . . . . . . . . . . . . . . . 10
Subsidiary . . . . . . . . . . . . . . . . . . . . . 10
Surviving Corporation. . . . . . . . . . . . . . . . .2
takeover proposal. . . . . . . . . . . . . . . . . . 39
TCI Purchase Agreement . . . . . . . . . . . . . . . 22
Trading Day. . . . . . . . . . . . . . . . . . . . . .6
Trading Price. . . . . . . . . . . . . . . . . . . . .5
VCL. . . . . . . . . . . . . . . . . . . . . . . . . 10
without limitation.. . . . . . . . . . . . . . . . . 60
<PAGE>
Exhibits
Exhibit 1.2 Certificate of Merger
Exhibit 2.1 Restated Certificate of
Incorporation of Carolco
Exhibit 2.2 Amended and Restated Bylaws
of Carolco
Exhibit 2.3 Board of Directors of
Carolco at Effective Date
Exhibit 3.1 Amended and Restated
Certificate of
Incorporation of Carolco
Entertainment Inc.
Exhibit 3.2 Amended and Restated Bylaws
of Carolco Entertainment
Inc.
Exhibit 3.3A Board of Directors and
Committees of Carolco
Entertainment Inc. at
Effective Date
Exhibit 3.3B Officers of Carolco
Entertainment Inc. at
Effective Date
Exhibit 3.4 Amended Bylaws of LHV
Exhibit 5.3A Warrant Agreements and
Options for LIVE Common
Stock
Exhibit 5.3B LIVE Registration Rights
Agreements
Exhibit 5.4(c) Investor Representation
Agreement
Exhibit 6.3A Options for Carolco Common
Stock
Exhibit 6.3B Carolco Registration Rights
Agreements
Exhibit 9.3(a) Amendment to LIVE 12% Indenture
Exhibit 9.3(b) Amendment to LIVE Increasing
Rate Notes Indenture
Exhibit 9.8(d) 1994 Stock Option and Stock
Appreciation Rights Plan
Exhibit 9.9(a) Assumption Agreement with
respect to Carolco-Mario Kassar
Employment Agreement
Exhibit 9.9(b) Amended and Restated Carolco 5%
Indenture
Exhibit 9.9(c) Amended and Restated Standby
Purchase and Investment
Agreement with respect to the
Carolco 7% Notes
Exhibit 9.9(d) First Supplemental Indenture
with respect to the Carolco
11.5%/10% Notes
Exhibit 9.9(e) First Supplemental Indenture
with respect to the Carolco
13%/12% Notes
Exhibit 9.9(f) First Supplemental
Indenture with respect to
the Carolco 13% Notes
Exhibit 9.9(g) Assumption Agreement with
respect to the MGM Distribution
Agreements
Exhibit 9.9(h) Assumption Agreement with
respect to RCS Agreements
Exhibit 9.9(i) Assumption Agreement with
respect to Canal+
Agreements
Exhibit 9.9(j) Assumption Agreement with
respect to Pioneer
Agreements
Exhibit 9.10 New Carolco Entertainment
Inc. Registration Rights
Agreement
Exhibit 10.1(f) Terms of Aggregate Working
Capital Commitments
Exhibit 10.2(d) Form of Opinion of Counsel
to LIVE and CAC
Exhibit 10.3(d) Form of Opinion of Counsel
to Carolco
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 10,
1994 (this "Agreement"), by and among LIVE
Entertainment Inc., a Delaware corporation ("LIVE"),
Carolco Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of LIVE ("CAC"), and
Carolco Pictures Inc., a Delaware corporation
("Carolco") (CAC and Carolco being hereinafter
collectively referred to as the "Constituent
Corporations").
W I T N E S S E T H:
WHEREAS, LIVE is a corporation duly organized and
existing under the laws of the State of Delaware
with an authorized capitalization as set forth in
Section 5.3 hereof;
WHEREAS, Carolco is a corporation duly organized and
existing under the laws of the State of Delaware
with an authorized capitalization as set forth in
Section 6.3 hereof;
WHEREAS, CAC is a corporation duly organized and
existing under the laws of the State of Delaware
with an authorized capitalization as set forth in
Section 7.2 hereof and is a wholly-owned subsidiary
of LIVE;
WHEREAS, the respective Boards of Directors of LIVE,
CAC and Carolco have approved and declared fair to
and in the best interests of their respective
corporations and stockholders, and LIVE acting as
the sole stockholder of CAC has approved, the merger
of CAC with and into Carolco (the "Merger"), upon
the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of
the common stock, par value $.01 per share, of
Carolco ("Carolco Common Stock") and each issued and
outstanding share of the preferred stock, par value
$1.00 per share, of Carolco ("Carolco Preferred
Stock"), will be cancelled and converted into the
right to receive such consideration as is
hereinafter described;
WHEREAS, for federal income tax purposes, the
parties hereto intend that the Merger shall qualify
as a tax free reorganization within the meaning of
the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, LIVE, CAC and Carolco desire to make
certain representations, warranties and agreements
in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and
agreements herein contained, the parties hereto
agree as follows:
ARTICLE 1
THE MERGER
Section 1.a The Merger. At the Effective Date
(as defined in Section 1.2), CAC shall be merged
with and into Carolco in accordance with the
applicable provisions of the General Corporation Law
of the State of Delaware (the "DGCL") with Carolco
as the surviving corporation in the Merger (the
"Surviving Corporation"), the separate existence of
CAC shall thereupon cease, and Carolco, as the
Surviving Corporation, shall continue its corporate
existence under the laws of the State of Delaware.
From and after the Effective Date, the Merger shall
have all the effects provided in Section 259(a) of
the DGCL.
Section 1.b Effective Date of the Merger;
Closing.
(i) The Merger shall become effective when a
properly executed Certificate of Merger in the form
attached hereto as Exhibit 1.2 is duly filed with
the Secretary of State of the State of Delaware in
accordance with the relevant provisions of the DGCL
(the "Certificate of Merger"), which filing shall be
made as soon as practicable after the Closing
hereinafter contemplated; provided, however, that,
upon mutual consent of the Constituent Corporations,
the Certificate of Merger may provide for a later
date and time of effectiveness of the Merger in
accordance with the DGCL, in which case the Merger
shall become effective at the date and time
specified in the Certificate of Merger. When used
in this Agreement, the term "Effective Date" shall
mean the date and time at which such actions are
completed and such Merger becomes effective.
(ii) The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place (i)
at the offices of Sidley & Austin, 2049 Century Park
East, Los Angeles, California, at 10:00 A.M. local
time on the later of (A) the next business day after
the date of the later of the stockholders' meetings
referred to in Section 9.1 and (B) the day on which
the last of the conditions set forth in Article 9 is
fulfilled or waived or (ii) at such other time and
place as LIVE and Carolco shall agree.
ARTICLE 2
THE SURVIVING CORPORATION
Section 2.a Certificate of Incorporation. The
Certificate of Incorporation of Carolco as in effect
immediately prior to the Effective Date ("Restated
Certificate of Incorporation of Carolco"), attached
hereto as Exhibit 2.1, as amended by the Certificate
of Merger, at and after the Effective Date shall
become the Certificate of Incorporation of the
Surviving Corporation unless and until thereafter
amended in accordance with its terms and applicable
law.
Section 2.b Bylaws. At or immediately prior to
the Effective Date, the Board of Directors of
Carolco shall repeal the Bylaws of Carolco as in
effect immediately prior to the Effective Date and
adopt new Bylaws ("Amended and Restated Bylaws of
Carolco") substantially in the form attached hereto
as Exhibit 2.2 and at and after the Effective Date,
such Amended and Restated Bylaws of Carolco shall
become the Bylaws of the Surviving Corporation, and
shall continue in full force as the Bylaws of the
Surviving Corporation until amended or repealed in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of the Surviving
Corporation and in accordance with applicable law.
Section 2.c Board of Directors and Officers. At
the Effective Date, the members of the Board of
Directors of Carolco shall resign from their
positions as and cease being directors of Carolco,
and the persons named on Exhibit 2.3 shall become
the directors of the Surviving Corporation, each of
whom shall serve until the earlier of his
resignation or removal or until his respective
successor is duly elected and qualified in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of the Surviving
Corporation as then in effect and in accordance with
applicable law. At the Effective Date, the officers
of Carolco immediately prior to the Effective Date
shall become the officers of the Surviving
Corporation until the earlier of their resignation
or removal or until their respective successors are
duly elected and qualified in accordance with the
terms of the Bylaws and the Certificate of
Incorporation of the Surviving Corporation as then
in effect and in accordance with applicable law.
ARTICLE 3
CHANGES AT LIVE AT OR BEFORE EFFECTIVE DATE
Section 3.a Certificate of Incorporation. The
Certificate of Incorporation of LIVE as in effect
immediately prior to the Effective Date ("Restated
Certificate of Incorporation of LIVE") shall be
amended and, immediately before the Effective Date,
the Restated Certificate of Incorporation of LIVE,
as amended ("Amended and Restated Certificate of
Incorporation of LIVE") substantially in the form
attached hereto as Exhibit 3.1 shall be filed with
the Secretary of State of the State of Delaware. At
and after the Effective Date, the Amended and
Restated Certificate of Incorporation of LIVE shall
continue in full force as the Certificate of
Incorporation of LIVE unless and until thereafter
amended in accordance with its terms and applicable
law. At the Effective Date, pursuant to the Amended
and Restated Certificate of Incorporation of LIVE,
the name of LIVE shall be changed to "Carolco
Entertainment Inc."
Section 3.b Bylaws. At or immediately prior to
the Effective Date, the Board of Directors of LIVE
shall repeal the Bylaws of LIVE as in effect
immediately prior to the Effective Date and adopt
new Bylaws ("Amended and Restated Bylaws of LIVE")
substantially in the form attached hereto as Exhibit
3.2 and at and after the Effective Date, such
Amended and Restated Bylaws of LIVE, shall continue
in full force as the Bylaws of LIVE until amended or
repealed in accordance with the terms of the Bylaws
and the Certificate of Incorporation of LIVE and in
accordance with applicable law.
Section 3.c Board of Directors and Officers. At
the Effective Date, the members of the board of
directors of LIVE shall resign, seriatim, from their
positions as and cease being directors of LIVE and
as each such person resigns, the persons named on
Exhibit 3.3A shall become, seriatim, the directors
of LIVE and members of the committees of the board
of directors of LIVE as indicated on Exhibit 3.3A,
each of whom shall serve until the earlier of his
resignation or removal or until his respective
successor is duly elected and qualified in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of LIVE as then in
effect and in accordance with applicable law. At
the Effective Date, the officers of LIVE immediately
prior to the Effective Date shall resign from their
positions as and cease being officers of LIVE, and
the persons named on Exhibit 3.3B shall become the
officers of LIVE until the earlier of their
resignation or removal or until their respective
successors are duly elected and qualified in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of LIVE as then in
effect and in accordance with applicable law.
Section 3.d LIVE Home Video Inc. The Certificate
of Incorporation of LIVE Home Video Inc., a Delaware
corporation and a wholly-owned subsidiary of LIVE
("LHV"), as in effect immediately prior to the
Effective Date shall continue in full force as the
Certificate of Incorporation of LHV unless and until
thereafter amended in accordance with its terms and
applicable law. At or immediately prior to the
Effective Date, the Board of Directors of LHV shall
repeal the Bylaws of LHV as in effect immediately
prior to the Effective Date and adopt new Bylaws
substantially in the form attached hereto as Exhibit
3.4 (as amended, the "LHV Bylaws"), and at and after
the Effective Date, such LHV Bylaws shall become the
Bylaws of LHV, and shall continue in full force as
the Bylaws of LHV until amended or repealed in
accordance with their terms and the terms of the
Certificate of Incorporation of LHV as then in
effect and in accordance with applicable law. The
Board of Directors of LHV shall not change in
connection with the Merger and each member of the
Board of Directors of LHV shall continue to serve
until the earlier of his resignation or removal or
until his respective successor is duly elected and
qualified in accordance with the terms of the Bylaws
and the Certificate of Incorporation of LHV as then
in effect and in accordance with applicable law.
ARTICLE 4
CONVERSION AND EXCHANGE OF SHARES AND CERTIFICATES
Section 4.a Conversion. At the Effective Date,
by virtue of the Merger and without any action on
the part of any holder of any capital stock of
Carolco, LIVE or CAC:
(i) Conversion of Carolco Common Stock.
(1) Subject to the provisions of clause (ii) of
this Section 4.1(a), every 5.5 shares of Carolco
Common Stock issued and outstanding immediately
prior to the Effective Date (other than any such
shares held in Carolco's treasury) shall be
converted into one share of common stock of LIVE,
par value $.01 per share ("LIVE Common Stock")
(hereinafter the number of shares of Carolco Common
Stock which shall be converted into one share of
LIVE Common Stock shall be referred to as the
"Exchange Ratio"). All such shares of Carolco
Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and
retired and each holder of a Carolco Common
Certificate (as defined in Section 4.2(a))
representing any such shares shall cease to have any
rights with respect thereto, except as provided in
Section 4.2. All shares of LIVE Common Stock to be
received by holders of Carolco Common Stock upon
conversion of such Carolco Common Stock pursuant to
the Merger shall be duly authorized, validly issued
and outstanding, fully paid and nonassessable, free
of preemptive rights, and will not be liable to any
further call, nor shall the holder thereof be liable
for any further payments with respect thereto. Each
share of Carolco Common Stock held in Carolco's
treasury shall be cancelled and cease to exist at
and after the Effective Date and no consideration
shall be delivered with respect thereto.
(2) If the Average Trading Price (as defined below)
(A) is less than 54.5 cents per share, the Exchange
Ratio shall not be 5.5 shares and instead shall be
equal to the number obtained by dividing $3.00 by
the Average Trading Price; provided, however, that
in no event shall the Exchange Ratio exceed 6.5
shares; or (B) is greater than 72.7 cents per share,
the Exchange Ratio shall not be 5.5 shares and
instead shall be equal to the number obtained by
dividing $4.00 by the Average Trading Price;
provided, however, that in no event shall the
Exchange Ratio decrease below 4.5 shares.
For purposes of this Agreement:
(i) "Average Trading Price" means the average
Trading Price (as defined below) for the 20
consecutive Trading Days (as defined below) ending
on a date that is three Trading Days prior to the
date of the Carolco Stockholder Meeting and the LIVE
Stockholder Meeting (or in the event the Carolco
Stockholder Meeting and LIVE Stockholder Meeting are
not on the same date, the date of the later
Stockholder Meeting), or ending on such earlier date
as may be required by the Securities and Exchange
Commission,
(ii) "Trading Price" means, on any day, the last
reported sale price of one share of Carolco Common
Stock regular way on the New York Stock Exchange or,
if such security is not listed on the New York Stock
Exchange, the last sale price of such security
regular way, as reported in a composite published
report of transactions which includes transactions
on the exchange or other principal markets on which
such security is traded or, if there is no such
composite report as to any day, the last reported
sale price, regular way (or if there is no such
reported sale on such day, the average of the
closing reported bid and asked prices) on the
principal United States securities trading market
(whether a stock exchange, National Association of
Securities Dealers Automated Quotation System or
otherwise) on which such security is traded, and
(iii) "Trading Day" means a day on which the New
York Stock Exchange is open for at least one-half of
its normal business hours.
(3) Stockholders of Carolco entitled to receive a
fractional share of LIVE Common Stock upon the
conversion of the Carolco Common Stock shall receive
in lieu thereof cash in an amount equal to the
Average Trading Price times the number of shares of
Carolco Common Stock not converted (which number
shall be less than the Exchange Ratio). All checks
issued in payment for fractional interests shall be
denominated in U.S. dollars and drawn on a United
States bank.
(ii) Conversion of Carolco Preferred Stock. Each
share of Series A Convertible Preferred Stock of
Carolco, par value $1.00 ("Carolco Series A
Preferred Stock"), issued and outstanding
immediately prior to the Effective Date shall be
converted into one share of Series D Convertible
Preferred Stock of LIVE, par value $1.00 ("LIVE
Series D Preferred Stock"), the statement of
designations, rights, preferences and powers of
which is included in Exhibit 3.1. All such shares
of Carolco Series A Preferred Stock, when so
converted, shall no longer be outstanding and shall
automatically be cancelled and retired and each
holder of a certificate representing any such shares
shall cease to have any rights with respect thereto,
except as provided in Section 4.2. All shares of
the LIVE Series D Preferred Stock to be received by
holders of Carolco Series A Preferred Stock upon
conversion of such Carolco Series A Preferred Stock
pursuant to the Merger shall be duly authorized,
validly issued and outstanding, fully paid and
nonassessable, free of preemptive rights, and will
not be liable to any further call, nor shall the
holder thereof be liable for any further payment
with respect thereto.
(iii) LIVE Stock and CAC Stock. Each Share of
LIVE Common Stock issued and outstanding immediately
prior to the Effective Date shall remain unchanged
by virtue of the Merger. Each Share of Series C
Convertible Preferred Stock of LIVE, par value $1.00
("LIVE Series C Preferred Stock") shall remain
unchanged except as the Amended Certificate of
Designations, Preferences and Rights of LIVE
Series C Preferred Stock ("Series C Certificate of
Designations") shall be amended by the Amended and
Restated Certificate of Incorporation of LIVE to be
filed as provided herein. Each Share of common
stock of CAC, par value $0.01 per share ("CAC Common
Stock") issued and outstanding immediately prior to
the Effective Date shall be converted into one share
of common stock, par value $0.01 per share, of the
Surviving Corporation.
Section 4.b LIVE to Make Certificates Available.
(i) Exchange of Common Stock Certificates. Prior
to the Effective Date, LIVE shall authorize American
Stock Transfer & Trust Company (or such other person
or persons as shall be acceptable to LIVE and
Carolco) to act as Exchange Agent hereunder (the
"Exchange Agent"). At or prior to the Effective
Date, LIVE shall deposit with the Exchange Agent in
trust for the holders of certificates which
immediately prior to the Effective Date represented
shares of Carolco Common Stock (the "Carolco Common
Certificates"), and, subject to Section 4.3, each
such holder will be entitled to receive, upon
surrender to the Exchange Agent in the manner set
forth in subsection (d) below of one or more Carolco
Common Certificates for cancellation, certificates
representing the number of shares of LIVE Common
Stock into which the shares represented by such
Carolco Common Certificates were converted in the
Merger. LIVE Common Stock into which Carolco Common
Stock shall be converted in the Merger shall be
deemed to have been issued at the Effective Date,
and Carolco Common Certificates shall, at and after
the Effective Date, be deemed to represent only the
right to receive, upon surrender of such Carolco
Common Certificates, the certificates contemplated
by the preceding sentence.
(ii) Exchange of Series A Certificates. At or prior
to the Effective Date, LIVE shall deposit with the
Exchange Agent in trust for the holders of
certificates which immediately prior to the
Effective Date represented shares of Carolco Series
A Preferred Stock ("Series A Certificates"), and,
subject to Section 4.3, each such holder will be
entitled to receive, upon surrender to the Exchange
Agent in the manner set forth in subsection (d)
below of one or more Series A Certificates for
cancellation, certificates representing the number
of shares of LIVE Series D Preferred Stock into
which the shares represented by such Series A
Certificates were converted in the Merger. LIVE
Series D Preferred Stock into which Carolco Series A
Preferred Stock shall be converted in the Merger
shall be deemed to exist as of the Effective Date,
and Series A Certificates shall, at and after the
Effective Date, be deemed to represent only the
right to receive, upon surrender of such Series A
Certificates, the certificates contemplated by the
preceding sentence.
(iii) Exchange of Old LIVE Certificates. At or
prior to the Effective Date, LIVE shall deposit with
the Exchange Agent in trust for the holders of
certificates which immediately prior to the
Effective Date represented shares of LIVE Common
Stock or LIVE Series C Preferred Stock or of
certificates which immediately prior to the
Effective Date represented Contingent Payment Rights
(as defined in Section 5.3) (collectively, "Old LIVE
Certificates"), and, subject to Section 4.3, each
such holder will be entitled to receive, upon
surrender to the Exchange Agent in the manner set
forth in subsection (d) below of one or more Old
LIVE Certificates for cancellation, certificates
representing the number of shares of LIVE Common
Stock or LIVE Series C Preferred Stock or Contingent
Payment Rights (reflecting the change of LIVE's name
at the Effective Date), equal to the number of
shares or rights represented by the Old LIVE
Certificates so exchanged ("New LIVE Certificates").
Notwithstanding the foregoing, at and after the
Effective Date, until the holder of an Old LIVE
Certificate surrenders such Old LIVE Certificate to
the Exchange Agent for cancellation in the manner
set forth in subsection (d) below, each Old LIVE
Certificate shall continue to represent the same
number of shares of LIVE Common Stock, LIVE Series C
Preferred Stock or Contingent Payment Rights as such
Old LIVE Certificate represented immediately prior
to the Effective Date.
(iv) Exchange Procedures. As soon as practicable
after the Effective Date, but in any event no later
than five business days thereafter, the Exchange
Agent shall mail to each holder of record (at such
address as appears on the books of LIVE or Carolco
or as such holder shall otherwise designate) of a
Carolco Common Certificate, a Series A Certificate
and/or an Old LIVE Certificate, as the case may be
(any such certificates are sometimes referred to
hereinafter individually as a "Certificate," and
collectively as "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to such
Certificates shall pass, only upon actual delivery
of such Certificates to the Exchange Agent and shall
be in such form and have such other provisions as
LIVE and Carolco shall mutually specify, including
procedures to be followed in the event a holder has
lost his certificates) and (ii) instructions for use
in effecting the surrender of the Certificates in
exchange for certificates representing shares of
LIVE Common Stock and/or LIVE Series D Preferred
Stock and/or for New LIVE Certificates (the
"Mailing"). Upon surrender of such a Certificate
for cancellation to the Exchange Agent, at the
offices of the Exchange Agent and as otherwise
specified in the transmittal letter from the
Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of
whole shares of LIVE Common Stock, or that number of
whole shares of LIVE Series D Preferred Stock, which
such holder has the right to receive pursuant to
this Article 4, or New LIVE Certificates in
accordance with the provisions of Section 4.2(c),
and the Certificate so surrendered shall be
cancelled.
Section 4.c Dividends; Transfer Taxes.
(i) Dividends. No dividends or other
distributions, if any, that are declared on or after
the Effective Date on LIVE Common Stock (other than
LIVE Common Stock represented by an Old LIVE
Certificate) or LIVE Series D Preferred Stock or are
payable to the holders of record thereof will be
paid with respect to shares of such LIVE Common
Stock (other than LIVE Common Stock represented by
an Old LIVE Certificate) or LIVE Series D Preferred
Stock, until the holders thereof surrender their
Carolco Common Certificates or Series A
Certificates, as applicable, as provided in
Section 4.2. Nothing in this Agreement shall
require holders of Old LIVE Certificates to
surrender such Old LIVE Certificates, as permitted
in Section 4.2, as a condition to receipt of any
dividend or other distribution, if any, payable to
such holder with respect to shares of LIVE Common
Stock, LIVE Series C Preferred Stock or Contingent
Payment Rights represented by such Old LIVE
Certificate. Subject to the effect of any
applicable laws, there shall be paid to such record
holder of the certificates representing such LIVE
Common Stock or LIVE Series D Preferred Stock at the
time of such surrender, if required, or the
appropriate payment date, if later, or as promptly
as practicable thereafter, the amount of any
dividends or other distributions theretofore paid
with respect to whole shares of such LIVE Common
Stock or LIVE Series D Preferred Stock and having a
record date on or after the Effective Date. In no
event shall the person entitled to receive any such
dividends or other distributions be entitled to
receive interest on such dividends or other
distributions.
(ii) Transfer Taxes. No transfer taxes shall be
payable by a (i) holder of Carolco Common Stock or
Carolco Series A Preferred Stock in connection with
such holder's receipt of shares of LIVE Common Stock
or LIVE Series D Preferred Stock, as the case may
be, upon surrender of a Carolco Common Certificate
or Series A Certificate or (ii) holder of LIVE
Common Stock, LIVE Series C Preferred Stock or
Contingent Payment Rights in connection with such
holder's exchange of an Old LIVE Certificate for a
New LIVE Certificate, except in any event if any
certificate representing shares of LIVE Common
Stock, LIVE Preferred Stock or Contingent Payment
Rights is to be paid to or issued in a name other
than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a
condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise
in proper form for transfer (including any signature
guarantees necessary) and that the person requesting
such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the
issuance of certificates for such shares of LIVE
Common Stock or LIVE Preferred Stock in a name other
than that of the registered holder of the Carolco
Common Certificate, Series A Certificate, or Old
LIVE Certificate surrendered, or shall establish to
the satisfaction of the Exchange Agent or LIVE, as
appropriate, that such tax has been paid or is not
applicable. For purposes of this Agreement, "LIVE
Preferred Stock" means, collectively, the LIVE
Series C Preferred Stock and the LIVE Series D
Preferred Stock.
(iii) Delay in Delivery. Any certificates
delivered to the Exchange Agent by LIVE pursuant to
Sections 4.2(a) or 4.2(b) representing shares of
LIVE Common Stock or LIVE Series D Preferred Stock
(or any dividends or distributions thereon) which
remain undistributed to the previous stockholders of
Carolco for six months after the date of the Mailing
(as defined above in Section 4.2(e)) shall be
returned to LIVE, upon demand. Any persons who were
previously stockholders of Carolco who have not
theretofore complied with this Article 4 shall
thereafter look only to LIVE (subject to abandoned
property, escheat and other similar laws) for
payment of their claim for LIVE Common Stock or LIVE
Series D Preferred Stock (or any dividends or
distributions thereon). Notwithstanding the
foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of a Carolco
Common Certificate or Series A Certificate for any
shares of LIVE Common Stock or LIVE Series D
Preferred Stock (or any dividends or distributions
thereon) delivered to a public official pursuant to
any applicable abandoned property, escheat or
similar law.
Section 4.d No Further Ownership Rights in
Carolco Common Stock. All shares of LIVE Common
Stock or LIVE Series D Preferred Stock issued upon
the surrender for exchange of shares of Carolco
Common Stock or Carolco Series A Preferred Stock in
accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights
pertaining to such shares of Carolco Common Stock or
Carolco Series A Preferred Stock, subject, however,
to the Surviving Corporation's obligation to pay any
dividends or make any other distribution with a
record date prior to the Effective Date which may
have been declared or made by Carolco on such shares
of Carolco Common Stock or Carolco Series A
Preferred Stock in accordance with the terms of this
Agreement.
Section 4.e Closing of Carolco Transfer Books.
Upon the Effective Date, the stock transfer books of
Carolco shall be closed and no transfer of Carolco
Common Stock or Carolco Preferred Stock shall
thereafter be made. If, after the Effective Date,
Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged
as provided in this Article 4.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIVE
LIVE represents and warrants to Carolco as follows:
Section 5.a Organization, Standing and Power.
(i) LIVE is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has the requisite corporate
power and authority to own its property and carry on
its business as now being conducted. LIVE and each
of its Subsidiaries is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities makes such qualification necessary,
except where the failure to be so qualified would
not, individually or in the aggregate, have a
Material Adverse Effect on LIVE.
(ii) For purposes of this Agreement (i) "Material
Adverse Change" or "Material Adverse Effect" means,
when used with respect to LIVE or Carolco, as the
case may be, any change or effect that is or may be
materially adverse to the assets, properties,
business, condition (financial or otherwise) or
results of operations of LIVE and its Subsidiaries
taken as a whole or Carolco and its Subsidiaries
taken as a whole, as the case may be, and (ii)
"Subsidiary" means any corporation or other legal
entity of which LIVE or Carolco, as the case may be
(either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or
more of the stock or other equity interests the
holders of which are generally entitled to vote for
the election of the board of directors or other
governing body of such corporation or other legal
entity, or otherwise directly or indirectly controls
the operations of such corporation or other legal
entity, except that in the case of LIVE,
Subsidiaries shall not include Strawberries, Inc.
("Strawberries") or VCL/Carolco Communications GmbH
("VCL"), or any subsidiaries of Strawberries or VCL.
(iii) LIVE has disclosed to Carolco in writing
all information regarding Strawberries and/or VCL
(i) which should have been disclosed in the LIVE
LETTER had Strawberries and/or VCL been included
within the definition of "Subsidiary" in
Section 5.1(b) hereof and (ii) which, individually
or in the aggregate, has, had or could reasonably be
expected to have a Material Adverse Effect on LIVE
or the Surviving Corporation.
Section 5.b Subsidiaries. LIVE has delivered to
Carolco a disclosure letter of even date herewith
(together with the exhibits included as a part
thereof, the "LIVE LETTER") which lists, among other
things, each Subsidiary of LIVE. All the
outstanding shares of capital stock or other
ownership interests of each such Subsidiary have
been duly authorized, validly issued and are fully
paid and nonassessable and are, except as set forth
in the LIVE LETTER, owned by LIVE, by another
Subsidiary of LIVE or by LIVE and another such
Subsidiary, free and clear of all liens, charges,
claims and encumbrances except as set forth in the
LIVE LETTER. Except as set forth in the LIVE
LETTER, there are no outstanding options, rights or
agreements of any kind relating to the issuance,
sale or transfer of any capital stock or other
equity securities or ownership interests of any such
Subsidiary of LIVE to any person. Each Subsidiary
of LIVE (i) is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the
requisite corporate power and authority to own its
properties and carry on its business as now being
conducted, and (iii) is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities make such qualification necessary, except
where the failure to be so qualified would not,
individually or in the aggregate, have a Material
Adverse Effect on LIVE. Except for the capital
stock of its Subsidiaries and except as disclosed in
LIVE's Annual Report on Form 10-K for the year ended
December 31, 1993, and in LIVE's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, LIVE
does not own, directly or indirectly, any capital
stock or other ownership interest in any
corporation, partnership or other entity which is
material to LIVE.
Section 5.c Capital Structure and Commitments.
As of the date hereof, the authorized capital stock
of LIVE consists of 120,000,000 shares of LIVE
Common Stock, 15,000,000 shares of LIVE Series A
Common Stock, par value $.01 per share ("LIVE Series
A Common Stock") (none of which LIVE Series A Common
Stock is issued and outstanding) and 15,000,000
shares of LIVE preferred stock (of the authorized
LIVE preferred stock, 9,000,000 shares have been
designated as LIVE Series B Cumulative Convertible
Preferred Stock ("LIVE Series B Preferred Stock")
(which LIVE Series B Preferred Stock shall be
redeemed as provided in Section 10.2(e) herein),
15,000 shares have been designated as LIVE Series C
Preferred Stock and 500,000 shares have been
designated as LIVE Series R Junior Participating
Cumulative Preferred Stock ("LIVE Series R Preferred
Stock") (none of which LIVE Series R Preferred Stock
is issued and outstanding)). As of the date hereof,
each share of LIVE Common Stock outstanding includes
a LIVE Right (which LIVE Right shall be terminated
as provided in Section 9.17 herein). For purposes
of this Agreement, a "LIVE Right" is a right to
purchase LIVE Common Stock pursuant to the Rights
Agreement (the "LIVE Rights Agreement") dated as of
July 19, 1990, as amended, between LIVE and American
Stock Transfer and Trust Company, as Rights Agent.
As of the date of this Agreement:
(i) approximately 12,000,000 shares of LIVE Common
Stock are duly authorized, validly issued and
outstanding, fully paid and nonassessable,
(ii) approximately 1,900,000 shares of LIVE Common
Stock are reserved for issuance upon the exercise of
outstanding options to purchase LIVE Common Stock,
which options are listed in Exhibit 5.3A,
(iii) approximately 2,400,000 shares of LIVE
Common Stock are reserved for issuance upon the
exercise of warrants issued under the warrant
agreements listed in Exhibit 5.3A,
(iv) approximately 6,000,000 shares of LIVE Series B
Preferred Stock are duly authorized, issued and
outstanding, fully paid and nonassessable,
(v) 15,000 shares of LIVE Series C Preferred Stock
are duly authorized, issued and outstanding, fully
paid and nonassessable,
(vi) up to 60,000,000 shares of LIVE Common Stock
are reserved for issuance upon conversion of the
LIVE Series B Preferred Stock, and
(vii) approximately 5,100,000 shares of LIVE
Common Stock are reserved for issuance upon
conversion of the LIVE Series C Preferred Stock.
As of the date of this Agreement, except for this
Agreement, the stock options referred to in clause
(b) of this Section 5.3 and listed on Exhibit 5.3A,
the warrant agreements referred to in clause (c) of
this Section 5.3 and listed on Exhibit 5.3A, the
Contingent Payment Rights issued in connection with
the acquisition by LIVE of certain of the assets of
Vestron Inc. in July 1991 ("Contingent Payment
Rights"), the shares of LIVE Common Stock underlying
the LIVE Series B Preferred Stock and the LIVE
Series C Preferred Stock, the shares of LIVE
Series A Common Stock underlying the LIVE Series C
Preferred Stock, the LIVE Rights, and other
agreements and transactions relating to capital
stock described in the LIVE SEC Documents or in the
LIVE LETTER, there are no options, warrants, rights,
contracts, commitments, agreements, arrangements or
undertakings of any kind to which LIVE or any of its
Subsidiaries is a party or by which any of them is
bound relating to the issuance of any capital stock
or other voting securities of LIVE or of any of its
Subsidiaries or any securities convertible into or
exchangeable for any capital stock or other voting
securities of LIVE or of any of its Subsidiaries, or
any options, warrants or other rights to purchase
capital stock or other voting securities of LIVE or
any of its Subsidiaries, nor has LIVE or any of its
Subsidiaries granted any stock appreciation rights
to any person or entity. As of March 31, 1994,
there are approximately 1,281 holders of record of
LIVE Common Stock, approximately 281 holders of
record of LIVE Series B Preferred Stock and one (1)
holder of record of LIVE Series C Preferred Stock.
Exhibit 5.3B lists all agreements of LIVE as of the
date hereof by which LIVE may be required to
register any of its securities ("LIVE Registration
Rights Agreements").
Section 5.d Authority; Non-Contravention.
(i) Each of LIVE and CAC has all requisite
corporate power and authority to enter into and
execute this Agreement and, subject to any approval
by the stockholders of LIVE of the Merger and the
related amendments to the Restated Certificate of
Incorporation of LIVE, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement by LIVE and CAC, the
performance by LIVE and CAC of their respective
obligations hereunder and the consummation by LIVE
and CAC of the transactions contemplated hereby have
been duly authorized by all necessary corporate
action on the part of LIVE and CAC, except for the
approval of LIVE's stockholders, which will be
solicited in accordance with the provisions of
Section 9.1 hereof, and no other act or proceeding
on the part of LIVE or CAC is necessary to authorize
the execution, delivery and consummation of this
Agreement or the transactions contemplated hereby.
(ii) The Board of Directors of LIVE has received the
opinion of Chemical Securities Inc. ("Chemical"),
the financial advisor to the Board, dated July 1,
1994, to the effect that in Chemical's opinion the
financial terms of the Merger are fair, from a
financial point of view, to the holders of LIVE
Common Stock, other than the LIVE Investors (as
defined below). A true, correct and complete copy
of such opinion (the "Chemical Fairness Opinion")
has been delivered to Carolco. For purposes of this
Agreement, "LIVE Investors" means, collectively,
Pioneer, Cinepole, and RCS, where "Pioneer" refers
to Pioneer LDCA, Inc., "Cinepole" refers to Cinepole
Productions B.V. and "RCS" refers, collectively, to
RCS International Communications N.V. and RCS Video
International Services B.V.
(iii) LIVE has received a letter agreement (the
"Investor Representation Agreement") from each LIVE
Investor and each such Investor Representation
Agreement, substantially in the form of Exhibit
5.4(c) hereto, has been executed by such LIVE
Investor.
(iv) This Agreement has been duly and validly
executed and delivered by each of LIVE and CAC and
(assuming the valid authorization, execution and
delivery of this Agreement by Carolco) constitutes a
valid and binding obligation of each of LIVE and CAC
enforceable against LIVE and CAC in accordance with
its terms, except (i) as their respective
obligations may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar
laws, or by equitable principles relating to or
limiting creditors' rights generally, and (ii) that
the remedies of specific performance, injunction and
other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before
which any proceeding therefor may be brought.
(v) The Board of Directors of LIVE has approved the
terms of this Agreement and of the transactions
contemplated hereby, and the Advisory Committee of
the Board of Directors of LIVE (the "Advisory
Committee") has approved and declared advisable and
in the best interests of LIVE and its stockholders
the Merger, upon the terms and subject to the
conditions herein; the Special Committee (the "LIVE
Special Committee") formed pursuant to and in
accordance with Section 3.6 of the Certificate of
Designations, Preferences and Relative,
Participating, Optional or other Special Rights of
the Series B Preferred Stock of LIVE has approved
the terms of this Agreement and of the transactions
contemplated hereby.
(vi) Except as set forth in the LIVE LETTER, the
execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated
hereby and compliance with the provisions hereof
will not, breach, conflict with, or result in any
violation of, or default (with or without notice or
lapse of time, or both) under, or result in or give
rise to a right of termination, cancellation or
acceleration of any liability or obligation or to
the loss of a material benefit under, or result in
the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets
of LIVE or any of its Subsidiaries under, any
provision of (i) the Restated Certificate of
Incorporation of LIVE or Bylaws of LIVE (true and
complete copies of which as of the date hereof have
been delivered to Carolco) or any provision of the
comparable charter or organizational documents of
any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession,
franchise or license applicable to LIVE or any of
its Subsidiaries or (iii) any judgment, order,
decree, statute, law, ordinance, injunction, writ,
or authorization, consent, approval, rule or
regulation of any court or governmental authority
applicable to LIVE or any of its Subsidiaries or any
of their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, liens,
security interests, charges or encumbrances that,
individually or in the aggregate, would not (A) have
a Material Adverse Effect on LIVE, (B) materially
impair the ability of LIVE or CAC to perform their
respective obligations hereunder or (C) prevent the
consummation of any of the transactions contemplated
hereby. The redemption of the LIVE Series B
Preferred Stock as contemplated in Section 10.2(c)
herein and the termination of the LIVE Rights as
contemplated in Section 9.17 herein shall have
complied with, and shall not have resulted in a
violation of, either the Certificate of
Designations, Preferences and Rights governing the
LIVE Series B Preferred Stock or the LIVE Rights
Agreement, respectively, or any applicable
securities laws.
(vii) No filing or registration with, or
authorization, consent or approval of, any domestic
(federal and state), foreign or international court,
commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is
required by or with respect to LIVE or any of its
Subsidiaries in connection with the execution and
delivery of this Agreement by LIVE or is necessary
for the consummation by LIVE of the Merger or the
other transactions contemplated by this Agreement,
except (i) in connection, or in compliance with, the
provisions of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated
thereunder, the "Securities Act") and the Securities
Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the
"Exchange Act"), (ii) in connection with, or in
compliance with, the provisions of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) the filing of the
Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with
the relevant authorities of other states in which
LIVE is qualified to do business, (iv) the
amendments to the Restated Certificate of
Incorporation of LIVE as provided in Section 3.1,
(v) any required filings under state securities or
"blue sky" laws and (vi) filings, registrations,
authorizations, consents or approvals which if not
made or obtained would have a Material Adverse
Effect on LIVE or would prevent or materially
adversely affect the transactions contemplated
hereby.
Section 5.e LIVE SEC Documents. LIVE has filed
all required reports, statements, forms and
documents with the SEC that LIVE was required to
file during the three-year period immediately
preceding the date hereof (the "LIVE SEC
Documents"). As of their respective dates, and as
subsequently revised, amended or superseded by
later-filed LIVE SEC Documents through and including
the date of this Agreement, the LIVE SEC Documents
complied in all material respects with the
requirements of the Securities Act or the Exchange
Act, as the case may be, and as so revised,
superseded or amended none of the LIVE SEC Documents
including the financial information contained
therein contained or currently contain any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading. The financial statements of LIVE
included in the LIVE SEC Documents comply as to form
in all material respects with applicable accounting
requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting
principles (except, in the case of the unaudited
statements, as permitted by Regulation S-X
promulgated by the SEC) applied on a consistent
basis during the periods involved (except as may be
indicated therein or in the notes thereto) and
fairly present the consolidated financial position
of LIVE and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their
operations and statements of cash flows for the
periods included therein (subject, in the case of
unaudited statements, to normal year-end audit
adjustments and to any other adjustments described
therein). Notwithstanding the foregoing, LIVE makes
no representation or warranty in this Agreement
regarding any information (including financial
information and financial statements) supplied by
Carolco for inclusion in the LIVE SEC Documents.
Section 5.f No Material Adverse Change. Except
as set forth in the LIVE LETTER, since the date of
the most recent balance sheet and notes to
consolidated financial statements contained in
LIVE's Annual Report on Form 10-K for the year ended
December 31, 1993, or LIVE's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, as
filed with the SEC (the "LIVE Balance Sheet"), there
has been no Material Adverse Change in LIVE, and
neither LIVE nor any of its Subsidiaries knows of
any such Material Adverse Change that is threatened,
nor has there been any damage, destruction or loss
affecting the assets, properties, business,
operations or condition (financial or otherwise) of
LIVE or any of its Subsidiaries, whether or not
covered by insurance, which would have a Material
Adverse Effect on LIVE, and which has not been
subsequently reported in any of the LIVE SEC
Documents filed with the SEC prior to the date
hereof.
Section 5.g Absence of Undisclosed Liabilities.
Except as set forth in the LIVE SEC Documents or the
LIVE LETTER, as of the date of the LIVE Balance
Sheet neither LIVE nor any of its Subsidiaries had
any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles
to be set forth on a financial statement or in the
notes thereto and which, individually or in the
aggregate, would have a Material Adverse Effect on
LIVE, which were not set forth on the LIVE Balance
Sheet.
Section 5.h Absence of Certain Events. Except as
disclosed in the LIVE SEC Documents or the LIVE
LETTER, since the date of the LIVE Balance Sheet,
LIVE and its Subsidiaries have conducted their
business only in the ordinary course.
Section 5.i No Solicitation. LIVE is not now
engaged in any activities, discussions or
negotiations with any parties (other than Carolco)
in respect of a "takeover proposal" or an "offer"
(both as defined in Section 8.3), except with
respect to Strawberries and VCL.
Section 5.j Registration Statement and Proxy
Statement. None of the information to be supplied
by LIVE or CAC for inclusion or incorporation by
reference in the registration statement on Form S-4
under the Securities Act to be filed with the SEC
pursuant to Section 9.2 (the "Registration
Statement"), or the joint proxy statement/prospectus
together with any amendments or supplements thereto
included within the Registration Statement (the
"Proxy Statement") will (a) in the case of the
Registration Statement, at the time it becomes
effective, contain any statement which, at the time
and in the light of the circumstances under which it
is made, is false or misleading with respect to any
material fact, or which omits to state any material
fact required to be stated therein or necessary in
order to make the statements therein not false or
misleading, or (b) in the case of the Proxy
Statement, at the time of the mailing of the Proxy
Statement and at the times of the Stockholder
Meetings, contain any statement which, at the time
and in the light of the circumstances under which it
is made, is false or misleading with respect to any
material fact, or which omits to state any material
fact required to be stated therein or necessary in
order to make the statements therein not false or
misleading. The Registration Statement will comply
(with respect to LIVE and CAC) as to form in all
material respects with the provisions of the
Securities Act and the Proxy Statement will comply
(with respect to LIVE and CAC) as to form in all
material respects with the provisions of the
Exchange Act. Notwithstanding the foregoing,
neither LIVE nor CAC, individually or collectively,
makes any representation or warranty regarding any
information (including financial information and
financial statements) supplied by Carolco for
inclusion in the Registration Statement or the Proxy
Statement.
Section 5.k Reorganization. Neither LIVE nor any
of its Subsidiaries has taken any action or failed
to take any action which action or failure to take
action would jeopardize the qualification of the
Merger as a tax free reorganization under the Code.
Section 5.l Litigation. Except as set forth in
the LIVE LETTER or the LIVE SEC Documents, as of the
date hereof, there is no claim, suit, action or
proceeding pending or, to the knowledge of LIVE,
threatened against or affecting LIVE or any of its
Subsidiaries (whether or not covered by insurance)
which (i) could reasonably be expected to have a
Material Adverse Effect on LIVE (and LIVE is not
aware of any reasonable basis for any such suit,
action or proceeding), or (ii) challenge the
transactions contemplated hereby at law or in equity
or before or by any federal, state, local, foreign
or other governmental department, commission, board,
agency, instrumentality, or authority; nor is there
any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding
against LIVE or any of its Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the
future would have, any such effect.
Section 5.m Loan Agreements, Customers and
Suppliers.
(i) Neither LIVE nor any of its Subsidiaries is in
violation of or in default under (nor does there
exist any condition which upon the passage of time,
the giving of notice or both would cause such a
violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease
instrument, permit, concession, franchise, license
or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it
or any of its properties or assets is bound, except
for violations or defaults that could not,
individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on
LIVE or except as are set forth in the LIVE LETTER.
Set forth in the LIVE LETTER is a list of each loan
or credit agreement, note, bond, mortgage, indenture
and other agreement and instrument pursuant to which
any indebtedness of LIVE or any of its Subsidiaries
(other than indebtedness solely among or between
LIVE and/or any of its Subsidiaries), in an
aggregate principal amount in excess of $3,000,000
is outstanding or may be incurred and the respective
principal amounts currently outstanding thereunder.
For purposes of this Agreement, "indebtedness" shall
mean, with respect to any person, without
duplication, (i) any liability, contingent or
otherwise, (x) for borrowed money (whether or not
the recourse of the lender is to the whole of the
assets of the person or only to a portion thereof),
(y) evidenced by a note, debenture or similar
instrument (including a purchase money obligation),
or (z) for the payment of money relating to a
capitalized lease obligation; (ii) any liability of
others of the kind described in the preceding clause
which the person has guaranteed or which is
otherwise its legal liability; (iii) any obligation
secured by a lien to which the property or assets of
the person are subject, whether or not the
obligations secured thereby shall have been assumed
by or shall otherwise be the person's legal
liability, and (iv) any and all deferrals, renewals,
extensions and refundings of, or amendments,
modifications or supplements to, any liability of
the kind described in any of the preceding clauses
(i), (ii) or (iii).
(ii) Neither LIVE nor any of its Subsidiaries is in
default under (nor does there exist any condition
which upon the passage of time, the giving of notice
or both would cause such a violation of or default
under) any material agreement with any of its
customers or suppliers of products or services which
are of material importance to LIVE or any of its
Subsidiaries, and no such customer or supplier, to
the knowledge of LIVE or any of its Subsidiaries, is
in default under (nor does there exist any condition
which upon the passage of time, the giving of notice
or both would cause such customer or supplier to be
in violation of or default under) any of such
material agreements or except as are set forth in
the LIVE LETTER.
Section 5.n Permits. LIVE and each of its
Subsidiaries possess all franchises, permits,
licenses, certificates, approvals or other
authorizations necessary to own or lease and operate
their properties and to conduct their businesses,
except for incidental franchises, permits, licenses,
certificates, approvals and other authorizations
that would be readily obtainable by any qualified
applicant without undue burden in the event of any
lapse, termination, cancellation or forfeiture or
which if not obtained would not, in the aggregate,
have a Material Adverse Effect on LIVE.
Section 5.o Absence of Changes in LIVE Benefit
Plans. Except as disclosed in the LIVE SEC
Documents or the LIVE LETTER, since the date of the
most recent audited financial statements included in
the LIVE SEC Documents, there has not been any
adoption or amendment by LIVE or any of its
Subsidiaries of any collective bargaining agreement
or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical fringe
benefit or other plan, arrangement or understanding
(whether or not legally binding) providing benefits
to any current or former employee or director of, or
any other person providing services to, LIVE or any
of its Subsidiaries (collectively, "LIVE Benefit
Plans") which will have a Material Adverse Effect on
LIVE. LIVE has delivered to Carolco true, correct
and complete copies of all LIVE Benefit Plans. Each
of the LIVE Benefit Plans is in material compliance
with all applicable laws including the Employee
Retirement Income Security Act of 1974, as amended
("ERISA") and the Code.
Section 5.p Intellectual Property. LIVE and its
Subsidiaries own, or are licensed or otherwise have
the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights,
copyrights and other proprietary intellectual
property rights and computer programs (collectively,
the "LIVE Proprietary Rights") which are material to
the conduct of the business of LIVE and its
Subsidiaries taken as a whole. No claims are
pending or, to the knowledge of LIVE, threatened
that LIVE or any Subsidiary is infringing or
otherwise adversely affecting the rights of any
person with regard to any LIVE Proprietary Right,
except for such claims or threats which could not
reasonably be expected to have a Material Adverse
Effect on LIVE. To the knowledge of LIVE, no person
is infringing the rights of LIVE with respect to any
LIVE Proprietary Right that would have a Material
Adverse Effect on LIVE. No lien, encumbrance or
restriction with respect to any LIVE Proprietary
Right has a Material Adverse Effect on LIVE, or so
far as LIVE can now foresee could reasonably be
expected to have a Material Adverse Effect on LIVE.
Section 5.q Environmental Matters. To the
knowledge of LIVE, LIVE and each of its Subsidiaries
are in compliance with all applicable federal,
state, regional and local laws, statutes,
ordinances, judgments, rulings and regulations
relating to any matters of pollution, protection of
the environment or environmental regulation or
control (collectively, "Environmental Laws"), except
for violations of the Environmental Laws that could
not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on
LIVE.
Section 5.r Taxes. Except as set forth in the
LIVE LETTER or the LIVE SEC Documents: (a) each of
LIVE and its Subsidiaries has timely filed all
federal, state, local or foreign tax returns
required to be filed by it (except for all such
returns the failure of which timely filing would,
individually or in the aggregate, not have a
Material Adverse Effect on LIVE), and has paid (or
LIVE has paid on its behalf) all taxes shown as due
on the returns in respect of the periods covered by
such returns; (b) there are no tax liens upon any
property or assets of LIVE or any of its
Subsidiaries which would have a Material Adverse
Effect on LIVE, except liens for current taxes not
yet due; (c) neither LIVE nor any of its
Subsidiaries is delinquent in the payment of any
material tax, assessment or governmental charge
which would have a Material Adverse Effect on LIVE;
(d) no deficiencies for any taxes have been
proposed, asserted or assessed against LIVE or any
of its Subsidiaries which would have a Material
Adverse Effect on LIVE or its Subsidiaries, and no
requests for waivers of the time to assess any such
taxes are pending; and (e) no audits of the tax
returns of LIVE or any of its Subsidiaries are
currently being conducted by a taxing authority and
neither LIVE nor its Subsidiaries have received any
notices of pending or proposed audits from a taxing
authority.
Section 5.s Foreign Corrupt Practices Act. To
the best knowledge of the officers of LIVE, neither
LIVE, any Subsidiary of LIVE nor any director,
officer, agent, employee or other person associated
with or acting on behalf of any of them has (i) used
any corporate or other funds for unlawful
contributions, payments, gifts or entertainment or
made any unlawful expenditures relating to political
activity, or made any direct or indirect unlawful
payments to governmental officials or others or
established or maintained any unlawful or unrecorded
funds in violation of Section 30A of the Exchange
Act or (ii) accepted or received any unlawful
contributions, payments, gifts or expenditures.
LIVE is in compliance in all material respects with
the provisions of Section 13(b) of the Exchange Act
and to the best knowledge of the officers of LIVE,
there is no failure of compliance with such
provisions.
Section 5.t Brokers. No broker, investment
banker or other person, other than Chemical or
Jefferson Capital Corporation, the fees and expenses
of which will be paid by LIVE in accordance with
LIVE's written agreements with Chemical and
Jefferson Capital Corporation (copies of which have
been delivered by LIVE to Carolco prior to the date
hereof), is entitled to any broker's, finder's or
other similar fee or commission in connection with
the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of
LIVE, any Subsidiary of LIVE or CAC.
Section 5.u Officers, Directors and Key
Employees. The LIVE LETTER sets forth (i) the name
and total compensation of each officer and director
of LIVE; (ii) the name of each officer and director
of any of LIVE's Subsidiaries; (iii) the name and
total compensation of each other officer, director,
employee, consultant, agent or other representative
of LIVE or any of its Subsidiaries whose current
annual rate of compensation (including bonuses and
commissions) exceeds $150,000; (iv) all wage or
salary increases or bonuses received by the persons
identified in Section 5.21(i) and (iii)
("Significant LIVE Employees") since December 31,
1993, and any accrual for or commitment or agreement
by LIVE or any of its Subsidiaries to pay such
increases or bonuses; and (v) a notation with
respect to each of such Significant LIVE Employees,
whether they have an employment agreement with LIVE
or any of its Subsidiaries and, if so, the date and
term of such agreement. Except as set forth in the
LIVE LETTER, (x) to the knowledge of LIVE or any of
its Subsidiaries, none of such Significant LIVE
Employees has made a threat to LIVE or any of its
Subsidiaries or to any of their officers or
directors to cancel or otherwise terminate such
Significant LIVE Employee's relationship with LIVE
or any of its Subsidiaries and (y) none of such
Significant LIVE Employees have "change of control"
clauses or agreements with LIVE or any of its
Subsidiaries (or similar clauses or agreements
permitting such Significant LIVE Employees to
terminate their employment relationship with LIVE or
any of its Subsidiaries) that would be triggered by
the Merger which have not been waived on the date
hereof.
Section 5.v State Takeover Statutes. Neither
Section 203 of the DGCL nor any other "fair price,"
"moratorium," "control share acquisition" or other
state takeover statute or similar statute or
regulation applies to the Merger by virtue of LIVE
and CAC engaging in the transactions contemplated
hereby.
Section 5.w Insurance. LIVE and each of its
Subsidiaries have been and are insured by
financially sound and reputable insurers with
respect to their properties and the conduct of their
business in such amounts and against such risks as
are reasonable in relation to their respective
businesses, and each will use its best efforts to
maintain such insurance. Such insurance is in full
force and effect and no notice of cancellation or
termination has been received with respect to any of
said insurance. Except as disclosed in the LIVE
LETTER, there are no claims pending thereunder
except where such claim would not, individually or
in the aggregate, have a Material Adverse Effect on
LIVE.
Section 5.x Title to Properties and Related
Matters. Except with respect to the LIVE
Proprietary Rights, LIVE and each of its
Subsidiaries have good and marketable title (or
valid and subsisting leasehold interests) to all of
the personal properties and assets (tangible and
intangible) and the real properties utilized in
their businesses or reflected in the LIVE SEC
Documents or acquired after the date thereof (other
than properties sold or otherwise disposed of in the
ordinary course of business), which are material to
them, free and clear of all title defects, liens,
encumbrances and restrictions, except (i) as
reflected in the LIVE SEC Documents, (ii) to the
extent not described in clause (i), those described
in the LIVE LETTER, (iii) to the extent not
described in clause (i), statutory liens not yet due
or delinquent or the validity of which are being
contested or litigated in good faith by appropriate
proceedings and for which LIVE has set aside on its
books reserves that are adequate with respect
thereto; and (iv) liens, encumbrances, covenants,
rights of way, building or use restrictions,
easements, exceptions, variances, reservations and
other matters or limitations of any kind, if any,
which, when considered together with the liens
described in clauses (i), (ii) and (iii), do not
have a Material Adverse Effect on LIVE's business or
operations. All properties of LIVE and each of its
Subsidiaries are reflected in the LIVE SEC Documents
in the manner and to the extent required by
generally accepted accounting principles
consistently applied. Neither the whole nor any
portion of the leaseholds or any other assets of
LIVE or any of its Subsidiaries is subject to any
governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any
public authority with or without payment of
compensation therefor, nor to the knowledge of LIVE
or any of its Subsidiaries has any such
condemnation, expropriation or taking been proposed,
which would have a Material Adverse Effect on LIVE
and its Subsidiaries taken as a whole.
Section 5.y Accuracy of LIVE Disclosure. Neither
this Agreement, nor any document or other paper
furnished (or to be furnished pursuant hereto at the
Closing) by or on behalf of LIVE or CAC to Carolco
pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary to make the statements made, in
the context in which made, not false or misleading.
There is no fact that LIVE has not disclosed to
Carolco in writing that has a Material Adverse
Effect on LIVE, or so far as LIVE can now foresee
will have a Material Adverse Effect on LIVE or on
the ability of LIVE to perform this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CAROLCO
Carolco represents and warrants to LIVE and CAC as
follows:
Section 6.a Organization, Standing and Power.
Carolco is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has the requisite corporate
power and authority to own its property and carry on
its business as now being conducted. Carolco and
each of its Subsidiaries is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities makes such qualification necessary,
except where the failure to be so qualified would
not, individually or in the aggregate, have a
Material Adverse Effect on Carolco.
Section 6.b Subsidiaries. Carolco has delivered
to LIVE a disclosure letter of even date herewith
(together with the exhibits included as a part
thereof, the "CAROLCO LETTER") which lists, among
other things, each Subsidiary of Carolco. All the
outstanding shares of capital stock of each such
Subsidiary have been duly authorized, validly issued
and are fully paid and nonassessable and are, except
as set forth in the CAROLCO LETTER, owned by
Carolco, by another Subsidiary of Carolco or by
Carolco and another such Subsidiary, free and clear
of all liens, charges, claims and encumbrances.
Except as set forth in the CAROLCO LETTER, there are
no outstanding options, rights or agreements of any
kind relating to the issuance, sale or transfer of
any capital stock or other equity securities or
ownership interests of any such Subsidiary of
Carolco to any person. Each Subsidiary of Carolco
(i) is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the
requisite corporate power and authority to own its
properties and carry on its business as now being
conducted, and (iii) is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities make such qualification necessary, except
where the failure to be so qualified would not,
individually or in the aggregate, have a Material
Adverse Effect on Carolco. Except for the capital
stock of its Subsidiaries and except as disclosed in
Carolco's Annual Report on Form 10-K for the year
ended December 31, 1993 and Carolco's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1994, Carolco does not own, directly or indirectly,
any capital stock or other ownership interest in any
corporation, partnership or other entity which is
material to Carolco.
Section 6.c Capital Structure and Commitments.
As of the date hereof, the authorized capital stock
of Carolco consists of 650,000,000 shares of Carolco
Common Stock and 10,000,000 shares of Carolco
preferred stock (of the Carolco preferred stock,
120,000 shares have been designated as Carolco
Series A Preferred Stock). As of the date of this
Agreement:
(a) approximately 137,687,728 shares of Carolco
Common Stock are duly authorized, validly issued and
outstanding, fully paid and non-assessable
(excluding 2,327,381 treasury shares),
(b) approximately 31,222,000 shares of Carolco
Common Stock are reserved for issuance upon the
exercise of outstanding options to purchase Carolco
Common Stock, which options are listed in Exhibit
6.3A.
(c) 82,500 shares of Carolco Series A Preferred
Stock are duly authorized, validly issued and are
outstanding, fully paid and non-assessable,
(d) 37,500 shares of Carolco Series A Preferred
Stock are reserved for issuance upon the
distribution of payment-in-kind dividends;
(e) approximately 137,500,000 shares of Carolco
Common Stock are reserved for issuance upon
conversion of the Carolco Series A Preferred Stock;
(f) approximately 50,000,000 shares of Carolco
Common Stock are reserved for issuance upon
conversion of $30,000,000, in aggregate, of 5%
Payment-in-Kind Convertible Subordinated Notes of
Carolco (the "Carolco 5% Notes") due 2002;
(g) approximately 66,666,666 shares of Carolco
Common Stock are reserved for issuance upon
conversion of $50,000,000, in aggregate, of 7%
Convertible Subordinated Notes of Carolco (the
"Carolco 7% Notes") due 2006; and
(i) approximately 74,074,074 shares of Carolco
Common Stock are reserved for issuance ("Pay-Per-
View Shares") in connection with the Purchase
Agreement dated as of August 19, 1993, by and
between Carolco and TCI (the "TCI Purchase
Agreement").
As of the date of this Agreement, except for this
Agreement, the stock options referred to in clause
(b) of this Section 6.3 and listed on Exhibit 6.3A,
the shares of Carolco Common Stock underlying the
Carolco Series A Preferred Stock, the Carolco 5%
Notes and the Carolco 7% Notes and the Pay-Per-View
Shares, and other agreements and transactions
relating to capital stock described in the Carolco
SEC Documents or in the CAROLCO LETTER, there are no
options, warrants, rights, commitments, agreements,
arrangements or undertakings of any kind to which
Carolco or any of its Subsidiaries is a party or by
which any of them is bound relating to the issuance
of any capital stock or other voting securities of
Carolco or of any of its Subsidiaries or any
securities convertible into or exchangeable for any
capital stock or other voting securities of Carolco
or any of its Subsidiaries, or any options, warrants
or other rights to purchase capital stock or other
voting securities of Carolco or any of its
Subsidiaries. As of the date of this Agreement,
there were approximately 1,040 holders of record of
Carolco Common Stock, and three (3) holders of
record of Carolco Series A Preferred Stock.
Exhibit 6.3B lists all agreements of Carolco by
which Carolco may be required to register any of its
securities ("Carolco Registration Rights
Agreements").
Section 6.d Authority; Non-Contravention.
(i) Carolco has all requisite corporate power and
authority to enter into this Agreement and, subject
to any approval by the stockholders of Carolco to
consummate the Merger, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement by Carolco, the
performance by Carolco of its obligations hereunder
and the consummation by Carolco of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Carolco,
except for the approval of Carolco's stockholders,
which will be solicited in accordance with the
provisions of Section 9.1 hereof, and no other act
or proceeding on the part of Carolco is necessary to
authorize the execution, delivery and consummation
of this Agreement or the transactions contemplated
hereby.
(ii) The Board of Directors of Carolco has received
the opinion of The Seidler Companies Incorporated
("Seidler"), Carolco's financial advisor, dated June
30, 1994, to the effect that in Seidler's opinion
the financial terms of the Merger are fair, from a
financial point of view, to the holders of Carolco
Common Stock, other than the Carolco Investors (as
defined below). A true, correct and complete copy
of such opinion (the "Seidler Fairness Opinion") has
been delivered to LIVE. For purposes of this
Agreement, the "Carolco Investors" are Pioneer,
Cinepole, RCS, MGM Holdings Corporation and New
Carolco Investments B.V.
(iii) Carolco has received an Investor
Representation Agreement from each Carolco Investor
and each such Investor Representation Agreement,
substantially in the form of Exhibit 5.4(c) hereto,
has been executed by such Carolco Investor.
(iv) This Agreement has been duly and validly
executed and delivered by Carolco and (assuming the
valid authorization, execution and delivery of this
Agreement by LIVE and CAC) constitutes a valid and
binding obligation of Carolco enforceable against
Carolco in accordance with its terms, except (i) as
such obligation may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar
laws, or by equitable principles relating to or
limiting creditors' rights generally, and (ii) that
the remedies of specific performance, injunction and
other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before
which any proceeding therefor may be brought.
(v) The Board of Directors of Carolco has approved
the terms of this Agreement and of the transactions
contemplated hereby.
(vi) Except as set forth in the CAROLCO LETTER, the
execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated
hereby and compliance with the provisions hereof
will not breach, conflict with, or result in any
violation of, or default (with or without notice or
lapse of time, or both) under, or result in or give
rise to a right of termination, cancellation or
acceleration of any liability or obligation or to
the loss of a material benefit under, or result in
the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets
of Carolco or any of its Subsidiaries under, any
provision of (i) the Restated Certificate of
Incorporation of Carolco or Restated Bylaws of
Carolco (true and complete copies of which as of the
date hereof have been delivered to LIVE) or any
provision of the comparable charter or
organizational documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Carolco or any of its Subsidiaries or
(iii) any judgment, order, decree, statute, law,
ordinance, injunction, writ, or authorization,
consent, approval, rule or regulation of any court
or governmental authority applicable to Carolco or
any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of
clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, liens, security
interests, charges or encumbrances that,
individually or in the aggregate, would not (A) have
a Material Adverse Effect on Carolco, (B) materially
impair the ability of Carolco to perform its
obligations hereunder or (C) prevent the
consummation of any of the transactions contemplated
hereby.
(vii) No filing or registration with, or
authorization, consent or approval of, any
Governmental Entity is required by or with respect
to Carolco or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by
Carolco or is necessary for the consummation by
Carolco of the Merger or the other transactions
contemplated by this Agreement, except (i) in
connection, or in compliance, with the provisions of
the Securities Act and the Exchange Act, (ii) in
connection with, or in compliance with, the
provisions of the HSR Act, (iii) the filing of the
Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with
the relevant authorities of other states in which
Carolco is qualified to do business, (iv) any
required filings under state securities or "blue
sky" laws, and (v) filings, registrations,
authorizations, consents or approvals which if not
made or obtained would have a Material Adverse
Effect on Carolco or would prevent or materially
adversely affect the transactions contemplated
hereby.
Section 6.e Carolco SEC Documents. Carolco has
filed all required reports, statements, forms and
documents with the SEC that Carolco was required to
file during the three-year period immediately
preceding the date hereof (the "Carolco SEC
Documents"). As of their respective dates, and as
subsequently revised, amended or superseded by
later-filed Carolco SEC Documents through and
including the date of this Agreement, the Carolco
SEC Documents complied in all material respects with
the requirements of the Securities Act or the
Exchange Act, as the case may be, and as so revised,
superseded or amended none of the Carolco SEC
Documents including the financial information
contained therein contained or currently contain any
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein, in
light of the circumstances under which they were
made, not misleading. The financial statements of
Carolco included in Carolco SEC Documents comply as
to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted
accounting principles (except, in the case of the
unaudited statements, as permitted by Regulation S-X
promulgated by the SEC) applied on a consistent
basis during the periods involved (except as may be
indicated therein or in the notes thereto) and
fairly present the consolidated financial position
of Carolco and its consolidated Subsidiaries as at
the dates thereof and the consolidated results of
their operations and statements of cash flows for
the periods included therein (subject, in the case
of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described
therein). Notwithstanding the foregoing, Carolco
makes no representation or warranty in this
Agreement regarding any information (including
financial information and financial statements)
supplied by LIVE for inclusion in any Carolco SEC
Documents.
Section 6.f No Material Adverse Change. Except
as set forth in the CAROLCO LETTER, since the date
of the most recent balance sheet and notes to
consolidated financial statements contained in
Carolco's Annual Report on Form 10-K for the year
ended December 31, 1993, or Carolco's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1994, as filed with the SEC ("Carolco Balance
Sheet"), there has been no Material Adverse Change
in Carolco and neither Carolco nor any of its
Subsidiaries knows of any such Material Adverse
Change that is threatened, nor has there been any
damage, destruction or loss affecting the assets,
properties, business, operations or condition
(financial or otherwise) of Carolco or any of its
Subsidiaries, whether or not covered by insurance
which would have a Material Adverse Effect on
Carolco, and which has not been subsequently
reported in any of the Carolco SEC Documents filed
with the SEC prior to the date hereof.
Section 6.g Absence of Undisclosed Liabilities.
Except as set forth in the Carolco SEC Documents or
the CAROLCO LETTER, as of the date of the Carolco
Balance Sheet neither Carolco nor any of its
Subsidiaries had any liabilities or obligations of
any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a financial statement
or in the notes thereto and which, individually or
in the aggregate, would have a Material Adverse
Effect on Carolco, which were not set forth on the
Carolco Balance Sheet.
Section 6.h Absence of Certain Events. Except as
disclosed in Carolco SEC Documents or the CAROLCO
LETTER, since the date of the Carolco Balance Sheet,
Carolco and its Subsidiaries have conducted their
business only in the ordinary course.
Section 6.i No Solicitation. Carolco is not now
engaged in any activities, discussions or
negotiations with any parties (other than LIVE) in
respect of a "takeover proposal" or an "offer" (both
as defined in Section 8.3).
Section 6.j Registration Statement and Proxy
Statement. None of the information to be supplied
by Carolco for inclusion or incorporation by
reference in the Registration Statement or the Proxy
Statement will (a) in the case of the Registration
Statement, at the time it becomes effective, contain
any statement which, at the time and in the light of
the circumstances under which it is made, is false
or misleading with respect to any material fact, or
which omits to state any material fact required to
be stated therein or necessary in order to make the
statements therein not false or misleading, or (b)
in the case of the Proxy Statement, at the time of
the mailing of the Proxy Statement and at the times
of the Stockholder Meetings, contain any statement
which, at the time and in the light of the
circumstances under which it is made, is false or
misleading with respect to any material fact, or
which omits to state any material fact required to
be stated therein or necessary in order to make the
statements therein not false or misleading. The
Registration Statement will comply (with respect to
Carolco) as to form in all material respects with
the provisions of the Securities Act and the Proxy
Statement will comply (with respect to Carolco) as
to form in all material respects with the provisions
of the Exchange Act. Notwithstanding the foregoing,
Carolco makes no representation or warranty
regarding any information (including financial
information and financial statements) supplied by
LIVE or CAC for inclusion in the Registration
Statement or the Proxy Statement.
Section 6.k Reorganization. Neither Carolco nor
any of its Subsidiaries has taken any action nor
failed to take any action which action or failure to
take action would jeopardize the qualification of
the Merger as a tax free reorganization under the
Code.
Section 6.l Litigation. Except as set forth in
the CAROLCO LETTER or the Carolco SEC Documents, as
of the date hereof, there is no claim, suit, action
or proceeding pending or, to the knowledge of
Carolco, threatened against or affecting Carolco or
any of its Subsidiaries (whether or not covered by
insurance) which (i) could reasonably be expected to
have a Material Adverse Effect on Carolco (and
Carolco is not aware of any reasonable basis for any
such suit, action or proceeding), or (ii) challenge
the transactions contemplated hereby at law or in
equity or before or by any federal, state, local,
foreign or other governmental department,
commission, board, agency, instrumentality, or
authority; nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Carolco or any of
its Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future would
have, any such effect.
Section 6.m Loan Agreements, Customers and
Suppliers.
(i) Neither Carolco nor any of its Subsidiaries is
in violation of or in default under (nor does there
exist any condition which upon the passage of time,
the giving of notice or both would cause such a
violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease
instrument, permit, concession, franchise, license
or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it
or any of its properties or assets is bound, except
for violations or defaults that could not,
individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on
Carolco or except as are set forth in the CAROLCO
LETTER. Set forth in the CAROLCO LETTER is a list
of each loan or credit agreement, note, bond,
mortgage, indenture and other agreement and
instrument pursuant to which any indebtedness of
Carolco or any of its Subsidiaries (other than
indebtedness solely among or between Carolco and/or
any of its Subsidiaries) in an aggregate principal
amount in excess of $3,000,000 is outstanding or may
be incurred and the respective principal amounts
currently outstanding thereunder.
(ii) Neither Carolco nor any of its Subsidiaries is
in default under (nor does there exist any condition
which upon the passage of time, the giving of notice
or both would cause such a violation of or default
under) any material agreement with any of its
customers or suppliers of products or services which
are of material importance to Carolco or any of its
Subsidiaries, and no such customer or supplier, to
the knowledge of Carolco or any of its Subsidiaries,
is in default under (nor does there exist any
condition which upon the passage of time, the giving
of notice or both would cause such customer or
supplier to be in violation of or default under) any
of such material agreements or except as are set
forth in the CAROLCO LETTER.
Section 6.n Permits. Carolco and each of its
Subsidiaries possess all franchises, permits,
licenses, certificates, approvals or other
authorizations necessary to own or lease and operate
their properties and to conduct their businesses,
except for incidental franchises, permits, licenses,
certificates, approvals and other authorizations
that would be readily obtainable by any qualified
applicant without undue burden in the event of any
lapse, termination, cancellation or forfeiture or
which if not obtained would not have a Material
Adverse Effect on Carolco.
Section 6.o Absence of Changes in Carolco Benefit
Plans. Except as disclosed in the Carolco SEC
Documents or the CAROLCO LETTER, since the date of
the most recent audited financial statements
included in the Carolco SEC Documents, there has not
been any adoption or amendment by Carolco or any of
its Subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical fringe
benefit or other plan, arrangement or understanding
(whether or not legally binding) providing benefits
to any current or former employee or director of, or
any other person providing services to, Carolco or
any of its Subsidiaries (collectively, "Carolco
Benefit Plans") which will have a Material Adverse
Effect on Carolco. Carolco has delivered to LIVE
true, correct and complete copies of all Carolco
Benefit Plans. Each of the Carolco Benefit Plans is
in material compliance with all applicable laws
including ERISA and the Code.
Section 6.p Intellectual Property. Carolco and
its Subsidiaries own, or are licensed or otherwise
have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights,
copyrights and other proprietary intellectual
property rights and computer programs (collectively,
the "Carolco Proprietary Rights") which are material
to the conduct of the business of Carolco and its
Subsidiaries taken as a whole. No claims are
pending or, to the knowledge of Carolco, threatened
that Carolco or any of its Subsidiaries is
infringing or otherwise adversely affecting the
rights of any person with regard to any Carolco
Proprietary Right, except for such claims or threats
which could not reasonably be expected to have a
Material Adverse Effect on Carolco. To the
knowledge of Carolco, no person is infringing the
rights of Carolco with respect to any Carolco
Proprietary Right that would have a Material Adverse
Effect on Carolco. No lien, encumbrance or
restriction with respect to any Carolco Proprietary
Right has a Material Adverse Effect on Carolco, or
so far as Carolco can now foresee could reasonably
be expected to have a Material Adverse Effect on
Carolco.
Section 6.q Environmental Matters. To the
knowledge of Carolco, Carolco and each of its
Subsidiaries are in compliance with all applicable
Environmental Laws, except for violations of the
Environmental Laws that could not, individually or
in the aggregate, reasonably be expected to result
in a Material Adverse Effect on Carolco.
Section 6.r Taxes. Except as set forth in the
CAROLCO LETTER or the Carolco SEC Documents: (a)
each of Carolco and its Subsidiaries has timely
filed all federal, state, local or foreign tax
returns required to be filed by it (except for all
such returns the failure of which timely filing
would, individually or in the aggregate, not have a
Material Adverse Effect on Carolco), and has paid
(or Carolco has paid on its behalf) all taxes shown
as due on the returns in respect of the periods
covered by such returns; (b) there are no tax liens
upon any property or assets of Carolco or any of its
Subsidiaries which would have a Material Adverse
Effect on Carolco, except liens for current taxes
not yet due; (c) neither Carolco nor any of its
Subsidiaries is delinquent in the payment of any
material tax, assessment or governmental charge
which would have a Material Adverse Effect on
Carolco; (d) no deficiencies for any taxes have been
proposed, asserted or assessed against Carolco or
any of its Subsidiaries which would have a Material
Adverse Effect on Carolco or its Subsidiaries, and
no requests for waivers of the time to assess any
such taxes are pending; and (e) no audits of the tax
returns of Carolco or any of its Subsidiaries are
currently being conducted by a taxing authority, and
neither Carolco nor its Subsidiaries have received
any notices of pending or proposed audits from a
taxing authority.
Section 6.s Foreign Corrupt Practices Act. To
the best knowledge of the officers of Carolco,
neither Carolco, any Subsidiary of Carolco nor any
director, officer, agent, employee or other person
associated with or acting on behalf of any of them
has (i) used any corporate or other funds for
unlawful contributions, payments, gifts or
entertainment or made any unlawful expenditures
relating to political activity, or made any direct
or indirect unlawful payments to governmental
officials or others or established or maintained any
unlawful or unrecorded funds in violation of Section
30A of the Exchange Act or (ii) accepted or received
any unlawful contributions, payments, gifts or
expenditures. Carolco is in compliance in all
material respects with the provisions of Section
13(b) of the Exchange Act and to the best knowledge
of the officers of Carolco, there is no failure of
compliance with such provisions.
Section 6.t Brokers. No broker, investment
banker or other person, other than Seidler or
Daniels & Associates, the fees and expenses of which
will be paid by Carolco in accordance with Carolco's
written agreement with Seidler and Daniels &
Associates (copies of which have been delivered by
Carolco to LIVE prior to the date hereof), is
entitled to any broker's, finder's or other similar
fee or commission in connection with the
transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Carolco.
Section 6.u Officers, Directors and Key
Employees. The CAROLCO LETTER sets forth (i) the
name and total compensation of each officer and
director of Carolco; (ii) the name of each officer
and director of any of Carolco's Subsidiaries; (iii)
the name and total compensation of each other
officer, director, employee, consultant, agent or
other representative of Carolco or any of its
Subsidiaries whose current annual rate of
compensation (including bonuses and commissions)
exceeds $150,000; (iv) all wage or salary increases
or bonuses received by the persons identified in
Section 6.21(i) and (iii) ("Significant Carolco
Employees") since December 31, 1993, and any accrual
for or commitment or agreement by Carolco or any of
its Subsidiaries to pay such increases or bonuses;
and (v) a notation with respect to each of such
Significant Carolco Employees, whether they have an
employment agreement with Carolco or any of its
Subsidiaries and, if so, the date and term of such
agreement. Except as set forth in the CAROLCO
LETTER, (x) to the knowledge of Carolco or any of
its Subsidiaries, none of such Significant Carolco
Employees has made a threat to Carolco or any of its
Subsidiaries or to any of their officers or
directors to cancel or otherwise terminate such
Significant Carolco Employee's relationship with
Carolco or any of its Subsidiaries and (y) none of
such Significant Carolco Employees have "change of
control" clauses or agreements with Carolco or any
of its Subsidiaries (or similar clauses or
agreements permitting such Significant Carolco
Employees to terminate their employment relationship
with Carolco or any of its Subsidiaries) that would
be triggered by the Merger which have not been
waived on the date hereof.
Section 6.v State Takeover Statutes. Neither
Section 203 of the DGCL nor any other "fair price,"
"moratorium," "control share acquisition" or other
state takeover statute or similar statute or
regulation applies to the Merger by virtue of
Carolco engaging in the transactions contemplated
hereby.
Section 6.w Insurance. Carolco and each of its
Subsidiaries have been and are insured by
financially sound and reputable insurers with
respect to their properties and the conduct of their
business in such amounts and against such risks as
are reasonable in relation to their respective
businesses, and each will use its best efforts to
maintain such insurance. Such insurance is in full
force and effect and no notice of cancellation or
termination has been received with respect to any of
said insurance. Except as disclosed in the CAROLCO
LETTER, there are no claims pending thereunder
except where such claim would not, individually or
in the aggregate, have a Material Adverse Effect on
Carolco.
Section 6.x Title to Properties and Related
Matters. Except with respect to the Carolco
Proprietary Rights, Carolco and each of its
Subsidiaries have good and marketable title (or
valid and subsisting leasehold interests) to all of
the personal properties and assets (tangible and
intangible) and the real properties utilized in
their businesses or reflected in the Carolco SEC
Documents or acquired after the date thereof (other
than properties sold or otherwise disposed of in the
ordinary course of business) which are material to
them, free and clear of all title defects, liens,
encumbrances and restrictions, except (i) as
reflected in the Carolco SEC Documents, (ii) to the
extent not described in clause (i), those described
in the CAROLCO LETTER, (iii) to the extent not
described in clause (i), statutory liens not yet due
or delinquent or the validity of which are being
contested or litigated in good faith by appropriate
proceedings and for which Carolco has set aside on
its books reserves that are adequate with respect
thereto; and (iv) liens, encumbrances, covenants,
rights of way, building or use restrictions,
easements, exceptions, variances, reservations and
other matters or limitations of any kind, if any,
which, when considered together with the liens
described in clauses (i), (ii) and (iii), do not
have a Material Adverse Effect on Carolco's business
or operations. All properties of Carolco and each
of its Subsidiaries are reflected in the Carolco SEC
Documents in the manner and to the extent required
by generally accepted accounting principles
consistently applied. Neither the whole nor any
portion of the leaseholds or any other assets of
Carolco or any of its Subsidiaries is subject to any
governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any
public authority with or without payment of
compensation therefor, nor to the knowledge of
Carolco or any of its Subsidiaries has any such
condemnation, expropriation or taking been proposed,
which would have a Material Adverse Effect on
Carolco and its Subsidiaries taken as a whole.
Section 6.y Accuracy of Carolco Disclosure.
Neither this Agreement, nor any document or other
paper furnished (or to be furnished pursuant hereto
at the Closing) by or on behalf of Carolco to LIVE
pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary to make the statements made, in
the context in which made, not false or misleading.
There is no fact that Carolco has not disclosed to
LIVE in writing that has a Material Adverse Effect
on Carolco or so far as Carolco can now foresee will
have a Material Adverse Effect on Carolco or on the
ability of Carolco to perform this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES REGARDING CAC
LIVE and CAC jointly and severally represent and
warrant to Carolco as follows:
Section 7.a Organization and Standing. CAC is a
corporation duly organized, validly existing and in
good standing under the laws of the State of
Delaware. CAC was organized solely for the purpose
of engaging in the transactions contemplated by this
Agreement and has not engaged in any business or
entered into any agreements since it was
incorporated which is not in connection with this
Agreement, has not incurred any liabilities since it
was incorporated, and (except as set forth in the
LIVE LETTER) does not own any properties.
Section 7.b Capital Structure. As of the date of
this Agreement, the authorized capital stock of CAC
consists of one share of CAC Common Stock, which is
validly issued and outstanding, fully paid and
nonassessable. As of the date of this Agreement,
except for this Agreement, there are no options,
warrants, rights, commitments, agreements,
arrangements or undertakings of any kind to which
CAC is a party or by which it is bound relating to
the issuance of any capital stock or other voting
securities of CAC or any securities convertible into
or exchangeable for any capital stock or other
voting securities of CAC, or any options, warrants
or other rights to purchase capital stock or other
voting securities of CAC.
Section 7.c Authority.
(i) CAC has all requisite corporate power and
authority to enter into and execute this Agreement
and to consummate the transactions contemplated
hereby. The execution and delivery of this
Agreement, the performance by CAC of its obligations
hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by its
Board of Directors and LIVE as its sole stockholder,
and no other corporate proceedings on the part of
CAC are necessary to authorize this Agreement and
the transactions contemplated hereby. This
Agreement has been duly and validly executed and
delivered by CAC and (assuming the due
authorization, execution and delivery hereof by
Carolco) constitutes a valid and binding obligation
of CAC enforceable against CAC in accordance with
its terms, except (i) as such obligation may be
affected by bankruptcy, insolvency, reorganization,
moratorium or similar laws, or by equitable
principles relating to or limiting creditors' rights
generally, and (ii) that the remedies of specific
performance, injunction and other forms of equitable
relief are subject to certain tests of equity
jurisdiction, equitable defenses and the discretion
of the court before which any proceeding therefor
may be brought.
(ii) The execution and delivery of this Agreement do
not, and the consummation of the transactions
contemplated hereby in compliance with the
provisions hereof will not, breach, conflict with,
or result in any violation of, or default (with or
without notice or lapse of time, or both) under or
result in or give rise to a right of termination,
cancellation or acceleration of any liability or
obligation or to the loss of a material benefit
under, any provision of the Certificate of
Incorporation or Bylaws of CAC, true and complete
copies of which as of the date hereof have been
delivered to Carolco.
ARTICLE 8
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 8.a Conduct of Business by LIVE Pending
the Merger.
(i) Ordinary Course. During the period from the
date of this Agreement through the Effective Date or
earlier termination of this Agreement, LIVE shall,
and shall cause its Subsidiaries to, in all material
respects carry on their respective businesses in the
usual, regular and ordinary course in substantially
the same manner as heretofore conducted and, to the
extent consistent therewith, use all reasonable best
efforts to preserve intact their current business
organizations, keep available the services of their
current officers and employees necessary to its
business and preserve their relationships with
customers, suppliers and others having business
dealings with them to the end that their goodwill
and ongoing businesses shall be unimpaired at the
Effective Date. Without limiting the generality of
the foregoing, and, except as otherwise expressly
contemplated by this Agreement, LIVE shall not, and
shall not permit any of its Subsidiaries to, without
the prior written consent of Carolco or except as
disclosed in the LIVE LETTER:
(1) (i) declare, set aside or pay any dividends
on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital
stock, except for dividends from Subsidiaries to
LIVE, and except for dividends declared, set aside
or paid with respect to the LIVE Series B Preferred
Stock and LIVE Series C Preferred Stock in
accordance with their current terms;
(ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(iii) purchase, redeem or otherwise acquire any
shares of capital stock of LIVE or any other debt or
equity securities thereof or any rights, warrants or
options to acquire any such shares or other
securities, except that LIVE may, before the
Effective Date, redeem all outstanding shares of the
LIVE Series B Preferred Stock as contemplated in
Section 10.2(e) herein, and except that LIVE may,
before the Effective Date, redeem or repay up to
$6,000,000, in aggregate, of its $37,000,000, in
aggregate, 12% Senior Subordinated Secured Notes due
1994 ("LIVE 12% Notes");
(D) amend the terms of any LIVE capital stock or
any other securities of LIVE, except as contemplated
herein.
(2) issue, deliver, sell, pledge, dispose of or
otherwise encumber (or propose to do any of the
foregoing) any shares of its capital stock, any
other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting
securities or convertible securities or equity
equivalent (other than, in the case of LIVE, the
issuance of LIVE Common Stock or LIVE Series A
Common Stock during the period from the date of this
Agreement through the Effective Date upon the
exercise of existing LIVE stock options or warrants
or conversion of LIVE Series B Preferred Stock or
LIVE Series C Preferred Stock outstanding on the
date of this Agreement in accordance with their
current terms, and actions with respect to the LIVE
Rights in accordance with their current terms);
(3) other than as provided herein or contemplated
hereby, amend the Restated Certificate of
Incorporation of LIVE or Bylaws of LIVE or
comparable charter or organizational documents of
any of its Subsidiaries;
(4) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any
other manner, any business or any corporation,
partnership, association or other business
organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate,
to LIVE and its Subsidiaries taken as a whole or
which would make it impossible or a violation of
applicable laws, rules or regulations for Carolco to
effect the Merger;
(5) except with respect to plans previously
disclosed to Carolco with respect to Strawberries
and VCL, sell, lease, assign or otherwise dispose of
or agree to sell, lease, assign or otherwise dispose
of any of its assets that are material, individually
or in the aggregate, to LIVE and its Subsidiaries
taken as a whole or which would make it impossible
or a violation of applicable laws, rules or
regulations for Carolco to effect the Merger;
(6) except as permitted in Section 10.2(f) hereof,
incur any indebtedness (as defined in
Section 5.13(a)).
(7) make or incur any capital expenditure or
expenditures exceeding $100,000 in the aggregate,
other than in the ordinary course of business
consistent with past practice;
(8) except as disclosed in the LIVE SEC Documents,
pay, discharge or satisfy any material claims,
litigation, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business
consistent with past practice or in accordance with
their terms, of liabilities (a) reflected or
reserved against in, or contemplated by, the most
recent consolidated financial statements (or the
notes thereto) of LIVE included in LIVE SEC
Documents or (b) incurred in the ordinary course of
business consistent with past practice;
(9) take any action with respect to the grant of
any severance or termination pay to any director,
officer or employee of LIVE or any of its
Subsidiaries or with respect to any increase of
benefits payable under its severance or termination
pay practices in effect on the date hereof, except
for actions involving expenditures by LIVE or any of
its Subsidiaries of (a) individually, no more than
$100,000 in excess of the amount of compensation
that would have been paid during the remainder of
the term had the contract not been terminated, or
(b) in the aggregate, no more than $500,000 in
excess of the amount of compensation that would have
been paid during the remainder of the term of all
terminated contracts had they not been terminated;
(10) except as may be required by law or this
Agreement, enter into, adopt or increase in any
material manner the benefits payable under any
bonus, profit sharing, compensation, termination,
stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement,
deferred compensation, employment, severance or
other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or
welfare of any director, officer or employee, or
(except for increases in the ordinary course of
business consistent with past practice) increase in
any manner the compensation or fringe benefits of
any director or officer or pay any benefit not
required by any existing plan and arrangement
(including the granting of stock options, stock
appreciation rights, shares of restricted stock or
performance units) or enter into any contract,
agreement, commitment or arrangement to do any of
the foregoing;
(11) except as may be required as a result of a
change in law or in generally accepted accounting
principles, change any of the accounting principles
or practices used by it;
(12) write down the value of any inventory or write
off as uncollectible any notes or accounts
receivable, except with respect to plans previously
disclosed to Carolco with respect to Strawberries
and VCL and except for immaterial write-downs and
write-offs in the ordinary course of business and
consistent with past practice;
(13) dispose of or permit to lapse any LIVE
Proprietary Rights or disclose to any person any
LIVE Proprietary Rights except where such disposal,
lapse or disclosure would not, individually or in
the aggregate, have a Material Adverse Effect on
LIVE;
(14) pay, loan or advance any amount to, or sell,
transfer or lease any properties or assets to, or
enter into any agreement or arrangement with, any of
its officers or directors or any affiliate thereof,
except pursuant to existing agreements with such
persons, except for directors' fees and compensation
to officers at rates not exceeding the rates of
compensation paid during the six-month period ended
December 31, 1993, or except for transactions in the
ordinary course of business, or except as disclosed
in the LIVE SEC Documents or except as otherwise
permitted or contemplated hereunder; or
(15) enter into any contract, agreement, commitment
or arrangement with respect to any of the foregoing.
(ii) No Default. Other than with Carolco's prior
written consent or as disclosed in the LIVE LETTER,
neither LIVE nor any of its Subsidiaries shall do
any act or omit to do any act, or knowingly permit
any act or omission to act, which will cause a
breach of any material contract or commitment of
LIVE or any of its Subsidiaries, except for such
breaches (other than of the provisions of this
Agreement) as would not, individually or in the
aggregate, have a Material Adverse Effect on LIVE.
(iii) Compliance with Laws. LIVE and each of
its Subsidiaries shall duly comply with all laws
applicable to it and its properties, operations,
business and employees, except where the breach
thereof would not, individually or in the aggregate,
have a Material Adverse Effect on LIVE.
(iv) Tax Returns. LIVE and each of its Subsidiaries
shall prepare, file and pay amounts shown as due on
all federal, state, local and foreign tax returns
and amendments thereto required to be filed by it,
except that the failure to file those state, local
or foreign returns which individually or in the
aggregate would not have a Material Adverse Effect
on LIVE shall not be deemed a breach of this Section
8.1(d).
(v) Other Actions. LIVE shall not, and shall not
permit any of its Subsidiaries to, take any action
that would, or that could reasonably be expected to,
result in (i) any of the representations and
warranties of LIVE or CAC set forth in this
Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming
untrue in any material respect or (iii) any of the
conditions set forth in Article 10 not being
satisfied.
(vi) Advice of Changes; SEC Filings. LIVE shall
promptly advise Carolco in writing of any change or
event having, or which, insofar as can reasonably be
foreseen, would have, a Material Adverse Effect on
LIVE without regard to whether such change or event
would be permitted hereunder. LIVE shall promptly
advise Seidler in writing of any change or event or
any other information which would materially impact
the Seidler Fairness Opinion including material
write-downs, litigation or changes in financial
condition or capitalization without regard to
whether such change or event would be permitted
hereunder. LIVE shall promptly provide Carolco (or
its counsel) with copies of all filings made by LIVE
or CAC with the SEC or any other Governmental Entity
in connection with this Agreement and the
transactions contemplated hereby and thereby.
Section 8.b Conduct of Business by Carolco
Pending the Merger.
(i) Ordinary Course. During the period from the
date of this Agreement through the Effective Date or
earlier termination of this Agreement, Carolco
shall, and shall cause its Subsidiaries to, in all
material respects carry on their respective
businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore
conducted and, to the extent consistent therewith,
use all reasonable best efforts to preserve intact
their current business organizations, keep available
the services of their current officers and employees
necessary to its business and preserve their
relationships with customers, suppliers and others
having business dealings with them to the end that
their goodwill and ongoing businesses shall be
unimpaired at the Effective Date. Without limiting
the generality of the foregoing, and, except as
otherwise expressly contemplated by this Agreement,
Carolco shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent
of LIVE or except as disclosed in the CAROLCO
LETTER:
(1) (A) declare, set aside or pay any dividends
on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital
stock, except for dividends from Subsidiaries to
Carolco, and except for payment-in-kind dividends
declared, set aside or paid on the Carolco Series A
Preferred Stock,
(B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any
other securities in respect of, in lieu of, or in
substitution for shares of its capital stock,
(C) purchase, redeem or otherwise acquire any
shares of capital stock of Carolco or any of its
Subsidiaries or any other debt or equity securities
thereof or any rights, warrants or options to
acquire any such shares or other securities, or
(D) amend the terms of any Carolco capital stock or
any other securities of Carolco.
(2) issue, deliver, sell, pledge, dispose of or
otherwise encumber (or propose to do any of the
foregoing) any shares of its capital stock, any
other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting
securities or convertible securities or equity
equivalent (other than, in the case of Carolco, the
issuance of Carolco Common Stock during the period
from the date of this Agreement through the
Effective Date upon the exercise of existing Carolco
stock options or warrants, the conversion of Carolco
Series A Preferred Stock, the Carolco 5% Notes or
the Carolco 7% Notes in accordance with their
current terms or the issuance of Pay-Per-View Shares
during the period from the date of this Agreement
through the Effective Date);
(3) other than as provided herein, amend the
Restated Certificate of Incorporation of Carolco or
Restated Bylaws of Carolco or comparable charter or
organizational documents of any of its Subsidiaries;
(4) enter into any contract, agreement, commitment
or arrangement with respect to United States and
Canadian video rights;
(5) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any
other manner, any business or any corporation,
partnership, association or other business
organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate,
to Carolco and its Subsidiaries taken as a whole or
which would make it impossible or a violation of
applicable laws, rules or regulations for LIVE to
effect the Merger;
(6) sell, lease, assign or otherwise dispose of or
agree to sell, lease, assign or otherwise dispose of
any of its assets that are material, individually or
in the aggregate, to Carolco and its Subsidiaries
taken as a whole or which would make it impossible
or a violation of applicable laws, rules or
regulations for LIVE to effect the Merger;
(7) incur any indebtedness (as defined in Section
5.13(a)), except for indebtedness incurred in the
ordinary course of business consistent with past
practice; or make any material loans, advances or
capital contributions to, or investments in, any
other person, other than to any wholly-owned
Subsidiary of Carolco; and other than loans,
advances, capital contributions, and investments
made in the ordinary course of business, consistent
with past practice;
(8) make or incur any capital expenditure or
expenditures exceeding $100,000 in the aggregate
other than in the ordinary course of business
consistent with past practice;
(9) except as disclosed in the Carolco SEC
Documents, pay, discharge or satisfy any material
claims, litigation, liabilities or obligations
(absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of
business consistent with past practice or in
accordance with their terms, of liabilities (a)
reflected or reserved against in, or contemplated
by, the most recent consolidated financial
statements (or the notes thereto) of Carolco
included in Carolco SEC Documents or (b) incurred in
the ordinary course of business consistent with past
practice;
(10) take any action with respect to the grant of
any severance or termination pay to any director,
officer or employee of Carolco or any of its
Subsidiaries or with respect to any increase of
benefits payable under its severance or termination
pay practices in effect on the date hereof, except
for actions involving expenditures by Carolco or any
of its Subsidiaries of (a) individually, no more
than $100,000 in excess of the amount of
compensation that would have been paid during the
remainder of the term had the contract not been
terminated, or (b) in the aggregate, no more than
$500,000 in excess of the amount of compensation
that would have been paid during the remainder of
the term of all terminated contracts had they not
been terminated;
(11) except as may be required by law or this
Agreement, enter into, adopt or increase in any
material manner the benefits payable under any
bonus, profit sharing, compensation, termination,
stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement,
deferred compensation, employment, severance or
other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or
welfare of any director, officer or employee, or
(except for increases in the ordinary course of
business consistent with past practice) increase in
any manner the compensation or fringe benefits of
any director or officer or pay any benefit not
required by any existing plan and arrangement
(including the granting of stock options, stock
appreciation rights, shares of restricted stock or
performance units) or enter into any contract,
agreement, commitment or arrangement to do any of
the foregoing;
(12) except as may be required as a result of a
change in law or in generally accepted accounting
principles, change any of the accounting principles
or practices used by it;
(13) write down the value of any inventory or write
off as uncollectible any notes or accounts
receivable, except for immaterial write-downs, and
write-offs in the ordinary course of business and
consistent with past practice;
(14) dispose of or permit to lapse any Carolco
Proprietary Rights or disclose to any person any
Carolco Proprietary Rights except where such
disposal, lapse or disclosure would not,
individually or in the aggregate, have a Material
Adverse Effect on Carolco;
(15) pay, loan or advance any amount to, or sell,
transfer or lease any properties or assets to, or
enter into any agreement or arrangement with, any of
its officers or directors or any affiliate thereof,
except pursuant to existing agreements with such
persons, except for directors' fees and compensation
to officers at rates not exceeding the rates of
compensation paid during the six-month period ended
December 31, 1993, or except for transactions in the
ordinary course of business or except as otherwise
permitted or contemplated hereunder; or
(16) enter into any contract, agreement, commitment
or arrangement with respect to any of the foregoing.
(ii) No Default. Other than with LIVE's prior
written consent or as disclosed in the CAROLCO
LETTER, neither Carolco nor any of its Subsidiaries
shall do any act or omit to do any act, or knowingly
permit any act or omission to act, which will cause
a breach of any material contract or commitment of
Carolco or any of its Subsidiaries, except for such
breaches (other than of the provisions of this
Agreement) as would not, individually or in the
aggregate, have a Material Adverse Effect on
Carolco.
(iii) Compliance with Laws. Carolco and each of
its Subsidiaries shall duly comply with all laws
applicable to it and its properties, operations,
business and employees, except where the breach
thereof would not, individually or in the aggregate,
have a Material Adverse Effect on Carolco.
(iv) Tax Returns. Carolco and each of its
Subsidiaries shall prepare, file and pay amounts
shown as due on all federal, state, local and
foreign tax returns and amendments thereto required
to be filed by it, except that the failure to file
those state, local or foreign returns which
individually or in the aggregate would not have a
Material Adverse Effect on Carolco shall not be
deemed a breach of this Section 8.2(d).
(v) Other Actions. Carolco shall not, and shall
not permit any of its Subsidiaries to, take any
action that would, or that could reasonably be
expected to, result in (i) any of the
representations and warranties of Carolco set forth
in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such
representations and warranties that are not so
qualified becoming untrue in any material respect,
or (iii) any of the conditions set forth in Article
10 not being satisfied.
(vi) Advice of Changes; SEC Filings. Carolco shall
promptly advise LIVE in writing of any change or
event having, or which, insofar as can reasonably be
foreseen, would have, a Material Adverse Effect on
Carolco without regard to whether such change or
event would be permitted hereunder. Carolco shall
promptly advise Chemical in writing of any change or
event or any other information which would
materially impact the Chemical Fairness Opinion,
including material write-downs, litigation or
changes in financial condition or capitalization
without regard to whether such change or event would
be permitted hereunder. Carolco shall promptly
provide LIVE (or its counsel) with copies of all
filings made by Carolco with the SEC or any other
Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
Section 8.c Competing Offers. Either LIVE or
Carolco may accept a competing "takeover proposal"
or "offer" if the Board of Directors of LIVE or
Carolco, as the case may be, declare such "takeover
proposal" or "offer" advisable, in the best interest
of LIVE or Carolco, as the case may be, and that the
terms, in the aggregate, of such "takeover proposal"
or "offer" are better than the terms of the Merger
as provided herein, provided, however, that LIVE or
Carolco, as the case may be, shall pay the costs and
expenses incurred in connection with the Merger in
accordance with Section 9.7 hereof. In the case of
Carolco, "takeover proposal" or "offer" shall mean
any proposal or offer, other than a proposal or
offer by LIVE or any of its affiliates, for a tender
or exchange offer, a merger, consolidation or other
business combination involving Carolco or any
Subsidiary of Carolco or any proposal to acquire in
any manner all or a substantial equity interest in,
or all or a substantial portion of the assets of,
Carolco or any of its Subsidiaries other than the
transactions contemplated by this Agreement. In the
case of LIVE, "takeover proposal" or "offer" shall
mean any proposal or offer, other than a proposal or
offer by Carolco or any of its affiliates, for a
tender or exchange offer, a merger, consolidation or
other business combination involving LIVE or any
Subsidiary of LIVE (other than Strawberries or VCL)
or any proposal to acquire in any manner all or a
substantial equity interest in, or all or a
substantial portion of the assets of, LIVE or any of
its Subsidiaries (other than Strawberries or VCL)
other than the transactions contemplated by this
Agreement. Nothing herein shall prevent LIVE from
selling all or any part of its Strawberries or VCL
subsidiaries on terms previously disclosed to
Carolco or otherwise acceptable to Carolco.
Section 8.d Reorganization. During the period
from the date of this Agreement through the
Effective Date, unless the other parties hereto
shall otherwise agree in writing, none of LIVE, CAC,
any other Subsidiary of LIVE, Carolco nor any
Subsidiary of Carolco shall knowingly take or fail
to take any action which action or failure to act
would jeopardize qualification of the Merger as a
tax free reorganization under the Code.
Section 8.e Conduct of Business of CAC Pending
the Merger. During the period from the date of this
Agreement through the Effective Date, CAC shall not
engage in any activities of any nature except as
provided in or contemplated by this Agreement.
Section 8.f Update of LIVE LETTER and CAROLCO
LETTER. LIVE will update the LIVE LETTER and
Carolco will update the CAROLCO LETTER (the CAROLCO
LETTER and the LIVE LETTER are sometimes referred to
herein collectively as the "Letters" and
individually as a "Letter") from time to time
hereafter until the Closing, including as of the
date of the mailing of the Proxy Statement and as of
the date of the Closing, to the extent any
information disclosed on such Letters requires
updating because of a change in facts or
circumstances, and to the extent any new information
that would have been included in either of such
Letters on the date hereof had such information
existed or been known on the date hereof later comes
to the knowledge of LIVE or Carolco, as the case may
be. The update of such Letters shall not modify or
add additional exceptions to representations,
warranties or covenants contained herein; any
updating of the LIVE LETTER or CAROLCO LETTER which
subsequently makes materially inaccurate as of the
date of this Agreement any representation or
warranty that is qualified as to materiality, or
makes inaccurate as of the date of this Agreement
any representation or warranty that is not qualified
as to materiality, shall be deemed a material breach
of this Agreement by the party whose representation
or warranty was so made inaccurate; and neither
party shall, by any update of its respective Letter,
be relieved from the conditions set forth in
Sections 10.2(a) and 10.2(b) and 10.3(a) and 10.3(b)
concerning the truth and correctness of such
parties' respective representations and warranties
contained herein on and as of the Effective Date.
Section 8.g Bringdown of Fairness Opinion. LIVE
will request that Chemical confirm the Chemical
Fairness Opinion and Carolco will request that
Seidler confirm the Seidler Fairness Opinion each as
of the day immediately preceding the Effective Date
without any material change in any conclusions or
opinions contained therein.
ARTICLE 9
ADDITIONAL AGREEMENTS
Section 9.a Carolco and LIVE Stockholder
Approvals.
(i) Carolco shall promptly call a meeting of its
stockholders (the "Carolco Stockholder Meeting") for
the purpose of voting upon this Agreement and the
transactions contemplated hereby and, subject to the
fiduciary duties of Carolco's Board of Directors
under applicable law, shall use its best efforts to
obtain stockholder approval of this Agreement and
the transactions contemplated hereby. The Carolco
Stockholder Meeting shall be held as soon as
practicable following the date upon which the
Registration Statement becomes effective and Carolco
will, through its Board of Directors but subject to
the fiduciary duties of its Board of Directors under
applicable law as advised in writing by outside
counsel, recommend to its stockholders the approval
of this Agreement and the transactions contemplated
hereby and not rescind its declaration that the
Merger is advisable. This Agreement and the
transactions contemplated hereby shall be approved
on behalf of Carolco's stockholders if (i) holders
of at least a majority of the combined voting power
with respect to Carolco's voting securities entitled
to vote and present at the Carolco Stockholder
Meeting (other than the Carolco Investors) vote in
favor of this Agreement and the transaction
contemplated hereby, (ii) holders of at least a
majority of the combined voting power with respect
to Carolco's voting securities entitled to vote at
the Carolco Stockholder Meeting (including the
Carolco Investors) vote in favor of this Agreement
and the transactions contemplated hereby, and (iii)
holders of 100% of the Carolco Series A Preferred
Stock, voting as a class, vote in favor of this
Agreement and the transactions contemplated hereby.
(ii) LIVE shall promptly call a meeting of its
stockholders (the "LIVE Stockholder Meeting" and,
together with Carolco Stockholder Meeting, the
"Stockholder Meetings") for the purpose of voting
upon this Agreement and the transactions
contemplated hereby, including the amendments to the
Restated Certificate of Incorporation of LIVE
referred to in Article 3 above, the issuance of LIVE
Common Stock and LIVE Series D Preferred Stock in
connection with the Merger, and taking such other
actions as are reasonably required to consummate the
Merger and, subject to the fiduciary duties of
LIVE's Board of Directors under applicable law,
shall use its best efforts to obtain stockholder
approval of such issuance and action. The LIVE
Stockholder Meeting shall be on the date of the
Carolco Stockholder Meeting or, if such date is not
practicable, on the closest date practicable. LIVE
will, through its Board of Directors but subject to
the fiduciary duties of its Board of Directors under
applicable law as advised in writing by outside
counsel, recommend to its stockholders the approval
of this Agreement and the transactions contemplated
hereby and not rescind its declaration that the
Merger is advisable. This Agreement and the
transactions contemplated hereby shall be approved
on behalf of LIVE's stockholders if (i) holders of
at least a majority of the combined voting power
with respect to LIVE's voting securities entitled to
vote and present at the LIVE Stockholder Meeting
(other than the LIVE Investors) vote in favor of
this Agreement and the transactions contemplated
hereby, (ii) holders of at least 66-2/3% of the
combined voting power with respect to LIVE's voting
securities entitled to vote at the LIVE Stockholder
Meeting (including the LIVE Investors) vote in favor
of the Agreement and the transactions contemplated
hereby and (iii) holders of 100% of the LIVE Series
C Preferred Stock, voting as a class, vote in favor
of the Agreement and the transactions contemplated
hereby.
Section 9.b Registration Statement and Proxy
Statement
(i) LIVE and Carolco shall jointly prepare and file
with the SEC as soon as practicable the Registration
Statement and the Proxy Statement. The Registration
Statement will provide for the registration of all
shares of LIVE capital stock to be issued pursuant
to the Merger, including without limitation, any
shares of LIVE Common Stock underlying any LIVE
Series D Preferred Stock to be issued pursuant to
the Merger, any shares of LIVE Common Stock
underlying any convertible debt of Carolco disclosed
in the CAROLCO LETTER or herein, any shares of LIVE
Common Stock underlying any warrants previously
issued by Carolco as described herein or in the
CAROLCO LETTER, and, as LIVE and Carolco mutually
agree, any other security of LIVE. Each of LIVE and
Carolco shall use all reasonable efforts to (i) have
the Registration Statement declared effective by the
SEC as soon as practicable and (ii) respond to
and/or comply with any SEC staff comments on the
Proxy Statement. LIVE shall also take any action
(other than qualifying to do business in any
jurisdiction in which it is not now so qualified)
required to be taken under state blue sky or
securities laws in connection with the issuance of
the LIVE Common Stock and LIVE Series D Preferred
Stock pursuant to the Merger and the exercise after
the Effective Date of the New Stock Options issuable
in respect of Carolco Stock Options as contemplated
by Section 9.8. LIVE shall also prepare and timely
file with the SEC one or more registration
statements on Form S-8 for the purpose of
registering the shares of LIVE Common Stock issuable
after the Effective Date upon exercise of any
Carolco Stock Options theretofore granted
(collectively, the "Option Registration Statement"),
and LIVE shall use its best efforts to cause the
Option Registration Statement to become effective as
soon as practicable after the Effective Date. LIVE
and Carolco shall each furnish the other company all
information concerning their respective companies
and all such other information required for use in
the Registration Statement, the Option Registration
Statement and the Proxy Statement and both LIVE and
Carolco shall each take such other action as the
other company may reasonably request (and in the
case of the Proxy Statement as required by the
Exchange Act) in connection with the preparation of
such Registration Statement, Option Registration
Statement and Proxy Statement and the actions to be
taken by LIVE pursuant to this Section 9.2.
(ii) If at any time prior to the Effective Date any
event with respect to LIVE or Carolco, their
officers and directors or any of their Subsidiaries
(including CAC) shall occur which is required at
that time to be described in the Proxy Statement or
the Registration Statement, the party with respect
to whom the event occurs shall promptly notify the
other party, and to the extent required by law,
Carolco and LIVE will promptly file an amendment or
supplement with the SEC and disseminate such
amendment to the stockholders of LIVE and the
stockholders of Carolco.
Section 9.c Amendment to Indentures.
(i) LIVE Note Indenture. LIVE shall take all
action necessary to amend the Indenture ("LIVE
Increasing Rate Notes Indenture") governing its
$40,000,000, in aggregate, Increasing Rate Secured
Senior Subordinated Notes due 1999 ("LIVE Increasing
Rate Notes"), in form, scope and substance and on
terms set forth in Exhibit 9.3(a).
(ii) LIVE 12% Indenture. LIVE shall take all action
necessary to amend the Indenture ("LIVE 12%
Indenture") governing its $37,000,000, in aggregate,
12% Notes due 1994, in form, scope and substance and
on terms set forth in Exhibit 9.3(b) and in
accordance with the actions contemplated by
Section 8.1(a)(i)(C) hereof with respect to the LIVE
12% Notes.
Section 9.d Listing Application. LIVE will use
its best efforts to obtain, prior to the Effective
Date, approval for listing the Shares of LIVE Common
Stock registered pursuant to the Registration
Statement on the New York Stock Exchange, upon
official notice of issuance.
Section 9.e Access to Information. Each of the
parties hereto shall, and shall cause each of their
respective Subsidiaries to, afford to the other
party and to such other party's accountants,
counsel, financial advisers and other
representatives, reasonable access, and permit them
to make such inspections as they may reasonably
require, during normal business hours during the
period from the date of this Agreement through the
Effective Date to all their respective properties,
books, contracts, commitments and records and,
during such periods, Carolco and LIVE, as the case
may be, shall, and shall cause each of their
respective Subsidiaries to, furnish promptly to LIVE
or Carolco, as the case may be, all other
information concerning its business, properties and
personnel as LIVE or Carolco, as the case may be,
may reasonably request. Except as required by law,
each of LIVE and Carolco will hold, and will cause
its affiliates, associates, agents and
representatives to hold, any nonpublic information
in confidence unless disclosure of such material is
compelled by judicial or administrative process, or,
in the reasonable opinion of LIVE's and Carolco's
respective outside counsel, by other requirements of
law (in which cases the party compelled to disclose
shall give reasonable notice to the other party
prior to making the compelled disclosure), until
such time as such information becomes publicly
available otherwise than through the actions of such
person, and each of Carolco and LIVE shall use its
best efforts to ensure that such affiliates,
associates and representatives do not disclose such
information to others without the prior written
consent of Carolco or LIVE, as appropriate. In the
event of termination of this Agreement for any
reason, LIVE shall promptly return all documents
containing nonpublic information so obtained from
Carolco or any of its Subsidiaries and any copies
made of such documents for LIVE, and Carolco shall
promptly return all documents containing nonpublic
information so obtained from LIVE or any of its
Subsidiaries and any copies made of such documents
for Carolco. No investigation pursuant to this
Section 9.5 shall add to or subtract from any
representations or warranties of Carolco or LIVE, as
the case may be, or the conditions to the respective
obligations of Carolco or LIVE or CAC to consummate
the Merger. Nothing herein shall limit or release
any of the confidentiality agreements previously
entered in by the parties.
Section 9.f Affiliates. Prior to the Effective
Date, Carolco and LIVE, after consultation with
Gipson Hoffman & Pancione and Sidley & Austin, shall
each cause to be prepared and delivered to the other
a list (reasonably satisfactory to each other's
counsel) identifying all persons who, at the time of
the respective Stockholder Meetings, may be deemed
to be "affiliates" of Carolco as that term is used
in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Affiliates"). Carolco and
LIVE, through its counsel, shall advise each such
possible Affiliate of its obligations under Rule 145
with respect to shares of LIVE Common Stock issued
to each such possible Affiliate pursuant to the
Merger.
Section 9.g Fees and Expenses. Whether or not
the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by
the party incurring such costs and expenses, except
that the legal fees and expenses incurred in
connection with printing and mailing the
Registration Statement and related materials, the
Option Registration Statement and the Proxy
Statement will be shared equally by LIVE and
Carolco, except that in the event this Agreement
shall terminate by virtue of either of the
provisions of subsections (b)(i) or (ii) or (c)(i)
or (ii) of Section 11.1 hereof, then Carolco, in the
case of subsection (b), and LIVE, in the case of
subsection (c), shall reimburse the other party for
all such legal fees and expenses. In the event this
Agreement shall terminate by virtue of
Subsection (d) of Section 11.1 hereof, then the
party who accepts the "competing proposal" or
"offer" shall reimburse the other party for all out-
of-pocket expenses incurred by the other party in
connection with the Merger through the date of
termination of this Agreement.
Section 9.h Carolco Stock Options.
(i) As of the Effective Date, LIVE shall assume
(pursuant to an assumption agreement satisfactory to
LIVE and Carolco) Carolco's obligations under the
1986 Non-Employee Stock Option Plan of Carolco and
the 1986 Employee Stock Option Plan of Carolco
(collectively, the "1986 Plan") and the 1989 Stock
Option and Stock Appreciation Rights Plan of Carolco
(the "1989 Plan") (the 1986 Plan and the 1989 Plan
are sometimes referred to hereinafter collectively
as the "Carolco Stock Plans"). Each option to
purchase shares of Carolco Common Stock outstanding
immediately prior to the Effective Date pursuant to
the Carolco Stock Plans (a "Plan Option") shall
become and represent an option to purchase that
number of shares of LIVE Common Stock (a "New Stock
Option") as the holder of such Plan Option would
have been entitled to receive by virtue of the
Merger had it exercised such Plan Option immediately
prior to the Effective Date, at an exercise price
per share equal to the exercise price per share of
such Plan Option immediately prior to the Effective
Date multiplied by the Exchange Ratio. After the
Effective Date, except as provided in this Section
9.8, each New Stock Option shall be exercisable upon
the same terms and conditions as were applicable
under the related Plan Option prior to the Effective
Date.
(ii) All time elapsed since the grant of a Plan
Option shall be credited to the applicable successor
option for purposes of determining when such
successor option vests.
(iii) In the event of any reclassification,
stock split or stock dividend with respect to LIVE
Common Stock (or if a record date with respect to
any of the foregoing) should occur after the date of
this Agreement and before the Effective Date,
appropriate and proportionate adjustments shall be
made in the exchange ratios for Plan Options.
(iv) After the Effective Date, LIVE shall grant no
New Stock Options or Carolco stock appreciation
rights under the Carolco Stock Plans as assumed by
LIVE or any LIVE stock options or LIVE stock
appreciation rights under LIVE's 1988 Stock Option
and Stock Appreciation Rights Plan. After the
Effective Date, LIVE may grant LIVE stock options or
LIVE stock appreciation rights only pursuant to a
1994 Stock Option and Stock Appreciation Rights Plan
for LIVE substantially in the form attached hereto
as Exhibit 9.8(d) ("New Plan"), subject to approval
of such New Plan by a majority of the voting power
of LIVE entitled to vote and voting at the LIVE
Stockholder Meeting.
Section 9.i Other Obligations of Carolco and
LIVE.
(i) As of the Effective Date, LIVE shall assume
(pursuant to an assumption agreement in the form of
Exhibit 9.9(a) hereto) each of Carolco's obligations
under that certain Employment Agreement dated as of
August 10, 1994, by and between Carolco and Mario
Kassar. The agreement of LIVE under this Section
9.9(a) is also made for the benefit of Mario Kassar,
who is intended to be, and hereby expressly is
constituted, a third party beneficiary of such
agreement.
(ii) As of the Effective Date, LIVE shall become co-
obligor with Carolco (pursuant to an amendment to
the Indenture dated as of October 20, 1993, by and
between Carolco and First Trust of California,
National Association, as Indenture Trustee,
governing the Carolco 5% Notes in the form of
Exhibit 9.9(b) hereto ("Amended and Restated Carolco
5% Indenture")), with respect to certain of
Carolco's obligations with respect to the Carolco 5%
Notes.
(iii) As of the Effective Date, LIVE shall
become co-obligor with Carolco (pursuant to an
amendment to the Standby Purchase and Investment
Agreement dated as of July 29, 1993, by and among
Carolco, Cinepole, Le Studio Canal+, RCS, Pioneer
and Tele-Communications, Inc. in the form of
Exhibit 9.9(c) hereto ("Amended and Restated Standby
Purchase and Investment Agreement")) with respect to
certain of Carolco's obligations with respect to the
Carolco 7% Notes.
(iv) As of the Effective Date, LIVE, Carolco and
American Stock Transfer & Trust Company shall have
entered into that certain First Supplemental
Indenture in the form of Exhibit 9.9(d) hereto with
respect to the Indenture governing the 11.5%/10%
Reducing Rate Senior Notes of Carolco (the "Carolco
11.5%/10% Notes").
(v) As of the Effective Date, LIVE, Carolco and
American Stock Transfer & Trust Company shall have
entered into that certain First Supplemental
Indenture in the form of Exhibit 9.9(e) hereto with
respect to the Indenture governing the 13%/12%
Reducing Rate Senior Subordinated Notes of Carolco
(the "Carolco 13%/12% Notes").
(vi) As of the Effective Date, LIVE, Carolco and IBJ
Schroder Bank & Trust Company shall have entered
into that certain First Supplemental Indenture in
the form of Exhibit 9.9(f) hereto with respect to
the Amended and Restated Indenture governing the 13%
Senior Subordinated Notes of Carolco (the "Carolco
13% Notes").
(vii) As of the Effective Date, LIVE shall
become a party (pursuant to an assumption agreement
in the form of Exhibit 9.9(g) hereto to that certain
Domestic Output Agreement dated as of May 1, 1993 by
and between Carolco and Metro-Goldwyn-Mayer Inc.
("MGM") and with respect to that certain
Confidential Draft Term Sheet dated as of April 23,
1993 by and between Carolco and MGM (together, the
"MGM Distribution Agreements").
(viii) As of the Effective Date, LIVE (as Carolco
Entertainment Inc.) shall become a party (pursuant
to an assumption agreement in the form of Exhibit
9.9(h) hereto) to that certain Output Agreement
dated as of May 8, 1991, by and between RCS Video
Services Antilles N.V. and Carolco International
Inc. (formerly known as Carolco International N.V.),
as amended and to that certain Inducement Letter
dated as of May 8, 1991, by and among RCS Video
Services Antilles N.V., Carolco, Carolco
International Inc. (formerly known as Carolco
International N.V.), RCS Editori SpA and RCS
International Communications N.V.
(ix) As of the Effective Date, LIVE (as Carolco
Entertainment Inc.) shall become a party (pursuant
to an assumption agreement in the form of Exhibit
9.9(i) hereto) to that certain First Refusal
Agreement dated effective as of October 30, 1991, by
and between Carolco and Le Studio Canal+ S.A. and
agreed to by Carolco International Inc. (formerly
known as Carolco International N.V.).
(x) As of the Effective Date, LIVE (as Carolco
Entertainment Inc.) shall become a party (pursuant
to an assumption agreement in the form of Exhibit
9.9(j) hereto) to that certain Ancillary Agreement
Concerning Japan and Laser Disc Rights of Pioneer,
dated as of July 3, 1990 by and between Carolco and
Pioneer and agreed to by Carolco International Inc.
(formerly known as Carolco International N.V.) and
LIVE.
Section 9.j Registration Rights. After the
Effective Date, all registration rights in favor of
the LIVE Investors with respect to any equity
securities of LIVE (other than the LIVE Series C
Preferred Stock and the LIVE Common Stock underlying
such LIVE Series C Preferred Stock, as to which the
registration rights agreement currently in effect
with respect thereto shall continue to remain in
full force and effect after the Effective Date) held
by them as of the Effective Date, or in favor of the
Carolco Investors (other than New Carolco
Investments B.V.) with respect to any equity
securities of Carolco held by them as of the
Effective Date, shall be cancelled and replaced by a
registration rights agreement (the "New Carolco
Entertainment Inc. Registration Rights Agreement")
substantially in the form of Exhibit 9.10 hereto.
Section 9.k Best Efforts. Upon the terms and
subject to the conditions set forth in this
Agreement, and further subject to the fiduciary
obligations of the respective Boards of Directors of
LIVE, CAC and Carolco under applicable law as
advised in writing by outside counsel, each of the
parties agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper
or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger,
and the other transactions contemplated by this
Agreement, including (a) the obtaining of all
necessary actions or non-actions, waivers, consents
and approvals from Governmental Entities and the
making of all necessary registrations and filings
(including filings with Governmental Entities) and
the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any
Governmental Entity, (b) the obtaining of all
necessary consents, approvals or waivers from third
parties including those entities identified in the
LIVE LETTER and the CAROLCO LETTER, (c) the
defending of any lawsuits or other legal
proceedings, whether judicial or administrative,
challenging this Agreement, or the consummation of
the transactions contemplated hereby and thereby,
including seeking to have any stay or temporary
restraining order entered by any court or other
Governmental Entity vacated or reversed, and (d) the
execution and delivery of any additional instruments
necessary to consummate the transactions
contemplated by this Agreement. Copies of all
third-party consents obtained hereunder by LIVE (or
any of its Subsidiaries) or Carolco (or any of its
Subsidiaries) shall be provided to LIVE or Carolco,
respectively, promptly after any such consent is
obtained. In case at any time after the Effective
Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper
officers and/or directors of LIVE, Carolco or CAC
shall take all such necessary action.
Section 9.l Public Announcements. LIVE and CAC,
on the one hand, and Carolco, on the other hand,
will consult with each other before issuing any
press release or otherwise making any public
statements with respect to the transactions
contemplated by this Agreement, and shall not issue
any such press release or make any such public
statement prior to such consultation, except as may
be required by applicable law. Nothing herein shall
limit or release any of the confidentiality
agreements previously entered into by the parties.
Section 9.m State Takeover Laws. If any "fair
price" or "control share acquisition" statute or
other similar statute or regulation is or shall
become applicable to the transactions contemplated
hereby, Carolco and the members of the Board of
Directors of Carolco and LIVE and the members of the
Board of Directors of LIVE shall use their best
efforts to grant such approvals and take such
actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly
as practicable on the terms contemplated hereby and
otherwise act to minimize the effects of such
statute or regulation on the transactions
contemplated hereby.
Section 9.n Indemnification. LIVE and CAC agree
that all rights to indemnification from Carolco for
acts or omissions occurring prior to the Effective
Date now existing shall continue in full force and
effect, as obligations of the Surviving Corporation,
in accordance with their terms. LIVE will provide,
or cause the Surviving Corporation to provide, for a
period of not less than seven years from the
Effective Date, Carolco's current directors and
officers an insurance and indemnification policy
that provides coverage for events occurring prior to
the Effective Date (the "D&O Insurance") that is no
less favorable to them than Carolco's existing
policy or, if substantially equivalent insurance
coverage is unavailable or is only available on
terms which LIVE believes are not commercially
reasonable, the best available coverage. At and
after the Effective Date, LIVE shall indemnify,
defend and hold harmless each person who is now or
has been at any time prior to the date hereof or who
becomes prior to the Effective Date an officer,
director, employee, agent or representative of
Carolco or any of its Subsidiaries and all
defendants in their capacity as such in the same
manner and to the same extent required by the
Restated Certificate of Incorporation of Carolco and
the Restated Bylaws of Carolco and/or the comparable
charter or organizational documents of any of its
Subsidiaries as of the date hereof and in the same
manner and to the same extent required by any
Indemnity Agreements existing as of the date hereof
between Carolco or any of its Subsidiaries whereby
Carolco or any of its Subsidiaries has agreed to
indemnify, defend or hold harmless any officers,
directors, employees or agents thereof (a list of
such indemnity agreements is included in the CAROLCO
LETTER).
Section 9.o [Intentionally Deleted.]
Section 9.p [Intentionally Deleted.]
Section 9.q LIVE Rights. In satisfaction of
Section 10.2(i) hereof, before the Effective Date
LIVE will take all actions necessary to terminate
the existing LIVE Rights Agreement and cancel all
outstanding LIVE Rights.
Section 9.r Continuation of Business or Business
Assets. After the Effective Date, LIVE will
continue at least one significant historic business
line of Carolco or use at least a significant
portion of Carolco's historic business assets in a
business, in each case within the meaning of
Treasury Regulation Sec. 1.368-1(d).
ARTICLE 10
CONDITIONS PRECEDENT
Section 10.a Conditions to Each Party's Obligation
to Effect the Merger. The respective obligations of
each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of
the following conditions:
(i) Stockholder Approvals. (i) This Agreement and
the transactions contemplated hereby shall have been
approved by the requisite vote of the holders of
Carolco capital stock as set forth in Section 9.1
above and (ii) this Agreement and the transactions
contemplated hereby, including the issuance of LIVE
Common Stock and LIVE Series D Preferred Stock
pursuant to the Merger, the amendments to the
Restated Certificate of Incorporation of LIVE and
related matters shall have been approved by the
requisite vote of the holders of LIVE capital stock
as set forth in Section 9.1 above.
(ii) Bringdown of Fairness Opinions. The Chemical
Fairness Opinion and the Seidler Fairness Opinion
shall have been confirmed as of the date immediately
preceding the Effective Date without any material
change in any conclusions or opinions contained
therein.
(iii) Registration Statements. The Registration
Statement shall have become effective in accordance
with the provisions of the Securities Act. No stop
order suspending the effectiveness of the
Registration Statement shall have been issued by the
SEC and remain in effect and no proceedings for such
purpose shall be pending before the SEC.
(iv) Stock Exchange Listing. The shares of LIVE
Common Stock registered pursuant to the Registration
Statement shall be approved for listing on the New
York Stock Exchange, upon official notice of
issuance, or on such other principal United States
trading market (whether a stock exchange or the
National Association of Securities Dealers Automated
Quotation System) as the LIVE Common Stock is listed
immediately prior to the Effective Date or as the
parties may mutually agree.
(v) Reorganization. Each of Carolco and LIVE shall
be reasonably satisfied that none of Carolco, LIVE
and CAC will recognize material taxable gain as a
result of the Merger and that its stockholders will
not recognize any taxable gain as a result of the
Merger.
(vi) Adequate Financing Commitments. Aggregate
financing commitments shall have been received by
Carolco and LIVE, the terms of which shall be set
out more fully on Exhibit 10.1(f) hereto.
(vii) No Material Adverse Change. There shall
not have occurred any change or development in or
affecting the assets, liabilities, business,
operations, condition (financial or other) or
prospects of Carolco or LIVE which, in the
aggregate, could be reasonably expected to have a
Material Adverse Effect on such party, except for
(i) such changes at LIVE with respect to plans
previously disclosed to Carolco with respect to
Strawberries and VCL, or (ii) such changes resulting
from facts disclosed as of the date of the Merger
Agreement in the CAROLCO LETTER or Carolco SEC
Documents or the LIVE LETTER or LIVE SEC Documents,
as the case may be.
(viii) Governmental Approvals. All consents and
approvals of, and notices to and filings with, any
governmental authority or agency as are required in
connection with the consummation of the Merger and
the transactions contemplated hereby shall have been
obtained, given and made, and all waiting periods,
if any, applicable to the consummation of the Merger
imposed by any applicable law, rule or regulation
(including, but not limited to, the HSR Act) shall
have expired without any action, proceeding or
investigation being commenced or threatened which
seeks to enjoin or delay consummation of the Merger
or to impose any material restrictions or onerous
requirements on Carolco, LIVE or their respective
stockholders.
(ix) Third Party Consents. All consents and
approvals of, and notices to and filings with, any
non-governmental persons required in connection with
the consummation of the Merger and the transactions
contemplated hereby shall have been obtained, given
or made, except for any thereof which, if not
obtained, given or made would not, in the aggregate,
have a Material Adverse Effect on the ability of any
party to consummate the transactions contemplated
hereby or on the assets, liabilities, business,
operations, condition (financial or other) or
prospects of any party or any of its direct or
indirect subsidiaries.
(x) No Order. No Governmental Entity or court of
competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or
permanent) which is then in effect and has the
effect of preventing the consummation of the Merger
or making the transactions contemplated hereby
illegal (each party hereto agreeing to use its best
efforts to have any such order, injunction or the
like lifted or waived).
(xi) Approval of Counsel to Carolco and LIVE. All
actions, proceedings, instruments and documents
required to carry out the transactions contemplated
hereby or incidental hereto and all other related
legal matters shall be reasonably satisfactory to
and approved by counsel for each of Carolco and LIVE
and such counsel shall have been furnished with such
certified copies of such corporate actions and
proceedings and such other instruments and documents
as it shall have reasonably requested.
(xii) Registration Rights. The Carolco
Investors (other than New Carolco Investments B.V.)
and the LIVE Investors shall have entered into the
registration rights agreement contemplated in
Section 9.10 hereof.
(xiii) Amended and Restated Certificate of
Incorporation of LIVE. The Amended and Restated
Certificate of Incorporation of LIVE shall have been
filed with the Secretary of State of the State of
Delaware.
Section 10.b Conditions to Obligation of Carolco
to Effect the Merger. The obligation of Carolco to
effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the
following additional conditions, any or all of which
may be waived by Carolco at its option, except as
may be required by law:
(i) Performance of Obligations; Representations and
Warranties; No Material Adverse Change. LIVE and
CAC shall have performed and satisfied in all
material respects each of their covenants and
agreements required or contemplated by this
Agreement to be performed by them on or prior to the
Effective Date; each of the representations and
warranties of LIVE and CAC contained in this
Agreement that is qualified by materiality shall be
true and correct on and as of the Effective Date as
if made on and as of such date and each of the
representations and warranties that is not so
qualified shall be true and correct in all material
respects on and as of the Effective Date as if made
on and as of such date, in each case except as
contemplated or permitted by this Agreement; there
shall have been no Material Adverse Change with
respect to LIVE after the date of this Agreement;
and Carolco shall have received a certificate of
LIVE, signed by the Chief Executive Officer and the
Chief Financial Officer of LIVE, to that effect.
(ii) [Intentionally Deleted.]
(iii) Tax Opinion. Carolco shall receive an
opinion of Gipson Hoffman & Pancione, in form and
substance satisfactory to Carolco, dated the
Effective Date, substantially to the effect that on
the basis of facts, representations and assumptions
set forth in such opinion which are consistent with
the state of facts existing as of the Effective
Date:
(1) The Merger will constitute a reorganization for
federal income tax purposes within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code,
and Carolco, LIVE and CAC will each be a party to
that reorganization within the meaning of Section
368(b) of the Code.
(2) No gain or loss will be recognized by LIVE,
Carolco or CAC as a result of the Merger.
(3) No gain or loss will be recognized by the
holders of Carolco Common Stock or Carolco Series A
Preferred Stock upon the conversion of such Carolco
Common Stock or Carolco Series A Preferred Stock
into shares of LIVE Common Stock or LIVE Series D
Preferred Stock, respectively, by reason of the
consummation of the Merger, except with respect to
cash, if any, received in lieu of fractional shares
of LIVE Common Stock.
(4) The aggregate tax basis of the shares of LIVE
Common Stock or LIVE Series D Preferred Stock into
which shares of Carolco Common Stock or Carolco
Series A Preferred Stock are converted pursuant to
the Merger will be the same as the aggregate tax
basis of shares of Carolco Common Stock or Carolco
Series A Preferred Stock converted into such LIVE
Common Stock or LIVE Series D Preferred Stock in the
Merger, decreased by the amount of any tax basis
allocable to the fractional shares of LIVE Common
Stock in lieu of which cash was received.
(5) The holding period for shares of LIVE Common
Stock or LIVE Series D Preferred Stock into which
shares of Carolco Common Stock or Carolco Series A
Preferred Stock are converted pursuant to the Merger
will include the period that such shares of Carolco
Common Stock or Carolco Series A Preferred Stock
were held, provided such shares of Carolco Common
Stock or Carolco Series A Preferred Stock were held
as capital assets on the Effective Date.
In rendering such opinion, Gipson Hoffman & Pancione
may receive and rely upon representations of fact
contained in certificates of Carolco, LIVE, CAC and
others, and the obligation of Gipson Hoffman &
Pancione to deliver the opinion contemplated in this
Section 10.2(c) shall be subject to the receipt by
Gipson Hoffman & Pancione of the Investor
Representation Agreements contemplated by Section
6.4(c).
(iv) Opinion of Counsel to LIVE and CAC. Carolco
shall have received the opinion of Sidley & Austin,
counsel to LIVE, dated the Effective Date, addressed
to Carolco, in the form attached hereto as Exhibit
10.2(d).
(v) Redemption of LIVE Series B Preferred Stock.
LIVE shall have redeemed all outstanding shares of
the LIVE Series B Preferred Stock in accordance with
the provisions of the Certificate of Designations,
Preferences and Rights governing the LIVE Series B
Preferred Stock.
(vi) No Additional Indebtedness. LIVE shall not
have incurred any indebtedness (as defined in
Section 5.13(a)) from the date hereof through the
Effective Date other than (i) borrowings under its
existing credit facility with Chemical Bank and any
extensions or replacements thereof (the "LIVE Credit
Facility") which borrowings may be used solely for
working capital purposes or for the partial
repayment of amounts owed on the LIVE 12% Notes as
permitted by Section 8.1(a)(i)(C) or for the
redemption of the LIVE Series B Preferred Stock as
contemplated in Section 10.2(e) hereof and (ii)
other borrowings of up to $17,000,000 which may be
used solely for the redemption of the LIVE Series B
Preferred Stock as contemplated in Section 10.2(e)
hereof.
(vii) Amendments to LIVE Increasing Rate Notes
Indenture. LIVE shall have received amendments to
the LIVE Increasing Rate Notes Indenture in form,
scope and substance and on terms set forth in
Exhibit 9.3(a).
(viii) Amendments to LIVE 12% Indenture. The
LIVE 12% Indenture shall have been amended to extend
the maturity date to at least ninety days after the
maturity date of the LIVE Credit Facility and LIVE
shall have received other amendments to such
indenture in form, scope and substance and on terms
set forth in Exhibit 9.3(b).
(ix) LIVE Rights Agreement. The LIVE Rights shall
no longer be outstanding.
(x) Assets of LIVE. Neither LIVE nor its
Subsidiaries shall have disposed of or written-down
the carrying value of any assets of LIVE or its
Subsidiaries except with respect to plans previously
disclosed to Carolco with respect to Strawberries
and VCL and except for immaterial write-downs and
write-offs in the ordinary course of business and
consistent with past practice.
(xi) Sale of Strawberries and VCL. If LIVE shall
have sold Strawberries or VCL, the terms of such
sales shall have been on terms and conditions
reasonably satisfactory to Carolco.
Section 10.c Conditions to Obligations of LIVE and
CAC to Effect the Merger. The obligations of LIVE
and CAC to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the
following additional conditions, any or all of which
may be waived by LIVE and CAC at their option,
except as may be required by law:
(i) Performance of Obligations; Representations and
Warranties; No Material Adverse Change. Carolco
shall have performed and satisfied in all material
respects each of its covenants and agreements
required or contemplated by this Agreement to be
performed on or prior to the Effective Date; each of
the representations and warranties of Carolco
contained in this Agreement that is qualified by
materiality shall be true and correct on and as of
the Effective Date as if made on and as of such date
and each of the representations and warranties that
is not so qualified shall be true in all material
respects on and as of the Effective Date as if made
on and as of such date, in each case except as
contemplated or permitted by this Agreement; there
shall have been no Material Adverse Change with
respect to Carolco after the date of this Agreement;
and LIVE and CAC shall have received a certificate
of Carolco, signed by the Chief Executive Officer
and Chief Financial Officer of Carolco, to that
effect.
(ii) [Intentionally Deleted.]
(iii) Tax Opinion. LIVE shall have received an
opinion of Sidley & Austin, in form and substance
satisfactory to LIVE, dated the Effective Date,
substantially to the effect that on the basis of
facts, representations and assumptions set forth in
such opinion which are consistent with the state of
facts existing as of the Effective Date:
(1) The Merger will constitute a reorganization for
federal income tax purposes within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code,
and Carolco, LIVE and CAC will each be a party to
that reorganization within the meaning of Section
368(b) of the Code.
(2) No gain or loss will be recognized by Carolco,
LIVE or CAC as a result of the Merger.
(3) No gain or loss will be recognized by the
holders of LIVE Common Stock or LIVE Series C
Preferred Stock as a result of the Merger.
In rendering such opinion, Sidley & Austin may
receive and rely upon representations of fact
contained in certificates of Carolco, LIVE, CAC and
others.
(iv) Opinion of Counsel to Carolco. LIVE and CAC
shall have received the opinion of Gipson Hoffman &
Pancione, counsel to Carolco, dated the Effective
Date, addressed to LIVE and CAC, in the form of
Exhibit 10.3(d).
(v) Assets of Carolco. Neither Carolco nor its
Subsidiaries shall have disposed of or written-down
the carrying value of any assets of Carolco or its
Subsidiaries except for immaterial write-downs and
write-offs in the ordinary course of business and
consistent with past practice.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
Section 11.a Termination. This Agreement may be
terminated and the Merger herein contemplated may be
abandoned at any time prior to the Effective Date,
whether before or after any approval by the
stockholders of LIVE and the stockholders of
Carolco:
(i) by mutual consent of LIVE and Carolco, as
authorized by the boards of directors of each of
them;
(ii) by LIVE if (i) Carolco shall have failed to
comply in any material respect with any of its
material covenants or agreements contained in this
Agreement required to be complied with by Carolco
prior to the date of such termination, which failure
to comply has not been cured within five (5)
business days following receipt by Carolco of notice
of such failure to comply; (ii) there has occurred
(A) a material breach by Carolco of any
representation or warranty that is qualified as to
materiality either when made or at the Effective
Date or (B) a breach by Carolco of any
representation or warranty that is not qualified as
to materiality when made or at the Effective Date,
in each case which breach has not been cured within
five (5) business days following receipt by Carolco
of notice of the breach; or (iii) the stockholders
of Carolco voting at the Carolco Stockholder Meeting
shall have failed to approve this Agreement and the
transactions contemplated hereby as contemplated in
Section 9.1(a) hereof;
(iii) by Carolco if (i) LIVE or CAC or any of
their Subsidiaries shall have failed to comply in
any material respect with any of their material
covenants or agreements contained in this Agreement
required to be complied with by LIVE or CAC or any
of their Subsidiaries prior to the date of such
termination, which failure to comply has not been
cured within five (5) business days following
receipt by LIVE or CAC, as the case may be, of
notice of such failure to comply; or (ii) there has
occurred (A) a material breach by LIVE or CAC of any
representation or warranty that is qualified as to
materiality either when made or at the Effective
Date or (B) a breach by LIVE or CAC of any
representation or warranty that is not qualified as
to materiality when made or at the Effective Date,
in each case which breach has not been cured within
five (5) business days following receipt by LIVE or
CAC, as the case may be, of notice of the breach; or
(iii) the stockholders of LIVE voting at the LIVE
Stockholder Meeting shall have failed to approve
this Agreement and the transactions contemplated
hereby as contemplated in Section 9.1(b) hereof;
(iv) by either LIVE or Carolco, if the other party
accepts a competing "takeover proposal" or "offer"
as provided in Section 8.3 hereof;
(v) by either LIVE or Carolco, if such party shall
have exercised its best efforts to effect the Merger
and, notwithstanding such best efforts, if the
Merger has not been effected on or prior to the
close of business on December 31, 1994, unless an
extension of such date is agreed to by the parties
in writing on or before such date;
(vi) by LIVE, if the Board of Directors of Carolco
shall have modified or withdrawn its recommendation
of the Merger or declaration that the Merger is
advisable or if the Board of Directors of Carolco
shall have recommended to stockholders of Carolco
any takeover proposal of any other person or shall
have resolved to do any of the foregoing, in which
case costs shall be shared as set forth in Section
9.7;
(vii) by Carolco, if the Board of Directors of
LIVE and its Advisory Committee considering the
Merger shall have modified or withdrawn its
recommendation of the Merger or declaration that the
Merger is advisable or if the Board of Directors of
LIVE shall have recommended to stockholders of LIVE
any takeover proposal of any other person or shall
have resolved to do any of the foregoing, in which
case costs shall be shared as set forth in
Section 9.7; or
(viii) by either LIVE or Carolco if any permanent
injunction or other order of a court or other
competent authority preventing the consummation of
the Merger shall have become final and
non-appealable.
Section 11.b Effect of Termination. In the event
of termination of this Agreement by either LIVE or
Carolco or both, as provided in Section 11.1, this
Agreement shall forthwith become void and there
shall be no further liability hereunder on the part
of Carolco, LIVE or CAC or their respective officers
or directors except with respect to the provisions
concerning fees and expenses contained in
Section 9.7, and except with respect to provisions
concerning confidentiality and the return of
documents contained in Section 9.4, which shall
survive the termination; provided, however, that
nothing contained in this Section 11.2 shall relieve
any party hereto from any liability for any breach
of this Agreement occurring on or prior to the date
of termination hereof.
Section 11.c Amendment. This Agreement may be
amended by the parties hereto, by or pursuant to
action taken by their respective Boards of Directors
(and in the case of LIVE, with the consent of its
Advisory Committee), at any time before or after
approval of the Merger and the transactions
contemplated hereby by the stockholders of Carolco
or the approval of the Merger and the transactions
contemplated hereby by the stockholders of LIVE,
but, after any such approval by stockholders of
Carolco or LIVE, no amendment shall be made which
(i) alters or changes the amount or kind of shares
of any class or series of capital stock of LIVE,
(ii) alters or changes any terms of the Certificate
of Incorporation of LIVE or the Surviving
Corporation to be effected by the Merger, (iii)
alters or changes any of the terms and conditions of
the Agreement if such alteration or change would
adversely affect the holders of any class or series
of capital stock of LIVE, Carolco or CAC, (iv)
changes the Exchange Ratio provided in Section 4.1
or (v) in any way materially adversely affects the
rights of such stockholders, without the further
approval of such stockholders. This Agreement may
not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 11.d Waiver. At any time prior to the
Effective Date, the parties hereto pursuant to
action taken by their respective Boards of Directors
(and in the case of LIVE, with the consent of its
Advisory Committee of the Board of Directors) may
(i) extend the time for the performance of any of
the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or
in any document delivered pursuant hereto by the
other parties hereto and (iii) waive compliance by
the other parties hereto with any of the agreements
or conditions contained herein which may legally be
waived (except that neither CAC nor LIVE may waive
any material breach hereunder by the other and
except that in the event of a waiver of any material
condition, covenant or breach, each of the Carolco
Investors, in the event of a waiver by Carolco, and
each of the LIVE Investors, in the event of a waiver
by LIVE, shall be entitled to rescind such Carolco
Investor's or LIVE Investor's Investor
Representation Agreement within five (5) business
days of such waiver). Any agreement on the part of
a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure
of any party hereto to enforce at any time any
provision of this Agreement shall not be construed
to be a waiver of such provision, nor in any way to
affect the validity of this Agreement or any part
hereof or the right of any party thereafter to
enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent
breach.
Section 11.e Approval by LIVE Special Committee.
The approval of the LIVE Special Committee shall be
required for any amendment or waiver which has the
effect of reducing or eliminating the requirement
that 100% of the LIVE Series B Preferred Stock be
redeemed as a condition to the Merger.
ARTICLE 12
GENERAL PROVISIONS
Section 12.a Non-Survival of Representations and
Warranties. None of the representations and
warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive
the Effective Date.
Section 12.b Notices. All notices and other
communications hereunder shall be in writing and
shall be deemed given if delivered personally, sent
by overnight courier or telecopied (with a
confirmatory copy sent by overnight courier) to the
parties (with courtesy copies to the LIVE Investors
and Carolco Investors) at the following addresses
(or at such other address for a party as shall be
specified by like notice):
(i) if to LIVE or CAC, to
LIVE Entertainment Inc.
15400 Sherman Way, Suite 500
Van Nuys, California 91406
Attention: Michael J. White, General Counsel
Facsimile: (818) 908-9539
with a copy to:
Sidley & Austin
2049 Century Park East
39th Floor
Los Angeles, California 90067
Attention: Gary J. Cohen, Esq.
Facsimile: (310) 556-6502
(ii) if to Carolco, to
Carolco Pictures Inc.
8800 Sunset Boulevard
Los Angeles, California 90069
Attention: Robert W. Goldsmith, General Counsel
Facsimile: (310) 652-1343
with a copy to:
Gipson Hoffman & Pancione
1901 Avenue of the Stars
Suite 1100
Los Angeles, California 90067
Attention: Lawrence R. Barnett, Esq.
Facsimile: (310) 556-8945
(iii) if to Pioneer, to
Pioneer LDCA, Inc.
2265 East 220th Street
Long Beach, California 90810
Attention: Tetsuro Kudo
Facsimile: (310) 952-2420
with a copy to:
Pioneer LDC, Inc.
1-20-6 Ebisuminami
Shibuya-ku, Tokyo 150
JAPAN
Attention: Mr. Ryuichi Noda
Facsimile: 011 813 5721 2040
and
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attention: Blake Hornick, Esq.
Facsimile: (212) 326-0806
(iv) if to Cinepole, to
Cinepole Productions B.V.
P.O. Box 990
1000 AZ Amsterdam
THE NETHERLANDS
Facsimile:
with a copy to:
Coudert Brothers
52, Avenue Des Champs-Elysees
75008 Paris
FRANCE
Attention: Jonathan M. Wohl, Esq.
Facsimile: 011 331 4359 6655
and
Le Studio Canal+ (U.S.)
301 North Canon Drive, Suite 228
Beverly Hills, California 90210
Attention: Richard J. Garzilli, Esq.
Facsimile: (310) 246-9772
and
Coudert Brothers
1055 West 7th Street, 20th Floor
Los Angeles, California 90017-2503
Attention: John A. St. Clair, Esq.
Facsimile: (213) 689-4467
(v) if to RCS, to
RCS Video International Services B.V.
Avv. Enzo Pulitano
Affari Legali e Societari
RCS Editori SpA
Corso Garibaldi 86
20121 Milan ITALY
Facsimile: 011 392 2584 3073
with a copy to:
Werbel McMillin & Carnelutti
711 Fifth Avenue
New York, New York 10022
Attention: Paul D. Downs, Esq.
Facsimile: (212) 832-3353
(vi) if to MGM Holdings Corporation, to
MGM Holdings Corporation
c/o Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404
Attention: Michael S. Hope
Facsimile: (310) 449-3090
with a copy to:
White & Case
633 West Fifth Avenue, Suite 1900
Los Angeles, California 90071
Attention: David G. Johnson, Esq.
Facsimile: (213) 620-0758
(vii) if to New Carolco Investments B.V., to
New Carolco Investments B.V.
c/o Schutte, Zewald & Jorna
Parklaan 46, 3016 BC Rotterdam
THE NETHERLANDS
Facsimile: 011 3110 4361 880
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy, Esq.
Facsimile: (213) 687-5600
Section 12.c Interpretation. When a reference is
made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and
headings contained in this Agreement are for
reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall
be deemed to be followed by the words "without
limitation." The phrases "date of this Agreement,"
the "date hereof" and words of similar impact,
unless the context otherwise requires, shall be
deemed to refer to August 10, 1994. Unless
expressly indicated herein to the contrary, and when
the context so dictates, the masculine includes the
feminine and the singular includes the plural.
Section 12.d Counterparts. This Agreement may be
executed in counterparts, all of which shall be
considered one and the same agreement and shall
become effective when one or more counterparts have
been signed by each of the parties and delivered to
the other parties.
Section 12.e Entire Agreement; No Third-Party
Beneficiaries. This Agreement, including the
documents and instruments referred to herein, (a)
constitutes the entire agreement and supersedes all
prior agreements and understandings, both written
and oral, among the parties with respect to the
subject matter hereof, and there are no other
covenants, promises, agreements, conditions or
understandings, whether oral or written, among the
parties hereto, and (b) except for the provisions of
Sections 9.9(a) and 9.14, is not intended to confer
upon any person other than the parties any rights or
remedies hereunder.
Section 12.f Governing Law. This Agreement shall
be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
Section 12.g Assignment. Neither this Agreement
nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties
without the prior written consent of the other
parties, except that CAC may assign, in its sole
discretion, any of or all its rights, interests and
obligations under this Agreement to LIVE or to any
direct wholly-owned subsidiary of LIVE, but no such
assignment shall relieve CAC of any of its
obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, LIVE, CAC and Carolco have
caused this Agreement to be signed by their
respective officers thereunto duly authorized all as
of the date first written above.
LIVE ENTERTAINMENT INC.
By: /s/ Roger A. Burlage
Name: Roger A. Burlage
Title: President and Chief Executive Officer
Attest:
/s/ Robert L Denton
Name: Robert L. Denton
Title: Vice President and
Chief Accounting Officer
CAROLCO ACQUISITION CORP.
By:/s/ Roger A. Burlage
Name: Roger A. Burlage
Title: President and Chief Executive Officer
Attest:
/s/ Steven A. Mangel
Name: Steven A. Mangel
Title: Senior Vice President/Legal and Business
Affairs
CAROLCO PICTURES INC.
By: /s/ Mario F. Kassar
Name: Mario F. Kassar
Title: Chairman of the Board and Chief Executive
Officer
Attest:
/s/ Robert W. Goldsmith
Name: Robert W. Goldsmith
Title: Senior Vice President and General Counsel
Amendments to LIVE 12% Indenture
For purposes of this Exhibit 9.3(a) only, the LIVE
12% Notes shall be referred to as the "Notes" and
the LIVE 12% Indenture shall be referred to as the
"Indenture". The Notes and the Indenture will be
amended in the following respects:
1. The maximum principal amount which may be
outstanding under the Notes will equal $54,000,000.
2. The maturity date of the Notes will be extended
until a date 90 days after the maturity date of the
LIVE Credit Facility to be in place at either LIVE
or LIVE Home Video Inc. ("LHV") on the Effective
Date.
3. The covenants in the Indenture will be amended
to make such covenants no less favorable to LIVE or
LHV than the covenants in the LIVE Credit Facility.
The Notes and the Indenture will also be amended as
necessary to consummate the Merger and the
transactions contemplated by the Merger Agreement.
Exhibit 3.3A
Board of Directors and Committees of
Carolco Entertainment Inc. at Effective Date
Directors
Mario F. Kassar (Chairman)
Lynwood Spinks
Roger A. Burlage
Hector Patrick Dowd
Guy-Etienne Dufour
Michael E. Garstin
Paolo Glisenti
Olivier Granier
Michael S. Hope
Kaneo Ito
Rene-Claude Jouannet
Tetsuro Kudo
Pierre Lescure
Gordon C. Luce
Michael Meltzer
Ryuichi Noda
Anthony J. Scotti
Joseph A. Scudero
Adam Singer
Masaaki Sono
Gregory R. Pierson
Supervisory Committee
Mario F. Kassar
Olivier Granier
Michael S. Hope
Ryuichi Noda
Paolo Glisenti
Michael E. Garstin
Stock Option Committee
Hector Patrick Dowd
Gordon C. Luce
Joseph A. Scudero
Independent Committee
Hector Patrick Dowd
Gordon C. Luce
Joseph A. Scudero
Audit Committee
Hector Patrick Dowd
Michael E. Garstin
Gordon C. Luce
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
for the regulation, except as otherwise providedby
statute or the Certificate of Incorporation of
Carolco Entertainment Inc.
Article 1
General Provisions
Section 1.1 Principal Executive Office
The principal executive office of the Corporation
shall be located at 8800 Sunset Boulevard, Los
Angeles, California 90069. The Board of Directors
shall have the power to change the principal office
to another location and may fix and locate one or
more subsidiary offices at any place.
Section 1.2 Number of Directors
The affairs of the Corporation shall be managed by a
Board of Directors (the "Board") consisting of not
less than three (3) nor more than twenty-one (21)
directors. Directors need not be Stockholders or
citizens or residents of the United States. The
exact number of directors within the limits
specified shall be twenty-one (21) until changed by
an amendment to these Bylaws duly adopted by the
Board or by the Stockholders.
Section 1.3 Registration of Shares
The Corporation shall recognize each person
registered in its stock ledger as the exclusive
owner and holder of the shares registered in his
name and as the "Stockholder" for all purposes
hereunder with the exclusive rights inter alia to
vote the shares, to receive dividends declared with
respect to the shares, to transfer the shares to
others, and to exercise any other rights of
Stockholders. The Corporation shall have no
obligation to recognize any equitable or other claim
or interest in any shares on the part of any person
or persons other than the registered owner, as set
forth in the stock ledger, whether or not the
Corporation shall have any notice thereof, except as
may otherwise be provided by the laws of the State
of Delaware. "Shares" for purposes hereof, shall
mean shares of the Corporation's stock authorized by
its Certificate of Incorporation and registered in
the stock ledger as issued and outstanding,
including any one or more classes of stock so
authorized, and whether or not such share is deemed
to have voting or other privileges.
Article 2
Shares and Stockholders
Section 2.1 Share Certificates
A. In General
The Corporation shall issue a certificate or
certificates representing shares of its capital
stock. Each certificate so issued shall be signed
by or in the name of the Corporation by the Chairman
or Vice Chairman of the Board or the President or a
Vice President and by the Chief Financial Officer,
Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation and
shall state the name of the record owner thereof and
represent the number of shares registered in
certificate form. Any or all of the signatures on
the certificate may be a 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 such person were an officer,
transfer agent or registrar at the date of issue.
B. Form of Certificates
There shall be set forth on the face or back of a
certificate which the Corporation shall issue to
represent a class or series of stock one of the
following:
1. A statement of 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 and/or rights;
or
2. A summary of the statement described in
Subsection 2.1.B.1 above.
If a security of the Corporation is subject to a
restriction on the transfer or registration thereof,
such restriction shall be noted, in writing,
conspicuously upon the certificate representing the
security.
C. Fractional Share Interests
The Corporation may, but shall not be required to,
issue certificates representing a fraction of a
share and, in this event, the holder thereof shall
have all the rights appurtenant to ownership of that
interest in the Corporation. If the Corporation
elects not to issue certificates representing a
fraction of a share to the persons entitled thereto,
it shall, at its election, either:
1. Arrange for disposition of the fractional
interest by those entitled thereto.
2. Pay in cash the fair value of fractions of a
share as of the time when those entitled to receive
such fractions are determined.
3. Issue scrip or warrants in registered or bearer
form which entitles the holder to receive a full
share upon surrender of such scrip or warrants
aggregating one or more full shares, which scrip or
warrants may, if the Board elects, either become (i)
void if not so surrendered on or before a specified
date, or (ii) subject to such other conditions or
limitations as may be designated by the Board.
Section 2.2 Transfer of Certificates
Where a certificate for shares is presented to the
Corporation or its transfer clerk or transfer agent
with a request to register a transfer of shares, the
Corporation is under a duty to register the
transfer, cancel the certificate presented, and
issue a new certificate if:
A. The certificate is endorsed or the instructions
originated by the appropriate person or persons;
B. Reasonable assurance is given that those
endorsements or instructions are genuine and
effective;
C. The Corporation has no duty to inquire into
adverse claims or has discharged any such duty;
D. Any applicable law relating to the collection
of taxes has been complied with; and
E. The transfer is in fact rightful or is to a
bona fide purchaser.
Section 2.3 Lost Certificates
Where a certificate is alleged to have been lost,
destroyed or stolen, the Corporation shall issue a
new certificate in place of the original if the
owner:
A. So requests, in writing, before the Corporation
has notice that the certificate has been acquired by
a bona fide purchaser; and
B. If so requested by the Board, gives the
Corporation a bond sufficient to indemnify it
against any claim that may be made against it on
account of the alleged loss, destruction or theft of
such certificate or the issuance of such new
certificate.
Except as above provided, no new certificate for
shares shall be issued in lieu of an old certificate
unless the Corporation is ordered to do so by a
court in a judgment in an action brought in a court
of appropriate jurisdiction.
Section 2.4 Meetings of Stockholders
A. Place of Meetings
Meetings of Stockholders shall be held at any place
within or without the State of Delaware designated
by the Board. In the absence of any such
designation, Stockholders' meetings shall be held at
the principal executive office of the Corporation.
B. Annual Meetings
An annual meeting of the Stockholders of the
Corporation shall be held for the election of
directors on the date and at the time fixed, from
time to time, by the Board. The first annual
meeting shall be held on a date within thirteen (13)
months after the organization of the Corporation and
each subsequent annual meeting shall be held on a
date within thirteen (13) months after the
immediately preceding annual meeting. Any other
proper subject for Stockholder consideration may be
transacted which may be presented at the meeting,
whether or not included in the notice of the
meeting.
C. Special Meetings
Special meetings of the Stockholders may be called
by the Board, the Chairman of the Board, the
President, or by the holders of shares entitled to
cast not less than twenty-five percent (25%) of the
votes at the meeting. Upon request in writing to
the Chairman of the Board, the President, any Vice
President or the Secretary by any person (other than
the Board) entitled to call a special meeting of
Stockholders, the officer forthwith shall cause
notice to be given to the Stockholders 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 the request. If the
notice is not given within twenty (20) days after
receipt of the request, the persons entitled to call
the meeting may give the notice.
D. Notice of Meetings
1. Except to the extent otherwise provided by
applicable law or unless lapse of time shall be
waived, written notice of any Stockholders' meeting
shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting to
each Stockholder entitled to vote thereat. Each
notice shall state 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.
The notice of any meeting may be accompanied by any
additional documents, statements or information
which may be selected by the persons calling the
meeting or which may be prescribed by any applicable
law or regulation.
2. 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. An affidavit of the
Secretary or an Assistant Secretary or of the
transfer agent of the Corporation that the notice
has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
E. Adjourned Meetings and Notice Thereof
Any meeting of Stockholders may be adjourned from
time to time by the vote of a majority of the shares
represented either in person or by proxy whether or
not a quorum is present. When a Stockholders'
meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if
the time and place thereof are announced at the
meeting at which the adjournment is taken. At the
adjourned meeting the Corporation may transact any
business which might have been transacted at the
original meeting. However, 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 record
entitled to vote at the meeting.
F. Waiver of Notice
The transactions of any meeting of Stockholders,
however called and noticed, and wherever held, are
as valid as though they had taken place at a meeting
duly held after regular call and notice, if a quorum
is present either in person or by proxy, and if,
either before or after the meeting, each of the
persons entitled to vote, not present in person or
by proxy, signs a written waiver of notice or a
consent to the holding of the meeting or an approval
of the minutes thereof. No Stockholder may object
to any failure to comply with the provisions of this
Section if either (i) at any time before or after
the meeting he exercises a written waiver of notice
or (ii) he attends one meeting in person or by
proxy, except if he attends solely 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. Any
waiver of notice or consent need not specify either
the business to be transacted or the purpose of any
annual or special meeting of Stockholders. All such
waivers, consents and approvals shall be filed with
the corporate records or made a part of the minutes
of the meeting.
G. Quorum/Majority Vote
Except as otherwise provided by the laws of the
State of Delaware, a majority of shares entitled to
vote, present in person or represented by proxy,
shall constitute a quorum for the transaction of
business. If a quorum is present, the affirmative
vote of the majority of the voting shares
represented at the meeting and entitled to vote on
any matter shall be the act of the Stockholders,
unless the vote of a greater number or voting by
classes is required by law or under the Certificate
of Incorporation of the Corporation. The
Stockholders present at a duly called or held
meeting at which a quorum is present may continue to
transact business until adjournment notwithstanding
the withdrawal of enough Stockholders to leave less
than a quorum, provided that any action taken (other
than adjournment) must be approved by at least a
majority of the shares required to constitute a
quorum.
H. Conduct of Meetings
Meetings of Stockholders shall be presided over by
one of the following officers in the following order
by seniority, if present and acting: Chairman of
the Board, Vice Chairman of the Board, if any, the
President or any Vice President selected in the
order of chronological age. The Secretary of the
Corporation or, in his absence, any Assistant
Secretary shall act as Secretary of the meeting. In
lieu of the foregoing persons, the Board may
designate a Chairman and/or Secretary at any meeting
of the Stockholders. All meetings shall be
conducted by reference to Roberts Rules of Order or
other parliamentary system selected by the chairman
of the meeting and not inconsistent with these
Bylaws, the Certificate of Incorporation or any
applicable law.
I. Nominations for Directors
Nominations for the election of directors may be
made at any meeting at which directors are to be
elected by the Board or its designees or by any
Stockholder entitled to vote for directors generally
at that meeting. Nomination may be made by
Stockholders only if written notice thereof is given
to the Secretary of the Corporation at least ten
(10) days in advance of the meeting or two (2) days
after service of notice of the meeting (whichever
shall occur last). Said notice should identify the
person or persons whom the Stockholder wishes to
nominate and give the residential address of the
nominee and the nominee's business qualifications
for such position. The chairman of the meeting may
refuse to acknowledge any nominations not made in
accordance with the foregoing procedure or in
accordance with applicable law.
Section 2.5 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, 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 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 and shall be delivered to the
Corporation by delivery (by hand or by certified and
registered mail, return receipt requested) to its
registered office in the State of Delaware, its
principal place of business, or to the Secretary of
the Corporation. Where the approval of Stockholders
is given without a meeting by less than unanimous
written consent, unless the consents of all
Stockholders entitled to vote have been solicited in
writing, the Secretary shall give prompt notice of
the corporate action approved by the Stockholders
without a meeting. Such notice shall be given in
the same manner as notice of Stockholders' meetings.
All such written consents shall be filed with the
minutes of proceedings of the Stockholders and
actions authorized or taken under such written
consents shall have the same force and effect as
those adopted by vote of the Stockholders at any
annual or special meeting thereof.
Section 2.6 Voting of Shares
A. In General
Except as may otherwise be prescribed by the
provisions of the Certificate of Incorporation, each
share of stock 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 applicable law in the State of
Delaware prescribes a different percentage of votes
and/or a different exercise of voting power, and
except as may be otherwise prescribed by the
provisions of the Certificate of Incorporation and
these Bylaws.
B. Secret Voting by Ballot
Elections for directors and voting in other matters
need not be by secret ballot unless any Stockholder
demands voting by secret ballot on the applicable
issue at the meeting and before the voting begins.
C. Voting of Shares by Certain Holders
Shares of capital stock of the Corporation standing
in the name of another Corporation, domestic or
foreign, and entitled to vote may be voted by such
officer, agent or proxy as the by-laws of such other
Corporation may prescribe or, in the absence of such
provision, as the board of directors of such other
Corporation may determine.
Shares of capital stock of the Corporation standing
in the name of a deceased person, a minor, an
incompetent or a Corporation declared bankrupt and
entitled to vote may be voted by an administrator,
executor, guardian, conservator or trustee, as the
case may be, either in person or by proxy, without
transfer of such shares into the name of the
official so voting.
A Stockholder whose shares of capital stock of the
Corporation are pledged shall be entitled to vote
such shares unless on the transfer books of the
Corporation the pledgor has expressly empowered the
pledgee to vote such shares, in which case only the
pledgee, or such pledgee's proxy, may represent such
shares and vote thereon.
Shares of capital stock of the Corporation 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
shall be held by the Corporation, shall not be voted
at any meeting of Stockholders and shall not be
counted in determining the total number of
outstanding shares for the purpose of determining
whether a quorum is present. Nothing in this
Section 2.6.C shall be construed to limit the right
of the Corporation to vote shares of capital stock
of the Corporation held by it in a fiduciary
capacity.
Section 2.7 Proxies
Every person entitled to vote for directors or any
other 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 Stockholder's name is placed on
the proxy (whether by manual signature, typewriting,
telegraphic transmission, or otherwise) by the
Stockholder or Stockholder'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 signed by the person and delivered to the
Corporation stating that the proxy is revoked, or by
a subsequent proxy executed 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 the law applicable
in the State of Delaware.
Section 2.8 Inspectors of Election
A. Appointment
The Board shall, in advance of any meeting of
Stockholders, appoint one or more inspectors
(individually an "Inspector," and collectively the
"Inspectors") to act at such meeting and make a
written report thereof. The Board may designate one
or more persons as alternate Inspectors to replace
any Inspector who shall fail to act. If no
Inspector or alternate shall be able to act at such
meeting, the person presiding at such meeting shall
appoint one or more other persons to act as
Inspectors thereat. Each Inspector, before entering
upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of
Inspector with strict impartiality and according to
the best of his or her ability.
B. Duties
The Inspectors shall (i) ascertain the number of
shares of capital stock of the Corporation
outstanding and the voting power of each, (ii)
determine the shares of capital stock of the
Corporation represented at such meeting and the
validity of proxies and ballots, (iii) count all
votes and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any
challenges made to any determination by the
Inspectors and (v) certify their determination of
the number of such shares represented at such
meeting and their count of all votes and ballots.
The Inspectors may appoint or retain other persons
or entities to assist them in the performance of
their duties.
The date and time of the opening and the closing of
the polls for each matter upon which the
Stockholders will vote at such meeting shall be
announced at such meeting. No ballots, proxies or
votes, nor any revocations thereof or changes
thereto, shall be accepted by the Inspectors after
the closing of the polls unless the Court of
Chancery of the State of Delaware upon application
by any Stockholder shall determine otherwise.
In determining the validity and counting of proxies
and ballots, the Inspectors shall be limited to an
examination of the proxies, ballots and the regular
books and records of the Corporation, except that
the Inspectors may consider other reliable
information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of
banks, brokers, their nominees or similar persons
which represent more votes than the holder of a
proxy is authorized by a Stockholder of record to
cast or more votes than such Stockholder holds of
record. If the Inspectors consider other reliable
information for the limited purpose permitted
herein, the Inspectors, at the time they make their
certification pursuant to this Section 2.8.B, shall
specify the precise information considered by them,
including the person or persons from whom they
obtained such information, when the information was
obtained, the means by which such information was
obtained and the basis for the Inspectors' belief
that such information is accurate and reliable.
Section 2.9 Record Date
In order that the Corporation may determine the
Stockholders entitled to notice of or to vote at any
meeting or entitled to express consent to any
corporate action 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 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 such action. If no record date is fixed:
1. 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 date 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.
2. The record date for determining Stockholders
entitled to give consent to corporate action in
writing without a meeting, when no prior action by
the Board has been taken, shall be the first date on
which a signed written consent setting forth the
action taken or proposed to be taken is delivered
(by hand or by certified or registered mail, return
receipt requested) to the Corporation's registered
agent in the State of Delaware, its principal place
of business, or to the Secretary.
3. The record date for determining Stockholders
for any other purpose shall be at the close of
business on the day on which the Board 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 unless
the Board fixes a new record date for the adjourned
meeting, but the Board shall fix a new record date
if the meeting is adjourned for more than thirty
(30) days from the date set for the original
meeting. The stock ledger shall be the only
evidence as to who are the Stockholders entitled to
examine the stock ledger, the stocklist or the books
of the Corporation, or to vote in person or by proxy
at any meeting of Stockholders.
Article 3
Directors
Section 3.1 Powers
Subject to the provisions of the laws of the State
of Delaware and the Certificate of Incorporation,
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. The Board
may delegate the management of the day-to-day
operations 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 3.2 Committees of the Board
The Board shall, by resolution adopted by a majority
of the whole Board, designate a Supervisory
Committee consisting of six (6) directors, to serve
at the pleasure of the Board. Such resolution shall
provide that during intervals between meetings of
the Board, the Supervisory Committee shall have and
may exercise all the powers and authority of the
Board in the management of the business and affairs
of the Corporation in all cases; provided, however,
that the Supervisory Committee shall not have the
power or authority to (i) take any of the actions
set forth in nos. 1-6 in the next paragraph, (ii)
contravene any specific actions or directions of the
Board, or (iii) act on any matter upon which
committees may not act as otherwise provided in the
Delaware General Corporation Law. Such resolution
shall also designate one member of the Supervisory
Committee as the "Management Member", one member as
the "Independent Member" and the remaining four
members as "Other Members". The Management Member
and the four Other Members shall constitute a quorum
at meetings of the Supervisory Committee and no
action shall be taken by the Supervisory Committee
without the affirmative vote of each of the four
Other Members; provided, however, that if the
Management Member or any Other Member is not present
at a meeting of the Supervisory Committee after
having been given five Business Days (defined below)
prior written notice of such meeting, then the
attendance of such member shall not be required for
purposes of a quorum or, with respect to the Other
Members, unanimous voting on any action to be taken
at such meeting, so long as at least three members
of the Supervisory Committee are present, including
at least two of the Other Members, and so long as
the action is approved by all Other Members present.
"Business Day" means any day other than Saturday,
Sunday or any other day on which commercial banks in
Los Angeles, California are authorized to be closed
for business.
The Board may, by resolution adopted by a majority
of the whole Board designate one (1) or more
committees, each consisting of one (1) or more
directors, to serve at the pleasure of the Board.
The Board may designate one (1) 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 a quorum or not, may
unanimously appoint another member of the Board 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 and
subject to the provisions of the applicable law in
the State of Delaware, shall have and may exercise
all the powers and authority of the Board in the
management of the business and affairs of the
Corporation, and may authorize the corporate seal to
be affixed to all papers which may require it, but
neither the Supervisory Committee, the Audit
Committee, nor any other committee shall have the
power or authority with respect to:
1. 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 as provided in Section 151(a)
of the Delaware General Corporation Law, 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 shares for, shares of any other series of the
same class 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).
2. Adopting an agreement of merger or
consolidation under Sections 251 or 252 of the
Delaware General Corporation Law.
3. Recommending to the Stockholders the sale,
lease or exchange of all or substantially all of the
Corporation's property and assets.
4. Recommending to the Stockholders a dissolution
of the Corporation or a revocation of a dissolution.
5. Amending the Bylaws of the Corporation.
6. Unless the resolutions, Bylaws, or Certificate
of Incorporation expressly so provide, declaring a
dividend, authorizing the issuance of stock or
adopting a certificate of ownership and merger
pursuant to Section 253 of the Delaware General
Corporation Law.
Section 3.3 Election and Term of Office
The directors shall be elected at each annual
meeting of Stockholders but, if any such annual
meeting is not held or the directors are not elected
thereat, the directors may be elected at any special
meeting of Stockholders held for that purpose. All
directors shall hold office until the expiration of
the term for which elected and until their
respective successors are elected and qualified.
Section 3.4 Vacancies
A vacancy or vacancies in the Board shall be deemed
to exist in case of death, resignation or removal of
any director, or if the Stockholders fail, at any
annual or special meeting of Stockholders at which
any director or directors are elected, to elect to
fill the full authorized number of directorships,
each of which has previously been filled. A newly
created directorship or directorships shall be
deemed to exist if the authorized number of
directors is increased. The Board shall have the
power to declare vacant the office of a director
either if he is declared of unsound mind by order of
court or finally convicted of a felony. Except for
a vacancy created by the removal of a director,
vacancies on the Board may be filled by a majority
of the directors then in office, whether or not less
than a quorum, or by a sole remaining director, and
each director so elected shall hold office until his
successor is elected at an annual or a special
meeting of the Stockholders. A vacancy on the Board
created by the removal of a director may only be
filled 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. The Stockholders may elect a
director or directors at any time to fill any
vacancy or vacancies not filled by the directors.
Insofar as a director or directors are elected by a
class or series of stock, vacancies or newly created
directorships are to be filled only by the remaining
director or directors elected by such class or
series or by the vote of a majority of the shares of
such class or series.
Section 3.5 Removal
Subject to the rights of any shares having
preferences over the common stock of the Corporation
as to dividends or upon liquidation to elect
directors under specified circumstances, the entire
Board or any director may be removed from office,
with or without cause, but only by the affirmative
vote of the holders of a majority of the combined
voting power of all the then outstanding shares
entitled to vote generally in the election of
directors, voting together as a single class.
Section 3.6 Resignation
Any director may resign effective upon giving
written notice to the Chairman of the Board, the
President, the Secretary or the Board 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, the
Board or the Stockholders shall have the power to
elect a successor to take office when the
resignation is to become effective.
Section 3.7 Meetings of the Board
A. Regular Meetings
Regular meetings of the Board shall be held at such
time and place within or without the State of
Delaware as may be determined from time to time by
resolution of the Board or by written consent of all
members of the Board or in these Bylaws. Regular
meetings shall be held upon oral or written notice
given by any means in sufficient time for the
convenient assembly of directors; forty-eight (48)
hours' notice delivered by mail or twelve (12)
hours' notice delivered personally or by telephone,
telegraph or telecopier or other similar means shall
be deemed sufficient for the foregoing purpose. Any
notice shall state the date, place and hour of the
meeting. Notice of a meeting need not be given to
any director who signs 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 such director.
B. Organization Meetings
Immediately following each annual meeting of
Stockholders, the Board shall hold a regular meeting
for the purpose of organization, election of
officers, and the transaction of other business.
Notice of such meetings is hereby dispensed with.
C. Special Meetings
Special meetings of the Board for any purpose or
purposes shall be called at any time or place by the
Chairman of the Board or by the President or by any
Vice President or the Secretary or any two
directors. Special meetings shall be held upon oral
or written notice given by any means in sufficient
time for the convenient assembly of directors;
forty-eight (48) hours' notice delivered by mail or
twelve (12) hours' notice delivered personally or by
telephone, telegraph or telecopier or other similar
means shall be deemed sufficient for the foregoing
purpose. Any notice shall state the date, place and
hour of the meeting. Notice of a meeting need not
be given to any director who signs 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 such director.
D. Notice of Adjournment
A majority of the directors present, whether or not
a quorum is present, may adjourn any meeting to
another time and place. If the meeting is adjourned
for more than twenty-four (24) hours, notice of such
adjournment to another time and place shall be given
prior to the time of the adjourned meeting to the
directors who were not present at the time of
adjournment, in the same manner as set forth above
for special meetings in Section 3.7.C.
E. Place of Meeting
Meetings of the Board may be held at any place
within or without the State of Delaware which has
been designated in the notice of the meeting or, if
not stated in the notice or there is no notice, then
such meeting shall be held at the principal
executive office of the Corporation, or such other
place designated by resolution of the Board.
F. Presence by Conference Telephone Call
Members of the Board or any committee designated by
the Board may participate in a meeting through use
of conference telephone or similar communications
equipment, so long as all members participating in
such meeting can hear each other. Such
participation constitutes presence in person at such
meeting.
G. Quorum/Voting
1. A majority of the authorized number of
directors constitutes a quorum of the Board for the
transaction of business, provided, however, that in
the absence of a quorum, a majority of the directors
present at any directors' meeting, either regular or
special, may adjourn any meeting to another time and
place. If the meeting is adjourned for more than
twenty-four (24) hours, notice of any adjournment to
another time or place shall be given prior to the
time of the adjourned meeting to the directors who
were not present at the time of adjournment, in the
same manner as set forth above for special meetings
in Section 3.7.C. 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 is
the act of the Board, unless a greater number be
required by law, by the Certificate of Incorporation
or by the provisions of these Bylaws; provided,
however, that these Bylaws hereby authorize the
Board to adopt operating resolutions requiring a
greater than majority vote with respect to certain
actions. 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 such meeting.
2. The affirmative vote of (i) at least eighty-
five percent (85%) of the group of directors of the
Corporation (the "Director Pool") composed of (A)
all of the directors designated for election to the
Board by each of Pioneer LDCA, Inc. ("Pioneer"),
Cinepole Productions B.V. ("Cinepole"), RCS Video
International Services B.V. ("RCS") and MGM Holdings
Corporation ("MGM") (the "Director Designees"), (B)
two directors designated by the Chairman of the
Board of the Corporation (the "Management Director
Designees") and (C) two independent directors
elected to the Board by the Stockholders at large
who are not Director Designees or Management
Director Designees and who would qualify as a member
of the audit committee of the Board pursuant to the
rules of the New York Stock Exchange and who are
designated as members of the Director Pool by New
Carolco Investments, B.V., and (ii) directors
designated for election to the Board by at least
three (3) of the following four Stockholders:
Pioneer, Cinepole, RCS and MGM, shall be required
before the following actions, decisions,
expenditures and obligations are taken, made or
incurred in the name of and on behalf of the
Corporation:
(a) Any amendments to the Certificate of
Incorporation or these Bylaws which would alter (A)
the voting rights of the holders of the common stock
of the Corporation, the Series C Convertible
Preferred Stock, par value $1.00 per share, of the
Corporation ("Series C Preferred") or the Series D
Convertible Preferred Stock, par value $1.00 per
share, of the Corporation ("Series D Preferred"),
(B) the number or classes of directors on the Board,
(C) the notice and quorum requirements for meetings
of the Board or Stockholders of the Corporation, (D)
the constitution, powers or proceedings of the
Supervisory Committee (as described in Section 3.2
above), (E) the constitution of the Director Pool or
(F) this Section 3.7.G.2;
(b) Any merger, consolidation, liquidation,
dissolution or winding up of the Corporation or any
subsidiary of the Corporation which is material to
the business and operations of the Corporation and
its subsidiaries taken as a whole;
(c) The disposition of any asset or assets of the
Corporation or any subsidiary of the Corporation,
other than in the ordinary course of business, with
an aggregate fair market value in excess of
$10,000,000;
(d) Any acquisition by the Corporation or any
subsidiary of the Corporation of any business of
another person, or any property, securities, rights
or other assets in one or a series of related
transactions for a consideration in excess of
$10,000,000; provided, that the Corporation may
acquire rights to motion pictures or other related
properties or assets in the ordinary course of
business, or as permitted under the employment
agreement, dated as of August 10, 1994, between
Carolco Pictures Inc. and Mario F. Kassar, as
assumed by the Corporation (the "Kassar Employment
Agreement") and any amendments thereto, or pursuant
to a resolution of the Board existing on October 20,
1993;
(e) The creation, incurrence, assumption or
guaranty by the Corporation or any subsidiary of the
Corporation of any indebtedness, obligation or
liability, whether direct or contingent, in excess
of $10,000,000, except for (i) film production
financing incurred by the Corporation or by special
purpose subsidiaries of the Corporation engaged
solely in motion picture production, (ii) "pay or
play" obligations related directly to motion picture
production and (iii) bank financing used for general
corporate purposes of the Corporation and its
subsidiaries in an aggregate amount not exceeding
the amount of bank financing available to be drawn
pursuant to its terms at the closing of the
Securities Purchase Agreement, dated as of May 25,
1993, among the Corporation, Pioneer, Cinepole and
MGM, plus $10,000,000 (collectively, "Permitted
Indebtedness").
(f) The creation, incurrence, or assumption of any
lien, mortgage, pledge, security interest, charge or
encumbrance by the Corporation or any subsidiary of
the Corporation with respect to any property,
capital stock or asset of the Corporation or any
subsidiary of the Corporation, which secures payment
of indebtedness of the Corporation in excess of
$10,000,000, except for liens or pledges securing
Permitted Indebtedness.
(g) The declaration or payment by the Corporation
or any subsidiary of the Corporation (other than
special purpose subsidiaries engaged solely in
motion picture production) of any dividend on its
common stock or any other capital stock junior to
the Series C Preferred and the Series D Preferred
(except that (A) any subsidiary of the Corporation
may declare and pay dividends to the Corporation and
(B) the Corporation may declare and pay dividends on
the Series C Preferred or the Series D Preferred in
accordance with the terms of the Certificate of
Incorporation and applicable law).
(h) The termination of, or material amendment,
modification or supplement to (i) the Kassar
Employment Agreement, (ii) the Co-Production
Financing Commitment Agreement, dated as of August
19, 1993, among Carolco Pictures Inc. ("Carolco"),
an affiliate of Cinepole and Tele-Communications,
Inc. ("TCI"), and (iii) the Standby Purchase and
Investment Agreement, dated as of July 29, 1993,
among Carolco, Cinepole, an affiliate of Cinepole,
Pioneer, RCS and TCI, as amended as of the effective
date of the Agreement and Plan of Merger, dated as
of August 10, 1994, between the Corporation, Carolco
and Carolco Acquisition Corp. (the "Merger
Agreement").
(i) Any investments, or series of investments, by
the Corporation or any subsidiary of the Corporation
in excess of $3,000,000, other than (i) marketable
direct obligations issued or unconditionally
guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith
and credit of the United States, (ii) marketable
direct obligations issued by any state of the United
States of America or any political subdivision of
any such state or any public instrumentality
thereof, (iii) commercial paper or other corporate
obligations provided that, at the time of
acquisition, if the security has less than an
investment grade rating obtainable from either
Standard & Poor's Corp. or Moody's Investors
Services, Inc., then the Corporation shall not
purchase the security if the result would be that
the Corporation would (A) have invested more than
20% of its assets in the obligations of one issuer
or (B) own more than 10% of a single issue of
securities, (iv) demand deposits, certificates of
deposit (including Eurodollar certificates of
deposit) or bankers' acceptances issued by
commercial banks, savings and loans or other
financial institutions organized under the laws of
the United States of America or any state thereof or
the District of Columbia, each having capital and
surplus of, in the case of any such institution
organized under the laws of the United States or any
political subdivision thereof, not less than
$100,000,000 or, in the case of any such institution
organized under the laws of any foreign
jurisdiction, not less than $500,000,000 or whose
commercial paper is rated "A-1" by Standard & Poor's
Corp. or "P-1" by Moody's Investors Services, Inc.
("Qualifying Banks"), (v) repurchase agreements and
reverse repurchase agreements with Qualifying Banks,
(vi) money market funds organized under the laws of
the United States of America or any state thereof
and administered by securities dealers of recognized
national standing, (vii) any investment in
subsidiaries of the Corporation 95% of the capital
stock of which is owned by the Corporation, (viii)
negotiable instruments endorsed for deposit or
collection or similar instruments in the ordinary
course of business, and (ix) any investment
outstanding on the effective date of the Merger
Agreement and any extension, renewal refinancing or
deferral of such investment provided that such
extension, renewal, refinancing or deferral does not
increase the amount of such investment outstanding
on the date of such extension, renewal, refinancing
or deferral.
(j) Any agreement, understanding or arrangement by
the Corporation or any subsidiary of the
Corporation, or the amendment of any agreement,
understanding or arrangement of the Corporation or
any subsidiary of the Corporation, with respect to
any of the foregoing matters.
H. Waiver of Notice
Whenever notice is required to be given to any
director pursuant to Delaware law, the Corporation's
Certificate of Incorporation, or these Bylaws, a
written waiver thereof, signed by such director,
whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of
a director at a meeting shall constitute a waiver of
notice of such meeting except when the director
attends the meeting for the express and sole purpose
of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting
is not lawfully called or convened. All such
waivers, consents and approvals shall be filed with
the corporate records or made a part of the minutes
of the meeting.
Section 3.8 Action Without Meeting
Any action required or permitted to be taken at any
meeting of the Board or any committee thereof may be
taken without a meeting if all members of the Board
or any committee, as the case may be, consent in
writing to such action and the writing or writings
are filed with the minutes or proceedings of the
Board or committee, as the case may be.
Section 3.9 Fees and Compensation
Directors and members of committees 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.
Section 3.10 Interested Directors
The presence of a director, who is directly or
indirectly a party in a contract or transaction with
the Corporation, or between the Corporation and any
other corporation, partnership, association or other
organization in which such director is a director or
officer or has a financial interest, may be counted
in determining whether a quorum is present at any
meeting of the Board or a committee thereof at which
such contract or transaction is discussed or
authorized, and such director may participate in
such meeting to the extent permitted by applicable
law, including Section 144 of the Delaware General
Corporation Law.
Article 4
Officers
Section 4.1 Officers
The officers of the Corporation shall consist of a
Chairman of the Board or a President, or both, a
Secretary, a Chief Financial Officer, and such
additional officers as may be elected or appointed
in accordance with Section 4.3 of these Bylaws and
as may be necessary to enable the Corporation to
sign instruments and share certificates. Any number
of offices may be held by the same person.
Section 4.2 Elections
All officers of the Corporation, except such
officers as may be otherwise appointed in accordance
with Section 4.3, shall be chosen by the Board, and
each shall hold his office until he shall resign or
be removed or is otherwise disqualified to serve, or
until his successor is chosen and qualified.
Section 4.3 Other Officers
The Board, at its discretion, may appoint, or
empower the Chairman of the Board to appoint, a
Chief Operating Officer, one or more Vice
Presidents, one or more Assistant Secretaries, a
Treasurer, one or more Assistant Treasurers, or 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 set forth in the Bylaws or as the Board or the
President may from time to time determine.
Section 4.4 Removal
Any officer may be removed, either with or without
cause, by the Board, at any regular or special
meeting thereof, or, except in case of an officer
chosen by the Board, by any officer upon whom such
power of removal may be conferred by the Board
(subject, in each case, to the rights, if any, of an
officer under contract of employment).
Section 4.5 Resignation
Any officer may resign at any time by giving written
notice to the Board or to the President, or to the
Secretary of the Corporation without prejudice to
the rights, if any, of the Corporation under any
contract to which the officer is a party. Any such
resignation shall take effect at the date of the
receipt of such notice or at any later time
specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 4.6 Vacancies
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 such
office.
Section 4.7 Chairman of the Board
The Board may choose a Chairman of the Board from
among its members. The Chairman of the Board, if
there shall be such an officer, shall, if present,
preside at all meetings of the Board and at all
meetings of the Stockholders and exercise and
perform such other powers and duties as may be from
time to time assigned to him by the Board. 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 4.8 below. The Chairman of
the Board shall hold office until the organizational
meeting of the Board next succeeding his election
and until his successor is elected and qualified or
until his earlier resignation or removal.
Section 4.8 President
Subject to such supervisory powers, if any, as may
be given by the Board to the Chairman of the Board,
if there be such an officer, the President shall be
general manager and Chief Executive Officer of the
Corporation and shall, subject to the control of the
Board, have general supervision, direction and
control of the business and affairs of the
Corporation. In the absence of the Chairman of the
Board, or if there be none, he shall preside at all
meetings of the Board and at all meetings of
Stockholders. 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 or these Bylaws.
Section 4.9 Secretary
The Secretary shall keep or cause to be kept, at the
principal executive office or such other place as
the Board may order, a book of minutes of all
meetings of Stockholders, the Board and committees
of the Board, 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 the directors' or committee
meetings, the number of shares present or
represented at Stockholders' meetings, and the
proceedings thereof.
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,
record of its Stockholders giving the names and
addresses of all Stockholders and the number and
class of shares held by each, the number and date of
certificates issued for shares, and the number and
date of cancellation of every certificate
surrendered for cancellation. This information may
be kept in written form or in any other form capable
of being converted into written form.
The Secretary shall give, or cause to be given,
notice of all the meetings of the Stockholders and
of the Board required by the Bylaws or by law to be
given, and shall have such other powers and perform
such other duties as may be prescribed by the Board
or by the Bylaws.
Section 4.10 Chief Financial Officer
The Chief Financial Officer, who shall report on a
day to day basis to the President or Chief Executive
Officer, shall be subject to the control and general
supervision of the Supervisory Committee of the
Board, subject in all cases to the ultimate
supervision of the Board. The Chief Financial
Officer shall have general supervision, direction
and control of the financial affairs of the
Corporation and shall have such other powers and
duties as may be prescribed by the Supervisory
Committee or these Bylaws. In the absence of a
named Treasurer, the Chief Financial Officer shall
also have the powers and duties of the Treasurer as
hereinafter set forth and shall be authorized and
empowered to sign as Treasurer in any case where
such officer's signature is required.
Section 4.11 Treasurer
The Treasurer shall keep or cause to be kept the
books and records of account as provided for and in
accordance with Section 6.1 of these Bylaws. The
books of account shall at all reasonable times be
open to inspection by any director. The Treasurer
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. The
Treasurer, who shall report on a day to day basis to
the Chief Financial Officer or, if there is no Chief
Financial Officer, to the President or Chief
Executive Officer, shall be subject to the control
and general supervision of the Supervisory Committee
of the Board (subject in all cases to the ultimate
supervision of the Board), and shall disburse the
funds of the Corporation as may be ordered by the
Supervisory Committee, shall render to the Chief
Executive Officer and directors, whenever they
request it, an account of all of his transactions as
Treasurer 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 Supervisory Committee or these Bylaws.
Section 4.12 Vice President
In the absence or disability of the President, the
Vice Presidents, in order of their rank as fixed by
the Board, or, if not ranked, the Vice President
designated by the Board, 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. Each Vice
President shall have such other powers and perform
such other duties as from time to time may be
prescribed for them.
Section 4.13 Chief Operating Officer
The Chief Operating Officer, who shall report on a
day to day basis to the President or Chief Executive
Officer, shall have such authority and perform such
duties as the Supervisory Committee may from time to
time determine (subject in all cases to the ultimate
supervision of the Board).
Article 5
Indemnification and Insurance
Section 5.1 Definitions
For purposes of this Article 5 the following
definitions shall apply:
"Agent" means any person who: (i) is or was a
director, officer, employee, or other agent of this
Corporation; or (ii) is or was serving at the
request of this Corporation as a director, officer,
employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or
other enterprise ("enterprise"); or (iii) was a
director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor
corporation of this Corporation or of another
enterprise at the request of such predecessor
corporation.
"Predecessor Corporation" shall include, any
constituent corporations (including any constituent
of a constituent) absorbed in consolidation or
merger which, if its separate existence had
continued, would have had power and authority to
indemnify its agents, so that any person who is or
was an agent of such constituent corporation, or is
or was serving at the request of such constituent
corporation as agent of another enterprise, shall
stand in the same position under and subject to the
provisions of this Article 5 (including, without
limitation, the provisions of Section 5.5) with
respect to the resulting or surviving corporation as
he would have with respect to such constituent
corporation if its separate existence had continued.
"Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative and
whether internal or external to the Corporation.
"Expenses" includes, without limitation, attorneys'
fees and any expenses of establishing a right to
indemnification under this Article 5.
"Losses" means the total amount which the agent
becomes legally obligated to pay in connection with
any proceeding including judgments, fines, amounts
paid in settlement and expenses.
For purposes of this Article 5, references to "other
enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to any employee
benefit plan; references to "serving at the request
of this Corporation" shall include any service as a
director, officer, employee or agent of the
Corporation which imposes duties on, or involves
service 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 or she
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 5.
Section 5.2 Third Party Actions
The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party
to, or otherwise becomes involved in, any proceeding
(other than an action by or in the right of the
Corporation) by reason of the fact that he is or was
an agent of the Corporation against losses paid in
settlement actually and reasonably incurred by him
in connection with such 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
proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any
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 interests of the
Corporation, and, with respect to any criminal
proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 5.3 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, or otherwise becomes involved in, any proceeding
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 an agent of the Corporation against
expenses actually and reasonably incurred by him in
connection with the defense or settlement of such
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 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
Delaware Court of Chancery or the court in which
such proceeding 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
Delaware Court of Chancery or such other court shall
deem proper.
Section 5.4 Successful Defense
To the extent that an agent of the Corporation has
been successful on the merits or otherwise in
defense of any proceeding referred to in
Sections 5.2 and 5.3, or in defense of any claim,
issue or matter therein, he shall be indemnified
against expenses actually and reasonably incurred by
him in connection therewith.
Section 5.5 Determination of Conduct
Any indemnification under Sections 5.2 or 5.3
(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
agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in
Sections 5.2 and 5.3. Such determination shall be
made (1) by the Board of Directors or the
Supervisory Committee by a majority vote of a quorum
consisting of directors who were not parties to such
proceeding or (2) if such 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 5.6 Payment of Expenses in Advance
Expenses incurred by an agent in connection with a
proceeding shall be paid by the Corporation in
advance of the final disposition of such proceeding
upon receipt of an undertaking by or on behalf of
such agent 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 Article 5.
Section 5.7 Indemnity Not Exclusive
The indemnification and advancement of expenses
provided by, or granted pursuant to, the other
provisions of this Article 5, 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
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 5.8 Insurance Indemnification
The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or
was an agent of the Corporation 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 5 or of
Section 145 of the Delaware General Corporation Law.
Section 5.9 Heirs, Executors and Administrators
The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article 5
shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to
be an agent and shall inure to the benefit of the
heirs, executors and administrators of such a
person.
Article 6
Miscellaneous
Section 6.1 Books of Accounts and Proceedings
The Corporation shall keep adequate and correct
books and records of account and shall keep minutes
of the proceedings of its Stockholders, Board and
committees of the Board and shall keep at its
principal executive office, 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 shares held
by each. Such minutes shall be kept in written
form. Such other books and records shall be kept
either in written form or in any other form capable
of being converted to written form.
Section 6.2 Rights of Inspection
A. By Stockholders
1. Record of Stockholders
The Secretary shall prepare and make, at least ten
(10) days before every meeting of Stockholders, a
complete list of 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. 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 (10) days prior
to the meeting, at such place as specified in the
notice of the meeting or, if not so specified, 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. Further, any Stockholder, in person or by
attorney or other agent, upon written demand under
oath stating the purposes thereof, has the right,
during usual business hours, to inspect for any
proper purpose the Corporation's list of
Stockholders. Such Stockholder has the right to
make copies or extracts therefrom. A proper purpose
for Section 6.2.A shall mean a purpose reasonably
related to such person's interest as a Stockholder.
In every instance where an attorney or other agent
shall be the person who seeks the right to
inspection, the demand under oath shall be
accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent
to so act on behalf of the Stockholder. The demand
under oath shall be directed to the Corporation at
its principal place of business. The Corporation
shall either permit the right to inspection or reply
to the written demand within five (5) business days
of receiving the demand.
2. Corporate Records
Any Stockholder or holder of a voting trust, in
person or by attorney or other agent, shall upon
written demand under oath stating the purpose
thereof, have the right during usual business hours,
to inspect for any proper purpose the Corporation's
stock ledger, a list of its Stockholders and its
other books and records pursuant to the provisions
of Section 220 of the Delaware General Corporation
Law. This right of inspection shall also extend to
the records of any subsidiary of the Corporation.
B. By Directors
Every director shall have the right at any
reasonable time to examine the Corporation's stock
ledger, a list of its Stockholders and its other
books and records for a purpose reasonably related
to his position as a director. Such inspection by a
director may be made in person or by agent or
attorney and the right of inspection includes the
right to copy and make extracts.
Section 6.3 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, from time to time,
shall be determined by resolution of the Board.
Section 6.4 Authority to Execute Contracts
The Board 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 subject to the applicable
laws of the State of Delaware. Such authority may
be general or confined to specific instances and,
unless so authorized by the Board, 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 to any amount.
Section 6.5 Representation of Shares of Other
Corporations
The Chairman of the Board, if any, President or any
Vice President and the Secretary or any Assistant
Secretary of this Corporation are authorized to
vote, represent and exercise on behalf of this
Corporation all rights incident to any and all
shares of any other corporation or corporations
standing in the name of this Corporation. The
authority herein granted to said officers to vote or
represent on behalf of this Corporation any and all
shares held by this Corporation in any other
corporation or corporations may be exercised either
by such officers in person or by any other person
authorized so to do by proxy or power of attorney
duly executed by said officers.
Section 6.6 Construction and Definitions
Unless the context otherwise requires, the general
provisions, rules of construction and definitions
contained in the corporation laws of the State of
Delaware shall govern the construction of these
Bylaws. Without limiting the generality of the
foregoing, the masculine gender includes the
feminine and neuter, the singular number includes
the plural and the plural number includes the
singular, and the term "person" includes a
corporation as well as a natural person.
Section 6.7 Reimbursement of Disallowed
Compensation
Any payments made to an officer or director of the
Corporation including, but not limited to, payments
of compensation, interest, rent or reimbursement for
expenses, which payments are disallowed to the
Corporation in whole or in part by the Internal
Revenue Service as a deductible business expense,
shall, at the option of the Corporation, be
reimbursed by such officer or director to the
Corporation to the full extent of the amount so
disallowed. Any officer or director of the
Corporation who shall have received payment of any
such amounts so disallowed shall promptly, on
demand, reimburse the Corporation for same. The
Corporation may withhold the amount of any such
disallowance with respect to payments to any given
officer or director from the future compensation or
other payments which may be due or become due to
such officer or director, if he does not reimburse
the Corporation on demand.
Article 7
Amendments
Section 7.1 Power of Stockholders
New Bylaws may be adopted or these Bylaws may be
amended or repealed by the vote of Stockholders
entitled to exercise a majority of the voting power
of the Corporation or by the written consent of such
Stockholders, except as otherwise provided by law or
by the Certificate of Incorporation.
Section 7.2 Power of Directors
Subject to the right of Stockholders as provided in
Section 7.1 to adopt, amend or repeal Bylaws, any
Bylaw may be adopted, amended or repealed by the
Board.
Article 8
Emergency Provisions
Section 8.1 General
The provisions of this Article shall be operative
only during any emergency resulting from an attack
on the United States or on a locality in which the
Corporation conducts its business or customarily
holds meetings of the Board or Stockholders, or
during any nuclear or atomic disaster, or during the
existence of any catastrophe or other similar
emergency condition, as a result of which a quorum
of the Board or a standing committee thereof cannot
be convened. Said provisions in such event shall
override all other Bylaws of the Corporation in
conflict with any provisions of this Article, and
shall remain operative so long as it remains
impossible or impracticable to continue the business
of the Corporation otherwise, but thereafter shall
be inoperative; provided that all actions taken in
good faith pursuant to such provisions shall
thereafter remain in full force and effect unless
and until revoked by action taken pursuant to the
provisions of the Bylaws other than those contained
in this Article. No officer, director or employee
acting in accordance with any provision of this
Article shall be liable except for willful
misconduct.
Section 8.2 Unavailable Directors
All directors of the Corporation who are not
available to perform their duties as directors by
reason of physical or mental incapacity or for any
other reason or who are unwilling to perform their
duties or whose whereabouts are unknown shall
automatically cease to be directors, with like
effect as if such persons had resigned as directors,
so long as such unavailability continues.
Section 8.3 Authorized Number of Directors
The authorized number of directors shall be the
number of directors remaining after eliminating
those who have ceased to be directors pursuant to
Section 8.2, or the minimum number required by law,
whichever number is greater.
Section 8.4 Quorum
The number of directors necessary to constitute a
quorum shall be one-third (1/3rd) of the authorized
number of directors as specified in the foregoing
Section, or such other minimum number as, pursuant
to the law or lawful decree then in force, it is
possible for the bylaws of a corporation to specify.
Section 8.5 Creation of Emergency Committee
In the event the number of directors remaining after
eliminating those who have ceased to be directors
pursuant to Section 8.2 is less than the minimum
number of authorized directors required by law, then
until the appointment of additional directors to
make up such required minimum, all the powers and
authorities which the Board could by law delegate,
including all powers and authorities which the Board
could delegate to a committee, shall be
automatically vested in an emergency committee, and
the emergency committee shall thereafter manage the
affairs of the Corporation pursuant to such powers
and authorities and shall have all other powers and
authorities as may by law or lawful decree be
conferred on any person or body of persons during a
period of emergency.
Section 8.6 Constitution of Emergency Committee
The emergency committee shall consist of all the
directors remaining after eliminating those who have
ceased to be directors pursuant to Section 8.2,
provided that such remaining directors are not less
than three (3) in number. In the event such
remaining directors are less than three (3) in
number, the emergency committee shall consist of
three (3) persons, who shall be the remaining
director or directors and either one (1) or two (2)
officers or employees of the Corporation, as the
remaining director or directors may in writing
designate. If there is no remaining director, the
emergency committee shall consist of the three (3)
most senior officers of the Corporation who are
available to serve, and if and to the extent that
officers are not available, the most senior
employees of the Corporation. Seniority shall be
determined in accordance with any designation of
seniority in the minutes of the proceedings of the
Board, and in the absence of such designation, shall
be determined by rate of remuneration. In the event
that there are no remaining directors and no
officers or employees of the Corporation available,
the emergency committee shall consist of three (3)
persons designated in writing by the Stockholder
owning the largest number of shares of record as of
the date of the last record date.
Section 8.7 Powers of Emergency Committee
The emergency committee, once appointed, shall
govern its own procedures and shall have power to
increase the number of members thereof beyond the
original number, and in the event of a vacancy or
vacancies therein, arising at any time, the
remaining member or members of the emergency
committee shall have the power to fill such vacancy
or vacancies. In the event at any time after its
appointment all members of the emergency committee
shall die or resign or become unavailable to act for
any reason whatsoever, a new emergency committee
shall be appointed in accordance with the foregoing
provisions of this Article.
Section 8.8 Directors Becoming Available
Any person who has ceased to be a director pursuant
to the provisions of Section 8.2 and who thereafter
becomes available to serve as a director shall
automatically become a member of the emergency
committee.
Section 8.9 Election of Board
The emergency committee shall, as soon after its
appointment as is practicable, take all requisite
action to secure the election of a Board, and upon
such election all the powers and authorities of the
emergency committee shall cease.
Section 8.10 Termination of Emergency Committee
In the event, after the appointment of an emergency
committee, a sufficient number of persons who ceased
to be directors pursuant to Section 8.2 become
available to serve as directors, so that if they had
not ceased to be directors as aforesaid, there would
be enough directors to constitute the minimum number
of directors required by law, then all such persons
shall automatically be deemed to be reappointed as
directors and the powers and authorities of the
emergency committee shall be at an end.
The undersigned, being the Secretary of Carolco
Entertainment Inc., hereby certifies that the
foregoing Bylaws were adopted as the Bylaws of said
Corporation by its Board of Directors on [________],
1994.
__________________________________________
[_____], Secretary
EXHIBIT 3.1
Amended and Restated Certificate of Incorporation
of LIVE Entertainment Inc., a Delaware corporation
(Pursuant to Sections 242 and 245 of the Delaware
General Corporation Law)
LIVE Entertainment Inc., a corporation organized and
existing under the Delaware General Corporation Law,
DOES HEREBY CERTIFY:
That this Amended and Restated Certificate of
Incorporation has been approved by its Board of
Directors and adopted by the Corporation's
stockholders pursuant to Sections 242 and 245 of the
Delaware General Corporation Law.
That its Certificate of Incorporation as filed with
the office of the Delaware Secretary of State on
March 15, 1988, and restated by its Restated
Certificates of Incorporation filed on September 20,
1988 and November 2, 1988, is hereby further amended
and restated in its entirety as follows:
FIRST: The name of the corporation (hereinafter
called the "Corporation") is Carolco Entertainment
Inc.
SECOND: The address, including street, number,
city and county, of the registered office of the
Corporation in the State of Delaware is 1209 Orange
Street, City of Wilmington, County of New Castle;
and 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 this Corporation is to
engage in any lawful act or activity for which
corporations may now or hereafter be organized under
the General Corporation Law of the State of
Delaware.
FOURTH: The aggregate number of shares of capital
stock of the Corporation (referred to herein as
"Shares") which the Corporation shall have authority
to issue is 215,000,000 Shares, of which 200,000,000
will be common stock having a par value of $0.01
(the "Common Stock") and 15,000,000 will be series
preferred stock having a par value of $1.00 (the
"Series Preferred Stock"), of which 15,000 shall be
designated as Series C Preferred Stock ("Series C
Preferred Stock") and 120,000 shall be designated as
Series D Preferred Stock ("Series D Preferred
Stock"), each of which such Series of Preferred
Stock shall have the preferences and relative,
participating, optional and special rights and
qualifications, limitations and restrictions set
forth below. The remaining Series Preferred Stock
may be issued, from time to time, in one or more
series as authorized by the Board of Directors.
Prior to issuance of a series, the Board of
Directors by resolution shall designate it from
other series and classes of stock of the
Corporation, shall specify the number of shares to
be included in the series, and shall fix the terms,
rights, restrictions and qualifications of the
shares of a series, including any preferences,
voting powers, dividend rights and redemption,
sinking fund and conversion rights. Subject to the
express terms of the Series Preferred Stock
outstanding at the time, the Board of Directors may
increase or decrease the number of shares or alter
the designation or classify or reclassify any
unissued shares of a particular series of Series
Preferred Stock by fixing or altering in any one or
more respects from time to time before issuing the
shares, any terms, rights, restrictions and
qualifications of the shares.
A. Series C Preferred Stock
1. Series C Dividend Rights
1.1 A. The holder of each share of Series C
Preferred Stock (a "Series C Share") registered as
such in the stock records of the Corporation (a
"Series C Holder") as of the Series C Record Date
(as defined below) shall be entitled to receive,
when, as and if declared by the Corporation's Board
of Directors or a duly authorized committee thereof
out of the funds of the Corporation legally
available therefor, on January 1, April 1, July 1
and October 1 of each year (a "Series C Dividend
Payment Date") cumulative dividends per Series C
Share (the "Series C Cash Dividends") in cash at the
Series C Cash Rate (as hereinafter defined) based
upon the Series C Liquidation Preference (as defined
in Paragraph A.2 and as adjusted pursuant to
Paragraph A.1.1.D below) of such Series C Share. To
the extent permitted by applicable law and not
prohibited pursuant to the terms of applicable
credit instruments or senior securities, the Board
of Directors shall declare Series C Cash Dividends
at the Series C Cash Rate for payment on each
Series C Dividend Payment Date (or, if such day is
not a business day, on the next business day
thereafter).
B. A "Series C Quarterly Payment Period" shall
mean each of the three month periods ending on
December 31, March 31, June 30 and September 30 of
each year.
C. The "Series C Cash Rate" shall mean the
quarterly rate of one and one quarter percent (1
1/4%).
D. Series C Dividends shall accrue (whether or not
paid) during each Series C Quarterly Payment Period
from the Series C Dividend Payment Date immediately
preceding such Series C Quarterly Payment Period to
the last day of such Series C Quarterly Payment
Period, provided that, for the first Series C
Quarterly Payment Period, Series C Cash Dividends
shall accrue commencing as of the date of Initial
Issuance (as defined below) of the Series C Shares.
Series C Cash Dividends shall be calculated on the
basis of a 90 day Series C Quarterly Payment Period
and the actual number of days elapsed. For any
Series C Quarterly Payment Period with respect to
which the Series C Cash Dividend is not fully paid
in cash on the Series C Dividend Payment Date at the
end of such Series C Quarterly Payment Period, such
accrued but unpaid Series C Cash Dividends shall be
added to the Series C Liquidation Preference of the
Series C Shares effective at the beginning of the
Series C Quarterly Payment Period next succeeding
the Series C Quarterly Payment Period as to which
such Series C Cash Dividends were not paid, and
shall thereafter accrue additional Series C Cash
Dividends at the Series C Cash Rate. Any Series C
Cash Dividend payment made on Series C Shares shall
first be credited against the earliest accrued but
unpaid Series C Cash Dividend which has been added
to the Series C Liquidation Preference of the
Series C Shares pursuant to this Paragraph A.1.1.D
and shall thereafter reduce the Series C Liquidation
Preference. With respect to the Series C Shares,
the date of "Initial Issuance" shall mean the
Effective Date (as defined in that certain Agreement
and Plan of Merger dated as of August 10, 1994 by
and among the Corporation, Carolco Acquisition Corp.
and Carolco Pictures Inc.) of said merger.
E. Series C Cash Dividends, if and when declared
on each Series C Share, shall to the extent
permitted by applicable law be declared at least
twenty (20) business days prior to the next Series C
Dividend Payment Date for payment on the next
Series C Dividend Payment Date to the Series C
Holders of record on the date determined in such
declaration, which date shall in no event be more
than fifteen (15) business days after the date of
declaration (the "Series C Record Date"). Series C
Cash Dividends shall be payable on each Series C
Dividend Payment Date (or if any such day is not a
business day, the next succeeding business day),
except that Series C Cash Dividends for the period
during which a Series C Redemption (as defined in
Paragraph A.5.1) shall occur shall be payable on
Series C Shares redeemed in accordance with
Paragraph A.5.2 (unless otherwise paid on a Series C
Dividend Payment Date for a Series C Record Date
occurring prior to a Series C Redemption Date (as
defined in Paragraph A.5.2)). The Series C Holder
of any Series C Shares which are the subject of a
conversion pursuant to Paragraph A.4 shall, on the
Series C Conversion Date (as defined in Paragraph
A.4.F), cease to have any rights with respect to any
accrued Series C Cash Dividends on such Series C
Shares which have not been declared and paid on or
before such Series C Conversion Date except to the
extent such accrued but unpaid Series C Cash
Dividends have been added to the Series C
Liquidation Preference of such Shares and except
that in the event a conversion of Series C Shares is
effected after a Series C Redemption Notice (as
defined in Paragraph A.5.2) is delivered by the
Corporation but prior to a Series C Redemption Date,
then, to the extent lawful, the Corporation shall
pay to such Series C Holder an amount in cash equal
to all accrued and unpaid Series C Cash Dividends
from the last Series C Dividend Payment Date until
the date the converting Series C Holder delivered
its notice of conversion pursuant to Paragraph
A.4.F.
1.2 Until the date no Series C Shares are
outstanding (the "Series C Termination Date"), the
Corporation shall not declare, pay or set aside for
payment any dividend (other than in shares of Junior
Stock (as hereinafter defined)) or other
distribution in respect of its Junior Stock, or call
for redemption, redeem, purchase or otherwise
acquire for any consideration (other than shares of
its Junior Stock) any shares of its Junior Stock,
any warrants, rights, calls or options exercisable
for any shares of Junior Stock unless all dividends
accumulated and unpaid with respect to the Series C
Shares are simultaneously declared and paid. With
respect to the Series C Preferred Stock, "Junior
Stock" means Common Stock (as hereinafter defined),
Series D Preferred Stock or any other series of
preferred stock of the Corporation which ranks
junior to or on a parity with (as determined
pursuant to Paragraph A.6) the Series C Preferred
Stock. "Common Stock" means the common stock, par
value $.01 per share, of the Corporation, and any
share of successor or replacement stock.
1.3 Each Series C Holder shall be entitled to
participate with the holders of Common Stock equally
and ratably (on the basis of the number of shares of
Common Stock such Series C Holder would then own if
it then converted its Series C Shares pursuant to
Paragraph A.4) in any subscription rights or other
similar rights to acquire securities or property of
the Corporation granted to any holder of Common
Stock; provided that any subscription rights or
other similar rights acquired by Series C Holders
shall be excluded for purposes of calculating any
adjustments pursuant to Paragraph A.4.D hereof.
2. Rights on Liquidation and Ranking
2.1 In the event of the liquidation, dissolution,
winding up or sale or other disposition of all or
substantially all of the assets of the Corporation,
whether voluntary or involuntary ("Liquidation"),
the Series C Holder shall be entitled to receive
with respect to its Series C Shares, after the
satisfaction of all distributions to holders of
other series of preferred stock, if any, which are
required (at the direction of the holder thereof or
otherwise) to be redeemed prior to or in connection
with the consummation of such Liquidation or which
are expressly senior in liquidation preference to
the Series C Shares including any series of
preferred stock which is mandatorily redeemable
(collectively, the "Series C Senior Payments") but
before any distribution is made to or set aside for
the holders of Common Stock or any other series of
preferred stock of the Corporation, if any, which
are not then required to be redeemed or which are
junior in liquidation preference to the Series C
Shares, cash or any other assets of the Corporation
in an amount (or having a fair market value) equal
to $1,000 ("Series C Liquidation Preference") plus
all accrued but unpaid Series C Cash Dividends which
have been added to the Series C Liquidation
Preference of such shares pursuant to Paragraph
A.1.1.D up to the date of the final distribution in
Liquidation. If after the satisfaction of all
Series C Senior Payments the assets of the
Corporation available for distribution to Series C
Holders shall be insufficient to permit the payment
in full of the amount due the Series C Holders
pursuant to this Paragraph A.2, the entire assets of
the Corporation available for distribution to
Series C Holders after the satisfaction of all
Series C Senior Payments shall be distributed pari
passu among the Series C Holders and the holders of
other series of preferred stock which are not junior
in liquidation preferences to the Series C Shares,
if any, in accordance with their respective
liquidation preferences. The fair market value of
any assets of the Corporation and the proportion of
cash and other assets distributed by the Corporation
to the Series C Holders shall be reasonably
determined in good faith by the Board of Directors.
A merger or consolidation of the Corporation with
another corporation or a voluntary sale of all or
substantially all of the assets of the Corporation
principally in exchange for stock and/or securities
of another corporation (all referred to as a
"Merger") shall not be deemed a Liquidation if such
Merger does not occur as part of a proceeding under
Title 11 of the United States Code or any federal or
state law for the protection of creditors or relief
of debtors.
2.2 With regard to rights to receive distributions
upon Series C Liquidation of the Corporation and
dividends, the Series C Shares shall rank (i) senior
to the Series D Preferred Stock and (ii) senior to
the Common Stock and any other equity securities of
the Corporation that by their terms are not made
senior to or on a parity with the Series C Shares as
to such rights.
3. Voting Rights
3.1 Except as otherwise provided by law and except
as provided in Paragraphs A.3.2 and A.3.3 below,
each Series C Holder shall have the same voting
rights as a holder of the number of shares of Common
Stock which such Series C Holder would then own if
it then converted its Series C Shares pursuant to
Paragraph A.4.
3.2 So long as any of the Series C Shares are
outstanding, the Corporation will not, without the
affirmative vote or consent of the Series C Holders
representing at least a majority (unless the consent
or vote of Series C Holders of greater than a
majority is then required by law) of the Series C
Shares at the time outstanding, given in person or
by proxy, either in writing or by a resolution
adopted at a meeting called for the purpose, the
Series C Holders voting or consenting separately as
a class:
A. amend, alter or repeal any of the provisions of
the Corporation's Amended and Restated Certificate
of Incorporation or Amended and Restated Bylaws or
the resolution providing for the issue of the
Series C Shares or pass any stockholder resolution,
including such action effected by merger or similar
transaction in which the Corporation is the
surviving corporation, if such amendment or
resolution would affect adversely the preferences,
special rights or powers of the Series C Shares
except if such action is permitted under the other
provisions of this Paragraph A.3.2;
B. increase or decrease (other than by redemption
or conversion) the total number of authorized
Series C Shares;
C. issue any capital stock which ranks senior or
on a parity with the Series C Shares with respect to
rights to receive distributions upon liquidation,
dissolution or winding up of the Corporation or with
respect to dividends;
D. enter into a Merger in which the Corporation is
not the surviving corporation; provided, however,
that the provisions of this subparagraph D shall not
be applicable to any such Merger if the authorized
capital stock of the surviving corporation
immediately after such Merger shall include only
classes or series of stock for which no such consent
or vote would have been required pursuant to
Paragraph A.3.2 if such class or series had been
authorized by the Corporation immediately prior to
such Merger or which have the same rights,
preferences and limitations and authorized amount as
a class or series of stock of the Corporation
authorized (with such consent or vote of the
Series C Shares) prior to such Merger and continuing
as an authorized class or series at the time
thereof.
A Merger of the Corporation, or similar Merger in
which the holders of its capital stock receive all
cash shall not be deemed to adversely affect the
preferences, special rights or powers of the
Series C Shares. Nor shall the authorization or
issuance of the Series D Preferred Stock, nor the
authorization or issuance of any other series of
preferred stock if such other series ranks junior to
the Series C Shares with respect to rights to
receive distributions upon Liquidation of the
Corporation or with respect to dividends be deemed
to adversely affect the preferences, special rights
or powers of the Series C Shares.
3.3 In the event of an issuance by means of a stock
split, reverse split or stock dividend or other
similar event or reclassification of shares of
Common Stock outstanding, the voting rights of the
Series C Shares shall be fairly and equitably (in
the judgment of the Board of Directors of the
Corporation) adjusted at the same time and in the
same manner as the adjustment is made in the rights
of the Common Stock in order to maintain the same
voting rights as the Series C Shares on the date of
issuance.
3.4 Copies of all notices sent to the holders of
Common Stock shall be simultaneously sent to each
Series C Holder.
4. Series C Conversion Rights Common Stock
A. Number of Series C Shares. Each Series C Share
shall be convertible, at the option of the Series C
Holder thereof, at any time and from time to time,
into that number of shares of Common Stock obtained
by dividing the Series C Liquidation Preference
(including any Series C Cash Dividends added to the
Series C Liquidation Preference pursuant to
Paragraph A.1.1.D) of such Series C Share by the
"Series C Conversion Price" determined in accordance
with Paragraph A.4.B.
B. Series C Conversion Price. The Series C
Conversion Price shall be $3.045 and shall be
adjusted from time to time pursuant to Paragraph
A.4.D. The Corporation may (but shall have no
obligation to) from time to time temporarily or
permanently reduce the Series C Conversion Price as
it deems appropriate.
C. Series C Conversion and Series C Redemption.
In case any Series C Share is called for redemption,
the right to convert such Series C Share shall
terminate at the close of business on the Series C
Redemption Date; provided that no default by the
Corporation in the payment of the applicable
Series C Redemption Price (as defined in Paragraph
A.5.1) shall have occurred and be continuing.
D. Adjustment of Series C Conversion Price and
Ratio for Series C Conversion. Except as otherwise
provided herein, the Series C Conversion Price shall
be subject to adjustment from time to time only as
follows:
(a) In case the Corporation shall (1) take a record
of the holders of Common Stock for the purpose of
entitling them to receive a dividend payable in
shares of Common Stock, (2) subdivide (by stock
split, merger, consolidation or otherwise) the
outstanding shares of Common Stock into a greater
number of shares, (3) combine (by reverse stock
split, merger, consolidation or otherwise) the
outstanding shares of Common Stock into a smaller
number of shares or (4) increase or decrease the
number of shares of outstanding Common Stock by
reclassification of its Common Stock or issue any
shares of any other class or series of the
Corporation by reclassification of its Common Stock,
the Series C Conversion Price (then in effect) shall
be adjusted so that each Series C Holder shall
thereafter be entitled upon the conversion of each
Series C Share held by him to receive for such
Series C Share the number of shares of Common Stock
which it would have owned and/or have been entitled
to receive upon the occurrence of an event or record
date described above had the Series C Share been
converted immediately prior to the happening of the
event, the adjustment to the Series C Conversion
Price to become effective immediately after (x) the
record date (in the case of a dividend) or (y) the
day upon which such subdivision or combination shall
become effective.
(b) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common
Stock property including securities, but excluding:
(x) any dividend or distribution paid in Common
Stock; (y) any dividend or distribution paid in cash
out of the surplus of the Corporation (provided that
such distribution shall not reduce stockholders'
equity below the sum of the aggregate Series C
Liquidation Preference of the Series C Shares then
outstanding and the aggregate liquidation preference
of all other shares ranking senior or pari passu to
the Series C Shares) or (z) any securities issued or
redeemed pursuant to a shareholders rights plan, the
Series C Conversion Price shall be adjusted by
multiplying (a) the Series C Conversion Price in
effect immediately prior to the close of business on
the date fixed for the determination of stockholders
entitled to receive the distribution by (b) a
fraction, the numerator of which is the excess of
the Market Price (as defined in Paragraph A.4.J) for
that date over the fair market value on that date
(as reasonably determined in good faith by the Board
of Directors, whose determination shall be
conclusive) of the property so distributed per share
of Common Stock, and the denominator of which is the
Market Price for that date. The adjustment shall
become effective immediately prior to the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive
the distribution.
(c) In case the Corporation shall sell or issue
shares of Common Stock or rights, options, warrants
or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of
Common Stock, excluding shares of Common Stock
issued or reserved for issuance by the Corporation
in the following situations:
(i) in any transaction described in clause (a) or
(b) above;
(ii) (x) pursuant to any plan providing for the
reinvestment of dividends or interest payable on
securities of the Corporation, and the investment of
additional optional amounts with respect to such
plan, (y) pursuant to any employee benefit plan or
program of the Corporation or (z) to officers,
directors or employees pursuant to an employee stock
option plan approved by the holders of the Common
Stock, in any such case, either (A) at a price per
share not less than 95% of the Market Price per
share of Common Stock, or (B) in an amount of shares
of Common Stock not greater than 5% of the total
number of shares of Common Stock outstanding on a
fully diluted basis; and
(iii) upon conversion of the Series C Shares or
Series D Shares, or upon conversion, exercise or
exchange of rights, options, warrants or convertible
or exchangeable securities outstanding or as to
which a binding commitment existed as of the date of
Initial Issuance of the Series C Shares.
and the price per share (determined in the case of
rights, options, warrants or convertible or
exchangeable securities as the quotient of (x) the
aggregate consideration received or receivable by
the Corporation upon the sale and issuance of such
rights, options, warrants or convertible or
exchangeable securities plus the total consideration
payable to the Corporation upon such exercise or
conversion divided by (y) the total number of shares
of Common Stock covered by such rights, options,
warrants or convertible or exchangeable securities)
is lower than the Market Price on the date of such
initial sale and issuance, then the Series C
Conversion Price in effect immediately prior to such
issuance shall upon such issuance be reduced to the
price determined by multiplying such Series C
Conversion Price by a fraction, the numerator of
which shall be an amount equal to the sum of (A) the
number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such
issuance multiplied by the Market Price in effect
immediately prior to such issuance plus (B) the
consideration, if any, received by the Corporation
upon such issuance, and the denominator of which
shall be the product of (A) the Market Price in
effect immediately prior to such issuance and (B)
the total number of shares of Common Stock
outstanding on a fully diluted basis, immediately
after such issuance.
(d) In case the Corporation shall distribute to the
holders of its Common Stock evidences of its
indebtedness or assets (excluding Series C Cash
Dividends or distributions made out of current or
retained earnings) or rights or warrants to
subscribe other than as referred to in subparagraph
(c) above, then in each such case the number of
shares of Common Stock into which each Series C
Share shall thereafter be convertible shall be
determined by multiplying the number of shares of
Common Stock into which such Series C Shares was
theretofore convertible by a fraction, of which the
numerator shall be the current Market Price per
share of Common Stock on the date of such
distribution, and of which the denominator shall be
the current Market Price per share of Common Stock,
less the then fair market value (as reasonably
determined by the Board of Directors of the
Corporation) of the assets, evidences of
indebtedness, subscription rights or warrants so
distributed (the "Distributed Property") over the
aggregate consideration receivable by the
Corporation, if any, for the Distributed Property,
as applicable to one share of Common Stock. Such
adjustment shall be made whenever any such
distribution is made (unless an adjustment is made
pursuant to subparagraph (a), (b) or (c) above, in
which case such subparagraphs shall apply), but
shall also be effective retroactively as to Series C
Shares converted after the record date for the
determination of stockholders entitled to receive
such distribution and before the date such
distribution is made.
(e) No adjustment in the Series C Conversion Price
shall be required unless such adjustment would
require an increase or decrease of at least 1% of
such price; provided that any adjustments which by
reason of this clause (e) are not required to be
made shall be carried forward and taken into account
in any subsequent adjustment. All calculations
shall be made to the nearest cent or the nearest
one-hundredth of a share, as the case may be.
E. Series C Conversion Upon Reorganization. In
case the Corporation shall effect a reorganization,
reclassification of its Common Stock (other than a
subdivision or combination described in clause (a)
of Paragraph A.4.D) or Merger, and pursuant to any
such reorganization, reclassification or Merger, any
assets or securities of the Corporation, any
successor or transferee corporation or any affiliate
thereof or cash is received by or distributed to the
holders of Common Stock, then each Series C Holder
shall have the right thereafter to convert each
Series C Share held by such Series C Holder into the
kind and amount of shares or assets, securities or
cash receivable as a result of consummation of such
transaction by a holder of the number of shares of
Common Stock into which such Series C Share might
have been converted immediately prior to such
transaction and shall have no other conversion
rights nor shall there be any adjustment to the
Series C Conversion Price; in any such event,
effective provision shall be made in the certificate
of incorporation of the successor or transferee
corporation or otherwise, so that the provisions set
forth herein for the protection of the conversion
rights of the Series C Shares shall thereafter be
applicable, as nearly as reasonably may be, to any
such other securities, cash and assets deliverable
upon conversion of the Series C Shares or other
convertible stock or securities received by the
Series C Holders in place thereof, and any such
successor or transferee corporation shall expressly
assume the obligation to deliver, upon the exercise
of the conversion privilege, such other securities,
cash or assets as the Series C Holders, or other
convertible stock or securities received by the
Series C Holders in place thereof, shall be entitled
to receive pursuant to the provisions hereof, and to
make provision for the protection of the conversion
right as above provided. In case securities other
than Common Stock, cash or assets shall be issuable,
payable or deliverable by the Corporation upon
conversion as aforesaid, then all references in this
Paragraph A.4.E shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other
securities, cash or assets. This provision shall
similarly apply to successive reorganizations,
reclassifications or Mergers.
F. Series C Conversion Method. Any Series C
Holder may, at any time prior to the close of
business on the Series C Redemption Date for such
Series C Shares, exercise the conversion rights as
to such Series C Shares by delivering to the
Corporation during regular business hours, at the
office of the then transfer agent for the Series C
Shares or at such other place as may be designated
in writing delivered to all Series C Holders by the
Corporation, at least ten (10) business days prior
to the requested date for conversion, a notice
requesting conversion on a specified date and the
certificate for the Series C Shares to be converted,
duly endorsed in blank or for transfer to the
Corporation (if required by it), or accompanied by
separate instruments of transfer satisfactory to the
Corporation, in either case sufficient to transfer
the Series C Shares being converted free of any
adverse claim, and written notice stating the number
of Series C Shares represented by such certificate
that the Series C Holder elects to convert. The
notice shall also state the names and addresses of
the persons to whom certificates for shares of
Common Stock shall be issued, the denominations of
such certificates and reasonable delivery
instructions with respect thereto. A notice failing
to meet the foregoing requirements shall not be
valid or effective for any purpose. (The
Corporation may (but shall have no obligation to)
from time to time waive the requirement of ten (10)
days written notice.) Each conversion shall be
deemed to have been effected immediately on the
close of business on the date specified in such
notice (the "Series C Conversion Date"), and the
person in whose name any certificate for shares of
Common Stock is issuable upon the conversion shall
be deemed to have become the holder of record of the
Common Stock at such time. If the stock transfer
books of the Corporation are closed on the Series C
Conversion Date, the Series C Conversion Date for
purposes of determining record ownership shall be
the next succeeding day on which the stock transfer
books are open (and the conversion shall be deemed
to have been effected immediately prior to the close
of business on that day), but in all cases the
conversion shall be at the Series C Conversion Price
in effect on the Series C Conversion Date specified
in the notice of conversion. As promptly as
practicable after the Series C Conversion Date (but
in any event within 10 business days), the
Corporation shall issue and deliver to such Series C
Holder, at the expense of the Corporation and in
accordance with such Series C Holder's delivery
instructions, a certificate or certificates for the
number of full shares of Common Stock to which such
Series C Holder is entitled and a check or cash with
respect to any fractional interest in a share of
Common Stock as provided in Paragraph A.4.G below.
Upon conversion of only a portion of the Series C
Shares represented by a certificate surrendered for
conversion, the Corporation shall issue and deliver
to such Series C Holder, at the expense of the
Corporation, a new certificate covering the number
of Series C Shares representing the unconverted
portion of the certificate so surrendered and which
new certificate shall entitle the Series C Holder
thereof to the same rights of the Series C Shares
represented thereby as if the certificate
theretofore covering such unconverted Series C
Shares had not been surrendered for conversion.
G. Fractional Shares of Common Stock. No
fractional shares of Common Stock or scrip shall be
issued upon conversion of Series C Shares. If more
than one Series C Share shall be surrendered for
conversion at any one time by the same Series C
Holder, the number of full shares of Common Stock
issuable upon conversion of such Series C Shares
shall be computed on the basis of the aggregate
number of Series C Shares so surrendered. Instead
of any fractional shares of Common Stock which
otherwise would be issuable upon conversion of any
Series C Shares, the Corporation shall pay a cash
adjustment in respect of such fractional interest
based upon the Series C Conversion Price in effect
at the close of business on the last business day
prior to the Series C Conversion Date.
H. Taxes. All shares of Common Stock issued upon
conversion of Series C Shares will be validly
issued, fully paid and nonassessable. The
Corporation shall pay any and all documentary stamp
or similar issue or transfer taxes that may be
payable in respect of any issue or delivery of
shares of Common Stock on conversion of Series C
Shares pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be
payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a
name other than that in which the Series C Shares so
converted were registered, and no such issue or
delivery shall be made unless and until the person
requesting such transfer has paid to the Corporation
the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has
been paid or that no such tax is payable.
I. Unauthorized Series C Shares. All certificates
representing Series C Shares surrendered for
conversion or Series C Redemption shall be
appropriately cancelled on the books of the
Corporation and the Series C Shares so converted or
redeemed represented by such certificates shall be
restored to the status of authorized but unissued
Series C Shares.
J. Market Price. For purposes hereof, the term
"Market Price" on any day shall mean the average of
the closing prices (as defined below) per share of
Common Stock on the New York Stock Exchange, Inc.
("NYSE") if the Common Stock is listed thereon, or,
if not so listed, on the principal national stock
exchange on which the Common Stock is then listed,
or, if not so listed, on the National Association of
Securities Dealers Inc. Automated Quotation System
(the "NASDAQ System"), in each case, for the 20
consecutive Trading Days immediately preceding the
date of determination. A "Trading Day" is a
business day in which the principal market on which
the Common Stock is traded is open for trading for
at least four hours. As used herein, the "closing
price" per share of Common Stock for each day shall
be the last reported sales price per share, regular
way on such day, or if there are no sales on such
day, on the immediately preceding day on which such
sales occurred; provided that if at the time of any
computation pursuant to this paragraph the Common
Stock is not then traded on any trading market, the
"Market Price" for the purposes hereof shall be the
fair value as reasonably determined in good faith by
the Board of Directors of the Corporation.
K. Available Common Stock. The Corporation shall
at all times reserve and keep available out of its
authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion
of Series C Shares, such number of shares of Common
Stock as shall from time to time be sufficient to
effect a conversion of all outstanding Series C
Shares under Paragraph A.4.A, as such number may
from time to time be adjusted pursuant to Paragraph
A.4.D, and if at any time the number of authorized
but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then
outstanding Series C Shares, the Corporation shall
promptly take such corporate action as may, in the
opinion of its counsel and subject to any necessary
approval of its stockholders, be necessary to
increase its authorized but unissued shares of
Common Stock to such number of shares as shall be
sufficient for such purpose.
L. Notice to Series C Holders. In the event (i)
the Corporation shall declare a dividend or other
distribution on the Common Stock other than regular
cash dividends declared in the ordinary course or
dividends or other distributions payable in Common
Stock, (ii) the Common Stock is subdivided, combined
or reclassified, (iii) of a Merger, or (iv) of a
Liquidation, or (v) the Corporation offers for
subscription pro rata to holders of Common Stock any
additional shares of stock of any class or series or
other rights, then the Corporation shall mail to
each Series C Holder at the Series C Holder's
address as it appears in the stock records of the
Corporation, promptly and in any event at least
15 days prior to the date described in clause (a)
below, a notice stating (a) the date for the
determination of holders of Common Stock entitled to
receive the distribution, subscription rights or the
consideration in the Merger or Liquidation, or (b)
the date of determination as to which shares of
Common Stock will be affected by a subdivision,
combination, reclassification, (c) a brief statement
of the facts requiring such notice, and (d) if
applicable, that the Series C Conversion Price shall
be adjusted in accordance with this Paragraph A.4.
Upon any adjustment in the Series C Conversion
Price, the Corporation shall mail to each Series C
Holder at the Series C Holder's address as it
appears in the stock records of the Corporation a
notice setting forth the adjusted Series C
Conversion Price and the method of calculation
thereof, provided that, if such address is outside
of the United States, then such notice shall be sent
by facsimile transmission (if such Series C Holder
shall have provided a facsimile number).
M. Conclusive Determination. Whenever the
Series C Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with
the transfer agent for the Common Stock, a
certificate of a firm of independent public
accountants regularly employed by the Corporation
setting forth the adjusted Series C Conversion
Price, along with a brief statement of the facts
requiring the adjustment and the manner of computing
the adjustment, which certificate shall be
conclusive evidence of the correctness of the
adjustment, absent manifest error.
5. Series C Redemption Rights
5.1 Series C Redemption. The Corporation may, at
its option, at any time after three years from the
date of Initial Issuance of the Series C Shares, and
from time to time thereafter, redeem (a "Series C
Redemption") at the price determined herein ("Series
C Redemption Price"), from funds legally available
therefor, all or any portion of the outstanding
Series C Shares (not thereafter converted at any
time prior to the Series C Redemption Date in
accordance with Paragraph A.4) at the Series C
Redemption Price which shall be the Series C
Liquidation Preference plus all accrued and unpaid
Series C Cash Dividends through the Series C
Redemption Date (including any accrued but unpaid
Series C Cash Dividends added to Series C
Liquidation Preference pursuant to Paragraph
A.1.1.D) only if there has occurred a Series C
Redemption Event (as defined in Paragraph A.5.3) and
only if prior to the giving of the Series C
Redemption Notice (as hereinafter defined) all
Series C Cash Dividends have been paid through the
end of the most recent Series C Quarterly Payment
Period (including accrued but unpaid Series C Cash
Dividends added to Series C Liquidation Preference
pursuant to Paragraph A.1.1.D).
5.2 Notice of Series C Redemption. If the
Corporation elects to redeem any or all Series C
Shares pursuant to a Series C Redemption, the
Corporation shall (a) give written notice of such
Series C Redemption ("Series C Redemption Notice")
to each Series C Holder of Series C Shares to be
redeemed at its address as it appears on the stock
records of the Corporation by deposit thereof in
first class U.S. mail, postage prepaid, and, in the
case of a Series C Holder with an address outside of
the United States, a Series C Redemption Notice
shall be sent by facsimile transmission (if such
Series C Holder shall have provided a facsimile
number) and (b) set aside an amount equal to the
Series C Redemption Price of all Series C Shares
subject to Series C Redemption at that time for the
benefit of all Series C Holders of Series C Shares
subject to Series C Redemption apart from its other
funds, and the Series C Shares then subject to
Series C Redemption and not otherwise converted in
accordance with Paragraph A.4 shall, on the date
which is twenty (20) business days after the deposit
of the Series C Redemption Notice in accordance with
clause (a) of this sentence (the "Series C
Redemption Date"), cease to be outstanding and the
rights of the Series C Holders and owners thereof
shall be limited to payment of the Series C
Redemption Price thereof plus accumulated Series C
Dividends through the Series C Redemption Date in
accordance with the terms hereof. The Corporation
shall mail to each Series C Holder of a Series C
Share tendered for Series C Redemption the Series C
Redemption Price thereof by check within ten (10)
days after the Corporation shall receive at its
principal office a certificate representing the
applicable Series C Share (or an affidavit of lost
certificate and indemnity therefor in a form
prescribed by the Board of Directors) duly endorsed
in blank for transfer to the Corporation (if
required by it), accompanied by instruments of
transfer satisfactory to the Corporation and
sufficient to transfer the Series C Shares being
redeemed free of any adverse claim. Should any
Series C Holder not receive payment of any amounts
due on Series C Redemption of its Series C Shares at
the times prescribed by reason of the Corporation's
failure to give a Series C Redemption Notice at the
times or in the manner prescribed above or to make
payment at the times prescribed above for any reason
other than the Series C Holder's failure to tender
its Series C Shares (or affidavit and indemnity) and
instruments of transfer as provided above, the
Corporation shall pay to the applicable Series C
Holder on demand (x) interest on the sums not paid
when due at an annual rate equal to two percent in
excess of the "Prime Rate" that is then in effect or
announced by Chemical Bank, New York, New York, or
its successor, compounding at the end of each thirty
(30) days, until the applicable Series C Holder is
paid in full and (y) all costs of collection,
including but not limited to attorneys' fees and
costs, whether or not suit or other formal
proceedings are instituted. The Series C Redemption
Price shall (in the discretion of the Board of
Directors of the Corporation) be adjusted to take
into account any stock split or other similar change
in the Series C Shares.
5.3 Series C Redemption Event. A "Series C
Redemption Event" shall occur with respect to any
Series C Share (a) on the tenth day following any
ten (10) consecutive Trading Days on which the
Market Price is equal to or greater than 150% of the
Series C Conversion Price of such Series C Share or
(b) in the event of a merger or consolidation of the
Corporation with another corporation (or other
business entity) or a voluntary sale of all or
substantially all of the assets of the Corporation
(a "Redemption Event Merger") in which the
consideration to be paid to holders of the Common
Stock in the Redemption Event Merger is either
payable entirely in cash or is property with a fair
market value (as reasonably determined in good faith
by the Board of Directors of the Corporation) of not
less than 150% of the Series C Conversion Price of
such Series C Share on the date fixed for purposes
of determining the holders of Common Stock entitled
to receive consideration in the Redemption Event
Merger.
5.4 Selection of Shares. The Corporation shall
select the Series C Shares to be redeemed in any
Series C Redemption in which not all Series C Shares
are required or permitted to be redeemed so that the
Series C Shares of each Series C Holder selected for
Series C Redemption shall bear the same proportion
to the total Series C Shares owned by that Series C
Holder as the proportion of all Series C Shares
selected for Series C Redemption bears to the total
of all then outstanding Series C Shares, but
adjusted as determined by the Board of Directors to
avoid the redemption of fractional Series C Shares.
Should any Series C Shares allowed to be redeemed
under the terms hereof not be redeemed solely by
reason of limitations imposed by law, the applicable
Series C Shares may be redeemed on the earliest
possible date thereafter that the applicable Series
C Shares may be redeemed to the maximum extent
permitted by law. Except as set forth above, the
Board of Directors shall prescribe the manner in
which any Series C Redemption shall be effected.
Any monies set aside by the Corporation for the
holders of Series C Shares subject to Series C
Redemption which shall not be claimed at the end of
one (1) year after the first service of the
applicable Series C Redemption Notice shall be
released and repaid to the Corporation but shall be
paid to the Series C Holder of the applicable Series
C Shares so long as submission of its shares occurs
within five (5) years after the first service of the
applicable Series C Redemption Notice.
6. Ranking of Stock of the Corporation
For purposes hereof, any stock of any class or
classes of the Corporation shall be deemed to rank:
A. Prior to the Series C Shares, either as to
dividends or upon liquidation, if the holders of
such class or classes shall be entitled to the
receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or
priority to the Series C Holders;
B. On a parity with the Series C Shares, either as
to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption
or liquidation prices per share or sinking fund
provisions, if any, are different from those of the
Series C Shares, if the holders of such stock shall
be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may
be, in proportion to their respective dividend rates
or liquidation prices, without preference or
priority, one over the other, as between the holders
of such stock and the Series C Holders; and
C. Junior to the Series C Shares, either as to
dividends or upon liquidation, if such class shall
be Common Stock or Series D Preferred Stock, or if
the Series C Holders shall be entitled to receipt of
dividends or of amounts distributable upon
dissolution, liquidation, winding up of the
Corporation, or upon redemption as the case may be,
in preference or priority to the holders of shares
of such class or classes.
B. Series D Preferred Stock
1. Series D Dividend Rights
1.1 A. The holder of record of each share of
Series D Preferred Stock ("Series D Share") of the
Corporation (a "Series D Holder") as of the Series D
Record Date (as defined below) shall be entitled to
receive, when, as and if declared by the
Corporation's Board of Directors or a duly
authorized committee thereof, on January 1, April 1,
July 1 and October 1 of each year (a "Series D
Dividend Payment Date"), at the option of the
Corporation, either:
(a) out of the funds of the Corporation legally
available therefor, cumulative dividends per
Series D Share (the "Series D Cash Dividends") in
cash equal to the "Series D Cash Rate" (as
hereinafter defined) multiplied by the Series D
Liquidation Preference (as defined in Paragraph B.2
and as adjusted pursuant to Paragraph B.1.1.D below)
for each Series D Quarterly Payment Period (as
hereinafter defined) that such Series D Share is
outstanding; or
(b) for any Series D Dividend (as hereinafter
defined) accruing prior to October 20, 1998, to the
extent legally available therefor, cumulative
dividends per Series D Share (the "Series D PIK
Dividends") in additional Series D Shares equal to
the "Series D PIK Rate" (as hereinafter defined)
multiplied by the Series D Liquidation Preference
(and as adjusted pursuant to Paragraph B.1.1.D
below) for each Series D Quarterly Payment Period
that such Series D Share is outstanding.
To the extent permitted by applicable law and not
prohibited pursuant to the terms of applicable
credit instruments, senior securities or the Amended
and Restated Certificate of Incorporation, the Board
of Directors shall declare either Series D Cash
Dividends or Series D PIK Dividends (collectively
referred to hereinafter as "Series D Dividends") for
payment on each Series D Dividend Payment Date (or,
if such day is not a business day, on the next
business day thereafter).
B. A "Series D Quarterly Payment Period" shall
mean the three month period ending on December 31,
March 31, June 30 and September 30 of each year.
C. The "Series D Cash Rate" and "Series D PIK
Rate" both shall mean the quarterly dividend rate of
one and one quarter percent (1 1/4%). The Series D
Cash Rate and Series D PIK Rate shall collectively
be referred to as the "Series D Dividend Rate."
D. Series D Dividends shall accrue (whether or not
paid) during each Series D Quarterly Payment Period
from the Series D Dividend Payment Date immediately
preceding such Series D Quarterly Payment Period to
the last day of such Series D Quarterly Payment
Period, provided that, for the first Series D
Quarterly Payment Period, Series D Dividends shall
accrue commencing as of the date of Initial Issuance
(as defined below) of the Series D Shares. Series D
Dividends shall be calculated on the basis of a
90-day Series D Quarterly Payment Period and the
actual number of days elapsed. For any Series D
Quarterly Payment Period with respect to which the
Series D Dividend is not fully paid in cash or in
Series D Shares on the Series D Dividend Payment
Date at the end of such Series D Quarterly Payment
Period, such accrued but unpaid Series D Dividends
shall be added to the Series D Liquidation
Preference of the Series D Shares effective at the
beginning of the Series D Quarterly Payment Period
next succeeding the Series D Quarterly Payment
Period as to which such Series D Dividends were not
paid, and shall thereafter accrue additional
Series D Dividends at the Series D Dividend Rate.
Any Series D Dividend payment made on Series D
Shares shall be credited against the earliest
accrued but unpaid Series D Dividend which has been
added to the Series D Liquidation Preference of the
Series D Shares pursuant to this Paragraph B.1.1.D
and shall reduce the Series D Liquidation Preference
by the amount of the Series D Dividend paid. With
respect to the Series D Shares, the date of "Initial
Issuance" shall mean October 20, 1993.
1.2 Series D Dividends, if and when declared on
each Series D Share, shall to the extent permitted
by applicable law be declared at least twenty (20)
business days prior to the next Series D Dividend
Payment Date for payment on the next Series D
Dividend Payment Date to the Series D Holders of
record on the date determined in such declaration,
which date shall in no event be more than fifteen
(15) business days after the date of declaration
(the "Series D Record Date"). Series D Dividends
shall be payable on each Series D Dividend Payment
Date (or if any such day is not a business day, the
next succeeding business day), except that Series D
Dividends for the period during which a Series D
Redemption (as defined in Paragraph B.5.1) shall
occur shall be payable on Series D Shares redeemed
in accordance with Paragraph B.5.2 (unless otherwise
paid on a Series D Dividend Payment Date for a
Series D Record Date occurring prior to a Series D
Redemption Date (as defined in Paragraph B.5.2)).
The Series D Holder of any Series D Shares which are
the subject of a conversion pursuant to Paragraph
B.4 shall, on the Series D Conversion Date (as
defined in Paragraph B.4.F), cease to have any
rights with respect to any accrued Series D
Dividends on such Series D Shares which have not
been declared and paid on or before such Series D
Conversion Date except to the extent such accrued
but unpaid Series D Dividends have been added to the
Series D Liquidation Preference of such Shares and
except that in the event a conversion of Series D
Shares is effected after a Series D Redemption
Notice (as defined in Paragraph B.5.2) is delivered
by the Corporation but prior to a Series D
Redemption Date, then, to the extent lawful, the
Corporation shall pay to such Series D Holder an
amount in cash equal to all accrued and unpaid
Series D Dividends from the last Series D Dividend
Payment Date until the date the converting Series D
Holder delivered its notice of conversion pursuant
to Paragraph B.4.F.
1.3 So long as any Series D Shares are outstanding,
the Corporation shall not declare, pay or set aside
for payment any dividend (other than in shares of
Junior Stock (as hereinafter defined)) or other
distribution in respect of its Junior Stock, or call
for redemption, redeem, purchase or otherwise
acquire for any consideration (other than shares of
its Junior Stock) any shares of its Junior Stock,
any warrants, rights, calls or options exercisable
for any shares of Junior Stock unless all dividends
accumulated and unpaid with respect to the Series D
Shares are simultaneously declared and paid. With
respect to the Series D Preferred Stock, "Junior
Stock" means Common Stock or any other series of
preferred stock of the Corporation which ranks
junior to or on a parity with (as determined
pursuant to Paragraph B.6) the Series D Preferred
Stock. "Common Stock" means the common stock, par
value $.01 per share, of the Corporation, and any
share of successor or replacement stock.
1.4 Each Series D Holder shall be entitled to
participate with the holders of Common Stock equally
and ratably (on the basis of the number of shares of
Common Stock such Series D Holder would then own if
it then converted its Series D Shares pursuant to
Paragraph B.4) in any subscription rights or other
similar rights to acquire securities or property of
the Corporation granted to any holder of Common
Stock; provided that any subscription rights or
other similar rights acquired by Series D Holders
shall be excluded for purposes of calculating any
adjustments pursuant to Paragraph B.4.D hereof.
2. Rights on Liquidation and Ranking
2.1 In the event of the liquidation, dissolution,
winding up or sale or other disposition of all or
substantially all of the assets of the Corporation,
whether voluntary or involuntary ("Liquidation"),
the Series D Holder shall be entitled to receive
with respect to such Series D Share, after the
satisfaction of all distributions to holders of
other series of preferred stock, if any, which are
required (at the direction of the holder thereof or
otherwise) to be redeemed prior to or in connection
with the consummation of such Liquidation or which
are expressly senior in liquidation preference to
the Series D Shares including any series of
preferred stock which is mandatorily redeemable
(collectively, the "Series D Senior Payments") but
before any distribution is made to or set aside for
the holders of Common Stock or any other series of
preferred stock of the Corporation, if any, which
are not then required to be redeemed or which are
junior in liquidation preference to the Series D
Shares, cash or any other assets of the Corporation
in an amount (or having a fair market value) equal
to $1,000 ("Series D Liquidation Preference") plus
all accrued but unpaid Series D Dividends which have
been added to the Series D Liquidation Preference of
such shares pursuant to Paragraph B.1.1.D up to the
date of the final distribution in Liquidation. If,
after the satisfaction of all Series D Senior
Payments, the assets of the Corporation available
for distribution to Series D Holders shall be
insufficient to permit the payment in full of the
amount due the Series D Holders pursuant to this
Paragraph B.2, the entire assets of the Corporation
available for distribution to Series D Holders after
the satisfaction of all Series D Senior Payments
shall be distributed pari passu among the Series D
Holders and the holders of other series of preferred
stock which are not junior in liquidation
preferences to the Series D Shares, if any, in
accordance with their respective liquidation
preferences. The fair market value of any assets of
the Corporation and the proportion of cash and other
assets distributed by the Corporation to the
Series D Holders shall be reasonably determined in
good faith by the Board of Directors. A merger or
consolidation of the Corporation with another
corporation or a voluntary sale of all or
substantially all of the assets of the Corporation
principally in exchange for stock and/or securities
of another corporation (all referred to as a
"Merger") shall not be deemed a Liquidation if such
Merger does not occur as part of a proceeding under
Title 11 of the United States Code or any federal or
state law for the protection of creditors or relief
of debtors.
2.2 With regard to rights to receive distributions
upon Liquidation of the Corporation and dividends,
the Series D Shares shall rank (i) junior to the
Series C Preferred Stock, and (ii) senior to the
Common Stock and any other equity securities of the
Corporation that by their terms are not made senior
to or on a parity with the Series D Shares as to
such rights.
3. Voting Rights
3.1 Except as otherwise provided by law and except
as provided in Paragraphs B.3.2 and B.3.1 below,
each Series D Holder shall have the same voting
rights as a holder of the number of shares of Common
Stock which such Series D Holder would then own if
it then converted its Series D Shares pursuant to
Paragraph B.4.
3.2 So long as any of the Series D Shares are
outstanding, the Corporation will not, without the
affirmative vote or consent of the Series D Holders
of at least eighty percent (80%) of the Series D
Shares at the time outstanding, given in person or
by proxy, either in writing or by a resolution
adopted at a meeting called for such purpose, with
the Series D Holders voting or consenting separately
as a class:
A. amend, alter or repeal any of the provisions of
the Corporation's Amended and Restated Certificate
of Incorporation or Amended and Restated Bylaws or
the resolution providing for the issue of the
Series D Shares or pass any stockholder resolution,
including such action effected by merger or similar
transaction in which the Corporation is the
surviving corporation, if such amendment or
resolution would affect adversely the preferences,
special rights or powers of the Series D Shares
except if such action is otherwise permitted under
the other provisions of this Paragraph B.3.2;
B. increase or decrease (other than by redemption
or conversion) the total number of authorized
Series D Shares;
C. issue any capital stock (other than Series D
PIK Dividends) which ranks senior to or on a parity
with the Series D Shares with respect to rights to
receive distributions upon liquidation, dissolution,
or winding up of the Corporation or with respect to
dividends;
D. enter into a Merger in which the Corporation is
not the surviving corporation; provided however,
that the provisions of this subparagraph D shall not
be applicable to any such Merger if the authorized
capital stock of the surviving corporation
immediately after such Merger shall include only
classes or series of stock for which no such consent
or vote would have been required pursuant to
Paragraph B.3.2 if such class or series had been
authorized by the Corporation immediately prior to
such Merger or which have the same rights,
preferences and limitations and authorized amount as
a class or series of stock of the Corporation
authorized (with such consent or vote of the
Series D Shares) prior to such Merger and continuing
as an authorized class or series at the time
thereof;
E. take any action, if submitted to the
stockholders, which would result in there being no
Series D Preferred Acceptable Chairman of the Board
of Directors of the Corporation. "Series D
Preferred Acceptable Chairman of the Board" means
Mario F. Kassar ("Kassar") at any time he is serving
as such and any successor chairman of the Board of
Directors of the Corporation who is supported by at
least eighty percent (80%) of the Series D Shares
then outstanding. The holders of at least 80% of
the Series D Shares shall irrebuttably be presumed
to support any successor to such person as chairman
of the Board of Directors of the Corporation unless
persons having the power to vote at least 80% of the
Series D Shares then outstanding shall submit a
written statement to the Secretary of the
Corporation within 10 days after Kassar or a
chairman of the Board supported by holders of at
least 80% of the Series D Shares shall have ceased
to be chairman of the Board of Directors of the
Corporation stating that the Board of Directors has
failed to elect a chairman of the Board acceptable
to such holders.
A Merger of the Corporation, or similar Merger in
which the holders of its capital stock receive all
cash shall not be deemed to adversely affect the
preferences, special rights or powers of the
Series D Shares. Nor shall the authorization or
issuance of any other series of preferred stock if
such other series ranks junior to the Series D
Shares with respect to rights to receive
distributions upon Liquidation of the Corporation or
with respect to dividends be deemed to adversely
affect the preferences, special rights or powers of
the Series D Shares.
3.3 In the event of an issuance by means of a stock
split, reverse split or stock dividend or other
similar event or reclassification of shares of
Common Stock outstanding, the voting rights of the
Series D Shares shall be fairly and equitably (in
the judgment of the Board of Directors of the
Corporation) adjusted at the same time and in the
same manner as the adjustment is made in the rights
of the Common Stock in order to maintain the same
voting rights as the Series D Shares had on the date
of issuance.
3.4 Copies of all notices sent to the holders of
Common Stock shall be simultaneously sent to each
Series D Holder.
4. Series D Conversion Rights Common Stock
A. Number of Series D Shares. Each Series D Share
shall be convertible, at the option of the Series D
Holder thereof, at any time and from time to time
into that number of shares of Common Stock, obtained
by dividing the Series D Liquidation Preference
(including any Series D Dividends added to Series D
Liquidation Preference pursuant to Paragraph
B.1.1.D) of such Series D Share by the "Series D
Conversion Price" determined in accordance with
Paragraph B.4.B.
B. Series D Conversion Price. The Series D
Conversion Price shall be [$.60 x Exchange Ratio]
and shall be adjusted from time to time pursuant to
Paragraph B.4.D.
C. Series D Conversion and Series D Redemption.
In case any Series D Share is called for redemption,
the right to convert such Series D Share shall
terminate at the close of business on the Series D
Redemption Date; provided that no default by the
Corporation in the payment of the applicable
Series D Redemption Price (as defined in Paragraph
B.5.1) shall have occurred and be continuing.
D. Adjustment of Series D Conversion Price and
Ratio for Series D Conversion. Except as otherwise
provided herein, the Series D Conversion Price shall
be subject to adjustment from time to time only as
follows:
(a) In case the Corporation shall (1) take a record
of the holders of Common Stock for the purpose of
entitling them to receive a dividend payable in
shares of Common Stock, (2) subdivide (by stock
split, merger, consolidation or otherwise) the
outstanding shares of Common Stock into a greater
number of shares, (3) combine (by reverse stock
split, merger, consolidation or otherwise) the
outstanding shares of Common Stock into a smaller
number of shares or (4) increase or decrease the
number of shares of outstanding Common Stock by
reclassification of its Common Stock or issue any
shares of another class or series of the Corporation
by reclassification of its Common Stock, the
Series D Conversion Price (then in effect) shall be
adjusted so that each Series D Holder shall
thereafter be entitled upon the conversion of each
Series D Share held by him to receive for such
Series D Share the number of shares of Common Stock
which it would have owned and/or have been entitled
to receive upon the occurrence of an event or record
date described above had the Series D Share been
converted immediately prior to the happening of the
event, the adjustment to the Series D Conversion
Price to become effective immediately after (x) the
record date (in the case of a dividend) or (y) the
day upon which such subdivision or combination shall
become effective.
(b) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common
Stock property including securities, but excluding:
(x) any dividend or distribution paid in Common
Stock; (y) any dividend or distribution paid in cash
out of the surplus of the Corporation (provided that
such distribution shall not reduce stockholders'
equity below the sum of the aggregate Series D
Liquidation Preference of the Series D Shares then
outstanding and the aggregate liquidation preference
of all other shares ranking senior or pari passu to
the Series D Shares), or (z) any securities issued
or redeemed pursuant to a shareholders rights plan,
the Series D Conversion Price shall be adjusted by
multiplying (a) the Series D Conversion Price in
effect immediately prior to the close of business on
the date fixed for the determination of stockholders
entitled to receive the distribution by (b) a
fraction, the numerator of which is the excess of
the Market Price (as defined in Paragraph B.4.J) for
that date over the fair market value on that date
(as reasonably determined in good faith by the Board
of Directors, whose determination shall be
conclusive) of the property so distributed per share
of Common Stock, and the denominator of which is the
Market Price for that date. The adjustment shall
become effective immediately prior to the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive
the distribution.
(c) In case the Corporation shall sell or issue
shares of Common Stock or rights, options, warrants
or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of
Common Stock, excluding shares of Common Stock
issued or reserved for issuance by the Corporation
in the following situations:
(i) in any transaction described in clause (a) or
(b) above;
(ii) (x) pursuant to any plan providing for the
reinvestment of dividends or interest payable on
securities of the Corporation, and the investment of
additional optional amounts with respect to such
plan, (y) pursuant to any employee benefit plan or
program of the Corporation or (z) to officers,
directors or employees pursuant to an employee stock
option plan approved by the holders of the Common
Stock, in any such case, either (A) at a price per
share not less than 95% of the Market Price per
share of Common Stock, or (B) in an amount of shares
of Common Stock not greater than 5% of the total
number of shares of Common Stock outstanding on a
fully diluted basis; and
(iii) upon conversion of the Series C Shares or
Series D Shares or upon conversion, exercise or
exchange of rights, options, warrants or convertible
or exchangeable securities outstanding or as to
which a binding commitment existed as of the
Effective Date (as defined in that certain Agreement
and Plan of Merger dated as of August 10, 1994 by
and among the Corporation, Carolco Acquisition Corp.
and Carolco Pictures, Inc.) of said merger.
and the price per share (determined in the case of
rights, options, warrants or convertible or
exchangeable securities as the quotient of (x) the
aggregate consideration received or receivable by
the Corporation upon the sale and issuance of such
rights, options, warrants or convertible or
exchangeable securities plus the total consideration
payable to the Corporation upon such exercise or
conversion divided by (y) the total number of shares
of Common Stock covered by such rights, options,
warrants or convertible or exchangeable securities)
is lower than the Market Price on the date of such
initial sale and issuance, then the Series D
Conversion Price in effect immediately prior to such
issuance shall upon such issuance be reduced to the
price determined by multiplying such Series D
Conversion Price by a fraction, the numerator of
which shall be an amount equal to the sum of (A) the
number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such
issuance multiplied by the Market Price in effect
immediately prior to such issuance plus (B) the
consideration, if any, received by the Corporation
upon such issuance, and the denominator of which
shall be the product of (A) the Market Price in
effect immediately prior to such issuance and
(B) the total number of shares of Common Stock
outstanding on a fully diluted basis, immediately
after such issuance.
(d) In case the Corporation shall distribute to the
holders of its Common Stock evidences of its
indebtedness or assets (excluding Series D Dividends
or distributions made out of current or retained
earnings) or rights or warrants to subscribe other
than as referred to in subparagraph (c) above, then
in each such case the number of shares of Common
Stock into which each Series D Share shall
thereafter be convertible shall be determined by
multiplying the number of shares of Common Stock
into which such Series D Shares was theretofore
convertible by a fraction, of which the numerator
shall be the current Market Price per share of
Common Stock on the date of such distribution, and
of which the denominator shall be the current Market
Price per share of Common Stock, less the excess of
the then fair market value (as reasonably determined
by the Board of Directors of the Corporation) of the
assets, evidences of indebtedness, subscription
rights or warrants so distributed (the "Distributed
Property") over the aggregate consideration
receivable by the Corporation, if any, for the
Distributed Property, as applicable to one share of
Common Stock. Such adjustment shall be made
whenever any such distribution is made (unless an
adjustment is made pursuant to subparagraph (a), (b)
or (c) above, in which case such subparagraphs shall
apply), but shall also be effective retroactively as
to Series D Shares converted after the record date
for the determination of stockholders entitled to
receive such distribution and before the date such
distribution is made.
(e) No adjustment in the Series D Conversion Price
shall be required unless such adjustment would
require an increase or decrease of at least 1% of
such price; provided that any adjustments which by
reason of this clause (e) are not required to be
made shall be carried forward and taken into account
in any subsequent adjustment. All calculations
shall be made to the nearest cent or the nearest
one-hundredth of a share, as the case may be.
E. Series D Conversion Upon Reorganization. In
case the Corporation shall effect a reorganization,
reclassification of its Common Stock (other than a
subdivision or combination described in clause (a)
of Paragraph B.4.D) or Merger, and pursuant to any
such reorganization, reclassification or Merger, any
assets or securities of the Corporation, any
successor or transferee corporation or any affiliate
thereof or cash is received by or distributed to the
holders of Common Stock, then each Series D Holder
shall have the right thereafter to convert each
Series D Share held by such Series D Holder into the
kind and amount of shares or assets, securities or
cash receivable as a result of consummation of such
transaction by a holder of the number of shares of
Common Stock into which such Series D Share might
have been converted immediately prior to such
transaction and shall have no other conversion
rights nor shall there be any adjustment to the
Series D Conversion Price; in any such event,
effective provision shall be made in the certificate
of incorporation of the successor or transferee
corporation or otherwise, so that the provisions set
forth herein for the protection of the conversion
rights of the Series D Shares shall thereafter be
applicable, as nearly as reasonably may be, to any
such other securities, cash and assets deliverable
upon conversion of the Series D Shares or other
convertible stock or securities received by the
Series D Holders in place thereof, and any such
successor or transferee corporation shall expressly
assume the obligation to deliver, upon the exercise
of the conversion privilege, such other securities,
cash or assets as the Series D Holders, or other
convertible stock or securities received by the
Series D Holders in place thereof, shall be entitled
to receive pursuant to the provisions hereof, and to
make provision for the protection of the conversion
right as above provided. In case securities other
than Common Stock, cash or assets shall be issuable,
payable or deliverable by the Corporation upon
conversion as aforesaid, then all references in this
Paragraph B.4.E shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other
securities, cash or assets. This provision shall
similarly apply to successive reorganizations,
reclassifications or Mergers.
F. Series D Conversion Method. Any Series D
Holder may, at any time prior to the close of
business on the Series D Redemption Date for such
Series D Shares, exercise the conversion rights as
to such Series D Shares by delivering to the
Corporation during regular business hours, at the
office of the then transfer agent for the Series D
Shares or at such other place as may be designated
in writing delivered to all Series D Holders by the
Corporation, at least ten (10) business days prior
to the requested date for conversion, a notice
requesting conversion on a specified date and the
certificate for the Series D Shares to be converted,
duly endorsed in blank or for transfer to the
Corporation (if required by it), or accompanied by
separate instruments of transfer satisfactory to the
Corporation, in either case sufficient to transfer
the Series D Shares being converted free of any
adverse claim, and written notice stating the number
of Series D Shares represented by such certificate
that the Series D Holder elects to convert. The
notice shall also state the names and addresses of
the persons to whom certificates for shares of
Common Stock shall be issued, the denominations of
such certificates and reasonable delivery
instructions with respect thereto. A notice failing
to meet the foregoing requirements shall not be
valid or effective for any purpose. (The
Corporation may (but shall have no obligation to)
from time to time waive the requirement of ten (10)
days written notice.) Each conversion shall be
deemed to have been effected immediately on the
close of business on the date specified in such
notice (the "Series D Conversion Date"), and the
person in whose name any certificate for shares of
Common Stock is issuable upon the conversion shall
be deemed to have become the holder of record of the
Common Stock at such time. If the stock transfer
books of the Corporation are closed on the Series D
Conversion Date, the Series D Conversion Date for
purposes of determining record ownership shall be
the next succeeding day in which the stock transfer
books are open (and the conversion shall be deemed
to have been effected immediately prior to the close
of business on that day), but in all cases the
conversion shall be at the Series D Conversion Price
in effect on the Series D Conversion Date specified
in the notice of conversion. As promptly as
practicable after the Series D Conversion Date (but
in any event within ten (10) business days), the
Corporation shall issue and deliver to such Series D
Holder, at the expense of the Corporation and in
accordance with such Series D Holder's delivery
instructions, a certificate or certificates for the
number of full shares of Common Stock to which such
Series D Holder is entitled and a check or cash with
respect to any fractional interest in a share of
Common Stock as provided in Paragraph B.4.G below.
Upon conversion of only a portion of the Series D
Shares represented by a certificate surrendered for
conversion, the Corporation shall issue and deliver
to such Series D Holder, at the expense of the
Corporation, a new certificate covering the number
of Series D Shares representing the unconverted
portion of the certificate so surrendered and which
new certificate shall entitle the Series D Holder
thereof to the same rights of the Series D Shares
represented thereby as if the certificate
theretofore covering such unconverted Series D
Shares had not been surrendered for conversion.
G. Fractional Shares of Common Stock. No
fractional shares of Common Stock or scrip shall be
issued upon conversion of Series D Shares. If more
than one Series D Share shall be surrendered for
conversion at any one time by the same Series D
Holder, the number of full shares of Common Stock
issuable upon conversion of such Series D Shares
shall be computed on the basis of the aggregate
number of Series D Shares so surrendered. Instead
of any fractional shares of Common Stock which
otherwise would be issuable upon conversion of any
Series D Shares, the Corporation shall pay a cash
adjustment in respect of such fractional interest
based upon the Series D Conversion Price in effect
at the close of business on the last business day
prior to the Series D Conversion Date.
H. Taxes. All shares of Common Stock issued upon
conversion of Series D Shares will be validly
issued, fully paid and nonassessable. The
Corporation shall pay any and all documentary stamp
or similar issue or transfer taxes that may be
payable in respect of any issue or delivery of
shares of Common Stock on conversion of Series D
Shares pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be
payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a
name other than that in which the Series D Shares so
converted were registered, and no such issue or
delivery shall be made unless and until the person
requesting such transfer has paid to the Corporation
the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has
been paid or that no such tax is payable.
I. Surrendered Series D Shares. All certificates
representing Series D Shares surrendered for
conversion or Series D Redemption shall be
appropriately cancelled on the books of the
Corporation and the Series D Shares so converted or
redeemed represented by such certificates shall be
restored to the status of authorized but unissued
Series D Shares.
J. Market Price. For purposes hereof, the term
"Market Price" on any day shall mean the average of
the closing prices (as defined below) per share of
Common Stock on the New York Stock Exchange, Inc.
("NYSE") if the Common Stock is listed thereon, or,
if not so listed, on the principal national stock
exchange on which the Common Stock is then listed,
or, if not so listed, on the National Association of
Securities Dealers Inc. Automated Quotation System
(the "NASDAQ System"), in each case, for the 20
consecutive Trading Days immediately preceding the
date of determination. A "Trading Day" is a
business day in which the principal market on which
the Common Stock is traded is open for trading for
at least four hours. As used herein, the "closing
price" per share of Common Stock for each day shall
be the last reported sales price per share, regular
way on such day, or if there are no sales on such
day, on the immediately preceding day on which such
sales occurred; provided that if at the time of any
computation pursuant to this paragraph the Common
Stock is not then traded on any trading market, the
"Market Price" for the purposes hereof shall be the
fair value as reasonably determined in good faith by
the Board of Directors of the Corporation.
K. Available Common Stock. The Corporation shall
at all times reserve and keep available out of its
authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion
of Series D Shares, such number of shares of Common
Stock as shall from time to time be sufficient to
effect a conversion of all outstanding Series D
Shares under Paragraph B.4.A, as such number may
from time to time be adjusted pursuant to Paragraph
B.4.D, and if at any time the number of authorized
but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then
outstanding Series D Shares, the Corporation shall
promptly take such corporate action as may, in the
opinion of its counsel and subject to any necessary
approval of its stockholders, be necessary to
increase its authorized but unissued shares of
Common Stock to such number of shares as shall be
sufficient for such purpose.
L. Notice to Series D Holders. In the event
(i) the Corporation shall declare a dividend or
other distribution on the Common Stock other than
regular cash dividends declared in the ordinary
course or dividends or other distributions payable
in Common Stock, (ii) the Common Stock is
subdivided, combined or reclassified, (iii) of a
Merger, or (iv) of a Liquidation, or (v) the
Corporation offers for subscription pro rata to
holders of Common Stock any additional shares of
stock of any class or series or other rights, then
the Corporation shall mail to each Series D Holder
at the Series D Holder's address as it appears in
the stock records of the Corporation promptly and in
any event at least 15 days prior to the date
described in clause (a) below, a notice stating
(a) the date for the determination of holders of
Common Stock entitled to receive the distribution,
subscription rights or the consideration in the
Merger or Liquidation, or (b) the date of
determination as to which shares of Common Stock
will be affected by a subdivision, combination,
reclassification, (c) a brief statement of the facts
requiring such notice, and (d) if applicable, that
the Series D Conversion Price shall be adjusted in
accordance with this Paragraph B.4. Upon any
adjustment in the Series D Conversion Price, the
Corporation shall mail to each Series D Holder at
the Series D Holder's address as it appears in the
stock records of the Corporation a notice setting
forth the adjusted Series D Conversion Price and the
method of calculation thereof, provided that, if
such address is outside of the United States, then
such notice shall be sent by facsimile transmission
(if such Series D Holder shall have provided a
facsimile number).
M. Conclusive Determination. Whenever the
Series D Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with
the transfer agent for the Common Stock, a
certificate of a firm of independent public
accountants regularly employed by the Corporation
setting forth the adjusted Series D Conversion
Price, along with a brief statement of the facts
requiring the adjustment and the manner of computing
the adjustment which certificate shall be conclusive
evidence of the correctness of the adjustment,
absent manifest error.
5. Series D Redemption Rights
5.1 Series D Redemption. The Corporation may, at
its option, at any time after October 20, 2000, and
from time to time thereafter, redeem (a "Series D
Redemption") at the price determined herein
("Series D Redemption Price"), from funds legally
available therefor, all or any portion of the
outstanding Series D Shares (not thereafter
converted at any time prior to the Series D
Redemption Date in accordance with Paragraph B.4) at
the Series D Redemption Price which shall be the
Series D Liquidation Preference plus all accrued but
unpaid Series D Dividends (other than accrued but
unpaid Series D Dividends added to Series D
Liquidation Preference pursuant to Paragraph
B.1.1.D) through the Series D Redemption Date only
if there has occurred a Series D Redemption Event
(as defined in Paragraph B.5.3) and only if prior to
the giving of the Series D Redemption Notice (as
hereinafter defined) all Series D Dividends have
been paid through the end of the most recent
Series D Quarterly Payment Period (including accrued
but unpaid Series D Dividends added to Series D
Liquidation Preference pursuant to Paragraph
B.1.1.D).
5.2 Notice of Series D Redemption. If the
Corporation elects to redeem any or all Series D
Shares pursuant to a Series D Redemption, the
Corporation shall (a) give written notice of such
Series D Redemption within ten (10) days after the
occurrence of the applicable Series D Redemption
Event ("Series D Redemption Notice") to each
Series D Holder of Series D Shares to be redeemed at
its address as it appears on the stock records of
the Corporation by deposit thereof in first class
U.S. mail, postage prepaid, and, in the case of a
Series D Holder with an address outside of the
United States, a Series D Redemption Notice shall be
sent by facsimile transmission (if such Series D
Holder shall have provided a facsimile number), and
(b) set aside an amount equal to the Series D
Redemption Price of all Series D Shares subject to
Series D Redemption at that time for the benefit of
all Series D Holders of Series D Shares subject to
Series D Redemption apart from its other funds, and
the Series D Shares then subject to Series D
Redemption and not otherwise converted in accordance
with Paragraph B.4 shall, on the date which is
twenty (20) business days after the deposit of the
Series D Redemption Notice in accordance with clause
(a) of this sentence (the "Series D Redemption
Date"), cease to be outstanding and the rights of
the Series D Holders and owners thereof shall be
limited to payment of the Series D Redemption Price
thereof plus accumulated Series D Dividends through
the Series D Redemption Date in accordance with the
terms hereof. The Corporation shall mail to each
Series D Holder of a Series D Share tendered for
Series D Redemption the Series D Redemption Price
thereof by check within ten (10) days after the
Corporation shall receive at its principal office a
certificate representing the applicable Series D
Share (or an affidavit of lost certificate and
indemnity therefor in a form prescribed by the Board
of Directors) duly endorsed in blank for transfer to
the Corporation (if required by it), accompanied by
instruments of transfer satisfactory to the
Corporation and sufficient to transfer the Series D
Shares being redeemed free of any adverse claim.
Should any Series D Holder not receive payment of
any amounts due on Series D Redemption of its
Series D Shares at the times prescribed by reason of
the Corporation's failure to give a Series D
Redemption Notice at the times or in the manner
prescribed above or to make payment at the times
prescribed above for any reason other than the
Series D Holder's failure to tender its Series D
Shares (or affidavit and indemnity) and instruments
of transfer as provided above, the Corporation shall
pay to the applicable Series D Holder on demand
(x) interest on the sums not paid when due at an
annual rate equal to two percent in excess of the
"Prime Rate" that is then in effect or announced by
Chemical Bank, New York, New York, or its successor,
compounding at the end of each thirty (30) days,
until the applicable Series D Holder is paid in full
and (y) all costs of collection, including but not
limited to attorneys' fees and costs, whether or not
suit or other formal proceedings are instituted.
The Series D Redemption Price shall (in the
discretion of the Board of Directors of the
Corporation) be adjusted to take into account any
stock split or other similar change in the Series D
Shares.
5.3 Series D Redemption Event. A "Series D
Redemption Event" shall occur with respect to any
Series D Share (a) on the tenth day following any
ten (10) consecutive Trading Days in which the
Market Price is equal to or greater than 150% of the
Series D Conversion Price of such Series D Share or
(b) in the event of a Redemption Event Merger in
which the consideration to be paid to holders of the
Common Stock in the Redemption Event Merger is
either payable entirely in cash or is property with
a fair market value (as reasonably determined in
good faith by the Board of Directors of the
Corporation) of not less than 150% of the Series D
Conversion Price of such Series D Share on the date
fixed for purposes of determining the holders of
Common Stock entitled to receive consideration in
the Redemption Event Merger.
5.4 Selection of Shares. The Corporation shall
select the Series D Shares to be redeemed in any
Series D Redemption in which not all Series D Shares
are to be redeemed so that the Series D Shares of
each Series D Holder selected for Series D
Redemption shall bear the same proportion to the
total Series D Shares owned by that Series D Holder
as the proportion of all Series D Shares selected
for Series D Redemption bears to the total of all
then outstanding Series D Shares, but adjusted as
determined by the Board of Directors to avoid the
redemption of fractional Series D Shares. Should
any Series D Shares required to be redeemed under
the terms hereof not be redeemed solely by reason of
limitations imposed by law, the applicable Series D
Shares shall be redeemed on the earliest possible
date thereafter that the applicable Series D Shares
may be redeemed to the maximum extent permitted by
law. Except as set forth above, the Board of
Directors shall prescribe the manner in which any
Series D Redemption shall be effected. Any monies
set aside by the Corporation for the holders of
Series D Shares subject to Series D Redemption which
shall not be claimed at the end of one (1) year
after the first service of the applicable Series D
Redemption Notice shall be released and repaid to
the Corporation but shall be paid to the Series D
Holder of the applicable Series D Shares so long as
submission of its shares occurs within five (5)
years after the first service of the applicable
Series D Redemption Notice.
6. Ranking of Stock of the Corporation
For purposes hereof, any stock of any class or
classes of the Corporation shall be deemed to rank:
A. Prior to the Series D Shares, either as to
dividends or upon liquidation, if the holders of
such class or classes shall be entitled to the
receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or
priority to the Series D Holders;
B. On a parity with the Series D Shares, either as
to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption
or liquidation prices per share or sinking fund
provisions, if any, are different from those of the
Series D Shares, if the holders of such stock shall
be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may
be, in proportion to their respective dividend rates
or liquidation prices, without preference or
priority, one over the other, as between the holders
of such stock and the Series D Holders; and
C. Junior to the Series D Shares, either as to
dividends or upon liquidation, if such class shall
be Common Stock or if the Series D Holders shall be
entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation, winding
up of the Corporation, or upon redemption as the
case may be, in preference or priority to the
holders of shares of such class or classes.
FIFTH:
A. Management Vested in the Board of Directors.
The management of the business and the conduct of
the affairs of the Corporation shall be vested in
its Board of Directors. In furtherance of and not
in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to
make, repeal, alter, amend and rescind the Amended
and Restated Bylaws of the Corporation. The number
of directors which shall constitute the whole Board
of Directors shall be fixed by, or in the manner
provided in, the Amended and Restated Bylaws of the
Corporation from time to time. 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.
B. Terms of Directors. Each director shall serve
for a term ending on the date of the next annual
meeting following the meeting at which such director
was elected, or such later date as such director's
successor shall have been elected and qualified.
Advance notice of shareholder nominations for the
election of directors shall be given in the manner
provided in the Amended and Restated Bylaws of the
Corporation.
C. Appointment of New Directors. Except as
otherwise provided, newly created directors
resulting from any increase in the number of
directors and any vacancies on the Board of
Directors resulting from death, resignation,
disqualification, removal or other causes shall be
filled by the affirmative vote of a majority of the
remaining directors then in office, even though less
than a quorum of the Board of Directors. Any
director elected in accordance with the preceding
sentence shall hold office for the remainder of the
full term of directors in which the new directorship
was created or the vacancy occurred and until such
director's successor shall have been elected and
qualified. No decrease in the number of directors
constituting the Board of Directors shall shorten
the term of any incumbent director.
D. Removal of Directors. The entire Board or any
individual director may be removed from office, with
or without cause, by a vote of stockholders holding
a majority of the outstanding shares entitled to
vote at an election of directors.
E. Liability of Directors. 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 an
improper personal benefit.
SIXTH: Meetings of stockholders may be held
within or without the State of Delaware, as the
Amended and Restated Bylaws may provide. The books
of the Corporation may be kept outside the State of
Delaware at such place or places as may be
designated from time to time by the Amended and
Restated Bylaws of the Corporation.
SEVENTH: The Corporation is to have perpetual
existence.
EIGHTH: No holder of any Shares shall be entitled
as of right to subscribe for, purchase, or otherwise
acquire any Shares of any capital stock of the
Corporation which the Corporation proposes to issue
or any rights or options which the Corporation
proposes to grant for the purchase of Shares of any
class of the Corporation or for the purchase of any
Shares, bonds, securities, or obligations of the
Corporation which are convertible into or
exchangeable for, or which carry any rights to
subscribe for, purchase, or otherwise acquire Shares
of any class of capital stock of the Corporation;
and any and all of such Shares, bonds, securities or
obligations of the Corporation, whether now or
hereafter authorized or created, may be issued, or
may be reissued or transferred if the same have been
reacquired and have treasury status, and any and all
of such rights and options may be granted by the
Board of Directors to such persons, firms,
corporations and associations, and for such lawful
consideration, and on such terms, as the Board of
Directors in its discretion may determine, without
first offering the same, or any thereof, to any said
holder.
NINTH: The Corporation shall, to the fullest
extent permitted by Section 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 the 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
director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and
administrators of such person.
TENTH: Except as may otherwise be
specifically provided in this Amended and Restated
Certificate of Incorporation, no provision of this
Amended and Restated Certificate of Incorporation is
intended by the Corporation to be construed as
limiting, prohibiting, denying, or abrogating any of
the general or specific powers or rights conferred
under the General Corporation Law upon the
Corporation, upon its shareholders, bondholders, and
security holders, and upon its directors, officers,
and other corporate personnel, including, in
particular, the power of the Corporation to furnish
indemnification to directors and officers in the
capacities defined and prescribed by the General
Corporation Law and the defined and prescribed
rights of said persons to indemnification as the
same are conferred by the General Corporation Law.
ELEVENTH: From time to time any of the provisions of
this Amended and Restated 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 shareholders of the Corporation by this
Amended and Restated Certificate of Incorporation
are granted subject to the provisions of this
Article ELEVENTH.
TWELFTH: The effective time of the original
Certificate of Incorporation of the Corporation, and
the time when the existence of the Corporation
commenced, is March 15, 1988.
Signed on [____________], 1994.
LIVE ENTERTAINMENT INC.
By:
_____________________________________
[_____________], President
ATTEST:
__________________________________
[___________], Secretary
Exhibit 9.3(b)
Amendments to LIVE Increasing Rate Notes Indenture
For purposes of this Exhibit 9.3(b) only, the LIVE
Increasing Rate Notes shall be referred to as the
"Notes" and the LIVE Increasing Rate Notes Indenture
shall be referred to as the "Indenture". Other
capitalized terms used herein shall have the meaning
ascribed to them in the Indenture, except that
"Effective Date" shall have the meaning ascribed to
it in the Agreement. The Indenture will be amended
as follows:
1. Definitions. The definition of Senior Debt in
the Indenture will be expanded to provide that any
indebtedness which by its terms is stated to be
senior to the Notes will be treated as senior debt;
the definition of the Bank Credit Facilities will be
amended to include Carolco and LHV bank credit
facilities (including guarantees thereof); and
conforming changes will be made.
2. Section 2.12 (Payment of Interest; Interest
Rights Preserved). A technical change will be made
to clarify how interest is paid after a default.
3. Section 3.02 (Optional Redemption). LIVE will
be allowed to redeem part, as well as all, of the
Notes.
4. Section 4.05 (Compliance Certificate). An
amendment will be made to conform the requirements
in the Indenture with Carolco's indentures -- only
an Officer's Certificate will be required and no
certificate of LIVE's outside independent certified
public accountants will be required.
5. Section 4.10 (Ownership of Stock of Wholly
Owned Subsidiaries). LIVE is required to maintain
each of its wholly owned subsidiaries as a 100%
subsidiary unless disposed of in full. This
provision will be removed.
6. Section 4.15 (Limitation on Dividends and Other
Payment Restrictions Affecting Restricted
Subsidiaries). This provision restricts
Subsidiaries from agreeing to limits on the payment
of dividends, making loans or repaying indebtedness
to LIVE except as may be imposed in the Bank Credit
Facilities. This provision will be modified to make
a clear that product acquisition transactions may
also create such restrictions.
7. Section 4.16 (Restrictions on Sale and Issuance
of Restricted Subsidiary Preferred Stock). This
provision restricts LIVE from allowing its
Subsidiaries to issue preferred stock to third
parties unless LIVE could incur debt in like amount.
This provision will be removed.
8. Section 4.17 (Restricted Payments and
Investments). The prohibition on Restricted
Payments and Restricted Investments will not apply
if LIVE is not in default.
9. Section 4.18 (Limitation on Additional
Indebtedness). This provision will removed.
10. Section 4.20 (Limitation on Creation of Liens).
This provision will be removed.
11. Section 4.21 (Company or Subsidiaries May
Consolidate, etc. only on Certain Terms). There
will be no restriction on the ability of
Subsidiaries to merge with each other, liquidate or
take other actions. LIVE will be allowed to merge,
etc., as long as the surviving company assumes the
Notes, LIVE is not in default and no default will be
caused by the merger, and the net worth of the
resulting comparing is no less than the net worth of
LIVE prior to the merger.
12. Section 4.22 (Rank of Future Debt). This
provision will be removed.
13. Section 4.23 (Consolidated Net Worth). This
provision will be removed.
14. Section 6.01 (Events of Default). The cross
default provisions in this Indenture will be
conformed to those in Carolco's indentures by
increasing the cross default threshold from $3
million to $5 million, changing the grace periods
and increasing the number of holders required to
notice an Event of Default.
15. Section 6.02 (Acceleration). The percentage
required to accelerate for a monetary default will
be changed from 25% to 33-1/3%
Exhibit 3.3B
Officers of Carolco Entertainment Inc. at Effective
Date
Mario F. Kassar Chief Executive
Officer
Lynwood Spinks Executive Vice
President/President of
Production
William A. Shpall Executive Vice
President and Chief
Financial Officer
Karen A. Taylor Senior Vice
President/Finance
Robert W. Goldsmith Senior Vice President,
General Counsel and
Corporate Secretary
EXHIBIT 10.1(f)
Terms Of Aggregate Working Capital Commitments
B. Carolco
CUTTHROAT ISLAND DRAFT SHEET WITHOUT COMMITMENT
FOR DISCUSSION PURPOSES ONLY
Borrower: A single purpose company ("Borrower")
established under the laws of the Netherlands
Antilles, and wholly or majority-owned directly or
indirectly by Carolco Pictures Inc. ("CPI").
Lenders: A syndicate of banks with CLBN holding up
to a 30% share of the facility.
Facility: A senior secured credit facility
consisting of a single non-revolving project loan.
Purpose: To finance (a) a portion of the approved
budget of the feature film currently entitled
"Cutthroat Island" plus (b) Fees, Expenses and
Interest thereon.
Commitment: Up to 63,000,000 in the aggregate (the
"Project Loan"); provided, however, that 7,000,000
of the Project Loan shall be reserved to pay Fees,
Expenses and Interest on the Project Loan.
Maturity: Earlier of March 1, 1997 or fifteen
months following initial theatrical release.
Security: Collateralized by an assignment of firm
pre-sale contracts from acceptable
obligors/distributors or backed by irrevocable
letters of credit.
Completion Bond: To satisfaction of Lenders.
M:\LIVE\JKM4A65.WP
Execution
EXHIBIT 10.1(f)
Terms of Aggregate Working Capital Commitments
A. LIVE
LIVE shall arrange a working capital line for LHV
from a group of commercial lenders in principal
amount between $30,000,000 and $40,000,000 for a
period of at least 12 months after the line becomes
effective. The line will be generally available for
LHV's business operations and borrowers thereunder
will include LHV and substantial subsidiaries of
LIVE and LHV. LIVE will be a guarantor of the New
LIVE Credit Facility. Covenants and security will
generally parallel those in the LIVE Credit
Facility. The New LIVE Credit Facility will become
effective prior to the expiration of the LIVE Credit
Facility.
EXHIBIT 10.4
MGM INVESTOR REPRESENTATION AGREEMENT
As a condition to LIVE ENTERTAINMENT INC., a Delaware corporation
("LIVE"), CAROLCO ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of LIVE ("CAC"), and CAROLCO PICTURES
INC., a Delaware corporation ("Carolco"), entering into an Agreement and
Plan of Merger dated as of August 10, 1994 (the "Merger Agreement"), the
undersigned Carolco shareholder ("Significant Shareholder") hereby enters into
this Investor Representation Agreement (this "Agreement").
WHEREAS, pursuant to the Merger Agreement and in accordance with the
applicable provisions of the General Corporation Law of the State of Delaware
(the "DGCL"), CAC will merge with and into Carolco with Carolco surviving
(the "Merger") and, pursuant to the Merger, (i) the issued and outstanding
shares of common stock, par value $.01 per share, of Carolco ("Carolco
Common Stock") shall be converted into, and become exchangeable for, shares
of common stock, $.01 par value per share, of LIVE ("LIVE Common Stock")
as set forth in the Merger Agreement; and (ii) each issued and outstanding
share of Series A Convertible Preferred Stock of Carolco ("Carolco Series A
Preferred Stock") shall be converted into, and become exchangeable for, one
share of Series D Convertible Preferred Stock of LIVE, par value $1.00
("LIVE Series D Preferred Stock"); and
WHEREAS, Carolco, LIVE, and CAC are willing to consummate the Merger
only if such transaction will qualify as a tax free transaction under the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, THE SIGNIFICANT SHAREHOLDER AGREES AS
FOLLOWS:
A. The Significant Shareholder represents to LIVE and Carolco as follows:
1. The Significant Shareholder represents that as of the date hereof it (a) is
the record and beneficial owner of (x) no shares of Carolco Common Stock and
30,000 of Carolco Series A Preferred Stock (collectively, the "Carolco
Shares") and (y) no shares of LIVE Common Stock and no shares of Series C
Convertible Preferred Stock of LIVE, par value $1.00 per share (collectively,
the "LIVE Shares") and (b) has the power to vote or consent as to matters
concerning the Carolco Shares.
2. The Significant Shareholder (a) represents that, as of the date hereof, it
has no plan or intention to, and (b) agrees that, prior to the Effective Date as
defined in Section 1.2 of the Merger Agreement, it will not form a plan or
intention or enter into an arrangement to sell, transfer or otherwise dispose of
any of the shares of LIVE Common Stock and/or LIVE Series D Preferred
Stock to be received in the Merger by the Significant Shareholder.
B. The Significant Shareholder agrees as follows:
1. On or prior to the Effective Date, it will not sell, transfer or otherwise
dispose of any of its shares of Carolco Common Stock or Carolco Series A
Preferred Stock.
2. Until the Effective Date, it will not grant a proxy with respect to, or
otherwise encumber, any of its Carolco Shares, nor will it acquire any
additional Carolco Shares unless the Significant Shareholder executes an
amendment whereby such additional shares become subject to this Agreement.
The Significant Shareholder agrees that until the Effective Date it will not (i)
deposit any Carolco Shares into any voting trust or similar arrangement, (ii)
enter into any discussions, negotiations, arrangements or understandings with
any third party with respect to any of the foregoing, or (iii) take any action
inconsistent with any of the foregoing. The Significant Shareholder further
agrees that, subject to its receipt of the Prospectus and Joint Proxy Statement
pursuant to which Carolco and LIVE propose to solicit proxies from their
respective shareholders in connection with the Merger and the transactions
contemplated thereby (the "Prospectus"), it will vote all of the Carolco Shares
in favor of the Merger and the transactions contemplated hereby.
3. The Significant Shareholder consents to disclosure in the Prospectus of its
intention to vote for the Merger and the transactions contemplated in the
Merger Agreement.
4. The Significant Shareholder agrees to proceed with the proposed
transactions on a prompt basis and to use its reasonable best efforts to prepare
all documentation, obtain all necessary consents, authorizations, approvals and
waivers required in connection with the consummation of the Merger
(including any filings required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, with respect to such Significant
Shareholder) and take all other actions necessary to consummate the
transactions contemplated hereby in a manner consistent with applicable law,
including, but not limited to, executing the Carolco Entertainment Registration
Rights Agreement attached to the Merger Agreement as Exhibit 9.10 (the
"Carolco Entertainment Registration Rights Agreement").
5. The Significant Shareholder accepts and agrees to the terms of the Carolco
Entertainment Registration Rights Agreement and agrees that such agreement
shall supersede and replace all registration rights existing as of the Effective
Date with respect to all Carolco securities owned by it as of the Effective
Date.
C. This Agreement will terminate upon the earlier to occur of (i) the Effective
Date (other than with regard to Paragraph A.2 of this Agreement) and (ii) the
termination of the Merger Agreement pursuant to the terms of Section 11.1
thereof, but in no event later than December 31, 1994 unless an extension of
such date is agreed to by the Significant Shareholder.
D. In the event of a waiver by Carolco of any material condition, covenant or
breach, or in the event of an amendment of any material term, of the Merger
Agreement without the consent of the Significant Shareholder, then the
Significant Shareholder shall be entitled to rescind this Agreement within five
(5) business days of receipt of notice of such waiver or amendment.
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement
on August 10, 1994.
MGM HOLDINGS CORPORATION
By: /s/Rene-Claude Jouannet
Name: Rene-Claude Jouannet
Its: President and Treasurer
Agreed to and accepted as of
the date first written above:
CAROLCO PICTURES INC.
By: /s/ Robert W. Goldsmith
Name: Robert W. Goldsmith
Its: Senior Vice President
