PARTNERSHIP AGREEMENT
FOR
PAVILION PARTNERS
a partnership between
SM/PACE, INC.,
a wholly owned subsidiary of
PACE Music Group, Inc.
and
AMPHITHEATER ENTERTAINMENT PARTNERSHIP
a Delaware general partnership
whose sole general partners are
(i) YM Corp., a wholly-owned
subsidiary of Sony Music Entertainment Inc. and
(ii) Charlotte Amphitheater Corporation, an indirect
wholly-owned subsidiary of
Blockbuster Entertainment Corporation and
(iii) The Westside Amphitheatre Corporation,
an indirect wholly-owned subsidiary of
Blockbuster Entertainment Corporation
TABLE OF CONTENTS
ARTICLE I
Definitions ..........................................................1
1.1 Admission Agreement.......................................1
1.2 Affiliate.................................................1
1.3 Amphitheater..............................................1
1.4 Amphitheater Cost Limit...................................2
1.5 Amphitheater Loan.........................................2
1.6 Amphitheater Pro Forma....................................3
1.7 Annual Operating Budget...................................3
1.8 Approved Project..........................................3
1.9 Balloon Amphitheater Loan.................................3
1.10 Blockbuster...............................................3
1.11 Blockbuster's Initial Contribution Amount.................3
1.12 Blockbuster Guaranty......................................3
1.13 Blockbuster Specific Obligations..........................3
1.14 Blockbuster Subsidiary....................................4
1.15 Blockbuster Subsidiary Cash Amount........................4
1.15A Budget Year...............................................4
1.16 Budgeted Project Cost.....................................4
1.17 Camden Amphitheater.......................................4
1.18 Camden Asset..............................................4
1.19 Capital Account...........................................5
1.20 Cash Flow.................................................5
1.21 Cash Flow from Operations.................................5
1.22 Charlotte Amphitheater....................................5
1.23 Charlotte Asset ..........................................5
1.24 Charlotte Loan ...........................................5
1.25 Code......................................................5
1.26 Concession Loan...........................................5
1.27 Construction/Acquisition Recourse Obligations.............5
1.28 Construction Completion Date..............................6
1.29 Construction Costs........................................6
1.30 Contributed Project Funds............................ ....6
1.31 Controlling Interest......................................6
1.32 Cost Overruns.............................................6
1.33 CPI.......................................................6
1.34 Debt Coverage Ratio.......................................7
1.35 Defaulting Partner........................................7
1.36 Effective Date of Termination.............................7
1.37 Event of Withdrawal.......................................7
1.38 Executive Committee ...................................... 7
1.39 Executory Contract ....................................... 7
1.40 Existing Assets .......................................... 7
1.41 Existing Blockbuster Assets .............................. 8
1.42 Existing Facility Closing ................................ 8
1.43 Existing Pace Assets ..................................... 8
1.44 Existing Sony Assets ..................................... 8
1.45 Existing Sony/Block Assets ............................... 8
1.46 First Group .............................................. 8
1.47 Fiscal Year .............................................. 8
1.48 Foregone Concession Advance Amount ....................... 8
1.49 Free Cash ................................................ 8
1.50 Gross Asset Value ........................................ 8
1.51 Hard Costs ............................................... 9
1.52 Land Acquisition Costs ................................... 9
1.53 London Amphitheater ...................................... 9
1.54 Major Capital Improvements ............................... 9
1.55 Manager .................................................. 9
1.56 Market ................................................... 9
1.57 Maximum Rate ............................................. 9
1.58 MCA/Pace Amphitheaters ................................... 9
1.59 Nashville Amphitheater ................................... 10
1.60 Nashville Asset .......................................... 10
1.61 Nashville Partnership .................................... 10
1.62 Net Value ................................................ 10
1.63 New Amphitheater ......................................... 10
1.64 Non-Defaulting Partner ................................... 10
1.65 Non-Recourse Amphitheater ................................ 10
1.66 Non-Recourse Loan ........................................ 11
1.67 Nonrecourse Deductions ................................... 11
1.68 Nonrecourse Liability .................................... 11
1.69 Old Partnership Agreement ................................ 11
1.70 Operating Obligations .................................... 11
1.71 Operational Shortfall .................................... 11
1.72 Pace ..................................................... 11
1.73 Pace Rejected Amphitheater ............................... 12
1.74 Pace's Initial Contribution Amount ....................... 12
1.75 PEC ...................................................... 12
1.76 PMG ...................................................... 12
1.77 Partner Default .......................................... 12
1.78 Partner Nonrecourse Debt ................................. 12
1.79 Partner Nonrecourse Debt Minimum Gain .................... 12
1.80 Partner Nonrecourse Deductions ........................... 12
1.81 Partners ................................................. 12
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1.82 Partnership .............................................. 12
1.83 Partnership Act .......................................... 13
1.84 Partnership Interest ..................................... 13
1.85 Partnership Minimum Gain ................................. 13
1.86 Percentage Interest ...................................... 13
1.87 Person or person ......................................... 13
1.88 Phoenix Amphitheater ..................................... 13
1.89 Phoenix Asset ............................................ 13
1.90 Pittsburgh Amphitheater .................................. 13
1.91 Pittsburgh ............................................... 13
1.92 Plans and Specifications ................................. 14
1.93 Pre-opening Concessionaire Advances ...................... 14
1.94 Principal Reduction Amount ............................... 14
1.95 Project Budget ........................................... 14
1.96 Project Costs ............................................ 15
1.97 Project Loan ............................................. 15
1.98 Proposed Amphitheater Approval Meeting ................... 15
1.99 Proposed Amphitheater Approval Request ................... 15
1.100 Proposed Project Budget .................................. 15
1.101 PWOC ..................................................... 15
1.102 Qualified Amphitheater ................................... 15
1.103 Qualified Market ......................................... 16
1.104 R&D Expenditures ......................................... 16
1.105 Raleigh Amphitheater ..................................... 16
1.106 Raleigh Asset ............................................ 16
1.107 Raleigh Leasehold Estate ................................. 16
1.108 Raleigh Partnership ...................................... 16
1.109 Regulations .............................................. 17
1.110 Representative ........................................... 17
1.111 Renewal Loan ............................................. 17
1.112 Replacement Loan ......................................... 17
1.113.Restricted Funds ......................................... 17
1.114 Restricted Portion of the Earth .......................... 17
1.115 San Bernardino Amphitheater .............................. 17
1.116 San Bernardino Asset ..................................... 17
1.117 Second Group ............................................. 17
1.118 Short Term Rate .......................................... 17
1.119 Sinking Fund ............................................. 17
1.120 SMP ...................................................... 17
1.121 Soft Costs ............................................... 17
1.122 Sony ..................................................... 18
1.123 Sony's Initial Contribution Amount ....................... 18
1.124 Sony/Block ............................................... 18
1.125 Sony/Block Note #1 ....................................... 18
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1.126 Sony/Block Note #2 ....................................... 18
1.127 Sony/Block Notes ......................................... 18
1.128 Sony/Block Rejected Amphitheater ......................... 19
1.129 Sony/Block Related Party ................................. 19
1.130 Sony/Block Shared Obligations ............................ 19
1.131 Sony Guaranty ............................................ 20
1.132 Sony Specific Obligations ................................ 20
1.133 Sony Subsidiary .......................................... 20
1.134 Sony Subsidiary Cash Amount .............................. 20
1.135 Tampa Amphitheater ....................................... 21
1.136 Tampa Asset .............................................. 21
1.137 Tampa Purchase Agreement ................................. 21
1.138 Termination Notice ....................................... 21
1.139 Treasury Rate ............................................ 21
1.140 Unamortized Amount ....................................... 21
1.141 Unrestricted Funds ....................................... 21
1.142 Unwind Amphitheater Loans ................................ 22
1.143 Unwind Assets ............................................ 22
1.144 Unwind Concession Loan ................................... 22
1.145 Unwind Procedure ......................................... 22
1.146 Westside ................................................. 22
1.147 Woodlands Agreement ...................................... 22
1.148 Woodlands Amphitheater ................................... 22
1.149 Woodlands Asset .......................................... 22
1.150 Cross-References to other Defined Terms .................. 22
ARTICLE II
Continuation, Name and Commencement ............................ 26
2.1 Continuation of Partnership .............................. 26
2.2 Partnership Name ......................................... 26
2.3 Offices .................................................. 26
2.4 Term of Partnership ...................................... 26
ARTICLE III
Purposes and Powers ............................................ 27
3.1 Purposes of the Partnership .............................. 27
3.2 Powers of the Partnership ................................ 27
ARTICLE IV
Existing Assets and
Capital Contributions .......................................... 28
iv
4.1 Contribution of Woodlands Asset .......................... 28
4.2 Contribution of Nashville Asset .......................... 28
4.3 Ownership of the Raleigh Asset, the
Camden Asset, the Tampa Asset and
the Pittsburgh Asset ..................................... 28
4.4 [Intentionally Left Blank] ............................... 28
4.5 Contribution of Phoenix Asset ............................ 28
4.6 Contribution of Charlotte Asset .......................... 28
4.7 Contribution of San Bernardino Asset ..................... 28
4.8 Capital Accounts; Percentage Interests ................... 28
4.9 Transfer of the Sony Subsidiary's
Partnership Interest to Sony/Block ....................... 29
4.10 Sony/Block's Initial Cash Contribution ................... 29
4.11 Capital Contributions for Budgeted
Project Cost of Approved Projects ........................ 32
4.12 Operational Shortfalls ................................... 33
4.13 Cost Overruns ............................................ 33
4.14 No Other Capital Contribution Obligations ................ 34
4.15 Interim Development Costs ................................ 34
4.16 Repayment of Temporary Construction Advance............... 35
4.17 Special Provisions Relating to the
Woodlands Agreement ...................................... 35
4.18 Minneapolis/St. Xxxx...................................... 39
ARTICLE V
Project Loans, Renewal Loans and Replacement Loans ............. 41
5.1 Obligation of Sony/Block to Provide Project
Loan .................................................... 41
5.2 Definition of Project-Loan .............................. 43
5.3 Protection of Sony/Block Related Parties ................ 48
5.4 Renewal Loans ........................................... 49
5.5 Replacement Loans ....................................... 52
5.6 Special Provisions Relating to Charlotte
Amphitheater............................................. 53
5.7 Certain Defined Terms Used in Article V ................. 55
ARTICLE VI
Partnership's Obligation to Construct and
Acquire Amphitheaters .......................................... 58
6.1 Construction of Approved Projects ........................ 58
6.2 Purchase of Existing Amphitheaters ....................... 58
v
ARTICLE VII
Provisions Relating to the MCA/PACE Amphitheaters .............. 60
7.1. Generally ................................................ 60
7.2 Pace's Obligations to Partnership Regarding
MCA/PACE Amphitheaters ................................... 60
7.3 Number of New Amphitheaters .............................. 63
7.4 Best Efforts to Obtain a Transferable
Interest .................................................
ARTICLE VIII
Tax Allocations, Maintenance of Capital Accounts
and Distributions of Cash ...................................... 64
8.1 Tax Allocations .......................................... 64
8.2 Transferor/Transferee Allocations ........................ 67
8.3 Maintenance of Capital Accounts .......................... 67
8.4 Partnership's Use and Distribution
of Free Cash ............................................. 70
8.5 Provisions Regarding Sinking Funds ....................... 73
8.6 Distribution of Proceeds from Sale of an Amphitheater .... 73
8.7 Pace's Priority Distribution .............................
ARTICLE IX
Unwind Procedure ............................................... 75
9.1 Generally ................................................ 75
9.2 Commencement of Unwind Procedure ......................... 75
9.3 Timing of Closing the Unwind Procedure ................... 75
9.4 Unwind Closing ........................................... 76
9.5 Other Provisions Relating to the Unwind
Procedure ................................................ 86
9.6 Effect of Partner Default on Unwind
Procedure ................................................ 87
ARTICLE X
Management of Partnership Affairs .............................. 91
10.1 Management ............................................... 91
10.2 Executive Committee ...................................... 91
10.3 Manager .................................................. 92
10.4 Meetings of the Executive Committee ...................... 95
10.5 Annual Operating ......................................... 97
vi
10.6 Development of Proposed Amphitheaters .................... 99
10.7 Management, Booking and Consulting Services ............. 103
10.8 Removal of Manager .......................................104
10.9 Provisions Regarding Qualified Markets ...................106
ARTICLE XI
Rights and Obligations Following Termination
of Pace as Manager .............................................110
11.1 Generally ................................................110
11.2 Pace's Right to Commence Unwind Procedure ................110
11.3 Selection and Designation of Successor
Manager ..................................................111
11.4 Minimum Economic Criteria to be Imposed
Upon Successor Manager ...................................112
11.5 Special Provisions Relating to Construction
of Approved Projects by the Partnership after
Removal of Pace as Manager ...............................114
ARTICLE XII
Exclusivity, Non-Compete and Interaction with
partners .......................................................116
12.1 Exclusivity ..............................................116
12.2 Exceptions to Exclusivity ................................116
12.3 Continuing Noncompete Covenant After
Certain Circumstances ....................................117
12.4 Reformation of Unenforceable Provisions ..................121
12.5 Partners Arms-Length Dealing with
Partnership ..............................................121
12.6 Special Provisions Relating to Rejection
of Qualified Amphitheaters ...............................122
ARTICLE XIII
Fiscal Matters .................................................127
13.1 Fiscal Year ..............................................127
13.2 Books and Records ........................................127
13.3 Partnership Bank Accounts ................................127
13.4 Tax Matters and Reports ..................................127
13.5 Tax Returns ..............................................128
13.6 Tax Matters Partner ......................................128
13.7 Section 754 Election .....................................128
13.8 Reimbursement of Expenses ................................128
vii
13.9 Indemnity for Constructive Termination ...................129
ARTICLE XIV
Representations and Warranties of Partners .....................131
14.1 Representations and Warranties of Pace ...................131
14.2 Representations and Warranties of
Sony/Block ...............................................131
14.3 Indemnification Provisions ...............................133
ARTICLE XV
Transfer Restrictions ..........................................137
15.1 Partner Interest .........................................137
15.2 Ownership Interests in Partners ..........................138
15.3 Transfer Triggering Events................................142
15.4 Limited Right of Sony/Block to Admit
Minority Partners ........................................148
15.5 Notices ..................................................149
15.6 Representations and Covenants Relating
to Certain Voting Rights and Matters .....................150
ARTICLE XVI
Dissolution and Termination ....................................151
16.1 Dissolution ..............................................151
16.2 Option to Purchase Partnership Interest
of Withdrawing Partner ...................................151
16.3 Dissolution in the Event Option is Not
Exercised ................................................151
16.4 Waiver ...................................................152
16.5 Distributions Upon Termination ...........................152
16.6 Voluntary Withdrawal .....................................153
ARTICLE XVII
Default of a Partner ...........................................154
17.1 Default ..................................................154
17.2 Rights and Remedies ......................................154
17.3 Special Provisions Relating to Sony/Block
being a Defaulting Partner ...............................156
ARTICLE XVIII
viii
Miscellaneous Provisions .......................................164
18.1 Notices ..................................................164
18.2 Delaware Law to Apply ....................................165
18.3 Other Instruments ........................................165
18.4 Headings .................................................165
18.5 Parties Bound ............................................165
18.6 Legal Construction .......................................165
18.7 Counterparts .............................................166
18.8 Gender ...................................................166
18.9 Entire Agreement, Modification, Consents
and Waivers ..............................................166
18.10 Press Release; Right to Use of Certain Names .............166
18.11 Joinder by Parents .......................................166
18.12 Acquisition of Partners' Interests .......................168
18.13 Selection of Deciding Voter ..............................169
18.14 Amendment and Restatement ................................170
ix
SCHEDULE OF EXHIBITS
EXHIBIT "A"
EXHIBIT "B"
EXHIBIT "C"
EXHIBIT "D"
EXHIBIT 5.3(a)(1)
EXHIBIT 5.3(a)(2)
x
PARTNERSHIP AGREEMENT
[PAVILION PARTNERS]
This Partnership Agreement ("Agreement") is made and entered into
effective as of the 1st day of April, 1994 ("Effective Date"), by and among (a)
SM/PACE, INC., a Texas corporation, (b) YM CORP., a Delaware corporation, (c)
THE WESTSIDE AMPHITHEATRE CORPORATION, an Arizona corporation, (d) CHARLOTTE
AMPHITHEATER CORPORATION, a Delaware corporation, and (e) AMPHITHEATER
ENTERTAINMENT PARTNERSHIP, a Delaware general partnership. For and in
consideration of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the respective
meanings indicated:
1.1 Admission Agreement: That certain Agreement to Admit New Partner and
to Amend and Restate Partnership Agreement dated October 29, 1993 and entered
into by and among the Partnership, Pace, the Sony Subsidiary, the Blockbuster
Subsidiary and Sony/Block.
1.2 Affiliate: With respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. The term
"control," (including, with correlative meanings, the terms "controlled by" and
"under common control with") as used in the immediately preceding sentence, when
used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, (a) neither (i) H. Xxxxx Xxxxxxxx nor (ii) any Person (other
than Blockbuster and any Person directly or indirectly controlled by
Blockbuster) directly or indirectly controlled by Xxxxx Xxxxxxxx shall be an
Affiliate of Blockbuster unless, at any time hereafter, H. Xxxxx Xxxxxxxx shall
own, directly or indirectly, through one or more intermediaries, 50% or more of
Blockbuster's voting securities (or the equivalent thereof) and (b) the only
Affiliates of the Sony Subsidiary shall be (i) Sony and (ii) Persons that are,
directly or indirectly, through one or more intermediaries, controlled by Sony.
Article I - Definitions
Page 2
1.3 Amphitheater: Any existing or proposed open-air (with or without some
covered seating) or partially enclosed facility (excluding sports stadiums)
which has a capacity for 2,500 patrons or more and is designed primarily as a
venue for the presentation of live musical concerts. By way of example, and not
limitation, the following facilities are Amphitheaters:
(a) Star Lake (Pittsburgh);
(b) Walnut Creek (Raleigh);
(c) Pine Knob (Michigan);
(d) Shoreline (California);
(e) Great Xxxxx (Massachusetts); and
(f) Starplex (Dallas).
As the context may require, the term "Amphitheater" may also mean and include
the fee or leasehold interest in the facility and the land upon which it is
situated, all furniture, fixtures and equipment affixed to or otherwise used in
connection with the operation of the facility, all appurtenances to the land and
the facility and all other interests, privileges and other rights associated
with or related to one or both of the land and the facility.
1.4 Amphitheater Cost Limit: With respect to (i) a proposed Amphitheater
located within North America, Hawaii or the Caribbean Islands, $15,000,000.00
and (ii) a proposed Amphitheater located anywhere else in the Restricted Portion
of the Earth, $17,000,000.00. For purposes of the immediately preceding
sentence, the amounts "$15,000,000.00" and "$17,000,000.00" shall be deemed to
be increased on April 1, 1995 and on each successive April 1st thereafter in
the same proportionate amount by which the CPI most recently reported prior to
such date exceeds the CPI most recently reported prior to April 1, 1994.
1.5 Amphitheater Loan: With respect to (i) any Unwind Asset (other than
the Camden Asset and the Charlotte Asset), the loan or loans which are secured
by such Unwind Asset (or by the Amphitheater related to such Unwind Asset) at
the time of the Existing Facility Closing, (ii) the Charlotte Asset, the
Charlotte Loan and (iii) any other Amphitheater (or interest therein), the loan
or loans, whether secured by such Amphitheater or not, which funded any portion
of the Project Costs or purchase price of such Amphitheater or the proceeds of
which were used to reimburse to the Partnership any portion of said Project
Costs or purchase price originally paid from other funds of the Partnership.
The term "Amphitheater Loan" shall include any and
Article I - Definitions
Page 3
all renewals, extensions, rearrangements, replacements or consolidations of the
loan or loans described in the immediately preceding sentence. Notwithstanding
anything to the contrary contained in, or implied by, the provisions of this
Section 1.5, a loan or grant for which both of the following conditions are
satisfied shall not be an "Amphitheater Loan" for purposes of this Agreement:
(a) The Partnership, the Partners, the Affiliates of the Partners
and the Sony/Block Related Parties have no legal liability or obligation
to repay any portion of such loan or grant; and
(b) The Partnership's ownership interest or possessory rights in the
Amphitheater to which such loan or grant relates are not subject to being
terminated, sold, restricted, foreclosed upon or limited by reason of any
failure to repay such loan or grant.
1.6 Amphitheater Pro Forma: With respect to any Amphitheater being
considered by the Manager for construction by the Partnership, a pro forma of
operating costs and operating revenue projected for the first four full years
for such proposed Amphitheater prepared by the Manager in good faith in
accordance with generally accepted accounting principles. In addition, such pro
forma shall be based upon such assumptions as shall be reasonable and consistent
with the financing, construction and operating history of the Partnership and
general economic conditions prevailing at the location of the site proposed for
construction of such Amphitheater.
1.7 Annual Operating Budget: The budget for the Partnership's operations
for each Budget Year to be established in accordance with, and pursuant to, the
provisions of Section 10.5 hereof.
1.8 Approved Project: A proposed Amphitheater which the Executive
Committee has approved in accordance with the provisions of Section 10.6(b)
hereof as an Amphitheater which the Partnership will construct. Notwithstanding
anything to the contrary contained in this Agreement, the Camden Amphitheater is
an Approved Project for all purposes of this Agreement.
1.9 Balloon Amphitheater Loan: An Amphitheater Loan which has a scheduled
amortization period extending beyond the scheduled maturity date for such
Amphitheater Loan.
1.10 Blockbuster: (i) Blockbuster Entertainment Corporation, a Delaware
corporation, and its successors or (ii) if different, the ultimate corporate
parent of the affiliated group which is currently owned, directly or indirectly,
through one or more intermediaries, by Blockbuster Entertainment Corporation.
Article I - Definitions
Page 4
1.11 Blockbuster's Initial Contribution Amount: A pecuniary amount equal
to the sum of (i) the Net Value of the Phoenix Asset, (ii) the Net Value of
the San Bernardino Asset and (iii) the Net Value of the Charlotte Asset.
1.12 Blockbuster Guaranty: The unconditional and irrevocable guaranty
required to be executed by Blockbuster in the form of Exhibit "B" attached
hereto if Sony/Block elects to deliver Sony/Block Note #2 to the Partnership
pursuant to the provisions of Section 4.10(b)(2) of this Agreement.
1.13 Blockbuster Specific Obligations: The following obligations for which
Sony/Block is responsible for performing, observing or discharging pursuant to
this Agreement:
(a) The obligation of Sony/Block to contribute the Blockbuster
Subsidiary Cash Amount pursuant to Section 4.1O(b)(1) and the obligation
of Sony/Block to make payments on Sony/Block Note #2 as they become due.
(b) The obligation of Sony/Block to indemnify the Partnership
pursuant to one or both of Section 14.3 and Section 9.4(n) hereof to the
extent that either such indemnity relates to one or more of the Phoenix
Amphitheater, the Charlotte Amphitheater and the San Bernardino
Amphitheater.
(c) The obligation of Sony/Block to make a payment to Pace at the
closing of the Unwind Procedure pursuant to Section 9.4(g)(2) or Section
9.4(k)(4) or (5) hereof.
(d) The obligations, restrictions and limitations imposed upon
Sony/Block and the Sony/Block Related Parties pursuant to the provisions
of Articles XII and XV hereof, to the extent that such provisions apply to
one or more of the Blockbuster Subsidiary and the Affiliates of the
Blockbuster Subsidiary.
(e) The obligations imposed upon Sony/Block pursuant to the
provisions of Section 11.3(a) hereof to the extent that such provisions
apply to the Blockbuster Subsidiary or its Affiliates.
(f) The obligation imposed upon Sony/Block to make a capital
contribution pursuant to Section 4.15(b) hereof.
(g) The obligations imposed upon Sony/Block pursuant to Section 9.6
to the extent related to one or more of the Existing Blockbuster Assets.
1.14 Blockbuster Subsidiary: Both individually and collectively, The
Westside Amphitheatre Corporation, an Arizona corporation, and Charlotte
Amphitheater
Article I - Definitions
Page 5
Corporation, a Delaware corporation, both of which are wholly-owned by
Blockbuster through one or more intermediaries.
1.15 Blockbuster Subsidiary Cash Amount: The amount of the initial capital
contribution required to be made by Sony/Block pursuant to Section 4.10(b) of
this Agreement.
1.15A Budget Year: The fiscal year of the Partnership for financial
accounting and book reporting purposes, which shall end on October 31, unless
the Partners mutually designate a different financial accounting and book fiscal
year.
1.16 Budgeted Project Cost: With respect to any Amphitheater to be
constructed by the Partnership, the total budgeted amount of Project Costs set
forth in the Project Budget for such Amphitheater.
1.17 Camden Amphitheater: The proposed Amphitheater to be located on a
site located near the Xxxxxxx Street Terminal on the Delaware River in Camden,
New Jersey, together with all of the Partnership's interests, privileges and
other rights associated therewith or related thereto.
1.18 Camden Asset: All of the Partnership's rights, titles and interests
in and to the Camden Amphitheater.
1.19 Capital Account: The tax capital account maintained by the
Partnership for each Partner in accordance with, and as required by, the
provisions of Section 8.3 of this Agreement.
1.20 Cash Flow: For any Amphitheater, during any period of time, (a) the
amount of all revenues, receipts and other funds received by the owner of a
Controlling Interest in such Amphitheater, on a cash basis, from the operation,
ownership or use of such Amphitheater during such period of time minus (b) the
amount of (i) all expenditures paid by the owner of such Controlling Interest in
such Amphitheater, on a cash basis, during such period of time for any expenses,
costs or charges which are related to the use, ownership, maintenance,
management or operation of such Amphitheater and (ii) regularly scheduled
principal and interest payments paid, on a cash basis, by the owner of such
Controlling Interest in such Amphitheater during such period of time on any
Amphitheater Loan which relates to such Amphitheater.
1.21 Cash Flow from Operations: For any Amphitheater during any period of
time, (i) the Cash Flow of the owner of a Controlling Interest in such
Amphitheater during such period of time plus (ii) the amount of regularly
scheduled principal and interest payments paid during such period of time, on a
cash basis, by the owner of
Article I - Definitions
Page 6
such Controlling Interest in such Amphitheater on any Amphitheater Loan which
relates to such Amphitheater.
1.22 Charlotte Amphitheater: The currently existing Amphitheater located
at 000 Xxxxxxxxxxx Xxxxxxxxx in Charlotte, North Carolina and owned in fee
simple by the Partnership, together with all of the Partnership's interests,
privileges and other rights associated therewith or related thereto.
1.23 Charlotte Asset: All of the Partnership's rights, titles and
interests in and to the Charlotte Amphitheater.
1.24 Charlotte Loan: Shall have the meaning assigned to it pursuant to the
provisions of Section 5.6(a) hereof.
1.25 Code: The Internal Revenue Code of 1986, as amended.
1.26 Concession Loan: Any lump sum payment, advance or loan made by a
concessionaire to the owner of a Controlling Interest in an Amphitheater in
exchange for the right to sell food, beverages, novelties, merchandise or
other concessions at such Amphitheater, regardless of whether such payment,
advance or loan is required to be repaid to the concessionaire.
1.27 Construction/Acquisition Recourse Obligations: With respect to the
Partnership's construction of, or acquisition of a Controlling Interest in, any
Amphitheater the following:
(a) the Project Costs paid by the Partnership in connection with
the development and construction of such Amphitheater other than any
Project Costs funded by, or reimbursed from, a Non-Recourse Loan; and
(b) other contractual liabilities or obligations (which are not
included in the Project Costs of such Amphitheater) undertaken or assumed
by the Partnership in consideration for its acquisition of a Controlling
Interest in such Amphitheater (such as, by way of example, annual rental
obligations under a ground lease or annual guaranties on management
agreement) other than any liabilities or obligations for which the obligee
has recourse against the Partnership's Interest in such Amphitheater only
and not against any other asset of the Partnership, either Partner, any
Affiliate of a Partner or a Sony/Block Related Party.
For purposes of calculating the amount of Construction/Acquisition Recourse
Obligations that are attributable to clause (b) above, any prospective
obligations shall be discounted to present value using the Treasury Rate as the
discount factor.
Article I - Definitions
Page 7
1.28 Construction Completion Date: With respect to an Amphitheater being
constructed, the date on which the owner of a Controlling Interest in such
Amphitheater either (i) obtains a permanent certificate of occupancy for such
Amphitheater or (ii) obtains a temporary certificate of occupancy which permits
the use of such Amphitheater for its intended purpose.
1.29 Construction Costs: With respect to any Amphitheater, all costs
(other than Land Acquisition Costs and Soft Costs) directly associated with or
attributable to the actual construction of such Amphitheater including, without
limitation, (i) all costs associated with the obtaining of materials and
services relating to the construction of such Amphitheater, (ii) all fees and
other sums payable to any contractor relating to or in connection with the
construction of such Amphitheater and (iii) all interest which accrues on the
Amphitheater Loan related to such Amphitheater through the Construction
Completion Date.
1.30 Contributed Project Funds: Cash funds of the Partnership received
from (i) contributions to the capital of the Partnership pursuant to Section
4.10(a)(1) or Section 4.10(b)(1) or (ii) principal payments under either of the
Sony/Block Notes.
1.31 Controlling Interest: With respect to any Amphitheater, any ownership
interest, direct or indirect, or management right in such Amphitheater for which
the owner of such interest or right is obligated or entitled to direct and
control the management and operation of such Amphitheater. As currently owned,
the Partnership has a Controlling Interest in each of the Amphitheaters related
to the Existing Assets.
1.32 Cost Overruns: With respect to any Amphitheater constructed by the
Partnership, all Project Costs incurred by the Partnership with respect to such
Amphitheater which are, when taken together with all previously expended Project
Costs with respect to such Amphitheater, in excess of the Budgeted Project Cost
of such Amphitheater.
1.33 CPI: Consumer Price Index for All Urban Consumers (all U.S. cities),
1982-84 equals 100 Base, published monthly by the U.S. Department of Labor's
Bureau of Labor of Statistics, or any successor publication.
1.34 Debt Coverage Ratio: For any Amphitheater, during any period of time,
the ratio of (a) the Cash Flow from Operations of the Partnership for such
Amphitheater during such period of time to (b) the amount of regularly scheduled
principal and interest payments due on the Amphitheater Loans of the Partnership
which relate to such Amphitheater during such period of time.
1.35 Defaulting Partner: Shall have the meaning assigned pursuant to the
provisions of Section 17.1 of this Agreement.
Article I - Definitions
Page 8
1.36 Effective Date of Termination: The date upon which a Termination
Notice is effective in accordance with the provisions of Section 10.8(a) hereof.
1.37 Event of Withdrawal: The occurrence of any of the following events in
respect of a Partner: (i) the withdrawal by such Partner from the Partnership in
violation of the provisions of Section 16.6 hereof, (ii) the granting of relief
against such Partner in an involuntary case under the Federal Bankruptcy Code
which is not removed or discharged within ninety (90) days, or in any such
involuntary case, the approval of the petition by such Partner as properly
filed, or the admission of such Partner of material allegations contained in the
petition, (iii) the execution by such Partner of a general assignment for the
benefit of creditors, (iv) the commencement of a voluntary case under the
Federal Bankruptcy Code by such Partner, or (v) the appointment of a receiver
for a Partner or for all or a substantial part of the assets of such Partner and
such receivership proceedings are not removed or discharged within ninety (90)
days after the receiver's appointment.
1.38. Executive Committee: The committee of three (3) individuals
selected from time to time, by the Partners pursuant to the provisions of
Section 10.2(c) of this Agreement, to whom the responsibility of managing and
controlling the operations of the Partnership is delegated.
1.39. Executory Contract: Collectively, the several written contracts
entered into of even date with the Admission Agreement between and among the
Partners, the Partnership and all of the respective owners of the Existing
Assets in which, among other things, (i) the owner of each Existing Asset not
owned by the Partnership at the time of execution of the Admission Agreement
agreed to transfer, convey and assign such Existing Asset to the Partnership at
the Existing Facility Closing on and subject to the terms, conditions and
provisions contained therein and (ii) the Sony Subsidiary and Pace, as the sole
partners of the owner of the other Existing Assets, made certain
representations, warranties and covenants with respect to such Existing Assets
for the benefit of the Partnership.
1.40 Existing Assets: The Raleigh Asset, the Pittsburgh Asset, the
Woodlands Asset, the Nashville Asset, the Phoenix Asset, the Charlotte Asset,
the Camden Asset, the Tampa Asset and the San Bernardino Asset.
1.41 Existing Blockbuster Assets: The Phoenix Asset, the Charlotte Asset
and the San Bernardino Asset.
1.42 Existing Facility Closing: The closing of even date herewith of
the transfer to the Partnership of the Phoenix Asset, the Charlotte Asset, the
San Bernardino Asset, the Woodlands Asset and the Nashville Asset in accordance
with,
Article I - Definitions
Page 9
and as contemplated by, the provisions of the Admission Agreement and the
Executory Contract.
1.43 Existing Pace Assets: The Woodlands Asset, the Nashville Asset, an
undivided one-half interest in the Raleigh Asset, an undivided one-half interest
in the Pittsburgh Asset, an undivided one-half interest in the Camden Asset and
an undivided one-half interest in the Tampa Asset.
1.44 Existing Sony Assets: An undivided one-half interest in the Raleigh
Asset, an undivided one-half interest in the Pittsburgh Asset, an undivided
one-half interest in the Camden Asset, and an undivided one-half interest in the
Tampa Asset.
1.45 Existing Sony/Block Assets: The Phoenix Asset, the Charlotte Asset,
the San Bernardino Asset, an undivided one-half interest in the Raleigh Asset,
an undivided one-half interest in the Pittsburgh Asset, an undivided one-half
interest in the Camden Asset and an undivided one-half interest in the Tampa
Asset.
1.46 First Group: The first six (6) New Amphitheaters.
1.47 Fiscal Year: The fiscal year of the Partnership for federal income
tax purposes, which shall end on October 31, unless the Partners mutually
designate a different fiscal year which complies with the provisions and
limitations contained in the Code and the Treasury Regulations promulgated
thereunder.
1.48 Foregone Concession Advance Amount: With respect to each Unwind
Asset, the Unamortized Amount at the time of the closing of the Unwind Procedure
of the Partnership's share of any Concession Loan obtained after the Existing
Facility Closing with respect to the Amphitheater related to such Unwind Asset.
1.49 Free Cash: The portion of the Partnership's cash held on or about
November 1 of each calendar year which the Executive Committee determines is
available for use by the Partnership in accordance with the provisions of
Section 8.4 hereof for prepayments on Amphitheater Loans and distributions to
the Partners.
1.50 Gross Asset Value: Subject to the adjustments described in the next
succeeding sentence, the fair market value of each item of Partnership property
at the time of contribution to the capital of the partnership or, if applicable,
at the time of the determination required to be made under Section 8.3 (e)
hereof. The Gross Asset Value of each item of Partnership property shall be
adjusted by depreciation, amortization or other cost recovery deductions
determined pursuant to Section 8.3(c)(ii) of this Agreement.
Article I - Definitions
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1.51 Hard Costs: With respect to any Amphitheater, the sum of (x) all
Construction Costs incurred or expended in connection with such Amphitheater by
the owner of a Controlling Interest in such Amphitheater and (y) all Land
Acquisition Costs incurred or expended in connection with such Amphitheater by
the owner of a Controlling Interest in such Amphitheater.
1.52 Land Acquisition Costs: With respect to any Amphitheater, all amounts
expended and costs incurred (other than Construction Costs and Soft Costs) in
connection with the acquisition of a site for the construction of such
Amphitheater, including, without limitation, (i) the payment of the purchase
price for such site, (ii) all brokerage fees and other commissions incurred in
connection with the Acquisition of such site, (iii) all option payments and fees
payable in connection with the Partnership's acquisition of such site and (iv)
all lease payments and lease deposits payable until the Construction Completion
Date under the terms of any ground lease which grants to the owner of such
Amphitheater possessory rights to, and use of, such site.
1.53 London Amphitheater: The currently existing Amphitheater located in
Xxxxxx Keynes, England and commonly referred to as "The National Bowl."
1.54 Major Capital Improvements: With respect to any Amphitheater, any
reconstruction, rehabilitation or capital improvements made with respect to such
Amphitheater after completion of its initial construction involving,
individually or in the aggregate, no less than $100,000.00 in costs, but
specifically excluding (i) any routine repair or maintenance and (ii)
reconstruction or repair following damage from any casualty to the extent of
casualty insurance proceeds.
1.55 Manager: The Person that has (i) the authority to, and the
responsibility of, overseeing and directing the day-to-day operations of the
Partnership in the manner described in Section 10.3 hereof and (ii) the
obligation to provide the management, booking and consulting services in
connection with the development, construction, maintenance and operation of the
Partnership's Amphitheaters as described in Section 10.7(a) hereof. Unless and
until Pace has been removed as the Manager pursuant to the provisions of Section
10.8 hereof, the Manager shall be Pace.
1.56 Market: The greater of any Area of Dominant Influence (as defined by
the Arbitron Ratings Service) or Standard Metropolitan Statistical Area within
the United States or any equivalent metropolitan designation in any other part
of the Restricted Portion of the Earth.
1.57 Maximum Rate: The lesser of (a) eighteen percent (18%) per annum or
(b) the maximum non-usurious interest rate permitted by applicable law from time
to time in effect.
Article I - Definitions
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1.58 MCA/Pace Amphitheaters: Starplex Amphitheater located in Dallas,
Texas and Lakewood Amphitheater located in Atlanta, Georgia, both of which are
owned by MCA/Pace Amphitheaters Group, L.P., a Delaware limited partnership.
1.59 Nashville Amphitheater: The currently existing Amphitheater located
in Davidson County, Tennessee and commonly known as "Starwood Amphitheater."
1.60 Nashville Asset: All of the Partnership's rights, titles and
interests in and to the Nashville Partnership.
1.61 Nashville Partnership: Starwood Amphitheater Operating Company, a
Tennessee general partnership which has as its sole general partners
Xxxx-Starwood, Inc. and the Partnership. The Nashville Partnership owns the
Nashville Amphitheater.
1.62 Net Value: With respect to (i) any asset contributed to the capital
of the Partnership at the Existing Facility Closing, such asset's fair market
value at the time of the Existing Facility Closing net of liabilities assumed by
the Partnership with respect to the contributed asset or to which the
contributed asset is subject and (ii) any asset owned by the Partnership at the
time of the Existing Facility Closing, such asset's fair market value at the
time of the Existing Facility Closing net of liabilities of the Partnership with
respect to such asset or to which such asset is subject. The parties to this
Agreement previously set forth their agreement as to the Net Value of each of
the Existing Assets in the Admission Agreement.
1.63 New Amphitheater: Except for any Non-Recourse Amphitheater and the
Camden Amphitheater, any Amphitheater that is described below:
(a) An Amphitheater that the Partnership constructs at any time
after the Existing Facility Closing; or
(b) Any previously constructed Amphitheater in which the Partnership
acquires a Controlling Interest at any time after the Existing Facility
Closing.
1.64 Non-Defaulting Partner: Shall have the meaning assigned to it
pursuant to the provisions of Section 17.1 of this Agreement.
1.65 Non-Recourse Amphitheater: Any Amphitheater which satisfies both of
the following criteria:
(a) the Partnership constructs, or acquires a Controlling Interest
in, such Amphitheater after the Existing Facility Closing; and
Article I - Definitions
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(b) in connection with the construction of, or acquisition of the
Partnership's Controlling Interest in, such Amphitheater, the Partnership
incurs $1,000,000.00 or less of Construction/Acquisition Recourse
Obligations.
1.66 Non-Recourse Loan: Any Amphitheater Loan for which the lender thereof
shall have recourse only against the Partnership's interest in the Amphitheater
to which such Amphitheater Loan relates and not against any other asset of the
Partnership, either Partner, any Affiliate of a Partner or any Sony/Block
Related Party.
1.67 Nonrecourse Deductions: Shall have the meaning set forth in
Section 1.7O4-2(b)(1) of the Regulations.
1.68 Nonrecourse Liability: Shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
1.69 Old Partnership Agreement: That certain Partnership Agreement dated
April 6, 1990 entered into by and between Pace and the Sony Subsidiary pursuant
to which this Partnership was originally formed. This Agreement is a complete
amendment and restatement of the Old Partnership Agreement.
1.70 Operating Obligations: Any and all obligations of the Partnership to
make payments or expenditures which are not Project Costs. Specifically included
within the term "Operating Obligations," but subject to the provisions of the
immediately preceding sentence, shall be all of the Partnership's obligation
to pay overhead, operating and other expenses such as (i) salaries for employees
and staff for the Amphitheaters, (ii) the reimbursement of Pace's overhead costs
pursuant to Section 10.7(b) hereof, (iii) utility costs for the Partnership's
Amphitheaters, (iv) insurance costs related to the maintenance of casualty and
liability insurance for the Partnership's Amphitheaters, (v) regularly scheduled
payments of principal and interest on indebtedness related to the Partnership's
Amphitheaters such as Amphitheater Loans and Concession Loans, (vi) costs
relating to maintenance, repair and upkeep of the Partnership's Amphitheaters
and the personal property and equipment used in connection with the operation of
the Partnership's Amphitheaters, (vii) costs for the purchase of office supplies
and equipment at the Partnership's Amphitheaters, (viii) the costs directly
attributable to or associated with the booking, production, presentation or
promotion of any performance or events at any of the Partnership's Amphitheaters
(such as artist costs, advertising costs and costs of staging), (ix) costs or
expenses in excess of insurance proceeds which may be incurred as the result
of any emergency, casualty or other unforeseeable occurrence at any of the
Amphitheaters, (x) costs for defense or settlement of litigation, claims or
assessments against the Partnership, (xi) any adverse judgments entered
against the Partnership which are not covered by insurance and (xii) any and all
rent and other payments due and
Article I - Definitions
Page 13
payable by the Partnership under and pursuant to the terms of any lease
agreement to which it is a party.
1.71 Operational Shortfall: Shall mean the occurrence or happening, at
any time, of the circumstance of the Partnership having an insufficient amount
of Unrestricted Funds to pay its Operating Obligations as they become due.
1.72 Pace: SM/Pace, Inc. (formerly known as PACE Concerts, Inc.), a Texas
corporation, one of the general partners in the Partnership and a wholly owned
subsidiary of PMG.
1.73 Pace Rejected Amphitheater: A Qualified Amphitheater which is
proposed for development after Pace has been removed as Manager pursuant to the
provisions of Section 10.8 and which satisfies the following conditions:
(a) The Executive Committee, at a Proposed Amphitheater Approval
Meeting, declines to approve such Qualified Amphitheater as an
Amphitheater which the Partnership will construct; and
(b) The Representatives designated by Sony/Block present at the
Proposed Amphitheater Approval Meeting voted in favor of approving such
Qualified Amphitheater as an Amphitheater which the Partnership will
construct.
1.74 Pace's Initial Contribution Amount: A pecuniary amount equal to the
sum of (i) the Net Value of the Woodlands Asset, (ii) the Net Value of the
Nashville Asset, (ii) one-half (1/2) of the Net Value of the Raleigh Asset, (iv)
one-half (1/2) of the Net Value of the Pittsburgh Asset, (v) one-half (1/2) of
the Net Value of the Camden Asset and (vi) one-half (1/2) of the Net Value of
the Tampa Asset.
1.75 PEC: (i) PACE Entertainment Corporation, a Texas corporation and its
successors or (ii) if different, the ultimate corporate parent of the affiliated
group which is currently owned, directly or indirectly, through one or more
intermediaries, by PACE Entertainment Corporation.
1.76 PMG: PACE Music Group, Inc., a Texas corporation and a wholly-owned
subsidiary of PEC.
1.77 Partner Default: Shall have the meaning assigned pursuant to the
provisions of Section 17.1 hereof.
1.78 Partner Nonrecourse Debt: Shall have the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
Article I - Definitions
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1.79 Partner Nonrecourse Debt Minimum Gain: An amount, with respect to
each Partner Non-recourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
1.80 Partner Nonrecourse Deductions: Shall have the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
1.81 Partners: (i) Prior to the assignment of the Partnership interest of
the Sony Subsidiary to Sony/Block as contemplated by the provisions of Section
4.9 hereof, Pace, the Sony Subsidiary and Sony/Block and (ii) after the
assignment of the Partnership Interest of the Sony Subsidiary to Sony/Block as
contemplated by provisions of Section 4.9 hereof, Pace and Sony/Block.
1.82 Partnership: The Partnership created by the Old Partnership Agreement
and continued by this Agreement
1.83 Partnership Act: The Delaware Uniform Partnership Act, Title 6,
Chapter 15 of the Delaware Code (1974 Revision), as amended from time to time.
1.84 Partnership Interest: All of the interest of any Partner in the
Partnership, including its respective (a) capital interest in the Partnership,
(b) right to a distributive share of the profits and losses of the Partnership,
(c) right to a distributive share of the assets of the Partnership, and (d)
right to participate in the management of the affairs of the Partnership as
provided herein.
1.85 Partnership Minimum Gain: Shall have the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
1.86 Percentage Interest: The respective Partnership Interest of each
Partner in the Partnership expressed as a percentage of the Partnership
Interests owned by all Partners. The Percentage Interest of Pace is thirty-three
and one-third percent (33-1/3%). Prior to the assignment of the Partnership
Interest of the Sony Subsidiary to Sony/Block as contemplated by the provisions
of Section 4.9 hereof, the respective Percentage Interest of the Sony Subsidiary
and Sony/Block shall be determined in accordance with the provisions of Section
4.8 hereof. After the assignment of the Partnership Interest of the Sony
Subsidiary to Sony/Block, as contemplated by the provisions of Section 4.9
hereof, the Percentage Interest of Sony/Block will be sixty-six and two-thirds
percent (66-2/3%).
1.87 Person or person: Any Individual corporation, partnership, business
trust, business association, governmental entity, governmental authority or
other legal entity.
Article I - Definitions
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1.88 Phoenix Amphitheater: The currently existing Amphitheater located at
0000 Xxxxx 00xx Xxxxxx in Phoenix, Arizona.
1.89 Phoenix Asset: The leasehold estate currently owned by the
Partnership which creates a possessory right to the Phoenix Amphitheater and
created pursuant to that certain Amended and Restated Operator Lease Agreement
dated September 26, 1989 and entered into by and between Westside, as operator
and lessee, and The City of Phoenix, as landlord, together with all interests,
privileges and other rights associated therewith or related thereto.
1.90 Pittsburgh Amphitheater: The currently existing Amphitheater located
in Hanover Township, Pennsylvania and commonly known as "Star Lake
Amphitheater."
1.91 Pittsburgh Asset: The leasehold estate and option rights currently
owned by the Partnership which creates a possessory right to the Pittsburgh
Amphitheater and created pursuant to (a) that certain Lease Agreement between
Crossroads Properties, Inc., as landlord, and PMG, as tenant, executed by the
landlord on December 1, 1989 and the tenant on November 29, 1989, as assigned
to the Partnership by PMG pursuant to that certain Assignment of Ground Lease
dated April 6, 1990 and recorded in Book 2403, Page 374 with the Recorder of
Deeds in Washington County, Pennsylvania and (b) that certain Option Agreement
between Crossroads Properties, Inc. and PMG dated January 10, 1989, together
with all interests, privileges and other rights associated therewith or related
thereto.
1.92 Plans and Specifications: With respect to any proposed Amphitheater
being considered by the Manager as a possible project for construction by the
Partnership, the plans and specifications, including a site plan, of such
proposed Amphitheater prepared by a qualified architect or civil engineer
consistent in form and format with the plans and specifications prepared for the
Raleigh Amphitheater and the Pittsburgh Amphitheater.
1.93 Pre-opening Concessionaire Advances: With respect to (i) any newly
constructed Amphitheater, any Concessionaire Loan made to the Partnership prior
to the first public use of such Amphitheater and (ii) any existing Amphitheater
with respect to which the Partnership is acquiring a Controlling Interest, any
Concessionaire Loan made to the Partnership prior to the first use of such
Amphitheater by the Partnership. "Pre-opening Concessionaire Advances" shall not
include Concession Loans made to the Partnership upon the renewal of an existing
concession arrangement (unless and except such renewal coincides with the
Partnership's acquisition of a Controlling Interest in an Amphitheater).
Article I - Definitions
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1.94 Principal Reduction Amount: With respect to any Unwind Asset, an
amount of money equal to the sum of the following:
(a) (i) The Partnership's share of the amount of principal
outstanding under the Amphitheater Loan which relates to such Unwind Asset
at the time of the Existing Facility Closing minus (ii) the Partnership's
share of the amount of principal outstanding under the Amphitheater Loan
which relates to such Unwind Asset at the time of the closing of the
Unwind Procedure; and
(b) (i) The Partnership's share of the Unamortized Amount of the
Unwind Concession Loan which relates to such Unwind Asset at the time of
the Existing Facility Closing minus (ii) the Partnership's share of the
Unamortized Amount of the Unwind Concession Loan which relates to such
Unwind in Asset at the time of the closing of the Unwind Procedure.
As used throughout this Agreement, the term "Partnership's share" shall mean (i)
100% for the Pittsburgh Asset, the Phoenix Asset, the Charlotte Asset, the
Woodlands Asset and the San Bernardino Asset, (ii) 66-2/3% for the Raleigh
Asset, and (iii) 50% for the Nashville Asset. Notwithstanding anything to the
contrary contained in this Section 1.91, the Principal Reduction Amount shall be
$0.00 for any Unwind Asset which is not distributed at the closing of the Unwind
Procedure because the Partnership sold, distributed or otherwise transferred all
of its interest therein prior to the closing of the Unwind Procedure.
1.95 Project Budget: With respect to any proposed Amphitheater being
considered by the Manager as a possible project for construction by the
Partnership, the budget for the Project Costs for such proposed Amphitheater
which has been approved by the Executive Committee following delivery of a
Proposed Amphitheater Approval Request pursuant to Section 10.6(b) hereof. A
Project Budget may only be amended in accordance with the provisions of Section
10.6(c) hereof.
1.96 Project Costs: With respect to any Amphitheater, all of the Hard
Costs and all of the Soft Costs associated with such Amphitheater.
1.97 Project Loan: A loan extended to the Partnership for the funding of
the Project Costs of an Approved Project upon the terms and conditions
described in Section 5.2 hereof.
1.98 Proposed Amphitheater Approval Meeting: The meeting of the Executive
Committee required to be held pursuant to Section 10.6(b) hereof following
delivery of a Proposed Amphitheater Approval Request by the Manager to the
Representatives.
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1.99 Proposed Amphitheater Approval Request: With respect to any proposed
Amphitheater being considered by the Manager as a possible project for
construction by the Partnership, a formal written request provided to the
Representatives by the Manager pursuant to Section 10.6(b) hereof requesting
that the Executive Committee meet to determine whether the proposed Amphitheater
will be constructed by the Partnership.
1.100 Proposed Project Budget: With respect to any proposed Amphitheater
being considered by the Manager as a possible project for construction by the
Partnership, a proposed budget of the Project Costs for such Amphitheater
prepared by the Manager in good faith, in a manner consistent with and in
accordance with generally accepted accounting principles. A Proposed Project
Budget shall set forth in reasonable detail the projected total Project Costs
for such Amphitheater divided into three separate sections composed of the
projected amount of Construction Costs, Soft Costs and Land Acquisition Costs
for such proposed Amphitheater. The Manager may include in a Proposed Project
Budget a line item for "contingencies" or "cost overruns" equal to no more than
10% of the other Project Costs reflected therein, and the amount included in
such contingency line item shall be classified as a part of the Project Costs
for the proposed Amphitheater.
1.101 PWOC: Pace Woodlands Operating Company, a Texas corporation and
wholly-owned subsidiary of PMG.
1.102 Qualified Amphitheater: Any Amphitheater which the Manager proposes
for development by the Partnership and which satisfies the following conditions:
(a) the Manager has determined, in its reasonable discretion, that
the site which has been selected for the development of such Amphitheater
is suitable for such development;
(b) the projections contained in the Amphitheater Pro Forma and the
Proposed Project Budget for such proposed Amphitheater indicate that the
Debt Coverage Ratio (assuming, for these purposes, that a Project Loan
bearing an interest rate which is reasonable based on information made
available to Pace by Sony/Block, but in no event greater than the Treasury
Rate, will be extended to the Partnership on the terms described in
Section 5.2 hereof) for such Amphitheater in each of the first four full
years of operation will be no less than 1.3 to 1.0;
(c) the site which has been selected for the development of such
Amphitheater is located in a Qualified Market; and
Article I - Definitions
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(d) the total budgeted amount of Project Costs projected in the
Proposed Project Budget for such Amphitheater (including any budgeted
contingencies) is less than the then applicable Amphitheater Cost Limit.
1.103 Qualified Market: Any Market which is designated as a Qualified
Market pursuant to the provisions of Section 10.9 hereof, until such Market is
removed from the list of Qualified Markets in accordance with, or as required
by, the provisions of Section 10.9(c) hereof.
1.104 R&D Expenditures: With respect to any Market which the Manager
considers as a potential site for the development of an Amphitheater by the
Partnership, all reasonable amounts expended or incurred by the Partnership
which are associated with or attributable to activities related to the
determination by the Partnership as to the feasibility of developing an
Amphitheater in such Market including, without limitation, (i) travel expenses
which are directly expended or incurred in connection with the research and
development of such market or attempts to acquire a site for the Amphitheater in
such market, (ii) all costs and professional fees expended or incurred by the
Partnership in connection with demographic studies, feasibility studies and
other pre-development studies of such Market or specific sites in such Market
and (iii) all other miscellaneous expenses expended or incurred by the
Partnership which are directly attributable to or incurred in connection with
the research and development of a potential Amphitheater in such Market.
1.105 Raleigh Amphitheater: The currently existing Amphitheater located
Raleigh, North Carolina and commonly referred to as the "Walnut Creek
Amphitheater."
1.106 Raleigh Asset: All of the Partnership's rights, titles and
interests in and to the Raleigh Partnership.
1.107 Raleigh Leasehold Estate: The leasehold estate currently owned by
the Raleigh Partnership with respect to the Raleigh Amphitheater and created
pursuant to that certain Lease Agreement dated December 1, 1990 and entered by
and between the City of Raleigh, North Carolina, as landlord, and the
Partnership, as tenant.
1.108 Raleigh Partnership: Walnut Creek Amphitheater Partnership, a New
York general partnership, which has as its sole general partners the Partnership
and CDC Amphitheaters/I, Inc., a North Carolina corporation, which was formed
pursuant to a Partnership Agreement dated July 1, 1991 and entered into by and
between the Partnership and CDC Amphitheaters/I, Inc. The Raleigh Partnership
owns the Raleigh Leasehold Estate.
Article I - Definitions
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1.109 Regulations: The Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
1.110 Representative: One of the individuals who serves on the Executive
Committee.
1.111 Renewal Loan: A loan extended to the Partnership in connection with
a matured Balloon Amphitheater Loan upon the terms and conditions set forth in
Section 5.4 of this Agreement.
1.112 Replacement Loan: A loan extended to the Partnership as a "takeout"
loan for any existing Amphitheater Loan in accordance with, and as contemplated
by, the provisions of Section 5.5 hereof.
1.113 Restricted Funds: All Sinking Funds and all Contributed Project
Funds.
1.114 Restricted Portion of the Earth: The geographical areas encompassed
by (a) the continents of North America, Europe and Australia, (b) the State of
Hawaii and (c) the Caribbean Islands.
1.115 San Bernardino Amphitheater: The currently existing Amphitheater in
San Bernardino, California.
1.116 San Bernardino Asset: The leasehold estate currently owned by the
Partnership which creates a possessory right to the San Bernardino Amphitheater
and created pursuant to that certain Concession Lease dated October 19, 1992 and
entered into by and between San Bernardino Amphitheater Corporation, as lessee,
and the County of San Bernardino, California, as lessor.
1.117 Second Group: All New Amphitheaters not included in the First Group.
1.118 Short Term Rate: A rate of interest per annum equal to the per annum
yield on newly issued three year U.S. Treasury Notes, as it may vary from time
to time.
1.119 Sinking Fund: The sinking fund maintained in accordance with the
provisions of Section 8.5 of this Agreement.
Article I - Definitions
Page 20
1.120 SMP: Sony Music/Pace Partnership 1994, a New York general
partnership created of even date herewith and whose sole general partners are
the Sony Subsidiary and Pace.
1.121 Soft Costs: With respect to any Amphitheater, all out-of-pocket
costs incurred by the owner of a Controlling Interest in such Amphitheater which
are directly associated with or attributable to the research, development,
design or construction of such Amphitheater or the obtaining of, or attempts to
obtain, a site for the construction of such Amphitheater, other than the Hard
Costs associated with such Amphitheater. Soft Costs shall include, without
limitation, (a) pre-development costs incurred in connection with such
Amphitheater, (b) all fees and payments made to architects, land planners,
engineers and other consultants which are directly attributable to the design
and construction of such Amphitheater, (c) all attorneys' fees and other
consultants' fees incurred in connection with and directly attributable to the
planning, developing, designing and constructing of such Amphitheater or the in
acquisition of or attempts to acquire, a site for the construction of such
Amphitheater, (d) travel expenses which are directly attributable to or incurred
in connection with the planning, developing, designing or constructing of such
Amphitheater or the acquisition of, or attempts to acquire, a site for the
construction of such Amphitheater, (e) all R&D Expenditures expended or incurred
in connection with the city, population center or other market in which such
Amphitheater is located and (f) all start-up expenses (including but not limited
to salaries, office rental and supply costs expended or incurred prior to the
first entertainment event held at such Amphitheater) incurred with respect to
such Amphitheater.
1.122 Sony: (i) Sony Music Entertainment Inc., a Delaware corporation, and
its successors or (ii) if different, the Person or Persons which directly own
(and not any parent Person) the United States recorded music business presently
owned by Sony Music Entertainment Inc.
1.123 Sony's Initial Contribution Amount: A pecuniary amount equal to the
sum of (i) one-half (1/2) of the Net Value of the Raleigh Asset, (ii) one-half
(1/2) of the Net Value of the Pittsburgh Asset, (iii) one-half (1/2) of the Net
Value of the Camden Asset and (iv) one-half (1/2) of the Net Value of the Tampa
Asset.
1.124 Sony/Block: Amphitheater Entertainment Partnership, a Delaware
general partnership, and one of the general partners in the Partnership. The
current sole general partners of Amphitheater Entertainment Partnership are the
Blockbuster Subsidiary and the Sony Subsidiary.
1.125 Sony/Block Note #1: The promissory note in the form of Exhibit "A"
which may be executed and delivered to the Partnership by Sony/Block pursuant
Article I - Definitions
Page 21
to the right created in Section 4.1O(a)(2) in lieu of a current cash
contribution to the capital of the Partnership pursuant to Section 4.10(a)(1)
hereof.
1.126 Sony/Block Note #2: The promissory note in the form of Exhibit "A"
attached hereto which may be executed and delivered to the Partnership by
Sony/Block pursuant to the right created in Section 4.1O(b)(2) in lieu of a
current cash contribution to the capital of the Partnership pursuant to Section
4.10(b)(1) hereof.
1.127 Sony/Block Notes: Collectively, Sony/Block Note #1 and Sony/Block
Note #2.
1.128 Sony/Block Rejected Amphitheater: A Qualified Amphitheater which
satisfies one of the following conditions:
(a) (i) the Partnership elects to abandon further development
activities with respect to such Qualified Amphitheater, at any time, as a
result of an affirmative vote by the Executive Committee and (ii) the
Representative designated by Pace present at the Executive Committee
meeting voted against the resolution to abandon further development
activities with respect to such Qualified Amphitheater; or
(b) (i) the Executive Committee, at a Proposed Amphitheater Approval
Meeting, declines to approve such Qualified Amphitheater as an
Amphitheater which the Partnership will construct and (ii) the
Representative designated by Pace present at the Proposed Amphitheater
Approval Meeting voted in favor of approving such Qualified Amphitheater
as an Amphitheater which the Partnership will construct.
1.129 Sony/Block Related Party: Any one of Sony/Block, the Sony
Subsidiary, the Blockbuster Subsidiary, any Affiliate of the Sony Subsidiary or
any Affiliate of the Blockbuster Subsidiary.
1.130 Sony/Block Shared Obligations: All obligations for which Sony/Block
is responsible for performing, observing or discharging pursuant to this
Agreement other than the Sony Specific Obligations and the Blockbuster Specific
Obligations. The Sony/Block Shared Obligations shall include, without
limitation, the following:
(a) The obligation of Sony/Block to make capital contributions to
the Partnership for the Budgeted Project Cost of each Approved Project
pursuant to Section 4.11 hereof.
Article I - Definitions
Page 22
(b) The obligation of Sony/Block to make loans to the Partnership
for any Operational Shortfall pursuant to section 4.12 hereof.
(c) The obligation of Sony/Block to make loans to the Partnership
for any Cost Overruns pursuant to Section 4.13 hereof.
(d) The obligation of Sony/Block to make Project Loans to the
Partnership for each Approved Project pursuant to Section 5.1 hereof.
(e) The obligation of Sony/Block to make Renewal Loans pursuant to
Section 5.4 hereof.
(f) The obligation of Sony/Block to make Replacement Loans pursuant
to Section 5.5 hereof.
(g) The obligation of Sony/Block to make loans to the Partnership
pursuant to Section 6.2(a) hereof.
(h) The obligation of Sony/Block to make capital contributions to
the Partnership pursuant to Section 62(b) hereof.
(i) The obligations, restrictions and limitations imposed upon
Sony/Block pursuant to the provisions of Articles XIV and XV hereof, to
the extent that such provisions apply to Sony/Block itself.
(j) The obligation of Sony/Block to indemnify Pace under clause (y)
of Section 5.1 (b) hereof.
1.131 Sony Guaranty: The unconditional and irrevocable guaranty required
to be executed by Sony in the form of Exhibit "B" attached hereto if Sony/Block
elects to deliver Sony/Block Note #1 to the Partnership pursuant to the
provisions of Section 4.1O(a)(2) of this Agreement.
1.132 Sony Specific Obligations. The following obligations for which
Sony/Block is responsible for performing, observing or discharging pursuant to
this Agreement;
(a) The obligation of Sony/Block to contribute the Sony Subsidiary
Cash Amount pursuant to Section 4.1O(a)(1) hereof and the obligation of
Sony/Block to make required payments on Sony/Block Note #1.
(b) The obligation of Sony/Block to indemnify the Partnership
pursuant to one or both of Section 14.3 and Section 9.4(n) hereof to the
extent that
Article I - Definitions
Page 23
either such indemnity relates to the Raleigh Amphitheater, the Pittsburgh
Amphitheater or the Camden Amphitheater.
(c) The obligations, restrictions and limitations imposed upon
Sony/Block and the Sony/Block Related Parties pursuant to the provisions
of Articles XII and XV hereof, to the extent that such provisions apply to
one or more of the Sony Subsidiary and the Affiliates of the Sony
Subsidiary.
(d) The obligation imposed upon Sony/Block pursuant to the
provisions of Section 11.3(a) to the extent that such provisions apply to
the Sony Subsidiary or its Affiliates.
(e) The obligation imposed upon Sony/Block pursuant to the
provisions of Section 9.6 hereof to the extent related to one or more of
the Raleigh Asset, the Pittsburgh Asset and the Camden Asset.
(f) The obligation imposed upon Sony/Block pursuant to the
provisions of Section 18.12(a) hereof.
1.133 Sony Subsidiary: YM Corp., a Delaware corporation and wholly-owned
subsidiary of Sony.
1.134 Sony Subsidiary Cash Amount: The amount of the initial capital
contribution required to be made by Sony/Block pursuant to Section 4.10(a) of
this Agreement.
1.135 Tampa Amphitheater: The proposed Amphitheater to be constructed on
several tracts of land located in Hillsborough County, Florida, which are
covered by and included within the Tampa Purchase Agreement.
1.136 Tampa Asset: All of the Partnership's rights, titles and interests
in and to the Tampa Purchase Agreement and the Tampa Amphitheater.
1.137 Tampa Purchase Agreement: Collectively, (i) that certain Contract
for Sale and Purchase of Real Property dated August 29, 1991 and entered into by
and between Consolidated Minerals, Inc., as seller, and the Partnership, as
purchaser, as such Contract has been subsequently amended and revised and
covering a tract of land containing approximately 110 acres in Hillsborough
County, Florida, (ii) that certain Sale and Purchase Agreement dated February 7,
1992 and entered into by and among B. Xxx Xxxxxxx and Xxx X. Xxxxxxx, as seller,
and the Partnership, as purchaser, as such Agreement has been subsequently
amended from time to time and covering a tract of land containing approximately
23 acres in Hillsborough County, Florida, and (iii) that certain Sale and
Purchase Agreement dated September 2, 1992,
Article I - Definitions
Page 24
and entered into by and among Xxxxxx X. Xxxxx and wife, Xxxxx Xxxxx, as seller,
and the Partnership, as purchaser, and covering a tract of land containing
approximately 2.04 acres located in Hillsborough County, Florida.
1.138 Termination Notice: A notice provided by Sony/Block to Pace pursuant
to Section 10.8 hereof terminating Pace as the Manager.
1.139 Treasury Rate: At anytime, (a) the then per annum yield on newly
issued ten year U.S. Treasury notes plus (b) three percent (3%).
1.140 Unamortized Amount: With respect to any Concession Loan, the
unamortized balance of such Concession Loan at a particular time determined in
accordance with the following provisions:
(a) If a Concession Loan is required to be repaid in full by its
terms, then the Unamortized Amount with respect to such Concession Loan
shall be, as of any time, the outstanding principal balance of such
Concession Loan at such time.
(b) If a Concession Loan is not required to be repaid in full by
its terms, then the initial amount of such Concession Loan shall
be amortized in equal annual installments over the term of the agreement
creating the concession rights to which such Concession Loan relates for
purposes of determining the Unamortized Amount of such Concession Loan at
any given time.
1.141 Unrestricted Funds: All cash funds of the Partnership other than the
Restricted Funds.
1.142 Unwind Amphitheater Loans: The Amphitheater Loans which relate to
the Unwind Assets.
1.143 Unwind Assets. The Existing Assets other than the Tampa Asset.
1.144 Unwind Concession Loan: With respect to any of the Unwind Assets,
any Concession Loan made to the owner (or its predecessor in interest) of such
Unwind Asset prior to the occurrence of the Existing Facility Closing pursuant
to, or in connection with, a concession agreement which remains in effect at the
time of the Existing Facility Closing and is related to the sale of concessions
at the Amphitheater related to such Unwind Asset.
1.145 Unwind Procedure: The right governed by the provisions of Article IX
of this Agreement to cause the Unwind Assets to be distributed by the
Partnership in accordance with the provisions thereof.
Article I - Definitions
Page 25
1.146 Westside: The Westside Amphitheater Corporation, an Arizona
corporation.
1.147 Woodlands Agreement: The Events Management Agreement dated February
14, 1990 entered into by and between The Woodlands Center for the Performing
Arts (d/b/a Xxxxxxx Xxxxx Xxxxxxxx Center for the Performing Arts), as owner,
and PWOC, as facility manager, pursuant to which PWOC obtained the right to
manage and operate the Xxxxxxxxx Xxxxxxxxxxxx.
0.000 Xxxxxxxxx Amphitheater: The currently existing Amphitheater located
in The Woodlands, Texas and commonly known as the "Xxxxxxx Xxxxx Xxxxxxxx
Xxxxxxxx."
0.000 Xxxxxxxxx Asset: All of the Partnership's rights, titles and
interests in and to the Woodlands Agreement.
1.150 Cross-References to other Defined Terms. The following terms are
defined in the Sections of this Agreement indicated below.
Acceptable Form 9.4(j)(2)
Accused Partner 9.6
Acquired Person 12.2(c)
Acquiring Person 12.2(c)
Acting Party 13.9(b)
Advocating Partner 10.5(b)
Applicable Criteria 18.13(f)
Applicable Two Year Periods 10.9(c)(2)(i)
Applicable Percentage 6.2(a)
Approved Project Contribution Amount 4.11
Blockbuster Actual Contribution Amount 17.3(a)(7)(v)(B)
Blockbuster Parties 15.2(e)(7)
Blockbuster's Allocated Debt 8.4(c)(6)
Camden Make-Up Amount 9.4(h)
Casualty Termination Provision 4.17(a)(4)
Charlotte Distribution Amount 5.7(k)
Charlotte Excess Receipts 5.7(i)
Charlotte Phantom Loan Account 5.7(g)
Charlotte Scheduled Principal Payment Amount 5.7(h)
Clause K Sum 9.4(k)
Clause G & K Sum 9.4(k)
Clause G Sum 9.4(g)
Communications 18.1
Article - I Definitions
Page 26
Consecutive Turndown Rejection Triggering Event 12.6(a)(3)
Constructive Termination 13.9
Constructive Termination Damage Notice 13.9(b)
Constructive Termination Notice 13.9(b)
control 15.2(e)(8)
Corresponding Price 15.3(b)(1)
Debt Prepayment Portion of Free Cash 8.4(c)(1)
Default Notice 17.1
Disputed Changes 10.5(b)
Distributed Assets 9.6(b)(2)
Distributee 9.4(m)(1)
Division of Responsibility Notice 17.3
Effective Date opening paragraph
Equalizing Purchase Option 15.3(b)
Equalizing Purchase Price 15.3(b)(1)
Equalizing Partnership interest 15.3(b)
Existing MCA Concession Loan 7.2(d)(3)
General Funds 9.4(h)(2)
Indemnitee 14.3(c)
Indemnitor 14.3(c)
Innocent Partner 9.6
Interim Development Costs 4.15(a)
Management Selection Dispute Resolution
Notice 11.3(b)(1)
Management Selection Plan 11.3(b)(3)
MCA Partnership 7.1
MCA Purchase Option 7.2(a)
Measuring Amphitheaters 9.4(j)(1)
Minimum Economic Standards 11.4.
Minimum Number 10.9(a)
Neutral Selector 18.13
Nominal Principal Balance 8.4(c)(2)
Non-Debt Related Charlotte Operation
Expenditures 5.7(j)
Nonreceiving Partner 8.3(d)(1)
Objecting Partner 10.5(b)
Objecting Party's Proposed Changes 10.5(b)(2)
Objection Notice 10.5(b)
Offer 12.2(c)(2)
Ordinary Distributions 15.1(b)
Other Facilities Make-Up Amount 9.4(i)
Other Partner Equity Contribution Amount 9.4(i)
Article I - Definitions
Page 27
Owner's Early Termination Option 4.17(a)(3)
Pace Party 2.3(a)(2)
Pace Designated Markets 12.3(a)
Pace Controlled MCA Amphitheaters 7.2
Pace Preferred Account 8.7(b)
Pace Rejection Triggering Event 12.6(a)(2)
Pace's Allocated Debt 8.4(c)(4)
Pace's Permitted Number 12.6(a)(2)
PAI 7.1
Parent Corporation 9.6(c)(2)
Partnership MCA Amphitheaters 7.2(d)
Partnership's share 1.94
Permitted Blockbuster Persons 15.2(e)(1)
Permitted Sony Persons 15.2(e)(2)
Preliminary Budget Unwind Notice 1O.5(b)(2)
Previously Allocated Interim Development
Deductions 4.16(b)
Project Loan 5.2
Proposed Annual Operating Budget 10.5(a)
Real Principal Balance 8.4(c)(3)
Rejection Dispute Notice 12.6(d)
Rejection Occurrence Notice 12.6(d)
Required Woodlands Distribution Amount 4.17(b)(2)
S/B Partners 17.3
SCA Limited Parties 15.2(e)(4)
SCA Total Parties 15.2(e)(5)
SCA 15.2(e)(3)
Secondary Manner 2.5
Sony Actual Contribution Amount 17.3(a)(7)(v)(A)
Sony/Block Rejection Triggering Event 12.6(a)(1)
Sony/Block Guarantor 5.3(a) and (b);
5.4(c);5.5(c)
Sony Parties 15.2(e)(6)
Sony/Block's Permitted Number 12.6(a)(1)
Sony's Allocated Debt 8.4(c)(5)
Special Miami Amphitheater 12.2(d)
Special Rejection Event 1O.6(d)(2)
Special Woodlands Contribution Amount 4.17(b)(2)
Special Woodlands Termination 4.17(c)(2)
Special Woodlands Use Impairment 4.l7(c)(1)
Transfer Triggering Event 15.3(c)
Transferred Liabilities 9.4(I)(1)
Unacceptable Person 15.4
Unwind Debt Amount 8.4(b)(1)(iv)
Unwind Notice 9.2
Voting Representations 15.5
Woodlands Reduction Amount 4.17(c)(3)
Woodlands Reduction Percentage 4.17(c)(4)
[END OF ARTICLE I]
Article II - Continuation, Name and Commencement
Page 29
ARTICLE II
Continuation, Name and Commencement
2.1 Continuation of Partnership. The Partners do hereby continue, and
confirm the continuation of, pursuant to the Partnership Act, the general
partnership originally formed pursuant to the Old Partnership Agreement. The
rights and liabilities of the Partners shall, except as may be hereinafter
expressly stated to the contrary, be as provided for in the Partnership Act.
2.2 Partnership Name. From and after the date hereof, the name of the
Partnership shall be, and the business of the Partnership shall be conducted
under the name of PAVILION PARTNERS or such other name or names as the Partners
may select from time to time. The Partners shall execute and file such
certificates, if any, as are required by the provisions of any assumed name law
or statute in any jurisdiction in which the Partnership conducts business, as
may be required to reflect the Partnership's operation under such names.
2.3 Offices. The principal place of business of the Partnership shall be
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000. Substitute or
additional places of business may be established at such other locations as may,
from time to time, be approved by the Executive Committee.
2.4 Term of Partnership. The Partnership commenced on April 6, 1990 and
shall remain effective until the earlier to occur of (a) thirty-five (35) years
after the date of this Agreement or (b) the Partnership being dissolved and
terminated pursuant to any provision of this Agreement.
[END OF ARTICLE II]
Article III - Purposes and Powers
Page 30
ARTICLE III
Purposes and Powers
3.1 Purposes Partnership. The Partnership shall have as its purpose the
development, acquisition, construction, ownership, management, use, leasing and
operation of Amphitheaters in the Restricted Portion of the Earth.
3.2 Powers of the Partnership. The Partnership shall have the power, in
fulfilling the purposes set forth in Section 3.1, to conduct any business or
take any action which is lawful and which is not prohibited by the Partnership
Act.
[END OF ARTICLE III]
Article IV - Existing Assets and Capital Contributions
Page 31
ARTICLE IV
Existing Assets and
Capital Contributions
4.1 Contribution of Woodlands Asset. Pace contributed, or caused to be
contributed, the Woodlands Asset to the capital of the Partnership at the
Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.2 Contribution of Nashville Asset. Pace contributed, or caused to be
contributed, the Nashville Asset to the capital of the Partnership at the
Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.3 Ownership of the Raleigh Asset, the Camden Asset, the Tampa Asset and
the Pittsburgh Asset. The Partnership owned prior to the occurrence of the
Existing Facility Closing, and will continue to own hereafter, the Raleigh
Asset, the Camden Asset, the Tampa Asset and the Pittsburgh Asset. At the
Existing Facility Closing, the Gross Asset Value of each of the Raleigh Asset,
the Camden Asset, the Tampa Asset and the Pittsburgh Asset have been adjusted,
and the Capital Accounts of the Sony Subsidiary and Pace have been charged or
credited, as provided and contemplated in Section 3(d) of the Admission
Agreement.
4.4 [Intentionally Left Blank]
4.5 Contribution of Phoenix Asset. Sony/Block contributed, or caused to be
contributed, the Phoenix Asset to the capital of the Partnership at the Existing
Facility Closing in accordance with the terms of the Executory Contract.
4.6 Contribution of Charlotte Asset. Sony/Block contributed, or caused to
be contributed, the Charlotte Asset to the capital of the Partnership at the
Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.7 Contribution of Bernardino Asset. Sony/Block contributed, or caused to
be contributed, the San Bernardino Asset to the capital of the Partnership at
the Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.8 Capital Accounts; Percentage Interests. Immediately after the
completion of the contributions to the capital of the Partnership and the
adjustments to the Capital Accounts at the Existing Facility Closing as referred
to in Sections 4.1 through 4.7 hereof, the balance of the Capital Accounts of
the Partners shall be as follows:
Article IV - Existing Assets and Capital Contributions
Page 32
(a) The balance of Pace's Capital Account shall be equal to Pace's
Initial Contribution Amount.
(b) The balance of the Sony Subsidiary's Capital Account shall be
equal to Sony's Initial Contribution Amount.
(c) The balance of Sony/Block's Capital Account shall be equal to
the sum of (i) Blockbuster's Initial Contribution Amount and (ii) the cash
sums, if any, contributed to the Partnership upon execution hereof by
Sony/Block pursuant to Sections 4.1O(a)(1) and 4.1O(b)(1) hereof.
Prior to the transfer of the Sony Subsidiary's Partnership Interest to
Sony/Block as contemplated by the provisions of Section 4.9 hereof, the
Percentage Interest of (i) the Sony Subsidiary shall be equal to (x) 66-2/3%
multiplied by (y) a fraction, the numerator of which is the balance of the
Capital Account of the Sony Subsidiary immediately after completion of the
Existing Facility Closing as determined in accordance with the foregoing
provisions and the denominator of which is the sum of the balances of the
Capital Account of the Sony Subsidiary and Sony/Block immediately after
completion of the Existing Facility Closing as determined in accordance with the
foregoing provisions and (ii) Sony/Block shall be equal to (x) 66-2/3%
multiplied by (y) a fraction, the numerator of which is the balance in the
Capital Account of Sony/Block immediately after completion of the Existing
Facility Closing as determined in accordance with the foregoing provisions and
the denominator of which is the sum of the balances of the Capital Account of
the Sony Subsidiary and Sony/Block immediately after completion of the Existing
Facility Closing as determined in accordance with the foregoing provisions;
provided, however, for these purposes by the Capital Account of Sony/Block
immediately after completion of the Existing Facility Closing shall be deemed to
have been increased by the then outstanding principal balance under the
Sony/Block Notes.
4.9 Transfer of the Sony Subsidiary's Partnership Sony/Block. Within seven
(7) days after the Effective Date, but in no event before the next day after the
Effective Date, the Sony Subsidiary shall assign its Partnership Interest to
Sony/Block as a contribution to the capital of Sony/Block. Immediately following
the assignment of the Partnership Interest of the Sony Subsidiary to Sony/Block,
as contemplated by the provisions contained in the immediately preceding
sentence, the sole partners in the Partnership shall be Pace, with a Percentage
Interest of thirty-three and one-third percent (33-1/3%), and Sony/Block with a
Percentage Interest of sixty-six and two-thirds percent (66-2/3%). The Capital
Accounts of the Sony Subsidiary and of Sony/Block shall be combined into one
Capital Account for all purposes hereof upon the assignment of the Sony
Subsidiary's Partnership Interest to Sony/Block.
Article IV - Existing Assets and Capital Contributions
Page 33
4.10 Sony/Block's Initial Cash Contribution.
(a) Sony Subsidiary.
(l) Upon execution hereof, Sony/Block shall contribute to the
capital of the Partnership a cash sum ("Sony Subsidiary Cash
Amount") equal to (i) Pace's Initial Contribution Amount minus (ii)
Sony's Initial Contribution Amount.
(2) Notwithstanding the foregoing, Sony/Block shall have the
right and option, exercisable in its sole discretion, to satisfy the
obligation contained in clause (1) of this Section 4.10(a) by
delivering, or causing to be delivered, to the Partnership,
simultaneously with the execution hereof, (i) a promissory note
("Sony/Block Note #1") originally executed by an authorized partner
or other agent on behalf of Sony/Block in the original principal
amount of the Sony Subsidiary Cash Amount and in substantially the
same form as is attached hereto as Exhibit "A," (ii) a guaranty
("Sony Guaranty") originally executed by an authorized officer of
Sony in substantially the same form as the Guaranty attached hereto
as Exhibit "B" pursuant to which Sony guarantees the full and final
repayment of Sony/Block Note #1, (iii) such evidence as may be
necessary, including extracts from minutes of a meeting of the board
of directors of the Sony Subsidiary and the Blockbuster Subsidiary,
to demonstrate that the execution and delivery of Sony/Block Note #1
by Sony/Block is fully authorized and (iv) extracts from minutes of
a meeting of the board of directors of Sony authorizing the
execution and delivery of the Sony Guaranty and certified to by the
Secretary or Assistant Secretary of Sony. Pace shall have the right
to retain possession of Sony/Block Note #1 and the Sony Guaranty
for, and on behalf of, the Partnership.
(b) Blockbuster Subsidiary.
(1) Upon execution hereof, Sony/Block shall contribute to the
capital of the Partnership a cash sum ("Blockbuster Subsidiary Cash
Amount"), equal to (i) Pace's Initial Contribution Amount minus (ii)
Blockbuster's Initial Contribution Amount.
(2) Notwithstanding the foregoing, Sony/Block shall have the
right and option, exercisable in its sole discretion, to satisfy the
obligation contained in clause (1) of this Section 4.10(b) by
delivering, or causing to be delivered, to the Partnership,
simultaneously with the execution hereof, (i) a promissory note
("Sony/Block Note #2") originally
Article IV - Existing Assets and Capital Contributions
Page 34
executed by an authorized partner or other agent on behalf of
Sony/Block in the original principal amount of the Blockbuster Subsidiary
Cash Amount and in substantially the same form as is attached hereto as
Exhibit "A," (ii) a guaranty ("Blockbuster Guaranty") originally executed
by an authorized officer of Blockbuster in substantially the same form as
the Guaranty attached hereto as Exhibit "B" pursuant to which Blockbuster
guarantees the full and final repayment of Sony/Block Note #2, (iii) such
evidence as may be necessary, including extracts from minutes of a meeting
of the board of directors of the Blockbuster Subsidiary and the Sony
Subsidiary, to demonstrate that the execution and delivery of Sony/Block
Note #2 by Sony/Block is fully authorized and (iv) extracts from minutes
of a meeting of the board of directors of Blockbuster authorizing the
execution and delivery of the Blockbuster Guaranty and certified to by the
Secretary or Assistant Secretary of Blockbuster. Pace shall have the
right, to retain possession of Sony/Block Note #2 and the Blockbuster
Guaranty for, and on behalf of, the Partnership.
(c) Limitations on Use of Contributed Project Funds. All Contributed
Project Funds shall be (i) maintained in a separate interest bearing bank
account (or in such other investments as may be approved by the Executive
Committee) in the name of the Partnership and in no event commingled with
any other funds of the Partnership and (ii) applied or used (subject to
the budgetary restrictions contained elsewhere in this Agreement) for only
one or more of the following purposes:
(l) Payment of R&D Expenditures or other Project Costs related
to any Amphitheater being considered by the Manager as a possible
project for construction by the Partnership;
(2) Payment of any portion of the Budgeted Project Cost of an
Approved Project as contemplated by the provisions of Section
4.11(c) hereof;
(3) Payment of the purchase price or other costs related to
the acquisition of an existing Amphitheater by the Partnership as
contemplated by the provisions of Section 6.2(b) hereof;
(4) For distribution to Sony/Block at the closing of the
Unwind Procedure as contemplated by Section 9.4(f) hereof;
Article IV. Existing Assets end Capital Contributions
Page 35
(5) Payment of the Temporary Construction Advance (as such
term is defined in Section 2(d) of the Admission Agreement) pursuant
to the provisions of Section 4.16 hereof;
(6) For distribution to Sony/Block pursuant to the provisions
of Section 4.17(b)(2)(i) hereof, following the occurrence of a
Special Woodlands Termination or a Special Woodlands Use Impairment;
(7) For reimbursement to Pace and the Sony Subsidiary of the
amounts described in Section 4.18 hereof for R&D Expenditures
relating to the Minneapolis/St. Xxxx Market; and
(8) For distribution to the Partners upon dissolution of the
Partnership pursuant to, and in accordance with, the provisions of
Article XVI hereof.
Notwithstanding anything to the contrary contained herein or implied
hereby, interest earned on Contributed Project Funds and all interest
which accrues on the Sony/Block Notes shall not be Restricted Funds but
shall instead become a part of the Partnership's Unrestricted Funds
immediately upon receipt by the Partnership.
(d) Demand for Principal Payments on Sony/Block Notes. The principal
outstanding under each of the Sony/Block Notes shall be payable within
three (3) business days after demand of the Manager in accordance with the
following provisions:
(1) No demand may be made by the Manager for payment of any
principal outstanding under either of the Sony/Block Notes at any
time that the Partnership has in its possession unexpended
Contributed Project Funds.
(2) The aggregate amount of principal payments which may be
demanded, at any time, shall not exceed the then amounts which are
due and payable from the Partnership for one or more of the
permitted uses of Contributed Project Funds described in clause (c)
of this Section 4.10.
(3) Each demand for payment of principal under the Sony/Block
Notes by the Manager shall be allocated between the Sony/Block Notes
in proportion to the then principal balance of each of the
Sony/Block Notes.
Article IV - Existing Assets and Capital Contributions
Page 36
(4) Simultaneously with the making of each demand for payment
of principal under the Sony/Block Notes, the Manager shall notify
Sony/Block of the intended use of the amount being demanded.
4.11 Capital Contributions for Budgeted Project Cost of Approved Projects.
The Budgeted Project Cost of each Approved Project shall be paid or reimbursed
from the following sources:
(a) The proceeds of the Project Loan for such Approved Project;
(b) The proceeds of any and all Pre-opening Concessionaire Advances
for such Approved Project;
(c) The Contributed Project Funds (including unpaid principal
amounts under the Sony/Block Notes which are payable upon the demand of
the Manager); and
(d) Unrestricted Funds of the Partnership to the extent that the
Executive Committee determines that such funds will not be needed for the
payment of Operating Obligations of the Partnership.
If sufficient funds are not available from the foregoing sources to pay the
entire amount of the Budgeted Project Cost of any Approved Project, then the
Partners shall be obligated to contribute to the capital of the Partnership an
amount ("Approved Project Contribution Amount") equal to that amount which is
necessary to cause the total amount of funds available to in the Partnership for
payment of the Project Costs of such Approved Project, when combined with all
funds available from the sources listed above, to equal the Budgeted Project
Cost for such Approved Project. Contributions to the capital of the Partnership
required to be made pursuant to this Section 4.11 shall be due and payable, at
such times and in such amounts as may be necessary to enable the Partnership to
pay all Project Costs with respect to the applicable Approved Project as such
amounts become due and payable. The Manager shall provide notice to the Partners
as to the amount and due date of contributions to be made pursuant to this
Section 4.11 in accordance with the standards set forth in the immediately
preceding sentence. However, in no event shall the total amount required to be
contributed by the Partners pursuant to this Section 4.11 with respect to any
Approved Project exceed the Approved Project Contribution Amount for that
Approved Project. The amounts to be contributed to the capital of the
Partnership pursuant to this Section 4.11 shall be made by the Partners in
proportion to their respective Percentage interests.
4.12 Operational Shortfalls. If an Operational Shortfall occurs at any
time, then the Manager shall deliver a notice to the Partners specifying that an
Operational
Article IV - Existing Assets and Capital Contributions
Page 37
Shortfall has occurred, the reasons for the occurrence of such Operational
Shortfall, the amount of funds needed to cover such Operational Shortfall and
stating that each Partner is obligated to loan to the Partnership, in proportion
to their respective Percentage Interests, that amount of funds needed to cover
such Operational Shortfall. The loan which each Partner is obligated to make to
the Partnership pursuant to the provisions of this Section 4.12 must be fully
advanced to the Partnership within fifteen (15) days after the Manager has
provided the notice referred to in the immediately preceding sentence. The loan
required to be made pursuant to the provisions of this Section 4.12 shall be
governed by the following provisions:
(a) Interest shall accrue on the principal balance outstanding
thereunder from time to time at a variable rate equal to the Short Term
Rate.
(b) Installments shall be payable on such loan on the last day of
each of the next three calendar months following the advancement of such
loan by the Partners to the Partnership. Each such installment shall be in
an amount equal to the amount (if any) of the Partnership's Unrestricted
Funds as of such date that the Manager determines will not be needed for
the payment of Operating Obligations of the Partnership. If such loan is
not repaid in full with the three monthly installments referred to in the
immediately preceding sentence, then it may only be repaid thereafter from
distributions made pursuant to Section 8.4(b)(2)(i) hereof.
(c) All payments made on any such loan shall be applied first
against the accrued, unpaid interest thereon and, second, to reduce the
outstanding principal balance thereunder.
4.13 Cost Overruns. Cost Overruns with respect to any Amphitheater shall
be paid, to the extent that the Executive Committee determines that all or any
portion of such Cost Overruns need to be paid to protect the Partnership from
adverse legal proceedings or to enable the construction of the Amphitheater to
be completed, from the Partnership's Unrestricted Funds (to the extent that the
Executive Committee determines that such funds will not be needed for the
payment of Operating Obligations of the Partnership). If sufficient funds are
not available from the foregoing source to pay the Cost Overruns described in
the immediately preceding sentence, then the Partners shall be obligated to loan
to the Partnership, in proportion to their respective Percentage Interests, that
amount necessary to cause the total amount of funds available to the
Partnership, when combined with the available Unrestricted Funds as described
above, to equal the amount of the Cost Overruns which must be paid by the
Partnership. The loan which each Partner is obligated to make to the Partnership
pursuant to the provisions of this Section 4.13 must be fully advanced to the
Partnership within fifteen (15) days after the Manager has provided notice to
the Partners of the amounts required to be loaned in accordance with the
provisions of
Article IV - Existing Assets and Capital Contributions
Page 38
this Section 4.13. The loan required to be made by each Partner pursuant to this
Section 4.13 shall be governed by the following provisions:
(a) Interest shall accrue on the principal balance outstanding
thereunder from time to time at a variable rate equal to the Short Term
Rate.
(b) Payments shall be due on such loan on the last day of each of
the next three calendar months following the advancement of such loan by
the Partners to the Partnership. Each such installment shall be in an
amount equal to the amount (if any) of the Partnership's Unrestricted
Funds as of such date that the Manager determines will not be needed for
the payment of Operating Obligations of the Partnership. If such loan is
not repaid in full with the three monthly installments referred to in the
immediately preceding sentence, then it may only be repaid thereafter from
distributions made pursuant to Section 8.4(b)(2)(i) hereof.
(c) All payments made on any such loan shall be applied first
against in the accrued, unpaid interest thereon and, second, to reduce the
outstanding principal balance thereunder.
4.14 No Other Capital Contribution Obligations. Except for the specific
obligations to make contributions to the capital of the Partnership as expressly
set forth in this Agreement, neither Partner shall have any other obligation to
make contributions to the capital of the Partnership.
4.15 Interim Development Costs.
(a) Definition. As used herein, the term "Interim Development Costs"
shall mean all R&D Expenditures and other Project Costs incurred by the
Partnership after the date upon which the Admission Agreement was signed
and prior to the date of the occurrence of the Existing Facility Closing
in connection with any Market other than the Markets in which the
Amphitheaters related to the Existing Assets are located.
(b) Special Provisions Related to Interim Development Costs. Upon
execution hereof, Sony/Block shall contribute to the capital of the
Partnership an amount equal to one-third (1/3rd) of the amount of the
Interim Development Costs; provided however, in no event shall the total
amount required to be contributed by Sony/Block to the capital of the
Partnership pursuant to the provisions of this Section 4.15(b) exceed
one-third (1/3rd) of the total amount projected to be incurred for Interim
Development Costs in the budget attached to the Admission Agreement. If
any portion of the deductions and losses attributable to the Interim
Development Costs have been, or will be, allocated
Article IV. Existing Assets and Capital Contributions
Page 39
50% to Pace and 50% to Sony as contemplated by the provisions of Section 7
of the Admission Agreement (the "Previously Allocated Interim Development
Deductions"), then, notwithstanding anything to the contrary contained in
Section 8.1 hereof, a special allocation of Partnership deductions and
losses equal to one-third of the amount of Previously Allocated interim
Development Deductions shall be made to Sony/Block in the first Fiscal
Year ending after the execution of this Agreement.
4.16 Repayment of Temporary Construction Advance.
(a) Upon execution of this Agreement, the Partnership shall repay
the principal amount of, and all accrued unpaid interest on, the Temporary
Sony/Pace Construction Advance (as such term is defined in Section 2(b) of
the Admission Agreement), one-half to Pace and one-half to the Sony
Subsidiary. Such repayment shall be made with Contributed Project Funds.
The amount of Contributed Project Funds so applied towards repayment of
the Temporary Sony/Pace Construction Advance, to the extent it relates to
the Camden Amphitheater, shall be, for purposes of clause (1) of Section
9.4(h) and clause (iv) of Section 9.4(i) of this Agreement, deemed to have
been expended on Project Costs for the Camden Amphitheater.
(b) Upon execution of this Agreement, the Partnership shall repay
the principal amount of, and all accrued unpaid interest on, the Temporary
Blockbuster Construction Advance (as such term is defined in Section 2(c)
of the Admission Agreement). Such repayment shall be made with Contributed
Project Funds.
4.17 Special Provisions Relating to the Woodlands Agreement.
(a) Factual Recitals. Reference is made to the following:
(l) The Net Value of the Woodlands Asset was agreed upon
between the Partners on the assumption that the rights acquired by
the Partnership under the Woodlands Agreement would continue until
October 31, 2003.
(2) The current stated term of the Woodlands Agreement expires
December 31, 1999.
(3) Pursuant to the provisions of Section 7.04(a) of the
Woodlands Agreement ("Owner's Early Termination Option"), the owner
of the Woodlands Amphitheater has the unilateral right to terminate
the Wood-
Article IV - Existing Assets and Capital Contributions
Page 40
lands Agreement prior to its stated term for expiration on, subject
to and in accordance with the terms and provisions contained
therein.
(4) Pursuant to the provisions of Section 7.03 of the
Woodlands Agreement ("Casualty Termination Provision"), the owner of
the Woodlands Amphitheater has the unilateral right to terminate the
Woodlands Agreement following a major casualty which results in the
Woodlands Amphitheater no longer being able to be used for its
intended purposes without the making of significant capital repairs
and improvements.
(b) Equalization of Initial Contribution Amounts Upon the Occurrence
of a Special Woodlands Termination or a Special Woodlands Use Impairment.
If, prior to October 31, 2003, (i) a Special Woodlands Termination becomes
effective or (ii) a Special Woodlands Use Impairment occurs, then the
following provisions shall apply:
(1) The Net Value of the Woodlands Asset shall promptly be
retroactively reduced effective as of the Existing Facility Closing
by the Woodlands Reduction Amount and Pace's Capital Account shall
accordingly be reduced by an amount equal to the Woodlands Reduction
Amount.
(2) The Partnership shall promptly thereafter make a
distribution of cash to Sony/Block in an amount ("Required Woodlands
Distribution Amount") equal to (x) two (2.0) multiplied by (y) the
Woodlands Reduction Amount. The distribution required to be made by
the provisions of the immediately preceding sentence shall be paid
from the following sources in the order of priority listed:
(i) first, to the extent thereof, the Contributed
Project Funds (including unpaid principal amounts under the
Sony/Block Notes which are payable upon the demand of the
Manager); and
(ii) second, Unrestricted Funds of the Partnership to
the extent that the Executive Committee determines that such
funds will not be needed for the payment of Operating
Obligations of the Partnership.
If sufficient funds are not available from the foregoing sources to
make the entire distribution required to be made to Sony/Block
pursuant to the provisions of this Section 4.17(b)(2), then (x) the
remainder of such distribution, notwithstanding the other provisions
of this Section 4.17(b),
Article IV - Existing Assets and Capital Contributions
Page 41
shall not be made and (y) Pace shall, in lieu thereof, be obligated
to contribute to the capital of the Partnership a cash sum equal to
one-half (1/2) of the amount by which the Required Woodlands
Distribution Amount exceeds the amount actually distributed to
Sony/Block pursuant to clauses (i) and (ii) of this Section
4.17(b)(2).
(3) After the occurrence of a Special Woodlands Use Impairment
and after completion of the distributions and, if applicable,
contribution contemplated by the provisions of Section 4.17(b)(2)
hereof, the Partnership shall promptly distribute to Pace all of its
rights, titles and interest, if any, in and to the Woodlands Asset.
The fair market value of the Woodlands Asset shall be deemed to
equal $0.00 at such time for all purposes hereof. Pace (and its
Affiliates) may thereafter be or become interested in the Woodlands
Amphitheater without being deemed to have violated the restrictions
contained in Article XII hereof.
(c) Certain Definitions used in this Section 4.17. As used herein,
the following terms shall have the respective meanings indicated:
(1) "Special Woodlands Use Impairment" shall mean the
occurrence of any event or circumstance, other than (i) a Special
Woodlands Termination or (ii) a Pace Default (as such term is
defined in the Woodlands Agreement), which results in the
Partnership suffering a material impairment (or termination) of its
right to book, produce, present and promote T&P Events (as such term
is defined in the Woodlands Agreement) at the Woodlands Amphitheater
pursuant to the provisions of the Woodlands Agreement. The following
are examples (which are intended to be illustrative and not
exclusive) of events or circumstances which would constitute a
"Special Woodlands Use Impairment" for purposes of this Agreement:
(i) The owner of the Woodlands Amphitheater losing its
possessory right to the Woodlands Amphitheater as a result of
a failure of title or any other reason.
(ii) A determination that the Woodlands Amphitheater is
an unsafe locale for the presentation of public events because
of the presence of toxic or hazardous waste on the site at
which the Woodlands Amphitheater is located.
The election as to whether an event or circumstance which materially
impairs the Partnership's right to book, produce, present and
promote
Article IV - Existing Assets and Capital Contributions
Page 42
T&P Events will be deemed to be a "Special Woodlands Use Impairment"
for purposes hereof shall be made exclusively by the Executive
Committee. Notwithstanding anything to the contrary contained
herein, or implied hereby, the occurrence of any event or
circumstance which would give rise to the Partnership having the
right to terminate the Woodlands Agreement pursuant to the
provisions of Section 6.04 or Section 7.04(b), (c) or (d) thereof
shall not constitute a "Special Woodlands Use Impairment."
(2) "Special Woodlands Termination" shall mean the termination
of the Partnership's rights under the Woodlands Agreement (i) upon
the expiration of its stated term (including any extensions thereof
by written agreement with the owner of the Woodlands Amphitheater),
(ii) pursuant to an exercise of the Owner's Early Termination Right
or (iii) pursuant to the Casualty Termination Provision.
(3) "Woodlands Reduction Amount" shall mean, as of the date
that a Special Woodlands Termination becomes effective or that a
Special Woodlands Use Impairment occurs, an amount equal to (i) the
then Woodlands Reduction Percentage multiplied by (ii) the Net Value
of the Woodlands Asset as determined in accordance with the
provisions of the Admission Agreement.
(4) "Woodlands Reduction Percentage" shall mean, as of the
effective date of a Special Woodlands Termination or the date of
occurrence of a Special Woodlands Use Impairment, the percentage
specified in the table below:
Article IV - Existing Assets and Capital Contributions
Page 43
Effective Date of
Special Woodlands Termination
or Date of Occurrence of Woodlands Reduction
Special Woodlands Use Impairment Percentage
-------------------------------- ----------
After the Effective Date but
before October 31, 1994 100.00%
After October 30, 1994 but 87.29%
before October 31, 1995
After October 30, 1995 but 75.28%
before October 31, 1996
After October 30, 1996 but 63.92%
before October 31, 1997
After October 30, 1997 but, 53.19%
before October 31, 1998
After October 30, 1998 but 43.04%
before October 31,1999
After October 30, 1999 but 33.44%
before October 31, 2000
After October 30, 2000 but 24.86%
before October 31, 2001
After October 30, 2001 but 16.75%
before October 31, 2002
After October 30, 2002 but 9.08%
before October 31, 2003
After October 30, 2003 0.00%
(d) Termination of These Provisions. The provisions of this Section
4.17 shall automatically terminate and be of no further force or effect
after the closing of the Unwind Procedure.
Article IV - Existing Assets and Capital Contributions
Page 44
4.18 Minneapolis/St. Xxxx. If the Partnership should construct an
Amphitheater in the Minneapolis/St. Xxxx Market, then the Partnership shall be
obligated to reimburse $140,590.00 to Pace and $111,590.00 to the Sony
Subsidiary for R&D Expenditures previously incurred by such parties for or on
behalf of the Partnership in such Market. Such reimbursement shall be made from
the following sources in the order of priority listed:
(a) first, to the extent thereof, the Contributed Project Funds
(including unpaid amounts under the Sony/Block Notes which are payable
upon demand of the Manager); and
(b) second, Unrestricted Funds to the extent that the Executive
Committee determines that such funds will not be needed for the payment of
Operating Obligations of the Partnership.
Pace and the Sony Subsidiary each represent and warrant to the Partnership that
the amounts specified above are the true and actual amounts previously expended
by each such Person for R&D Expenditures in the Minneapolis/St. Xxxx Market.
[END OF ARTICLE IV]
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 45
ARTICLE V
Project Loans, Renewal Loans and Replacement Loans
5.1 Obligation of Sony/Block to Provide Project Loans.
(a) Generally. Subject to the provisions of clause (b) of this
Section 5.1, Sony/Block shall make a Project Loan to the Partnership for
each Approved Project. Sony/Block shall have the right and option,
exercisable in its sole discretion, to fulfill the obligation set forth in
the immediately preceding sentence with respect to any Approved Project by
causing a financially responsible lender to make a Project Loan to the
Partnership for such Approved Project. Each Project Loan must close on or
before the later to occur of (i) the scheduled date for commencement of
construction of the Approved Project to which such Project Loan relates
(provided that the Manager shall have given Sony/Block at least thirty
(30) days prior written notice of such date and provided, further, that
the Partnership is able to commence construction on such scheduled date)
or (ii) the date which is sixty (60) days after the Proposed Amphitheater
Approval Meeting at which the Approved Project to which such Project Loan
relates was approved by the Executive Committee as an Amphitheater that
the Partnership would construct.
(b) Limited Exception to Obligation. If, notwithstanding the
obligation created by the provisions of Section 5.1(a) hereof, Sony/Block
elects not to make, or cause to be made, a Project Loan to the Partnership
for any Approved Project, then Sony/Block shall be excused and relieved
from such obligation by (x) paying directly to Pace an amount equal to
one-third (1/3rd) of all Project Costs incurred by the Partnership since
the date upon which the proposed Amphitheater became an Approved Project
(any amount payable from Sony/Block to Pace pursuant to the provisions of
this clause (x) of Section 5.1(b) shall be, for all purposes of this
Agreement, deemed to have been contributed to the capital of the
Partnership by Sony/Block and deemed to have been immediately thereafter
distributed by the Partnership to Pace), (y) executing an instrument, in
form reasonably satisfactory to Pace, in which Sony/Block agrees to
indemnify, defend and hold harmless the Partnership and Pace from any and
all claims, demands, liabilities and other losses (including the loss of
any xxxxxxx money deposits and any reasonable attorneys' fees) relating
to, arising out of or otherwise attributable to the failure of Sony/Block
to make such Project Loan and (z) executing an instrument, in form
reasonably satisfactory to Pace, in which Sony/Block agrees that Pace (or
its Affiliates) shall have the right, notwithstanding the provisions of
Section 12.1 hereof, to construct and develop, at any time thereafter,
such Approved Project for its own account outside of the Partnership
without any duty, liability or obligation
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 46
to the Partnership the Partners. The following additional provisions shall
apply with respect to any Approved Project for which Sony/Block elects not
to a make, or cause to be made, a Project Loan to the Partnership pursuant
to the provisions of this Section 5.1(b):
(1) Whether such Approved Project shall be deemed to be a
Sony/Block Rejected Amphitheater for purposes of this Agreement
shall be determined in accordance with the following provisions:
(i) If Sony/Block's Permitted Number is zero at the time
that Sony/Block elects not to make, or cause to be made, a
Project Loan to the Partnership pursuant to the right created
in this Section 5.1(b), then such Approved Project shall be
deemed to be a Sony/Block Rejected Amphitheater for all
purposes of this Agreement immediately upon the making of such
election by Sony/Block, regardless of whether Pace (or its
Affiliates) elect to construct and develop, at any time
thereafter, such Approved Project outside of the Partnership.
(ii) Subject to the provisions of clause (i) of this
Section 5.1(b)(1), such Approved Project shall not be a
Sony/Block Rejected Amphitheater if Pace (or any of its
Affiliates) elect to construct and develop, within 2 years
thereafter, such Approved Project outside of the Partnership.
(iii) Subject to the provisions of clause (i) of this
Section 5.1(b)(1), if Pace (and its Affiliates) elect not to
construct and develop such Approved Project outside of the
Partnership, then upon the making of such election, such
Approved Project shall be deemed to be a Sony/Block Rejected
Amphitheater for all purposes of this Agreement. If Pace has
not made its election within 2 years, then it shall be deemed,
for purposes of this clause (iii) only, to have elected not
to construct and develop such Approved Project outside of the
Partnership.
(2) If Pace (or any of its Affiliates) elect to construct and
develop any such Approved Project outside of the Partnership, then
Pace shall (i) be required and obligated to reimburse to the
Partnership all Project Costs previously incurred by the Partnership
with respect to such Approved Project, (ii) return to Sony/Block any
amounts previously paid to Pace pursuant to the provisions of clause
(x) of Section 5.1(b) hereof and (iii) release Sony/Block from any
further obligation to make any payments to Pace pursuant to such
clause (x) of Section 5.1(b) hereof.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 47
Any amounts returned to Sony/Block by Pace pursuant to clause (ii)
of the immediately preceding sentence shall be, for all purposes of
this Agreement, deemed to have been contributed to the capital of
the Partnership by Pace and immediately thereafter distributed by
the Partnership to Sony/Block.
(c) Pace Procured Project Loans. Pace shall have the specific right
to seek Project Loans for the Partnership from its own lending sources. If
Pace is successful in obtaining a commitment to make any Project Loan with
respect to an Approved Project (i) with a lower effective rate of interest
than is obtained by Sony/Block (taking into account any commitment fees,
loan origination fees, or similar fees charged by the lender of the loans
being compared and the guaranty fee payable to Sony/Block pursuant to
Section 5.2(c)(1)(ii) hereof, if any), (ii) which does not impose any
negative covenants on Sony or Blockbuster or require the delivery of any
financial statements or information by Sony or Blockbuster and (iii) that
otherwise satisfies all of the conditions of Section 5.2 hereof, then the
following provisions shall apply:
(1) Sony/Block shall be obligated to cause, if requested, Sony
and Blockbuster to execute a guaranty pursuant to which each
severally guarantees the repayment of 50% of such Project Loan.
(2) The Partnership shall accept such loan obtained by Pace as
the Project Loan for such Approved Project.
(d) Partner Nonrecourse Debt. The Partnership may not incur any
Partner Nonrecourse Debt without the unanimous approval of the Executive
Committee.
(e) Requirement of Parent Guaranty. Notwithstanding any provision a
herein to the contrary, if the lender of any Project Loan for an
Amphitheater in the First Group is not a Sony/Block Related Party, then
Sony/Block shall be required to cause the full faith and credit of Sony
and Blockbuster to be utilized in the obtaining of such Project Loan.
5.2 Definition of Project Loan. As used in this Agreement, the term
"Project Loan" shall mean a loan to the Partnership in connection with an
Approved Project upon substantially the following terms:
(a) Use of Project Loan Advances. Principal advances to the
Partnership under a Project Loan may be used by the Partnership solely for
payment or reimbursement of Project Costs for the Approved Project to
which the Project Loan relates.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 48
(b) Principal Amount. The principal amount available to the
Partnership under a Project Loan shall be equal to an amount determined in
accordance with the following provisions:
(1) For a Project Loan which relates to an Approved Project in
the First Group or to the Camden Amphitheater, the principal amount
shall be equal to (x) eighty-five percent (85%) of the Budgeted
Project Cost of the Approved Project to which the Project Loan
relates minus (y) the amount of Pre-opening Concessionaire Advances
for the Approved Project to which the Project Loan relates.
(2) For a Project Loan which relates to an Approved Project in
the Second Group, the principal amount shall be equal to (x) seventy
percent (70%) of the Budgeted Project Cost of the Approved Project
to which the Project Loan relates minus (y) the amount of
Pre-opening Concessionaire Advances for the Approved Project to
which the Project Loan relates.
(c) Interest Rate. The interest rate which shall accrue on the
principal balance outstanding from time to time under a Project Loan shall
be determined in accordance with the following provisions:
(1) Subject to the provisions of clause (2) below, the
interest rate shall be a fixed rate of interest per annum during the
term of such Project Loan determined in accordance with the
following provisions:
(i) If a Sony/Block Related Party is the lender of such
Project Loan, the interest rate shall be (i) the lender's cost
of funds plus (ii) 0.75% per annum.
(ii) If the lender of such Project Loan is not a
Sony/Block Related Party, but the Project Loan is fully and
unconditionally guaranteed by one or both Sony and
Blockbuster, then (i) the interest rate shall be the fixed
rate per annum charged by such lender and (ii) Sony/Block
shall have the right to charge the Partnership a guaranty fee
of 0.75% per annum on that portion of the outstanding
principal balance outstanding from time to time under such
Project Loan which is guaranteed by one or both of Sony and
Blockbuster.
(iii) If the lender of such Project Loan is not a
Sony/Block Related Party, and the Project Loan is not required
to be guaran-
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 49
xxxx by one or both of Sony and Blockbuster, then the interest
rate shall be the fixed rate per annum charged by such
lender.
(2) Notwithstanding the provisions of clause (1) above, the
following provisions shall apply:
(i) If (x) the fixed rate of interest per annum payable
by the Partnership for any Project Loan (including any
guaranty fee payable to Sony/Block) exceeds the Treasury Rate
at the time of the making of such Project Loan and (y) the
full faith and credit of one or both of Sony and Blockbuster
were not utilized in the obtaining of such Project Loan or in
the obtaining of the source of funding for the Project Loan,
then Sony/Block shall be required to obtain another Project
Loan for the Partnership utilizing the full faith and credit
of both Sony and Blockbuster in an attempt to reduce the fixed
rate of interest payable by the Partnership with respect to
such Project Loan, in which event the deadline for closing
such Project Loan, as provided in Section 5.1 hereof, shall be
extended for an additional thirty (30) days.
(ii) If (x) the aggregate interest rate payable by the
Partnership for any Project Loan (including any guaranty fee
payable to Sony/Block) exceeds the Treasury Rate and (y) the
full faith and credit of both Sony and Blockbuster were
utilized in obtaining the Project Loan or the source of
funding for such Project Loan, then the Representative
designated by Pace shall have the right and option to withdraw
his prior approval for the Approved Project to which such
Project Loan relates, in which event (i) the Partnership will
not construct such Approved Project and (ii) such Approved
Project shall be deemed, for all purposes of this Agreement,
to be a Sony/Block Rejected Amphitheater (unless Sony/Block
can reasonably demonstrate that Sony and Blockbuster,
combined, do not have a sufficient amount of available funds
of their own to make the Project Loan).
(iii) To avoid any ambiguity or uncertainty, it is
hereby specifically recognized, agreed and acknowledged that a
guaranty arrangement whereby Sony and Blockbuster, on a
several basis, each guarantee 50% of a Project Loan (or a
Renewal Loan) or the source of funding for a Project Loan (or
a Renewal Loan) shall, for all purposes of Section 5.1(e),
this Section 5.2(c)(2) and Section 5.4(b)(3), be deemed to be
the utilization of the full faith and credit of both Sony and
Blockbuster in obtaining such Project Loan
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 50
(or such Renewal Loan) or such source of funding for such
Project Loan (or such Renewal Loan).
(d) Amortization. On or about the Construction Completion Date
for the Approved Project to which a Project Loan relates, the
outstanding principal balance of the Project Loan shall be placed
on an amortization schedule of at least twenty (20) years with
equal quarterly combined payments of principal and interest. Prior
to the Construction Completion Date for the Approved Project to
which a Project Loan relates, interest only shall be due and payable
no more frequently than once per calendar month.
(e) Term. The entire unpaid principal balance and all accrued
unpaid interest on a Project Loan shall be due and payable no sooner
than ten (10) years after the Construction Completion Date of the
Approved Project to which such Project Loan relates.
(f) Prepayment Rights. For a Project Loan made by a Sony/Block
Related Party, the Partnership shall have the right to prepay all or
any portion of the principal of such Project Loan at any time
without payment of any premium or penalty. For any other Project
Loan, Sony/Block shall attempt, but shall not be obligated, to
obtain an agreement from the lender permitting the Partnership to
have the right to prepay all or any portion of the principal balance
of such Project Loan at any time without payment of any premium or
penalty.
(g) Conditions on Advances. If required by the lender of a
Project Loan, the obligation of such lender to make advances under
the Project Loan may be conditioned upon commercially reasonable and
customary requirements set forth in a loan agreement, mortgage
instrument or other written agreement with the Partnership. The
following are non-exclusive examples of commercially reasonable and
customary requirements which may be imposed as conditions to the
making of advances under a Project Loan:
(1) That advances may not be made more often than once
per month.
(2) That the lender of the Project Loan has received (i)
copies of the construction plans (approved by the appropriate
governmental authorities) and specifications and all
construction contracts, (ii) a certificate from the
Amphitheater's architect certifying that the plans and
specifications have been approved by him and that the
construction contracts executed to date are acceptable to him
and satisfactorily provide for the construction of the
Amphitheater, (iii) a copy of the building permit for the
Amphitheater, (iv) an original current survey of
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 51
the land upon which the Amphitheater is to be constructed
prepared by a registered public surveyor in form reasonably
acceptable to the lender, (v) copies of insurance polices or
certificates of insurance indicating that appropriate policies
of liability and property insurance are in place, (vi) written
statements from the applicable agencies or municipalities
which, when taken together, provide evidence satisfactory to
the lender of the Project Loan that all utilities and related
services necessary for the construction of the Amphitheater
and the operation thereof for its intended purpose are (or
will be prior to commencement of construction of the
Amphitheater) available to the boundaries of the land upon
which the Amphitheater shall be constructed, (vii) a written
report of soil tests prepared by a qualified engineering firm
acceptable to the lender of the Project Loan containing no
information deemed to be unsatisfactory by the lender in its
reasonable discretion, (viii) a copy of a written
environmental audit or assessment with respect to the land
upon which the Amphitheater shall be constructed by an
engineering firm acceptable to such lender and containing no
information deemed to be unacceptable by lender in its
reasonable discretion, (ix) evidence that the Partnership has
adequate funds available to complete construction of the
Amphitheater if the Budgeted Project Cost exceeds the
principal amount of the Project Loan and (x) evidence that
there is or will be appropriate public access to the site,
through direct access, easements or otherwise.
(3) That the lender has received (i) a legal opinion
from counsel to the Partnership that the loan documents
evidencing the Project Loan are duly authorized and
enforceable in accordance with their terms and as to such
other matters as such lender may reasonably request, (ii)
executed originals of a promissory note, deed of trust,
mortgage or other lien creating instrument and such other
reasonable loan documents as are typically required to
document a construction loan similar to the Project Loan and
(iii) a copy of this Agreement, with all amendments thereto,
and such other documents required by the lender to evidence in
a manner reasonably acceptable to the lender that the person
executing the loan documents related to the Project Loan on
behalf of the Partnership has proper authorization and
authority to do so.
(4) That the lender has received a mortgagee policy of
title insurance in form reasonably acceptable to it and, for
each advance, a down-date endorsement to such policy showing
no additional liens or exceptions to title.
(5) That the lender has received a written request for
advance in form and substance reasonably acceptable to lender
certifying as to
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 52
the Project Costs to be paid or reimbursed from the requested
advance under the Project Loan, with such supporting data and
invoices and architect's certification as the Lender may
require.
(6) If permitted in the applicable jurisdiction, lien
waivers from contractors and subcontractors.
(7) With respect to the final advance, a temporary or
permanent certificate of occupancy, guaranties and warranties
from contractors and subcontractors, final lien waivers and
releases from contractors and subcontractors.
(h) Collateral. If required by the lender of a Project Loan,
payment and performance of the obligations and liabilities of the
Partnership in respect of such Project Loan shall be secured by a
first and prior lien on the Partnership's interest in the Approved
Project to which such Project Loan relates and such lien shall be
created by a mortgage, deed of trust or other lien creating
instrument which contains commercially reasonable and customary
terms and provisions.
(i) Closing Costs. The Partnership shall pay, if required,
commitment fees, loan origination fees, or similar fees and such
actual out-of-pocket expenses of the lender which directly relate to
such Project Loan and which are customarily paid by borrowers when
obtaining a construction loan similar to the Project Loan, such as
the lender's attorneys' and consultants' fees, filing fees,
recording costs and the cost of obtaining a mortgagee policy of
title insurance for the lender. Notwithstanding the provisions
contained in the immediately preceding sentence, the Partnership
will not be required to pay any "commitment fees," "loan origination
fees" or other similar fees in respect of any Project Loan made by a
Sony/Block Related Party.
5.3 Protection of Sony/Block Related Parties.
(a) Collateral for Guarantor. If (i) the lender of a Project Loan is
not a Sony/Block Related Party, (ii) the lender of such Project Loan does
not require that the Project Loan be secured by a lien on the
Partnership's interest in the Approved Project to which the Project Loan
relates and (iii) a Sony/Block Related Party ("Sony/Block Guarantor")
has guaranteed the repayment of all or any portion of the Project Loan,
then the Partnership shall do each and all of the following simultaneously
with the closing of the Project Loan:
(1) Execute, acknowledge and deliver to the Sony/Block
Guarantor an instrument in the form attached hereto as Exhibit
5.3(a)(1)
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 53
pursuant to which the Partnership indemnifies and holds harmless the
Sony/Block Guarantor from and against any and all liability, loss
or expense (including reasonable attorneys' fees and disbursements)
arising out of or relating to the guaranty of the Project Loan.
(2) Execute, acknowledge and deliver to the Sony/Block
Guarantor a first mortgage encumbering the Partnership's interest in
the Approved Project to which the Project Loan relates as security
for the performance by the Partnership of its obligations under the
indemnity instrument delivered pursuant to clause (1) of this
Section 5.3(a). Any such mortgage instrument shall be in the form
attached hereto as Exhibit 5.3(a)(2), with such modifications as may
be reasonably necessary to conform to the requirements of the local
jurisdiction.
(3) Pay for and deliver to the Sony/Block Guarantor a title
insurance policy insuring the mortgage delivered pursuant to clause
(2) of this Section 5.3(a), free of any title exceptions except
those that are reasonably satisfactory to Sony/Block.
(4) Deliver to the Sony/Block Guarantor an endorsement to the
casualty insurance policy naming the Sony/Block Guarantor as
mortgagee.
(b) Restrictions on Loan Advances for Benefit of Guarantor. If (i)
the lender of a Project Loan is not a Sony/Block Related Party, (ii) the
lender does not impose any requirements upon the Partnership which must be
satisfied as conditions to the making of advances to the Partnership under
the Project Loan and (iii) a Sony/Block Related Party ("Sony/Block
Guarantor") has guaranteed repayment of all or any portion of the Project
Loan, then the following provisions shall apply:
(1) Sony/Block may receive advances under the Project Loan on
behalf of the Partnership and hold such funds in a separate account.
(2) Sony/Block may condition the release of such funds held
pursuant to clause (1) of this Section 5.3(b) upon the satisfaction
of certain commercially reasonable and customary requirements set
forth in a separate written instrument between the Partnership and
Sony/Block. Non-exclusive examples of commercially reasonable and
customary requirements which may be imposed as conditions for
release of such funds to the Partnership are set forth in Section
5.2(g) of this Agreement.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 54
(c) Limited Exception to Exclusivity Provisions. If a Sony/Block
Related Party should ever acquire the Partnership's ownership interest in
an Amphitheater as a result of a foreclosure under a mortgage provided
pursuant to Sections 5.3(a)(2), 5.4(c)(2) or 5.5(c)(2) hereof, then such
Sony/Block Related Party may thereafter own, manage and otherwise operate
such Amphitheater without being deemed to be in violation of the
exclusivity provisions or restrictions contained in Article XII of this
Agreement.
5.4 Renewal Loans.
(a) Funding Sources for Balloon Amphitheater Loans. The Partnership
shall fund the remaining principal balance due on any Balloon Amphitheater
Loan at its maturity from the Sinking Fund. If (i) sufficient funds are
not available from the foregoing source to pay the entire amount of the
remaining principal balance due on any Balloon Amphitheater Loan at its
maturity and (ii) the Manager has not been able to obtain for the
Partnership, notwithstanding its reasonable best efforts to do so (which
shall require, at a minimum, offering to prospective lenders the
opportunity to receive a lien upon the then unencumbered assets of the
Partnership), another source of funding reasonably satisfactory to Pace,
then Sony/Block shall be obligated to make a loan ("Renewal Loan") to the
Partnership at the maturity of such Balloon Amphitheater Loan in an amount
necessary to cause the funds available to the Partnership, when combined
with all funds available from the Sinking Fund, if any, to equal the final
installment due on such Balloon Amphitheater Loan. Sony/Block shall have
the right and option, exercisable in its sole discretion, to fulfill the
obligations set forth in the immediately preceding sentence with respect
to any Balloon Amphitheater Loan by causing a financially responsible
lender to make a Renewal Loan to the Partnership for such Balloon
Amphitheater Loan.
(b) Required Terms of Renewal Loan. As used in this Agreement, the
term "Renewal Loan" shall mean a loan to the Partnership in connection
with a matured Balloon Amphitheater Loan, upon substantially the following
terms:
(1) The principal of the Renewal Loan shall be advanced in a
single installment for the sole purpose of paying all amounts then
due and payable in respect of the Balloon Amphitheater Loan to which
the Renewal Loan relates.
(2) The principal amount to be advanced under the Renewal Loan
shall be in an amount equal to the (i) final installment due on the
Balloon Amphitheater Loan to which the Renewal Loan relates minus
(ii) the then balance of the Sinking Fund.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 55
(3) Interest shall accrue on the principal balance outstanding
from time to time under a Renewal Loan at a fixed rate of interest
per annum determined in accordance with the following provisions:
(i) If a Sony/Block Related Party is the lender of such
Renewal Loan, the interest rate shall be (i) the lender's
cost of funds plus (ii) 1.0% per annum.
(ii) If the lender of such Renewal Loan is not a
Sony/Block Related Party, but the Renewal Loan is guaranteed
by one or both of Sony and Blockbuster, then (i) the
interest rate shall be the fixed rate per annum charged by
such lender and (ii) Sony/Block shall have the right to charge
the Partnership a guarantee fee of 1.0% per annum on the
portion of the principal amount outstanding from time to time
under such Renewal Loan which is guaranteed by one or both
Sony and Blockbuster.
(iii) If the lender of such Project Loan is not a
Sony/Block Related Party, and the Project Loan is not required
to be guaranteed by one or both of Sony and Blockbuster, then
the interest rate shall be the fixed rate per annum charged by
such lender.
If (x) the interest rate per annum payable by the Partnership for
any Renewal Loan (including any guaranty fee payable to Sony/Block)
exceeds the Treasury Rate and (y) the full faith and credit of one
or both of Sony and Blockbuster were not utilized in the obtaining
of such Renewal Loan or in the obtaining of the source of funding
for the Renewal Loan, then Sony/Block shall be required to obtain
another Renewal Loan for the Partnership utilizing the full faith
and credit of both Sony and Blockbuster in an attempt to reduce the
interest rate payable by the Partnership with respect to such
Renewal Loan. Notwithstanding the provisions contained in the
immediately preceding sentence, with respect to any Renewal Loan to
be obtained to fund the Amphitheater Loan related to the Nashville
Amphitheater upon its stated maturity, in no event shall Sony/Block
be required to provide or obtain a guaranty from Sony in excess of
twenty-five percent (25%) of such Renewal Loan or from Blockbuster
in excess of twenty-five percent (25%) of such Loan.
(4) A Renewal Loan shall be amortized with equal quarterly
combined payments of principal and interest equal to the quarterly
payments which were payable under the Balloon Amphitheater Loan to
which such Renewal Loan relates.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 56
(5) The Renewal Loan shall have as its scheduled maturity date
the date upon which the Renewal Loan is to be fully paid and
amortized based upon the amount of equal quarterly payments made
pursuant to clause (4) of this Section 5.4(b).
(6) If required by the lender of a Renewal Loan, payment and
performance of the obligations and liabilities of the Partnership in
respect of the Renewal Loan shall be secured by a first and prior
lien on the Partnership's interest in the Amphitheater which had its
Project Costs originally funded by the Balloon Amphitheater Loan to
which the Renewal Loan relates.
(c) Protection of Sony/Block Related Party Guarantor. If (i) the
lender of a Renewal Loan is not a Sony/Block Related Party, (ii) the
lender of such Renewal Loan does not require that the Renewal Loan be
secured by a lien on the Partnership's interest in the Amphitheater which
had its Project Costs originally funded by the Balloon Amphitheater Loan
to which the Renewal Loan relates and (iii) a Sony/Block Related Party
("Sony/Block Guarantor") has guaranteed repayment of all or any portion of
the Renewal Loan, then the Partnership shall do each and all of the
following simultaneously with the closing of the Renewal Loan:
(1) Execute, acknowledge and deliver to the Sony/Block
Guarantor an instrument in the form attached hereto as Exhibit
5.3(a)(1) pursuant to which the Partnership indemnifies and holds
harmless the Sony/Block Guarantor from and against any and all
liability, loss or expense (including reasonable attorneys' fees and
disbursements) arising out of or relating to the guaranty of the
Renewal Loan.
(2) Execute, acknowledge and deliver to the Sony/Block
Guarantor a first mortgage encumbering the Partnership's interest in
the Amphitheater which had its Project Costs originally funded by
the Balloon Amphitheater Loan to which the Renewal Loan relates as
security for performance by the Partnership of its obligations under
the indemnity instrument provided pursuant to clause (1) of this
Section 5.4(c). The form of such mortgage instrument shall be in
the form attached hereto as Exhibit 5.3(a)(2), with such
modifications as may be reasonably necessary to conform to the
requirements of the local jurisdiction.
(3) Pay for and deliver to the Sony/Block Guarantor a title
insurance policy insuring the mortgage delivered pursuant to clause
(2)
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 57
of this Section 5.4(c), free of any title exceptions except those
that are reasonably satisfactory to Sony/Block.
(4) Deliver to the Sony/Block Guarantor an endorsement to the
casualty insurance policy naming the Sony/Block Guarantor as
mortgagee.
5.5 Replacement Loans.
(a) Determination of Need for Replacement Loan. If the Executive
Committee unanimously agrees that the economic effect to the Partnership
of the interest rate, amortization schedule, maturity date, prepayment
rights and other terms of any Amphitheater Loan related to any of the
Unwind Assets could be improved by replacing such Amphitheater Loan with a
new loan on the same general economic terms described in Section 5.2
hereof (taking into account any guaranty fee which may be payable to
Sony/Block), then Sony/Block shall make a loan ("Replacement Loan") or
cause a financially responsible lender to make a Replacement Loan.
(b) Required Terms of a Replacement Loan. As used herein, the term
"Replacement Loan" shall mean a loan made by Sony/Block or a financially
responsible lender on substantially the following terms:
(1) The Replacement Loan shall be made to the owner of the
Amphitheater which secures repayment of the existing Amphitheater
Loan being replaced.
(2) The proceeds of the Replacement Loan shall be used solely
to pay and discharge the existing Amphitheater Loan being replaced.
(3) The principal balance of the Replacement Loan shall be
equal to the then principal balance outstanding, together with
accrued and unpaid interest thereon and all other amounts then due,
under the existing Amphitheater Loan being replaced.
(4) If required by a lender of a Replacement Loan, payment and
performance of the obligations and liabilities of the obligor of
such Replacement Loan shall be secured by a first and prior lien on
the same assets and properties which secured payment of the existing
Amphitheater Loan being replaced and such lien shall be created by a
mortgage, deed of trust or other lien creating instrument which
contains commercially reasonable and customary terms and provisions.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 58
(5) The other economic terms of the Replacement Loan shall be
the same as those that are required for Project Loans as described
in Section 5.2 hereof.
(c) Protection of Sony/Block Related Party Guarantor. If (i) the
lender of a Replacement Loan is not a Sony/Block Related Party, (ii) the
lender of the Replacement Loan does not require that the Replacement Loan
be secured by a lien on the assets and properties which secure the
existing Amphitheater Loan being replaced and (iii) a Sony/Block Related
Party ("Sony/Block Guarantor") has guaranteed repayment of all or any
portion of the Replacement Loan, then the borrower of the Replacement Loan
shall, as a condition to the closing of such loan, do each and all of the
following simultaneously with the closing of the Renewal Loan:
(1) Execute, acknowledge and deliver to the Sony/Block
Guarantor an instrument in the form attached hereto as Exhibit
5.3(a)(1) pursuant to which the borrower indemnifies and holds
harmless the Sony/Block Guarantor from and against any and all
liability, loss or expense (including reasonable attorneys' fees and
disbursements) arising out of or relating to the guaranty of the
Replacement Loan.
(2) Execute, acknowledge and deliver to the Sony/Block
Guarantor a first mortgage encumbering the same assets or properties
which secured repayment of the existing Amphitheater Loan being
replaced as security for the performance by the borrower of its
obligations under the indemnity agreement delivered pursuant to
clause (1) of this Section 5.5(c). The form of such mortgage
instrument shall be in the form attached hereto as Exhibit
5.3(a)(2), with such modifications as may be reasonably necessary to
conform to the requirements of the local jurisdiction.
(3) Pay for and deliver to the Sony/Block Guarantor a title
insurance policy insuring the mortgage delivered pursuant to clause
(2) of this Section 5.5(c), free of any title exceptions except
those that are reasonably satisfactory to Sony/Block.
(4) Deliver to the Sony/Block Guarantor an endorsement to the
casualty insurance policy naming the Sony/Block Guarantor as
mortgagee.
5.6 Special Provisions Relating to Charlotte Amphitheater. Notwithstanding
anything to the contrary contained elsewhere in this Agreement, the following
provisions shall apply with respect to the Charlotte Amphitheater:
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 59
(a) The Charlotte Loan. Reference is made to the fact that the
Charlotte Asset has been contributed to the capital of the Partnership of
even date herewith at the Existing Facility Closing subject to an
Amphitheater Loan ("Charlotte Loan") generally described as follows:
(1) The initial principal balance at the Existing Facility
Closing of the Charlotte Loan is $8,000,000. No accrued unpaid
interest is outstanding under the Charlotte Loan at the Existing
Facility Closing.
(2) Interest shall accrue on the Charlotte Loan at a fixed
rate of seven percent (7.0%) per annum.
(3) Quarterly payments of $186,640.00 shall be payable on the
Charlotte Loan based on a 20 year amortization schedule. Each
payment shall be applied first against the accrued unpaid interest
thereon and then against the principal balance thereof.
(4) On April 1, 2004, the entire unpaid principal balance of
the Charlotte Loan, together with all accrued unpaid interest
thereon shall become due and payable. Prepayments of principal under
the Charlotte Loan shall be expressly permitted without any penalty.
(5) The form and content of the promissory note evidencing the
Charlotte Loan and the mortgage on the Charlotte Asset securing the
Charlotte Loan shall be in form and content reasonably acceptable to
the Executive Committee.
The obligation to perform and discharge the Charlotte Loan in accordance
with its terms is hereby contractually assumed by the Partnership.
(b) Priority Equity Distributions for Charlotte. Within forty-five
(45) days after the end of each Debt Free Charlotte Year, the Charlotte
Distribution Amount shall be disbursed by the Partnership as follows:
(1) Sixty-five percent (65%) of the Charlotte Distribution
Amount shall be distributed to Sony/Block as a special priority
distribution; provided, that in no event shall any distribution made
pursuant to this clause (1) ever be in excess of the then balance of
the Charlotte Preferred Cash Distribution Account; and
(2) Thirty-five percent (35%) of the Charlotte Distribution
Amount shall be distributed to the Partners in proportion to their
respective Percentage Interests.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 60
Notwithstanding the other provisions of this Section 5.6(b), for the first
Debt Free Charlotte Year only, the Charlotte Distribution Amount shall be
reduced by the sum of the amount, if any, by which the balance of the
Charlotte Phantom Loan Account exceeded the principal balance of the
Charlotte Loan as of the first day of such Debt Free Charlotte Year.
(c) Special Distributions of Proceeds from Sales of Charlotte Asset.
Notwithstanding the provisions of Section 8.6 hereof, but subject to the
provisions of Section 16.5 hereof, the net cash proceeds received by the
Partnership upon the disposition of the Charlotte Amphitheater or any
portion thereof or any interest therein, after payment and discharge of
the Amphitheater Loan related to the Charlotte Amphitheater, shall be
distributed, as soon after the completion of such disposition as is
reasonably practicable, to the Partners in accordance with the following
provisions:
(1) First, to Sony/Block to the extent of the balance of the
Charlotte Preferred Cash Distribution Account at the time of the
closing of such disposition; and
(2) Second, to the Partners in proportion to their respective
Percentage Interests.
(d) Termination of these Provisions. The provisions of this Section
5.6 shall automatically terminate, with no action required by any party
hereto, upon the earlier to occur of (i) the balance in the Charlotte
Preferred Cash Distribution Account becoming $0.00, (ii) the Partnership
completing a disposition of its entire interest in the Charlotte
Amphitheater or (iii) the closing of the Unwind Procedure.
5.7 Certain Defined Terms Used in Article V. As used in this Article V,
the following terms shall have the meanings indicated:
(a) Charlotte Operations Expenditures: For any Charlotte Year, the
sum of the following:
(1) All Operating Obligations (including regularly scheduled
principal and interest payments under the Amphitheater Loan related
to the Charlotte Amphitheater) attributable to such Charlotte Year
which are related to the use, ownership or operation of the
Charlotte Amphitheater;
(2) All amounts applied against the Amphitheater Loan related
to the Charlotte Amphitheater during such Charlotte Year which are
not
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 61
regularly scheduled payments of principal and interest thereon, such
as principal prepayments.
(3) The cost of any capital improvements or refurbishments
made to the Charlotte Amphitheater during such Charlotte Year which
are either approved by the Executive Committee or expressly
contemplated by the Annual Operating Budget applicable to such
Charlotte Year; and
(4) The Special Charlotte Ratio for such Charlotte Year
multiplied by (i) the total amount required to be reimbursed to
Pace pursuant to the provisions of Section 10.7(b) hereof during
such Charlotte Year or (ii) such other amount that may be payable to
a successor Manager for the provision of its management, booking and
consulting services to the Partnership during such Charlotte Year.
(b) Charlotte Receipts: With respect to any Charlotte Year, all
revenues, receipts and other funds received by the Partnership from the
operation, ownership or use of the Charlotte Amphitheater during such
Charlotte Year (but specifically excluding any amounts received from a
sale of the Charlotte Asset by the Partnership).
(c) Charlotte Year: A fiscal year beginning on November 1 of each
calendar year and ending on October 31 of the following calendar year.
(d) Debt Free Charlotte Year: Any one of the following described
Charlotte Years:
(1) The Charlotte Year in which the Charlotte Phantom Loan
Account becomes $0.00.
(2) The Charlotte Year in which the balance of the Charlotte
Preferred Cash Distribution Account becomes $0.00.
(3) All Charlotte Years between the Charlotte Years described
in clauses (1) and (2) of this Section 5.7(d).
(e) Special Charlotte Ratio: With respect to any Charlotte Year, a
fraction, the numerator of which is one and the denominator of which is
the total number of existing Amphitheaters in which the Partnership has a
Controlling Interest as of the end of such Charlotte Year.
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 62
(f) Charlotte Preferred Cash Distribution Account: A bookkeeping
account which shall be established and maintained in accordance with the
following provisions:
(1) The initial balance of the Charlotte Preferred Cash
Distribution Account shall be $7,000,000.
(2) The balance of the Charlotte Preferred Cash Distribution
Account shall be decreased by (i) the amount of any distribution
made to Sony/Block pursuant to Section 5.6(b)(1) hereof and (ii) the
amount of any distribution made to Sony/Block pursuant to the
provisions of Section 5.6(c)(1) hereof.
(g) Charlotte Phantom Loan Account: A bookkeeping account which
shall be established and maintained in accordance with the following
provisions:
(1) The initial balance of the Charlotte Phantom Loan Account
shall be $8,000,000.00.
(2) Except for the Charlotte Years covered by the provisions
of clause (3) below, as of the last day of each Charlotte Year which
ends after the Effective Date, the Charlotte Phantom Loan Account
shall be reduced by the lesser of:
(i) the actual amount by which the principal balance of
the Charlotte Loan (or, if applicable, renewal, extension,
rearrangement, replacement or consolidation thereof) was
reduced by way of scheduled principal payments and principal
prepayments made during such Charlotte Year; or
(ii) the sum of (x) the Charlotte Scheduled Principal
Payment Amount for such Charlotte Year and (y) 65% of any
Excess Charlotte Receipts for such Charlotte Year.
For purposes of clause (i) of this Section 5.7(g)(2), any principal
prepayments made on the Charlotte Loan pursuant to the provisions of
Section 8.4(b) hereof within sixty (60) days after the end of any
Charlotte Year shall be deemed to have been made during such
Charlotte Year.
(3) As of the last day of the Charlotte Year in which the
Charlotte Loan (or, if applicable, renewal, extension,
rearrangement, replacement or consolidation thereof) is fully and
finally discharged by the Partnership and each Charlotte Year
thereafter, the Charlotte
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 63
Phantom Loan Account shall be reduced by the sum of (i) the
Charlotte Scheduled Principal Payment Amount for such Charlotte Year
and (ii) 65% of any Excess Charlotte Receipts for such Charlotte
Year.
(h) Charlotte Scheduled Principal Payment Amount: For any Charlotte
Year, the total amount of regularly scheduled principal payments due on
the Charlotte Loan during such Charlotte Year based upon the original 20
year amortization schedule assuming, for these purposes, that (i) no
prepayments of principal are ever made on the Charlotte Loan and (ii) the
remaining principal balance of the Charlotte Loan is due on April 1, 2014
instead of April 1, 2004.
(i) Excess Charlotte Receipts: For any Charlotte Year, the amount,
if any, by which (x) the total amount of Charlotte Receipts for such
Charlotte Year exceeds (y) the sum of $746,560.00 and the amount of
Non-Debt Related Charlotte Operating Expenditures for such Charlotte Year.
(j) Non-Debt Related Charlotte Operating Expenditures: For any
Charlotte Year, all Charlotte Operating Expenditures for such Charlotte
Year other than those attributable to principal and interest payments on
the Charlotte Loan.
(k) Charlotte Distribution Amount: For any Debt Free Charlotte Year,
the amount by which the total amount of Charlotte Receipts for such Debt
Free Charlotte Year exceeds the total amount of Charlotte Operating
Expenditures for such Debt Free Charlotte Year.
[END OF ARTICLE V]
Article VI - Partnership's Obligation to Construct and Acquire Amphitheaters
Page 64
ARTICLE VI
Partnership's Obligation to Construct and Acquire Amphitheaters
6.1 Construction of Approved Projects. The Partnership shall construct all
Approved Projects.
6.2 Purchase of Existing Amphitheaters. The Partnership will not acquire
or purchase any interest in a previously existing Amphitheater without the
unanimous consent of the Representatives attending a duly called and held
meeting of the Executive Committee at which a quorum of the Representatives are
present. However, the following provisions shall apply with respect to any
existing Amphitheater which the Executive Committee does so approve for purchase
by the Partnership:
(a) At the closing of the purchase of an interest in a previously
existing Amphitheater, Sony/Block shall make a loan or cause a loan to be
made by a financially responsible lender, upon the same economic terms and
with the same collateral described in Section 5.2 hereof that are required
for a Project Loan related to an Approved Project, but in a single
principal advance in the amount of (i) the Applicable Percentage (herein
defined) of the gross purchase price of such previously existing
Amphitheater minus (ii) the amount of any Pre-opening Concessionaire
Advances for such previously existing Amphitheater. As used in the
immediately preceding sentence, the term "Applicable Percentage" shall
mean (i) 85% if the existing Amphitheater to be purchased will be in the
First Group and (ii) 70% if the existing Amphitheater to be purchased will
be in the Second Group. If applicable, a Sony/Block Guarantor shall be
entitled to the same rights, protections and privileges in respect of any
loan made pursuant to this Section 6.2(a) as are provided for in Section
5.3 hereof with respect to a Project Loan. The loan to be extended to the
Partnership pursuant to the provisions of this Section 6.2(a) shall be an
"Amphitheater Loan" related to the Amphitheater (or the interest therein)
being purchased by the Partnership for all purposes of this Agreement.
(b) The balance of the purchase price shall be paid from the
following sources:
(1) The Contributed Project Funds (including unpaid principal
amounts under the Sony/Block Notes which are payable upon the demand
of the Manager); and
Article VI - Partnership's Obligation to Construct and Acquire Amphitheaters
Page 65
(2) Unrestricted Funds of the Partnership to the extent that
the Executive Committee reasonably determines that such funds will
not be needed for the payment of Operating Obligations of the
Partnership.
If sufficient funds are not available from the foregoing sources to pay
the balance of the purchase price of any such existing Amphitheater, then
the Partners shall be obligated to contribute to the capital of the
Partnership an amount equal to that amount which is necessary to cause the
total amount of funds available to the Partnership for the payment of such
purchase price, when combined with all funds available from the sources
listed in clause (b) above, to equal the balance of the purchase price for
such existing Amphitheater. The amounts to be contributed to the capital
of the Partnership pursuant to this Section 6.2 shall be made in
proportion to the Percentage Interest of the Partners.
[END OF ARTICLE VI]
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 66
ARTICLE VII
Provisions Relating to the MCA/PACE Amphitheaters
7.1 Generally. Reference is made to the fact that PACE Amphitheatres, Inc.
("PAI"), an Affiliate of Pace, is a 32.5% partner in MCA/Pace Amphitheaters
Group, L.P. ("MCA Partnership"). No interest in the MCA/Pace Amphitheaters has
been contributed to the Partnership. Pace represents and warrants to the
Partnership that the MCA Partnership owns a Controlling Interest in each of the
MCA/Pace Amphitheaters. Pace represents and warrants to the Partnership that
PAI's ownership interest in the MCA Partnership is not a Controlling Interest in
the MCA/Pace Amphitheaters.
7.2 Pace's Obligations to Partnership Regarding MCA/PACE Amphitheaters. If
Pace, or any one or more of Pace's Affiliates, should at any time hereafter
acquire a transferrable Controlling Interest in one or both of the MCA/Pace
Amphitheaters ("Pace Controlled MCA Amphitheaters"), then the following
provisions shall apply:
(a) Offer to Sell to Partnership. Pace shall be required to offer,
or cause to be offered, to the Partnership the option to purchase ("MCA
Purchase Option") such Controlling Interest in the Pace Controlled MCA
Amphitheaters upon the following terms:
(1) With respect to any Pace Controlled MCA Amphitheaters, the
MCA Purchase Option must be extended to the Partnership in a written
notice from Pace to Sony/Block on or before 120 days after Pace, or
any one or more of Pace's Affiliates, acquire such Controlling
Interest in such Amphitheater.
(2) The MCA Purchase Option must be open for exercise by the
Partnership for at least 90 days following delivery of the notice
provided to Sony/Block pursuant to clause (1) of this Section
7.2(a).
(3) The Partnership shall have the right and option to
purchase all, but not a portion of, such Controlling Interest in the
Pace Controlled MCA Amphitheaters pursuant to the MCA Purchase
Option for a purchase price equal to the sum of the following:
(i) For that portion of such Controlling Interest which
is attributable to the 32.5% partnership interest in the MCA
Partnership currently owned by Pace Amphitheaters, Inc., the
sum of (A) $6,400,341.00 if both MCA/Amphitheaters are
involved,
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 67
$1,285,165.00 if only Lakewood Amphitheater (Atlanta) is
involved or $5,115,176.00 if only Starplex Amphitheater
(Dallas) is involved and (B) 32.5% of the amount by which the
principal balance of the currently existing Amphitheater Loans
related to the MCA/Pace Amphitheaters are reduced (if any)
between the date of this Agreement and the date that the MCA
Purchase Option is extended by Pace to the Partnership; and
(ii) For the remaining portion of such Controlling
Interest in the Pace Controlled MCA Amphitheaters, Pace's (or
its Affiliates') actual cost of acquiring such remaining
portion of the Controlling Interest (such cost to specifically
include the principal balance of any debt which Pace or its
Affiliates assumes or takes subject to in connection with the
acquisition of such Controlling Interest; provided, that the
Partnership (x) shall apply the payment of the purchase price
funded in the manner described in clause (c) below first
against the discharge and payment of such debt or (y) may,
upon unanimous consent of the Partners, pay this portion of
the purchase price by assuming such debt or taking subject
thereto).
(4) Pace shall promptly provide to Sony/Block all relevant
financial data and other information that is reasonably necessary to
assist in the calculation and determination of the purchase price
described in clause (3) of this Section 7.2(a).
(b) Sony/Block's Decision. Notwithstanding any other provision of
this Agreement to the contrary, the decision as to whether the Partnership
will exercise the MCA Purchase Option shall be made unilaterally by
Sony/Block.
(c) Financing of Purchase Price. If the Partnership exercises the
MCA Purchase Option, the purchase price of the Controlling Interest in
the Pace Controlled MCA Amphitheaters shall be financed in accordance with
the provisions of Section 6.2 hereof.
(d) Effect on Unwind Procedure. If the Partnership purchases a
Controlling Interest in any Pace Controlled MCA Amphitheater ("Partnership
MCA Amphitheaters") pursuant to the MCA Purchase Option, then (i) the
Amphitheater Loan related to such Partnership MCA Amphitheaters shall
thereafter be included in Pace's Allocated Debt for purposes of the
provisions of a Section 8.4 hereof and (ii) the Partnership's Controlling
Interest in such Partnership MCA Amphitheaters shall be distributed to
Pace (or its designee)
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 68
at the closing of the Unwind Procedure and Pace shall be required to do
the following at the closing of the Unwind Procedure as a result:
(1) If any Major Capital Improvements were made by the Partnership
with respect to the Partnership MCA Amphitheaters, then Pace shall pay to
Sony/Block an amount equal to two-thirds of the total cost of such Major
Capital Improvements pursuant to clause (g) of Section 9.4 hereof.
(2) Pace shall pay to Sony/Block an amount equal to the sum of the
following:
(i) 100% of the Contributed Project Funds previously applied
to the purchase price of the Partnership MCA Amphitheaters.
(ii) Two-thirds of the Partnership's General Funds (as such
term is defined in clause (h)(2) of Section 9.4 hereof) previously
applied to the purchase price of the Partnership MCA Amphitheaters.
All amounts payable to Sony/Block pursuant to this clause (2) shall be
deemed, to be payable pursuant to Section 9.4(h) hereof at the closing of
the Unwind Procedure.
(3) Pace shall pay to Sony/Block an amount equal to two-thirds of
the sum of the following:
(i) (A) The Partnership's share of the amount of principal
outstanding under the Amphitheater Loans which relate to the
Partnership MCA Amphitheaters at the time the Controlling Interest
in such Amphitheaters is acquired by the Partnership minus (B) the
Partnership's share of the amount of principal outstanding under the
Amphitheater Loans which relate to the Partnership MCA Amphitheaters
at the time of the closing of the Unwind Procedure; and
(ii) (A) The Unamortized Amount of any Existing MCA Concession
Loans at the time that the Controlling Interest in such
Amphitheaters was acquired by the Partnership minus (B) the
Unamortized Amount of such Existing MCA Concession Loans at the time
of the closing of the Unwind Procedure.
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 69
All amounts payable to Sony/Block pursuant to this clause (3) shall
be deemed to be payable pursuant to Section 9.4(k) hereof at the
closing of the Unwind Procedure. As used above, the term "Existing
MCA Concession Loan" shall mean any Concession Loan made to the
owner (or its predecessor in interest) of a Partnership MCA
Amphitheater prior to the acquisition of such Partnership MCA
Amphitheater (or a Controlling Interest therein) by the Partnership
pursuant to, or in connection with, a concession agreement which
remains in effect at the time of such acquisition and is related to
the sale of concessions at such Partnership MCA Amphitheater.
(4) If Pace, or any one or more Pace's Affiliates, acquires a
Controlling Interest in one or both of the MCA/PACE Amphitheaters
after the closing of the Unwind Procedure, then none of the
provisions of this Section 7.2 shall apply and Pace shall have no
obligation or duty to offer any of its Controlling Interest in such
Amphitheaters to the Partnership pursuant to this Section 7.2.
7.3 Number of New Amphitheaters. Notwithstanding anything to the contrary
contained in this Agreement, if the Partnership acquires a Controlling Interest
in both MCA/Pace Amphitheaters at any time after the date hereof, such
Amphitheaters shall, for all purposes hereof, be deemed to be only one (1) New
Amphitheater.
7.4 Best Efforts to Obtain a Transferrable Interest. If Pace or any of its
Affiliates should ever enter negotiations with the other partners in the MCA
Partnership in connection with the possible acquisition by Pace or any of its
Affiliates of a Controlling Interest in one or both of the MCA/Pace
Amphitheaters, then Pace hereby covenants and agrees with Sony/Block that it
will exercise its best efforts to structure such acquisition in a manner that
Pace or its Affiliate will acquire a Controlling Interest in such Amphitheaters
that will be transferable on a reasonable basis.
[END OF ARTICLE VII]
Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 70
ARTICLE VIII
Tax Allocations, Maintenance of Capital Accounts
and Distributions of Cash
8.1 Tax Allocations.
(a) Generally. Except as provided to the contrary elsewhere in this
Section 8.1, all of the Partnership's income, gain, losses, deductions and
credits shall be allocated among the Partners in proportion to their
respective Percentage Interests.
(b) Section 704(c). Income, gain, loss and deduction with respect to
any item of property contributed to the Partnership shall, solely for
federal income tax purposes, be allocated between the Partners so as to
take into account any difference between the Gross Asset Value of such
item of property and its adjusted basis for federal income tax purposes on
the date of such contribution, in accordance with the requirements of
Section 704(c) of the Code. If the Gross Asset Value of any Partnership
property is adjusted pursuant to Section 8.3(e) hereof, subsequent
allocations of income, gain, loss and deduction with respect to such
property shall take account of any variation between the adjusted basis of
such property and its Gross Asset Value as so adjusted, in the same manner
as provided for under Section 704(c) of the Code. All allocations under
this Section 8.1(b) shall be made in such a manner as the Partners shall
determine reasonably reflects the requirements of Section 704(c) of the
Code. No allocations pursuant to this Section 8.1(b) shall be reflected as
an adjustment to any Partner's Capital Account.
(c) Gain or Loss upon Sale of an Amphitheater. Notwithstanding
clause (a) of this Section 8.1, but subject to the provisions of clause
(b) of this Section 8.1,
(1) the gain, if any, recognized by the Partnership upon any
disposition of any Amphitheater (other than the Charlotte
Amphitheater) or any portion thereof or any interest therein shall
be allocated as follows:
(i) first, to any Partner the balance of whose Capital
Account is negative, in the amount necessary to restore such
balance to zero;
(ii) second, to the Partners to the extent and in the
ratios necessary to cause the balances in the respective
Capital Ac-
Article. VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 71
counts of they Partners to be in the ratios of their
respective Percentage Interests (provided, that for purposes
of this clause (c)(1)(ii) only, prior to the allocation
required by this clause (c)(1)(ii), Sony/Block's Capital
Account shall be deemed to have been increased by the then
outstanding principal balance of the Sony/Block Notes unless
such outstanding principal balance has previously been
reflected as an increase in Sony/Block's Capital Account
pursuant to the provisions of clause (x) or (y) of Section
8.3(i) hereof); and
(iii) any remaining gain shall be allocated among the
Partners in the ratios of their respective Percentage
Interests.
(2) the gain, if any, recognized by the Partnership upon any
disposition of the Charlotte Amphitheater or any portion thereof or
any interest therein shall be allocated as follows:
(i) First, to Sony/Block to the extent of the balance of
the Charlotte Preferred Cash Distribution Account at the time
of the closing of such disposition; and
(ii) Any remaining gain shall be allocated between the
Partners in accordance with the provisions of clause (1) of
this Section 8.1(c).
(3) the loss, if any, recognized by the Partnership, upon any
disposition of any Amphitheater or any portion thereof or any
interest therein shall be allocated as follows:
(i) First, to the Partners to the extent and in the
ratios necessary to cause the balances in the respective
Capital Accounts of the Partners to be in the ratios of their
respective Percentage Interests (provided, that for purposes
of this clause (c)(3)(i) only, prior to the allocation
required by this clause (c)(3)(i), Sony/Block's Capital
Account shall be deemed to have been increased by the then
outstanding principal balance of the Sony/Block Notes unless
such outstanding principal balance has previously been
reflected as an increase in Sony/Block's Capital Account
pursuant to the provisions of clause (x) or (y) of Section
8.3(i) hereof); and
(ii) Any remaining loss shall be allocated among the
Partners in the ratios of their respective Percentage
Interests.
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 72
(d) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Section 8.1, if there is a net decrease in Partnership Minimum Gain during
any Fiscal Year, each Partner shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(f)(6)
and 1.704-2(j)(2) of the Regulations. This Section 8.1(d) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f)
of the Regulations and shall be interpreted consistently therewith.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year or other period shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Section 8.1, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt
during any Fiscal Year, each Partner who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the
Regulations, shall be specially allocated items of Partnership income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in
an amount equal to such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the
Regulations. This Section 8.1(f) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations
and shall be interpreted consistently therewith.
(g) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(1).
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 73
(h) Special Income Allocation for Charlotte. Notwithstanding any
other provision of this Section 8.1, for each Fiscal Year, Sony/Block
shall be specially allocated items of Partnership gross income equal to
the amount of cash distributions made to Sony/Block during such Fiscal
Year pursuant to the provisions of Section 5.6(b)(1) hereof.
(i) Special Allocations Related to Abandonment of an Approved
Project. Notwithstanding any other provision of this Section 8.1,
(1) For any Fiscal Year in which Sony/Block makes a deemed
capital contribution pursuant to clause (x) of Section 5.1(b)
hereof, Sony/Block shall be specially allocated items of Partnership
deduction and loss equal to (i) three (3.0) multiplied by (ii) the
amount of such deemed capital contributions made by Sony/Block
during such Fiscal Year pursuant to the provisions of clause (x) of
Section 5.1(b) hereof. To the extent possible, the items of
Partnership deduction and loss specially allocated to Sony/Block
pursuant to the immediately preceding sentence shall consist of
those deductions and losses related to the Project Costs referred to
in clause (x) of Section 5.1(b) hereof.
(2) For any Fiscal Year in which Pace makes a deemed capital
contribution pursuant to clause (ii) of Section 5.1(b)(2) hereof,
Pace shall be specially allocated items of Partnership deduction and
loss equal to (i) one and one-half (1.5) multiplied by (ii) the
amount of such deemed capital contributions made by Pace during such
Fiscal Year pursuant to the provisions of clause (ii) of Section
5.1(b)(2) hereof.
(j) Interim Development Costs. Notwithstanding any other provision
of this Section 8.1, certain special allocations of Partnership deductions
and losses shall be made to Sony/Block, if applicable, in accordance with
the provisions of Section 4.15(b) hereof in the first Fiscal Year which
ends after the execution of this Agreement.
(k) Special Income Allocation for Distributions Attributable to the
Pace Preferred Account. Notwithstanding any other provision of this
Section 8.1, for each Fiscal Year, Pace shall be specially allocated items
of Partnership gross income equal to the amount of cash distributions made
to Pace during such Fiscal Year pursuant to the provisions of Section
8.7(a) hereof.
8.2 Transferor/Transferee Allocations. If a Partnership Interest is
transferred during any year, the income, gains, losses and deductions allocable
in respect of that Partnership Interest shall be prorated between the transferor
and the transferee on the
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 74
basis of the number of days in the year that each was the holder of that
Partnership Interest without regard to the results of the Partnership operations
during the period before and after the transfer (unless either the transferor or
the transferee elects to use an allocation based on the results as of the record
date of transfer, to the extent permitted by the Code, and agrees to reimburse
the Partnership for the cost of making and recording such allocation).
8.3 Maintenance of Capital Accounts. A Capital Account shall be
established and maintained for each Partner in accordance with the following
provisions:
(a) Increases in Capital Accounts. Each Partner's Capital Account
shall be increased by (i) the amount of cash and the fair market value of
all property contributed by such Partner to the Partnership (net of
liabilities assumed by the Partnership or to which the contributed
property is subject), (ii) that Partner's allocable share of income and
gain for federal income tax purposes (excluding any allocations made
pursuant to Section 8.1(b) hereof), (iii) that Partner's allocable share
of the unrealized gain attributable to property with respect to which an
adjustment shall have been effected pursuant to subsection (d) or (e)
below, and (iv) that Partner's allocable share (determined by reference to
its share of the proceeds of such items under the terms of this Agreement)
of income exempt from tax described in section 705(a)(1)(B) of the Code.
(b) Decreases in Capital Accounts. Each Partner's Capital Account
shall be decreased by (i) the amount of cash and the fair market value of
all property distributed to such Partner (net of liabilities assumed by
the Partner or to which the property is subject), (ii) that Partner's
allocable share of losses and other items of deduction for federal income
tax purposes (excluding any allocations made pursuant to Section 8.1(b)
hereof), (iii) that Partner's allocable share of the unrealized loss
attributable to property with respect to which an adjustment shall have
been effected pursuant to subsection (d) or (e) below, and (iv) that
Partner's allocable share of expenditures described in Section
705(a)(2)(B) of the Code.
(c) Use of Gross Asset Value. For purposes of computing the amount
of any item of income, gain, loss, or deduction to be reflected in the
Partners' Capital Accounts, the determination, recognition and
classification of such items shall be the same as their determination,
recognition and classification for federal income tax purposes, except
that (i) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes (including any deemed disposition required by the
provisions of Section 8.3(d) hereof) shall be computed with reference to
the Gross Asset Value of the property disposed of, rather than its
adjusted basis, and (ii) depreciation, amortization, or other cost
recovery
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 75
deductions with respect to an item of Partnership property shall be computed
with reference to the Gross Asset Value of such property rather than its
adjusted basis.
(d) Effect of Distributions In Kind on Capital Accounts. If any
asset of the Partnership is distributed in kind, then pursuant to Section
1.704-1(b)(2)(iv)(e) of the Regulations, such asset shall be treated as
if it were sold in a taxable disposition equal to its then fair market
value (determined by taking into account the effect of Section 7701(g) of
the Code, if applicable) just prior to its distribution and the resulting
deemed gain or loss shall be allocated pursuant to the following
provisions for purposes of adjusting the balances of the Capital Accounts
of the Partners only:
(1) If such asset of the Partnership is being distributed
pursuant to the Unwind Procedure, then (i) the deemed gain from such
asset shall be allocated first to the Partner which does not receive
and is not deemed to receive the distribution of such asset
("Nonreceiving Partner") to the extent of depreciation deductions
with respect to such asset previously allocated to the Nonreceiving
Partner and then to the Partner which receives or is deemed to
receive the distribution of such asset; and (ii) the deemed loss
from such asset shall be allocated to the Partner which receives or
is deemed to receive the distribution of such asset; and
(2) If such asset is being distributed for any other reason,
then deemed gain or loss from such asset shall be allocated in the
manner described in Section 8.1(c) hereof.
(e) Effect of New Partners or Retiring Partners on Capital Accounts.
Upon the acquisition of an additional interest in the Partnership by any
new or existing partner in exchange for more than a de minimis capital
contribution, or immediately prior to the distribution by the Partnership
to a Partner of more than a de minimis amount of money or other
Partnership property as consideration for an interest in the Partnership,
at the request of any Partner made within 60 days of such acquisition or
distribution, the Gross Asset Value of all Partnership properties shall be
determined, and the unrealized gain or loss that would have been realized
if the sale of such properties at their Gross Asset Values had occurred
shall be charged or credited to the Capital Accounts of the Partners as if
such properties had actually been sold by the Partnership.
(f) Compliance with Treasury Regulations. The foregoing provisions
and the other provisions of this Agreement relating to they maintenance of
Capital Accounts are intended to comply with the Treasury Regulations
issued
Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 76
pursuant to Section 704(b) of the Code, and shall be interpreted and
applied in a manner consistent with such regulations. If the Partners
shall determine that it is prudent to modify the manner in which the
capital accounts are computed or maintained in order to comply with such
regulations, the Partners may make such modification.
(g) Transferee of Partnership Interest. A transferee of an interest
in the Partnership shall succeed to the Capital Account of the transferor.
(h) Capital Account Make-Up Provision. If a Partner's Capital
Account has a deficit balance following liquidation (as defined in
Treasury Regulation Section 1.704-1(b)(2)(ii)(g)) of the Partner's
interest in the Partnership (after taking into account all Capital Account
adjustments for the taxable year of the Partnership in which liquidation
occurs), the Partner shall, by the end of such taxable year (or, if later,
within 90 days after the date of such liquidation), contribute to the
Partnership an amount necessary to increase the balance in its Capital
Account to zero. Any amount so contributed shall be distributed as
provided in Section 16.5 hereof.
(i) Effect of Sony/Block Notes on Capital Accounts. Pursuant to
Section 1.704-1(b)(2)(iv)(d)(2) of the Regulations, the Capital Account of
Sony/Block shall not be increased by the principal amount of the
Sony/Block Notes upon contribution of the Sony/Block Notes to the
Partnership; however, Sony/Block's Capital Account shall be increased upon
(x) a taxable disposition of the Sony/Block Notes by the Partnership or
(y) any principal payments being made on the Sony/Block Notes (to the
extent of such payments). Interest payments made on the Sony/Block Notes
shall not be treated as contributions to the capital of the Partnership
and therefore shall not be credited to the Capital Account of Sony/Block.
8.4 Partnership's Use and Distribution of Free Cash.
(a) Determination of Amount of Free Cash. On November 1 of each
calendar year, the Executive Committee shall determine the amount of cash
then held by Partnership which is "Free Cash." For purposes of the
immediately preceding sentence, the Partnership's Free Cash, at any given
time, shall be all of the Partnership's cash on hand at such time except
for:
(1) subject to the adjustment to the amount of the Sinking
Fund required by Section 8.5(c) hereof, the Restricted Funds of the
Partnership;
Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 77
(2) that portion of the Partnership's Unrestricted Funds which
the Manager reasonably determines will be needed to pay the
Partnership's Operating Obligations between the date of the
determination of the amount of Free Cash and the next revenue
generating period for the Partnership;
(3) the proceeds of any Pre-opening Concessionaire Advances
which are then held by the Partnership and required to be applied
against the Project Costs of the Amphitheater to which such
Pre-opening Concessionaire Advances relate pursuant to the
provisions of this Agreement;
(4) that portion of the Partnership's Unrestricted Funds which
the Executive Committee has previously determined shall be used (i)
to pay a portion of the Budgeted Project Cost of any Approved
Project pursuant to the provisions of Section 4.11(d) hereof, (ii)
to pay for any Cost Overruns pursuant to the provisions of Section
4.13 hereof or (iii) to apply towards the purchase price of an
existing Amphitheater pursuant to the provisions of Section 6.2(b)
(2) hereof;
(5) any Partnership funds attributable to any Charlotte
Receipts received by the Partnership during any Debt Free Charlotte
Year which shall be governed by the provisions of Section 5.6(b)
hereof;
(6) all net cash proceeds received by the Partnership from the
disposition of its interest in any Amphitheater, after payment and
discharge of any Amphitheater Loan related to such Amphitheater,
which shall be governed by the provisions of Sections 5.6(c) or 8.6
hereof; and
(7) that portion of the Partnership's Unrestricted Funds
needed to fund the priority equity distribution then required to be
made to Pace pursuant to the provisions of Section 8.7(a) hereof.
(b) Distribution and Use of Free Cash. Within fifteen (15) days
after the determination of the amount of Free Cash held by the Partnership
pursuant to the provisions of clause (a) of this Section 8.4, the
Partnership shall utilize, apply and distribute all of the Free Cash in
accordance with the following provisions:
(1) Prepayment of Amphitheater Loans. The Debt Prepayment
Portion of the Free Cash (herein defined) shall be segregated from
the other funds of the Partnership to be specifically used for the
reduction
Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 78
of the principal balance of the Partnership's share of the
Amphitheater Loans in accordance with the following provisions:
(i) The Debt Prepayment Portion of Free Cash shall be
allocated between and among the Amphitheater Loans relating to
the Amphitheaters in which the Partnership has a Controlling
Interest in such amounts and in such proportions as may be
determined by the Executive Committee.
(ii) Subject to the provisions of clauses (iii) and (iv)
below, the part of the Debt Prepayment Portion of Free Cash
allocated to each Amphitheater Loan in accordance with the
provisions of clause (i) above shall be paid to the lender of
such Amphitheater Loan as a principal prepayment thereon.
(iii) With respect to any Amphitheater Loan that the
Executive Committee has determined cannot be prepaid without a
material adverse effect on the economic interest of the
Partnership, the part of the Debt Prepayment Portion of Free
Cash which is allocated to such Amphitheater Loan pursuant to
the provisions of clause (i) above shall be held in a separate
account maintained by the Partnership ("Sinking Fund") and
thereafter governed by the provisions of Section 8.5 hereof.
Examples of reasons why the Executive Committee might
determine an Amphitheater Loan cannot be prepaid without a
material adverse effect on the economic interest of the
Partnership include (x) the existence of a material prepayment
penalty under the terms of the Amphitheater Loan or (y) the
Amphitheater Loan is owed by a partnership in which the
Partnership is only a partner and the other partners in such
partnership are not willing to pay their proportionate share
of such a principal prepayment.
(iv) If any amount ("Unwind Debt Amount") of the Debt
Prepayment Portion of Free Cash is allocated to any of the
Unwind Amphitheater Loans pursuant to the provisions of clause
(i) above, then, unless the Executive Committee unanimously
agrees otherwise, the following provisions shall apply:
(A) The Unwind Debt Amount, or any part thereof,
may only be paid to the lenders of the Unwind
Amphitheater Loans to which it has been allocated as
principal prepayments thereon to the extent that the
principal balance of Pace's Allocated Debt, Sony's
Allocated Debt and Block-
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 79
buster's Allocated Debt will be reduced equally as a
result of such principal prepayments.
(B) Any part of the Unwind Debt Amount which is
not paid to the lenders of the Unwind Amphitheater Loans
as a principal prepayment thereon shall be held in the
Sinking Fund and thereafter governed by the provisions
of Section 8.5 hereof.
(2) Distribution to Partners. The remainder of the Free
Cash shall be distributed to the Partners in the following
order of priority and in accordance with the following
provisions:
(i) First, to the Partners for application against
any outstanding loans previously made by the Partners to
the Partnership pursuant to Sections 4.12 or 4.13
hereof, in proportion to, and to the extent of, the
outstanding principal balance of, and accrued unpaid
interest on, such loans.
(ii) Second, to the Partners, the balance of any
Free Cash in proportion to their respective Percentage
Interests.
(c) Defined Terms Used in Article VIII. As used in this
Article VIII, the following terms shall have the respective meanings
indicated:
(1) "Debt Prepayment Portion of Free Cash" shall mean,
at the time that the Executive Committee determines the amount
of Free Cash held by the Partnership pursuant to clause (a) of
this Section 8.4, an amount equal to the lesser of (i) the
Real Principal Balance at such time or (ii) 65% of the amount
of Partnership cash determined by the Executive Committee to
be Free Cash at such time.
(2) "Nominal Principal Balance" shall mean, at any time,
an amount of money equal to the sum of the Partnership's share
of the then actual principal balance of all of the
Amphitheater Loans relating to the Amphitheaters in which the
Partnership has a Controlling Interest.
(3) "Real Principal Balance" shall mean, at any time,
(i) the Nominal Principal Balance at such time minus (ii) the
amount of funds then held in the Sinking Fund.
(4) "Pace's Allocated Debt" shall mean (i) all of the
Partnership's share of the Amphitheater Loans related to the
Nashville Asset
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 80
and the Woodlands Asset and (ii) one-half of the Partnership's
share of the Amphitheater Loans related to the Pittsburgh
Asset, the Raleigh Asset and the Camden Asset.
(5) "Sony's Allocated Debt" shall mean one-half of the
Partnership's share of the Amphitheater Loans related to the
Pittsburgh Asset, the Raleigh Asset and the Camden Asset.
(6) "Blockbuster's Allocated Debt" shall mean all of the
Partnership's share of the Amphitheater Loans related to the
Phoenix Asset, the San Bernardino Asset and the Charlotte
Asset.
8.5 Provisions Regarding Sinking Funds. The funds required to be held in
the Sinking Fund pursuant to Section 8.4(b)(1)(iii) and Section
8.4(b)(1)(iv)(B) hereof shall be governed by the following provisions:
(a) Separate Account for the Sinking Fund. All funds held in the
Sinking Fund shall be held in a separate interest bearing bank account (or
any other investment approved by the Executive Committee) in the
Partnership's name and in no event commingled with any other funds of the
Partnership.
(b) Application of Sinking Funds against Amphitheater Loans. The
funds contained in the Sinking Fund shall be paid and applied against the
principal balance of any one or more Amphitheater Loans as soon as such
application can be made without violating the restrictions contained in
clauses (iii) and (iv) of Section 8.4(b)(1) hereof.
(c) Release of Excess Sinking Funds to Unrestricted Funds.
Immediately before determining the amount of the Partnership's cash which
is Free Cash in accordance with the provisions of Section 8.4(a) hereof,
the portion of the Sinking Fund which exceeds the then Nominal Principal
Balance shall be released from the Sinking Fund and become part of the
Partnership's Unrestricted Funds.
(d) Interest on Sinking Funds. All interest and other income earned
on the Sinking Fund shall be a part of the Sinking Fund.
8.6 Distribution of Proceeds from Sale of an Amphitheater. Subject to the
provisions of Sections 5.6(c) and 16.5 hereof, the net cash proceeds received by
the Partnership from the disposition of its interest in an Amphitheater, after
payment and discharge of any Amphitheater Loan related to such Amphitheater,
shall be distributed as soon after the completion of such sale as is reasonably
practicable, to the Partners in proportion to their respective Percentage
Interests.
Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 81
8.7 Pace's Priority Distribution.
(a) The Priority Distribution. On November 1 of each calendar year,
a priority distribution of cash shall be made to Pace, prior to the
determination of the amount of Free Cash pursuant to the provisions of
Section 8.4(a) hereof, in an amount equal to the lesser of the following
amounts:
(1) The sum of (i) $666,666.67 plus (ii) the amount added
pursuant to Section 8.7(b)(2) to the Pace Preferred Account since
the immediately preceding November 1;
(2) The then balance of the Pace Preferred Account; or
(3) The amount of Cash Flow attributable to the Partnership's
interest in the Woodlands Amphitheater for the most recently
completed Fiscal Year.
(b) The Pace Preferred Account. As used in this Agreement, the term
"Pace Preferred Account" shall mean a bookkeeping account which shall be
established and maintained in accordance with the following provisions:
(1) The initial balance of the Pace Preferred Account shall be
$2,000,000.00.
(2) The balance of the Pace Preferred Account shall be
increased on the last day of each Fiscal Year after the Effective
Date by an amount equal to 7.0% of the then balance of the Pace
Preferred Account.
(3) The balance of the Pace Preferred Account shall be
decreased by the amount of each distribution made to Pace pursuant
to Section 8.7(a) hereof.
(c) Termination of Provisions. The provisions of this Section 8.7
shall automatically terminate, with no action required by any party
hereto, upon the earlier to occur of (i) the balance of the Pace Preferred
Account becoming $0.00, (ii) the Partnership completing a disposition of
its entire interest in the Woodlands Amphitheater, (iii) the closing of
the Unwind Procedure, (iv) the occurrence of a Special Woodlands
Termination or (v) the occurrence of a Special Woodlands Use Impairment.
[END OF ARTICLE VIII]
Article IX - Unwind Procedure
Page 82
ARTICLE IX
Unwind Procedure
9.1 Generally. If Pace wishes to commence the Unwind Procedure pursuant to
an express right to do so set forth in this Agreement, then the provisions of
this Article IX shall apply and govern. For ease of reference, the following is
a cross-reference to the provisions in this Agreement which create a right in
favor of Pace to commence the Unwind Procedure:
(a) Section 12.6(b), relating to the occurrence of a certain number
of Qualified Amphitheaters having become Sony/Block Rejected
Amphitheaters.
(b) Section 11.2, relating to Sony/Block's election to terminate
Pace as the Manager or subsequent changes in the identity of the Manager
of the Partnership.
(c) Section 15.3(a), relating to certain changes in the ownership of
Sony/Block or the partners of Sony/Block which occur prior to April 1,
1996.
(d) Section 10.5(b)(2), relating to a failure to unanimously approve
an Annual Operating Budget.
9.2 Commencement of Unwind Procedure. If Pace desires to commence the
Unwind Procedure pursuant to a right set forth in this Agreement, Pace must
first provide, within the specific time limit required by the provision
contained in this Agreement which creates such right, notice ("Unwind Notice")
thereof to Sony/Block with (i) a statement setting forth the specific basis upon
which Pace is exercising its right to commence the Unwind Procedure and (ii) a
citation to the specific provision contained in this Agreement which creates
such right.
9.3 Timing of Closing the Unwind Procedure. The closing of the Unwind
Procedure shall occur on the date determined in accordance with the following
provisions:
(a) If the Unwind Notice is provided during the calendar months of
October, November or December of any year, then the closing of the Unwind
Procedure shall occur on the date which is sixty (60) days after the
giving of the Unwind Notice.
(b) If the Unwind Notice is provided at any other time during a
year, then the closing of the Unwind Procedure shall occur on the next
November 30 following the giving of the Unwind Notice.
Article IX - Unwind Procedure
Page 83
Between the date of the Unwind Notice and the occurrence of the closing of the
Unwind Procedure, the Partnership shall continue its business operations in
accordance with, and subject to, all of the provisions of this Agreement.
9.4 Unwind Closing. At the closing of the Unwind Procedure, each of the
Partners shall, in accordance with the terms and provisions set forth below,
take such actions as are required to cause the following to occur:
(a) Distributions to SMP. The Partnership shall convey, as a
distribution in-kind, all of its rights, titles and interests in and to
the Raleigh Amphitheater, the Pittsburgh Amphitheater and the Camden
Amphitheater to SMP. This conveyance shall be made to SMP (or its
designees) for the account of Pace (as to a fifty percent (50%) interest
therein) and Sony/Block (as to a fifty percent (50%) interest therein).
Accordingly, Pace and Sony/Block shall be deemed to have each received a
distribution of a one-half interest in such assets for purposes of making
adjustments to the Capital Accounts of the Partners.
(b) [Intentionally Left Blank]
(c) Distributions to Pace. The Partnership shall convey, as a
distribution in-kind, all of its rights, titles and interests in and to
the Woodlands Amphitheater and the Nashville Amphitheater to Pace (or its
designees).
(d) Distributions to Blockbuster. The Partnership shall convey, as a
distribution in-kind, all of its rights, titles and interests in and to
the Phoenix Amphitheater, the Charlotte Amphitheater and the San
Bernardino Amphitheater to Sony/Block (or its designees).
(e) Sinking Fund. If, at the time of the closing of the Unwind
Procedure, the total amount of the Sinking Fund exceeds the combined
aggregate principal balance of the Amphitheater Loans relating to those
Amphitheaters (if any) in which the Partnership has a Controlling Interest
and that are not being distributed at the closing of the Unwind Procedure,
then such excess shall be distributed to the Partners in proportion to
their Percentage Interests at the closing of the Unwind Procedure.
(f) Distribution of Proceeds of Sony/Block Notes. The Sony/Block
Notes (if any principal balance remains outstanding) shall be due and
payable, in full, at the closing of the Unwind Procedure. At the closing
of the Unwind Procedure, all unexpended Contributed Project Funds, after
full payment and discharge by Sony/Block of its obligations under the
Sony/Block Notes at the closing of the Unwind Procedure, shall be
distributed to Sony/Block; provided, however, if the Partnership is
obligated to construct, or otherwise acquire a
Article IX - Unwind Procedure
Page 84
Controlling Interest in, an Amphitheater at the time of the closing of the
Unwind Procedure, then a sufficient portion of Contributed Project Funds
shall be withheld by the Partnership to fund the Project Costs or
acquisition cost of such Amphitheater (or interest therein) in accordance
with the terms and provisions of this Agreement.
(g) Make-up for Major Capital Improvements. If any Major Capital
Improvements are made by the Partnership after the Existing Facility
Closing with respect to any of the Amphitheaters distributed at the
closing of the Unwind Procedure utilizing any source of funds other than
an Amphitheater Loan relating to such Amphitheater, then certain cash
amounts shall be payable at the closing of the Unwind Procedure in
accordance with the following provisions:
(1) If such Major Capital Improvements were made with respect
the Woodlands Amphitheater or the Nashville Amphitheater, then Pace
shall pay to Sony/Block an amount equal to two-thirds of the total
cost of such Major Capital Improvements.
(2) If such Major Capital Improvements were made with respect
to the Phoenix Amphitheater, the Charlotte Amphitheater or the San
Bernardino Amphitheater, then Sony/Block shall pay to Pace an amount
equal to one-third of the total cost of such Major Capital
Improvements.
(3) If such Major Capital Improvements were made with respect
to the Raleigh Amphitheater, the Camden Amphitheater or the
Pittsburgh Amphitheater, then Pace shall pay to Sony/Block an amount
equal to 16-2/3% of the total cost of such Major Capital
Improvements.
If amounts are payable by each Partner to the other Partner pursuant to
the provisions of this clause (g), then such amounts shall be applied
against each other and a single net sum ("Clause G Sum") shall be
calculated as being due from one Partner to the other. The final net
amount payable from one Partner to the other pursuant to the foregoing
provisions shall be, for all purposes of this Agreement, deemed to have
been contributed to the capital of the Partnership by the paying Partner
and deemed to have been immediately thereafter distributed by the
Partnership to the receiving Partner.
(h) Make-up for Camden. If the Partnership's interest in the Camden
Amphitheater is distributed at the closing of the Unwind Procedure as
provided for herein, then Pace shall pay to Sony/Block in cash at the
closing of the Unwind Procedure an amount ("Camden Make-Up Amount") equal
to the sum of the following:
Article IX - Unwind Procedure
Page 85
(1) One-half of the total amount of Contributed Project Funds
previously expended on Project Costs for the Camden Amphitheater;
and
(2) 16-2/3% of the amount of all General Funds (herein
defined) expended on Project Costs after the Existing Facility
Closing for the Camden Amphitheater (where "General Funds" means any
funds of the Partnership other than (i) Contributed Project Funds
and (ii) funds advanced to the Partnership pursuant to an
Amphitheater Loan).
The amount payable from Pace to Sony/Block pursuant to the provisions of
this clause (h) shall be, for all purposes of this Agreement deemed to
have been contributed to the capital of the Partnership by Pace and deemed
to have been immediately thereafter distributed by the Partnership to
Sony/Block.
(i) Make-up for Other Facilities. If, at the time of the closing of
the Unwind Procedure, the Partnership (a) owns a Controlling Interest in
any existing Amphitheater which is not required to be distributed pursuant
to the provisions hereof at the closing of the Unwind Procedure or (b) is
obligated to construct, or otherwise acquire a Controlling Interest in,
any other Amphitheater, then Pace shall be required and obligated to make
a payment in cash to Sony/Block at the closing of the Unwind Procedure in
an amount ("Other Facilities Make-Up Amount") equal to one-third (1/3rd)
of the Other Partner Equity Contribution Amount. As used in the
immediately preceding sentence, the term "Other Partner Equity
Contribution Amount" shall mean, at the time of the closing of the Unwind
Procedure, (i) the aggregate original principal amount of the Sony/Block
Notes plus (ii) the amount (if any) of cash funds contributed to the
Partnership by Sony/Block upon execution of this Agreement pursuant to
Sections 4.10(a)(1) and 4.l0(b)(1) hereof minus (iii) the total amount of
Contributed Project Funds previously or then being distributed to
Sony/Block pursuant to the provisions of Section 9.4(f) or Section 4.17
(b)(2)(i) hereof minus (iv), the total amount of Contributed Project
Funds previously expended by the Partnership for any one or more of (x)
Project Costs related to the Camden Amphitheater, (y) Major Capital
Improvements with respect to any of the Amphitheaters distributed at the
closing of the Unwind Procedure and (z) the purchase price of the
Partnership's Controlling Interest in any Partnership MCA/Pace
Amphitheaters. Any amount paid by Pace to Sony/Block at the closing of the
Unwind Procedure pursuant to the provisions of this Section 9.4(i) shall
be, for all purposes of this Agreement, deemed to have been contributed to
the capital of the Partnership by Pace and immediately thereafter
distributed by the Partnership to Sony/Block.
(j) Deferral of Pace's Camden and Other Facility Make-up
Obligations. Pace may, at its sole option, elect to make the payment of
the amounts due to
Article IX - Unwind Procedure
Page 86
Sony/Block pursuant to the provisions of clauses (h) and (i) by doing the
following at the closing of the Unwind Procedure:
(1) Executing and delivering to Sony/Block a promissory note
in Acceptable Form, in the principal amount of the sum of the Camden
Make-Up Amount and the Other Facilities Make-Up Amount and providing
for interest thereon at the Short Term Rate. The payment provisions
of such promissory note shall provide that annual payments shall be
due thereunder on each November 30 following the closing of the
Unwind Procedure, each such annual payment to be in an amount equal
to two-thirds of Pace's share of the Cash Flow for the Woodlands
Amphitheater and the Nashville Amphitheater ("Measuring
Amphitheaters") for the twelve month period then ended; provided,
however, if, at any time during which any principal amounts remain
outstanding under the promissory note referred to herein, Pace (or
any of its Affiliates) should no longer own substantially the same
interest in one of the Measuring Amphitheaters, then the annual
payment due thereunder shall be equal to two-thirds of Pace's share
of the Cash Flow for the remaining Measuring Amphitheater and one
other Amphitheater in which Pace (or any of its Affiliates) owns an
interest and which has historically produced an amount of Cash Flow
to Pace comparable to the Cash Flow previously produced to Pace by
the Measuring Amphitheater in which Pace (or its Affiliates) no
longer owns an interest. In any event, the entire unpaid principal
balance and all interest accrued thereon of such promissory note
shall be payable on or before the third anniversary of the closing
of the Unwind Procedure. Pace shall be required to (i) cause each of
the Measuring Amphitheaters to be operated in a manner consistent
with past practices and (ii) prohibit any Major Capital Improvements
to be made in respect of either Measuring Amphitheater during the
time that any amounts remain outstanding under the promissory note
delivered pursuant to the provisions of this clause (1).
(2) Executing and delivering to Sony/Block such mortgages,
security agreements or other security instruments reasonably
satisfactory to Sony/Block and as may be necessary to create valid,
binding and perfected first priority liens or security interests on
Pace's Partnership Interest (if the Partnership is to remain in
existence after the closing of the Unwind Procedure) and Pace's (or
its Affiliates') interest in the Woodlands Amphitheater, the
Nashville Amphitheater, the Raleigh Amphitheater, the Pittsburgh
Amphitheater and the Camden Amphitheater in order to secure payment
of the promissory note delivered pursuant to clause (1) of this
Section 9.4(j).
Article IX - Unwind Procedure
Page 87
If Pace exercises its option to deliver the above-described promissory
note then such promissory note shall be deemed to have been contributed to
the capital of the Partnership and immediately thereafter distributed by
the Partnership to Sony/Block. As used herein the term "Acceptable Form"
shall mean, with respect to the promissory note which Pace may deliver to
Sony/Block pursuant to the provisions of clause (1) of this Section
9.4(j), a promissory note issued by Pace to Sony/Block containing, among
other things which may be reasonably requested by Sony/Block, provisions
concerning (A) the acceleration of such promissory note, if (x) payments
of principal and interest on such note are not paid when due, (y) a
default occurs under any other promissory note issued by Pace to
Sony/Block, (z) an Event of Withdrawal occurs with respect to Pace or any
guarantor of such promissory note and (B) payment of legal fees and
disbursements incurred by the holder of such note in the event an
enforcement action is commenced with respect to said note.
(k) Make-up Provision for Principal Reductions. Certain cash amounts
shall be payable at the closing of the Unwind Procedure in accordance with
the following provisions:
(1) Pace shall pay to Sony/Block an amount equal to two-thirds
of the Principal Reduction Amount for the Nashville Asset and the
Woodlands Asset.
(2) Pace shall pay to Sony/Block an amount equal to 16-2/3% of
the Principal Reduction Amount for the Raleigh Asset and the
Pittsburgh Asset.
(3) If the Partnership's interest in the Camden Amphitheater
is distributed at the closing of the Unwind Procedure as provided
for herein, then Pace shall pay to Sony/Block 16-2/3% of an amount
equal to the sum of the following:
(i) (x) the largest principal balance outstanding at any
time under the Amphitheater Loan which relates to the Camden
Amphitheater minus (y) the principal balance of the
Amphitheater Loan which relates to the Camden Amphitheater at
the time of the closing of the Unwind Procedure; and
(ii) (x) the initial amount of the Concession Loan
related to the Camden Amphitheater (to the extent such amount
was used to fund or reimburse Project Costs for the Camden
Amphitheater) minus (y) the Unamortized Amount of the
Concession
Article IX - Unwind Procedure
Page 88
Loan related to the Camden Amphitheater at the time of the
closing of the Unwind Procedure.
(4) Sony/Block shall pay to Pace an amount equal to one-third
of the Principal Reduction Amount for the Phoenix Asset, the
Charlotte Asset and the San Bernardino Asset.
(5) If the Partnership's interest in the Charlotte
Amphitheater is distributed at the closing of the Unwind Procedure
as provided for herein, then Sony/Block shall pay to Pace an amount
equal to one-third of the amount by which (if any) (i) $7,000,000
exceeds (ii) the balance of the Charlotte Preferred Cash
Distribution Account as of the time of the closing of the Unwind
Procedure.
If the amount specified as being payable from one Partner to the other in
any of the above clauses in this Section 9.4(k) is, in fact, a negative
amount, then the other Partner shall owe the absolute amount thereof to
the first Partner. The amounts payable pursuant to this clause (k) of
Section 9.4 shall be added to and applied against each other and a single
net sum ("Clause K Sum") shall be calculated as being due from one Partner
to the other. The Clause K Sum and the Clause G Sum shall then be added
to, or netted against, each other, as applicable, to arrive at final net
sum ("Clause G & K Sum") being due from one Partner to the other pursuant
to the provisions of clauses (g) and (k) of this Section 9.4. If, after
the calculations referred to in the immediately preceding sentences,
Sony/Block owes to Pace a final net sum pursuant to the provisions of
clauses (g) and (k) of this Section 9.4 and if Pace has elected to execute
and deliver a promissory note pursuant to the right created in clause (j)
of this Section 9.4, then Sony/Block may cause the Clause G & K Sum to be
offset against the principal of such promissory note, to the extent
thereof. The final amount payable from one Partner to the other pursuant
to the foregoing provisions shall be, for all purposes of this Agreement,
deemed to have been contributed to the capital of the partnership by the
paying Partner and deemed to have been immediately thereafter distributed
by the Partnership to the receiving Partner.
(l) Amphitheater Loans, Receivables, Payables, Concession Loans,
etc.
(1) Each Amphitheater (or the Partnership's interest therein)
being distributed at the closing of the Unwind Procedure shall be
distributed subject to the following liabilities and obligations
("Transferred Liabilities"), but no others:
Article IX - Unwind Procedure
Page 89
(i) the obligation to repay the Amphitheater Loan (other
than past due amounts) relating to such Amphitheater;
(ii) the obligation to pay the Partnership's accounts
payable which directly relate to such Amphitheater and which
were incurred in the ordinary course of the operation, use,
management or ownership of such Amphitheater;
(iii) the obligation to make or pay lease or rental
payments (other than past due amounts) directly relating to
the occupancy or use of such Amphitheater or to the use or
possession of any equipment or furnishings used directly in
connection with the ownership, operation, management or
ownership of such Amphitheater;
(iv) the Partnership's obligations (other than past due
amounts) in respect of concession agreements, sponsor
agreements, employment agreements and other similar types of
contractual obligations which directly relate to the
operation, use, ownership or management of such Amphitheater
and which were either in existence at the time of the Existing
Facility Closing or were entered into thereafter by the
Partnership in accordance with the provisions of this
Agreement; and
(v) the obligation to pay (other than past due amounts)
all real estate taxes, ad valorem taxes, insurance premiums,
and utility bills directly related to the use, operation,
management or ownership of such Amphitheater.
(2) Each Amphitheater (or the Partnership's interest therein)
being distributed at the closing of the Unwind Procedure shall
include a transfer of (i) all of the Partnership's benefits,
privileges, assets, licenses, permits, easements, equipment,
supplies, sound systems, lighting systems, computers, contractual
rights and other benefits or ownership interests relating directly
to the use, operation, management, maintenance or ownership of such
Amphitheater, (ii) all of the Partnership's accounts receivable
which are directly related to, and which arose out of, the use,
operation, management or ownership of such Amphitheater and (iii)
the cash on hand then held in such Amphitheater's operating bank
account.
(3) The state and local transfer taxes, if any, payable by
reason of the distribution of each Amphitheater (or the
Partnership's interest
Article IX - Unwind Procedure
Page 90
therein) at the closing of the Unwind Procedure shall be paid by the
Partnership at the closing of the Unwind Procedure.
(4) A special distribution of cash shall be made by the
Partnership to the Partners simultaneously with the distribution of
the Unwind Assets at the closing of the Unwind Procedure in the
amounts designated below:
(i) to Pace, an amount equal to the sum of the
following:
(A) 66-2/3% of the Foregone Concession Advance
Amount for the Nashville Asset and the Woodlands Asset.
(B) 16-2/3% of the Foregone Concession Advance
Amount for each of the Camden Asset, the Pittsburgh
Asset and the Raleigh Asset.
(ii) to Sony/Block, an amount equal to the sum of the
following:
(A) 66-2/3% of the Foregone Concession Advance
Amount for the Phoenix Asset, the Charlotte Asset and
the San Bernardino Asset.
(B) 16-2/3% of the Foregone Concession Advance
Amount for each of the Camden Asset, the Pittsburgh
Asset and the Raleigh Asset.
(m) Indemnification by Partnership.
(1) With respect to each of the Amphitheaters (or the
Partnership's interest therein) being distributed at the closing of
the Unwind Procedure, the Partnership shall reimburse, indemnify,
defend and hold the Person ("Distributee") receiving the
distribution of such Amphitheater (or the interest therein)
harmless, on an after-tax basis, from and against:
(i) any and all damages, losses, deficiencies,
liabilities, costs and expenses based upon, resulting from,
relating to or arising out of any one or more of the following
matters:
Article IX - Unwind Procedure
Page 91
(A) any of the representations expressly made by
the Partnership in connection with, or relating to, such
Amphitheater in any document or instrument executed and
delivered as a part of the closing of the Unwind
Procedure;
(B) the material breach or violation of any
covenant or agreement made by the Partnership in
connection with, or relating to, such Amphitheater in
any document or instrument executed as a part of the
closing of the Unwind Procedure;
(C) any liabilities, duties, responsibilities or
obligations, other than the Transferred Liabilities, to
the extent that such liabilities, duties,
responsibilities or obligations relate to or arose out
of, the operation, use, management, maintenance or
ownership of such Amphitheater after the Existing
Facility Closing and before the closing of the Unwind
Procedure;
(D) any liability, responsibility or obligation
arising from existing litigation or claims or subsequent
litigation to the extent that any of such matters arise
out of, or relate to, an occurrence or event happening
at, or in connection with, such Amphitheater after the
Existing Facility Closing and before the closing of the
Unwind Procedure; and
(E) any liability based upon, arising from or
attributable to claims made before, on or after the
closing of the Unwind Procedure for personal injuries
(including claims for wrongful death), property damages
or consequential damages with respect thereto, to the
extent that such liability arises or results from or is
attributable to the operations of the Partnership at
such Amphitheater after the Existing Facility Closing
and before the closing of the Unwind Procedure; and
(ii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines,
judgments, costs and other expenses (including, without
limitation, reasonable attorneys' fees) incident to (A) any of
the matters listed and described in clause (1)(i) above or (B)
the enforcement of the provisions of this Section 9.4(m).
Article IX - Unwind Procedure
Page 92
(2) If any Distributee receives notice of any claim or the
commencement of any action or proceeding with respect to which the
Partnership is obligated to provide indemnification pursuant to this
Section 9.4(m), the Distributee shall promptly give the Partnership
and the Partners notice thereof. Such notice shall be a condition
precedent to any liability or obligation of the Partnership or the
Partners under the provisions for indemnification contained in this
Section 9.4(m) unless the Distributee can establish that the
Partnership and the Partners have not been materially prejudiced
thereby. If the Partnership (or the Partners) choose to defend any
claim, it (or they) shall be permitted to do so (unless the
Distributee can establish that (x) it is reasonably likely to bear a
greater portion of the potential losses associated with such claim
or (y) pendency of such claim is reasonably likely to have a
material adverse effect on the Distributee's continued business
operations) and the Distributee shall make available to the
Partnership and the Partners any books, records or other documents
within its control that are necessary or appropriate for such
defense. The Distributee shall not settle any claim or liability for
which it is claiming indemnification hereunder without the consent
of the Partnership (such consent not to be unreasonably withheld).
At the closing of the Unwind Procedure, the Partnership shall execute and
deliver such instruments or other documents in favor of the various
Distributees as may be reasonably necessary to further evidence and
document the indemnity obligations imposed upon the Partnership pursuant
to the provisions of this Section 9.4(m).
(n) Indemnification of the Partnership.
(1) With respect to each of the Amphitheaters (or the
Partnership's interest therein) being distributed at the closing of
the Unwind Procedure, the Distributee of such Amphitheater (or the
Partnership's interest therein) shall reimburse, indemnify, defend
and hold the Partnership harmless, on an after-tax basis, from and
against:
(i) any and all damages, losses, deficiencies,
liabilities, costs and expenses based upon, resulting from,
relating to or arising out of any Transferred Liabilities
relating to such Amphitheater to the extent that such damages,
losses, deficiencies, liabilities, costs or expenses arise
after the closing of the Unwind Procedure; and
Article IX - Unwind Procedure
Page 93
(ii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines,
judgments, costs and other expenses (including, without
limitation, reasonable attorneys' fees) incident to (A) any
of the matters listed and described in clause (1)(i) above or
(B) the enforcement of the provisions of this Section 9.4(n).
(2) If the Partnership receives notice of any claim or the
commencement of any action or proceeding with respect to which a
Distributee is obligated to provide indemnification pursuant to this
Section 9.4(n), the Partnership shall promptly give the Distributee
notice thereof. Such notice shall be a condition precedent to any
liability or obligation of the Distributee under the provisions for
indemnification contained in this Section 9.4(n) unless the
Partnership can establish that the Distributee has not been
materially prejudiced thereby. If the Distributee chooses to defend
any claim, it shall be permitted to do so (unless the Partnership
can establish that (x) it is reasonably likely to bear a greater
portion of the potential losses associated with such claim or (y)
pendency of such claim is reasonably likely to have a material
adverse effect on the Partnership's continued business operations)
and the Partnership shall make available to the Distributee any
books, records or other documents within its control that are
necessary or appropriate for such defense. The Partnership shall
not settle any claim or liability for which it is claiming
indemnification hereunder without the consent of the Distributee
(such consent not to be unreasonably withheld).
At the closing of the Unwind Procedure, each Distributee shall be
required, as a condition to the distribution of the Amphitheater (or the
Partnership's interest therein) being distributed to such Distributee,
such instruments or other documents in favor of the Partnership as may be
reasonably necessary to further evidence and document the indemnity
obligations imposed upon each Distributee pursuant to the provisions of
this Section 9.4(n).
(o) Continuing Noncompete Covenants. The Partners, PMG, PEC, Sony
and Blockbuster shall each execute such documents as may be necessary to
evidence their respective agreement to the continuing noncompete
covenants described in Section 12.3 hereof.
The Partnership shall execute such documents and instruments of conveyance, and
obtain such consents and releases, as may be necessary to complete the foregoing
distributions utilizing the same form of conveyancing documents as were used in
the original transfer of these assets to the Partnership at the Existing
Facility Closing. To the extent that the Partnership's rights to any of the
Unwind Assets may not be
Article IX - Unwind Procedure
Page 94
assigned and distributed without the consent or approval of another person which
is not obtained at or before the closing of the Unwind Procedure, the provisions
of this Article IX shall not constitute an agreement to assign and distribute
the same if an attempted assignment and distribution would constitute a breach
of any agreement or obligation or be unlawful, and the Partnership, at its
expense, shall use its best efforts to obtain any such required consent or
approval as promptly as possible. If any such consent or approval shall not be
obtained or any attempted assignment or distribution would be ineffective or
impair the Distributee's right to the Unwind Asset in question so that the
Distributee would not in effect acquire the benefit of all of the Partnership's
rights in and to such Unwind Asset, the Partnership, to the maximum extent
permitted by law, shall act after the closing of the Unwind Procedure as the
Distributee's agent in order to obtain for the Distributee the benefits
thereunder, and shall cooperate, to the maximum extent permitted by law, with
the Distributee in any other reasonable arrangements designed to provide such
benefits to the Distributee. Without limiting the generality of the provisions
contained in the immediately preceding sentence, the Partnership acknowledges
and agrees that its obligation contained herein is to place each Distributee in
a position at the closing of the Unwind Procedure to effectively manage the
operations of such Distributee's Unwind Asset and to receive all revenues
derived therefrom to the same extent that such Distributee would have received
such revenues had the Partnership obtained all required consents and approvals
to the distribution and transfer of such Unwind Asset to the Distributee and the
Distributee had obtained title to such Unwind Asset at the closing of the Unwind
Procedure. Each distributee shall be entitled to have the same closing
procedures used as were followed at the Existing Facility Closing (such as, by
way of example, if the Partnership received a policy of title insurance with
respect to any asset conveyed to it at the Existing Facility Closing, then the
distributee of that same asset at the closing of the Unwind Procedure will be
also entitled to the same type and quality of title insurance). If the
Partnership's interest in any of the Amphitheaters which are required by the
provisions of this Section 9.4 to be distributed at the closing of the Unwind
Procedure has been previously sold, distributed or otherwise transferred by the
Partnership, then, notwithstanding the provisions of this Section 9.4, the
Partnership's interest in any such Amphitheater shall not be distributed at the
closing of the Unwind Procedure and no adjustments shall be required to be made
between the Partners as a result thereof.
9.5 Other Provisions Relating to the Unwind Procedure. The additional
following provisions shall apply with regard to the Unwind Procedure:
(a) If, after completion of the closing of the Unwind Procedure, the
Partnership (i) does not own a Controlling Interest in any existing
Amphitheater and (ii) is not obligated to construct, or otherwise acquire
a Controlling Interest in, any other Amphitheater, then the Partnership
shall be deemed to be dissolved immediately following the completion of
the closing of the Unwind
Article IX - Unwind Procedure
Page 95
Procedure and the Partnership shall commence to wind up the affairs of the
Partnership and distribute its assets in accordance with the provisions of
Article XVI hereof.
(b) Following the giving of an Unwind Notice pursuant to Section 9.2
hereof, no further Amphitheaters (or interests therein) will be acquired,
developed or constructed by the Partnership (other than (i) any proposed
Amphitheater which became an Approved Project prior to the giving of such
Unwind Notice and (ii) any existing Amphitheater which the Partnership was
obligated to acquire a Controlling Interest in prior to the giving of such
Unwind Notice).
(c) Following the giving of an Unwind Notice pursuant to Section 9.2
hereof, notwithstanding the provisions of Section 10.5(c), no further
R&D Expenditures shall be budgeted or expended by the Partnership at any
time thereafter.
(d) If, after the closing of the Unwind Procedure, the Partnership
(i) owns a Controlling Interest in any existing Amphitheater or (ii) is
obligated to construct, or otherwise acquire a Controlling Interest in,
any other Amphitheater, then the Partnership shall continue in existence
in accordance with all of the terms, provisions and conditions contained
in this Agreement, with the exception that the general exclusivity
provisions contained in Section 12.1 of this Agreement shall terminate;
provided, however, that, pursuant to the provisions of Section 12.3
hereof, certain continuing noncompete and exclusivity provisions shall
continue to be in effect as specified therein.
9.6 Effect of Partner Default on Unwind Procedure. If, at the time of the
closing of the Unwind Procedure, either Partner ("Innocent Partner") asserts or
alleges that a Partner Default has occurred with respect to the other Partner
("Accused Partner"), then the closing of the Unwind Procedure shall still occur
in accordance with the provisions of Section 9.4 hereof, but subject to the
following special provisions and conditions:
(a) Notwithstanding any other provision hereof, the Partnership
shall not dissolve following the closing of the Unwind Procedure until a
final non-appealable determination is made by a court of competent
jurisdiction concerning the Innocent Partner's allegations of a Partner
Default with respect to the Accused Partner. The Accused Partner shall
continue to be liable and responsible to the Partnership and the Innocent
Partner for all damages and remedies to which the Partnership or the
Innocent Partner is entitled pursuant to the provisions of this Agreement,
at law or in equity if it is ultimately determined by a court of competent
jurisdiction that a Partner Default has occurred with
Article IX - Unwind Procedure
Page 96
respect to the Accused Partner prior to the closing of the Unwind
Procedure.
(b) If the Innocent Partner obtains, after the closing of the Unwind
Procedure, a final, nonappealable judgment of a court of competent
jurisdiction that (i) a Partner Default had occurred with respect to the
Accused Partner prior to the closing of the Unwind Procedure and (ii) as a
part of its damages, the Innocent Partner is entitled to purchase the
Accused Partner's Partnership Interest pursuant to Section 17.2(e) hereof,
then, in order that the Innocent Partner shall be entitled to the full
benefit of any and all remedies to which it would have been entitled
pursuant to the provisions of Section 17.2(e) hereof as if the closing of
the Unwind Procedure had never occurred, the following provisions shall
apply:
(1) The Accused Partner shall be obligated to immediately
after the entry of such judgment convey, or cause to be conveyed, to
the Partnership, as a contribution to capital, all of the assets and
interests which were distributed, or deemed to be distributed, to
the Accused Partner at the closing of the Unwind Procedure in the
same manner, and utilizing the same procedures, as were used in the
distribution of such interests and assets at the closing of the
Unwind Procedure. The Accused Partner's Capital Account shall be
increased as a result of the contribution to capital described in
the immediately preceding sentence in the same amount as it was
decreased as a result of the distribution of assets made, or deemed
to have been made, at the Closing of the Unwind Procedure to the
Accused Partner.
(2) The Accused Partner shall be obligated, with respect to
each of the assets or interests which were distributed or deemed to
be distributed to the Accused Partner at the closing of the Unwind
Procedure (the "Distributed Assets"), to immediately after the entry
of such judgment pay to the Partnership, as damages and not as a
contribution to capital, an amount equal to the Cash Flow from the
Distributed Assets, since the occurrence of the closing of the
Unwind Procedure as if such closing had not occurred. The Accused
Partner shall make all books and records reflecting the financial
results from the operation, ownership and management of the
Distributed Assets available to the Innocent Partner in order to
assist in the calculation and determination of the amount of funds
payable by the Accused Partner in accordance with the provisions
contained in the immediately preceding sentence.
(3) The Accused Partner shall indemnify and hold the
Partnership and the Innocent Partner harmless, on an after-tax
basis, from and
Article IX - Unwind Procedure
Page 97
against any taxes and any other cost, loss, damage or expense
(including, but not limited to, additional federal, state or local
taxes being owed or the due date of any such taxes being
accelerated) in connection with, or arising out of, (i) the
original occurrence of the Unwind Procedure and (ii) the subsequent
transfer of assets to the Partnership by the Accused Partner
pursuant to clauses (1) and (2) of this Section 9.6(b). The Accused
Partner shall also be required to reimburse the Partnership and the
Innocent Partner for their respective actual out-of-pocket costs for
any attorneys', fees, accountants' fees or other fees of other
professionals or advisors in enforcing or determining the amount of
the indemnity obligation created pursuant to the preceding sentence.
The indemnity obligations contained in this Section 9.6(b)(3) shall
operate independently of, and in addition to, the indemnity
obligations created pursuant to the provisions of Section 13.9(c)
hereof.
(4) The Innocent Partner shall thereafter be entitled to
exercise its right to purchase the Partnership Interest of the
Accused Partner in accordance with the provisions of Section 17.2(e)
hereof.
(c) As a condition to the closing of the Unwind Procedure, the
Accused Partner must cause the following to occur at the closing of the
Unwind Procedure:
(1) Each Distributee which receives any interest in an
Amphitheater at the closing of the Unwind Procedure which is being
deemed to have been distributed to the Accused Partner, shall be
required to execute and deliver to the Partnership such mortgages or
other security instruments reasonably satisfactory to the Innocent
Partner as may be necessary to create valid, binding and perfected
first priority liens or security interests (subject only to any
liens or security interests securing the applicable Amphitheater
Loans in existence at the time of the closing of the Unwind
Procedure) on the Distributee's interest in such distributed assets
or interests in order to secure payment and performance of the
obligations, responsibilities and liabilities of the Accused Partner
under and pursuant to the provisions of this Section 9.6. The
mortgages or other security instruments required to be executed by
the Accused Partner pursuant to the foregoing provisions shall
include (i) a covenant from the Accused Partner to continue the
management and operation of all Amphitheaters which are distributed,
or deemed to have been distributed, to the Accused Partner at the
closing of the Unwind Procedure in a manner consistent with the
operation and management thereof by the Partnership and (ii)
restrictions prohibiting the sale or other conveyance
Article IX - Unwind Procedure
Page 98
of any such Amphitheaters (or interest therein) or the placing of
any other liens or security interests thereon.
(2) The Accused Partner's Parent Corporation (herein defined)
shall be required to execute a guaranty in form reasonably
acceptable to the innocent Partner, pursuant to which the Parent
Corporation guarantees the full and final performance, payment and
discharge of all liabilities, duties, responsibilities and
obligations of the Accused Partner under and pursuant to the
provisions of this Section 9.6 (provided, however, that the guaranty
provided pursuant to this clause (2) shall be limited, in absolute
amount, to an amount equal to the sum of (i) the total net value of
the Distributed Assets plus (ii) the Cash Flow from such Distributed
Assets after the closing of the Unwind Procedure). As used in the
immediately preceding sentence, the term "Parent Corporation" shall
mean (i) PEC and PMG, with respect to Pace, (ii) Sony and
Blockbuster, with respect to Sony/Block.
(d) Subject first to the Accused Partner having complied with the
provisions of this Section 9.6, each of the Partners expressly waives
any right to enjoin or otherwise prohibit, through any judicial
proceeding, receivership proceeding or otherwise, the occurrence of the
closing of the Unwind Procedure, it being agreed that the contractual
remedies set forth in this Section 9.6, as to the Unwind Assets and the
Unwind Procedure, are exclusive.
(e) Notwithstanding anything to the contrary contained herein, if
(i) the Accused Partner is Sony/Block, (ii) a final non-appealable
determination is made by a court of competent jurisdiction that Sony/Block
is a Defaulting Partner and (iii) the breached obligation which gave rise
to such determination is also judicially determined to be a Sony Specific
Obligation or a Blockbuster Specific Obligation only, then the following
provisions shall apply:
(1) if it is a Blockbuster Specific Obligation, then, for
purposes of this Section 9.6, only the Blockbuster Subsidiary shall
be deemed to be the Accused Partner and only the Blockbuster
Subsidiary's Distributed Assets will have to be returned to the
Partnership as required by the provisions of clause (b)(1) of this
Section 9.6.
Article IX - Unwind Procedure
Page 99
(2) If it is a Sony Specific Obligation, then, for purposes of
this Section 9.6, only the Sony Subsidiary shall be deemed to be the
Accused Partner and only the Sony Subsidiary's Distributed Assets
will have to be returned to the Partnership as required by the
provisions of clause (b)(1) of this Section 9.6.
[END OF ARTICLE IX]
Article X - Management of Partnership Affairs
Page 100
ARTICLE X
Management of Partnership Affairs
10.1 Management. The management and control of the Partnership's business
shall be vested in the Partners, who shall exercise such management and control
exclusively through and by virtue of their respective selection of the
Representatives to serve on the Executive Committee in accordance with the
provisions of this Article X.
10.2 Executive Committee.
(a) Executive Committee's Authority. The Executive Committee shall,
subject to the provisions of clause (b) of this Section 10.2, have (i)
full, exclusive and complete authority and discretion to manage and
control, and shall make all decisions affecting, the Partnership's
business; (ii) full authority to effectuate the purposes of the
Partnership and to take any action required, permitted or authorized
pursuant to the terms of this Agreement; and (iii) full power to exercise
all rights and powers generally inferred or conferred by law in connection
therewith. The Executive Committee shall generally have the duties and
responsibilities of the Board of Directors of a corporation.
(b) Unanimous Partner Approval Required for Certain Decisions.
Notwithstanding the provisions of clause (a) of this Section 10.2, but
subject to the provisions of Articles XVI and XVII hereof, none of the
following actions may be taken on behalf of the Partnership without the
specific authorization and approval of both Partners:
(1) selling or transferring all or any portion of the
Partnership's interest in any Amphitheater;
(2) borrowing money from any lender in any amount other than
(i) the loans specifically contemplated by the provisions of this
Agreement and (ii) normal trade payables and accounts incurred in
the ordinary course of business consistent with the current Annual
Operating Budget;
(3) (i) constructing or undertaking to construct any
Amphitheater which is not an Approved Project or (ii) subject to the
provisions of Article VII hereof, purchasing or undertaking to
purchase any existing Amphitheater;
Article X - Management of Partnership Affairs
Page 101
(4) subject to the provisions of Section 11.3(a) hereof,
granting a right of possession or management rights to any Person at
any of the Partnership's Amphitheaters, by lease, license, sublease
or other arrangement for a term of two years or more;
(5) except as otherwise expressly provided to the contrary in
this Agreement, entering into any type of contractual relationship
with either Partner, any Affiliate of either Partner or any
Sony/Block Related Party;
(6) offering any partnership or other ownership interests in
the business of the Partnership to any other Person, including,
without limitation, an initial public offering;
(7) (a) selection of a successor Manager pursuant to Section
11.3(b) hereof and (b) removal of a successor Manager selected
pursuant to the provisions of Section 11.3(b) hereof except in the
limited circumstances described in clause (i) and (iii) of Section
11.3(b)(9) hereof.
(8) doing any act which would make it impossible to carry on
the ordinary business of the Partnership;
(9) doing any act which is outside of, or not directly related
to, the purposes of the Partnership described in Article III hereof;
or
(10) electing to dissolve the Partnership pursuant to the
provisions of Section 16.1(a) hereof.
(c) Selection of Representatives on Executive Committee. The
Executive Committee shall be comprised of three (3) individual
Representatives. Sony/Block shall have the right, at any time, and from
time to time, to designate and select two (2) out of the three (3)
Representatives who shall serve on the Executive Committee. Pace shall
have the right, at any time, and from time to time, to designate and
select one (1) out of the three (3) Representatives who shall serve on the
Executive Committee. Except as provided in Articles XVI and XVII hereof,
each Partner's Representatives on the Executive Committee may be removed
or replaced at any time, for any reason, temporarily or permanently by
such Partner.
(d) Xxxxx X. Xxxxxx. Xxxx shall exercise its reasonable best
efforts to cause, for at least the first five (5) years after the
effective date of the execution of this Agreement, Xxxxx X. Xxxxxx to (i)
be Pace's chief executive
Article X - Management of Partnership Affairs
Page 102
officer and president, (ii) perform, with respect to the Partnership, the
same or similar functions and roles as he has performed historically with
respect to the Partnership and (iii) attend, subject to his scheduling and
availability, the meetings of the Executive Committee.
10.3 Manager. Subject to the provisions of Section 10.8 of this Agreement,
the Manager shall be Pace. The Manager shall be responsible for the general
supervision and management of the business, affairs and property of the
Partnership and for the implementation of the decisions of the Executive
Committee, and shall have the authority to conduct the day-to-day affairs of the
Partnership. The Manager shall generally have the duties and responsibilities of
the President and Chief Executive Officer of a corporation. Without limitation
of the generality of the preceding provisions of this Section 10.3, the Manager
shall have the authority to take or cause to be taken on behalf of the
Partnership, and shall use its reasonable best efforts to take or cause to be
taken on behalf of the Partnership, the following actions:
(a) Implement or cause to be implemented any matters which are
consistent with, or contemplated by, the current Annual Operating Budget;
(b) Supervise the construction, development, operation and
maintenance of any Amphitheater owned, managed or leased by the
Partnership or in which the Partnership has an interest;
(c) Take such actions in the ordinary course as the Manager may
reasonably determine are necessary and appropriate to preserve and
maintain all rights and privileges of the Partnership, including
preserving the interest of the Partnership in and to any of its assets;
(d) Pay all taxes, assessments, and other impositions applicable to
the assets and business of the Partnership as and when the same are due
and payable; provided, however, that the Manager shall not be required to
pay any such tax, assessment or other imposition if the validity or amount
thereof shall be contested in good faith by proper proceedings;
(e) Take such actions as the Manager may reasonably determine are
necessary and appropriate to collect sums due to the Partnership and
otherwise enforce all material agreements to which the Partnership is a
party; provided, however, that the commencement of any litigation against
a third party shall require the consent of the Executive Committee;
(f) Cause all books of account and other records of the Partnership
to be kept in accordance with generally accepted accounting principles;
and such books and records shall fully and accurately reflect each and
every
Article X - Management of Partnership Affairs
Page 103
financial transaction with respect to the operation of the business of
the Partnership in accordance with generally accepted accounting
principles;
(g) Retain or employ and coordinate the services of all employees,
supervisors, engineers, attorneys and other persons necessary or
appropriate to carry out the business of the Partnership;
(h) Pay all debts and other obligations of the Partnership, as and
when the same are due and payable; provided, however, that the Manager
shall not be required to pay any debt or other obligation of the
Partnership if the validity or amount thereof shall be contested in good
faith by proper proceedings;
(i) Enter into, make and perform all contracts, agreements and other
undertakings binding the Partnership as may be necessary, appropriate or
advisable in furtherance of the purposes of the Partnership, including,
without limitation, such contracts, agreements and other undertakings as
may be necessary for the Partnership's pursuit and completion of any
Approved Project; provided, however, that the Manager shall not enter into
any agreement where the transaction contemplated thereunder is required by
the terms of this Agreement to be approved by the Executive Committee or
by all of the Partners or is outside the scope of this Agreement unless
and until such transaction has been approved by the Executive Committee or
all of the Partners (as the case may be);
(j) Maintain all funds of the Partnership in an account with a bank
or banks approved by the Executive Committee;
(k) When the amount of Free Cash is determined by the Executive
Committee, make required prepayments on Amphitheater Loans, make provision
for payments into the Sinking Fund and make distributions to the
Partners in accordance with the provisions of this Agreement;
(l) Maintain with financially sound and reputable insurers insurance
with respect to the properties and business of the Partnership against
loss or damage of the kind and in the amounts customarily insured against
by businesses of established reputation engaged in the same or a similar
business and similarly situated;
(m) Cause the Partnership to comply with the requirements of all
applicable laws, rules, regulations, or orders of any governmental
authority, and all agreements to which the Partnership is a party, the
noncompliance with which laws, rules, regulations, orders and agreements
could reasonably be expected to materially adversely affect the business
or assets of the Partnership
Article X - Management of Partnership Affairs
Page 104
or the business reputation of either Partner or any Affiliate thereof or
any Sony/Block Related Party;
(n) Promptly notify the Partners of any event which occurs or notice
received which could reasonably be expected to have a material adverse
effect on the business or assets of the Partnership including, without
limitation, any notice received from any lender of an Amphitheater Loan
which accelerates, or threatens to accelerate, the indebtedness
represented thereby or claims that a default has occurred or may occur
(with the passage of time or the giving of notice, or both) under any
Amphitheater Loan;
(o) At the request of any Partner for information concerning any
aspect of the business of the Partnership, to promptly supply such Partner
with the information so requested, if such information is available or can
be obtained or compiled without unreasonable effort or unreasonable
expense;
(p) Promptly report to all of the Partners if the Partnership does
not have sufficient Unrestricted Funds to cause any of the actions listed
in this Section 10.3 to be implemented or enacted;
(q) Such other actions as are expressly set forth in this Agreement
which require action to be taken by the Manager; and
(r) Perform other normal business functions, and otherwise operate
and manage the day-to-day business and affairs of the Partnership in the
ordinary course thereof.
The Manager shall act as a fiduciary hereunder and act in good faith in the
performance of its obligations hereunder, but shall not be liable to the
Partners or the Partnership for any decision made or action taken in connection
with the discharge of its duties hereunder except where such action or decision
was not taken or made in good faith or was grossly negligent. The provisions
contained in the immediately preceding sentence are intended to exculpate the
Manager, on and subject to the terms thereof, from tort liability for
mismanagement of the Partnership affairs. Accordingly, such exculpatory
provisions shall not limit, restrict or otherwise adversely affect Sony/Block's
right to assert any claim or cause of action against Pace for breach of a
contractual duty, liability or obligation created pursuant to the provisions of
this Agreement or otherwise assert that Pace is a Defaulting Partner. The
Representatives, the Manager and all agents, employees, officers, directors and
other representatives of the Manager shall be indemnified and held harmless by
the Partnership, to the extent of the assets of the Partnership, from and
against any and all claims, demands, liabilities, costs (including, without
limitation, the cost of litigation and reasonable attorneys' fees), damages and
causes of action of any nature
Article X - Management of Partnership Affairs
Page 105
whatsoever arising out of a claim asserted by a third party and relating to the
management of the affairs of the Partnership, except where the claim at issue is
based upon the proven gross negligence or willful misconduct of the indemnified
party. The indemnification rights herein contained shall be cumulative of, and
in addition to, any and all rights, remedies and recourses to which the
indemnified parties described herein shall be entitled, whether pursuant to
some other provision of this Agreement, at law or in equity. The provisions of
this Section 10.3 shall not apply with respect to any successor Manager
following the removal of Pace pursuant to an exercise of the rights created in
Section 10.8 hereof; provided, however, that the Management Agreement entered
into by and between the Partnership and such successor Manager shall (absent
some compelling reason to the contrary) contain provisions substantially similar
to this Section 10.3 with such necessary modifications as may be necessary to
accommodate the fact that such successor Manager is not a Partner.
10.4 Meetings of the Executive Committee.
(a) Meetings of the Executive Committee may be held at such regular
times as may be specified by the Executive Committee and, in addition, may
be called by any Representative or the Manager by giving at least ten (10)
days prior notice thereof to the Manager and each of the Representatives.
Notice of each meeting shall be in writing and shall state the date, time,
and place at which such meeting is to be held (which must be a place in
either Houston, Texas or Ft. Lauderdale, Florida) and the purposes for
which such meeting is called. The attendance of a Representative at a
meeting shall constitute a waiver of notice of such meeting. For so long
as Pace is the Manager, Pace shall designate the Representative who will
serve as the chairman of the Executive Committee; thereafter, Sony/Block
shall designate the Representative who will serve as the chairman of the
Executive Committee.
(b) An annual meeting of the Executive Committee shall be held on
the first Monday of April in each year (unless such date is a holiday, in
which event such meeting shall be held on the next business day
thereafter) or at such other time and place as the Partners may mutually
designate.
(c) Any action required or permitted to be taken at a meeting of the
Executive Committee may be taken, (i) by means of a telephone conference
in which all Representatives participating in the meeting and
constituting a quorum can hear and speak to each other or (ii) by means
of unanimous written consent executed by all of the Representatives. All
action taken pursuant to the immediately preceding sentence shall be
deemed for all purposes to have been taken at a meeting of the Executive
Committee.
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(d) The presence at a meeting of at least two (2) of the
Representatives shall constitute a quorum for the transaction of all
business of the Executive Committee. Any meeting of the Executive
Committee which is properly called and at which a quorum is present may be
adjourned to a date which is no later than twenty-one (21) days from the
date upon which the initial meeting was called. In the event that a
meeting was called and a quorum was not obtained for such meeting, any
matters which were set forth in the notice of meeting to be discussed
thereat shall, at the written election of the Partner then having the
right to select a minority of the Representatives to the Executive
Committee, served upon all of the members of the Executive Committee, be
deemed rejected by the Executive Committee.
(e) Except for those decisions specified elsewhere in this Agreement
which require the unanimous vote of the Representatives present at a
meeting of the Executive Committee, all decisions of the Executive
Committee shall be made by a majority vote of the Representatives present
at a meeting of the Executive Committee at which a quorum is present. For
ease of reference, but without in any way limiting any other provision of
this Agreement, the following is a list of decisions which require
unanimous approval of the Representatives present at a meeting of the
Executive Committee:
(1) A decision to incur Partner Nonrecourse Debt as referenced
in Section 5.1(d) hereof.
(2) The determination pursuant to Section 5.5(a) hereof that
the economic effect to the Partnership of any Amphitheater Loan
related to any of the Unwind Assets could be improved by replacing
such Amphitheater Loan with a Replacement Loan.
(3) The decision pursuant to Section 6.2 hereof to acquire or
purchase an interest in a previously existing Amphitheater.
(4) A decision to disregard the provisions of Section
8.4(b)(1)(iv) hereof.
(5) The adoption of an Annual Operating Budget for any Budget
Year pursuant to Section 10.5(b) or (d) hereof.
(6) The decision to approve, pursuant to Section 10.6(c)
hereof, a proposed Amphitheater as an Approved Project.
Article X - Management of Partnership Affairs
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(7) A decision to disregard the restriction contained in
Section 10.9(a), as to the maximum number of Qualified Markets which
may be located outside of the United States and Canada.
10.5 Annual Operating Budget.
(a) Proposed Operating Budget. On or before September 1 of each
year, Manager shall submit to the Executive Committee a proposed budget
("Proposed Annual Operating Budget"), which shall be prepared by the
Manager in good faith and shall set forth an overall program for the
Partnership for the twelve (12) month period commencing on November 1 of
that same year and ending on October 31 of the following year, showing in
reasonable detail (i) all anticipated operating expenses and operating
receipts to be incurred or received (as the case may be) by the
Partnership for such twelve (12) month period, (ii) the estimated amount
of R&D Expenditures to be expended by the Partnership for such twelve (12)
month period and (iii) the projected amount of general and administrative
expenses for the Partnership during such twelve (12) month period. Each
Proposed Annual Operating Budget shall be prepared based upon such
assumptions as shall be reasonable considering the operating history of
the Partnership's Amphitheaters and shall specifically project the amount
of Cash Flow from Operations for each of the Partnership's Amphitheaters
in the Budget Year covered thereby.
(b) Approval of Annual Operating Budget. The Proposed Annual
Operating Budget shall be considered for approval by the Executive
Committee at the next regularly held meeting of the Executive Committee
after submission thereof by the Manager or, if sooner, at a special
meeting of the Executive Committee called for such purpose pursuant to the
provisions of Section 10.4(a) hereof. Each Representative attending such
meeting at which the Proposed Annual Operating Budget is being considered
may require changes or modifications to the Proposed Annual Operating
Budget; provided, that, so long as Pace is the Manager, its Representative
may not require an increase in any amounts contained in the Proposed
Annual Operating Budget submitted by the Manager pursuant to Section
10.5(a) hereof. Upon unanimous approval by the Representatives attending a
duly called and held meeting of the Executive Committee at which a quorum
is present, such operating budget so approved shall be the Annual
Operating Budget of the Partnership for the Budget Year to which it
relates, if the Annual Operating Budget is not adopted in accordance with
the foregoing provisions within fifteen (15) days after the commencement
of the Budget Year to which it relates, then, the following provisions
shall apply:
Article X - Management of Partnership Affairs
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(1) So long as no Annual Operating Budget is so adopted for
the Budget Year, the Annual Operating Budget shall be deemed to
include all line items as to which unanimous agreement has been
reached by the Representatives and, with respect to each other line
item, the Annual Operating Budget shall be deemed to be the greater
of (i) the smallest amount for such line item approved by any of the
Representatives, or (ii) the amount for the same line item specified
in the Annual Operating Budget for the immediately preceding Budget
Year with such line item increased in the same proportionate amount
by which the CPI most recently reported prior to the first day of
such Budget Year exceeds the CPI most recently reported prior to the
first day of the immediately preceding Budget Year.
(2) If, at such time, (i) there are not nine (9) or more New
Amphitheaters and (ii) the Partnership has not committed to
construct, or acquire a Controlling Interest in, an Amphitheater
which will be the ninth New Amphitheater upon construction or
acquisition thereof, then Pace may thereafter, but in no event later
than July 1 of such Budget Year, provide notice ("Preliminary Budget
Unwind Notice") to Sony/Block that an Annual Operating Budget has
not been adopted in accordance with the provisions hereof with
respect to such Budget Year. If no Annual Operating Budget has been
adopted for such Budget Year within thirty (30) days following
delivery of a Preliminary Budget Unwind Notice then Pace shall have
the right and option to commence the Unwind Procedure pursuant to
the provisions of Article IX hereof by providing notice of the
election to exercise such right and option to Sony/Block on or
before the date which is 60 days after the delivery of the
Preliminary Budget Unwind Notice, if Pace fails to exercise the
right and option to commence the Unwind Procedure created pursuant
to this Section 10.5(b)(2) any time that such right may arise prior
to the expiration of the time period referred to in the immediately
preceding sentence, then Pace shall be deemed to have elected to not
exercise such right and option with respect to that specific
instance giving rise to the right and option.
(c) R&D Expenditures. Notwithstanding anything to the contrary
contained in this Agreement, the Partnership shall not incur any R&D
Expenditures or any general administrative expenditures unless the same is
consistent with the amounts contemplated in the Annual Operating Budget or
is otherwise approved by the Executive Committee. Each Annual Operating
Budget shall provide for R&D Expenditures in an amount that is
commensurate with the general business and development plan of the
Partnership, taking into account, in any particular Budget Year, the
number of Markets in which the Partnership
Article X - Management of Partnership Affairs
Page 109
then has active and significant development activities. The Annual
Operating Budget will provide reasonable detail as to the projected use of
the budgeted amount of R&D Expenditures by detailing a budgeted amount for
various specific Markets and a separate amount to be unallocated to any
specific Market.
10.6 Development of Proposed Amphitheaters. With respect to each proposed
Amphitheater being considered by the Manager as a possible project for
construction by the Partnership, the following provisions shall apply:
(a) Generally.
(1) Current Information to the Executive Committee. The
Manager shall exercise all reasonable efforts as may be required to
keep the Executive Committee informed of all significant
negotiations, developments and decisions relating to any such
proposed Amphitheater by providing periodic written reports to the
Representatives with copies of all materials and documents which
relate to the proposed Amphitheater. Without limiting the
foregoing, the Manager shall provide to the Representatives copies
of site acquisition contracts, lease agreements, governmental
agreements (bond financing or otherwise), preliminary budgets, the
development plan presented for zoning approval, environmental
reports, development schedules, material written communications from
surrounding landowners or other citizen groups opposing the proposed
development, traffic studies, demographic reports and similar
materials.
(2) Development Costs. With respect to each proposed
Amphitheater which is beyond the initial research and development
stage, the Manager shall submit to the Executive Committee, from
time to time, proposed development budgets detailing the then
anticipated Project Costs which are to be incurred by the
Partnership in connection with such proposed Amphitheater. Except
for R&D Expenditures (which will be governed by the Annual Operating
Budget), no Project Costs may be incurred or expended by the
Partnership during the development phase of any proposed
Amphitheater except and unless (i) such expenditure is consistent
with, and contemplated by, a development budget which has been
approved by the Executive Committee or (ii) specifically approved by
the Executive Committee.
(3) Abandonment of a Proposed Amphitheater. The Executive
Committee shall have the authority, by a majority vote of the
Representatives present at a meeting of the Executive Committee at
which a
Article X - Management of Partnership Affairs
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quorum is present, to elect to abandon further development
activities with respect to any specific proposed Amphitheater, at
any time and for any reason. Following any such affirmative vote by
the Executive Committee, the Manager shall not expend or incur any
further R&D Expenditures or any Project Costs with respect to such
specific proposed Amphitheater. A decision by the Executive
Committee to deny approval for the expenditure of any Project Costs
for a proposed Amphitheater which will have the effect of materially
and adversely affecting the Partnership's ability to continue the
development of such proposed Amphitheater shall be deemed to be an
affirmative decision by the Executive Committee to abandon further
development activities with respect to such proposed Amphitheater if
the Manager provides notice thereof to the Executive Committee and
30 days to change its prior decision with regard to such
expenditure.
(b) Proposed Amphitheater Approval Request. After the Manager has,
on behalf of the Partnership, (i) obtained the rights to acquire a site
for construction of a proposed Amphitheater and (ii) prepared, or caused
to be prepared, Plans and Specifications, a Proposed Project Budget and an
Amphitheater Pro Forma for such proposed Amphitheater, the Manager may at
any time thereafter, by formal written notification ("Proposed
Amphitheater Approval Request") to the Representatives, request that the
Executive Committee approve such proposed Amphitheater as an Amphitheater
which the Partnership will construct. With the Proposed Amphitheater
Approval Request, the Manager shall send to each Representative, to the
extent not previously provided, a copy of the following materials relating
to the proposed Amphitheater:
(1) The contract, lease or other agreement pursuant to which
the Partnership obtained the right to acquire the site for
construction, along with all materials and documents relating to
such site, including any environmental reports, title reports, soils
reports, traffic studies and other related matters which the
Partnership or the Manager possesses.
(2) The Plans and Specifications.
(3) The Proposed Project Budget.
(4) The Amphitheater Pro Forma.
The Executive Committee shall hold a meeting ("Proposed Amphitheater
Approval Meeting") within thirty (30) days after receipt of the Proposed
Amphi-
Article X - Management of Partnership Affairs
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theater Approval Request for the purpose of determining whether the
Executive Committee will approve the proposed Amphitheater as an
Amphitheater which the Partnership will construct. If, at or prior to a
Proposed Amphitheater Approval Meeting, any Representative reasonably
believes that additional information or clarification is needed to be
delivered by the Manager to permit such Representative to decide and
determine whether the Amphitheater being proposed for construction by the
Partnership should become an Approved Project, then such Representative
may adjourn the Proposed Amphitheater Approval Meeting for no more than
thirty (30) days by providing a written request to the Manager as to the
additional information or clarifying matters which such Representative
believes is needed to so permit a decision with regard to such
determination. As long as the Manager has made a reasonable, good faith
effort to comply with the specific requested additional or clarifying
information, to the extent such information can be obtained and provided,
then the Proposed Amphitheater Approval Meeting shall be thereafter
reconvened in accordance with the provisions hereof, but in no event later
than thirty (30) days after the original scheduled date for the Proposed
Amphitheater Approval Meeting. In no event may a Proposed Amphitheater
Approval Meeting be adjourned and subsequently reconvened more than once
pursuant to the foregoing provisions. Notwithstanding the provisions of
Section 10.4(e) hereof, the Executive Committee shall only be deemed to
have approved a proposed Amphitheater as an Amphitheater which the
Partnership will construct if the Representatives present at the Proposed
Amphitheater Approval Meeting unanimously vote in favor of such approval.
If a quorum of the Representatives do not attend a Proposed Amphitheater
Approval Meeting, then it shall be deemed, for all purposes hereof, that
the Executive Committee, at such Proposed Amphitheater Approval Meeting,
declined to approve such proposed Amphitheater as an Amphitheater which
the Partnership will construct.
(c) Subsequent Changes to Approved Matters. If there are any
significant or material changes or modifications to the site acquisition
contract, the Plans and Specifications, the Project Budget or the
Amphitheater Pro Forma with respect to any Approved Project (or, with
respect to the Camden Amphitheater, any other information or material that
was relied upon by the Representatives in deciding to approve the Camden
Amphitheater as an Approved Project), then the Executive Committee shall
be so advised by the Manager, and the Executive Committee shall meet to
decide whether it will approve such significant or material changes or
modifications (such approval not to be unreasonably withheld). If (i) any
such changes or modifications are not approved unanimously by the
Executive Committee at such meeting and (ii) the Manager determines that
the Partnership shall not construct the proposed Amphitheater with respect
to which such changes or modifications relate without the making of such
changes or modifications, then (x) such proposed
Article X - Management of Partnership Affairs
Page 112
Amphitheater shall no longer be an Approved Project for purposes hereof,
(y) the Partnership shall not construct such proposed Amphitheater and (z)
such proposed Amphitheater shall, for purposes of the defined terms
"Sony/Block Rejected Amphitheater" and "Pace Rejected Amphitheater," be
deemed to have been rejected by the Executive Committee at a Proposed
Amphitheater Approval Meeting; provided, however, if such proposed
Amphitheater is not a Qualified Amphitheater with such material changes or
modifications implemented, then it will not, regardless of any provision
to the contrary contained herein, be a "Sony/Block Rejected Amphitheater"
or a "Pace Rejected Amphitheater." For purposes of this Section 10.6(c),
it is specifically understood and acknowledged that any change to a
Project Budget which results in any increase in the Budgeted Project Cost
of the Amphitheater to which such Project Budget relates shall be deemed
to be a material change or modification to such Project Budget; provided,
however, changes or modifications to a Project Budget which only involve
the reallocation of amounts between and among line items contained in such
Project Budget but which does not result in an increase in the Budgeted
Project Cost shall be deemed to be an immaterial change to such Project
Budget.
(d) Rejection for Material Adverse Change or Failure to Meet Certain
Physical Criteria.
(1) Notwithstanding anything to the contrary contained in this
Agreement, if it is determined that a Special Rejection Event (herein
defined) exists with respect to any proposed Amphitheater, then the
following actions or decisions may be taken with regard to such proposed
Amphitheater without causing such proposed Amphitheater to become a
Sony/Block Rejected Amphitheater or a Pace Rejected Amphitheater:
(i) By majority vote of the Executive Committee, the
Partnership may elect to abandon further development activities with
respect to such proposed Amphitheater.
(ii) Any Representative may decline to approve such proposed
Amphitheater for construction by the Partnership at a Proposed
Amphitheater Approval Meeting.
(iii) Any Representative may withdraw, within thirty (30) days
after receipt of notice from the Manager that a Special Rejection
Event has occurred with respect to such proposed Amphitheater, his
previous consent and approval to such proposed Amphitheater at a
Proposed Amphitheater Approval Meeting, in which event such proposed
Article X - Management of Partnership Affairs
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Amphitheater shall no longer be an "Approved Project" for purposes
of this Agreement.
(2) As used in this Section 10.6(d), a "Special Rejection Event"
shall mean, with respect to any proposed Amphitheater the happening or
occurrence of any one or more of the following conditions or circumstances
in regard to such proposed Amphitheater:
(i) A determination that any zoning variance or governmental
permits or approvals which are necessary to permit the construction
and development of such proposed Amphitheater cannot be obtained or
issued without causing the total projected amount of Project Costs
for such Amphitheater to exceed the Budgeted Project Cost of such
Amphitheater.
(ii) An environmental report having been issued which
indicates that hazardous materials (within the scope of state or
federal environmental laws) are present on the proposed site for
construction of such proposed Amphitheater and cannot be removed or
remediated without causing the total projected amount of Project
Costs for such Amphitheater to exceed the Budgeted Project Cost of
such Amphitheater.
(iii) The issuance of a final soils report reflecting that the
site selected for the development of such proposed Amphitheater
contains or possesses adverse soil conditions which cannot be
corrected without causing the total projected amount of Project
Costs for such Amphitheater to exceed the Budgeted Project Cost of
such Amphitheater.
(3) As soon as the Manager has determined that a Special Rejection
Event has occurred with respect to any proposed Amphitheater, the Manager
shall provide notice thereof immediately to the Representatives.
10.7 Management, Booking and Consulting Services.
(a) In addition to the services which the Manager is required to
perform in accordance with the other provisions contained in this
Agreement, the Manager shall be obligated to provide to the Partnership
such management, booking and consulting services in connection with the
development, construction, maintenance and operation of the Amphitheaters
in which the Partnership owns a Controlling Interest, from time to time,
to the extent that such management, booking and consulting services may be
necessary to fulfill the Partnership's purposes contemplated by the
provisions of this Agreement.
Article X - Management of Partnership Affairs
Page 114
(b) Until such time as Pace may be removed as Manager pursuant to
the provisions of Section 10.8 hereof, the Partnership shall pay to Pace,
as complete reimbursement of its overhead expenses related to the
management, booking and consulting services provided to the Partnership as
required by the provisions of clause (a) of this Section 10.7 and the
performance of all services imposed elsewhere in this Agreement upon the
Manager, an annual amount determined in accordance with the following
provisions:
(1) The annual amount payable to Pace pursuant to this Section
10.7(b) shall be (i) an Operating Obligation of the Partnership and
included in each Annual Operating Budget and (ii) determined,
subject to the provisions of this Section 10.7(b), for each Budget
Year as a part of the process of adopting the Annual Operating
Budget of the Partnership.
(2) Notwithstanding the provisions of clauses (1) and (3) of
this Section 10.7(b), the amount payable to Pace pursuant to this
Section 10.7(b) from April 1, 1994 until adoption of the Annual
Operating Budget for the Budget Year beginning on November 1, 1994,
shall be based upon an annualized amount of $1,400,000.00.
(3) The annual amount payable to Pace pursuant to this Section
10.7(b) shall be, for any Budget Year, the budgeted projection of
Pace's (and its Affiliates') actual costs for providing the
management, booking and consulting services required by the
provisions of Section 10.7(a) hereof. It is understood, recognized
and acknowledged that the calculation of Pace's actual cost is, to
some extent, subjective in that it requires allocations of the costs
of various corporate overhead between and among the services to be
rendered by Pace pursuant to this Agreement and other business
functions and operations of Pace's Affiliates. Pace agrees that it
will, when determining the amount to be included in any Proposed
Annual Operating Budget as the amount to be paid to Pace pursuant to
this Section 10.7(b), use commercially reasonable methods of
allocation of corporate overhead generally consistent with the
manner and method which was used in arriving at the initial
annualized amount of $1,400,000.00. Upon Sony/Block's request, Pace
shall provide such reasonable support, data and other information as
may be reasonably necessary to document the amount of Pace's actual
cost in providing the management, booking and consulting services
required by the provisions of this Section 10.7(a) hereof.
All amounts payable to Pace by the Partnership pursuant to the provisions of
this Section 10.7(b) shall be payable as an Operating Obligation of the
Partnership in equal monthly installments, commencing on April 1, 1994. Exhibit
"C" attached hereto
Article X - Management of Partnership Affairs
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outlines and describes the various categories of Pace's corporate overhead which
are covered by and being reimbursed from the annual payment to be made to Pace
pursuant to the provisions of this Section 10.7(b). Exhibit "D" attached hereto
outlines and describes the various categories of Pace's out-of-pocket costs
which are not covered by or being reimbursed from the annual payment to be made
to Pace pursuant to the provisions of this Section 10.7(b) and which are
therefore subject to reimbursement by the Partnership pursuant to Section 13.8
hereof. The provisions of this Section 10.7(b) shall not apply with respect to
any successor Manager following the removal of Pace pursuant to an exercise of
the rights created in Section 10.8 hereof.
10.8 Removal of Manager. At any time after the second anniversary of the
execution of this Agreement, Sony/Block shall have the right to terminate Pace
as the Manager of the Partnership. In order to exercise the right described in
the immediately preceding sentence, Sony/Block shall provide written notice
("Termination Notice") thereof to Pace. The following provisions shall apply
upon and after the delivery of Termination Notice by Sony/Block to Pace:
(a) Regardless of when a Termination Notice may be provided by
Sony/Block to Pace, it shall not become effective until the Effective Date
of Termination (herein defined). As used herein, the term "Effective Date
of Termination" shall mean, with respect to any Termination Notice, the
next November 15th following the date upon which such Termination Notice
is given by Sony/Block to Pace.
(b) Between the date upon which a Termination Notice is given by
Sony/Block to Pace and the Effective Date of Termination, (i) the business
of the Partnership shall continue to be conducted and operated in
accordance with all of the other provisions of this Agreement, (ii) the
duties, liabilities, responsibilities, rights, authorities, and
responsibilities of the Manager, the Partners and the Representatives
shall be unchanged and (iii) each Partner shall use its reasonable efforts
to prevent disclosure to any Person of the fact that the Termination
Notice has been provided by Sony/Block to Pace. Notwithstanding the
restriction contained in clause (iii) in the immediately preceding
sentence, it is specifically understood, agreed and acknowledged that
Sony/Block shall have the right to commence interviewing and negotiating
with potential successor Managers on (x) the next September 15 following
the date upon which a Termination Notice is given by Sony/Block to Pace or
(y) if a Termination Notice is provided between September 15 and November
15 of a calendar year, then immediately upon the delivery of such
Termination Notice.
Article X - Management of Partnership Affairs
Page 116
(c) Subject to the provisions contained below, on and after the
Effective Date of Termination, (i) Pace shall no longer have any rights,
responsibilities, authorities or duties as the Manager of the Partnership
(but such termination shall not release Pace from any liabilities or
obligations it may have to the Partnership which arose prior to the
Effective Date of Termination), (ii) Pace shall have no further obligation
to provide any management, booking or consulting services pursuant to, or
as required by, the provisions of Section 10.7(a) hereof, (iii) the
Partnership shall have no further obligation to make the reimbursement
payments to Pace as described in Section 10.7(b) hereof and (iv) a
successor Manager shall thereafter be selected, from time to time, in
accordance with, and pursuant to, the provisions of Section 11.3 hereof.
Notwithstanding the provisions contained in the immediately preceding
sentence, Sony/Block shall have the right to require that Pace provide
certain transitional consulting, booking and management services in
accordance with the following provisions after the Effective Date of
Termination:
(1) Sony/Block shall have the right to require, by providing
notice thereof to Pace on the later to occur of the giving of a
Notice of Termination or 30 days before the Effective Date of
Termination, that Pace provide certain transitional management,
booking and consulting services during the thirty (30) days
immediately following the Effective Date of Termination, in which
event (i) Pace and its permanent staff shall provide such reasonable
advice, consultation and other transitional services as may be
necessary to assist the Partnership in continuing its business
operations in substantially the same manner as they were conducted
immediately prior to such termination, (ii) the Partnership shall be
obligated to pay and reimburse to Pace the actual cost of its
corporate overhead allocated to the performing of such services
during such thirty (30) day period but in no event more than
$250,000.00 and (iii) the Partnership shall reimburse to Pace all
out-of-pocket costs and expenses for the types of items described on
Exhibit "D" attached hereto which Pace pays in connection with the
performance of such services during such thirty (30) day period.
Pace shall provide such reasonable support, data and other
information as may be reasonably requested by Sony/Block to document
the amount of costs incurred by Pace and required to be reimbursed
to it in accordance with the provisions contained in the immediately
preceding sentence.
(2) Sony/Block shall additionally have the right and option to
require Pace to continue to provide certain transitional management,
booking and consulting services for an additional one year period by
providing written notice thereof to Pace on or before the Effective
Date of Termination or, if Sony/Block previously elected to exercise
the right
Article X - Management of Partnership Affairs
Page 117
contained in clause (1) above, on or before the date which is thirty
(30) days after the Effective Date of Termination. If Sony/Block
elects to extend Pace's obligation to provide such transitional
management services for an additional one year period pursuant to
the provisions of this clause (2), Pace shall provide such
assistance and transitional services for the Partnership and the
successor Manager as may be reasonably necessary to assist in the
efficient transition of management until the next November 15
following the Effective Date of Termination and the Partnership
shall continue to be obligated to pay the full amount which would
otherwise be payable to Pace during such additional period pursuant
to Section 10.7(b) of this Agreement.
(d) Notwithstanding the provisions of clauses (a), (b) and (c) of
this Section 10.8, if a Partner Default has occurred with respect to
Pace, then Sony/Block may terminate Pace as the Manager of the Partnership
effective immediately upon provision of a Termination Notice to Pace.
(e) Notwithstanding anything to the contrary contained in, or
implied by, the provisions of this Section 10.8, the provision of a
Termination Notice to Pace pursuant to any of the provisions of this
Section 10.8 shall not affect Pace's right to act as the Manager of the
Partnership with respect to the Woodlands Asset only. Accordingly, so long
as the Partnership continues to own the Woodlands Asset, Pace shall, in
all respects and at all times, (i) act as the Manager with respect to such
Asset, (ii) provide the management, booking and consulting services
referenced in Section 10.7 hereof with respect to the Woodlands Asset and
(iii) be reimbursed pursuant to the provisions of Section 10.7(b) hereof
for its actual costs of providing such management, booking and consulting
services.
10.9 Provisions Regarding Qualified Markets. The development efforts of
the Partnership will be primarily focused in the Qualified Markets; provided,
however, that it is understood that the Manager shall be expressly permitted, on
behalf of the Partnership, to conduct preliminary studies and other analyses in
other Markets, subject to the limitations of the then effective Annual Operating
Budget in regard to R&D Expenditures. The Partners shall designate certain
Markets, from time to time, as Qualified Markets in accordance with the
following provisions:
(a) Minimum Number. At all times during which Pace is the Manager,
no less than the Minimum Number (herein defined) of Markets in the
Restricted Portion of the Earth shall be designated, in accordance with
the provisions hereof, as Qualified Markets. Without the unanimous consent
of the Executive Committee, no more than 30% of the Qualified Markets may
be located outside of the United States and Canada. As used herein, the
term "Minimum
Article X - Management of Partnership Affairs
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Number" shall mean ten (10), as such amount may be adjusted pursuant to
the provisions of clause (c)(2)(ii) of this Section 10.9.
(b) Initial Qualified Markets. The initial ten (10) Qualified
Markets have been designated by the Partners in a letter signed of even
date with the Admission Agreement.
(c) Removal of Qualified Markets. Once a Market has been designated
a Qualified Market, it will remain a Qualified Market until the earlier to
occur of the following with respect to such Market:
(1) The Partnership constructs, or otherwise acquires a
Controlling Interest in, an Amphitheater in that Market.
(2) The Manager notifies the Partners that, after reasonable
analysis, diligence, market study and other research, it has
determined that such Market is not suitable for the development of
an Amphitheater by the Partnership. In such notice, the Manager
shall provide the specific reasons as to why such Market should not
continue to be a Qualified Market. The following provisions shall
apply with respect to the Manager's right to require that a Market
should not continue to be a Qualified Market:
(i) In no event may the Manager exercise the right
created pursuant to the provisions of this clause (2) more
frequently than once in any one of the Applicable Two Year
Periods. As used in the immediately preceding sentence, the
term "Applicable Two Year Periods" shall mean the separate
sets of two calendar year periods (x) commencing with calendar
years 1994 and 1995 as the first Applicable Two Year Period,
(y) continuing with calendar years 1996 and 1997 as the second
Applicable Two Year Period and (z) thereafter continuing with
successive sets of two calendar year periods.
(ii) If the Manager requires that a Market no longer be
designated as a Qualified Market pursuant to the right
contained in this clause (2), Sony/Block shall have the
express right and authority, by notice to Pace, to require
that such Market remain as a Qualified Market until determined
otherwise by Sony/Block. If Sony/Block elects to continue any
Market as a Qualified Market pursuant to the right contained
in the immediately preceding sentence, then the Minimum Number
shall be automatically increased by one with no further action
required by any party here-
Article X - Management of Partnership Affairs
Page 119
to. If Sony/Block subsequently elects to discontinue any
Market as a Qualified Market which it has previously required
pursuant to the right contained in this clause (ii) of this
Section 1O.9(c)(2), then such Market shall no longer be a
Qualified Market and the Minimum Number shall be automatically
decreased by one with no further action required by any party
hereto.
(3) The mutual agreement of the Partners that such Market
should no longer be a Qualified Market.
(d) Mutual Agreement. If, at any time, there are less Qualified
Markets than the Minimum Number, then either Partner may, at any time
thereafter, recommend to the other Partner which Market should be
designated as a Qualified Market to cause the number of Qualified Markets
to equal the Minimum Number. To be designated as a Qualified Market, any
such Market must be approved by both Partners.
(e) Procedure When No Mutual Agreement. If at any time the Partners
are unable to agree upon which Market should be designated as a Qualified
Market to cause the number of Qualified Markets to equal the Minimum
Number, then an additional Market shall be designated as a Qualified
Market in accordance with the following provisions:
(1) If no Market has been previously designated as a Qualified
Market pursuant to the procedure described in this clause (e), then
Pace shall designate a Market as a Qualified Market by providing
written notice thereof to Sony/Block and such Market shall
thereafter be a Qualified Market for all purposes hereof.
(2) If a Market has been previously designated as a Qualified
Market pursuant to the procedure described in this clause (e), then
the Partner which did not designate the last Qualified Market which
was so designated pursuant to the provisions of this clause (e)
shall have the right to designate the additional Qualified Market by
providing written notice thereof to the other Partner and such
Market shall thereafter be a Qualified Market for all purposes
hereof; however, if a Partner holds the right to designate an
additional Qualified Market pursuant to this clause (2) at a time
when there are less Qualified Markets than the Minimum Number, then
the other Partner may provide written notice to the first Partner
requesting that such Partner designate an additional Qualified
Market within thirty days after the receipt of such notice and, if
an additional Qualified Market is not designated as a Qualified
Market within such thirty day period by such Partner, then the other
Partner
Article X - Management of Partnership Affairs
Page 120
shall have the right, at any time thereafter, to designate the
additional Qualified Market by providing written notice thereof to
the first Partner.
(f) Additional Qualified Markets. The Partners may always designate
by mutual agreement any Market as a Qualified Market and there is no
limitation or restriction which would preclude the Partners from
designating, at any time, more Qualified Markets than the Minimum Number.
[END OF ARTICLE X]
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 121
ARTICLE XI
Rights and Obligations Following Termination of
Pace as Manager
11.1 Generally. The provisions of this Article XI shall apply following
the delivery of a Termination Notice by Sony/Block to Pace pursuant to the
provisions of Section 10.8 hereof.
11.2 Pace's Right to Commence Unwind Procedure.
(a) Pace shall have the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof upon the
occurrence of Sony/Block delivering a Termination Notice to Pace pursuant
to the provisions of Section 10.8 hereof. Pace may exercise such right and
option at any time on or before 30 days after Sony/Block has provided
written notice to Pace designating the name of the Person which will serve
as the successor Manager. The giving of the notice by Sony/Block referred
to in the immediately preceding sentence shall not be a condition
precedent to Pace's right to exercise the right to commence the Unwind
Procedure. If Pace fails to exercise the right and option to commence the
Unwind Procedure created pursuant to this Section 11.2(a) prior to the
expiration of the time period referred to in the second preceding
sentence, then Pace shall be deemed to have elected not to exercise such
right and option.
(b) If Pace does not elect to commence the Unwind Procedure pursuant
to the right contained in clause (a) of this Section 11.2, Pace shall
thereafter have the right and option to commence the Unwind Procedure
pursuant to the provisions of Article IX hereof each time that a Manager
is replaced by another Manager pursuant to Sony/Block's unilateral right
described in Section 11.3(a) hereof (including the situation in which the
Person designated as the initial successor Manager in the notice to Pace
described in Section 11.2(a) hereof is not subsequently engaged by the
Partnership but instead a different Person [other than an Affiliate of the
initially designated Person] is engaged as the initial successor Manager).
Pace may exercise such right and option, each time that it may arise, at
any time on or before 30 days after Sony/Block has provided written notice
to Pace designating the name of the Person which will serve as Manager of
the Partnership in replacement of the prior Manager. The giving of the
notice by Sony/Block referred to in the immediately preceding sentence
shall not be a condition precedent to Pace's right to exercise the right
to commence the Unwind Procedure. If Pace fails to exercise the right and
option to commence the Unwind Procedure created pursuant to this Section
11.2(b) at any time that such right may arise prior to
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 122
the expiration of the time period referred to in the second preceding
sentence, then Pace shall be deemed to have elected not to exercise such
right and option with respect to that specific instance giving rise to the
right and option. To avoid any ambiguity or uncertainty, it is understood
and agreed that Pace shall not have the right to commence the Unwind
Procedure pursuant to the provisions of this Section 11.2 after it has the
right to select the successor Manager pursuant to Section 11.3(c) hereof.
11.3 Selection and Designation of Successor Manager.
(a) Selection of First Successor. After the delivery of a
Termination Notice to Pace by Sony/Block pursuant to the provisions of
Section 10.8 hereof, Sony/Block shall have the sole and unilateral right,
authority and power to select, retain, engage and designate the Person,
upon terms acceptable to Sony/Block, which will serve as the Manager of
the Partnership in place of Pace. So long as Sony/Block's designated
Manager has met the Minimum Economic Standards described in Section 11.4
hereof, the right referred to in the immediately preceding sentence shall
include the right to designate subsequent Managers following the
resignation or termination of any other Manager. In no event may the
Person selected to serve as the Manager of the Partnership by Sony/Block
pursuant to the provisions of this Section 11.3(a) be any Sony/Block
Related Party. In addition, Sony/Block covenants with Pace that (i) no
Sony/Block Related Party or the Partnership will attempt to hire, or
employ the services of, any senior executive officers of Pace or its
Affiliates who are engaged in the Amphitheater business and (ii)
Sony/Block will cause the Partnership to obtain, from each successor
Manager chosen by Sony/Block pursuant to the right contained in this
Section 11.3(a), a covenant to not attempt to hire, or employ the services
of, any senior executive officers of Pace or its Affiliates who are
engaged in the Amphitheater business during such successor Manager's term
of engagement with the Partnership.
(b) Selection of Successor Manager Following Economic Criteria
Default. Notwithstanding anything to the contrary contained in, or implied
by the provisions of this Agreement, if either Partner exercises the right
created pursuant to the provisions of Section 11.4 hereof to require that
a successor Manager resign as a result of the Partnership failing to meet
the Minimum Economic Standards for any Fiscal Year, then no new Manager
may thereafter be engaged by the Partnership without the unanimous
approval of the Partners.
(c) Procedure When No Mutual Agreement. If the Partners are unable
to agree upon the selection and designation of the Manager as required by
the provisions of clause (b) of this Section 11.3, then the following
provisions shall
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 123
provide the method by which the successor Manager will be designated,
selected and retained by the Partnership:
(1) If no successor Manager has been previously selected
pursuant to the procedure described in this clause (c), then Pace
shall designate, select and retain, upon terms acceptable to Pace,
the successor Manager by providing written notice thereof to
Sony/Block, and such successor Manager shall thereafter be, subject
to the provisions of Section 11.3(d) hereof, the Manager for all
purposes hereof.
(2) If a successor Manager has been previously designated
pursuant to the procedure described in this clause (c), then the
Partner which did not designate the last successor Manager pursuant
to the provisions of this clause (c), shall have the right to
designate, select and retain, upon terms acceptable to such Partner,
the successor Manager by providing written notice thereof to the
other Partner, and such successor Manager shall thereafter be,
subject to the provisions of Section 11.3(d) hereof, the Manager for
all purposes hereof.
So long as the successor Manager which has been designated by a Partner
pursuant to the procedure described in this clause (c) has met the Minimum
Economic Standards described in Section 11.4 hereof, such Partner's right
to designate, select and retain the successor Manager shall include the
right to designate subsequent successor Managers following the resignation
or termination of any Manager. It shall be expressly permitted for a
successor Manager designated, selected and retained by a Partner pursuant
to the procedure described in this clause (c) to be an Affiliate of that
Partner; provided, however, if Pace should ever designate, select and
retain Pace or an Affiliate of Pace as the Manager pursuant to the
procedure described in this clause (c), then Sony/Block shall have the
right to terminate Pace (or its Affiliate) as the Manager of the
Partnership pursuant to the provisions of Section 10.8 hereof at any time
after the fourth anniversary of the designation, selection and retention
of Pace (or an Affiliate of Pace) as the Manager pursuant to the procedure
described in this clause (c) notwithstanding the fact that Sony/Block has
previously exercised such right pursuant to the provisions thereof.
(d) Subsequent Removal. After a successor Manager has been selected,
retained and engaged by the Partnership, either pursuant to the procedure
described in clause (c) of this Section 11.3 or by mutual agreement of the
Partners, the Manager may not be thereafter discharged or terminated by
the Partnership except for (i) failure to meet the minimum economic
criteria established pursuant to the provisions of Section 11.4 hereof,
(ii) the unanimous approval of the Partners or (iii) violation or breach
of the manage-
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 124
ment agreement pursuant to which such Manager is retained and engaged by
the Partnership (which violation or breach, if capable of being cured, is
not cured within thirty (30) days after the occurrence of such violation
or breach).
11.4 Minimum Economic Criteria to be Imposed Upon Successor Manager.
Following the delivery of a Termination Notice, the Partnership shall establish
certain minimum economic performance standards ("Minimum Economic Standards")
which the Partnership must meet on an annual basis as a condition to the right
of each subsequent Manager being entitled to retain its engagement with the
Partnership. The Minimum Economic Standards shall be determined in accordance
with the following provisions:
(a) The Minimum Economic Standards shall be determined and selected
based upon the Partnership's average earnings during the last two Fiscal
Years that Pace was the Manager, with appropriate adjustments for Fiscal
Years thereafter to reflect changes in the CPI.
(b) The earnings of the Partnership which were attributable to
Amphitheaters in which the Partnership (i) owned a Controlling Interest
during the last two Fiscal Years that Pace was the Manager and (ii) will
thereafter continue to own a Controlling Interest shall control the
determination and establishment of the Minimum Economic Standards. In
determining the earnings of the Partnership attributable to only one or a
few of the Partnership's Amphitheaters, only an appropriate portion of the
annual reimbursement payment payable to Pace pursuant to Section 10.7(b)
hereof and other general administrative expenditures of the Partnership
shall be allocated to such Amphitheater or Amphitheaters.
(c) The Minimum Economic Standards shall thereafter be (i)
appropriately decreased in the event that any Amphitheater in which the
Partnership previously owned a Controlling Interest is sold, distributed
or otherwise transferred and (ii) appropriately increased in the event
that the Partnership constructs, or otherwise acquires a Controlling
Interest in, any new Amphitheater.
(d) Utilizing the foregoing standards and descriptions, the
Executive Committee, acting in its reasonable discretion, shall establish
the Minimum Economic Standards which are to be in force and effect with
respect to all subsequent Managers after the removal of Pace.
If the Partnership should fail to meet the Minimum Economic Standards for any
Fiscal Year after the removal of Pace as Manager, either Partner shall have the
right,
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 125
exercisable in its sole discretion, within thirty (30) days after such Partner
has been provided with a complete and final unaudited set of financial
statements for the Partnership's operations during such Fiscal Year, to require
that the Manager resign effective as of the next succeeding November 15. If such
notice is not given within the aforesaid thirty (30) day period, then each
Partner's right to cause the Manager to resign for the failure to meet the
Minimum Economic Standards for such Fiscal Year shall be waived, but shall not
affect such right with respect to any other failures to meet the Minimum
Economic Standards in any subsequent Fiscal Years. Each successor Manager, after
removal of Pace as Manager pursuant to the provisions of Section 10.8 hereof,
shall specifically agree in writing (i) to observe and perform each of the
material obligations imposed upon the Manager pursuant to the terms of this
Agreement (with appropriate modifications to reflect that such Person is not a
Partner) and (ii) that such Manager's continued engagement by the Partnership is
conditioned upon the Partnership meeting the Minimum Economic Standards during
each Fiscal Year that it continues to serve as the Manager hereunder (which
written instrument shall be deemed to be a part of the management agreement
pursuant to which such Manager is engaged and retained by the Partnership).
11.5 Special Provisions Relating to Construction of Approved Projects by
the Partnership after Removal of Pace as Manager. If Pace does not elect to
commence the Unwind Procedure following receipt of a Termination Notice, then
the following provisions shall apply,
(a) with respect to any Approved Project following receipt of such
Termination Notice:
(1) if such Approved Project will be the first New
Amphitheater, then neither PEC nor PMG shall have any obligation to
provide any guaranty or otherwise participate in the obtaining of
the Project Loan for such Approved Project.
(2) if such Approved Project will not be the first New
Amphitheater, then the obligation of Sony/Block to provide a Project
Loan pursuant to the provisions of Section 5.1 hereof for such
Approved Project shall be the several obligation of Pace, as to
one-third of the required principal thereof, and Sony/Block, as to
two-thirds of the required principal thereof (and, under such
circumstances, any obligation of Sony/Block to cause Sony and
Blockbuster to guarantee such loan, shall be the obligation to cause
Sony and Blockbuster to each guarantee 33 1/3% of such loan and Pace
shall be obligated to cause PEC to guarantee 33 1/3% of such loan);
provided, however, that it is specifically confirmed and
acknowledged that Pace shall have the right to be relieved and
excused of such obligation in the same manner, and to the
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 126
same extent, that Sony/Block may be so excused and relieved pursuant
to the provisions of Section 5.1(b) hereof, subject to the terms and
obligations thereof (and, in the event Pace elects to avail itself
of such right, Sony/Block shall have the rights of Pace set forth in
such Section 5.1(b)).
(b) with respect to any previously constructed Amphitheater which
the Partnership is to acquire or purchase pursuant to the provisions of
Section 6.2 hereof following receipt of such Termination Notice:
(1) if such Amphitheater will be the first New Amphitheater,
then neither PEC nor PMG shall have any obligation to provide any
guaranty or otherwise participate in the obtaining of the loan
required to be extended pursuant to the provisions of Section
6(2)(a) hereof in respect of such Amphitheater.
(2) if such Amphitheater will not be the first New
Amphitheater, then the obligation of Sony/Block to provide the loan
required to be extended pursuant to the provisions of Section 6.2(a)
hereof in respect to such Amphitheater shall be the several
obligation of Pace, as to one-third of the required principal
thereof, and Sony/Block, as to two-thirds of the required principal
thereof (and, under such circumstances, any obligation of Sony/Block
to cause Sony and Blockbuster to guarantee such loans, shall be the
obligation to cause Sony and Blockbuster to each guarantee 33 1/3%
of such loan and Pace shall be obligated to cause PEC to guarantee
33 1/3% of such loan).
(c) Pace shall be required to cause PMG and PEC to guarantee Pace's
Percentage Interest of each Renewal Loan and Replacement Loan which are
thereafter made to the Partnership so long as there are then one or more
New Amphitheaters.
[END OF ARTICLE XI]
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 127
ARTICLE XII
Exclusivity, Non-Compete and Interaction with Partners
12.1 Exclusivity. Subject to the provisions of Sections 12.2 and 12.3
hereof and the other express provisions to the contrary contained herein, the
Partners agree as follows:
(a) Except for, the MCA/Pace Amphitheaters and the London
Amphitheater, this Agreement shall constitute an exclusive arrangement
between the Partners for the development, acquisition, construction,
management and operation of Amphitheaters anywhere within the Restricted
Portion of the Earth.
(b) None of Pace, any Affiliate of Pace or any Sony/Block Related
Party shall, directly or indirectly, be an owner, manager, operator,
lender, equity participant or consultant in or to any Amphitheater
anywhere in the Restricted Portion of the Earth, other than any one or
more of the MCA/Pace Amphitheaters and the London Amphitheater.
12.2 Exceptions to Exclusivity. The provisions of Section 12.1 shall not
prohibit the following activities:
(a) Either Partner, any Affiliate of a Partner or any Sony/Block
Related Party may provide booking services and production services (such
as logistical, technical and staging support services) for a fee at any
Amphitheater other than Amphitheaters which are within seventy-five (75)
miles of any Amphitheater in which the Partnership owns a Controlling
Interest.
(b) Either Partner, any Affiliate of a Partner or any Sony/Block
Related Party may act as a local promoter of any live entertainment event
in any Amphitheater other than Amphitheaters which are within seventy-five
(75) miles of any Amphitheater in which the Partnership owns a Controlling
Interest.
(c) Either Partner, any Affiliate of a Partner or any Sony/Block
Related Party ("Acquiring Person") may acquire control, or purchase all or
substantially all of the assets, of any Person ("Acquired Person") which
has ownership interests in Amphitheaters in the Restricted Portion of the
Earth so long as both of the following conditions are satisfied:
(1) The Acquired Person has not, during its most recently
completed fiscal year, obtained or derived more than five percent
(5%) of its gross revenue or its earnings (on a consolidated basis)
from the
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 128
development, acquisition, construction, management and operation of
Amphitheaters; and
(2) Within one hundred eighty (180) days after the acquisition
of control, or purchase of all or substantially all of the assets,
of the Acquired Person, the Acquiring Person has offered ("Offer")
to the Partnership the opportunity to purchase all of the acquired
Person's interests in Amphitheaters for a purchase price determined
at such time utilizing the same valuation procedures and methods
utilized in the valuation of the assets contributed to the capital
of the Partnership at the Existing Facility Closing. If the
Acquiring Person is Sony/Block, then Pace shall make the decision
and election, on behalf of the Partnership, as to whether the Offer
shall be accepted. If the Acquiring Person is Blockbuster or an
Affiliate of Blockbuster, then Pace and the Sony Subsidiary shall
jointly make the election and decision, on behalf of the
Partnership, as to whether the Offer shall be accepted. If the
Acquiring Person is Sony or an Affiliate of Sony, then Pace and the
Blockbuster Subsidiary shall jointly make the decision and election,
on behalf of the Partnership, as to whether the Offer shall be
accepted. If the Acquiring Person is Pace or an Affiliate of Pace,
then Sony/Block shall make the election and decision, on behalf of
the Partnership, as to whether the Offer shall be accepted. If the
Offer is accepted by the Partnership in accordance with the
foregoing provisions, then the purchase price shall be financed in
accordance with the provisions of Section 6.2 hereof.
(d) Blockbuster (or its Affiliates) may become an owner, manager,
operator, lender, equity participant or consultant of, in or to a Special
Miami Amphitheater. As used in the immediately preceding sentence, the
term "Special Miami Amphitheater" shall mean an Amphitheater which is (i)
located within ten (10) miles north or south of the county line dividing
Dade County and Broward County, Florida from the Everglades in the west to
the Atlantic Ocean in the east and (ii) a part of a larger integrated
project which includes other significant entertainment facilities and
attractions. To avoid any uncertainty or ambiguity, it is specifically
understood and acknowledged that nothing contained in this Section 12.2(d)
shall imply, or be deemed to imply, that (x) the Partners do not consider
the metropolitan areas included within south Florida, such as Miami, Miami
Beach and West Palm Beach as viable Markets for the development of
Amphitheaters by the Partnership or (y) the Partnership will not seek
development opportunities for Amphitheaters in south Florida.
12.3 Continuing Noncompete Covenant After Certain Circumstances. The
exclusivity provisions of Section 12.1 shall terminate upon (i) closing of the
Unwind
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 129
Procedure, (ii) dissolution and termination of the Partnership pursuant to
Article XVI hereof or (iii) a purchase of a Partner's Partnership Interest
pursuant to Sections 16.2 or 17.2(e) hereof. However, notwithstanding the
termination of the exclusivity provisions of Section 12.1 hereof pursuant to the
provisions contained in the immediately preceding sentence, the Partners shall
be bound by certain exclusivity and non-compete provisions upon the following
terms and under the following described circumstances:
(a) Unwind Procedure - Less than Six New Amphitheaters. If,
when Pace exercises the right to commence the Unwind Procedure
pursuant to a right contained in this Agreement, (x) there are less
than six (6) New Amphitheaters and (y) the Partnership has not
committed to construct, or acquire a Controlling Interest in an
Amphitheater which will be the sixth New Amphitheater upon
construction or acquisition thereof, then no Sony/Block Related
Party shall, for a period of three (3) years following the closing
of the Unwind Procedure, develop, acquire, construct, manage or own
(or take any action in contemplation of, or preparation for, any of
the foregoing) any Amphitheater in the Pace Designated Markets
(herein defined) other than (i) any Amphitheaters which a Sony/Block
Related Party may acquire at the Unwind Closing and (ii) through
Sony/Block's continuing interest in the Partnership (if applicable).
As used in the immediately preceding sentence, the term "Pace
Designated Markets" shall mean those Markets which are designated by
Pace providing notice thereof to Sony/Block at the closing of the
Unwind Procedure which, in any event, shall not exceed (x) five (5)
Qualified Markets and (y) five (5) other Markets. The following
additional provisions shall also apply with respect to these
matters:
(1) Within one (1) year after the closing of the Unwind
Procedure, Pace shall be obligated to pay to the Partnership the
total amount of Project Costs incurred by the Partnership prior to
the occurrence of the closing of the Unwind Procedure with respect
to the Pace Designated Markets.
(2) If, at any time during the three (3) years following the
closing of the Unwind Procedure, Pace or any Affiliate of Pace
(herein called a "Pace Party") commits to construct, or otherwise
acquire an interest in, an Amphitheater in any Qualified Market
which is not a Pace Designated Market, then the Pace Party shall
offer to Sony/Block the opportunity to participate in the
construction, or other acquisition of such interest in, such
Amphitheater on an equal basis with the Pace Party.
(b) Unwind Procedure - Six or More New Amphitheaters. If, when Pace
exercises its right to commence the Unwind Procedure pursuant to a right
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 130
contained in this Agreement, (x) there are six (6) or more New
Amphitheaters or (y) the Partnership has committed to construct, or
acquire a Controlling Interest in, an Amphitheater which will be the sixth
New Amphitheater upon construction or acquisition thereof, then the
Qualified Markets shall be allocated between the Partners in the manner
described below and neither Partner shall, for a period of three (3) years
after the closing of the Unwind Procedure, develop, acquire, construct,
manage or own (or take any action in contemplation of, or preparation for,
any of the foregoing) any Amphitheater which is located in any of the
Qualified Markets allocated to the other Partner as described below. The
allocation of the Qualified Markets between the Partners shall be made in
accordance with the following:
(1) At the closing of the Unwind Procedure, the Partners will
determine which of the Partners will select the first Qualified
Market by the toss of a U.S. minted coin. The toss of such coin
shall be governed by the following provisions:
(i) A representative of Pace at the closing of the
Unwind Procedure shall be responsible for selecting the coin
to be tossed and then subsequently tossing the coin.
(ii) A representative of Sony/Block shall have the
opportunity to inspect the coin selected by the representative
of Pace and the parties shall agree as to which side of the
coin will be designated the "head" of the coin and which side
will be designated as the "tail" of the coin. After these
initial agreements have been reached, the representative of
Pace will toss the coin in the air. While the coin is in the
air, the representative of Sony/Block will call either "heads"
or "tails" in a loud, audible voice. The representative of
Pace who tosses the coin into the air will allow it to fall to
the floor.
(iii) If the side of the coin called by the
representative of Sony/Block is facing up, then Sony/Block
shall be deemed the "winner of the flip." Otherwise, Pace
shall be deemed to be the "winner of the flip."
(2) At the closing of the Unwind Procedure, the "winner of the
flip" shall then proceed to select one of the Qualified Markets as a
Market which will be allocated to it. The other Partner shall then
proceed to select a Qualified Market which will be allocated to it
for purposes of this Section 12.3(b). The Partners shall continue
to
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 131
alternate selecting the Qualified Markets in this manner until all
Qualified Markets have been allocated between the Partners.
The noncompete covenant contained in this clause (b) shall apply to both
Partners and their respective Affiliates (and, in the case of Sony/Block,
to all of the Sony/Block Related Parties). If, during the three (3) year
period after the closing of the Unwind Procedure, either of the Partners
or any Affiliate of either of the Partners (and, in the case of
Sony/Block, any Sony/Block Related Party) should become interested in any
Amphitheater in any of the Qualified Markets which were allocated to it
pursuant to the foregoing provisions, then such Partner shall be obligated
to immediately reimburse to the Partnership all Project Costs previously
incurred by the Partnership with respect to such Qualified Market prior to
the closing of the Unwind Procedure. If (x) the provisions of this Section
12.3(b) are applicable at the closing of the Unwind Procedure instead of
the provisions of Section 12.3(a) hereof solely because the Partnership
has committed to construct, or acquire a Controlling Interest in, an
Amphitheater which will be the sixth New Amphitheater upon construction or
acquisition thereof and (y) the Partnership should at any time after the
closing of the Unwind Procedure for any reason (other than any default by
Pace or any of its Affiliates of its obligations under this Agreement)
elect not to construct or acquire such Amphitheater, then the Partners
shall immediately thereafter take such actions as may be reasonably
necessary to rescind all actions taken at the closing of the Unwind
Procedure pursuant to the provisions of this Section 12.3(b) and to
implement the provisions of Section 12.3(a) hereof effective retroactively
as of the time of the closing of the Unwind Procedure.
(c) Purchase of Interest for a Default or Withdrawal. If a Partner
has its Partnership Interest purchased pursuant to Section 16.2 hereof or
Section 17.2(e) hereof, then such Partner and its Affiliates (and, in the
case of Sony/Block, all Sony/Block Related Parties) may not, for a period
of two (2) years after the purchase of its Partnership Interest, develop,
acquire, construct, manage or own (or take any action in contemplation of,
or preparation for, any of the foregoing) any Amphitheater anywhere in the
Restricted Portion of the Earth other than an interest in an Amphitheater
which was acquired prior to such purchase in a manner which did not
violate the provisions of this Article XII.
(d) Dissolution. If the Partnership is dissolved and terminated
pursuant to Article XVI hereof as the result of an occurrence of an Event
of Withdrawal with respect to a Partner, then the withdrawing Partner and
its Affiliates (and, in the case of Sony/Block, all of the Sony/Block
Related Parties) may not, for a period of two (2) years after the
dissolution and termination of
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 132
the Partnership, develop, acquire, construct, manage or own (or take any
action in contemplation of, or preparation for, any of the foregoing) any
Amphitheater anywhere in the Restricted Portion of the Earth other than
(i) an Amphitheater which such Person acquired upon the final liquidating
distribution of the Partnership's assets and (ii) an interest in an
Amphitheater which was acquired prior to such dissolution and termination
in a manner which did not violate the provisions of this Article XII.
(e) Existing Market Noncompetes. In addition to all of the
foregoing, after (i) completion of the Unwind Closing, (ii) purchase of an
interest in the Partnership pursuant to Sections 16.2 or 17.2(e) or (iii)
dissolution and termination of the Partnership pursuant to Article XVI
hereof, neither Partner shall, for a period of twenty-five (25) years
after such occurrence, develop or construct (or take any action in
contemplation of, or preparation for, the development or construction of),
directly or indirectly, any Amphitheater which is located in the same
Market that an Amphitheater with respect to which the Partnership owned a
Controlling Interest prior to such occurrence is located and which
Controlling Interest is thereafter owned, in whole or in part by the other
Partner or its Affiliates (or, in the case of Sony/Block, by any
Sony/Block Related Party). The noncompete covenant contained in the
immediately preceding sentence shall apply to both Partners and their
respective Affiliates (and, in the case of Sony/Block, to all of the
Sony/Block Related Parties).
The provisions of this Section 12.3 shall survive the dissolution and
termination of the Partnership.
12.4 Reformation of Unenforceable Provisions. If any provision contained
in this Article XII is held to be unenforceable because of the scope, duration
or area of its applicability, the court making such determination shall have the
power to modify such scope, duration or area or all of them, and such provision
shall then be applicable in such modified form. Since a violation of this
Article XII will result in irreparable harm, the nondefaulting party shall be
entitled to an injunction restraining the commission or continuation of any
violation of the provisions of this Article XII or any other appropriate decree
of specific performance. Such remedies shall not be exclusive and shall be in
addition to any other remedy expressly provided for under the terms of this
Agreement or permitted at law or in equity.
12.5 Partners Arms-Length Dealing with Partnership.
(a) Subject to the provisions of Section 10.2(b)(5) hereof, it is
hereby recognized and acknowledged by and between the Partners that the
Partnership shall have the express right and authority to enter into
contracts and agreements, on an arms-length basis, with either of the
Partners or any Affiliates of
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 133
either of the Partners (and, in the case of Sony/Block any Sony/Block
Related Party) and all rights accruing to such Partner or such Affiliate
(or such Sony/Block Related Party) under such arms-length contract shall
be the sole and exclusive property of such contracting party and neither
the Partnership nor the other Partner or its Affiliate shall have any
participation rights therein or thereto.
(b) Just as with other contractual arrangements between the Partners
and their Affiliates, on the one hand, and the Partnership, on the other
hand, arrangements whereby Pace Concerts, Inc., an affiliate of Pace, acts
as the local promoter of events presented at any Amphitheater of the
Partnership shall require the unanimous approval of the Executive
Committee; provided, however, that it is hereby stipulated, acknowledged
and agreed that Pace Concerts, Inc. (or any successor thereto) shall have
the express right and authority, without any further consent or approval
from the Executive Committee, to act as the local promoter for all events
presented at the Woodlands Amphitheater upon, and subject to the following
terms, conditions and provisions:
PACE Concerts, Inc. is entitled to receive 20% of cash flow
related to the Woodlands Asset after all direct operating expenses,
including direct staff expenses for a marketing director,
production manager, sponsorship position, accounting position,
program sales position, a ticketing manager and two interns.
(c) The Partners acknowledge that each of them, and each of their
respective Affiliates, is engaged and may in the future be engaged in a
number of businesses related to the business of the Partnership and
(i) except as specifically provided in Sections 12.1 and 12.3 hereof,
nothing in this Agreement is intended to prohibit any Partner or any of
its Affiliates from owning, managing, operating, investing and
participating in their current businesses and investment interests or from
owning, managing, operating, investing and participating in additional
businesses and investment interests, and (ii) neither the Partnership nor
any other partner shall have any rights in or to any such businesses or
investments of such Partner or its Affiliates or any income or profits
derived therefrom.
(d) Notwithstanding any other provisions to the contrary contained
herein, the Partners hereby agree that Pace and each of its Affiliates
shall have the right to employ and use, at no cost or charge Pace or any
of its Affiliates, the services and time of the permanent staff at each of
the Partnership's Amphitheaters to assist in the entertainment promotion
businesses of Pace and its Affiliates in the Market in which such
Amphitheater is located, so long as such use does not interfere with the
management, use
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 134
or operation of such Amphitheater. In no event shall any one employee at
any of the Partnership's Amphitheaters spend a substantial portion of his
or her working time, on an annual basis, in connection with the provision
of any services or time to Pace or any of its Affiliates in assisting in
its entertainment promotion businesses pursuant to the provisions of the
immediately preceding sentence.
12.6 Special Provisions Relating to Rejection of Qualified Amphitheaters.
(a) Rejection Triggering Events. As used in this Section 12.6, the
following terms shall have the meanings indicated:
(1) "Sony/Block Rejection Triggering Event" shall mean the
occurrence of a Qualified Amphitheater becoming a Sony/Block
Rejected Amphitheater at a time when Sony/Block's Permitted Number
(herein defined) is zero. As used herein, the term "Sony/Block's
Permitted Number" shall mean, at any time, an integer determined in
accordance with the following provisions:
(i) Sony/Block's Permitted Number shall initially be 2.
(ii) Each time that a Qualified Amphitheater becomes a
Sony/Block Rejected Amphitheater, Sony/Block's Permitted
Number shall immediately thereafter be decreased by 1.
(iii) Each time that the Partnership commits to
construct, or acquire a Controlling Interest in, any
Amphitheater which will be a New Amphitheater upon
construction or acquisition thereof, Sony/Block's Permitted
Number shall immediately thereafter be increased by 1;
provided, however, if, for any reason (other than any default
by Pace or any of its Affiliates of its obligations under this
Agreement) the Partnership should subsequently fail to
construct, or acquire a Controlling Interest in, any such
Amphitheater notwithstanding its prior commitment,
Sony/Block's Permitted Number shall be reduced by 1 as if it
had never been increased as a result of the Partnership's
original commitment to construct, or acquire a Controlling
Interest in, such Amphitheater.
(iv) Notwithstanding anything to the contrary contained
herein, in no event shall Sony/Block's Permitted Number, at
any time, be greater than 3 or less than zero.
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 135
(v) When the Partnership commits to construct, or
acquire a Controlling Interest in, the Amphitheater which will
be the sixth New Amphitheater upon construction or acquisition
thereof, Sony/Block's Permitted Number shall immediately
thereafter be 3; provided, however, if, for any reason (other
than any default by Pace or any of its Affiliates of its
obligations under this Agreement), the Partnership should
subsequently fail to construct, or acquire a Controlling
Interest in, such Amphitheater notwithstanding its prior
commitment, Sony/Block's Permitted Number shall retroactively
return to the number which it had been prior to the
Partnership's commitment to construct, or acquire a
Controlling Interest in, such Amphitheater.
(2) "Pace Rejection Triggering Event" shall mean the
occurrence of a Qualified Amphitheater becoming a Pace Rejected
Amphitheater at a time when Pace's Permitted Number (herein defined)
is zero. As used herein, the term "Pace's Permitted Number" shall
mean, at any time, an integer determined in accordance with the
following provisions:
(i) Pace's Permitted Number shall initially be 2.
(ii) Each time that a Qualified Amphitheater becomes a
Pace Rejected Amphitheater, Pace's Permitted Number shall
immediately thereafter be decreased by 1.
(iii) Each time that the Partnership commits to
construct, or acquire a Controlling Interest in, any
Amphitheater which will be a New Amphitheater upon
construction or acquisition thereof, Pace's Permitted Number
shall immediately thereafter be increased by 1; provided,
however, if, for whatever reason, the Partnership should
subsequently fail to construct, or acquire a Controlling
Interest in, any such Amphitheater notwithstanding its prior
commitment, Pace's Permitted Number shall be reduced by one as
if it had never been increased as a result of the
Partnership's original commitment to construct, or acquire a
Controlling Interest in, such Amphitheater.
(iv) Notwithstanding anything to the contrary contained
herein, in no event shall Pace's Permitted Number, at any
time, be greater than three or less than zero.
(3) "Consecutive Turndown Rejection Triggering Event" shall
mean the occurrence of a Qualified Amphitheater, other than the
first
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 136
Sony/Block Rejected Amphitheater, becoming a Sony/Block Rejected
Amphitheater unless the Partnership has, since the last time that a
Qualified Amphitheater became a Sony/Block Rejected Amphitheater,
(i) constructed or acquired a New Amphitheater or (ii) committed
(and not withdrawn such commitment) to construct, or acquire
Controlling Interest in, an Amphitheater which will be a New
Amphitheater upon construction or acquisition thereof.
(b) Right to Commence Unwind Procedure. If, at the time of the
occurrence of a Sony/Block Rejection Triggering Event, (x) there are less
than nine (9) New Amphitheaters and (y) the Partnership has not committed
to construct, or acquire a Controlling Interest in, an Amphitheater which
will be the ninth New Amphitheater upon construction or acquisition
thereof, then Pace shall have the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof upon the
occurrence of such Sony/Block Rejection Triggering Event. Pace may
exercise such right and option, each time that it may arise, at any time
on or before 45 days after Sony/Block has provided written notice to Pace
that such right and option has arisen in accordance with the provisions of
the immediately sentence. The giving of the notice by Sony/Block referred
to in the immediately preceding sentence shall not be a condition
precedent to Pace's right to exercise the right to commence the Unwind
Procedure. If Pace fails to exercise the right and option to commence the
Unwind Procedure created pursuant to this Section 1 2.6(b) any time that
such right may arise prior to the expiration of the time period referred
to in the second preceding sentence, then Pace shall be deemed to have
elected not to exercise such right and option with respect to that
specific instance giving rise to the right and option. If (i) Pace does
not have the right and option to commence the Unwind Procedure upon the
occurrence of a Sony/Block Rejection Triggering Event solely because the
Partnership has committed to construct, or acquire a Controlling Interest
in, an Amphitheater which will be the ninth New Amphitheater upon
construction or acquisition thereof and (ii) the Partnership should at any
time after the occurrence of such Sony/Block Rejection Triggering Event,
for any reason (other than any default by Pace or any of its Affiliates of
its obligations under this Agreement), elect not to construct, or acquire
a Controlling Interest in, such Amphitheater, then Pace shall thereafter
have the right to exercise the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof upon a
determination that such Amphitheater will not be constructed or acquired
by the Partnership, exercisable at any time on or before 45 days after
Sony/Block has provided written notice to Pace that such right and option
has arisen in accordance with the provisions of this sentence.
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 137
(c) Effect of Rejection Triggering Events on Exclusivity Provisions.
Notwithstanding the provisions of Section 12.1 hereof,
(1) if a Sony/Block Rejection Triggering Event or a
Consecutive Turndown Rejection Triggering Event has occurred, then
Pace shall have the right to construct, or otherwise acquire a
Controlling Interest in, and thereafter manage, operate and use, the
Sony/Block Rejected Amphitheater which caused such Sony/Block
Rejection Triggering Event or such Consecutive Turndown Rejection
Triggering Event to occur for its own account outside of the
Partnership with or without one or more other participants or
partners without owing any obligation, liability or duty to
Sony/Block; and
(2) if a Pace Rejection Triggering Event has occurred, then
Sony/Block shall have the right to construct, or otherwise acquire a
Controlling Interest in, and thereafter manage, operate and use, the
Pace Rejected Amphitheater which caused such Pace Rejection
Triggering Event to occur for its own account outside of the
Partnership with or without one or more other participants or
partners without owing any obligation, liability or duty to Pace.
If either Partner elects to construct or acquire any Amphitheater outside
of the Partnership pursuant to the foregoing exclusions to the exclusivity
provisions of Section 12.1 hereof, then such Partner shall be required and
obligated to reimburse to the Partnership all Project Costs previously
incurred by the Partnership with respect to such Amphitheater.
(d) Disputes Related to Rejected Amphitheaters. If Pace believes a
proposed Amphitheater has become a Sony/Block Rejected Amphitheater, then
it shall provide written notice ("Rejection Occurrence Notice") thereof
to Sony/Block within 120 days after the event, circumstance or occurrence
which Pace believes caused such proposed Amphitheater to become a
Sony/Block Rejected Amphitheater. If Sony/Block does not provide written
notice to Pace within thirty (30) days after receipt of a Rejection
Occurrence Notice that Sony/Block disputes Pace's belief that such
proposed Amphitheater has become a Sony/Block Rejected Amphitheater, then
such proposed Amphitheater shall, for all purposes hereof, be deemed to be
a Sony/Block Rejected Amphitheater. If Sony/Block does provide written
notice ("Rejection Dispute Notice") to Pace within thirty (30) days after
receipt of a Rejection Occurrence Notice that it disputes Pace's belief
that such proposed Amphitheater has become a Sony/Block Rejected
Amphitheater, then the determination of whether such proposed Amphitheater
is a Sony/Block Rejected Amphitheater shall be made in accordance with the
following provisions:
Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 138
(1) A deciding voter shall be selected in accordance with the
provisions of Section 18.13 hereof as soon as possible after
Sony/Block has provided to Pace a Rejection Dispute Notice.
(2) Within thirty (30) days after the selection of the
deciding voter referred to in clause (1) above, both Pace and
Sony/Block shall submit to the deciding voter written statements in
support of each such Partner's position concerning the dispute as to
whether such proposed Amphitheater has become a Sony/Block Rejected
Amphitheater.
(3) Within forty-five (45) days after selection of the
deciding voter referred to in clause (1) above, a meeting shall be
convened in New York, New York between and among the deciding voter
and representatives of both of the Partners at which meeting each
Partner shall be given an opportunity to present arguments to the
deciding voter in favor of its position concerning the dispute
related to whether such proposed Amphitheater has become a
Sony/Block Rejected Amphitheater.
(4) Within fifteen (15) days after the holding of such
meeting, the deciding voter shall be required to determine whether
such proposed Amphitheater has become a Sony/Block Rejected
Amphitheater. The decision of the deciding voter shall be final and
binding and each Partner agrees not to institute any litigation
concerning the decision of the deciding voter.
[END OF ARTICLE XII]
Article XIII - Fiscal Matters
Page 139
ARTICLE XIII
Fiscal Matters
13.1 Fiscal Year. The Fiscal Year of the Partnership, for federal income
tax purposes, shall end on October 31, unless the Partners mutually designate a
different Fiscal Year which meets the requirements and provisions of the Code.
The Budget Year of the Partnership shall also end on October 31, unless the
Partners mutually designate a different financial accounting and book fiscal
year.
13.2 Books and Records. Proper books and records shall be kept, or caused
to be kept, in accordance with generally accepted accounting principles, by the
Manager with reference to all Partnership transactions, and each Partner shall
at all reasonable times during business hours have access thereto. Within ninety
(90) days after the close of each Budget Year, the Partnership shall furnish to
each Partner with respect to such Budget Year (i) a statement of income, (ii) a
statement of source and application of funds and (iii) a balance sheet as of the
close of such Budget Year. The foregoing financial statements shall be prepared
on the basis of generally accepted accounting principles, consistently applied,
and shall be audited and reported on by the independent certified accountants to
the Partnership hereafter selected, from time to time, by the Executive
Committee. Unless the Executive Committee shall subsequently agree otherwise,
(i) Price Waterhouse shall be the independent certified accountants to the
Partnership for its first five (5) Budget Years, (ii) Xxxxxx Xxxxxxxx shall be
the independent certified accountants to the Partnership for the next five (5)
Budget Years and (iii) Price Waterhouse and Xxxxxx Xxxxxxxx shall thereafter
alternate serving as the independent certified accountants to the Partnership in
successive five year periods thereafter. The Manager shall cooperate with said
accountants and shall provide them with all information which they may
reasonably request in order to audit the financial statements of the
Partnership. The cost of preparing the statements and of each audit shall be
paid for by the Partnership. Within thirty (30) days after the close of each
month, the Manager shall furnish to each Partner a monthly unaudited financial
report and operating statement of the Partnership (consisting of the same
financial statements as the financial statements prepared on an annual basis)
prepared in accordance with generally accepted accounting principles,
consistently applied, including a report of the Partnership's activities during
the period.
13.3 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at one or more
national or state banks selected by the Manager and approved by the Executive
Committee. Checks shall be drawn upon the Partnership and may be signed by the
Manager or such officers of the Partnership as may be designated by the Manager.
Duplicate copies of the monthly reconciliation statements sent by any such bank
to the Partner-
Article XIII- Fiscal Matters
Page 140
ship shall be sent by the Manager to each Partner within ten (10) days of
receipt thereof by the Partnership.
13.4 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for United States Federal Income Tax purposes, each of
the Partners hereby recognizes that the Partnership will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, the filing of U.S. Partnership Returns of Income shall not be construed
to extend the purposes of the Partnership or expand the obligations or
liabilities of the Partners.
13.5 Tax Returns. The Manager shall cause to be prepared and filed all tax
returns and statements, if any, which must be filed on behalf of the Partnership
with any taxing authority. Prior to filing any such return or statement, the
Manager shall (i) deliver a copy of all income tax returns or statements to the
Partners for their review and comment at least thirty (30) days before the due
date (including all extensions) for such return and (ii) provide to the
Partners, and their designated representatives, access to the Partnership's tax
and audit workpapers upon request. The Manager shall cause a copy of all filed
tax returns to be delivered to the Partners promptly after the filing of such
return.
13.6 Tax Matters Partner. Pace shall be the "Tax Matters Partner" pursuant
to Section 6231(a)(7) of the Code and the applicable Treasury Regulations
promulgated thereunder. In its capacity as "Tax Matters Partner," Pace shall be
required to provide copies to Sony/Block of all material information relating to
any tax controversy involving the Partnership and, to the extent practicable,
allow participation by Sony/Block in any such tax controversy.
13.7 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership Interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership shall file an election
under Section 754 of the Code in accordance with the procedures set forth in the
applicable Treasury Regulations upon the request of any Partner. All accounting,
legal and other costs associated with the making of such election by the
Partnership shall be borne by the requesting Partner.
13.8 Reimbursement of Expenses. Provided that any such costs and expenses
are within the limits contained in the applicable Annual Operating Budget
approved by the Executive Committee, the Partnership shall be obligated to
reimburse the Partners and their respective Affiliates and employees for any and
all out-of-pocket costs and expenses of the types described in Exhibit D"
attached hereto and which relate to the business of the Partnership.
Notwithstanding the foregoing, it is specifically understood and acknowledged
that nothing contained in this Section 13.8 shall
Article XIII - Fiscal Matters
Page 141
obligate the Partnership to reimburse any Partner or any of its Affiliates for
any salaries or overhead expenses.
13.9 Indemnity for Constructive Termination.
(a) Subject to the provisions contained clause (b) of this Section
13.9, if the Partnership should ever be considered terminated for purposes
of, and pursuant to, Section 708(b)(1)(B) of the Code (herein referred to
as a "Constructive Termination") as the result of any actual or
constructive transfer of Sony/Block Partnership's Interest, then
Sony/Block shall indemnify and hold harmless (on an after-tax basis
considering both (x) the federal, state and local income taxes which will
be owed by Pace on any payment or other amount received from Sony/Block
pursuant to this indemnity and (y) any federal, state and local income tax
benefits which will be realized by Pace on account of the indemnified
items) against any actual loss, cost or damage (including, but not limited
to, additional federal, state or local taxes being owed or the due date of
any such taxes being accelerated on account of the closing of the
Partnership's then current tax year) suffered by Pace as the result of the
occurrence of such Constructive Termination. Sony/Block shall also
reimburse Pace for its actual out-of-pocket costs for any attorneys' fees,
accountants' fees or other fees of other professionals or advisors in
enforcing or determining the amount of the indemnity obligation created
pursuant to the preceding sentence as the result of (i) the occurrence of
a Constructive Termination required to be indemnified pursuant to the
provisions contained in the immediately preceding sentence or (ii) the
receipt of a Constructive Termination Notice pursuant to clause (b) of
this Section 13.9.
(b) If Sony/Block or the partners in Sony/Block (Acting Party")
intend to take any action or make any transfer which will result in the
occurrence of a Constructive Termination or may result in a Constructive
Termination if Pace thereafter exercises its Equalizing Purchase Option,
then the Acting Party may provide a notice ("Constructive Termination
Notice") to Pace that such action or transfer is about to occur. If Pace
does not provide to Sony/Block, within 60 days after receipt of the
Constructive Termination Notice, a written notice ("Constructive
Termination Damage Notice") stating that such Constructive Termination
will result in an adverse tax consequence to Pace with a reasonably
detailed description of the type and magnitude of such adverse tax
consequences, then Sony/Block shall have no obligation to Pace under the
indemnity described in clause (a) of this Section 13.9. If Pace does
provide a Constructive Termination Damage Notice to Sony/Block within 60
days after receipt of a Constructive Termination Notice, then Sony/Block's
liabilities under the indemnity described in clause (a) of this Section
13.9 shall be limited to the
Article XIII - Fiscal Matters
Page 142
type and magnitude of adverse tax consequences described by Pace in the
Constructive Termination Notice.
(c) The indemnity and other obligations imposed upon Sony/Block
pursuant to the provisions of Section 13.9(a) (as limited by the
provisions of Section 13.9(b) hereof) shall also be applicable to Pace, in
the event of a Constructive Termination resulting from any actual or
constructive transfer of Pace's Partnership Interest at any time after the
exercise by Pace of its right to purchase the Equalizing Partnership
Interest pursuant to the Equalizing Purchase Option described in Section
15.3(b) hereof.
(d) The indemnity obligations contained in this Section 13.9 shall
not apply with respect to any Constructive Termination which may be caused
in connection with, or as the result of, the occurrence of the Unwind
Procedure.
[END OF ARTICLE XIII]
Article XIV - Representations and Warranties of Partners
Page 143
ARTICLE XIV
Representations and Warranties of Partners
14.1 Representations and Warranties of Pace. In order to induce Sony/Block
to enter into this Agreement, Pace hereby makes the following representations
and warranties to Sony/Block.
(a) Pace has taken or caused to be taken all necessary action to
authorize the execution, delivery and performance of this Agreement and
the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligations of Pace, enforceable in accordance
with its terms, except to the extent that enforcement thereof may be
limited by applicable bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor's rights generally and the
availability of equitable remedies. Neither the execution and delivery of
this Agreement, nor compliance with any of the provisions hereof, by Pace,
will violate any law or regulation, or any order, writ or decree of any
court or governmental instrumentality, or will conflict with, or result in
the breach of, or constitute a default in any respect under, any
indenture, mortgage, deed of trust, agreement or other instrument to which
Pace, PMG or PEC is a party or may be bound or by which any of its
properties may be affected or will violate any provision of the
certificate or articles of incorporation (as amended to date) or by-laws
(as currently in effect) of Pace.
(b) There is no claim, litigation, proceeding or governmental
investigation pending, or, so far as is known to Pace, threatened, against
or relating to Pace, PEC or PMG or any of their respective properties or
assets which questions the validity or enforceability of this Agreement or
any of the transactions contemplated hereby.
(c) None of Pace, PEC or PMG is in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which it is a
party, or by which it or any of its properties may be bound or affected,
except for such defaults which, individually or in the aggregate, will not
have a material and adverse effect on the business, operations, property
or assets or in the condition, financial or otherwise, of Pace or PMG.
(d) All information, reports, papers, financial data and other
materials given to Sony/Block or any Sony/Block Related Party with respect
to Pace or any of its Affiliates or any of the Amphitheaters or
partnerships owning Amphitheaters which Pace or its Affiliates have any
ownership interest in are accurate, complete and correct in all material
respects and do not omit any
Article XIV - Representations and Warranties of Partners
Page 144
fact, the inclusion of which is necessary to prevent the facts contained
therein from being materially misleading.
14.2 Representations and Warranties of Sony/Block. In order to induce Pace
to enter into this Agreement, Sony/Block hereby makes the following
representations and warranties to Pace.
(a) Sony/Block has taken or caused to be taken all necessary action
to authorize the execution, delivery and performance of this Agreement and
the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligations of Sony/Block, enforceable in
accordance with its terms, except to the extent that enforcement thereof
may be limited by applicable bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor's rights generally and the
availability of equitable remedies. Neither the execution and delivery of
this Agreement, nor compliance with any of the provisions of hereof, by
Sony/Block, will violate any law or regulation, or any order, writ or
decree of any court or governmental instrumentality, or will conflict
with, or result in the breach of, or constitute a default in any respect
under, any indenture, mortgage, deed of trust, agreement or other
instrument to which Sony/Block is a party or may be bound or by which any
of its properties may be affected or will violate any provision of the
partnership agreement of Sony/Block (as amended to date) or the
certificate or articles of incorporation (as amended to date) or by-laws
(as currently in effect) of the Sony Subsidiary or the Blockbuster
Subsidiary.
(b) There is no claim, litigation, proceeding or governmental
investigation pending, or, so far as is known to Sony/Block, threatened,
against or relating to Sony/Block or any of its respective properties or
assets which questions the validity or enforceability of this Agreement or
any of the transactions contemplated hereby.
(c) Sony/Block is not in default under any indenture, mortgage, deed
of trust, agreement or other instrument to which it is a party, or by
which it or any of its properties may be bound or affected, except for
such defaults which, individually or in the aggregate, will not have a
material and adverse effect on the business, operations, property or
assets or in the condition, financial or otherwise of Sony/Block.
(d) All information, reports, papers, financial data and other
materials given to Pace or any of the Affiliates of Pace with respect to
Sony/Block or any Sony/Block Related Party or any of the Amphitheaters in
which any of the Sony/Block Related Parties have an ownership interest are
accurate, complete and correct in all material respects and do not omit
any fact, the inclusion of
Article XIV - Representations and Warranties of Partners
Page 145
which is necessary to prevent the facts contained therein from being
materially misleading.
14.3 Indemnification Provisions.
(a) Pace shall reimburse, indemnify and hold the Partnership
harmless from and against:
(1) Any and all damages, losses, deficiencies, liabilities,
costs and expenses based upon, resulting from, relating to or
arising out of any one or more of the following matters:
(i) Any of the representations expressly made by Pace in
this Agreement being false or misleading to a material extent;
(ii) Any of the representations expressly made by the
owner of any Existing Pace Asset in the Executory Contract or
the Admission Agreement being false or misleading;
(iii) The breach or violation of any covenant or
agreement made in the Executory Contract with respect to any
Existing Pace Asset by the owner of such Existing Pace Asset;
and
(2) Any duty, responsibility, obligation or liability of any
kind or nature relating to any of the Existing Pace Assets or any of
the owners of the Existing Pace Assets which are not expressly
assumed by the Partnership pursuant to the terms of the Executory
Contract or the Admission Agreement.
(3) Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
attorneys' fees) incident to (i) any of the matters listed and
described in clauses (a)(1) or (2) above or (ii) the enforcement of
the provisions of this Section 14.3(a).
(b) The Sony Subsidiary shall reimburse, indemnify and hold the
Partnership harmless from and against:
(1) Any and all damages, losses, deficiencies, liabilities,
costs and expenses based upon, resulting from, relating to or
arising out of any one or more of the following matters:
Article XIV - Representations end Warranties of Partners
Page 146
(i) Any of the representations expressly made by
Sony/Block in this Agreement, to the extent such
representations relate to Sony/Block, the Sony Subsidiary or
any Affiliate of the Sony Subsidiary, being false or
misleading to a material extent;
(ii) Any of the representations expressly made by the
owner of an Existing Sony Asset in the Executory Contract or
the Admission Agreement being false or misleading;
(iii) The breach or violation of any covenant or
agreement made in the Executory Contract with respect to any
Existing Sony Asset by the owner of such Existing Sony Asset;
and
(2) Any duty, responsibility, obligation or liability of any
kind or nature relating to any of the Existing Sony Assets or any of
the owners of the Existing Sony Assets which are not expressly
assumed by the Partnership pursuant to the terms of the Executory
Contract or the Admission Agreement.
(3) Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
attorneys' fees) incident to (i) any of the matters listed and
described in clauses (b)(1) or (2) above or (ii) the enforcement of
the provisions of this Section 14.3(b).
(c) The Blockbuster Subsidiary shall reimburse, indemnify and hold
the Partnership harmless from and against:
(1) Any and all damages, losses, deficiencies, liabilities,
costs and expenses based upon, resulting from, relating to or
arising out of any one or more of the following matters:
(i) Any of the representations expressly made by
Sony/Block in this Agreement, to the extent such
representations relate to Sony/Block, the Blockbuster
Subsidiary or any Affiliate of the Blockbuster Subsidiary,
being false or misleading to a material extent;
(ii) Any of the representations expressly made by the
owner of an Existing Blockbuster Asset in the Executory
Contract or the Admission Agreement being false or misleading;
Article XIV - Representations and Warranties of Partners
Page 147
(iii) The breach or violation of any covenant or
agreement made in the Executory Contract with respect to any
Existing Blockbuster Asset by the owner of such Existing
Blockbuster Asset; and
(2) Any duty, responsibility, obligation or liability of any
kind or nature relating to any of the Existing Blockbuster Assets or
any of the owners of the Existing Blockbuster Assets which are not
expressly assumed by the Partnership pursuant to the terms of the
Executory Contract or the Admission Agreement.
(3) Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
attorneys' fees) incident to (i) any of the matters listed and
described in clauses (c)(1) or (2) above or (ii) the enforcement of
the provisions of this Section 14.3(c).
(d) If the Partnership (herein called the "Indemnitee") receives
notice of any claim or the commencement of any action or proceeding with
respect to which a Person ("Indemnitor") is obligated to provide
indemnification pursuant to the provisions of this Section 14.3, then the
Indemnitee shall promptly provide the Indemnitor notice thereof. Such
notice shall be a condition precedent to the Indemnitor's obligation to
provide any indemnity under this Section 14.3 unless the Indemnitee can
establish that the Indemnitor has not been materially prejudiced thereby.
If the Indemnitor chooses to defend any claim, it shall be permitted to do
so (unless the Indemnitee can establish that (x) it is reasonably likely
to bear a greater portion of the potential losses associated with such
claim or (y) the pendency of such claim is reasonably likely to have a
material adverse effect on the Indemnitee's continued business operations)
and the Indemnitee shall make available to the Indemnitor any books,
records or other documents within its control that are necessary or
appropriate for such defense. The Indemnitee shall not settle any claim
or liability for which it is claiming indemnification hereunder without
the consent of the Indemnitor (such consent not to be unreasonably
withheld).
(e) With respect to the obligations to reimburse, indemnify and hold
the Partnership harmless pursuant to the provisions of this Section 14.3
relating to any Existing Asset which is, in undivided interests, both an
Existing Pace Asset and an Existing Sony Asset, such obligations to
reimburse, indemnify and hold the Partnership harmless shall be the
several obligation of the Sony Subsidiary and Pace in proportion to their
respective undivided interests.
Article XIV - Representations and Warranties of Partners
Page 148
(f) Notwithstanding anything to the contrary contained in this
Section 14.3, in no event shall any Indemnitor be obligated to the
Partnership pursuant to the provisions hereof except and to the extent
that the total indemnity obligation of such Indemnitor pursuant to this
Section 14.3 exceeds, in the aggregate, $75,000.00.
(g) If an Indemnitor should ever have any indemnity obligation to
the Partnership pursuant to the provisions of this Section 14.3, such
Indemnitor shall have the right to defer payment of such obligation until
the next succeeding November 1st so as to enable such Indemnitor to apply,
by way of offset, its right to a distribution under Section 8.4 hereof
against such indemnity obligation; provided, however, that (i) if the
Executive Committee determines that, for cash flow purposes, the
Partnership requires immediate payment of any such indemnity obligation,
then no right of deferral and offset shall be available and (ii) in any
event, no deferral of any indemnity obligation may extend beyond the next
succeeding November 1st.
[END OF ARTICLE XIV]
Article XV - Transfer Restrictions
Page 149
ARTICLE XV
Transfer Restrictions
15.1 Partner Interest.
(a) Except for (i) a transfer of a Partnership Interest made
pursuant to the provisions of Section 16.2, Section 17.2(e) or Section
17.3 of this Agreement, (ii) a pledge of a Partner's right to receive cash
distributions pursuant to the provisions of clause (b) of this Section
15.1 or (iii) a pledge of Sony/Block's Partnership Interest to the Sony
Subsidiary or the Blockbuster Subsidiary pursuant to a requirement
contained in the Partnership Agreement of Sony/Block, neither Partner
shall have the right to sell, assign, convey, transfer, pledge or
hypothecate, by operation of law or otherwise, all or any portion of its
Partnership Interest without the prior consent of the other Partner, it
being agreed and acknowledged that such consent may be withheld in such
other Partner's sole discretion for any reason whatsoever or for no
reason. Any purported sale, assignment, conveyance, transfer, pledge or
hypothecation of any Partner's Partnership Interest in violation of the
provisions of this Section 15.1(a) shall be voidable at the option of the
other Partner ab initio.
(b) Notwithstanding the provisions of Section 15.1(a) hereof, each
Partner shall have the limited right and authority to pledge or
hypothecate such Partner's right to receive Ordinary Distributions (herein
defined) as security for the payment of borrowed money. Any lender
accepting a pledge or hypothecation of a Partner's right to receive
Ordinary Distributions from the Partnership shall be required, as a
condition to the effectiveness of such pledge or hypothecation, to execute
and deliver to the Partnership and the other Partner an instrument, in
form and content reasonably acceptable to the other Partner, evidencing
and acknowledging the following matters:
(1) That such lender's security interest or lien attaches only
to the pledging Partner's right to receive Ordinary Distributions
from the Partnership.
(2) That such lender's security interest or lien does not
attach to, or otherwise affect, any other rights, titles or
interests of the pledging Partner in, to or under the Partnership.
(3) That the lender's lien or security interest is subordinate
and subject to any and all rights, privileges, liens, claims or
other matters of the Partnership and the other Partner (including,
without limitation, any claim made under the provisions of Article
XVII hereof), whether created
Article XV - Transfer Restrictions
Page 150
pursuant to the terms of this Agreement or any other agreement and
whether currently existing or hereafter arising.
(4) That the lender accepting such pledge or hypothecation
shall, in no event, have any greater right to receive any Ordinary
Distributions than the pledging Partner would have had to receive
such Ordinary Distributions in the event that such pledge had never
been made.
As used in this Section 15.1(b), the term "Ordinary Distributions" shall
mean only those distributions required to be made to the Partners by the
Partnership pursuant to the provisions of Section 8.4(b)(2)(ii) or Section
8.6 hereof.
15.2 Ownership Interest in Partners.
(a) Capital Stock of Pace. None of the capital stock of Pace may, at
any time, be issued, sold, conveyed or transferred to any person other
than an Affiliate of Xxxxx X. Xxxxxx (or, after the death of Xxxxx X.
Xxxxxx, an Affiliate of a lineal descendant of Xxxxx X. Xxxxxx). If any
capital stock of Pace is hereafter to be issued, sold, conveyed or
transferred to an Affiliate of Xxxxx X. Xxxxxx (or, after the death of
Xxxxx X. Xxxxxx, an Affiliate of a lineal descendant of Xxxxx X. Xxxxxx)
pursuant to the exception contained in the immediately preceding sentence,
then concurrently with the closing of such issuance, sale, conveyance or
transfer, the transferee shall deliver a written instrument to Sony/Block
in which it agrees to be bound by the transfer restrictions on such
transferee's stock in Pace contained in this Section 15.2(a). All share
certificates evidencing the capital stock in Pace shall include an
appropriate legend which references the transfer restrictions contained
in this Section 15.2(a).
(b) Issuance of Sony/Block Partnership Interests. Subject to the
provisions of Section 15.4 hereof, no partnership interest in Sony/Block
shall be issued to any Person other than a Sony/Block Related Party.
(c) Blockbuster's Ownership Interests. None of the capital stock of
the Blockbuster Subsidiary or the partnership interest of the Blockbuster
Subsidiary in Sony/Block may, at any time, be issued, sold, conveyed or
transferred to any person other than a Permitted Blockbuster Person. If
any capital stock of the Blockbuster Subsidiary or the partnership
interest of the Blockbuster Subsidiary in Sony/Block is hereafter to be
issued, sold, conveyed or transferred to a Permitted Blockbuster Person
pursuant to the exception contained in the immediately preceding sentence,
then, concurrently with the closing of such issuance, sale, conveyance or
transfer to such Permitted Blockbuster Person, such Permitted Blockbuster
Person shall deliver a written
Article XV - Transfer Restrictions
Page 151
instrument to Pace in which such Permitted Blockbuster Person agrees to be
bound by the transfer restrictions on the stock in the Blockbuster
Subsidiary or the partnership interest in Sony/Block, whichever is
applicable, contained in this Section 15.2(c). All share certificates
evidencing the capital stock in the Blockbuster Subsidiary shall contain
an appropriate legend which references the transfer restrictions contained
in this Section 15.2(c). The following additional provisions shall apply:
(1) If any SCA Limited Party acquires all or any portion of
the capital stock of the Blockbuster Subsidiary or the partnership
interest of the Blockbuster Subsidiary in Sony/Block, then the last
sentence of Section 1.2 of this Agreement shall be deemed amended in
such a manner that such SCA Limited Party shall at all times
thereafter be deemed to be one of the Affiliates of the Sony
Subsidiary for all purposes hereof.
(2) If all or any portion of the partnership interest of the
Blockbuster Subsidiary in Sony/Block is sold, conveyed or
transferred to any Permitted Blockbuster Person, then the following
provisions shall apply:
(i) If the Permitted Blockbuster Person is a Blockbuster
Party and has acquired all of the partnership interest of the
Blockbuster Subsidiary in Sony/Block, then such Blockbuster
Party shall (x) thereafter be, for all for purposes of this
Agreement, the "Blockbuster Subsidiary" and (y) be required,
as a condition to the completion of such sale, conveyance or
transfer, to cause its shareholders to deliver a written
instrument to Pace to agree to be bound by the transfer
restrictions on the stock in the Blockbuster Subsidiary
contained herein.
(ii) If the Permitted Blockbuster Person is a
Blockbuster Party and has acquired only a portion of the
partnership interest of the Blockbuster Subsidiary in
Sony/Block, then such Blockbuster Party shall (x) thereafter
be, together with the Blockbuster Subsidiary, collectively the
"Blockbuster Subsidiary" for all purposes of this Agreement
and (y) be required, as a condition to the closing of such
sale, conveyance or transfer, to cause its shareholders to
deliver a written instrument to Pace to agree to be bound by
the transfer restrictions on the stock in the Blockbuster
Subsidiary contained herein.
(iii) If the Permitted Blockbuster Person is an SCA
Total Party and has acquired only a portion of the partnership
interest
Article XV - Transfer Restrictions
Page 152
of the Blockbuster Subsidiary in Sony/Block, then (x) such SCA
Total Party shall (A) thereafter be, together with the Sony
Subsidiary, collectively the "Sony Subsidiary" for all
purposes of this Agreement and (B) be required, as a condition
to the closing of such sale, conveyance or transfer, to cause
its shareholders to deliver a written instrument to Pace to
agree to be bound by the transfer restrictions on the stock in
the Sony Subsidiary contained herein and (y) the Blockbuster
Subsidiary shall continue to be the "Blockbuster Subsidiary"
for all purposes of this Agreement.
(iv) If the Permitted Blockbuster Person is an SCA Total
Party and has a acquired all of the partnership interest of
the Blockbuster Subsidiary in Sony/Block, then such SCA Total
Party shall (x) thereafter be, for all purposes of this
Agreement, the "Blockbuster Subsidiary" and (y) be required,
as a condition to the closing of such sale, conveyance or
transfer, to cause its shareholders to deliver a written
instrument to Pace to agree to be bound by the transfer
restrictions on the stock in the Blockbuster Subsidiary
contained herein.
(d) Sony's Ownership Interests. None of the capital stock of the
Sony Subsidiary or the partnership interest of the Sony Subsidiary in
Sony/Block may, at any time, be issued, sold, conveyed or transferred to
any person other than a Permitted Sony Person. If any capital stock of the
Sony Subsidiary or the partnership interest of the Sony Subsidiary in
Sony/Block is hereafter to be issued, sold, conveyed or transferred to any
Permitted Sony Person pursuant to the exception contained in the
immediately preceding sentence, then concurrently with the closing of such
issuance, sale, conveyance or transfer to such Permitted Sony Person, such
Permitted Sony Person shall deliver a written instrument to Pace in which
such Permitted Sony Person agrees to be bound by the transfer restrictions
on the stock in the Sony Subsidiary or the partnership interest in
Sony/Block whichever is applicable, contained in this Section 15.2(d). All
share certificates evidencing the capital stock in the Sony Subsidiary
shall contain an appropriate legend which references the transfer
restrictions contained in this Section 15.2(d). The following additional
provisions shall apply:
(1) If any SCA Limited Party acquires all or any portion of
the capital stock of the Sony Subsidiary or the partnership interest
of the Sony Subsidiary in Sony/Block, then the last sentence of
Section 1.2 of this Agreement shall be deemed amended in such a
manner that such SCA Limited Party shall at all times thereafter be
deemed to be one of the Affiliates of the Sony Subsidiary for all
purposes hereof.
Article XV - Transfer Restrictions
Page 153
(2) If all or any portion of the partnership interest of the
Sony Subsidiary in Sony/Block is sold, conveyed or transferred to
any Permitted Sony Person, then the following provisions shall
apply:
(i) If the Permitted Sony Person is an SCA Total Party
and has acquired all of the partnership interest of the Sony
Subsidiary in Sony/Block, then such Permitted Sony Person
shall (x) thereafter be for all purposes of this Agreement,
the "Sony Subsidiary" and (y) be required, as a condition to
the completion of such sale, conveyance or transfer, to cause
its shareholders to deliver a written instrument to Pace to
agree to be bound by the transfer restrictions on the stock in
the Sony Subsidiary contained herein.
(ii) If the Permitted Sony Person is an SCA Total Party
and has acquired only a portion of the partnership interest of
the Sony Subsidiary in Sony/Block, then such SCA Total Party
shall (x) thereafter be, together with the Sony Subsidiary,
collectively the "Sony Subsidiary" for all purposes of this
Agreement and (y) be required, as a condition to the closing
of such sale, conveyance or transfer, to cause its
shareholders to deliver a written instrument to Pace to agree
to be bound by the transfer restrictions on the stock in the
Sony Subsidiary contained herein.
(iii) If the Permitted Sony Person is a Blockbuster
Party and has acquired only a portion of the partnership
interest of the Sony Subsidiary in Sony/Block, then (x) such
Blockbuster Party shall (A) thereafter be, together with the
Blockbuster Subsidiary, collectively the "Blockbuster
Subsidiary" for all purposes of this Agreement and (B) be
required, as a condition of the closing of such sale,
conveyance or transfer, to cause its shareholders to deliver a
written instrument to Pace to agree to be bound by the
transfer restrictions on the stock in the Blockbuster
Subsidiary contained herein and (y) the Sony Subsidiary shall
continue to be the "Sony Subsidiary" for all purposes of this
Agreement.
(iv) If the Permitted Sony Person is a Blockbuster Party
and has acquired all of the partnership interest of the Sony
Subsidiary in Sony/Block, then such Blockbuster Party shall
(x) thereafter be, for all purposes of this Agreement, the
"Sony Subsidiary" and (y) be required, as a condition of the
closing of such sale, conveyance or transfer, to cause its
shareholders to deliver a
Article XV - Transfer Restrictions
Page 154
written instrument to Pace to agree to be bound by the
transfer restrictions on the stock in the Sony Subsidiary
contained herein.
(e) Certain Defined Terms. As used in this Section 15.2, the
following terms shall have the respective meanings indicated:
(1) "Permitted Blockbuster Persons": (i) the SCA Total
Parties, (ii) the Blockbuster Parties and (iii) so long as there has
been no prior divestiture of a material portion of Blockbuster's
assets (determined on a consolidated basis) any Person which
acquires all or substantially all of the assets of Blockbuster.
(2) "Permitted Sony Persons": (i) the SCA Total Parties, (ii)
the Blockbuster Parties and (iii) so long as there has been no prior
divestiture of a material portion of Sony's assets (determined on a
consolidated basis), any Person which acquires all or substantially
all of the assets of Sony.
(3) "SCA": Sony Corporation of America, a New York
corporation.
(4) "SCA Limited Parties": The SCA Total Parties other than
the Sony Parties.
(5) "SCA Total Parties": (i) SCA and (ii) Persons that are,
directly or indirectly, through one or more intermediaries,
controlled by SCA.
(6) "Sony Parties": (i) Sony and (ii) Persons that are,
directly or indirectly, through one or more intermediaries,
controlled by Sony.
(7) "Blockbuster Parties": Blockbuster and its Affiliates.
(8) "control": When used with respect to any specified Person,
the power to direct the management and policies of the specified
Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.
15.3 Transfer Triggering Events. Without in any way limiting, expanding or
otherwise affecting the transfer restrictions set forth elsewhere in this
Article XV, the following provisions shall apply upon the occurrence at any
time, or from time to time, of any Transfer Triggering Event:
Article XV - Transfer Restrictions
Page 155
(a) Pace's Right to Unwind for a Transfer Triggering Event Prior to
April 1, 1996. Pace shall have the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof each time that a
Transfer Triggering Event occurs prior to April 1, 1996. Pace may exercise
the right and option to commence the Unwind Procedure pursuant to this
Section 15.3(a) each time that it may arise, at any time on or before
thirty (30) days after Sony/Block has provided written notice to Pace that
a Transfer Triggering Event has occurred. The giving of the notice by
Sony/Block referred to in the immediately preceding sentence shall not be
a condition precedent to Pace's right to exercise the right to commence
the Unwind Procedure. If Pace fails to exercise the right and option to
commence the Unwind Procedure created pursuant to this Section 15.3(a) any
time that such right may arise prior to the expiration of the time period
referred to in the second preceding sentence, then Pace shall be deemed to
have elected not to exercise such right and option with respect to that
specific instance giving rise to the right and option. Pace shall not
have the right and option to commence the Unwind Procedure pursuant to the
provisions of this Section 15.3(a) upon the occurrence of any Transfer
Triggering Event which occurs on or after April 1, 1996.
(b) Pace's Right to Purchase a 16-2/3rds% Percentage Interest from
Sony/Block. If, upon the occurrence of a Transfer Triggering Event, Pace
either (x) elects not to exercise its right and option to commence the
Unwind Procedure or (y) does not have the right and option to commence the
Unwind Procedure because such Transfer Triggering Event occurs on or after
April 1, 1996, then Pace shall have a right and option ("Equalizing
Purchase Option"), exercisable by notice to Sony/Block at any time within
30 days after notice is provided to Pace by Sony/Block pursuant to Section
15.5(a) hereof with respect to such Transfer Triggering Event, to purchase
and acquire a 16-2/3% Percentage Interest in the Partnership ("Equalizing
Partnership Interest") from Sony/Block upon the following terms,
conditions and provisions:
(1) Equalizing Purchase Price. The purchase price ("Equalizing
Purchase Price") of the Equalizing Partnership Interest shall be
determined by making the appropriate mathematical computations to
the corresponding price ("Corresponding Price") of the direct or
indirect interest in Sony/Block which was made the subject of a
transfer that gave rise to the occurrence of the Transfer Triggering
Event, subject to the following provisions:
(i) If Sony/Block owns assets other than its Partnership
Interest in the Partnership, then the Corresponding Price
shall be appropriately allocated between Sony/Block's
Partnership Interest in the Partnership and the other assets
of Sony/Block. Only that
Article XV - Transfer Restrictions
Page 156
portion of the Corresponding Price allocated to Sony/Block's
Partnership Interest in the Partnership shall be utilized in
determining the Equalizing Purchase Price.
(ii) The Corresponding Price shall be only that portion
of the purchase price attributable to the equity interest
acquired in the transfer which gave rise to the Transfer
Triggering Event net of any Sony/Block or Partnership debt
assumed or otherwise involved in such transfer.
(iii) Sony/Block shall be obligated to provide to Pace
all relevant financial data and other information that is
reasonably necessary to assist in the calculation or
determination of the Corresponding Price; provided, that Pace
shall use its reasonable efforts to prevent disclosure to any
Person of such data and information.
(iv) If the Corresponding Price is not readily
determinable, or if the Partners are unable to agree upon the
amount of the Corresponding Price or the resulting
determination of the Equalizing Purchase Price, then the
Equalizing Purchase Price shall be determined as follows:
(A) A deciding voter shall be selected in
accordance with the provisions of Section 18.13 hereof
as soon as possible after one Partner has given notice
to the other Partner that it has been unable to agree
with the other Partner as to the calculation of the
Equalizing Purchase Price.
(B) Within ten (10) business days after the
selection of the deciding voter referred to in clause
(1) above, each of the Partners shall submit to the
deciding voter such written information as may be
necessary to support such Partner's determination and
calculation of the Equalizing Purchase Price.
(C) Within fifteen (15) business days after the
selection of the deciding voter referred to in clause
(A) above, a meeting shall be convened in New York, New
York between and among the deciding voter and
representatives of the Partners at which meeting each
Partner shall be given an opportunity to present
arguments to the deciding
Article XV - Transfer Restrictions
Page 157
voter in favor of such Partner's method of calculating
the Equalizing Purchase Price.
(D) Within five (5) days after the holding of such
meeting, the deciding voter shall be required to
determine which Partner's calculation of the Equalizing
Purchase Price is more reasonable and proper. The
deciding voter shall be required to select between the
two proposed determinations and calculations of the
Equalizing Purchase Price and shall not, without the
prior consent of both Partners, make any compromises
pursuant to which portions of the two competing
calculations and computations are combined. The decision
of the deciding voter shall be final and binding and
each Partner agrees not to institute any litigation
concerning the decision of the deciding voter.
(E) All costs paid or incurred in connection with
the process of determining the Equalization Purchase
Price pursuant to the provisions of this Section
15.3(b)(1)(iv) shall be paid by the Partner whose
calculation and computation of the Equalization Purchase
Price is not selected by the deciding voter.
If, pursuant to the foregoing procedures, the deciding voter
does not select Pace's computation and calculation of the
Equalizing Purchase Price, then Pace shall have the right and
option, for a period of five (5) days after publication of the
deciding voter's decision, to rescind its prior election
pursuant to the Equalizing Purchase Option to purchase and
acquire the Equalizing Partnership Interest. Unless rescinded
pursuant to the provisions contained in the immediately
preceding sentence, upon the giving of notice of exercise of
the Equalizing Purchase Option pursuant to the provisions
hereof, Pace shall be irrevocably obligated to consummate the
Equalizing Purchase Option as herein provided.
(2) Example. To assist in the interpretation of the provisions
of clause (1) of this Section 15.3(b) assume that (x) the Sony
Subsidiary sells its partnership interest in Sony/Block to an
Affiliate of the Blockbuster Subsidiary in 1998 for a cash purchase
price of $5,333,333 plus an assumption and indemnification for all
Sony/Block and Partnership debts and obligations, (y) Sony/Block
owns one other asset at the time other than the Partnership Interest
in the Partnership and the parties
Article XV - Transfer Restrictions
Page 158
stipulate that the value of the Partnership Interest constitutes 75%
of the value of Sony/Block's assets and the other asset constitutes
25% of the value of Sony/Block's assets and (z) there are no
minority partners in Sony/Block so that the Blockbuster Affiliate is
acquiring a 50% interest in Sony/Block from the Sony Subsidiary.
Based upon the assumed facts contained in the immediately preceding
sentence, the Equalizing Purchase Price would be $2,000,000
calculated as follows:
(i) The Corresponding Price of $5,333,333 represents the
purchase price of a 50% partnership interest in Sony/Block.
Accordingly, the total value of Sony/Block, based upon such
Corresponding Price is $10,666,666.
(ii) Of the $10,666,666 value of Sony/Block, only 75%,
or $8,000,000, is allocable to Sony/Block's Partnership
Interest in the Partnership.
(iii) Since the Equalizing Partnership Interest is
one-fourth of the Sony/Block Partnership Interest in the
Partnership (16-2/3% divided by 66-2/3%), the value of the
Equalizing Partnership Interest is one-fourth of $8,000,000 or
$2,000,000.
(3) Closing of Purchase Pursuant to the Equalizing Purchase
Option. If Pace timely elects pursuant to the foregoing provisions
to acquire the Equalizing Partnership Interest following a Transfer
Triggering Event, then on a date selected by Pace in a written
notice to Sony/Block, but in no event later than thirty (30) days
after the date upon which the Equalizing Purchase Price is agreed
upon between the Partners or determined by the deciding voter
pursuant to the provisions of clause (iv) of Section 15.3(b)(1) (or
if the Equalizing Purchase Price has been determined prior to the
closing of the transfer or other transaction giving rise to the
Transfer Triggering Event as a result of the procedures described in
Section 15.5 hereof, then within five (5) days after the closing of
such transfer or other transaction), Pace and Sony/Block shall close
the sale and transfer of the Equalizing Partnership Interest. At
such closing, the following provisions shall apply:
(i) Pace shall pay to Sony/Block, in immediately
available funds, the Equalizing Purchase Price.
(ii) Sony/Block shall execute such instruments of
assignment or conveyance as may be reasonably required or
requested
Article XV - Transfer Restrictions
Page 159
to evidence the sale, transfer and assignment of a 16-2/3%
Percentage Interest in the Partnership to Pace.
(iii) Pace shall cause PEC and PMG to provide a joint
and several guaranty to Sony/Block, in form reasonably
acceptable to Sony/Block, as to 16-2/3% of all then
outstanding Amphitheater Loans which are then guaranteed by
one or both of Sony and Blockbuster.
(iv) Pace shall execute a security agreement in form
reasonably acceptable to Sony/Block which shall create a first
priority security interest on Pace's Partnership Interest in
favor of Sony/Block to secure (x) the obligations undertaken
by PEC and PMG in the guaranty provided pursuant to clause
(iii) of this Section 15.3(b)(3) and (y) the obligations to
thereafter be undertaken by PEC and PMG in any subsequent
guaranty provided to Sony/Block with respect to any future
Approved Project as referenced in clause (D) of Section
15.3(b)(3)(v) hereof.
(v) The Partners shall execute and enter into a written
amendment to this Agreement that is necessary to reflect the
following changes, provisions, and agreements:
(A) That Pace will not have the right and option
to commence the Unwind Procedure at any time thereafter
for any reason pursuant to the provisions of this
Agreement.
(B) That Pace and Sony/Block shall at all times
thereafter each have a 50% Percentage Interest in the
Partnership.
(C) That the Executive Committee shall thereafter
be comprised of two Representatives, one of which will
be designated by Sony/Block and one of which will be
designated by Pace.
(D) That, while Sony/Block will still be obligated
to obtain the Project Loan for each Approved Project
thereafter in accordance with the provisions of Section
5.1 hereof, Pace shall be required to cause PEC and PMG
to jointly and severally guaranty, to Sony/Block and, if
requested by Sony/Block, the lender of such Project
Loan, an aggregate amount equal to 16-2/3% of such
Project Loan thereafter
Article XV - Transfer Restrictions
Page 160
obtained by Sony/Block, so long as Sony or Blockbuster
have guaranteed at least 83-1/3% of such Project Loan.
(E) That Sony/Block shall have no further right to
remove Pace as Manager except and unless (i) the Actual
Cumulative Amphitheatre Cash Flow is less than the
Minimum Cumulative Amphitheatre Cash Flow (as such terms
are defined in the Old Partnership Agreement) as of the
end of any Fiscal Year thereafter, (ii) an Event of
Withdrawal shall occur with respect to Pace, (iii) a
Partner Default shall be deemed to have occurred with
respect to Pace or (iv) the holder of any promissory
note evidencing an Amphitheater Loan accelerates the
payment of the principal or interest, or any portion
thereof, of such note prior to its stated maturity,
unless the acceleration is the result of the default by
Sony or Blockbuster under a guaranty of such
Amphitheater Loan.
(F) That, at all times thereafter, the selection
and designation of any successor Manager after
resignation or removal of Pace as Manger shall be made
in accordance with the provisions of Section 11.3(b)
hereof.
(G) Any other matters which are reasonably
necessary or required to reflect that Pace and
Sony/Block are equal Partners in the Partnership, each
with a 50% Percentage Interest.
(4) Electing to Not Purchase Equalizing Partnership Interest.
If Pace, for whatever reason, does not exercise the right and option
to purchase and acquire the Equalizing Partnership Interest
following the occurrence of a Transfer Triggering Event, then all of
the provisions of this Agreement shall continue in full force and
effect with no changes or amendments.
(c) Definition of Transfer Triggering Event. As used herein, the
term "Transfer Triggering Event" shall mean the occurrence of any one or
more of the following:
(1) The occurrence of any transfer, sale, issuance, merger,
consolidation, reorganization or other transaction or circumstance
which results in the Blockbuster Subsidiary becoming an Affiliate of
an SCA Total Party.
Article XV - Transfer Restrictions
Page 161
(2) The occurrence of any sale, transfer, issuance, merger,
consolidation, reorganization or other transaction or circumstance
which results in the Sony Subsidiary becoming an Affiliate of
Blockbuster.
(3) For any reason, including the transfer of all or any
portion of the Blockbuster Subsidiary's or the Sony Subsidiary's
partnership interest in Sony/Block to the other, any one or more of
the Voting Representations become untrue in any respect.
(4) Following the delivery of the Division of Responsibility
Notice, the Partnership Interest of either of the S/B Partners is
acquired by the other S/B Partner pursuant to the exclusive purchase
options described in Section 17.3(a)(12)(i) or 17.3(a)(13)(i)
hereof.
15.4 Limited Right of Sony/Block to Admit Minority Partners.
Notwithstanding the restrictions set forth in clauses (b), (c) and (d) of
Section 15.2 hereof with respect to the issuance, sale, conveyance or transfer
of any partnership interest in Sony/Block, it is specifically understood, agreed
and acknowledged that the Blockbuster Subsidiary, the Sony Subsidiary and
Sony/Block may permit partnership interests in Sony/Block to be assigned or
issued to one or more minority partners in Sony/Block in strict accordance with
the following limitations and provisions:
(a) No new partner admitted into Sony/Block may be an Unacceptable
Person (herein defined) without the prior consent of Pace.
(b) No new partner admitted into Sony/Block may have, when combined
with the percentage economic interest of any other new partners previously
admitted into Sony/Block, a percentage economic interest in Sony/Block of
more than 49%.
(c) No new partner admitted into Sony/Block shall have the right,
power or authority to do any one or more of the following:
(1) designate, or have any vote concerning the designation of,
any Representative to serve on the Executive Committee of this
Partnership;
(2) attend any meetings of the Executive Committee; or
(3) cast any vote or have any veto power under the terms of
the Sony/Block Partnership Agreement in regard to any of the
following matters:
Article XV - Transfer Restrictions
Page 162
(i) any vote to be taken or consent to be given by
Sony/Block as contemplated or permitted by the provisions of
this Agreement;
(ii) the process of approving and revising an Annual
Operating Budget pursuant to the provisions of Section 10.5 of
this Agreement;
(iii) the process of making the decision to whether a
proposed Amphitheater should become an Approved Project; and
(iv) the decision or action relating to the removal of
Pace as the Manager of this Partnership pursuant to the
provisions of Section 10.8 hereof or in the selection of the
successor Manager to replace Pace after it has been removed as
Manager of the Partnership.
As used herein, the term "Unacceptable Person" shall mean any Person which owns,
in its own capacity or through any of its Affiliates, a Controlling Interest in
two or more Amphitheaters.
15.5 Notices. Sony/Block hereby covenants and agrees with Pace that it
will provide prompt notice to Pace of the following matters:
(a) The occurrence of a Transfer Triggering Event with (i) such
reasonable information concerning the details of the underlying transfer
or other transaction which gave rise to such Transfer Triggering Event as
may be requested by Pace and (ii) a written statement setting forth, in
reasonable detail, Sony/Block's calculation and determination of the
Equalizing Purchase Price; and
(b) The admission of any new partner in Sony/Block pursuant to the
provisions of Section 15.4 hereof with such reasonable information
concerning he new partner as may be requested by Pace.
If Sony/Block or any Sony/Block Related Party has entered into a contract to
complete a transaction which would give rise to a Transfer Triggering Event,
conditioned upon, among other things, a prior determination that Pace will not
exercise its rights which will result from the occurrence of such Transfer
Triggering Event pursuant to Section 15.3(a) hereof (if applicable) and Section
15.3(b) hereof, then Sony/Block (or the Sony/Block Related Party) shall have the
express right to provide notice to Pace that such contractual commitment exists
along with (i) such reasonable information concerning the details of such
transaction as may be requested by Pace and (ii) a
Article XV - Transfer Restrictions
Page 163
written statement setting forth, in reasonable detail, Sony/Block's calculation
and determination of the Equalizing Purchase Price. Upon receipt of any such
notice, Pace shall have a period of thirty (30) days from receipt of such notice
to elect whether or not it will exercise its rights which will result from the
occurrence of such Transfer Triggering Event pursuant to Section 15.3(a) hereof
(if applicable) or Section 15.3(b) hereof; provided, however, that Pace shall
have the express right to dispute the calculation and determination of the
Equalizing Purchase Price made by Sony/Block pursuant to the provisions of
clause (iv) of Section 15.3(b)(1) hereof and then subsequently rescind its
election to exercise its rights under Section 15.3(b) hereof if Sony/Block's
computation and calculation of the Equalizing Purchase Price ultimately
prevails. If Pace fails to notify Sony/Block within such thirty (30) day period
that it will exercise its rights under Section 15.3(a) hereof (if applicable) or
Section 15.3(b) hereof upon the occurrence of such proposed transaction, then
Pace may not exercise its rights under Section 15.3(a) (if applicable) or
Section 15.3(b) hereof as a result of the completion of such transaction if
Sony/Block (or the Sony/Block Related Party) completes the transaction described
in the notice within one hundred twenty (120) days after the expiration of such
thirty (30) day period.
15.6 Representations and Covenants Relating to Certain Voting Rights and
Matters. Sony/Block hereby represents and warrants to Pace as follows (the
"Voting Representations"):
(a) The Sony Subsidiary and the Blockbuster Subsidiary each possess
the sole, unfettered and unilateral right to designate one of the two
Representatives which Sony/Block has the power to designate pursuant to
the provisions of Section 10.2(c) hereof.
(b) The Sony Subsidiary and the Blockbuster Subsidiary each possess
the equal power and authority, without the requirement of obtaining any
other Person's consent or approval, to direct and determine Sony/Block's
decisions as to the following matters:
(1) All matters that come to a vote of the Partners in this
Partnership.
(2) All matters that require the consent or approval of a
Partner in this Partnership.
(3) All rights of Sony/Block under this Agreement to make any
selections or designations on behalf of the Partnership or in
connection with the business of the Partnership.
Article XV - Transfer Restrictions
Page 164
Sony/Block hereby covenants and agrees with Pace that it will provide to Pace
written notice promptly upon the occurrence of any circumstance or event which
causes any one or more of the Voting Representations to no longer be true in any
respect.
[END OF ARTICLE XV]
Article XVI - Dissolution and Termination
Page 165
ARTICLE XVI
Dissolution and Termination
16.1 Dissolution. The Partnership shall be dissolved upon the occurrence
of any of the following:
(a) The unanimous agreement of the Partners;
(b) The expiration of thirty-five (35) years from the date hereof;
(c) The occurrence of an Event of Withdrawal with respect to a
Partner and the failure by a designee of the nonwithdrawing partner to
purchase the Partnership Interest of the withdrawing partner as provided
in Section 16.2 below; or
(d) As required by the provisions of Section 9.5(a) hereof, the
condition or circumstance of the Partnership (i) owning no Controlling
Interest in any existing Amphitheaters or (ii) not being obligated to
construct, or otherwise acquire a Controlling Interest in, any
Amphitheaters following the completion of the closing of the Unwind
Procedure.
16.2 Option to Purchase Partnership Interest of Withdrawing Partner. Upon
the occurrence of an Event of Withdrawal, the nonwithdrawing partner shall have
the option of nominating a designee of its choice to purchase the entire
Partnership Interest of the withdrawing partner, which option shall be
exercisable by the giving of written notice to the withdrawing partner or its
legal representatives within one hundred twenty (120) days after the
nonwithdrawing partner first has actual knowledge of the Event of Withdrawal.
The purchase price for the Partnership Interest of the withdrawing partner and
the manner of payment thereof, and the procedures for a closing of such
purchase, shall be the same as if the withdrawing partner were a Defaulting
Partner and its Partnership Interest was being purchased pursuant to the
provisions of Section 17.2(e) hereof (except that the closing shall occur on
that date designated by the designee of the nonwithdrawing partner which is
within forty-five (45) days from the exercise of such option). The option set
forth in this Section is being provided in view of the fact that the prospects
for the Partnership and the Partnership Interest of the nonwithdrawing partner
will be placed in jeopardy upon the occurrence of an Event of Withdrawal, all
with potential damages to the nonwithdrawing partner and the Partnership which
cannot be foreseen.
16.3 Dissolution in the Event Option is Not Exercised. Upon the occurrence
of an Event of Withdrawal and the failure by the designee of the nonwithdrawing
Article XVI - Dissolution and Termination
Page 166
partner to exercise the option to purchase the Partnership Interest of the
withdrawing partner as provided in Section 16.2 above, the provisions of
paragraphs (a) through (d) below shall control such dissolution notwithstanding
anything to the contrary contained in Section 16.5 below.
(a) The withdrawing partner shall thereafter be deemed to be an
assignee of a Partner's interest (and accorded only the limited rights
provided pursuant to the Partnership Act to such an assignee) and shall
have no voting, consent or approval rights under Section 10.2 or any other
provision of this Agreement, and the nonwithdrawing partner may send such
notice or other advice of the dissolution to each such Person as the
nonwithdrawing partner may deem appropriate and necessary under the
circumstances.
(b) The nonwithdrawing partner shall settle the business of the
Partnership as expeditiously as the nature of such business will permit.
(c) The nonwithdrawing partner shall be entitled to, but shall not
be obligated to seek or obtain, administration of the assets of the
Partnership by a receiver, referee, trustee or court of bankruptcy.
(d) In the event of a liquidation and distribution pursuant to this
Article XVI as a result of the occurrence of an Event of Withdrawal, the
withdrawing partner shall have no power or authority to bind the
Partnership or the Partners but shall cooperate with and, to the extent
requested, assist the nonwithdrawing partner in the dissolution and
winding up of the Partnership and the distribution of the assets thereof.
16.4 Waiver. Each Partner hereby waives and renounces, to the fullest
extent permitted by law, all right and benefit conferred by any statute or rule
of law upon such Partner to dissolve, terminate or liquidate, or to petition a
court for the dissolution, termination or liquidation of, the Partnership in any
manner other than as provided in this Agreement. Each Partner hereby waives and
renounces, to the fullest extent permitted by law, all rights and entitlements
conferred upon or available to such Partner by reason of any statute or rule of
law to seek, or to petition a court for, the partition of any property of the
Partnership.
16.5 Distributions Upon Termination. On dissolution of the Partnership,
the Partners (except as otherwise expressly provided in Section 16.3 hereof)
shall proceed diligently to wind up the affairs of the Partnership and
distribute its assets. Except as otherwise provided in Section 16.3 hereof, the
Partners shall decide which Partnership assets are to be sold for cash and which
are to be distributed in kind. The Partnership's assets, or the proceeds of
their sale, shall be applied or distributed in the
Article XVI Dissolution and Termination
Page 167
following order of priority (after giving effect to all allocations of gain,
loss, deduction and credits of the Partnership pursuant to Article VIII for the
Fiscal Year in which the final distribution is being made, including the deemed
gain and deemed loss described in Section 8.3(d) of this Agreement):
(a) In payment of all liabilities of the Partnership, including any
liabilities owed to a Partner. If any liability is contingent or uncertain
in amount, a reserve equal to the maximum amount for which the Partnership
could be reasonably held liable shall be established. Any liabilities
still remaining shall then be borne by the Partners in accordance with
their respective Percentage Interest.
(b) To the Partners in repayment of the then balances of their
Capital Accounts.
16.6 Voluntary Withdrawal. No Partner shall have the right to, and each
Partner agrees that it will not, withdraw voluntarily from the Partnership. If
any Partner withdraws from the Partnership in contravention of this Agreement,
such withdrawing Partner shall remain liable for its Percentage Interest of the
Partnership liabilities in existence at the time of its withdrawal and shall, in
addition, be liable to the other Partner for all damages attributable to its
breach of this Agreement. The nonwithdrawing Partner shall in addition have the
rights and remedies set forth in Articles XVI and XVII hereof. Any Partner which
withdraws from the Partnership in contravention of this Section 16.6 shall no
longer be entitled to designate any Representatives to the Executive Committee
pursuant to Section 10.2 of this Agreement and the, nonwithdrawing Partner shall
have the immediate right to designate the Manager thereafter without regard to
the provisions of Article XI hereof.
[END OF ARTICLE XVI]
Article XVII - Default of a Partner
Page 168
ARTICLE XVII
Default of a Partner
17.1 Default. If any Partner (the "Defaulting Partner") fails to perform
any of its material obligations contained in this Agreement, or materially
violates the terms of this Agreement, then the other Partner (the
"Non-Defaulting Partner") shall have the right to give the Defaulting Partner a
notice (the "Default Notice") specifically setting forth the nature of such
failure or violation and stating that such Defaulting Partner shall have a
period of ten (10) days to pay any sums of money specified herein as due and
owing to the Partnership or to any Partner or, if the failure or violation is a
non-monetary default and is capable of being cured, thirty (30) days to cure
such default specified therein. If (i) the monies specified in the Default
Notice are not paid within such ten (10) day period or (ii) such non-monetary
failures or violations are not capable of being cured or, if capable of being
cured, such Defaulting Partner has not cured such nonmonetary failures or
violations within such thirty (30) day period, then a "Partner Default" shall be
deemed to have occurred with respect to such Partner. For all purposes of this
Agreement, (i) the obligation of any Partner to make payments as they become due
under any promissory note executed and delivered pursuant to, or as required by,
the provisions of this Agreement shall be deemed to be a material obligation of
such Partner under this Agreement and (ii) the obligation of Pace to perform and
fulfill its duties and functions as Manager, at all times prior to Pace being
removed as Manager pursuant to the provisions of Section 10.8 hereof, shall be
deemed to be a material obligation of Pace under this Agreement. If PEC, PMG,
Sony or Blockbuster, as the case may be, is in default of their respective
obligations under any guaranty executed, respectively, by PEC, PMG, Sony or
Blockbuster pursuant to any provision of this Agreement, and such default is not
cured within the notice and cure period set forth above for a Partner Default,
then a Partner Default shall be deemed to have occurred with respect to Pace (in
the case of a default by PEC or PMG) or Sony/Block (in the case of a default by
Sony or Blockbuster).
17.2 Rights and Remedies. Upon the occurrence of a Partner Default, the
Non-Defaulting Partner and the Partnership shall each have the following rights,
options and remedies which shall be cumulative and may be exercised concurrently
or singularly in the sole and absolute discretion of the Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of the
Partnership or the Non-Defaulting Partner in order to recover the amounts
owed, if any, and any incidental or consequential damages arising from
such default (including, without limitation, reasonable attorneys fees and
disbursements incurred by the Partnership or the Non-Defaulting Partner,
as the case may be, in prosecuting any such action).
Article XVII - Default of a Partner
Page 169
(b) The right to bring any proceeding in the nature of injunction,
specific performance or other equitable remedy, it being acknowledged by
each of the Partners that damages at law may be an inadequate remedy for
such default.
(c) If a sum of money is owed to the Partnership (whether a capital
contribution or a loan), the Non-Defaulting Partner may advance the sum of
money owed to the Partnership by the Defaulting Partner with the following
results:
(1) the sum thus advanced shall be deemed to be a loan from
the Non-Defaulting Partner to the Defaulting Partner;
(2) The principal balance of such deemed loan shall be due and
payable in whole upon written demand from the Non-Defaulting Partner
to the Defaulting Partner;
(3) The principal balance of such deemed loan shall bear
interest at the Maximum Rate compounded monthly; and
(4) All distributions from the Partnership that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until such loan and all interest accrued
thereon has been repaid in full.
(d) For purposes of voting, giving any consents or approvals under
any provisions of this Agreement or making any selections or designations
pursuant to this Agreement, the right to deny the Defaulting Partner any
of its voting, consent or approval rights under this Agreement (and to
take any action or omit to take any action without the consent, vote or
approval of the Defaulting Partner) and its authority and power to make
selections or designations under this Agreement and to immediately replace
with its own designees any Representatives of the Defaulting Partner on
the Executive Committee.
(e) If, as a result of the nature of the default, failure, breach or
omission which gave rise to such Partner Default, the damages suffered or
incurred as a result thereof by the Non-Defaulting Partner are difficult
or impossible to ascertain, then the Non-Defaulting Partner shall have, as
liquidated damages and not as a penalty, the right and option to purchase
all, but not a portion of, the Partnership Interest of the Defaulting
Partner at a purchase price equal to seventy five (75%) percent of the
Article XVII - Default of a Partner
Page 170
then balance in its Capital Account, which shall be payable in ten (10)
equal annual installments of principal, together with interest at a
variable rate equal to the Short Term Rate, with the first installment due
on the first anniversary following the closing hereinafter referred to.
The option to purchase the interest of the Defaulting Partner shall be
exercisable on or before the ninetieth (90th) day following the expiration
of the period of time in which the Defaulting Partner could have cured
such default (or if such default is not capable of being cured, on or
before the ninetieth (90th) day following the giving of the Default
Notice) by the giving of written notice to the Defaulting Partner. The
closing of any such purchase shall take place on a date and at a place
designated by the Non-Defaulting Partner (but the date designated for such
closing shall in any event be a date which is not later than thirty (30)
days from the exercise of such option). At the closing, the Non-Defaulting
Partner shall deliver to the Defaulting Partner the required consideration
in exchange for an instrument or instruments (and such other documents as
counsel to the Non-Defaulting Partner may reasonably request) validly
assigning the interest of the Defaulting Partner to the Non-Defaulting
Partner free and clear of all liens, claims and encumbrances. The
obligation to pay the purchase price to the Defaulting Partner shall be an
obligation of the Non-Defaulting Partner alone and in any event shall not
be an obligation included within the provisions of Section 18.11 hereof.
Any Defaulting Partner whose Partnership Interest is purchased under the
provisions of this clause (e) shall remain liable for its Percentage
Interest of the Partnership's liabilities in existence at the time of
closing of such purchase. The Non-Defaulting Partner may, at its sole
option, designate any third party of its choosing to exercise the option
granted to it in this clause (e).
17.3 Special Provisions Relating to Sony/Block being a Defaulting Partner.
If Pace, as a Non-Defaulting Partner, should ever provide a Default Notice to
Sony/Block as a Defaulting Partner, pursuant to the provisions contained in the
first sentence of Section 17.1 hereof, then either of the partners of Sony/Block
("S/B Partners") may provide a notice ("Division of Responsibility Notice") to
Pace and the other S/B Partner, at anytime within thirty (30) days following the
entry of a final, nonappealable judgment of a court of competent jurisdiction
that Sony/Block is a Defaulting Partner in connection with such Default Notice,
that such S/B Partner wishes to allocate and divide the rights and obligations
of Sony/Block created pursuant to this Agreement between the S/B Partners in
accordance with the provisions of this Section 17.3. Following the timely
delivery of a Division of Responsibility Notice to Pace and the other S/B
Partner by either of the S/B Partners, the following provisions shall apply:
Article XVII - Default of a Partner
Page 171
(a) Subject to the provisions of clause (c) of this Section 17.3,
without any further action required by any party hereto, (i) Sony/Block's
Partnership Interest shall be deemed to have been distributed by
Sony/Block in equal shares to the Sony Subsidiary and the Blockbuster
Subsidiary and (ii) this Agreement shall be deemed to have been amended in
a manner necessary to effectuate the following provisions:
(1) The Sony Subsidiary and the Blockbuster Subsidiary shall
be substituted as Partners in the Partnership in place of
Sony/Block, each with a Percentage Interest of 33-1/3%. Except as
specifically contemplated to the contrary in the other provisions of
this Section 17.3(a), all references to Sony/Block in this Agreement
shall thereafter be a reference to both the Sony Subsidiary and the
Blockbuster Subsidiary.
(2) The Sony Subsidiary, as a new Partner in the Partnership,
shall only be obligated to perform (i) those obligations of
Sony/Block contained in this Agreement which are Sony Specific
Obligations and (ii) one-half of each obligation of Sony/Block
contained in this Agreement which is a Sony/Block Shared Obligation.
(3) The Blockbuster Subsidiary, as a new Partner in the
Partnership, shall only be obligated to perform (i) those
obligations of Sony/Block contained in this Agreement which are
Blockbuster Specific Obligations and (ii) one-half of each
obligation of Sony/Block contained in this Agreement which is a
Sony/Block Shared Obligation.
(4) Sony/Block's Capital Account shall be separated into
separate Capital Accounts for the Sony Subsidiary and the
Blockbuster Subsidiary, with the balance of Sony/Block's Capital
Account being split between the Sony Subsidiary and the Blockbuster
Subsidiary in proportion to the then balances in their respective
capital accounts in Sony/Block as of the date of the giving of the
Division of Responsibility Notice. For purposes of making the deemed
increase to the Capital Account of Sony/Block under Section
8.1(c)(1)(ii) and Section 8.l(c)(3)(i), the Capital Account of the
Sony Subsidiary shall be increased by the outstanding principal
balance of Sony/Block Note #1 and the Capital Account of the
Blockbuster Subsidiary shall be increased by the outstanding
principal balance of Sony/Block Note #2. For purposes of increasing
the Capital Account of Sony/Block under Section 8.3(i) hereof, the
increase in the Capital Account of the Blockbuster Subsidiary shall
be made with reference to Sony/Block Note #2 and the increase in the
Capital Account of the Sony Subsidiary shall be made with reference
to Sony/Block Note #1.
Article XVII - Default of a Partner
Page 172
(5) The cash distributions required to be made (i) under
Section 4.17(b)(2) shall be made one-half to the Blockbuster
Subsidiary and one-half to the Sony Subsidiary and (ii) under
Sections 5.6(b)(1) and 5.6(c)(1) shall be made to the Blockbuster
Subsidiary.
(6) The special tax allocations to be made to Sony/Block
pursuant to (i) Section 8.1(c)(2)(i), Section 8.1(h) and Section
8.1(j) shall be made to the Blockbuster Subsidiary and (ii) Section
8.1(i) shall be made one-half to the Sony Subsidiary and one-half to
the Blockbuster Subsidiary.
(7) At any subsequent closing of the Unwind Procedure, the
following provisions shall apply:
(i) Those distributions deemed to be received by
Sony/Block pursuant to clauses (a) and (b) of Section 9.4
hereof shall be deemed received by the Sony Subsidiary.
(ii) The distributions required to be made to Sony/Block
pursuant to clause (d) of Section 9.4 hereof shall be made to
the Blockbuster Subsidiary (or its designees).
(iii) Any unexpended Contributed Project Funds
attributable to Sony/Block Note #1, to the extent required to
be distributed to Sony/Block pursuant to the provisions of
Section 9.4(f) hereof, shall be distributed to the Sony
Subsidiary.
(iv) Any unexpended Contributed Project Funds
attributable to Sony/Block Note #2, to the extent required to
be distributed to Sony/Block pursuant to the provisions of
Section 9.4(f) hereof, shall be distributed to the Blockbuster
Subsidiary.
(v) Any amounts payable to Sony/Block pursuant to (i)
Section 9.4(g)(1) or 9.4(k)(1) hereof shall be payable
one-half to the Sony Subsidiary and one-half to the
Blockbuster Subsidiary and (ii) Section 9.4(i) hereof shall be
payable to the Sony Subsidiary and the Blockbuster Subsidiary
in the same ratio that the Sony Actual Contribution Amount
bears to the Blockbuster Actual Contribution Amount provided,
however, to the extent that the G&K Sum is a net amount due to
Pace from Sony/Block, then such amount shall be utilized to
reduce the note payable to the Blockbuster Subsidiary only. As
used in the immediately preced-
Article XVII - Default of a Partner
Page 173
ing sentence, the following terms shall have the meanings
indicated:
(A) "Sony Actual Contribution Amount" shall mean
an amount equal to (i) the original principal amount of
Sony/Block Note #1 plus (ii) the amount (if any) of cash
funds contributed to the Partnership by Sony/Block upon
execution of this Agreement pursuant to Section
4.10(a)(1) hereof minus (iii) the amount of Contributed
Project Funds distributed to the Sony Subsidiary at the
closing of the Unwind Procedure pursuant to the
provisions of Section 9.4(f) hereof by way of Section
17.3(a)(7)(iii) hereof.
(B) "Blockbuster Actual Contribution Amount" shall
mean an amount equal to (i) the original principal
amount of Sony/Block Note #2 plus (ii) the amount (if
any) of the cash funds contributed to the Partnership by
Sony/Block upon execution of this Agreement pursuant to
Section 4.10(b)(1) hereof minus (ii) the amount of
Contributed Project Funds distributed to the Blockbuster
Subsidiary at the closing of the Unwind Procedure
pursuant to the provisions of Section 9.4(f) hereof by
way of Section 9.3(a)(7)(iv) hereof.
(vi) Any amounts payable to Sony/Block pursuant to
Section 9.4(g)(3), 9.4(h), 9.4(k)(2) or (3) or
9.4(l)(4)(ii)(A) hereof shall be payable to the Blockbuster
Subsidiary.
(vii) Any amounts payable to Sony/Block pursuant to
Section 9.4(l)(4)(ii)(B) shall be payable to the Sony
Subsidiary.
(viii) If Pace elects, pursuant to the right set forth
in Section 9.4(j) hereof, to defer payment of any amount due
to Sony/Block pursuant to clauses (h) and (i) of Section 9.4
hereof, then the following provisions shall apply:
(A) A separate promissory note shall be executed
for the amount payable pursuant to Section 9.4(h)
hereof, the original principal amount of the Camden
Make-Up Amount and shall be made payable to the
Blockbuster Subsidiary.
Article XVII - Default of a Partner
Page 174
(B) Two separate promissory notes shall be
executed for the amount payable pursuant to Section
9.4(i) hereof, (i) one payable to the Blockbuster
Subsidiary in the original principal amount of the
portion of the Other Facilities Make-Up Amount which is
payable to the Blockbuster Subsidiary pursuant to
Section 17.3(a)(7)(v)(ii) hereof and (ii) the other one
payable to the Sony Subsidiary in the original principal
amount of the portion of the Other Facilities Make-Up
Amount which is payable to the Sony Subsidiary pursuant
to Section 17.3(a)(7)(v)(ii) hereof.
(C) The annual payment obligation which would have
been payable with respect to the single promissory note
contemplated by the provisions of Section 9.4(j)(1)
hereof shall be allocated among the promissory notes
delivered pursuant to clauses (A) and (B) of this
Section 17.3(a)(7)(vii) in proportion to the original
principal balance of each.
(D) The mortgages or other security instruments
required to be executed and delivered by Pace to
Sony/Block pursuant to Section 9.4(j)(2) shall be
executed and delivered to both the Sony Subsidiary and
the Blockbuster Subsidiary (if both receive promissory
notes pursuant to clauses (A) and (B) of this Section
17.3(a)(7)(vii) or only to the Blockbuster Subsidiary
(if no promissory notes are issued by Pace pursuant to
clause (B) of this Section 17.3(a)(7)(vii)). If such
mortgages or security instruments are executed and
delivered to both the Blockbuster Subsidiary and the
Sony Subsidiary, then they shall secure proportionately
all promissory notes issued pursuant to clauses (A) and
(B) of this Section 17.3(a)(7)(vii) and the exercise of
any remedy thereunder shall require the consent of both
the Blockbuster Subsidiary and the Sony Subsidiary.
(ix) With respect to each Project Loan for which a
guaranty fee is payable to Sony/Block under the provisions of
Article V hereof, such guaranty fee shall be payable to the
Blockbuster Subsidiary and the Sony Subsidiary in proportion
to the principal amount of such Project Loan which is
guaranteed by Blockbuster and Sony, respectively.
Article XVII - Default of a Partner
Page 175
(8) Sony/Block's right to designate two (2) of the three (3)
Representatives on the Executive Committee, as provided in Section
10.2(c) hereof, shall be divided between the Sony Subsidiary and the
Blockbuster Subsidiary such that each will designate one of the
Representatives on the Executive Committee.
(9) (i) Sony/Block's right to terminate Pace as the Manager of
the Partnership, as provided in Section 10.8 hereof, (ii)
Sony/Block's right to require that Pace provide additional
management services pursuant to clauses (1) or (2) of Section
10.8(c) and (iii) Sony/Block's right under Section 7.2(b) hereof may
only be exercised by the unanimous approval of the Blockbuster
Subsidiary and the Sony Subsidiary.
(10) Sony/Block's unilateral right described in Section
11.3(a) with respect to the selection of the first Manager after the
delivery of the Termination Notice shall thereafter be exercised by
a majority vote of the Executive Committee.
(11) The obligations of Sony/Block to reimburse, indemnify and
hold the Partnership harmless pursuant to the provisions of Section
14.3(b) shall be allocated such that (i) the Sony Subsidiary shall
be obligated in respect of such indemnity provisions to the extent
that they relate to one or more of the Raleigh Asset, the Pittsburgh
Asset and the Camden Asset and (ii) the Blockbuster Subsidiary shall
be obligated in respect of such indemnity provisions to the extent
that they relate to one or more of the Phoenix Asset, the San
Bernardino Asset and the Charlotte Asset.
(12) For purposes of Article XVI hereof, if an Event of
Withdrawal should occur with respect to either the Sony Subsidiary
or the Blockbuster Subsidiary, then the other of such parties and
Pace shall collectively be the "nonwithdrawing partner" as such
term is used in Article XVI hereof, and the following provisions
shall apply:
(i) For the first 90 days of the 120 day period referred
to in Section 16.2 hereof, the Sony Subsidiary or the
Blockbuster Subsidiary, whichever is not the withdrawing
partner, shall have the exclusive option to purchase the
Partnership Interest of the withdrawing partner pursuant to
the provisions of Section 16.2 hereof.
(ii) If the Partner with the exclusive option to
purchase the withdrawing partner's Partnership Interest
pursuant to clause
Article XVII - Default of a Partner
Page 176
(i) of this Section 17.3(a)(12) does not exercise such
exclusive option within the first 90 days of the 120 day
period referred to in Section 16.2 hereof, then such option
may thereafter be exercised during the remaining 30 days of
the 120 day option period by one or both of the Partners
constituting the nonwithdrawing partner (and if both exercise
such right then each will purchase one-half of the
withdrawing partner's Partnership Interest).
(iii) All other elections, consents, approvals,
decisions and obligations provided to, or imposed upon, the
nonwithdrawing partner by the provisions of Article XVI hereof
shall be made, taken and completed by the Partners
constituting the nonwithdrawing partner by unanimous and equal
action.
(13) For purposes of Article XVII hereof, if a Partner Default
should occur with respect to either the Sony Subsidiary or the
Blockbuster Subsidiary, then the other of such parties and Pace
shall collectively be the "Non-Defaulting Partner," as such term is
used in Article XVII hereof, and the following provisions shall
apply:
(i) If the remedy of purchasing the Defaulting Partner's
Partnership Interest pursuant to Section 17.2(e) hereof is
available, then, for the first 60 days of the 90 day period
referred to in Section 17.2(e) hereof, the Sony Subsidiary
or the Blockbuster Subsidiary, whichever is not the Defaulting
Partner shall have the exclusive option to purchase the
Partnership Interest of the Defaulting Partner pursuant to
the provisions of Section 17.2(e) hereof.
(ii) If the Partner with the exclusive option to
purchase the Defaulting Partner's Partnership Interest
pursuant to clause (i) of this Section 17.3(a)(13) does not
exercise such exclusive option within the first 60 days of the
90 day period referred to in Section 17.2(e) hereof, then such
option may thereafter be exercised during the remaining 30
days of the 90 day option period by one or both of the
Partners constituting the Non-Defaulting Partner (and if both
exercise such right then each will purchase one-half of the
Defaulting Partner's Partnership Interest).
(iii) All other elections, consents, approvals,
decisions and obligations provided to, or imposed upon, the
Non-Defaulting Partner by the provisions of Article XVII
hereof shall be made,
Article XVII - Default of a Partner
Page 177
taken and completed by the Partners constituting the
Non-Defaulting Partner by unanimous and equal action.
(b) if a Division of Responsibility Notice is timely given in
accordance with the provisions of this Section 17.3 and immediately
thereafter one of the S/B Partners is not in default of an obligation
which is allocated to such S/B Partner pursuant to clause (2) or (3) of
Section 17.3(a) hereof, then a Partner Default shall be deemed to have not
occurred with respect to such S/B Partner. Until the earlier of (i) the
expiration of the period of time within which Division of Responsibility
Notice under this Section 17.3 may be timely given or (ii) the giving of
the Division of Responsibility Notice pursuant to the provisions of this
Section 17.3, Pace shall not take any action against Sony/Block or its
Partners pursuant to clauses (d) or (e) of Section 17.2 hereof as a result
of the occurrence of a Partner Default with respect to Sony/Block. Upon
the giving of a Division of Responsibility Notice, Sony/Block shall not be
liable or responsible for any Blockbuster Specific Obligations or Sony
Specific Obligations, it being agreed that such obligations shall be the
responsibility and obligation of the Sony Subsidiary and the Blockbuster
Subsidiary pursuant to the provisions of Section 17.3(a)(2) or (3) hereof.
(c) An S/B Partner which will not be in default pursuant to the
provisions of Section 17.3(b) following the timely delivery of a Division
of Responsibility Notice may restructure the transactions contemplated by
this Section 17.3 so as to approach as nearly as possible the result
contemplated by the provisions hereof but so as to prevent the occurrence
of a Constructive Termination. So long as such restructuring does not
result in a material adverse change to any substantive rights of Pace
created hereby, both Pace and the other S/B Partner shall fully cooperate
in such restructuring. Each Partner hereby irrevocably constitutes and
appoints the other Partner and each officer of the other Partner and their
respective successors, acting singly, as its true and lawful
attorney-in-fact with full right of substitution, in its name, place and
stead, to take all actions, and to make, execute, acknowledge, swear to
and file any document, instrument, agreement or amendment, in each case
that may be required to effectuate the restructuring referred to in this
Section 17.3(c). Provided Pace complies with the provisions of this
Section 17.3(c), nothing contained in this Section 17.3(c) shall limit
Pace's right to indemnification under the provisions of Section 13.9 of
this Agreement.
(d) If, following the delivery of a Division of Responsibility
Notice, the Partnership Interest of either of the S/B Partners is acquired
completely by (i) the other S/B Partner pursuant to the exclusive purchase
options described in Sections 17.3(a)(12)(i) or 17.3(a)(13)(i) hereof or
(ii) one of the Partners pursuant to the non-exclusive purchase options
described in Sections
Article XVII - Default of a Partner
Page 178
17.3(a)(12)(ii) or 17.3(a)(13)(ii) hereof, then the following provisions
shall apply:
(1) The acquiring Partner shall, at all times thereafter, be
required to fulfill the responsibilities and obligations of the S/B
Partner whose interest was acquired under and pursuant to this
Agreement; provided, however, in no event shall such acquiring
Partner be under any liability or obligation to cure, correct or
perform any responsibilities or obligations of the S/B Partner which
has had its interest so acquired which was in default or breach at
the time of such acquisition.
(2) The acquiring Partner shall, at all times thereafter, have
all of the rights, powers and authorities of such S/B Partner
including, without limitation, such S/B Partner's right to designate
a Representative to serve on the Executive Committee.
[END OF ARTICLE XVII]
Article XVIII - Miscellaneous Provisions
Page 179
ARTICLE XVIII
Miscellaneous Provisions
18.1 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile (with an appropriate answer back code), telex or
cablegram (which shall be confirmed by a writing sent by registered or certified
mail or equivalent on the same day that such facsimile, telex or cablegram is
sent), or by recognized overnight courier for next day delivery, addressed or
sent to the parties at the following addresses and facsimile numbers or to such
other or additional address or facsimile number as any party shall hereafter
specify by Communication to the other parties:
Pace: S/M Pace, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxx
with a copy to: Xxxxxx & Xxxxx
000 Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
The Blockbuster
Subsidiary: c/o Blockbuster Entertainment Corporation
Xxx Xxxxxxxxxxx Xxxxx
Xx. Xxxxxxxxxx Xxxxxxx 00000
Fax No. (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxxxx
The Sony Subsidiary: c/o Sony Music Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No. (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxx
Vice President
Article XVIII - Miscellaneous Provisions
Page 180
Sony Music, A Group of Sony Music
Entertainment Inc.
with a copy to: Sony Music Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No. (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx
Senior Vice President, General Counsel
and with a copy to: Sony Corporation of America
Nine Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No. (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
Senior Vice President
Sony/Block To both the
Blockbuster Subsidiary and the Sony Subsidiary
Notice of change of address shall be deemed given when actually received or upon
refusal to accept delivery thereof; all other Communications shall be deemed to
have been given, received and dated on the earlier of: (i) when actually
received or upon refusal to accept delivery thereof; or (ii) on the date when
delivered personally, one (1) day after being sent by facsimile, cable, telex or
overnight courier and four (4) business days after mailing, as aforesaid.
18.2 Delaware Law to Apply. This Agreement shall be construed under and in
accordance with laws of the State of Delaware, without giving effect to the
choice of law provisions thereof.
18.3 Other Instruments. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary to effectuate and carry out the Partnership created by this
Agreement.
18.4 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
18.5 Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
Article XVIII - Miscellaneous Provisions
Page 181
18.6 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, be invalid or unenforceable in
any respect, the validity and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision which shall
be a reasonable substitute for such invalid and unenforceable provision in light
of the tenor of this Agreement and, upon so agreeing, shall incorporate such
substitute provision in this Agreement.
18.7 Counterparts. This Agreement may be executed any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original.
18.8 Gender. Wherever the context shall so require, all words herein in
the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
18.9 Entire Agreement, Modification, Consents and Waivers. This Agreement
contains the entire agreement of the parties with respect to the subject matter
hereof (except for letters executed contemporaneously herewith) and no
interpretation, change, termination or waiver of or extension of time for
performance under any provision of this Agreement shall be binding upon any
party unless in writing and signed by the party intended to be bound thereby.
Receipt by any party of money or other consideration due under this Agreement,
with or without knowledge of breach, shall not constitute a waiver of such
breach or any provision of this Agreement. Except as otherwise provided in this
Agreement, no waiver of or other failure to exercise any right under, or default
or extension of time for performance under, any provision of this Agreement
shall affect the right of any party to exercise any subsequent right under or
otherwise enforce said provision or any other provision hereof or to exercise
any right or remedy in the event of any other default, whether or not similar.
18.10 Press Release; Right to Use of Certain Names. All press releases
which are issued by the Partnership or any Partner (or any Affiliate of a
Partner or any Sony/Block Related Party) concerning the subject matter of this
Agreement shall first be approved by all of the Partners before the release
thereof. Prior to the use by any Partner or the Partnership of the name "Sony,"
"Blockbuster" or "Pace" to advertise, promote or otherwise market the activities
of the Partnership, such parties shall have obtained the prior written approval
of the Sony Subsidiary, the Blockbuster Subsidiary or Pace, respectively, to the
proposed use of such names (which may be withheld for any reason or no reason).
In the event that Pace or Sony/Block, as the case may be, ceases for any reason
to be a Partner in the Partnership, or the Sony Subsidiary or the Blockbuster
Subsidiary shall cease to be a partner of Sony/Block, the Partnership shall
immediately cease to use the name "Sony" and "Blockbuster" (in the case that
Article XVIII - Miscellaneous Provisions
Page 182
Sony/Block ceases to be a Partner, or the name "Sony" in the event the Sony
Subsidiary shall cease to be a partner of Sony/Block and the name "Blockbuster"
in the event Blockbuster shall cease to be a Partner of Sony/Block) or "Pace"
(in the case that Pace ceases to be a Partner).
18.11 Joinder by Parents.
(a) The Sony Subsidiary shall cause Sony to execute of even date
herewith a letter addressed to Pace, in form reasonably acceptable to
Pace, in order to indicate Sony's agreement to (i) be bound by the
exclusivity and non-compete covenants contained in Article XII of this
Agreement, (ii) be bound by the transfer restrictions on Sony's stock in
the Sony Subsidiary contained in Section 15.2(d) of this Agreement, (iii)
guarantee, severally, fifty percent (50%) of the obligations of Sony/Block
to make the loans, advances, payments and capital contributions required
pursuant to the provisions of this Agreement (other than the obligation
created pursuant to Section 8.3(h) hereof), (iv) guarantee, severally,
one-third of the Partnership's indemnity obligations created pursuant to
Section 9.4(m) hereof (provided, however, that the guaranty provided
pursuant to this clause (iv) shall be limited, in absolute amount, to an
amount equal to the total net value of the assets distributed, or deemed
to be distributed, to the Sony Subsidiary pursuant to the closing of the
Unwind Procedure), (v) guarantee the indemnity obligations created
pursuant to the provisions in Section 9.4(n) hereof to the extent that
such indemnity obligations are made by Distributees that receive the
distribution of Amphitheaters (or the Partnership's interest therein) at
the closing of the Unwind Procedure which are distributed, or deemed to
be distributed, to the Sony Subsidiary and (vi) guarantee the indemnity
obligations of the Sony Subsidiary created pursuant to the provisions of
Section 14.3(b) hereof.
(b) Pace shall cause PMG and PEC to execute of even date herewith a
letter addressed to Sony/Block, in form reasonably acceptable to
Sony/Block, in order to indicate PMG's and PEC's agreement to (i) be bound
by the exclusivity and noncompete covenants contained in Article XII of
this Agreement, (ii) be bound by the transfer restrictions on PMG's stock
in Pace contained in Section 15.2(a) of this Agreement, and, (iii)
guarantee all of the obligations of Pace to make the loans, advances,
payments (including payments pursuant to promissory notes issued by Pace
pursuant to this Agreement) and capital contributions required by the
provisions of this Agreement (other than (x) the obligation to extend
loans to the Partnership pursuant to Section 4.12 hereof for Operational
Shortfalls and (y) the obligation created pursuant to Section 8.3(h)
hereof), (iv) guarantee, severally, one-third of the Partnership's
indemnity obligations created pursuant to Section 9.4(m) hereof (provided,
however, that the guaranty obligation pursuant to this clause (iv) shall
have an
Article XVIII - Miscellaneous Provisions
Page 183
absolute limitation equal to the total net value of the assets
distributed, or deemed to be distributed, to Pace at the closing of the
Unwind Procedure), (v) guaranty the indemnity obligations created pursuant
to the provisions of Section 9.4(n) hereof to the extent that such
indemnity obligations are made by Distributees that receive the
distribution of an Amphitheater (or the Partnership's interest therein)
at the closing of the Unwind Procedure which are distributed, or deemed to
be distributed, to Pace and (vi) guaranty the indemnity obligations of
Pace created pursuant to the provisions of Section 14.3(a) hereof.
(c) The Blockbuster Subsidiary shall cause Blockbuster to execute of
even date herewith a letter addressed to Pace, in form reasonably
acceptable to Pace, in order to indicate Blockbuster's agreement to (i) be
bound by the exclusivity and noncompete covenants contained in Article
XII of this Agreement, (ii) honor the transfer restrictions on the stock
in the Blockbuster Subsidiary contained in Section 15.2(c) of this
Agreement, (iii) guarantee, severally, fifty percent (50%) of the
obligations of Sony/Block to make the loans, advances, payments and
capital contributions required by the provisions of this Agreement (other
than the obligation created pursuant to Section 8.3(h) hereof), (iv)
guarantee, severally, one-third of the Partnership's indemnity obligations
created pursuant to Section 9.4(m) hereof (provided, however, that the
guaranty obligation created pursuant to this clause (iv) shall have an
absolute limit equal to the aggregate net value of the assets
distributed, or deemed to be distributed, to the Blockbuster Subsidiary at
the closing of the Unwind Procedure), (v) guaranty the indemnity
obligations created pursuant to the provisions of Section 9.4(n) hereof
to the extent that such indemnity obligations are made by Distributees
that receive the distribution of an Amphitheater (or the Partnership's
interest therein) at the closing of the Unwind Procedure which are
distributed, or deemed to be distributed, to the Blockbuster Subsidiary
and (vi) guaranty the indemnity obligations of the Blockbuster Subsidiary
created pursuant to the provisions of Section 14.3(c) hereof.
(d) For purposes of the guaranties to be provided pursuant to
clauses (iv) and (v) of Section 18.11(a) and pursuant to clauses (iv) and
(v) of Section 18.11(c) the following provisions shall apply:
(1) At the closing of the Unwind Procedure, the Partnership's
interest in the Pittsburgh Asset, the Raleigh Asset and the Camden
Asset which are distributed to Sony/Block shall be deemed to have
been distributed to the Sony Subsidiary; and
(2) At the closing of the Unwind Procedure, the Partnership's
interest in the Phoenix Asset, the San Bernardino Asset and the
Article XVIII - Miscellaneous Provisions
Page 184
Charlotte Asset that are distributed to Sony/Block shall be deemed
to have been distributed to the Blockbuster Subsidiary.
(3) At the closing of the Unwind Procedure, those cash amounts
(if any) which are distributed to Sony/Block pursuant to one or both
of clauses (e) and (f) of Section 9.4 hereof shall be deemed to have
been distributed one-half to the Blockbuster Subsidiary and one-half
to the Sony Subsidiary.
Execution by each of the above letters by Sony, PMG, PEC and Blockbuster,
respectively, shall be a condition to the effectiveness of this Agreement.
18.12 Acquisition of Partners' Interests. If the Partners should ever
unanimously agree to purchase (i) the partnership interest in the Raleigh
Partnership which is not currently owned by the Partnership of even date
herewith or (ii) the partnership interest in the Nashville Partnership which is
not being conveyed to the Partnership at the Existing Facility Closing pursuant
to Section 4.2 hereof, then the following provisions shall apply:
(a) With respect to the Raleigh Partnership, Pace and Sony/Block
shall each reimburse the Partnership for one-half of the excess (if any)
of the purchase price of such partnership interest over the value of such
interest based upon the Net Value assigned to the Raleigh Asset.
(b) With respect to the Nashville Partnership, Pace shall be
required to reimburse the Partnership for the excess (if any) of the
purchase price of such partnership interest over the value of such
interest based upon the Net Value assigned to the Nashville Asset.
18.13 Selection of Deciding Voter. The selection of a deciding voter
required pursuant to any provision of this Agreement shall be made in accordance
with the following provisions:
(a) Within ten (10) days after a notice is given by one Partner to
the other that a deciding voter will need to be selected pursuant to
another provision contained in this Agreement, the Partners shall select a
mutually acceptable individual to serve as the "Neutral Selector"
hereunder. If (i) that individual is unwilling or unable to serve as the
Neutral Selector hereunder for whatever reason or (ii) a mutually
acceptable person cannot be agreed upon within such ten (10) day period,
then the American Arbitration Association in New York, New York will serve
as the Neutral Selector.
Article XVIII - Miscellaneous Provisions
Page 185
(b) The Neutral Selector shall, as soon as is reasonably possible,
provide to each of the Partners an identical list of ten names, numbered 1
through 10, of individuals who would be willing to serve as a deciding
voter hereunder and who meet the Applicable Criteria (herein defined). The
list shall include each individual's address, phone number and employer.
The Partners may contact the individuals listed solely for the purpose of
investigating their respective employment history and business experience.
(c) Within seven (7) days after receipt of the list of names
referred in clause (b) above, each Partner shall be required to return to
the Neutral Selector such list of names with no more than five of the
names deleted. The highest name remaining on the two lists returned by the
Partners which was not deleted on either list shall be the deciding voter.
If there is no name which was not deleted on both lists, then the Neutral
Selector shall issue a new list of ten other names in the same manner as
before and the procedure shall be repeated until a deciding voter is
chosen.
(d) No deciding voter selected in accordance with the foregoing
provisions shall be qualified to serve as a deciding voter hereunder if it
is subsequently determined that such individual is, or was within the past
five (5) years, (i) an officer, employee or director of either of the
Partners, any Affiliate of the Partners or any Sony/Block Related Party or
(ii) a party, directly or indirectly, as a principal, shareholder or
senior executive officer of any entity, to any contract or arrangement
with either Partner, any Affiliate of a Partner or any Sony/Block Related
Party in which the aggregate annual compensation or other amounts payable
thereunder exceeded $300,000.00.
(e) Any fees or costs payable to the Neutral Selector and the
deciding voter selected in accordance with the foregoing provisions shall
be paid by the Partnership as an Operating Obligation.
(f) As used herein, the term "Applicable Criteria" shall mean the
following:
(1) with respect to the selection of a deciding voter pursuant
to the provisions of Section 15.3(b)(1)(iv)(A) of this Agreement,
an individual who has been an active, practicing public accountant
with substantial experience in the entertainment industry over the
past 15 years, at least 10 of which shall have been with a "big 6"
accounting firm (or their predecessors); and
(2) With respect to the selection of a deciding voter pursuant
to the provisions of Section 12.6(d) hereof, an individual who has
been
Article XVIII - Miscellaneous Provisions
Page 186
an active, practicing attorney for no less than fifteen years with a
private law firm consisting of thirty lawyers or more in a
metropolitan area of 1,000,000 people or more.
18.14 Amendment and Restatement. This Agreement is a complete amendment
and restatement of the Old Partnership Agreement and shall, as of the Effective
Date, supersede and replace in all respects the terms, provisions and conditions
contained in the Old Partnership Agreement. Notwithstanding anything to the
contrary contained herein, neither (i) the transfer and assignment of the Sony
Subsidiary's Partnership Interest as contemplated by the provisions of Section
4.9 hereof, (ii) the amendment and restatement of the Old Partnership Agreement
or (iii) the subsequent purchase by Pace of an Equalizing Partnership Interest
pursuant to the provisions of Section 15.3(b) hereof is intended to be, or shall
be, a termination of the general partnership created by, and pursuant to, the
terms and provisions contained in the Old Partnership Agreement and continued
pursuant to the terms and provisions contained in this Agreement, it being the
intent of the Partners to continue the Partnership in existence without
termination:
[END OF ARTICLE XVIII]
187
EXECUTED as of the day and year first written above.
SM/PACE, INC., a Texas corporation
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Tile: President
"PACE"
AMPHITHEATER ENTERTAINMENT PARTNER-
SHIP, a Delaware general partnership
By: YM CORP.
By: /s/ Xxxxxx Xxxx
--------------------------
Name: Xxxxxx Xxxx
Title: Vice President
By: THE WESTSIDE AMPHITHEATRE COR-
PORATION
By: /s/ Xxxxx Xxxxxx
---------------------------
Name: Xxxxx Xxxxxx
Title: President
By: CHARLOTTE AMPHITHEATER CORPO-
RATION
By: /s/ Xxxxx Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
"SONY/BLOCK"
YM CORP.
By: /s/ Xxxxxx Xxxx
---------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
"SONY SUBSIDIARY"
188
THE WESTSIDE AMPHITHEATRE CORPORA-
TION, an Arizona corporation
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: President
CHARLOTTE AMPHITHEATER CORPORA-
TION, a North Carolina corporation
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
individually and collectively, the
"BLOCKBUSTER SUBSIDIARY"
189
SCHEDULE OF EXHIBITS
Exhibit "A" - Form of Sony/Block Notes
Exhibit "B" - Form of Guaranty of Sony/Block Notes
Exhibit "C" - Pace's corporate overhead which are covered by and
being reimbursed from the annual payment to be made to
Pace
Exhibit "D" - Pace's out-of-pocket costs which are not covered by or
being reimbursed from the annual payment to be made to
Pace
Exhibit 5.3(a)(1) - Form of Indemnification
Exhibit 5.3(a)(2) - Form of Mortgage Instrument
EXHIBIT "A"
Form of Sony/Block Note
NON-NEGOTIABLE PROMISSORY NOTE
$_________ April 1, 1994
FOR VALUE RECEIVED, after date, in the manner, on the dates and in the
amounts so herein stipulated, the undersigned, AMPHITHEATER ENTERTAINMENT
PARTNERSHIP ("Borrower"), a Delaware general partnership, PROMISES TO PAY TO
PAVILION PARTNERS ("Lender"), 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 the principal sum of _______________________________ DOLLARS ($______) in
lawful money of the United States of America, which shall be legal tender in
payment of all debts and dues, public and private, at the time of payment, and
to pay interest on the unpaid principal amount from date until maturity at a
fixed rate per annum which shall be equal to the lesser of (a) the Short Term
Rate (as such term is defined in the Partnership Agreement) per annum as in
effect on the date of this Note or (b) the maximum non-usurious interest rate
permitted by applicable law from time to time in effect as such law may be
interpreted, amended, revised, supplemented or enacted ("Maximum Rate").
Reference is made to the Partnership Agreement ("Partnership Agreement")
of Lender dated of even date herewith pursuant to which a general partnership
was continued between (i) Borrower and (ii) SM/Pace, Inc. Capitalized terms used
in this Promissory Note which are not defined herein shall have the respective
meanings assigned to them pursuant to the provisions of the Partnership
Agreement.
This Note shall be payable as follows:
(a) On the last day of each March, June, September and December
while any principal amounts remain outstanding under this Note, all
accrued unpaid interest hereon shall be due and payable.
(b) The entire unpaid principal balance of this Note, together with
all accrued unpaid interest hereon, shall be due and payable on the
earlier to occur of (i) the third anniversary of the date of this Note,
(ii) dissolution of the Lender pursuant to Article XVI of the Partnership
Agreement or
_________________
Initials
(iii) the closing of the Unwind Procedure pursuant to the provisions of
Article IX of the Partnership Agreement.
(c) In addition, principal installments shall be payable upon demand
of Lender in accordance with the provisions of Section 4.10(d) of the
Partnership Agreement.
If the entire principal balance of this Note becomes due and payable as a result
of the dissolution of the Lender, such payment shall be, in any event, paid
before the final liquidating distribution to the Partners pursuant to Section
16.5 of the Partnership Agreement.
It is agreed that time is of the essence of this agreement. In the event
of default in the payment of any installment of principal or interest on this
Note when due, and such default shall not be cured within fifteen (15) days
after notice thereof is provided to Borrower, Lender may accelerate and declare
this Note immediately due and payable. Any failure to exercise this option shall
not constitute a waiver by Lender of the right to exercise the same at any other
time. All notices hereunder shall be provided in the manner specified in Section
18.1 of the Partnership Agreement.
In the event of default in the making of any payment herein provided,
either of principal or interest beyond the expiration of the fifteen (15) day
grace period referenced above, or in the event this Note is declared due,
interest shall accrue at the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof, if
this Note is placed in the hands of an attorney for collection or if collected
by suit or through any bankruptcy or any other legal proceedings.
Interest charges will be calculated on the principal amount from time to
time outstanding on the actual number of days these amounts are outstanding on
the basis of a 365-day year, except for calculations of the Maximum Rate which
will be on the basis of a 365-day or 366-day year, as is applicable. It is the
intention of the parties hereto to comply with all applicable usury laws;
accordingly, it is agreed that notwithstanding any provision to the contrary in
this Note, or in any of the documents securing payment hereof or otherwise
relating hereto, no such provision shall require the payment or permit the
collection of interest in excess of the Maximum Rate. If any excess of interest
in such respect is provided for, or shall be adjudicated to be so provided for,
in this Note or in any of the documents securing payment hereof or otherwise
relating hereto, then in such event (1) the provisions of this paragraph shall
govern and control, (2) neither Borrower, endorsers or guarantors, nor their
heirs, legal representatives, successors or assigns nor any other party liable
for the payment hereof, shall be obligated to pay the amount of such interest to
the extent that it is in excess of the Maximum Rate, (3) any such excess which
may have been collected shall be either applied as a credit against the then
unpaid principal amount hereof or refunded to Borrower, and (4) the provisions
of this Note and
any documents securing payment of this Note shall be automatically reformed so
that the effective rate of interest shall be reduced to the Maximum Rate. For
the purpose of determining the Maximum Rate, all interest payments with respect
to this Note shall be amortized, prorated and spread throughout the full term of
the Note so that the effective rate of interest on account of this Note is
uniform throughout the term hereof.
The provisions of this Note shall be governed by the laws of the State of
Delaware.
Except as expressly provided herein to the contrary, each maker, surety,
guarantor and endorser waives demand, grace, notice, presentment for payment,
notice of intention to accelerate the maturity hereof, notice of acceleration of
the maturity hereof and protest, and agrees that this Note may be renewed, and
the time of payment extended from time to time, without notice and without
releasing any of the foregoing.
Borrower may prepay this Note, in whole or in part, at any time prior to
maturity without penalty, and interest shall cease on any amount prepaid.
AMPHITHEATER ENTERTAINMENT PARTNERSHIP,
a Delaware general partnership
By: YM Corp.,
a Delaware corporation
By:________________________________
Name:___________________________
Title:__________________________
By: CHARLOTTE AMPHITHEATER CORPORATION,
a North Carolina corporation
By:________________________________
Name:___________________________
Title:__________________________
Exhibit "A"
Page 3 of 2
By: THE WESTSIDE AMPHITHEATRE CORPORATION,
an Arizona corporation
By:________________________________
Name:___________________________
Title:__________________________
Exhibit "A"
Page 4 of 2
EXHIBIT "B"
Form of Sony/Block Guaranty
SPECIFIC GUARANTY
This SPECIFIC GUARANTY ("Guaranty") is executed by [SONY MUSIC
ENTERTAINMENT, INC. OR BLOCKBUSTER ENTERTAINMENT CORPORATION, AS APPLICABLE]
("Guarantor"), a ______________________________ corporation, in favor of
PAVILION PARTNERS ("Lender"), a Delaware general partnership.
W I T N E S S E T H:
WHEREAS, AMPHITHEATER ENTERTAINMENT PARTNERSHIP ("Borrower"), a Delaware
general partnership, and Guarantor desire Lender to extend financial and credit
accommodations to Borrower;
WHEREAS, Lender is willing to extend credit and financial accommodations
to Borrower only upon the condition that Guarantor executes and delivers to
Lender this Guaranty and undertake the obligations of Guarantor set out herein;
NOW, THEREFORE, in consideration of the extension of financial and credit
accommodation by Lender to Borrower, and other good and valuable consideration,
receipt of which is hereby acknowledged, Guarantor agrees as follows:
1. Obligation of Guarantor. Reference is hereby made to that certain
Promissory Note ("Note") dated of even date herewith, executed by Borrower,
payable to Lender and in the original principal amount of $__________. Guarantor
hereby irrevocably, absolutely and unconditionally guarantees to Lender the full
and timely payment of the Note and all sums to become due to Lender under the
Note (the principal of, interest on and all other amounts, payments and premiums
due under the Note, herein being called the "Indebtedness"), as and when the
same shall be due and payable, whether by lapse of time, acceleration of
maturity or otherwise. The obligations of Guarantor contained in this Guaranty
shall be absolute and unconditional without regard to the validity, legality,
regularity or enforceability of the Indebtedness, or any instrument evidencing,
securing or relating to the Indebtedness, and shall not be reduced or affected
in any way by any failure or omission to enforce any right against Borrower or
Guarantor or by any other action which may in any manner or to any extent vary
the risks of Guarantor, or which might otherwise constitute a legal or equitable
discharge of Guarantor; it being the purpose and intent of Guarantor and Lender
that (a) this Guaranty and the obligations of Guarantor hereunder shall be
absolute and unconditional under any and all circumstances and shall not be
discharged except by payment and performance as herein provided, (b) this
Guaranty be construed as a payment guaranty and not as a guaranty of collection
and (c) Guarantor's liability under this Guaranty shall be primary, and not
secondary. Guarantor agrees that, without the necessity of any reservation of
rights against Guarantor and without notice to or further assent by Guarantor,
(1) any demand for payment of any or all of the Indebtedness may be rescinded by
the party making such
demand, and the Indebtedness reinstated or continued, and (2) the Indebtedness
or any collateral security therefor or rights of offset with respect thereto
may, from time to time, in whole or in part, be renewed, extended, modified,
rearranged, consolidated, compromised or released by Lender, and without notice
to or further assent by Guarantor, who will remain bound hereunder
notwithstanding any such rescission, renewal, extension, modification,
rearrangement, consolidation, compromise or release.
2. Waiver by Guarantor. Guarantor waives:
(i) presentment, demand for payment, protest, notice of intent to
accelerate maturity, notice of acceleration of maturity, and notice of
dishonor of the Indebtedness;
(ii) any other notice to which Guarantor might be entitled;
(iii) any defense (other than payment of the Indebtedness) arising
by reason of any disability, insolvency, lack of authority or power,
death, insanity, minority, change in composition or structure, dissolution
or any other defense of Borrower or Guarantor (even though rendering same
void, unenforceable or otherwise uncollectible), it being agreed that
Guarantor shall remain liable hereon regardless of whether Borrower or
Guarantor be found not liable thereon for any reason; and
(iv) joinder of Borrower in any suit or action to enforce this
Guaranty:
3. Rights of Lender. Lender may, at any time without the consent of, or
notice to, Guarantor, and without impairing or releasing the obligations of
Guarantor.
(i) with the agreement of Borrower, change the manner, place, time
or terms of payment, renew, extend or alter the payment schedule of the
Indebtedness, or increase the interest rate on any Indebtedness; and
(ii) exercise or refrain from exercising any rights against
Borrower, any Obligor or others, or otherwise act or refrain from acting;
4. Parties in Interest. This Guaranty shall continue in full force and
effect notwithstanding the dissolution of Guarantor and shall be binding on the
successors and assigns of Guarantor, and shall inure to the benefit of Lender
and its successors and assigns.
5. Additional Obligations of Guarantor. In addition to obligations of
Guarantor set forth elsewhere herein, Guarantor agrees absolutely and
unconditionally to pay to Lender all costs, reasonable attorneys' fees and other
expenses incurred by Lender in an effort to enforce and/or collect the
Indebtedness and the Guarantor's obligations hereunder.
Exhibit "B"
Page 2 of 7
6. Compliance with Laws. It is expressly stipulated and agreed to be the
intent of Guarantor and Lender at all times to comply with the applicable
Delaware law governing the maximum non-usurious rate or amount of interest
payable on or in connection with the Indebtedness (or applicable United States
federal law to the extent that it permits Lender to contract for, charge, take,
reserve or receive a greater amount of interest than under Delaware law). If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Note or contracted for, charged, taken, reserved or
received with respect to the loan evidenced by the Note, or if the acceleration
of the maturity of the Indebtedness or if any prepayment by Guarantor results in
Guarantor having paid any interest in excess of the maximum non-usurious rate
permitted by law, then it is Guarantor's and Lender's express intent that all
excess amounts theretofore collected by Lender be credited on the principal
balance of the Indebtedness (or, if the Indebtedness has been or would thereby
be paid in full, refunded to Guarantor), and the provisions of the Note
immediately be deemed reformed and the amounts thereafter collectible thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder. The right to accelerate
maturity of the Indebtedness does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Indebtedness shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of the
Indebtedness until payment in full so that the rate or amount of interest on
account of the Indebtedness does not exceed the applicable usury ceiling.
7. No Waiver By or Estoppel Against Lender. No failure to exercise nor any
delay in exercising on the part of Lender any right, power or privilege
hereunder or at law or in equity shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law or in equity.
8. Subrogation. Guarantor hereby agrees that Guarantor shall not be
entitled to be subrogated to any of the rights of Lender or any of its
successors, endorsees and assigns against the Borrower until all of the
Indebtedness has been paid in full, performed and discharged.
9. Reinstatement of Obligations. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment of any of
the Indebtedness is rescinded or must otherwise be restored or returned to
Borrower on account of any insolvency, bankruptcy or reorganization of Borrower,
or on account of any preferential transfer, all as though such payment had never
been made.
10. Governing Law. This Guaranty has been executed and delivered in, and
shall be construed and enforced in accordance with the laws of, the State of
Delaware.
Exhibit "B"
Page 3 of 7
11. Severability. If any clause or portion of this Guaranty shall be
declared unenforceable, invalid, or illegal, the remaining clauses and portions
shall not be affected thereby.
12. Entire Agreement Guarantor acknowledges that this Guaranty sets forth
all the terms of the agreement between Lender and Guarantor regarding the
subject matter of this Guaranty, and that any statements, representations or
affirmations made by Lender and its agents or Guarantor prior to, or
contemporaneously, with the execution of this Guaranty are to be of no force and
effect whatever in determining the liability of Guarantor under this Guaranty.
Without limiting the foregoing, Guarantor warrants, represents and acknowledges
that Guarantor is not relying on any representations or statements of Lender or
any other party concerning the financial condition of Borrower, the likelihood
that Guarantor will be required to pay or perform the Indebtedness hereby
guaranteed, or any other representations or statements other than as expressly
set forth herein, and all other representations or agreements, if any, are
merged into this Guaranty.
13. Benefit to Guarantor. Guarantor, by executing and delivering this
Guaranty, agrees, acknowledges, represents and warrants that (i) Guarantor will
benefit, directly or indirectly, by the extension of credit to Borrowers
pursuant to the terms of the Note and (ii) without the execution and delivery of
this Guaranty and Guarantor's agreement to be bound by the provisions hereof,
Lender would not have agreed to advance funds to Borrower.
14. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and may be personally served
or sent by telex, telecopier, mail or the express mail service of the United
States Postal Service, Federal Express or other equivalent overnight or
expedited delivery service and (i) if given by personal service, telex
(confirmed by telephone) or telecopier (confirmed by telephone), it shall be
deemed to have been given upon receipt, (ii) if sent by telex or telecopier
without telephone confirmation, it shall be deemed to have been given
twenty-four (24) hours after being given, (iii) if sent by mail, it shall be
deemed to have been given upon receipt and (iv) if sent by Federal Express, the
Express Mail Service of the United States Postal Service or other equivalent
overnight or expedited delivery service, it shall be deemed given twenty-four
(24) hours after delivery to such overnight or expedited delivery service,
delivery charges prepaid and properly addressed to Guarantor or Lender, as the
case may be. For purposes hereof, the address of Guarantor and Lender shall be
as follows:
Guarantor:
______________________________
______________________________
______________________________
Attention: ___________________
Exhibit "B"
Page 4 of 7
Lender:
The addresses specified for all of the Partners of Lender in the
Partnership Agreement of Lender.
Any party may, by proper written notice hereunder to the other parties, change
the address to which notices shall thereafter be sent to it.
EXECUTED this the ____ day of _____________, 1993.
___________________________________
By:________________________________
Name:___________________________
Title:__________________________
Exhibit "B"
Page 5 of 7
Exhibit "C" to Partnership Agreement
GENERAL AND ADMINISTRATIVE/CORPORATE DEPARTMENT STRUCTURE AND SCHEDULE
PROGRAMMING AND BOOKING
Principal Programmer 250,000
Senior Xxxxxx 85,000
Xxxxxx Xxxxxx 45,000
Contract Administration 30,000
Clerical (2) 45,000
---------
Total 455,000
=========
FINANCE AND ACCOUNTING
Controller 60,000
Senior Accountant 40,000
Clerical 20,000
MIS Support 30,000
---------
Total Finance and Accounting Salaries 150,000
=========
OPERATIONS
Chief Operating Officer 210,500
Operations Manager 35,000
Clerical 20,000
SM/Block Liaison, Promotions 40,000
Sponsorships 40,000
---------
Total Operations Salaries 345,500
=========
ADMINISTRATION
Legal 42,000
Clerical 20,000
---------
Total Administrations Salaries 62,000
=========
TOTAL FACILITY MANAGEMENT SALARIES 1,012,500
FRINGE @ 25% 253,125
RENT (HOUSTON & NEW YORK) 60,000
COMPUTER SUPPORT 15,000
Miscellaneous including corporate
advertising, conferences and seminars 125,000
---------
TOTAL FACILITY GROUP MANAGEMENT OVERHEAD 1,465,625
=========
NOTE: SALARIES INCLUDE PROJECTED BONUSES
NUMBERS BASED ON 1993-1994 NUMBERS.
DEVELOPMENT
Director of Development 125,000
Project Manager 75,000
Clerical 28,560
---------
Total Development Salaries 228,560
=========
Fringe @ 25% 57,140
---------
Total Development Salary and Fringe 285,700
=========
EXHIBIT "D" to
Partnership Agreement
Types of Costs to be Directly
Reimbursed and Not Included in
the Reimbursement Fee
- Delivery charges for amphitheatre communications
- Travel for operations, sales, financial, legal and booking support
to amphitheatres
- Travel for development staff to projects
- Local site managers for new projects
- Long distance telephone and fax
- Travel and Entertainment - Managing Director
- Postage
Exhibit [ILLEGIBLE]
to Partnership Agreement
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT ("Agreement") is executed by PAVILION PARTNERSHIP
("Obligor"), a Delaware general partnership having an office at 000 Xxxx Xxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, as of the ___ day of ________,
_______, for the benefit of [SONY/BLOCK GUARANTOR], having an office at
_________________ and [SONY/BLOCK GUARANTOR], having an office at
________________(individually, "Obligee" and collectively, "Obligees").
Recitals
A. [Name of Lender] ("Lender") has extended to the Obligor a loan in the
principal amount of $______ (which loan, as the same may hereafter be amended,
extended, modified or renewed, shall be called herein the "Loan").
B. As a material inducement to Lender's agreement to make the Loan to
Obligor, each Obligee has or is about to execute and deliver certain guaranty
or similar instruments with respect to the Loan (each of said instruments shall
be called herein a "Guarantee").
C. As a material inducement to Obligees to agree to provide Lender with
their respective Guarantee and as required by the Partnership Agreement for
Obligor dated as of _______, ______, 1994, as amended (the "Partnership
Agreement"), Obligor is hereby agreeing to indemnify and hold harmless each of
the Obligees in connection with their respective Guarantee and the Loan as
further provided in this Agreement.
Agreement
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by Obligor, and intending to be legally bound, Obligor agrees as
follows for the express benefit of [both] of the Obligees:
1. Obligor shall indemnify and hold harmless each of the Obligees from and
against any and all liability, loss or expense (including reasonable attorneys'
fees and disbursements) incurred by [either] of the Obligees under or with
respect to their respective Guarantee or otherwise under or with respect to the
Loan. The indemnity and hold harmless set forth herein is absolute,
unconditional and irrevocable.
2. The indemnity obligations of Obligor set forth in this Agreement shall
not be terminated, affected or impaired by reason of (a) any amendment or
modification of the Partnership Agreement or a Guarantee; (b) the waiver of any
term, covenant or provision of a Guarantee by Lender; (c) any restriction
imposed by Lender on the subrogation rights of an Obligee with respect to the
Loan, (d) any bankruptcy, insolvency, merger, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding or occurrence
involving or affecting the Obligor; or (e) any other circumstances, conditions,
transactions or events which might otherwise constitute a defense to said
indemnity obligations.
-2-
3. Obligor irrevocably consents that any legal action or proceeding
against it under, arising out of or in any manner relating to this Agreement or
the transactions contemplated herein may, but shall not be required to be,
brought in any Federal or New York State court of competent jurisdiction located
within the City, County and State of New York. Obligor, by its execution and
delivery of this Agreement, irrevocably: (a) consents and submits to the
personal jurisdiction of any of such courts in any such action or proceeding,
and (b) consents to the service of any complaint, summons, notice or other
process relating to any such action or proceeding by delivery thereof to it in
the manner provided, and at the address of S/M Pace, Inc. set forth, in Section
18.1 of the Partnership Agreement. Obligor waives any claim or defense in any
such action in any such court or proceeding based on any alleged lack of
personal jurisdiction, improper venue or forum non conveniens or any similar
basis.
4. Obligor shall pay, on demand, all costs and expenses (including,
without limitation, reasonable attorneys fees and disbursements) incurred by
[either] Obligee in connection with the enforcement by [either] of them of their
respective rights under this Agreement.
5. This Agreement is governed in all respects by the internal laws of the
State of New York without giving effect to the principles of conflicts of law
and cannot be changed or terminated orally. This Agreement is binding upon
Obligor and its legal representatives, successors and assigns and shall inure to
-3-
the benefit of each Obligee, and their respective legal representatives,
successors and assigns.
6. Obligees shall not have any recourse against any of the Affiliates (as
that term is defined in the Partnership Agreement) of S/M Pace, Inc., in
enforcing any of their rights or remedies under this Agreement.
Executed as of the ___ day of __________, ____.
PAVILION PARTNERSHIP
By: S/M Pace, Inc.
By:_________________________
By: [Sony/Block]
By:_________________________
-4-
Exhibit [ILLEGIBLE]
to Partnership Agreement
LEASEHOLD MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE, made as of the day of _______, ________, between PAVILION
PARTNERSHIP, a Delaware general partnership whose only general partners are S/M
Pace, Inc., a Texas corporation, and [Sony/Block], a Delaware general
partnership, having an office at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000 ("Mortgagor"), and [Sony/Block Guarantor], a corporation, with
offices at __________________________________ and [Sony/Block Guarantor], a
corporation with offices ________________ (individually and collectively, the
"Mortgagee");
WHEREAS, by Lease Agreement, dated __________________, a memorandum of which was
recorded on ___________________, in the office of the Recorder, County of
_________________________________, State of ________, in Book ____, at page
_____, ___________ as Landlord, did demise and let unto the Mortgagor,
_________, as Tenant, all and singular the premises hereinafter mentioned and
described, together with their appurtenances, to have and to hold the same unto
the Mortgagor and its successors and assigns, for and during and until the full
end and term commencing on __________ and expiring on _________, [subject to a
renewal option in favor of the Mortgagor for [one] renewal term of ____________
( ) years], at the rent and upon the covenants, conditions, agreements and
provisions therein contained (the "Lease"); and
[If Mortgagor's interest is not a leasehold interest, appropriate changes will
be made to this instrument to reflect the Mortgagor's ownership interest]
WHEREAS, the Mortgagor executed and delivered to the Mortgagee that certain
Indemnity Agreement of even date herewith (such Indemnity Agreement, together
with all modifications, amendments, renewals and restatements thereof, herein
being called the "Indemnity Agreement") pursuant to which the Mortgagor
indemnifies and holds harmless each Mortgagee from and against any liability,
loss or expense (including reasonable attorneys' fees and disbursements)
incurred by each Mortgagee in connection with their respective Guarantee (as
that term is defined in the Indemnity Agreement); and
WITNESSETH, that to secure the obligations of the Mortgagor, to the extent
of________________ ($ ) DOLLARS, lawful money of the United States (the
"Secured Principal
Amount"), of all sums which may now or hereafter be owing by the Mortgagor to
the Mortgagee pursuant to the Indemnity Agreement and to secure the payment of
any other sums payable pursuant to this Mortgage and the performance and
observance of all the provisions of the Indemnity Agreement and this Mortgage,
the Mortgagor hereby gives, grants, bargains, sells, warrants, aliens, remises,
releases, conveys, assigns, transfers, mortgages, hypothecates, deposits,
pledges, sets over and confirms to the Mortgagee:
ALL of the leasehold estate created by the Lease in that certain plot, piece or
parcel of land, with the buildings and improvements thereon erected or to be
erected (hereinafter called the "Premises"), more particularly bounded and
described in Schedule A annexed hereto and made a part hereof;
TOGETHER with all right, title and interest, if any, of the Mortgagor of, in and
to the land lying in the streets, roads or avenues, open or proposed, in front
of and adjoining the Premises and of, in and to any strips or gores of land
adjoining the Premises;
TOGETHER, ALSO, with the Mortgagor's right, title and interest in and to all
fixtures, chattels and articles of personal property now owned by the mortgagor
and now or hereafter attached to or located in or upon the Premises and used or
usable in connection with any present or future operation or letting of the
Premises or the activities at any time conducted therein (hereinafter called
"Building Equipment"), including but not limited to furnaces, boilers, oil
burners, radiators and piping, coal stokers, plumbing and bathroom fixtures,
refrigeration, air conditioning and sprinkler systems, wash-tubs, sinks, gas and
electric fixtures, stoves, ranges, awnings, screens, window shades, elevators,
motors, dynamos, refrigerators, kitchen cabinets, incinerators, plants and
shrubbery and all other machinery, appliances, fittings, furniture, furnishings
and fixtures of every kind used in the operation of the buildings standing or
hereafter erected on the Premises, together with any and all replacements
thereof and additions thereto, and all right, title and interest of the
Mortgagor in and to any Building Equipment which may be subject to any security
agreements, as defined in subdivision (1)(1) of Section 9105 of the Uniform
Commercial Code of the _________________ (hereinafter called "Security
Agreements"), superior in lien to the lien of this Mortgage; it being understood
and agreed that all Building Equipment is part and parcel of the Premises and
appropriated to the use thereof and, whether
-2-
affixed or annexed to the Premises or not, shall, for the purpose of this
Mortgage, be deemed conclusively to be real estate and all of the Mortgagor's
right, title and interest in and to the Building Equipment shall be deemed
mortgaged hereby; and the Mortgagor agrees to execute and deliver, from time to
time, such further instruments (including further Security Agreements) as may be
requested by the Mortgagee to confirm the lien of this Mortgage on the
Mortgagor's right, title and interest in and to any Building Equipment;
TOGETHER, ALSO, with any and all awards, including interest thereon, heretofore
and hereafter made to the Mortgagor for the taking by eminent domain of the
whole or any part of the Premises or any easement therein, including any awards
for changes of grade of streets, which said awards are hereby assigned to the
Mortgagee, who is hereby authorized to collect and receive the proceeds of such
awards and to give proper receipts and acquittances therefor, and to apply the
same as herein provided; and the Mortgagor hereby agrees, upon request, to make,
execute and deliver any and all instruments sufficient for the purpose of
confirming such assignment of said awards to the Mortgagee, free, clear and
discharged of any encumbrances of any kind or nature whatsoever;
TOGETHER, ALSO, with all the Mortgagor's interest in all agreements, contracts,
certificates, instruments and other documents, now or hereafter entered into,
pertaining to the construction, operation or management of any structure or
building now or hereafter erected on the Premises;
TOGETHER, ALSO, with all the Mortgagor's interest in all franchises, permits,
licenses and rights therein and thereto respecting the use, occupation or
operation of the Premises;
TOGETHER, ALSO, with all the Mortgagor's interest in all easements,
rights-of-way, and appurtenances whatsoever in any way belonging, relating or
appurtenant to the Premises, whether now owned or hereafter acquired by
Mortgagor;
TOGETHER with the appurtenances and all the estate and rights of the Mortgagor
of, in and to the Premises under and by virtue of the Lease;
TO HAVE AND TO HOLD the Lease and renewal thereby, and the above granted
Mortgagor's interest in and to the Premises, Building Equipment and other
property and rights unto the Mortgagee, its successors and assigns, for and
during all
-3-
the rest, residue and remainder of the said term of years yet to come and
unexpired, in the Lease and the renewal therein provided for; subject,
nevertheless, to the rents, covenants, conditions and provisions in the Lease
mentioned.
PROVIDED, HOWEVER, that these presents are upon the condition that if the
Mortgagor shall pay, perform or cause to be paid and performed all of the
Mortgagor's obligations under the Indemnity Agreement, at the times and in the
manner therein and herein provided, and shall keep, perform and observe all and
singular the covenants, agreements and provisions in the Indemnity Agreement and
in this Mortgage expressed to be kept, performed and observed by or on the part
of the Mortgagor, and provided, further, that the Indemnity Agreement shall no
longer be of any force or effect, then this Mortgage and the estate and rights
hereby granted shall cease, determine and be void but otherwise shall be and
remain in full force and effect.
AND the Mortgagor covenants with the Mortgagee as follows:
1. That the Mortgagor will pay and perform the indebtedness and obligations as
hereinbefore provided.
2. (a) That the Mortgagor, at its sole cost and expense, shall maintain the
following insurance:
(i) Insurance on any building and any other improvements covered by the
lien of this Mortgage (hereinafter sometimes collectively referred to as the
"Building") and the Building Equipment against loss or damage by fire and
against loss or damage by other risks now or hereafter embraced by "All-Risks"
insurance, so called, in an amount sufficient to prevent the Mortgagor from
becoming a co-insurer under the applicable policies but, in any event, not less
than 100% of the "full replacement cost" thereof, without deduction for
depreciation, and with a replacement cost endorsement and agreed amount
endorsement satisfactory to the Mortgagee. As used herein, "full replacement
cost" shall mean (A) with reference to the Building, the cost of replacing the
Building, exclusive of the cost of excavations, foundations and footings below
the lowest basement floor, and (B) with reference to the Building Equipment, the
cost of replacing the Building Equipment, and in either case, without deduction
for the physical depreciation thereof.
(ii) When reasonably required by the Mortgagee, such other insurance in
such amounts as may from time to
-4-
time be reasonably required by Mortgagee against other insurable hazards which
at the time are commonly insured against and generally available in the case of
premises similarly situated due regard being or to be given to the height and
type of the Building, its construction, use and occupancy.
(b) [Intentionally Deleted].
(c) That all insurance provided for in this Article 2 shall be effected
under valid and enforceable policies issued by financially responsible insurers
authorized to do business in the ___________________. Upon the execution of this
Mortgage and thereafter, not less than thirty (30) days prior to the expiration
dates of the expiring policies theretofore furnished pursuant to this Article 2
or any other Article of this Mortgage, originals or certified copies of the
policies bearing notations evidencing the payment of not less than one year's
premiums, or accompanied by other evidence satisfactory to the Mortgagee of such
payment, shall be assigned and delivered by the Mortgagor to the Mortgagee.
(d) That all policies of insurance required by clause (i) and, if
appropriate, clause (ii) of subdivision (a) of this Article 2 shall contain the
standard non-contributory mortgagee endorsement in favor of the Mortgagee
(entitling the Mortgagee to collect any and all proceeds payable under such
insurance). All policies of liability insurance that may be required pursuant to
clause (ii) of subdivision (a) of this Article 2 shall name the Mortgagee as an
additional insured. All insurance maintained by the Mortgagor shall be
reasonably satisfactory in all material respects to the Mortgagee and shall
provide that no cancellation, material change or reduction in the coverage or
amounts thereof shall be effective until at least thirty (30) days after
receipt by the Mortgagee of written notice thereof. If binders for any of the
insurance required by this Article 2 were delivered upon the execution of this
Mortgage, originals or certified copies of the policies of insurance to be
issued pursuant to such binders shall be delivered to the Mortgagee within
thirty (30) days from the date hereof.
(e) That, if the Mortgagor shall fail to procure, pay for or deliver to
the Mortgagee any policy or policies of insurance and/or renewals thereof as in
this Article 2 required, the Mortgagee may, at its option, but shall be under no
obligation to do so, effect such insurance and pay the premium therefor, and the
Mortgagor will repay to the
-5-
Mortgagee on demand any premiums so paid, with interest thereon at the rate set
forth in Article 4 hereof. Any amount so expended by the Mortgagee, with
interest thereon, shall be secured by the lien of this Mortgage. The Mortgagor
hereby waives any claim against the Mortgagee by reason of the failure of the
Mortgagee to (i) notify the Mortgagor of the cancellation or non-renewal of any
insurance required by this Article 2, or (ii) effect any such insurance.
(f) All insurance proceeds shall be paid by the Mortgagee to the
Mortgagor, from time to time, for the purpose of allowing the Mortgagor to pay
for the repair or reconstruction of the Premises provided that, at the time such
proceeds are payable to the Mortgagor, no defaults under this Mortgage shall
have occurred and be continuing. If at the time any such insurance proceeds are
payable to the Mortgagor a default under this Mortgage shall have occurred and
be continuing, then the Mortgagee shall have the right to apply such proceeds
against any indebtedness or obligation secured by this Mortgage.
(g) That, in the event of a foreclosure of this Mortgage, the purchase of
the Premises shall succeed to all the rights of the Mortgagor, including any
rights to the proceeds of insurance and to unearned premiums, in and to a11
policies of insurance required by this Article.
3. That no building or other property now or hereafter covered by the lien of
this Mortgage shall be removed, demolished or materially altered without the
prior written consent of the Mortgagee, except that the Mortgagor shall have
the right, without such consent, to remove and dispose of, free from the lien of
this Mortgage, such Building Equipment as from time to time may become worn out
or obsolete, provided that either (a) simultaneously with or prior to such
removal, any such equipment shall be replaced with other equipment of a value at
least equal to that of the replaced equipment and free from any Security
Agreement, and by such removal and replacement the Mortgagor shall be deemed to
have subjected such Building Equipment to the lien of this Mortgage, or (b) any
net cash proceeds received from such disposition shall be paid over promptly to
the Mortgagee to be applied to the last installments due on the indebtedness
secured, without any charge for prepayment. As long as YM Corp. remains as a
partner in the Mortgagor, and provided that any removal, demolition or material
alteration described in the foregoing sentence which requires the Mortgagee's
consent is not in violation of the Partnership
-6-
Agreement of the Mortgagor (such Partnership Agreement, as it may be amended and
restated, herein being called the "Partnership Agreement"), then such consent
shall be deemed to have been given. The Mortgagee understands that the Mortgagor
is constructing an amphitheatre on the Premises. The consent of the Mortgagee
shall not be required for such construction or any work incident thereto.
4. That in the event of any default in the performance of any of the Mortgagor's
covenants or agreements herein, the Mortgagee may, at the option of the
Mortgagee, perform the same and the cost thereof, with interest at three (3%)
percent in excess of the rate of interest designated, and in effect from time to
time, by Citibank, N.A., in New York, New York, as its prime rate (but in no
event in excess of the maximum rate allowed by law to be charged to the
Mortgagor), shall immediately be due from the Mortgagor to the Mortgagee and
secured by this Mortgage.
5. (a) That the Mortgagor will pay all taxes, assessments, water rates, sewer
rents and other charges now or hereafter levied against the Premises or any
part thereof, and also any and all license fees or similar charges which may be
imposed by the municipality in which the Premises are situated for the use of
walks, chutes, areas and other space beyond the lot line and on or abutting the
public sidewalks in front of or adjoining the Premises, together with any
penalties or interest on any of the foregoing, and in default thereof the
Mortgagee may pay the same and the Mortgagor will repay the same with interest
thereon at the rate per annum specified in Article 4 hereof and the same shall
be added to the indebtedness secured hereby and be secured by this Mortgage;
that upon request of the Mortgagee, the Mortgagor will exhibit to the Mortgagee
receipts for the payment of all items specified in this Article prior to the
date when the same shall become delinquent.
(b) That the Mortgagor will not claim any credit or any deduction from the
indebtedness secured by this Mortgage by reason of the payment of any taxes upon
the Premises.
6. That the Mortgagee shall have the right in case of failure of the Mortgagor
to perform any of the acts, covenants, and conditions in this Mortgage, upon a
complaint filed or any proper action being commenced for the foreclosure of this
Mortgage, to apply for, and the Mortgagee shall be entitled as a matter of
right, without consideration of the value of the Mortgagor's interest in the
Premises as
-7-
security for the amounts due the Mortgagee, or of the solvency of any person or
persons obligated for the payment of such amounts, to the appointment by any
competent court or tribunal, without notice to any party, of a receiver of the
rents, issues, and profits of the Premises, with power to lease the Premises, or
such part thereof as may not then be under lease, and with such other powers as
may be deemed necessary, who, after deducting all proper charges and expenses
attending the execution of the trust as receiver, shall apply the residue of the
rents and profits to the payment and satisfaction of the amount remaining
secured hereby, or to any deficiency which may exist after applying the proceeds
of any judicially decreed sale of the Mortgagor's interest in the Premises to
the payment of the amount due, including interest and the costs of the
foreclosure and sale.
7. That the Mortgagor, within five days upon request in person or within ten
days upon request by mail, will furnish a written statement duly acknowledged of
the amount due on this Mortgage and whether any offsets or defenses exist
against the mortgage debt.
8. That notice and demand or request shall be made in writing and shall be
served in person or by registered or certified mail, return receipt requested,
addressed to the party to be served at its address above set forth or at such
other address as shall have been given by like notice from the party to be
served to the party giving the notice.
9. (a) The Mortgagor warrants that it is the owner and holder of the leasehold
estate in the Premises created by the Lease and that the Lease is a valid lease
of the Premises and is in full force and effect in accordance with its terms
without modification except as aforesaid, and, to the best of the Mortgagor's
knowledge, no default under the Lease by either the lessor or the Mortgagor or
its predecessor(s) as lessee under the Lease has occurred and is continuing.
(b) That the Mortgagor shall execute and deliver, from time to time, such
further instruments (including further Security Agreements) as may be requested
by the Mortgagee to confirm the lien of this Mortgage on the Mortgagor's
interest in any Building Equipment.
(C) That the Mortgagor, upon request, shall make, execute and deliver any
and all instruments sufficient for the purpose of confirming the assignment to
the Mortgagee of awards for the taking by eminent domain of the whole or any
-8-
part of the Mortgagor's interest in the Premises or any easement therein,
including any awards for changes of grade of streets, free, clear and discharged
of any encumbrances of any kind or nature whatsoever.
10. That in case of a foreclosure sale, the Mortgagor's interest in the
Premises, or so much thereof as may be affected by this Mortgage, may be sold in
one parcel.
11. That if any action or proceeding be commenced (including an action to
foreclose this Mortgage or to collect the debt secured hereby), in which the
Mortgagee becomes a party or participates, by reason of being the holder of this
Mortgage or the debt secured hereby, all sums paid by the Mortgagee for the
expense of so becoming a party or participating (including reasonable counsel
fees) shall on notice and demand be paid by the Mortgagor, together with
interest thereon at the rate per annum specified in Article 4 hereof, and shall
be a lien on the leasehold estate in the Premises created by the Lease, prior
to any right or title to, interest in, or claim upon, the leasehold estate in
the Premises created by the Lease subordinate to the lien of this Mortgage, and
shall be deemed to be secured by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect the debt secured hereby, the
provisions of law respecting the recovering of costs, disbursements and
allowances shall apply in addition to the foregoing.
12. That the Mortgagor will maintain the Premises and the Building Equipment in
good condition and repair, will not commit or suffer any waste thereof or the
conduct of any nuisance or unlawful occupation or business on, or use of, the
Premises, and will comply with, or cause to be complied with, all statutes,
ordinances and requirements of any governmental authority relating to the
Premises; that the Mortgagor will promptly repair, restore, replace or rebuild
any part of the Premises or the Building Equipment now or hereafter covered by
the Lease which may be damaged or destroyed by any casualty whatsoever or which
may be affected by any proceeding of the character referred to in Article 13;
and that, the Mortgagor will not initiate, join in, or consent to any change in
any private restrictive covenant, zoning ordinance or other public or private
restrictions, limiting or defining the uses which may be made of the Premises,
or any part thereof, except if [Sony/Block] remains as a partner in the
Mortgagor and such change or the consent to such change, as the case may be, is
not in violation of the Partnership Agreement.
-9-
13. That notwithstanding any taking by eminent domain or other governmental
action causing injury to, or decrease in value of, the Premises and creating a
right to compensation therefor, including, without limitation, the change of the
grade of any street, the Mortgagor shall continue to perform its obligations
under the Indemnity Agreement. All condemnation and eminent domain proceeds
shall be applied in the manner set forth in Paragraph 2(f) to the same extent as
if such proceeds were insurance proceeds. If, prior to the receipt by the
Mortgagee of such award or compensation, the Mortgagor's interest in the
Premises shall have been sold on foreclosure of this Mortgage, the Mortgagee
shall have the right to receive said award or compensation to the extent of any
deficiency found to be due upon such sale, with legal interest thereon, whether
or not a deficiency judgment on this Mortgage shall have been sought or
recovered or denied, together with reasonable counsel fees and the costs and
disbursements by the Mortgagee in connection with the collection of such award
or compensation.
14. That the Mortgagee and any Persons authorized by the Mortgagee shall have
the right to enter and inspect the Premises at all reasonable times.
15. [Intentionally Deleted].
16. That the Mortgagor hereby assigns to the Mortgagee, as further security for
the payment of the indebtedness secured hereby, the rents, issues and profits of
the Premises, together with all leases and other documents evidencing such
rents, issues and profits now or hereafter in effect and any and all deposits
held as security under said leases, and shall, upon demand, deliver to the
Mortgagee an executed counterpart of each such lease or other document. Nothing
contained in the foregoing sentence shall be construed to bind the Mortgagee to
the performance of any of the covenants, conditions or provisions contained in
any such lease or other document or otherwise to impose any obligation on the
Mortgagee (including, without limitation, any liability under the covenant of
quiet enjoyment contained in any lease in the event that any tenant shall have
been joined as a party defendant in any action to foreclose this Mortgage and
shall have been barred and foreclosed thereby of all right, title and interest
and equity of redemption in the Premises), except that the Mortgagee shall be
accountable for any money actually received pursuant to such assignment. The
Mortgagor hereby further grants to the Mortgagee the right (i) to enter upon and
take possession of the Premises for the purpose of collecting the said rents,
issues and
-10-
profits; (ii) to dispossess by the usual summary proceedings any tenant
defaulting in the payment thereof to the Mortgagee; (iii) to let the Premises,
or any part thereof, and (iv) to apply said rents, issues and profits, after
payment of all necessary charges and expenses, on account of said indebtedness.
Such assignment and grant shall continue in effect until the indebtedness
secured by this Mortgage is paid, the execution of this Mortgage constituting
and evidencing the irrevocable consent of the Mortgagor to the entry upon and
taking possession of the Premises by the Mortgagee pursuant to such grant,
whether foreclosure has been instituted or not and without applying for a
receiver. The Mortgagee, however, hereby waives the right to enter upon and take
possession of the Premises for the purpose of collecting said rents, issues and
profits, and the Mortgagor shall be entitled to collect and receive the same
until the occurrence of a default by the Mortgagor under any of the covenants,
conditions or agreements contained in this Mortgage and the continuation of same
beyond any applicable grace period. The Mortgagor agrees to use said rents,
issues and profits in payment of amounts becoming due on this Mortgage and in
payment of taxes, assessment, water rates, sewer rents and carrying charges
becoming due against the Premises and the Rent (hereafter defined) due under the
Lease. Such right of the Mortgagor to collect and receive said rents, issues and
profits may be revoked by the Mortgagee upon any such default by the Mortgagor
and the continuation of same beyond any applicable grace period by the Mortgagee
giving not less than five (5) days' written notice of such revocation, served
personally upon or sent by registered or certified mail to the record owner of
the leasehold estate in the Premises. In the event of any default under this
Mortgage and the continuation of same beyond any applicable grace period, the
Mortgagor will pay monthly in advance to the Mortgagee, on its entry into
possession pursuant to the foregoing grant, or to any receiver appointed to
collect said rents, issues and profits, the fair and reasonable rental value for
the use and occupation of the Premises or of such part thereof as may be in the
possession of the Mortgagor, and upon default in any such payment will vacate
and surrender the possession of the Premises or such part thereof, as the case
may be, to the Mortgagee or to such receiver, and, in default thereof, may be
evicted by summary proceedings.
17. [Intentionally Deleted.]
18. That the whole of the Secured Principal Amount and the interest thereon
shall become due at the option of the
-11-
Mortgagee: (a) after default in the payment of any sums due under the Indemnity
Agreement when the same is due and payable and the continuation of said default
for five (5) days after notice; or (b) if the Mortgagor shall fail to make
payment of any other sums required to be paid hereunder within the period
required by specific provision of this Mortgage or, if no such period is so
provided, by not later than five (5) days after written notice; or (c) if the
Mortgagor shall fail to comply with any other covenants or conditions contained
in this Mortgage and, except with respect to failure to pay money, such failure
shall continue unremedied for the period within which performance is required to
be made by specific provision of this Mortgage, or, if no such period is so
provided, for a period of fifteen (15) days after written notice thereof shall
have been given by the Mortgagee or, with respect to any such default which
shall be of such nature that it cannot reasonably be cured or remedied within
fifteen (15) days or other period specified in this Mortgage, if the Mortgagor
shall not promptly commence and exercise due diligence and continuous effort to
remedy the same; or (d) if the Mortgagor (not acting through [Sony/Block])
shall: (i) admit in writing its inability to pay its debts generally as they
become due; (ii) file a petition in bankruptcy or a petition to take advantage
of any insolvency act; (iii) make an assignment for the benefit of creditors;
(iv) consent to, or acquiesce in, the appointment of a receiver, liquidator or
trustee of itself or of the whole or any substantial part of its properties or
assets; (v) file a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the
federal bankruptcy laws or any other applicable law; or (e) (i) if, without the
Mortgagor's consent or acquiescence, a court of competent jurisdiction shall
enter an order, judgment or decree appointing a receiver, liquidator, or trustee
of the Mortgagor, or of the whole or any substantial part of the property or
assets of the Mortgagor and such order, judgment or decree shall remain
unvacated, or not set aside, or unstayed for thirty (30) days, or (ii) if a
petition shall be filed against the Mortgagor seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the federal bankruptcy laws or any other applicable law and such
petition shall remain undismissed for thirty (30) days, or (iii) if, under the
provisions of any other law for the relief or aid of debtors, any court of
competent jurisdiction shall assume custody or control of the Mortgagor of the
whole or any substantial part of its property or assets, and such custody or
control shall remain
-12-
unterminated or unstayed for thirty (30) days; or (f) if any representation,
warranty or statement contained herein or in any writing delivered to the
Mortgagee simultaneously with the execution and delivery hereof, shall prove to
be incorrect in any material respect; or (g) if, without the prior written
consent of the Mortgagee, (i) the leasehold estate in the Premises created by
the Lease or any portion thereof or interest therein shall be sold or otherwise
transferred by the Mortgagor, or (ii) any mortgage lien other than the lien of
this Mortgage shall be placed on the leasehold estate in the Premises created by
the Lease; or (h) if there shall occur any other default under the Lease by the
Mortgagor that is not cured prior to the expiration of any applicable grace
period therein provided; or (i) if the Lease is canceled or terminated for any
reason whatsoever (including, without limitation, by the lessor thereunder upon
the occurrence of any casualty or the condemnation of all or a portion of the
Premises).
18A. That in the event that, pursuant to Article 18 hereof, the Mortgagee
exercises its option to declare the Secured Principal Amount due, the Mortgagee
may foreclose this Mortgage notwithstanding that (a) all or any portion of the
indebtedness of the Mortgagor under the Indemnity Agreement is not then due and
payable, and/or (b) the Mortgagee may not or does not proceed against the
Mortgagor to collect such indebtedness by reason of the bankruptcy of the
Mortgagor or otherwise. The proceeds arising from such action to foreclose this
Mortgage shall, at the option of the Mortgagee, be applied in payment of the
indebtedness of the Mortgagor under the Indemnity Agreement, if then due and
payable, and/or held by the Mortgagee as cash collateral for the obligations of
the Mortgagor under the Indemnity Agreement. Any such cash collateral shall be
held in an interest bearing account and all interest earned thereon shall be
retained by the Mortgagee as cash collateral for the obligations of the
Mortgagor under the Indemnity Agreement.
19. That any payment made in accordance with the terms of this Mortgage by any
person at any time liable for the payment of the whole or any part of the sums
now or hereafter secured by this Mortgage, or by any subsequent owner of the
leasehold estate in the Premises created by the Lease, or by any other person
whose interest in the leasehold estate in the Premises created by the Lease
might be prejudiced in the event of a failure to make such payment, or by any
stockholder, officer or director of a corporation which at any time may be
liable for such payment or may own or have such
-13-
an interest in the leasehold estate of the Premises created by the Lease, shall
be deemed, as between the Mortgagee and all persons who at any time may be
liable as aforesaid or may own the leasehold estate in the Premises created by
the Lease, to have been made on behalf of all such persons.
20. That any failure by the Mortgagee to insist upon the strict performance by
the Mortgagor of any of the terms and provisions hereof shall not be deemed to
be a waiver of any of the terms and provisions hereof, and the Mortgagee,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by the Mortgagor of any and all of the terms and
provisions of this Mortgage to be performed by the Mortgagor; that neither the
Mortgagor nor any other person now or hereafter obligated for the payment of the
whole or any part of the sums now or hereafter secured by this Mortgage shall be
relieved of such obligation by reason of the failure of the Mortgagee to comply
with any request of the Mortgagor, or of any other person so obligated, to take
action to foreclose this Mortgage or otherwise enforce any of the provisions of
this Mortgage or any obligations secured by this Mortgage, or by reason of the
release, regardless of consideration, of the whole or any part of the security
held for the indebtedness secured by this Mortgage, or by reason of any
agreement or stipulation between any subsequent owner or owners of the leasehold
estate in the Premises created by the Lease and the Mortgagee extending the time
of payment or modifying the terms of the Indemnity Agreement or this Mortgage
(so long as the Mortgagor's obligations thereunder are not increased) without
first having obtained the consent of the Mortgagor or such other person, and in
the latter event, the Mortgagor and all such other persons shall continue liable
to make such payments according to the terms of any such agreement of extension
or modification unless expressly released and discharged in writing by the
Mortgagee; that, regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien on the leasehold
estate in the Premises created by the Lease, the Mortgagee may release the
obligation of anyone at any time liable for any of the indebtedness secured by
this Mortgage or any part of the security held for the indebtedness without, as
to the security or the remainder thereof, in anywise impairing or affecting the
lien hereof or the priority thereof over any subordinate encumbrance; and that
the Mortgagee may resort for the payment of the indebtedness secured hereby to
any other security therefor held by the Mortgagee in such order and manner as
the Mortgagee may elect.
-14-
21. [Intentionally Deleted].
22. That when and if the Mortgagor and the Mortgagee shall respectively become
the Debtor and Secured Party in any Uniform Commercial Code Financing Statement
affecting the Mortgagor's interest in the Building Equipment or other property
referred to or described herein, this Mortgage shall be deemed the Security
Agreement as defined in the Uniform Commercial Code of the State of
__________________ and the remedies for any violation of the covenants, terms
and conditions of the agreements herein contained shall be (i) as prescribed
herein, (ii) by general law, or (iii), as to such part of the security which is
also reflected in said Financing Statement, by the specific statutory
consequences now or hereafter enacted and specified in said Uniform Commercial
Code, all at Mortgagee's sole election. The filing of such a Financing Statement
in the records normally having to do with personal property shall never be
construed as in any way derogating from or impairing this declaration and hereby
stated intention of the parties hereto, that all items of Building Equipment and
other property used in connection with the production of income from the
Premises (furniture only excepted) or adapted for use therein and/or which is
described or reflected in this Mortgage are, and at all times and for all
purposes and in all proceedings, both legal and equitable, shall be, regarded as
part of the real estate irrespective of whether or not (i) any such item is
physically attached to the improvements, (ii) serial numbers are used for the
better identification of certain equipment items capable of being thus
identified in a recital contained herein or in any list filed with the Mortgagee
or (iii) any such item is referred to or reflected in any such Financing
Statement so filed at any time. Similarly, the mention in any such Financing
Statement of (1) the rights in or the proceeds of any fire and/or hazard
insurance policy, (2) any award in eminent domain proceedings for a taking or
for loss of value or (3) the debtor's interest as lessor in any present or
future lease or rights to income growing out of the use or occupancy of the
Premises, whether pursuant to a lease or otherwise, shall never be construed as
in any way altering any of the rights of the Mortgagee as determined by this
instrument or impugning the priority of the Mortgagee's lien granted hereby or
by any other recorded document, but such mention in the Financing Statement is
declared to be for the protection of the Mortgagee in the event any court or
judge shall at any time hold with respect to (1), (2) or (3) that notice of the
Mortgagee's priority of interest, to be effective against a particular class of
persons, including but not limited to the Federal government and any
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subdivisions or entity of the Federal government, must be filed in the Uniform
Commercial Code records.
23. That the Mortgagor will not at any time insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of any stay or extension
or moratorium law, any exemption from execution or sale of the Premises or any
part thereof, wherever enacted, now or at any time hereafter in force, which may
affect the covenants and terms of performance of this Mortgage, nor claim, take
or insist upon any benefit or advantage of any law now or hereafter in force
providing for the valuation or appraisal of the Premises, or any part thereof,
prior to any sale or sales thereof which may be made pursuant to any provision
herein, or pursuant to the decree, judgment or order of any court of competent
jurisdiction; nor, after any such sale or sales, claim or exercise any right
under any statute heretofore or hereafter enacted to redeem the property so sold
or any part thereof and the Mortgagor hereby expressly waives all benefit or
advantage of any such law or laws and covenants not to hinder, delay or impede
the execution of any power herein granted or delegated to the Mortgagee, but to
suffer and permit the execution of every power as though no such law or laws had
been made or enacted. The Mortgagor, for itself and all who may claim under it,
waives, to the extent that it lawfully may, ail right to have the Premises
marshaled upon any foreclosure hereof.
24. That if the Mortgagor consists of more than one party, such parties shall
be jointly and severally liable under any and all obligations, covenants and
agreements of the Mortgagor contained herein.
25. That the Mortgagor shall keep this Mortgage a valid lien upon the leasehold
estate in the Premises created by the Lease; shall not at any time create or
allow to accrue or exist any other lien or encumbrance upon the leasehold estate
in the Premises created by the Lease or any part thereof; and shall not cause or
permit the lien of this Mortgage to be diminished or impaired in any way.
26. That wherever used in this Mortgage, unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, the word
"lease" shall mean "tenancy, subtenancy, lease or sublease", the word
"Mortgagor" shall mean "Mortgagor and any subsequent owner or owners of the
leasehold estate in the Premises created by the Lease", the word "Mortgagee"
shall mean "Mortgagee or any subsequent holder or holders of this Mortgage", the
word "person" shall
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mean "an individual, corporation, partnership or unincorporated association" and
the word "Premises" shall include the real estate hereinbefore described,
together with all Building Equipment, condemnation awards and any other rights
or property interests at any time made subject to the lien of this Mortgage by
the terms hereof.
27. That the execution of this Mortgage has been duly authorized by the board of
directors of the Mortgagor, if a corporation.
28. That the Mortgagor shall pay all fees and charges incurred in connection
with the preparation of the Indemnity Agreement and this Mortgage, including
without limitation, the reasonable fees and disbursements of the Mortgagee's
attorneys, charges for appraisals, fees and expenses relating to examination of
title, title insurance premiums, surveys and mortgage recording, documents,
transfer or other similar taxes and revenue stamps.
29. That the Mortgagor recognizes that, in general, borrowers who experience
difficulties in honoring their loan obligations, in an effort to inhibit or
impede lenders from exercising the rights and remedies available to lenders
pursuant to mortgages, notes, loan agreements or other instruments evidencing or
affecting loan transactions, frequently present in court the argument, without
merit, that some loan officer or administrator of the lender made an oral
modification or made some statement which could be interpreted as an extension
or modification or amendment of one or more debt instruments and that the
borrower relied to its detriment upon such "oral modification of the loan
document". For that reason, and in order to protect the Mortgagee from such
allegations in connection with the transactions contemplated by this Mortgage,
the Mortgagor acknowledges that this Mortgage, the Indemnity Agreement, and all
instruments referred to in any of them can be extended, modified or amended
only in writing executed by the Mortgagee and that none of the rights or
benefits of the Mortgagee can be waived permanently except in a written document
executed by the Mortgagee. The Mortgagor further acknowledges the Mortgagor's
understanding that no officer or administrator of the Mortgagee has the power or
the authority from the Mortgagee to make an oral extension or modification or
amendment of any such instrument or agreement on behalf of the Mortgagee.
30. That the Mortgagor shall pay the fixed rent, additional and other charges
mentioned in and made payable by the Lease
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(collectively, the "Rent") within three (3) days after the applicable portion of
the Rent is payable.
31. That the Mortgagor will also observe and perform all of the other provisions
of the Lease on the lessee's part to be observed and performed at least ten (10)
days prior to the expiration of the period within which such observance or
performance is therein required, or as soon thereafter as may be practicable.
32. [Intentionally Deleted].
33. That the Mortgagor shall not exercise any rights it might have to cancel,
terminate, modify or amend the Lease without obtaining the prior written consent
of the Mortgagee, nor shall it surrender the Lease or otherwise abandon any
portion of the Premises demised thereunder.
34. That the Mortgagor shall at all times fully perform and comply with all the
terms, covenants and conditions imposed upon or assumed by the Mortgagor under
the Lease, and if the Mortgagor shall fail to do so, then the Mortgagee may
(but shall not be obligated to) take any action that the Mortgagee deems
necessary or desirable to prevent or cure any default by the Mortgagor in the
performance of or compliance with any of said terms, covenants, and conditions
under the Lease. Upon receipt by the Mortgagee from the lessor under the Lease
of any notice of a default by the Mortgagor under the Lease, the Mortgagee may
rely thereon and take any action to cure such default even though the existence
of such default or the nature thereof be questioned or denied by the Mortgagor,
or by any party on behalf of the Mortgagor. The Mortgagor hereby expressly
grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute
and immediate right, to the extent not prohibited by the Lease or applicable
law, to enter in and upon the Premises, or any part thereof, to such extent and
as often as the Mortgagee, in its sole discretion, deems necessary or desirable
in order to prevent or to cure any such default by the Mortgagor. The Mortgagee
may pay and expend such sums of money as is reasonably necessary for such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and upon demand, all such sums so paid and expended by the Mortgagee, together
with interest thereon from the date of each such payment at the rate set forth
in Article 4 of this Mortgage. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and secured by the lien of this
Mortgage.
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35. That the Mortgagor shall deliver to the Mortgagee, upon demand, proof of
payment of all items which are required to be paid by the Mortgagor pursuant to
the Lease and proof of payment of which is required to be given to the lessor
under the Lease.
36. That the Mortgagor shall not waive any of its rights under the Lease, or
refrain from exercising any right or remedy accorded to it under the Lease on
account of any default by the lessor thereunder or release such lessor from any
liability or condone or excuse any improper actions of the lessor thereunder
without first obtaining the written consent of the Mortgagee.
37. That for the purpose of preventing or curing any default by the Mortgagor
under the Lease, the Mortgagee may (but shall be under no obligation to) do any
act or execute any document in the name of the Mortgagor or as its
attorney-in-fact, as well as in the name of the Mortgagee. The Mortgagor hereby
irrevocably appoints the Mortgagee its true lawful attorney-in-fact in its name
or otherwise to do any and all acts and to execute any and all documents which
in the opinion of the Mortgagee may be necessary or desirable to prevent or cure
any default under the Lease or to preserve any rights of the Mortgagor in, to or
under the Lease, or any sublease thereof, including the right to effectuate a
renewal of the Lease or to preserve any rights of the Mortgagor whatsoever in
respect of any part of the Premises. Notwithstanding any provision to the
contrary contained in this Article 37, the Mortgagee shall not exercise any of
the rights granted to it under this Article 37 unless and until the Mortgagor is
in default under the Lease or the Mortgagee has received notice from the lessor
under the Lease that the Mortgagor is in default under the Lease or that an
event has occurred which, with the passage of time or giving of notice, or both,
would constitute a default by the Mortgagor under the Lease.
38. That the Mortgagor shall notify the Mortgagee promptly of (a) the occurrence
of any default by the lessor under the Lease or the occurrence of any event
which, with the passage of time or service of notice, or both, would constitute
a default by the lessor under the Lease, (b) the receipt by the Mortgagor of any
notice (written or oral) from the lessor under the Lease and of any notice
(written or oral) noting or claiming the occurrence of any default by the
Mortgagor under the Lease or the occurrence of any event which, with the passage
of time or service of notice, or both, would constitute a default by the
Mortgagor under the
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Lease, and (c) any request made by either party to the Lease for arbitration
proceedings pursuant to the Lease and of the institution or commencement of
arbitration proceedings thereunder. The Mortgagor shall permit the Mortgagee to
participate in any arbitration proceedings in association with the Mortgagor,
and if at the time any such arbitration proceedings shall be initiated, the
Mortgagor shall be in default hereunder beyond any applicable grace periods, the
Mortgagee is hereby granted the sole and exclusive right to designate and
appoint any arbitrators to be appointed by Mortgagor under the Lease.
39. That promptly upon demand by the Mortgagee, the Mortgagor shall use its best
efforts to obtain from the lessor under the Lease and furnish to the Mortgagee
the estoppel certificate of such lessor required to be delivered by such lessor
pursuant to Subsection _________ of the Lease.
40. That promptly upon request by the Mortgagee, the Mortgagor shall give its
unqualified consent in writing to any and all modifications of the Lease which
the lessor thereunder agrees to make at the request of the Mortgagee for the
purpose of improving, maintaining or preserving the Mortgagee's security in the
Lease, so long as such modification does not adversely affect the Mortgagor's
rights under the Lease.
41. (a) That the Mortgagor shall not sell or assign the Lease or any of its
rights thereunder or the leasehold estate created thereby or sublease all or any
portion of the Premises without the prior written consent of the Mortgagee.
(b) That all references in Article 16 hereof, and elsewhere in this
Mortgage, to a lease of the Premises shall be deemed to include any sublease of
all or any portion of the Premises.
42. That each sublease entered into by the Mortgagor as lessor shall provide
that such sublease is subordinate to the lien of this Mortgage, and any
extensions, replacements or modifications hereof, and that (a) the sublessee
thereunder will attorn to the Mortgagor if the Mortgagor acquires fee title to
the Premises by exercising its purchase option under the Lease, and (b) if the
Mortgagee enters into a new lease with the lessor under the Lease under the
circumstances therein stated such sublessee agrees to attorn to the Mortgagee
and that the sublease will remain in full force and effect in accordance with
its terms notwithstanding the termination of the Lease.
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43. (a) That so long as the indebtedness and obligations secured hereby shall
remain unpaid, unless the Mortgagee shall otherwise consent in writing, the fee
title to the Premises and the leasehold estate in the Premises created by the
Lease shall not merge but shall always be kept separate and distinct,
notwithstanding the ownership of both such estates by the lessor or the lessee
under the Lease, or by a third party. Nothing hereunder contained shall be
construed as authorizing the sale or transfer by the Mortgagor of its leasehold
estate under the Lease without the written consent of the Mortgagee.
(b) That in the event that the Mortgagor becomes the owner of the fee
title to the Premises, the lien of this Mortgage shall spread to the Premises
upon the acquisition of such fee title by the Mortgagor. The foregoing sentence
shall be self-operative and such spreading of said lien shall not require the
execution of any further instruments. However, upon request by the Mortgagee,
the Mortgagor shall execute, acknowledge and deliver instruments in recordable
form confirming the spreading of the lien of this Mortgage to the fee title of
the Premises.
44. (a) That the Mortgagor hereby represents and warrants that the Premises is
not currently used nor, to the best of the Mortgagor's knowledge after diligent
investigation, had it been used in the past, by the Mortgagor, prior owners,
tenants, operators, or any other persons or organizations, in a manner that
violates any applicable federal, state, or local law, statute, ordinance or
regulation, or any court or administrative order or decree of any governmental
or quasi-governmental authority or agency or any private agreement pertaining to
environmental matters or hazardous substances (hereinafter collectively called
"Environmental Requirements"), and there are no conditions existing at, or
materials currently located on, the Premises that would violate any
Environmental Requirements or give rise to liability for hazardous substances
(including, without limitation, solid wastes, toxic materials, radon, asbestos
and oil) or any substances that would require special handling in collection,
storage, treatment or disposal (hereinafter collectively called "Hazardous
Substances"). The Mortgagor will not place or permit to be placed on the
Premises any Hazardous Substances or use or permit the use of the Premises in a
manner that would violate any applicable Environmental Requirements or give rise
to any liability for Hazardous Substances. The Mortgagor further covenants and
agrees that it will not use or permit the use or operation of the Premises in a
manner that would
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authority or agency concerning Environmental Requirements or environmental
issues affecting the Premises or sent by the Mortgagor to any such authority or
agency regarding the same, within five (5) days after such receipt or
transmittal by the Mortgagor.
(d) That if the Premises are being used or operated in a manner, or that a
condition exists on the Premises, which would (i) violate any Environmental
Requirements, or (ii) give rise to potential liability for Hazardous Substances,
the Mortgagee may, but shall not be obligated to, perform or cause to be
performed any remedial action, including, but not limited to, removal and
clean-up, which the Mortgagee in its sole discretion believes necessary or
prudent under the circumstances and the Mortgagee may make advances or payments
towards performance or satisfaction of such Environmental Requirements, but
shall be under no obligation to do so. The Mortgagor shall execute and deliver,
promptly after request, such instruments as the Mortgagee may deem useful or
required to permit the Mortgagee to take any such action. All sums so advanced
or paid and all expenses incurred by the Mortgagee, including, without
limitation, attorneys' fees, fines or other penalty payments and all sums
advanced or paid in connection with any judicial or administrative investigation
or proceeding relating thereof, shall immediately, upon demand, be due from the
Mortgagor and shall bear interest at the rate set forth in Article 4 hereof from
the date the same shall become due and payable until the date paid, and all sums
so advanced or paid and expenses, incurred, with interest as aforesaid, shall be
secured by the lien of this Mortgage. The Mortgagor shall reimburse the
Mortgagee for all such sums so advanced or paid and expenses incurred regardless
of whether the Mortgagor would have ultimately been responsible for such costs
under applicable law. The Mortgagee by the payment of any such fees, fines or
other penalty payments, may, if it sees fit, be thereby subrogated to the rights
of the federal, state or local governmental entity or agency otherwise entitled
to such rights, under the applicable Environmental Requirements; but no such
advance by the Mortgagor shall be deemed to relieve the Mortgagor from any
default hereunder or impair any right or remedy consequent thereon.
(e) That the Mortgagor hereby agrees to indemnify, hold harmless,
reimburse, and, upon request of the Mortgagee, defend the Mortgagee from and
against any and all losses, liabilities, damages, injuries, costs, expenses and
claims of any and every kind whatsoever (including, without
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IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor.
IN PRESENCE OF:
PAVILION PARTNERSHIP
By: S/M Pace, Inc.
Attest:
By:_______________________
Name:
_______________________ Title:
By: [Sony/Block]
Attest:
By:_______________________
Name:
_______________________ Title:
(Acknowledgments to be added)
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