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PURCHASE AGREEMENT
by and among
SM/PACE, INC.
and
PACE ENTERTAINMENT CORPORATION
and
CHARLOTTE AMPHITHEATER CORPORATION
and
THE WESTSIDE AMPHITHEATRE CORPORATION
and
VIACOM INC.
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Dated as of December 19, 1997
TABLE OF CONTENTS
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1. Defined Terms ........................................................ 2
1.1 Cross-References .............................................. 2
1.2 Other Defined Terms ........................................... 3
1.3 Special Defined Terms ......................................... 3
1.4 Knowledge ..................................................... 8
2. Purchase and Sale .................................................. 8
2.1 Transferred Interest .......................................... 8
2.2 Charlotte Loan ................................................ 8
2.3 Instruments of Conveyance, Transfer and Assumption and
Release ..................................................... 8
(a) Instruments of Conveyance and Transfer ................ 8
(b) Instruments of Assumption ............................. 9
2.4 Blockbuster Group Release ..................................... 9
2.5 Mutual Releases ............................................... 9
3. Closing; Purchase Price; Liabilities ................................. 10
3.1 Closing Date .................................................. 10
3.2 Purchase Price and Payment at Closing ......................... 10
3.3 Assumed Liabilities; Excluded Liabilities; Retained
Liabilities ................................................. 11
(a) Assumed Liabilities ................................... 11
(b) Retained Liabilities .................................. 12
4. Representations and Warranties ....................................... 12
4.1 Representations and Warranties of the Blockbuster Group ....... 12
(a) Due Organization; Good Standing and Power ............. 12
(b) Authorization of Agreement ............................ 12
(c) No Approvals or Notices Required; No Conflict of
Instruments ......................................... 13
(d) Ownership of Transferred Interest ..................... 13
(e) Ownership of Charlotte Loan ........................... 13
(f) Legal Proceedings ..................................... 13
(g) Certain Fees .......................................... 14
(h) Sony/Block Representations ............................ 14
4.2 Representations and Warranties of the PACE Group .............. 14
(a) Due Organization; Good Standing and Power ............. 14
(b) Authorization and Validity of Agreement ............... 15
(c) No Approvals or Notices Required; No Conflict with
Instruments ......................................... 15
(d) Certain Fees .......................................... 15
(e) Legal Proceedings ..................................... 15
4.3 Survival of Representations and Warranties .................... 15
4.4 Blockbuster Acknowledgment .................................... 16
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5. Covenants; Actions Prior to Closing .................................. 16
5.1 Access to Information ......................................... 16
5.2 No Disposition of Transferred Assets; Modification of
Specific Indemnification Obligations ........................ 16
5.3 Further Actions ............................................... 17
5.4 Notification .................................................. 17
6. Conditions Precedent ................................................. 17
6.1 Conditions Precedent to Obligations of All Parties ............ 17
(a) No Lawsuits ........................................... 17
(b) Mutual Third Party Consents and Approvals ............. 18
(c) Name-in-Title Agreement ............................... 18
6.2 Conditions Precedent to the Obligations of the Blockbuster
Group ....................................................... 18
(a) Accuracy of Representations and Warranties ............ 18
(b) Performance of Agreements ............................. 18
(c) PACE Group's Officer's Certificate .................... 18
(d) Actions and Proceedings ............................... 19
(e) Carowinds Amphitheater ................................ 19
6.3 Conditions Precedent to Obligations of the PACE Group ......... 19
(a) Accuracy of Representations and Warranties ............ 19
(b) Performance of Agreements ............................. 19
(c) Blockbuster Officer's Certificate ..................... 19
(d) Actions and Proceedings ............................... 19
(e) The PACE Group Special Consents and Approvals ......... 20
(f) Funding Amounts ....................................... 20
7. Termination .......................................................... 21
7.1 General ....................................................... 21
7.2 No Liabilities in Event of Termination ........................ 21
8. Covenants and Actions Subsequent to Closing .......................... 21
8.1 Covenant Not to Compete ....................................... 21
8.2 Performance Guarantee ......................................... 22
8.3 Tax Matters ................................................... 22
9. Indemnification ...................................................... 22
9.1 Indemnification by the PACE Group ............................. 22
9.2 Indemnification by the Blockbuster Group ...................... 23
9.3 Matters Involving Third Parties ............................... 23
10. Miscellaneous ........................................................ 24
10.1 Public Announcements .......................................... 24
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10.2 Expenses ...................................................... 24
10.3 Remedy ........................................................ 25
10.4 Notices ....................................................... 26
10.5 Delaware Law to Apply ......................................... 26
10.6 Headings ...................................................... 26
10.7 Legal Construction ............................................ 26
10.8 Counterparts .................................................. 26
10.9 Gender ........................................................ 26
10.10 Binding Effect; Benefit ....................................... 26
10.11 Assignability ................................................. 26
10.12 Entire Agreement, Modification, Consents and Waivers .......... 27
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule 4.1(c) - Blockbuster Approvals
Schedule 4.1(d) - Transferred Interest
Schedule 4.1(e) - Charlotte Loan
Schedule 4.1(f) - Litigation
Schedule 4.2(c) - PACE Approvals
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is entered into as of this 19th
day of December, 1997 by and among (i) SM/PACE, INC., a Texas corporation (the
"PACE Subsidiary"), (ii) PACE ENTERTAINMENT CORPORATION, a Texas corporation
(the "PACE Parent"), and the parent corporation of PACE Subsidiary, (iii)
CHARLOTTE AMPHITHEATER CORPORATION, a Delaware corporation ("CAC"), and THE
WESTSIDE AMPHITHEATRE CORPORATION, an Arizona corporation ("WAC", and together
with CAC, the "Blockbuster Subsidiary"), and (iv) VIACOM INC. (successor in
interest by merger to Blockbuster Entertainment Corporation), a Delaware
corporation (the "Blockbuster Parent"), and the parent corporation of the
Blockbuster Subsidiary. The PACE Subsidiary and the PACE Parent are hereinafter
collectively referred to as the PACE Group, and the Blockbuster Subsidiary and
the Blockbuster Parent are hereinafter collectively referred to as the
"Blockbuster Group".
RECITALS:
1. Pavilion Partners (the "Pavilion Partnership") is a Delaware general
partnership created by and pursuant to the provisions contained in that certain
Partnership Agreement ("Pavilion Partnership Agreement") entered into by and
among the PACE Subsidiary, the Blockbuster Subsidiary, Amphitheater
Entertainment Partnership ("Sony/Block"), a Delaware general partnership whose
sole general partners are the Blockbuster Subsidiary and YM Corp, a Delaware
corporation (the "Sony Subsidiary"), and the Sony Subsidiary.
2. Pursuant to the terms of the Pavilion Partnership Agreement, the PACE
Subsidiary currently owns a thirty-three and one-third percent (33-1/3%)
Percentage Interest in Pavilion Partnership and Sony/Block currently owns a
sixty-six and two-thirds percent (66-2/3%) Percentage Interest in Pavilion
Partnership. Pursuant to the terms of the Partnership Agreement of Sony/Block
(the "Sony/Block Partnership Agreement"), each of the Blockbuster Subsidiary and
the Sony Subsidiary currently owns a fifty percent (50%) interest in Sony/Block.
3. As part of the transactions contemplated by this Agreement, the
Blockbuster Group desires to have the Blockbuster Subsidiary assign and sell to
the PACE Subsidiary, and the PACE Group desires for the PACE Subsidiary to
purchase from the Blockbuster Subsidiary, all of the Blockbuster Subsidiary's
fifty percent (50%) interest in Sony/Block (the "Transferred Interest").
4. After giving effect to the transactions contemplated by this Agreement,
(i) the Sony Subsidiary's fifty percent (50%) interest in Sony/Block will be
unchanged, the PACE Subsidiary will own a fifty percent (50%) interest in
Sony/Block, and the Blockbuster Subsidiary will not own any interest in
Sony/Block, (ii) the direct ownership of the Pavilion Partnership will be
unchanged,
and (iii) the Blockbuster Group shall be fully released from all Liabilities
arising under the Amphitheater Loans and the Assumed Agreements.
5. As part of the transactions contemplated by this Agreement, the
Blockbuster Parent shall also sell to the PACE Subsidiary that certain loan (the
Charlotte Loan) which (i) is evidenced by that certain Promissory Note in the
original principal amount of $8,000,000, dated April 1, 1994, executed by CAC in
favor of the Blockbuster Parent (the "Charlotte Note"), (ii) is secured by that
certain North Carolina Deed of Trust dated April 1, 1994, executed by CAC in
favor of the Blockbuster Parent and covering the Charlotte Asset (the "Charlotte
Deed of Trust"), and (iii) has been contractually assumed by the Pavilion
Partnership pursuant to Section 5.6 of the Pavilion Partnership Agreement.
6. In consideration for the sale of the Transferred Assets, the PACE
Subsidiary shall pay the Cash Purchase Price provided for herein and assume the
Assumed Liabilities and shall release or cause to be released the Blockbuster
Group from certain liabilities and obligations as specified herein, all subject
to the terms and provisions hereinafter set forth.
7. The PACE Parent is joining in the execution of this Agreement for the
purpose of making certain representations and warranties to, and covenants and
agreements with, the Blockbuster Group, including to evidence its agreement to
indemnify the Blockbuster Group from any Damages it incurs which arise out of
any of the Assumed Liabilities.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree as
follows:
1. Defined Terms.
1.1 Cross References. The following terms are defined in this Agreement in
the Sections indicated below:
Amphitheater Loan Release Section 2.4
Assumed Agreements Section 2.4
Assumed Liabilities Section 3.3(a)
Blockbuster Executory Contracts Section 1.3 (in the definition of
Indemnification Obligations)
Blockbuster Group Preamble
Blockbuster Parent Preamble
Blockbuster Subsidiary Preamble
CAC Preamble
Cash Purchase Price Section 3.2(d)
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Charlotte Deed of Trust Recitals
Charlotte Loan Recitals
Charlotte Note Recitals
Charlotte Parking Obligations Section 3.3(a)(iii)
Closing Section 3.1
Closing Date Section 3.1
Communications Section 10.4
Damages Section 9.1
Financial Closing Obligations Section 3.3(a)(ii)
Indemnified Party Section 9.3(a)
Indemnifying Party Section 9.3(a)
Liabilities Section 3.3(b)
Loan Purchase Price Section 3.2(a)
Miscellaneous Payable
Obligations Section 3.3(a)(iv)
New Pavilion Partnership
Agreement Section 6.3(e)(i)
New Sony/Block Partnership
Agreement Section 6.3(e)(iii)
Noncompete Covenant Section 8.1
PACE Group Preamble
PACE Parent Preamble
PACE Subsidiary Preamble
Partner Note Obligations Section 3.3(a)(i)
Pavilion Partnership Recitals
Pavilion Partnership Agreement Recitals
Reimbursement Amount Section 3.2(b)
Retained Liabilities Section 3.3(b)
Sony/Block Recitals
Sony/Block Partnership
Agreement Recitals
Sony Subsidiary Recitals
Third Party Claim Section 9.3(a)
Transferred Interest Recitals
Transferred Interest Cash Amount Section 3.2(b)
WAC Preamble
1.2 Other Defined Terms. Except as otherwise specified herein, other
capitalized terms used herein which are not specifically defined herein shall
have the respective meanings assigned pursuant to the terms of the Pavilion
Partnership Agreement.
1.3 Special Defined Terms. As used in this Agreement, the following terms
shall have the respective meanings indicated:
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"affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such person;
provided however, with respect to the Blockbuster Group, the definition of
"affiliate" shall not be deemed to include National Amusements Inc.
"Amphitheater Loans" means the Camden Loan and the West Palm Beach
Loan.
"Applicable Law" means any statute, law, rule or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity to
which a specified person or property is subject.
"Applicable Releasing Parties" means (i) the members of the PACE
Group, (ii) the members of the Sony Group, (iii) the Pavilion Partnership,
(iv) Sony/Block and (v) any third party to whom any member of the
Blockbuster Group has undertaken a direct contractual obligation at any
time on or before the Closing Date in connection with indebtedness of the
Pavilion Partnership for borrowed funds, including, without limitation,
The Sanwa Bank, Limited.
"Camden Loan" means that certain $23,630,000 loan extended by The
Sanwa Bank, Limited to the Pavilion Partnership and evidenced by (i) that
certain Loan Agreement dated July 3, 1995 and entered into by and between
The Sanwa Bank, Limited and the Pavilion Partnership and (ii) that certain
Promissory Note dated July 3, 1995 executed by the Pavilion Partnership,
payable to the order of The Sanwa Bank, Limited and in the original
principal amount of $23,630,000.
"Camden Loan Indemnification Agreement" means that certain
Indemnification Agreement dated October 5, 1994, and executed by the
Blockbuster Parent in favor of the Sony Parent relating to the Camden
Loan.
"Cost Overrun Obligations" means the obligations of the Blockbuster
Group to the City of Phoenix under Section 3.1 of the Phoenix Amphitheater
Lease (and the Development Agreement referred to therein) arising out of
or existing due to the final construction costs of the Phoenix
Amphitheater exceeding Eleven Million Dollars ($11,000,000.00), which
obligations have been previously fully and finally released and
discharged.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition or otherwise), and other encumbrances
of every type and description, whether imposed by law, agreement,
understanding or otherwise.
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"Governmental Entity" means any court or tribunal in any
jurisdiction or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or
instrumentality.
"Indemnification Obligations" means any indemnification obligation
of the Blockbuster Group to the Pavilion Partnership or arising under the
Pavilion Partnership Agreement, including, without limitation, any such
indemnification obligation related to any one or more of (i) the Partner
Note Obligations, the Financial Closing Obligations, the Charlotte Parking
Obligations, the Cost Overrun Obligations, or the Miscellaneous Payable
Obligations; (ii) the obligation of the Blockbuster Group related to the
cost, expense and obligation of maintaining, collateralizing and/or
securing the letters of credit required by the terms of the Phoenix
Amphitheater Lease, if any; (iii) any obligation of the Blockbuster Group
to the Pavilion Partnership for a breach of any representation or warranty
made by the Blockbuster Subsidiary (which for purposes of this definition
includes San Bernardino Amphitheater Corporation) under the Executory
Contracts relating to the Existing Blockbuster Assets (the "Blockbuster
Executory Contracts"), (iv) the Stagehand Union Lawsuit Obligation, (v)
the Phoenix Tax Obligation, or (vi) the San Bernardino Representation
Obligation.
"Name-in-Title Agreement" means that certain agreement to be
executed by and between the Blockbuster Group and the Pavilion Partnership
on terms reasonably agreed to by such parties and consistent with the
following:
(a) The Name-in-Title Agreement shall provide that through and
until the second anniversary of the Closing Date, the "Blockbuster"
name will, at the option of the Blockbuster Group, continue to be
displayed and utilized consistent with past practices in connection
with the name of the Xxxx Xxxxx Blockbuster Pavilion in San
Bernardino, California, the Desert Sky Pavilion in Phoenix, Arizona,
and the Blockbuster Pavilion in Charlotte, North Carolina (the "Old
Blockbuster Amphitheaters"). The Name-in-Title Agreement will
provide that the Blockbuster Group will be granted a right of first
offer on the name-in-title rights at each of the Old Blockbuster
Amphitheaters as follows:
(1) If the Pavilion Partnership desires to seek, at any
time, a name-in-title sponsor for any of the Old Blockbuster
Amphitheaters with respect to any period of time after the
second anniversary of the Closing Date, the Pavilion
Partnership shall be required to first offer to the
Blockbuster Group the right to purchase a name-in-title
sponsorship for such Old Blockbuster Amphitheater for a price
to be designated by the Pavilion Partnership (the "First
Offer").
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(2) If the Blockbuster Group rejects a First Offer with
respect to any Old Blockbuster Amphitheater, or does not
accept a First Offer with respect to any Old Blockbuster
Amphitheater within thirty (30) days following the making of
such First Offer to the Blockbuster Group, then (i) subject to
clause (ii) below, the Pavilion Partnership shall be free at
any time within the next twelve (12) months following the
making of such First Offer, without any contractual obligation
to the Blockbuster Group, to sell the name-in-title
sponsorship for such Old Blockbuster Amphitheater on the same
or better terms as to the Pavilion Partnership and (ii) the
Pavilion Partnership shall be prohibited from selling the
name-in-title sponsorship rights with respect to such Old
Blockbuster Amphitheater upon terms materially less favorable
to the Pavilion Partnership without having first made a second
offer to the Blockbuster Group to acquire such rights upon the
same terms.
(3) Such right of first offer shall expire with respect
to each of the Old Blockbuster Amphitheaters upon the
execution of the first name-in-title sponsorship agreement of
such Old Blockbuster Amphitheater with a person other than the
Blockbuster Group.
(b) The Name-in-Title Agreement will provide that the Pavilion
Partnership will have the right to sell after the Closing a
name-in-title sponsorship with any third party at the Coral Sky
Amphitheater in West Palm Beach, Florida and the Entertainment
Center in Camden, New Jersey (or at either such facility) without
any contractual obligation to the Blockbuster Group; provided,
however, the Pavilion Partnership will be required to display, at
the option of the Blockbuster Group, the "Blockbuster" name through
and until the second anniversary of the Closing Date, (i) on the
exterior of each such facility in a secondary position, (ii) on an
interior sign tower at each such facility, and (iii) in print media
related to each such facility. Each of the foregoing displays of the
"Blockbuster" name shall be in accordance with exhibits to be
attached to the Name-in-Title Agreement in a form reasonably
approved by the parties.
"Paramount Amphitheaters" means those certain outdoor concert venues
which are located on the property of, and operated in connection with,
certain amusement parks located in North America owned and operated by
Paramount Parks Inc., an affiliate of the Blockbuster Parent.
6
"Permitted Encumbrances" means any Encumbrances contained in,
created by or under the Sony/Block Partnership, the Pavilion Partnership
Agreement or the Blockbuster Executory Contracts.
"Phoenix Amphitheater Lease" means that certain Amended and Restated
Operator Lease Agreement dated September 26, 1989 entered into by and
between WAC, as operator and lessee, and the City of Phoenix, as landlord.
"Phoenix Tax Obligation" means any obligation or liability for any
Privilege License (Sales) and Use Tax assessed by the City of Phoenix with
respect to the Phoenix Amphitheater for any period prior to April 1, 1994.
"reasonable best efforts" means a party's best efforts in accordance
with reasonable commercial practice and without the incurrence of
unreasonable expense.
"San Bernardino Representation Obligation" means the obligation of
the Blockbuster Group to the County of San Bernardino (and any
indemnification obligation of the Blockbuster Group to the Pavilion
Partnership related thereto) arising out of any representations alleged by
the County of San Bernardino to have been made by the Blockbuster Group or
their affiliates at the time of the execution of that certain Concession
Lease dated October 19,1992 entered into by and between the Amphitheater
Entertainment Corporation and The County of San Bernardino, California
Regional Parks Department, related to the San Bernardino Amphitheater.
"Sony Group" means the Sony Subsidiary and the Sony Parent,
collectively.
"Sony Parent" means Sony Music Entertainment Inc.
"Stagehand Union" means the International Alliance of Theatrical
Stage Employees and Moving Picture Machine Operators.
"Stagehand Union Lawsuit Obligation" means any liabilities, costs or
expenses arising out of or relating to the existing lawsuit between CAC
and the Stagehand Union and any indemnification obligation of the
Blockbuster Group to the Pavilion Partnership related thereto.
"Transferred Assets" means collectively, the Transferred Interest
and all rights to the Charlotte Loan to be transferred to the PACE
Subsidiary pursuant to the provisions of Section 2.2 hereof, including the
Charlotte Note and the Charlotte Deed of Trust.
"West Palm Beach Loan" means that certain $8,000,000 loan extended
by The Sanwa Bank, Limited to the Pavilion Partnership as evidenced by (i)
that certain Loan Agreement dated December 15, 1995 and entered into by
and between The Sanwa Bank,
7
Limited and the Pavilion Partnership and (ii) that certain Promissory Note
dated December 15, 1995, executed by the Pavilion Partnership, payable to
the order of The Sanwa Bank, Limited and in the original principal amount
of $8,000,000.
1.4 Knowledge. For all purposes under this Agreement, a party shall be
deemed to have knowledge only on matters of which it had actual knowledge
without any obligation to make any specific investigation or inquiry of any
kind.
2. Purchase and Sale
2.1 Transferred Interest. Subject to the terms and conditions of this
Agreement, at the Closing, the Blockbuster Subsidiary shall assign, sell,
transfer, convey and deliver to the PACE Subsidiary, and the PACE Subsidiary
shall purchase, acquire and accept from the Blockbuster Subsidiary, the
Transferred Interest, free and clear of all Encumbrances other than any
Permitted Encumbrances. Upon consummation of the transactions contemplated by
this Agreement, the Blockbuster Subsidiary will not own any rights or interests,
directly or indirectly, in the Transferred Interest, or to any other securities
or interests of Pavilion Partnership or Sony/Block Partnership or have any
option, warrant or other right to acquire any such interests or securities.
2.2 Charlotte Loan. Subject to the terms and conditions of this Agreement,
at the Closing, the Blockbuster Parent shall assign, sell, transfer, convey and
deliver to the PACE Subsidiary and the PACE Subsidiary shall purchase, acquire
and accept the Charlotte Note, together with the liens, security interests, and
all other collateral of whatsoever type, kind, or character, held by the
Blockbuster Parent created by the Charlotte Deed of Trust, together with all
other rights, equities, remedies, privileges, titles, powers and interests of
the Blockbuster Parent relating to the Charlotte Loan, free and clear of all
Encumbrances other than any Permitted Encumbrances.
2.3 Instruments of Conveyance, Transfer and Assumption and Release.
(a) Instruments of Conveyance and Transfer. On the Closing Date, the
Blockbuster Group shall deliver or cause to be delivered to the PACE Subsidiary
the following:
(i) An assignment of the Transferred Interest executed by the
Blockbuster Subsidiary in a form reasonably satisfactory to the PACE Subsidiary,
transferring to the PACE Subsidiary Blockbuster Subsidiary's right to the
Transferred Interest, free and clear of all Encumbrances other than Permitted
Encumbrances; and
(ii) An (A) Assignment of the Charlotte Note and Charlotte
Deed of Trust executed by the Blockbuster Parent in a form reasonably
satisfactory to the PACE Subsidiary, transferring to the PACE Subsidiary the
Blockbuster Parent's rights to and under the Charlotte Note and the Charlotte
Deed of Trust, free and clear of all Encumbrances, other than those contained in
or created by or under the Pavilion Partnership Agreement or the Sony/Block
8
Partnership Agreement, if any, and (B) the original of the Charlotte Note
endorsed to the PACE Subsidiary (or, in lieu thereof, a lost note affidavit and
other agreements customarily provided in connection therewith) in a form
reasonably satisfactory to the PACE Subsidiary.
(b) Instruments of Assumption. On the Closing Date, the PACE Group
shall execute, as applicable, and deliver or cause to be delivered to the
Blockbuster Group instruments in a form reasonably satisfactory to the
Blockbuster Group pursuant to which (i) the PACE Subsidiary assumes the Assumed
Liabilities and accepts the Transferred Assets in accordance with the terms
hereof, (ii) the PACE Group releases the Blockbuster Group from all the Assumed
Liabilities and (iii) each Applicable Releasing Party releases the Blockbuster
Group from the Assumed Liabilities owed to such Applicable Releasing Party.
2.4 Blockbuster Group Release. On the Closing Date, the PACE Group shall
cause the Blockbuster Group to be released and discharged in full from (A) all
of its obligations and liabilities under (i) the Amphitheater Loans, including
without limitation, any obligations and liabilities under the Camden Loan
Indemnification Agreement (the "Amphitheater Loan Release"), and (ii) the
Blockbuster Executory Contracts (other than any liability excluded from the
"Assumed Liabilities" under the Blockbuster Executory Contracts pursuant to the
provisions of Section 2.5(b)(ii) thereof), the Sony/Block Partnership Agreement,
the Pavilion Partnership Agreement, the Charlotte Note and the Charlotte Deed of
Trust (such agreements, as modified by the immediately preceding parenthetical,
being herein collectively called the "Assumed Agreements"), (B) the Partner Note
Obligations, the Financial Closing Obligations, the Charlotte Parking
Obligations and the Miscellaneous Payable Obligations and (C) any and all claims
and causes or causes of action arising under any of the foregoing, which
releases shall be evidenced by instruments in forms reasonably satisfactory to
the Blockbuster Group and shall include, without limitation, (1) an instrument
executed by The Sanwa Bank, Limited releasing the Blockbuster Group from any
liabilities or obligations under the West Palm Beach Loan, (2) an instrument
executed by the Sony Group releasing the Blockbuster Group from any liabilities
or obligations under the Camden Loan Indemnification Agreement and the
Sony/Block Partnership Agreement and (3) the cancellation of any of the letters
of credit maintained by the Blockbuster Group with respect to the Phoenix
Amphitheater by the issuer banks and the holders thereof and any cancellation
fees related thereto.
2.5 Mutual Releases. On the Closing Date, (i) the Blockbuster Group shall
execute and deliver to the PACE Group an instrument in a form reasonably
satisfactory to the PACE Group in which the Blockbuster Group releases the PACE
Group, the Sony Group, the Pavilion Partnership and Sony/Block from any and all
claims, rights or causes of action, known or unknown, liquidated or
unliquidated, in contract, tort or otherwise, arising out of any act, event,
circumstance or occurrence in connection with the Pavilion Partnership which
existed or occurred on or before the Closing Date, and (ii) the PACE Group shall
execute, as applicable, and deliver, or cause to be delivered to the Blockbuster
Group, instruments in a form reasonably satisfactory to the Blockbuster Group in
which the PACE Group, the Sony Group, the Pavilion Partnership and Sony/Block
releases the Blockbuster Group from any and all claims, rights or causes of
action,
9
known or unknown, liquidated or unliquidated, in contract, tort or otherwise,
arising out of any act, event, circumstance or occurrence in connection with the
Pavilion Partnership which existed or occurred on or before the Closing Date.
Notwithstanding anything to the contrary, the releases to be delivered pursuant
to this Section 2.5 shall not, and shall expressly provide that they will not,
affect, limit, negate or lessen the contractual obligations undertaken by any of
the parties pursuant to this Agreement.
3. Closing; Purchase Price; Liabilities.
3.1 Closing Date. The closing of the transactions provided for in this
Agreement (the "Closing") shall take place (i) at the offices of Viacom Inc.,
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, within five
(5) business days after the conditions to the obligations of the parties set
forth in Article 6 have been satisfied or waived, or (ii) at such other time or
place or on such other date as the parties hereto shall agree. The date on which
the Closing is required to take place is herein referred to as the "Closing
Date".
3.2 Purchase Price and Payment at Closing.
(a) Subject to the terms and conditions of this Agreement, the PACE
Subsidiary shall pay to the Blockbuster Parent as the purchase price for the
Charlotte Loan (the "Loan Purchase Price"), an amount equal to (i) the
outstanding principal of the Charlotte Note as of the Closing Date and (ii)
accrued and unpaid interest on the Charlotte Note as of the Closing Date. The
Loan Purchase Price shall be payable in cash at Closing pursuant to Section
3.2(c). As of September 30, 1997, the outstanding principal balance and accrued
and unpaid interest of the Charlotte Note was $9,507,257.
(b) Subject to the terms and conditions of this Agreement, the PACE
Subsidiary shall, as the purchase price for the Transferred Interest, (i)
assume, pay, perform and discharge the Assumed Liabilities as provided for in
Section 3.3(a) hereof, (ii) pay to the Blockbuster Subsidiary in cash the sum of
Five Hundred Twenty-One Thousand Sixty Dollars ($521,060.00) as reimbursement to
the Blockbuster Subsidiary for the amounts previously paid by the Blockbuster
Subsidiary for the Cost Overrun Obligations (the Reimbursement Amount"), and
(iii) pay to the Blockbuster Subsidiary in cash the sum of Three Million Six
Hundred Fifty Thousand and no/100 Dollars ($3,650,000.00) (the "Transferred
Interest Cash Amount").
(c) The Reimbursement Amount, the Loan Purchase Price and the
Transferred Interest Cash Amount are herein collectively referred to as the
"Cash Purchase Price". The Cash Purchase Price shall be payable in cash at the
Closing by wire transfer of immediately available funds to such bank accounts as
may be designated by the Blockbuster Group prior to the Closing Date.
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3.3 Assumed Liabilities; Excluded Liabilities; Retained Liabilities.
(a) Assumed Liabilities. From and after the Closing Date, the PACE
Subsidiary shall assume and pay, perform, fulfill and discharge the following
obligations and Liabilities of the Blockbuster Group (the "Assumed
Liabilities"):
(i) The obligation of the Blockbuster Group for the
outstanding principal balance and accrued and unpaid
interest under Sony/Block Note #2 and the related
Blockbuster Guaranty (the "Partner Note Obligations") as
of the Closing Date, the outstanding principal balance
of which Sony/Block Note #2 is $608,750 as of the date
hereof;
(ii) The obligations of the Blockbuster Group to make the
cash contributions to the Pavilion Partnership
contemplated by Section 6.1(e) of each of the Executory
Contracts relating to the Existing Blockbuster Assets,
as such obligations were modified by that certain
Post-Closing Agreement dated effective April 1, 1994, by
and among the Pavilion Partnership, the PACE Subsidiary,
the Sony Subsidiary, the Blockbuster Subsidiary,
Sony/Block and the other parties named therein (the
"Financial Closing Obligations"), the amount of which
Financial Closing Obligations is agreed among the
parties to be $1,196,003;
(iii) The obligations of the Blockbuster Group to the Pavilion
Partnership under the Executory Contract (Charlotte
Asset) for the failure of the Charlotte Asset to have
the parking spaces that are necessary to satisfy the
current or reasonably anticipated business activities of
the Charlotte Asset (the "Charlotte Parking
Obligations"), the amount of which Charlotte Parking
Obligations is agreed among the parties to be
$1,049,667;
(iv) The amount of other miscellaneous payable obligations
(if any) due from the Blockbuster Group to the Pavilion
Partnership as of the Closing Date (the "Miscellaneous
Payable Obligations"); and
(v) Any and all Liabilities and obligations of the
Blockbuster Group (1) under the Assumed Agreements
(including, without limitation, the Indemnification
Obligations) or (2) arising from or accruing with
respect to any contract entered into by, or the
operations of, the Pavilion Partnership, any action or
inaction on the part of the Pavilion Partnership.
11
It is understood and agreed that the PACE Subsidiary shall assume the full
amount of the Assumed Liabilities, regardless of whether the amount of any
Assumed Liability is different from the amount for such Assumed Liability set
forth above.
(b) Retained Liabilities. From and after the Closing Date, the PACE
Subsidiary will not assume any direct or indirect duties, liabilities or
obligations of the Blockbuster Group of any kind or nature, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured, known or
unknown, accrued, absolute, contingent or otherwise (collectively, the
"Liabilities") other than the Assumed Liabilities. It is understood and agreed
that all Liabilities of the Blockbuster Group other than the Assumed Liabilities
are retained by the Blockbuster Group (the "Retained Liabilities"), and the
Blockbuster Group shall be responsible for the payment and discharge of all such
Retained Liabilities; provided, however, (1) the Retained Liabilities shall not
include any Liabilities relating to the Charlotte Loan, the Amphitheater Loans
or any other loans or financing arrangements entered into by the PACE Group or
entered into by and in connection with the Pavilion Partnership and (ii)
notwithstanding anything herein to the contrary, the Retained Liabilities shall
include, and the Assumed Liabilities shall exclude, any Liability of the
Blockbuster Group for any federal, state or local income tax obligation of the
Blockbuster Group.
4. Representations and Warranties.
4.1 Representations and Warranties of the Blockbuster Group. The
Blockbuster Group hereby makes the following representations and warranties to
the PACE Group, which representations and warranties shall be true and accurate
as of the date hereof and as of the Closing Date as if made on that date:
(a) Due Organization; Good Standing and Power. Each member of the
Blockbuster Group is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. Each member of the
Blockbuster Group has the corporate power and authority to enter into this
Agreement and to perform its obligations hereunder.
(b) Authorization of Agreement. The execution, delivery and
performance of this Agreement by the Blockbuster Group and the consummation by
the Blockbuster Group of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the Blockbuster Group's part. No
other corporate, director, shareholder, or partner action or approval is
necessary for the authorization, execution, delivery and performance by the
Blockbuster Group of this Agreement and the consummation by the Blockbuster
Group of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Blockbuster Group and, assuming due authorization,
execution and delivery by the PACE Group, constitutes the legal, valid and
binding obligations of the Blockbuster Group, enforceable against them in
accordance with its terms, subject as to enforceability, to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or similar laws
12
affecting creditors' rights generally and to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(c) No Approvals or Notices Required; No Conflict of Instruments.
Except as described in Schedule 4.1(c) hereto, the execution, delivery and
performance of this Agreement by the Blockbuster Group and the consummation by
the Blockbuster Group of the transactions contemplated hereby (i) will not
violate (with or without the giving of notice or the lapse of time or both), or
require any consent, approval, filing or other notice under, any provision of
any Applicable Law except where the failure to obtain such consent, approval, or
make such filing or notice would not prevent the transactions contemplated
hereby being consummated in accordance with the terms hereof and (ii) assuming
all consents, approvals and other acts described in Schedule 4.1(c) hereto have
been obtained and all filings and notifications listed in Schedule 4.1(c) have
been made and except as may result from any facts or circumstances relating
solely to the PACE Group or the Sony Group or as described in Schedule 4.1(c),
will not conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or require any consent or approval, or result
in the acceleration of the performance of the obligations of the Blockbuster
Group under, or result in the creation of an Encumbrance upon any portion of the
Transferred Assets pursuant to, the charter or bylaws of any member of the
Blockbuster Group, the Pavilion Partnership Agreement, or the Sony/Block
Partnership Agreement, or any indenture, mortgage, deed of trust, lease,
contract, instrument or other agreement to which any member of the Blockbuster
Group is a party or by which any member of the Blockbuster Group or any of the
Transferred Assets are bound or affected.
(d) Ownership of Transferred Interest. Except as set forth in
Schedule 4.1(d) hereto, the Blockbuster Subsidiary owns and has good and
marketable title to the Transferred Interest. At Closing, the Transferred
Interred shall be transferred to the PACE Subsidiary, free and clear of all
Encumbrances, other than the Permitted Encumbrances.
(e) Ownership of Charlotte Loan. Except as set forth in Schedule
4.1(e) hereto, the Blockbuster Parent owns and has good and marketable title to
the Charlotte Note and is the beneficiary (as successor-in-interest by merger to
the Blockbuster Entertainment Corporation) to the Charlotte Deed of Trust. At
Closing, upon consummation of the transactions contemplated by this Agreement,
the Charlotte Note and Charlotte Deed of Trust shall be transferred to the PACE
Subsidiary, free and clear of all Encumbrances other than the Permitted
Encumbrances, and the PACE Subsidiary shall be vested with good and marketable
title to the Charlotte Note, the Charlotte Deed of Trust, and all the other
liens, security interests, rights, equities, remedies, privileges, titles,
powers and interests of the Blockbuster Parent relating to the Charlotte Loan,
free and clear of all Encumbrances, other than the Permitted Encumbrances.
(f) Legal Proceedings. Except as described in Schedule 4.1(f)
hereto, (i) there is no litigation, proceeding, claim or governmental
investigation pending or, to the knowledge of the Blockbuster Group, threatened,
seeking relief or damages which, if granted, would materially and adversely
affect Sony/Block, the Transferred Assets or which to the knowledge of the
13
Blockbuster Group would prevent the consummation of the transactions
contemplated by this Agreement and (ii) the Blockbuster Group and Sony/Block
have not been charged with the violation of or threatened, in writing, with a
charge of violation of any provision of Applicable Law or regulation which
charge or violation, if determined adversely to the Blockbuster Group or
Sony/Block, would materially and adversely affect the right of the PACE
Subsidiary to own the Transferred Assets.
(g) Certain Fees. Neither the Blockbuster Group nor, to the
knowledge of the Blockbuster Group, any of their respective officers, directors
or employees have employed any broker or finder or incurred any other liability
for any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
(h) Sony/Block Representations. To the Blockbuster Group's
knowledge, neither the Blockbuster Group nor any of their affiliates has
breached any provision of (x) Sections 15 or 18.10 of the Pavilion Partnership
Agreement (and no Event of Withdrawal has ever occurred with respect to the
Blockbuster Subsidiary) or (y) the Sony/Block Partnership Agreement (and the
Blockbuster Group has not undertaken any action to withdraw from or otherwise
cause the dissolution of the Sony/Block Partnership). To the Blockbuster Group's
knowledge, (i) the Sony/Block Partnership Agreement is in full force and effect,
(ii) the ownership of Sony/Block is as described in the Recitals to this
Agreement and that no person other than the Sony Subsidiary and the Blockbuster
Subsidiary holds any ownership interest in Sony/Block or has any option,
warrant, call, subscription or other right or agreement to acquire any interest
in Sony/Block, (iii) Sony/Block has no assets or properties other than its
Partnership Interest in the Pavilion Partnership (and the Blockbuster Group has
not taken any action to create or approve any Encumbrances other than the
Permitted Encumbrances on such Partnership Interest) and conducts no business
activities unrelated to such ownership, (iv) Sony/Block has no Liabilities other
than Liabilities as a general partner of the Pavilion Partnership and Sony/Block
is not a party to any contract or commitment other than those entered into with
the Pavilion Partnership or the PACE Group, and (v) Sony/Block has not employed
any employees.
4.2 Representations and Warranties of the PACE Group. The PACE Group
hereby makes the following representations and warranties to the Blockbuster
Group, which representations and warranties shall be true and correct as of the
date hereof and as of the Closing Date as if made on that date:
(a) Due Organization; Good Standing and Power. Each member of the
PACE Group is a corporation duly organized, validly existing and in good
standing under the laws of Texas. Each member of the PACE Group has all
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder.
14
(b) Authorization and Validity of Agreement. The execution, delivery
and performance of this Agreement by the PACE Group and the consummation by the
PACE Group of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the PACE Group's part. No other corporate,
director, shareholder or partner action is necessary for the authorization,
execution, delivery and performance by the PACE Group of this Agreement and the
consummation by the PACE Group of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the PACE Group and, assuming
due authorization, execution and delivery by the Blockbuster Group, constitutes
the legal, valid and binding obligations of the PACE Group, enforceable against
them in accordance with its terms, subject as to enforceability, to the effect
of any applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally and to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) No Approvals or Notices Required; No Conflict with Instruments.
Except as disclosed on Schedule 4.2(c) the execution, delivery and performance
of this Agreement by the PACE Group and the consummation by the PACE Group of
the transactions contemplated hereby (i) will not violate (with or without the
giving of notice or the lapse of time or both), or require any consent,
approval, filing or notice under, any provision of any Applicable Law except
where the failure to obtain such consent, approval, or make such filing or
notice would not prevent the transactions contemplated hereby being consummated
in accordance with the terms hereof and (ii) assuming all consents, approvals
and other acts described in Schedule 4.2(c) hereto have been obtained and all
filings and notifications listed in Schedule 4.2(c) have been made and except as
may result from any facts or circumstances relating solely to the Blockbuster
Group or as described in Schedule 4.2(c) will not conflict with, or result in
the breach or termination of any provision of, or constitute a default under, or
require any consent or approval, or result in the acceleration of the
performance of the obligations of the PACE Group under, the charter or bylaws of
any member of the PACE Group, the Pavilion Partnership Agreement or any
indenture, mortgage, deed of trust, lease, contract, instrument or other
agreement to which any member of the PACE Group is a party or by which any
member of the PACE Group or any of their assets or properties are bound or
affected.
(d) Certain Fees. Neither the PACE Group, nor to the knowledge of
the PACE Group, any of their respective officers, directors or employees, have
employed any broker or finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
(e) Legal Proceedings. There is no litigation, proceeding, claim or
governmental investigation pending or, to the knowledge of the PACE Group,
threatened which would prevent the consummation of the transactions contemplated
by this Agreement.
4.3 Survival of Representations and Warranties. Notwithstanding any right
of a party to investigate the affairs of the other party, each party shall have
the right to rely fully upon the
15
representations and warranties, covenants and agreements of the other party
contained in this Agreement and to pursue all rights and remedies in connection
therewith. The representations and warranties of the parties set forth in
Sections 4.1(b), 4.1(c), 4.1(d), 4.1(e), 4.2(b) and 4.2(c) shall survive in full
force and effect until the second anniversary of the Closing Date. All other
representations and warranties of the parties set forth in this Agreement shall
survive in full force and effect for a period of six months after the Closing
Date. The covenants and agreements of the parties set forth in Sections 4.4,
5.3, 8.2, 8.3, 9 and 10 (except as otherwise noted therein) shall survive the
execution and delivery of this Agreement and the Closing without limitation
(except that the Blockbuster Parent's obligations under Section 8.2 shall
terminate at Closing). The covenants of the Blockbuster Group set forth in
Section 8.1 shall survive the execution and delivery of this Agreement and the
Closing in accordance with the terms thereof. All other covenants and agreements
of the parties contained in or made pursuant to the terms of this Agreement or
any certificate furnished pursuant hereto shall terminate at the Closing.
4.4 Blockbuster Acknowledgment. The Blockbuster Group acknowledges that in
order to consummate this transaction, the PACE Group has entered discussions
with the Sony Group in order to secure certain required consents contemplated by
this Agreement. Those discussions include the terms of a potential purchase of
the Sony Group's interest in Sony/Block. The Blockbuster Group agrees that the
PACE Group is not required to advise the Blockbuster Group of the content of any
such discussions or the terms of any transaction which may result from such
discussions, it being acknowledged and agreed that the Blockbuster Group is
sophisticated and experienced in business matters and has determined to enter
into this Agreement after its own independent evaluation of the merits of the
transactions contemplated hereby.
5. Covenants; Actions Prior to Closing.
5.1 Access to Information. Neither title nor right to possession of the
Transferred Assets shall pass to the PACE Subsidiary until the Closing, but
during the period commencing on the date hereof and ending on the Closing Date,
the Blockbuster Subsidiary shall give or cause to be given to the PACE Group and
its representatives reasonable access, during normal business hours, to the
properties, books and records of the Blockbuster Subsidiary relating to the
Transferred Assets as the PACE Group shall from time to time reasonably request;
provided, however, that such investigation shall not unreasonably interfere with
the businesses or operations of the Blockbuster Subsidiary.
5.2 No Disposition of Transferred Assets; Modification of Specific
Indemnification Obligations. During the period commencing on the date hereof and
ending on the Closing Date, (a) the Blockbuster Group shall not (i) sell or
otherwise dispose of any right, title and interest in and to the Transferred
Assets, (ii) permit or allow the Transferred Assets to become subject to any
Encumbrances, other than in the ordinary course of business and consistent with
past practice, (iii) otherwise modify or change in any material respect any
rights of the Blockbuster Group relating to the Transferred Assets (other than
in the manner contemplated by this Agreement), (iv) solicit from any
corporation, business or person any proposals or offers, or enter into any
negotiations,
16
relating to the disposition of the Transferred Assets, (v) directly or
indirectly provide to any other person any non-public information concerning the
Transferred Assets except that which is on the advice of counsel required in
governmental filings or judicial, administrative or arbitration proceedings,
(vi) modify or change in any respect the Indemnification Obligations, or modify
or change or waive any rights or obligations related thereto, other than in the
ordinary course of business consistent with past practice, or (vii) agree,
whether in writing or otherwise, to do any of the foregoing and (b) the PACE
Group shall use its reasonable best efforts to not permit and shall not take any
action which will (x) cause the Transferred Assets to become subject to any
Encumbrances or (y) modify or change or affect in any respect any rights of the
Blockbuster Group relating to the Transferred Assets.
5.3 Further Actions. Subject to the terms and conditions hereof, prior to
and after the Closing, the Blockbuster Group and the PACE Group will each use
their reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement, including:
(i) to obtain prior to the Closing Date all consents or approvals as are
necessary for the consummation of the transactions contemplated hereby; (ii) to
effect all necessary registrations and filings; and (iii) to execute and
deliver, or cause to be executed and delivered, without further consideration,
such other documents and papers, to take such further actions and to furnish to
each other such information and assistance, as reasonably may be requested in
connection with any of the foregoing. Nothing herein shall require either party,
after Closing, to pay any money or incur any out-of-pocket expenses (other than
minor expenses, such as long distance charges and copying charges) to accomplish
the foregoing.
5.4 Notification. Each of the parties hereto shall promptly notify the
other in writing and keep the other advised as to (i) any litigation or
administrative proceeding filed or pending against the Blockbuster Group or the
PACE Group, or to the Blockbuster Group's knowledge or to the PACE Group's
knowledge, threatened against any of them that challenges the transactions
contemplated hereby and (ii) any variance from the representations and
warranties contained in Section 4.1 or Section 4.2 hereof, as applicable, or of
any failure or inability on the part of the Blockbuster Group or the PACE Group
to comply with any of their respective covenants contained in this Article 5.
6. Conditions Precedent.
6.1 Conditions Precedent to Obligations of All Parties. The respective
obligations of the parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction (or waiver by each party) at or
prior to the Closing Date of each of the following conditions:
(a) No Lawsuits. No action of any private party or Governmental
Entity shall have been taken or explicitly threatened in writing and no statute,
rule, regulation or executive order shall have been proposed, promulgated or
enacted by any Governmental Entity which seeks
17
to restrain, enjoin or otherwise prohibit or to obtain damages or other relief
in connection with this Agreement or the transactions contemplated hereby.
(b) Mutual Third Party Consents and Approvals. All consents or
approvals of third parties (including all Governmental Entities) required to be
obtained by or on the part of the parties hereto or otherwise reasonably
necessary for the consummation of the transactions contemplated hereby (other
than those specified in Section 6.3(e) below) shall have been obtained in a form
reasonably acceptable to the PACE Group and the Blockbuster Group and shall be
in full force and effect at the time of the Closing, including without
limitation, to the extent required, the consent or agreement by the Sony Group
(or Sony/Block) to (i) the transfer of the Transferred Interest to the PACE
Subsidiary pursuant to the terms of this Agreement and (ii) the execution and
delivery of the Name-in-Title Agreement and the agreement contemplated by
Section 6.2(e) (unless the requirement for such agreement has been waived by the
Blockbuster Group) as contemplated by the terms of this Agreement.
(c) Name-in-Title Agreement. The Pavilion Partnership shall have
executed and delivered to the Blockbuster Group the Name-in-Title Agreement.
6.2 Conditions Precedent to the Obligations of the Blockbuster Group. The
obligations of the Blockbuster Group under this Agreement are subject to the
satisfaction (or waiver by the Blockbuster Group) at or prior to the Closing
Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All representations
and warranties of the PACE Group contained herein or in any certificate or
document delivered to the Blockbuster Group pursuant hereto shall be true and
correct on and as of the Closing Date, in all material respects, with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(b) Performance of Agreements. The PACE Group shall have performed
all obligations and agreements, and complied with all covenants and conditions,
contained in this Agreement to be performed or complied with by it prior to or
at the Closing Date, including without limitation, (x) executing and delivering
the instruments contemplated by Section 2.3(b) of this Agreement, (y) delivering
the Cash Purchase Price as provided for in Section 3.2(c) hereof and (z)
effecting, obtaining and delivering the Amphitheater Loan Release and the other
releases (including, without limitation, the releases from the Applicable
Releasing Parties) provided for in Sections 2.3 (b) and 2.4 hereof.
(c) PACE Group's Officer's Certificate. The Blockbuster Group shall
have received a certificate dated on the Closing Date executed by an appropriate
corporate officer of each member of the PACE Group to the effect that the
conditions specified in Sections 6.2(a) and (b) have been satisfied.
18
(d) Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal matters shall
be reasonably satisfactory to counsel for the Blockbuster Group, and such
counsel shall have been furnished with such certified copies of such corporate
actions and proceedings and such other instruments and documents as it shall
have reasonably requested.
(e) Carowinds Amphitheater. The Pavilion Partnership shall have
executed and delivered to the Blockbuster Group a written instrument in form
reasonably acceptable to the Blockbuster Group whereby the Pavilion Partnership
agrees that it will not exercise any right which it may now or hereafter have,
to prevent or preclude Cellar Door Productions, Inc. or its affiliates ("Cellar
Door") from acting as a booking agent (but not any right it has to prevent or
preclude Cellar Door from acting as a promoter) at the Carowinds Amphitheater in
Charlotte, North Carolina in a manner consistent with Cellar Door's current
authority, responsibility and capacity at such amphitheater, but not otherwise.
6.3 Conditions Precedent to Obligations of the PACE Group. The obligations
of the PACE Group under this Agreement are subject to the satisfaction (or
waiver by the PACE Group) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All representations
and warranties of the Blockbuster Group contained herein or in any certificate
or document delivered to the PACE Group pursuant hereto shall be true and
correct on and as of the Closing Date, in all material respects, with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(b) Performance of Agreements. The Blockbuster Group shall have
performed all obligations and agreements, and complied with all covenants and
conditions, contained in this Agreement to be performed or complied with by them
prior to or at the Closing Date, including executing and delivering the
conveyancing instruments and other documents contemplated by Section 2.3 of this
Agreement.
(c) Blockbuster Officer's Certificate. The PACE Group shall have
received a certificate dated on the Closing Date executed by an appropriate
officer of each member of the Blockbuster Group to the effect that the
conditions specified in Sections 6.3(a) and (b) have been satisfied.
(d) Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal matters shall
be reasonably satisfactory to counsel for the PACE Group, and such counsel shall
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
19
(e) The PACE Group Special Consents and Approvals. The following
consents, agreements, and approvals shall have been obtained in a manner
reasonably acceptable to the PACE Group and shall be in full force and effect at
the time of the Closing:
(i) The consent and agreement by the Sony Subsidiary and the
Sony Parent to the amendment and restatement of the
Pavilion Partnership Agreement (the "New Pavilion
Partnership Agreement") in a manner acceptable to the
PACE Group, including to reflect that all rights to the
Charlotte Preferred Cash Distribution Account and any
amounts distributable pursuant thereto shall inure to
the benefit of the PACE Subsidiary;
(ii) The PACE Group shall obtain the waiver or consent from
its lender described in Schedule 4.2(c) to the extent
necessary to permit the PACE Group to complete the
transactions contemplated by this Agreement without
violating any covenants or restrictions contained herein
and in the Credit Agreement described in Schedule
4.2(c); and
(iii) The consent by the Sony Subsidiary and the Sony Parent
to an amendment and restatement of the Sony/Block
Partnership Agreement (the "New Sony/Block Partnership
Agreement") in a manner acceptable to the PACE Group,
including (x) to reflect that the PACE Subsidiary shall
not have any liability or obligation under the
Sony/Block Partnership Agreement or the New Sony/Block
Partnership Agreement except as specifically provided
for in the New Sony/Block Partnership Agreement (without
negating, limiting or lessening, as between the
Blockbuster Group and the PACE Group, any obligation or
liability undertaken herein by any member of the PACE
Group) and (y) to reflect that all rights to the
Charlotte Preferred Distribution Account and any amounts
distributable pursuant thereto shall inure to the
benefit of the PACE Subsidiary.
(f) Funding Amounts. The PACE Group shall have obtained third party
financing on terms reasonably acceptable to the PACE Group in an amount
sufficient to effect the Amphitheater Loan Release and to fund the Loan Purchase
Price without imposing any obligation or liability on the Blockbuster Group or
otherwise encumbering any of the assets of the Blockbuster Group (other than
encumbrances upon the Transferred Asset to take effect upon occurrence of the
Closing).
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7. Termination.
7.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned (a) by mutual consent of the PACE Group and
the Blockbuster Group or (b) by any party by written notice to the other parties
in the event that the Closing Date shall not have occurred on or before May 31,
1998; provided, however, that if the Closing Date shall not have occurred on or
before such date due to a breach of this Agreement by one of the parties, the
breaching party may not terminate this Agreement.
7.2 No Liabilities in Event of Termination. In the event of any
termination of this Agreement as provided above, this Agreement shall forthwith
become wholly void and of no further force or effect and there shall be no
liability on the part of the PACE Group, the Blockbuster Group or their
respective officers, directors, or agents, except that the provisions of
Sections 10.2 and 10.5 hereof shall remain in full force and effect, and
provided that nothing contained herein shall release any party from liability
for any willful failure to comply with any provision, covenant or agreement
contained herein.
8. Covenants and Actions Subsequent to Closing.
8.1 Covenant Not to Compete. In order to allow the PACE Group to realize
the full benefit of its bargain in connection with the purchase of the
Transferred Assets, the Blockbuster Group hereby agrees as follows:
(a) The Blockbuster Group shall not permit Blockbuster Entertainment
Inc. or any direct or indirect subsidiary of Blockbuster Entertainment Inc.
which has its operations managed by the operational management of Blockbuster
Entertainment Inc. (including the Blockbuster Subsidiary) (collectively, the
"Included Blockbuster Entities") to become (and shall prevent any such entity
from becoming), at any time for a period of two (2) years following the Closing
Date, directly or indirectly, an owner, manager, operator, or equity participant
in or to any Amphitheater anywhere in the United States of America.
(b) In the event of a breach of the Noncompete Covenant, it is
understood and agreed that the PACE Group shall be entitled to injunctive relief
as well as any and all other applicable remedies at law or in equity available
to the PACE Group against the Blockbuster Group. If a court of competent
jurisdiction should declare the Noncompete Covenant unenforceable, in whole or
in part, due to any unreasonable restriction of duration and/or geographical
area and/or activity, then the PACE Group and the Blockbuster Group hereby
acknowledge and agree that such court of law or equity shall have the express
authority of the parties to reform the Noncompete Covenant to a reasonable
restriction and/or grant the PACE Group any and all other relief, at law or in
equity, that may be reasonable or necessary to protect the interests of the PACE
Group.
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(c) The parties expressly acknowledge and agree that neither the
Blockbuster Parent nor any affiliate of the Blockbuster Parent other than the
Included Blockbuster Entities shall be restricted or limited by the terms of the
Non-Compete Covenant.
8.2 Performance Guarantee. The PACE Parent and the Blockbuster Parent
hereby agree to guarantee the performance of any and all obligations of the PACE
Subsidiary and the Blockbuster Subsidiary, respectively, under the terms of this
Agreement.
8.3 Tax Matters. The Blockbuster Group will have the right to participate
in any tax audit or administrative or judicial proceeding or of any demand or
claim relating to the Assumed Agreements which affects any taxable period ending
on or before or including the Closing Date to the same extent the Blockbuster
Group has such rights prior to the Closing. After the Closing, the PACE Group
shall promptly notify the Blockbuster Group in writing of the commencement of
any such tax audit, administrative or judicial proceeding or demand or claim
which relates, in whole or in part, to any period of time prior to the Closing.
Such notice shall contain factual information (to the extent known) describing
the asserted tax matter in reasonable detail and shall include copies of any
notice or other document received from any tax authority in respect of such tax
matter.
9. Indemnification.
9.1 Indemnification by the PACE Group.
(a) Subject to the provisions of this Section 9, the PACE Group
shall protect, indemnify and hold harmless the Blockbuster Group, in respect of
any losses, claims, damages, liabilities, deficiencies, delinquencies, defaults,
assessments, fees, penalties or related costs or expenses, including, but not
limited to, court costs and attorneys' and accountants' fees and disbursements,
and any federal, state and local income and/or franchise taxes payable in
respect of the receipt of cash or money in discharge of the foregoing
(collectively referred to herein as "Damages") to which the Blockbuster Group
may become subject if such Damages arise out of, relate to, or are based upon:
(i) the inaccuracy or breach of any of the representations, warranties,
covenants or agreements made by the PACE Group in this Agreement or in any
certificate, document, schedule or instrument delivered to the Blockbuster Group
pursuant hereto or in connection herewith; (ii) any Assumed Liability; (iii) any
Liabilities relating to the Pavilion Partnership to the extent such Liabilities
arise from and after the Closing; or (iv) any failure by the PACE Group to carry
out, perform and satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and/or other instruments delivered by the PACE Group pursuant to
this Agreement.
(b) Notwithstanding any other provision to the contrary, the PACE
Group shall not be required to indemnify and hold harmless any Blockbuster Group
Indemnified Party pursuant to Section 9.1 unless the Blockbuster Group has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 4.3.
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9.2 Indemnification by the Blockbuster Group.
(a) Subject to the provisions of this Section 9, the Blockbuster
Group shall protect, indemnify and hold harmless the PACE Group in respect of
any Damages to which the PACE Group may become subject if such Damages arise out
of, relate to, or are based upon (i) the breach of any of the representations,
warranties, covenants or agreements made by the Blockbuster Group in this
Agreement or any certificate, document, schedule or instrument delivered to the
PACE Group pursuant hereto or in connection herewith, (ii) any Retained
Liability, (iii) the failure of the Blockbuster Parent to deliver the original
of the Charlotte Note to the PACE Subsidiary at the Closing by reason of same
having been lost, or (iv) any failure by the Blockbuster Group to carry out,
perform and satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and/or other instruments delivered by the Blockbuster Group
pursuant to this Agreement.
(b) Notwithstanding any other provision to the contrary, the
Blockbuster Group shall not be required to indemnify and hold harmless any PACE
Group Indemnified Party pursuant to Section 9.2 unless the PACE Group has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 4.3.
9.3 Matters Involving Third Parties.
(a) If any third party shall notify a party entitled to be
indemnified pursuant to Section 9.1 or 9.2 (the "Indemnified Party") with
respect to any matter which the Indemnified Party has determined may give rise
to a claim for indemnification against the PACE Group or the Blockbuster Group,
as the case may be (a "Third Party Claim") (the "Indemnifying Party"), then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced. Subject to the Indemnifying Party's right to defend
in good faith Third Party Claims as hereinafter provided, the Indemnifying Party
shall satisfy its obligations under this Section 9 within 30 days after the
receipt of written notice thereof from the Indemnified Party unless the
Indemnifying Party notifies the Indemnified Party that it disputes any such
obligations.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 9.3(a), and if such claim or demand
relates to a Third Party Claim or demand against the Indemnified Party which the
Indemnifying Party acknowledges is a claim or demand for which it must indemnify
or hold harmless the Indemnified Party under Section 9.1 or 9.2, the
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has given notice of
the Third Party Claim that the Indemnifying Party will
23
indemnify the Indemnified Party from and against the entirety of any Damages the
Indemnified Party may suffer resulting from, arising out of, relating to or
caused by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damage and does not seek an injunction
or other equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnifying Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts in good faith the defense of the
Third Party Claim actively and diligently. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and other material
in the Indemnified Party's possession reasonably required by it for use in
contesting the Third Party Claim. Whether or not the Indemnifying Party elects
to defend the Third Party Claim, the Indemnified Party shall have no obligation
to do so.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.3(b) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.3(b) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), and (B) the Indemnifying Party will
remain responsible for any damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Section 9.
10. Miscellaneous
10.1 Public Announcements. Prior to the Closing Date, no news release or
other public announcement pertaining in any way to the transactions contemplated
by this Agreement will be made by any party hereto except in accordance with the
terms of this Agreement or as otherwise required by Applicable Law.
10.2 Expenses. Except as otherwise specifically provided for herein, each
of the parties hereto shall pay the fees and expenses incurred by it in
connection with the negotiation,
24
preparation, execution and performance of this Agreement, including, without
limitation, attorneys' fees and accountants' fees.
10.3 Remedy. The parties hereto recognize that any breach of the terms of
this Agreement may give rise to irreparable harm for which money damages would
not be an adequate remedy, and accordingly agree that, in addition to any other
remedies a non-breaching party may have available at law or in equity, any
non-breaching party shall be entitled to enforce the terms of this Agreement by
decree of specific performance without the necessity of proving the inadequacy
as a remedy of money damages.
10.4 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 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 numbers or to such other additional
address or facsimile number as any party shall hereafter specify by
Communication to the other party:
Blockbuster Group: Blockbuster Entertainment Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax No. (000)000-0000
Attention: General Counsel
With a copy to: VIACOM Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
Attention: General Counsel and
Deputy General Counsel
PACE Group: c/o SM/PACE, Inc.
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxx
25
With a copy to: Xx. Xxxxxxx X. Xxxxxx
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Notice of change of address shall be deemed given when actually received; 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.
10.5 Delaware Law to Apply. This Agreement shall be construed under and in
accordance with the laws of the State of Delaware without giving effect to the
choice of law provisions thereof.
10.6 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matters to be
considered in construing the terms of this Agreement.
10.7 Legal Construction. In case any one or more of the provisions
contained in this 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 into this Agreement.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original.
10.9 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.
10.10 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective permitted successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
10.11 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
26
10.12 Entire Agreement, Modification, Consents and Waivers. This Agreement
(including the Schedules and Exhibits hereto and the certificates to be
delivered in connection herewith) contains the entire agreement of the parties
with respect to the subject matter hereof and no interpretation, change,
termination or waiver of or extension of time for the performance under any
provisions 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, or the Closing of the
transactions contemplated hereby, 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 this Agreement 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.
27
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
SM/PACE, INC.,
a Texas corporation
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: XXXXX XXXXXX
Title: VICE PRESIDENT
PACE ENTERTAINMENT CORPORATION,
a Texas corporation
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: XXXXX XXXXXX
Title: VICE PRESIDENT
PACE GROUP
CHARLOTTE AMPHITHEATER
CORPORATION, a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Name: XXXXXXX XXXXXXXX
Title: SENIOR VICE PRESIDENT
THE WESTSIDE AMPHITHEATRE
CORPORATION, an Arizona corporation
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Name: XXXXXXX XXXXXXXX
Title: SENIOR VICE PRESIDENT
VIACOM INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Name: XXXXXXX XXXXXXXX
Title: SENIOR VICE PRESIDENT
THE BLOCKBUSTER GROUP
27
