EXHIBIT 10.36

STOCK PURCHASE AGREEMENT

between

LIVE NATION WORLDWIDE, INC.

and

KEY BRAND ENTERTAINMENT INC.

Dated as of January 23, 2008

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TABLE OF CONTENTS

 

     Page

ARTICLE I DEFINITIONS

   1

SECTION 1.1 Certain Defined Terms

   1

SECTION 1.2 Other Defined Terms

   9

SECTION 1.3 Other Interpretive Provisions

   10

ARTICLE II PURCHASE AND SALE

   10

SECTION 2.1 Purchase and Sale

   10

SECTION 2.2 Closing

   11

SECTION 2.3 Adjustments to the Total Consideration Amount for Free Cash Deficit

   11

SECTION 2.4 Closing Deliveries by Seller

   13

SECTION 2.5 Closing Deliveries by Purchaser

   13

SECTION 2.6 Allocation of Equity Consideration Among the Target Parent Companies

   14

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

   14

SECTION 3.1 Organization

   14

SECTION 3.2 Authority; Enforceability

   14

SECTION 3.3 Non-Contravention

   14

SECTION 3.4 Governmental Consents

   15

SECTION 3.5 Capital Stock of the Target Parent Companies

   15

SECTION 3.6 Target Subsidiaries and Equity Investments

   15

SECTION 3.7 Financial Information

   16

SECTION 3.8 Absence of Certain Changes or Events

   17

SECTION 3.9 Subscription Markets

   17

SECTION 3.10 Properties

   18

SECTION 3.11 Contracts

   20

SECTION 3.12 Compliance with Law

   21

SECTION 3.13 Litigation

   21

SECTION 3.14 Employees

   21

SECTION 3.15 Proprietary Rights

   23

SECTION 3.16 Environmental Laws

   23

SECTION 3.17 Contracts with Certain Persons

   23

SECTION 3.18 Taxes

   23

SECTION 3.19 Insurance

   24

SECTION 3.20 Bank Accounts

   24

SECTION 3.21 Brokers

   24

SECTION 3.22 Canadian Revenues and Assets

   24

SECTION 3.23 Cash Related Representations

   25

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER

   25

SECTION 4.1 Organization

   25

SECTION 4.2 Authority; Enforceability

   25

SECTION 4.3 Non-Contravention

   25

SECTION 4.4 Governmental Consents

   26

SECTION 4.5 Purchase for Investment

   26

SECTION 4.6 Financing

   26

SECTION 4.7 Canon Theatre

   26

SECTION 4.8 Brokers

   26

 

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TABLE OF CONTENTS

(continued)

 

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ARTICLE V ADDITIONAL AGREEMENTS AND UNDERSTANDINGS

   26

SECTION 5.1 Conduct of Business Prior to the Closing

   26

SECTION 5.2 Access to Information

   28

SECTION 5.3 Efforts to Close; Regulatory Approvals

   29

SECTION 5.4 Notice of Developments

   29

SECTION 5.5 Insurance; Risk of Loss

   29

SECTION 5.6 Corporate Names

   30

SECTION 5.7 Trademarks

   30

SECTION 5.8 IT Matters

   31

SECTION 5.9 Resignations and Releases

   31

SECTION 5.10 Books and Records

   31

SECTION 5.11 Excluded Assets; Certain Pre-Closing Transfers

   33

SECTION 5.12 LN Guarantees; Letters of Credit

   33

SECTION 5.13 Ticketing Agent

   35

SECTION 5.14 Transition Services

   35

SECTION 5.15 Customer Database

   36

SECTION 5.16 Exclusivity and Non-Compete

   37

SECTION 5.17 Canadian Tax Clearance Certificate

   41

ARTICLE VI EMPLOYEE MATTERS

   42

SECTION 6.1 Participation in Benefit Plans as of the Closing

   42

SECTION 6.2 Continuation of Benefits

   42

SECTION 6.3 Liability After the Closing

   43

SECTION 6.4 Individual Account Plan

   43

SECTION 6.5 COBRA

   43

SECTION 6.6 WARN

   43

SECTION 6.7 No Other Rights

   43

ARTICLE VII TAX MATTERS

   43

SECTION 7.1 Preparation and Filing of Returns

   43

SECTION 7.2 Mutual Cooperation, Access and Assistance

   44

SECTION 7.3 Refunds, Credits and Offsets

   44

SECTION 7.4 Examination Adjustments

   45

SECTION 7.5 Other Taxes

   45

SECTION 7.6 Termination of Tax Sharing Agreement

   45

SECTION 7.7 Treatment of Tax Indemnity Payments

   45

SECTION 7.8 Timing of Non-Ordinary Course Transactions on the Closing Date

   45

ARTICLE VIII CONDITIONS TO CLOSING

   46

SECTION 8.1 Conditions to Obligations of Seller

   46

SECTION 8.2 Conditions to Obligations of Purchaser

   46

ARTICLE IX INDEMNIFICATION

   47

SECTION 9.1 Survival

   47

SECTION 9.2 Indemnification other than for Tax Matters

   47

SECTION 9.3 Limits on Indemnification

   50

SECTION 9.4 Tax Indemnification

   51

 

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TABLE OF CONTENTS

(continued)

 

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SECTION 9.5 Computation of Indemnifiable Losses

   53

SECTION 9.6 Indemnification as Exclusive Remedy

   53

ARTICLE X [INTENTIONALLY DELETED]

   54

ARTICLE XI GENERAL PROVISIONS

   54

SECTION 11.1 Expenses

   54

SECTION 11.2 Disclaimer Regarding Projections

   54

SECTION 11.3 Materiality

   54

SECTION 11.4 [intentionally left blank]

   54

SECTION 11.5 Notices

   54

SECTION 11.6 Public Announcements

   55

SECTION 11.7 Headings; Table of Contents

   56

SECTION 11.8 Severability

   56

SECTION 11.9 Entire Agreement

   56

SECTION 11.10 Binding Effect; Assignment

   56

SECTION 11.11 No Third Party Beneficiaries

   56

SECTION 11.12 Amendment

   56

SECTION 11.13 Waiver

   56

SECTION 11.14 Governing Law

   57

SECTION 11.15 Counterparts

   57

SECTION 11.16 Construction

   57

SECTION 11.17 Time of the Essence

   57

 

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STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT dated as of January 23, 2008 between Live Nation
Worldwide, Inc., a Delaware corporation (“Seller”) and Key Brand Entertainment
Inc a Delaware Corporation (“Purchaser”). Each of Seller and Purchaser is a
“Party” and together, the “Parties”.

W I T N E S S E T H:

WHEREAS, Seller owns all of the issued and outstanding shares of capital stock
(the “Shares”) of the following companies (each being referred to as a “Target
Parent Company” and collectively referred to as the “Target Parent Companies”):

(i) Live Nation Theatrical Group, Inc. (f/k/a Pace Theatrical Group, Inc.), a
Texas corporation;

(ii) Live Nation Family Holdings, Inc. (f/k/a SFX Family Holdings, Inc.), a
Delaware corporation;

(iii) SFX Theatrical Group, Inc., a Delaware corporation; and

(iv) TCN Theatre Group, Inc., a Delaware corporation.

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the Shares
upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual terms,
conditions and agreements set forth herein, Seller and Purchaser hereby agree as
follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:

(a) “Action” shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or any
arbitrator.

(b) “Affiliate” shall mean, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with such specified
Person; provided that for purposes of Sections 3.22 and 4.8 only, “Affiliate”
shall have the meaning attributed to such term in the Competition Act (Canada).

(c) “Agreement” shall mean this Stock Purchase Agreement between Seller and
Purchaser, including the Schedules and Exhibits hereto, as amended, modified or
supplemented from time to time.

(d) “Agreed Manner and Methodology” shall mean the methodology normally used by
the Target Group Companies to determine “Free Cash” as illustrated in Exhibit B
attached hereto.

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(e) “Auction” shall mean the process undertaken by Seller, its Affiliates,
agents and representatives with respect to the potential disposition of the
business, assets and operations of the Target Group Companies that has resulted
in the execution of this Agreement.

(f) “Business Day” shall mean any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in The City of
Los Angeles (or for any action to be performed in Canada, the City of Toronto).

(g) “Canadian Employee” shall mean any Employee of the Canadian Subsidiaries.

(h) “Canadian Employee Benefit Plans” means any pension, retirement, bonus,
profit sharing, incentive, stock purchase, stock option, stock appreciation,
severance, change-of-control, savings, thrift, insurance, medical care, dental
care, vision care, prescription drugs, hospitalization, disability, death or
other similar program or practice providing benefits to Canadian Employees,
other than any Canadian Union Plans and any Canadian Statutory Plans.

(i) “Canadian Statutory Plans” means statutory benefit plans that benefit
Canadian Employees which the Target Group Companies are required to participate
in or comply with, including the Canada and Quebec Pension Plans and plans
administered pursuant to applicable health tax, workplace safety insurance and
employment insurance legislation.

(j) “Canadian Subsidiaries” shall mean each of the following Target
Subsidiaries: Eagle Eye Entertainment, Inc., TTL and Theater Management Group -
Toronto Corp.

(k) “Canadian Union Plans” means any and all pension and other benefit plans for
the benefit of Canadian Employees which are not maintained, sponsored or
administered by any of the Target Group Companies, and in respect of which the
Target Group Companies are required to contribute pursuant to a collective
agreement.

(l) “Capex Shortfall Amount” shall mean the amount, if any, by which the
Expended Capex Amount is less than $1,924,005.

(m) “Closing” shall mean the closing of the sale and purchase of the Shares
pursuant hereto.

(n) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(o) “Company Theaters” shall mean the Owned Theaters, the Leased Theaters and
the Managed Theaters.

(p) “Confidentiality Agreement” shall mean the confidentiality agreement dated
March 1, 2007 between Purchaser and Live Nation, Inc.

(q) “control” (including the terms “controlled by” and “under common control
with”), with respect to the relationship between or among two or more Persons,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the
power to elect a majority of the board of directors or similar body governing
the affairs of such Person.

 

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(r) “Employee” shall mean any employee of the Target Group Companies.

(s) “Employment Contract” shall mean any written employment agreement with an
Employee that is binding upon any of the Target Group Companies and is not
terminable by the employer on ninety (90) days’ notice or less without material
cost or penalty.

(t) “Encumbrance” shall mean any security interest, pledge, mortgage, lien
(statutory of otherwise), hypothec, charge or other encumbrance of any kind
other than Permitted Encumbrances.

(u) “Environmental Laws” shall mean any Law currently in effect relating to the
protection or restoration of the environment, to industrial hygiene, or to the
treatment, storage, handling, presence, transport, disposal or management of
Hazardous Materials.

(v) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

(w) “ERISA Affiliate” shall mean, with respect to any Person, any other Person
that, as of any relevant measuring date under ERISA, was or is required to be
treated along with such Person as a single employer under Section 414 of the
Code.

(x) “Expended Capex Amount” shall mean the sum of (i) $557,806 and (ii) the
amount actually expended in cash after September 30, 2007 but prior to or on the
Closing Date for the contractually required capital expenditures with respect to
the Historic Theater Group’s theaters in Minneapolis and the France-Merrick
(Hippodrome) Theater in Baltimore.

(y) “First Class Legitimate Theater” shall mean (i) in Boston, the first class
theatres presently known as The Boston Opera House, The Shubert Theatre, The
Wang, The Wilbur Theatre and any similar first class theatres subsequently
constructed in the greater Boston, Massachusetts area, (ii) in Baltimore, the
first class theatre presently known as The Opera House and any similar first
class theatres subsequently constructed in the greater Baltimore area, (iii) in
Minneapolis/Saint Paul, the first class theatres presently known as The Ordway,
The Guthrie and any similar first class theatres subsequently constructed in the
greater Minneapolis/Saint Paul area, and (iv) in Toronto, the first class
theatres presently known as The Elgin Theatre, Hummingbird Center for The
Performing Arts, Princess of Wales, Roy Thompson Hall, Royal Alexandra Theatre,
Toronto Center for The Performing Arts, the Winter Garden Theatre, and any
similar first class theatres subsequently constructed in the greater Toronto
area.

(z) “Free Cash” shall mean, as of any date, the amount shown as “Free Cash” on
the Target Group Companies internal balances sheets as prepared in the normal
course of business and in a manner and utilizing a methodology consistent with
the Agreed Manner and Methodology. For purposes of calculating the Free Cash of
the Target Group Companies, the Free Cash of any Target Subsidiary that is less
than wholly-owned, directly or indirectly, by the Target Parent Companies, will
be multiplied by the Target Parent Companies’ then effective percentage share of
that Target Subsidiary’s Free Cash before including the Free Cash of that Target
Subsidiary in the calculation of Free Cash for the Target Group Companies. For
example, if a Target Parent Company is entitled to receive 80% of cash
distributions from a Target Subsidiary, then only 80% of that Target
Subsidiary’s Free Cash will be included in the calculation of Free Cash of the
Target Group Companies.

 

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(aa) “Free Cash Estimated Deficit Amount” means the amount by which the Free
Cash of the Target Group Companies, as reflected in the internally prepared
monthly financial statements of the Target Group Companies as of December 31,
2007 that are prepared in the ordinary course and as calculated consistent with
the Agreed Manner and Methodology, is less than $2,400,000.

(bb) “Free Cash Final Deficit Amount” means the amount by which the Free Cash of
the Target Group Companies, as of the close of business on the Closing Date, is
less than $2,400,000.

(cc) “GAAP” shall mean generally accepted accounting principles and practices as
in effect from time to time of the United States or Canada, as applicable.

(dd) “Governing Documents” shall mean, with respect to any business
organization, those documents, instruments and agreements that govern the
formation, ownership, management and/or operation of such business organization,
including, without limitation, (i) in the case of a corporation, Articles of
Incorporation, Bylaws, and any Shareholders Agreement, (ii) in the case of a
limited liability company, a Certificate of Formation (or similar document) and
any Operating Agreement (or similar document), and (iii) in the case of a
partnership, a Certificate of Formation (or similar document), if any, and any
Partnership Agreement (or similar document).

(ee) “Governmental Authority” shall mean any United States or Canadian federal,
state, provincial, territorial or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or any arbitrator,
court, tribunal or judicial body, including state attorneys general, but
excluding any such entity acting in the capacity of a lessor, licensor,
licensee, owner or operator of any public gathering facility.

(ff) “Governmental Order” shall mean any order, writ, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

(gg) “Hazardous Materials” shall mean any hazardous or toxic substance, material
or waste defined, listed, or classified as such in any Environmental Law,
including, without limitation, asbestos, petroleum, polychlorinated biphenyls,
and urea-formaldehyde insulation.

(hh) “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.

(ii) “Indebtedness” shall mean any indebtedness for borrowed money.

(jj) “Knowledge” shall mean (i) with respect to Purchaser, the actual knowledge
(without independent inquiry) of the executive officers of Purchaser and
(ii) with respect to Seller, the actual knowledge (without independent inquiry)
of the following executive officers of Seller: Michael Rapino, Lee Ann Gliha,
Kathy Willard and Michael Rowles.

(kk) “Law” shall mean any applicable statute, law, ordinance, regulation or rule
of any Governmental Authority.

(ll) “Liabilities” shall mean any and all liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured.

 

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(mm) “Material Adverse Effect” shall mean, except as provided in the next
succeeding sentence, any material adverse effect on (a) the business, assets,
results of operations or financial condition of the Target Group Companies,
taken as a whole, or (b) the ability of the Seller to consummate the
transactions contemplated hereby. Notwithstanding the foregoing, a Material
Adverse Effect will not include any effect (i) affecting companies engaged in
all or any part of the Target Business generally, (ii) resulting from terrorist
threats or other acts of hostility or from general economic, business, social,
political or regulatory conditions, (iii) resulting from the announcement or
performance of this Agreement, the transactions contemplated hereby or the
Auction, (iv) resulting from any actions required under this Agreement to obtain
any approval, waiver or consent from any Person or Governmental Authority,
(v) resulting from changes made by the Target Group Companies in their
accounting methods or principles of practice, as required by applicable Law or
GAAP, (vi) resulting from the loss of services of any Employees or
(vii) attributable to or caused by changes in the U.S. securities markets.

(nn) “Minneapolis Guaranty” shall mean that certain Guaranty Agreement executed
by Seller in favor of the City of Minneapolis and dated as of December 1, 2005
in which Seller unconditionally guaranteed the full and prompt payment and
performance of the obligations of the tenant under that certain Lease Agreement
dated as of December 1, 2005 between the City of Minneapolis, as landlord, and
Hennepin Theater Trust, as tenant.

(oo) “Minneapolis Liens” means the security interests created in favor of Seller
pursuant to the Minneapolis Lien Documents on those assets of Historic Theatre
Group, LLC and Live Nation Theatrical Group, Inc. relating to their respective
operations in Minneapolis, including (i) the Management Agreement dated
December 1, 2005 by and between Historic Theatre Group, LLC and Hennepin Theatre
Trust and (ii) the Consulting Agreement dated December 1, 2005 between Live
Nation Theatrical Group, Inc. and Hennepin Theatre Trust.

(pp) “Minneapolis Lien Documents” means the following documents executed in
favor Seller to secure performance of the liabilities of Historic Theatre Group,
LLC under a Loan Agreement dated of even date herewith relating to loans that
may be extended in connection with the funding of obligations guaranteed by
Seller pursuant to the Minneapolis Guaranty: (i) the Security Agreement dated
December 1, 2005 and executed by Historic Theatre Group, LLC and Hennepin
Theatre Trust in favor of Seller, as amended by the Security Agreement of even
date herewith between Seller and Historic Theatre Group, LLC and (ii) that
certain Security Agreement dated of even date herewith and executed by Historic
Theatre Group, LLC and Live Nation Theatrical Group, Inc. in favor of Seller.

(qq) “Office Lease” shall mean a lease agreement, sublease agreement or other
rental contract whereby a Target Group Company receives the right to occupy and
possess office space for the conducting of normal office functions.

(rr) “Ordinary Course Agreements” shall mean (i) any presenting agreement with
the show entered into by a Target Group Company in the ordinary course of
business and consistent with past practices for one touring production in a BAA
Market, (ii) any contract (other than the presenting agreement with the show)
entered into by a Target Group Company in the ordinary course of business and
consistent with past practices that relates to the presentation of one touring
production in a BAA Market, (iii) any Ordinary Presenting Agreement and (iv) any
contract entered into by Network Presentations, LLC in the ordinary course and
consistent with past practices that relate to the production of a show, such as
agreements with cast members, designers and directors, and that involve
financial commitments consistent with the production budget for such show;
provided that any agreement that would otherwise be covered under clause
(ii) that contains fixed and/or contingent payments in excess of $200,000
payable to a single individual will not be an “Ordinary Course Agreement” for
purposes hereof.

 

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(ss) “Ordinary Presenting Agreement” shall mean a lease, license or similar
arrangement entered into by a Target Group Company in the ordinary course of
business in which a third party presenter or producer is given the right to
present a specific theatrical production for a specified term in a Company
Theater.

(tt) “Permitted Encumbrances” shall mean: (A) liens for Taxes, assessments and
governmental charges or levies not yet subject to penalties for delinquent
nonpayment or which are actively being contested, (B) Encumbrances in respect of
property or assets imposed by Law which were incurred in the ordinary course of
business, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens
and other similar liens, (C) pledges or deposits made in the ordinary course of
business to secure obligations under workers’ compensation laws or similar
legislation or to secure public or statutory obligations, (D) land use
planning/zoning, building restrictions, entitlements, restrictive covenants and
other land use and environmental regulations by any Governmental Authority,
(E) rights of eminent domain or expropriation, as applicable, in respect of any
real property unless notice of the exercise thereof has been previously provided
to Seller or its Affiliates, (F) encumbrances that will be discharged or
released prior to the Closing, (G) with respect to any real property, easements,
rights in the nature of easements, restrictions, concessions, licenses, rights
of access, covenants, servitudes, terms of governmental permits, minor survey
exceptions, title defects, encroachments or irregularities and other
Encumbrances which either (x) do not materially interfere with or materially
restrict the current use and operation of such real property or (y) are
required, necessary or useful in connection with the current use and operation
of such real property, (H) as to any real property leased to a Target Group
Company, any Encumbrance affecting the interest of the fee title owner of such
real property, (I) such other encumbrances that are not substantial and do not
materially detract from or interfere with the present or intended use of the
asset in question, (J) liens given to a public utility or any governmental
authority when required by such utility or governmental authority in connection
with the operations of that Person in the ordinary course of business and
(K) any conditions that would be shown by a current, accurate survey or physical
inspection. With respect to real property located in Canada, the term “Permitted
Encumbrances” shall include (i) any reservations, limitations, provisos and
conditions expressed in any original grant from the Crown and (ii) all
unregistered rights, interests and privileges in favour of the Crown under or
pursuant to any applicable statute or regulation, provided the same do not arise
as a result of some failure to comply with a governmental requirement.

(uu) “Person” shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization, joint venture, limited
liability company or other entity.

(vv) “Post-Closing Tax Period” means any Tax period beginning after the close of
business on the Closing Date and that portion of any Straddle Period beginning
after the Closing Date.

(ww) “Purchased Presenting Business” shall mean the business of the Seller Group
Companies in North America involving the operation of a subscription series for
touring Theatrical Shows in various local markets, as currently being operated
under the trade name of “Broadway Across America”.

(xx) “Pre-Closing Tax Period” shall mean all taxable periods ending on or before
the Closing Date and that portion of any Straddle Period ending on the Closing
Date.

 

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(yy) “Presenting Business” shall mean the type of business operated by the
Seller Group Companies in North America involving the operation of a
subscription series for touring Theatrical Shows in various local markets, as
currently being operated under the trade name of “Broadway Across America”.

(zz) “Prime Rate” the base lending rate posted by 75% of the largest banks in
the United States as published daily in the Wall Street Journal.

(aaa) “Proprietary Right” shall mean any copyright, trademark, service mark,
trade name, brand name, logo, domain name, URL, or custom software application
currently being used by the Target Group Companies in the Target Business.

(bbb) “Regulations” shall mean the Treasury Regulations (including temporary
regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal Tax statutes.

(ccc) “Return or Returns” shall mean all returns, declarations, reports, claims
for refund or information returns or statements, including any schedule or
attachment thereto, and including any amendment thereof filed or to be filed
with any Tax Authority.

(ddd) “Securities Act” shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

(eee) “Seller Bank Account” shall mean one or more bank accounts to be
designated by Seller in a written notice to Purchaser at least two (2) Business
Days before the Closing.

(fff) “Seller Group Companies” shall mean the Seller and all of the Seller’s
Affiliates other than the Target Group Companies.

(ggg) “Seller Group Company” shall mean any one of the Seller Group Companies.

(hhh) “Seller’s Senior Lender Agent” means JPMorgan Chase Bank, N.A., as
Administrative Agent for the lenders under the Senior Facility.

(iii) “Senior Facility” shall mean the Credit Facility (as amended) created in
favor of Seller and its Affiliates pursuant to that certain Amended and Restated
Credit Agreement dated as of June 29, 2007 by and among Live Nation, Inc.,
Seller and others, as borrowers, and JPMorgan Chase Bank, N.A., as
Administrative Agent, and others.

(jjj) “Senior Facility Liens” shall mean the liens and security interests that
secure the repayment of the Senior Facility.

(kkk) “Senior Lender Waiver” shall mean that Seller’s Senior Lender Agent has
agreed, in writing, to release, at the Closing, (i) the Senior Facility Liens on
the Shares and on the Target Group Assets and (ii) all of the Target Group
Companies from all liabilities in respect of the Senior Facility.

(lll) “Separate Return or Return(s)” shall mean any Return that is not a
consolidated, combined or unitary Return.

 

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(mmm) “Straddle Period” shall mean any taxable period that includes (but does
not end on) the Closing Date.

(nnn) “Target Business” shall mean the Venue Business and the Purchased
Presenting Business.

(ooo) “Target Group Assets” shall mean all of the assets of the Target Group
Companies other than the Excluded Assets.

(ppp) “Target Group Companies” shall mean the Target Parent Companies and the
Target Subsidiaries.

(qqq) “Target Group Company” shall mean any one of the Target Group Companies.

(rrr) “Target Subsidiaries” shall mean Networks Presentations LLC and all
corporations, partnerships, limited liability companies and other entities with
respect to which the Target Parent Companies, directly or indirectly, own 50% or
more of the securities having the power to elect members of the board of
directors or similar body governing the affairs of such entity.

(sss) “Target Subsidiary” shall mean any one of the Target Subsidiaries.

(ttt) “Tax” or “Taxes” shall mean all federal, state, provincial, local and
foreign income, profits, franchise, gross receipts, payroll, sales,
employment-related, use, property, real estate, escheat, excise, license, value
added, estimated, stamp, utility, alternative or add-on minimum, environmental,
withholding and any other taxes, duties, levies or assessments, together with
all interest, penalties and additions attributable to or imposed with respect to
such amounts.

(uuu) “Tax Authority” and “Taxing Authority” shall mean any domestic, foreign,
federal, national, state, provincial, county or municipal or other local
government, any subdivision, agency, commission or authority thereof, or any
quasi-governmental body exercising any taxing authority or any other authority
exercising Tax regulatory authority.

(vvv) “Theatrical Show” shall mean a live entertainment event featuring a
professional Broadway-type dramatic and/or dramatic-musical attraction of the
type presented on Broadway.

(www) “TTL” shall mean Toronto Theater Ltd., an Ontario corporation and one of
the Target Subsidiaries.

(xxx) “TTL Debt” shall mean the outstanding Indebtedness owed by TTL to the
Seller in the current principal amount of the TTL Debt Amount.

(yyy) “TTL Debt Amount” shall mean $24,500,000, which represents the aggregate
outstanding principal amount of the TTL Debt as of the date hereof.

(zzz) “Venue Business” shall mean the business of owning, operating or managing
the Company Theaters but excluding any activities related to the Purchased
Presenting Business being conducted in the Company Theaters.

 

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SECTION 1.2 Other Defined Terms. The following terms shall have the meanings
defined for such terms in the Sections set forth below:

 

Term

  

Section

Active Theatrical Investment

   3.6(b)

Acquisition Transaction

   5.16(i)

Agreed Manner and Methodology

   1.1(y)

Applicable Chicago Theaters

   5.16(h)

Arbitrating Accountant

   2.3(b)(iii)

Assumption Agreement

   5.12(a)

Auction Confidentiality Agreements

   5.10(e)

BAA Markets

   3.9

Back-to-Back LCs

   5.12(c)(i)

Bank

   2.1(f)

BIC Chicago Ownership Covenant

   5.16(h)(iii)

BIC Transaction

   5.16(h)(iv)

Boston Playhouse Lien

   9.2(a)(iii)

Canadian Employee Benefit Plans

   3.14(a)

Cash Closing Payment

   2.1(d)

Closing Date

   2.2

“commercially reasonable efforts”

   5.1(b)

Continued Employees

   6.1(a)

Customer Database

   5.15

Deposit Escrow Funds

   2.1(f)

DOJ

   5.3(c)

Due Date

   5.17(a)

Elections

   7.1(a)

Employee Benefit Plans

   3.14(a)

Equity Consideration

   2.1(b)

Excluded Assets

   5.11

Financial Statements

   3.7(a)(iv)

First Party

   9.4(e)

Free Cash Statement

   2.3(b)(i)

FTC

   5.3(c)

Governmental Conditions

   5.3(c)

Historical TM Allocation Methodology

   5.13(c)

Incidental

   5.16(c)

Indefinitely Surviving Representations

   9.1

Indemnified Party

   9.2(c)

Indemnifying Party

   9.2(c)

Insurance Policies

   3.19

Interest Commencement Date

   2.1(c)

Lease

   3.10(a)

Leased Theaters

   3.10(a)

LN Guarantees

   5.12(a)

LN LCs

   5.12(b)

LN Marks

   5.7

Local Presenter

   3.9

Local Venue

   3.9

Loss(es)

   9.2(a)

Managed Theaters

   3.10(a)

Minneapolis Excluded Obligations

   5.12(a)

Minneapolis Theaters

   5.16(i)

Multiemployer Plan

   3.14(b)

 

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Note Purchaser

   2.1(b)(i)(B)

Outside Date

   10.1(a)

Owned Theaters

   3.10(a)

Party/Parties

   Preamble

Property Taxes

   9.4(c)(i)

Purchaser

   Preamble

Purchaser Plans

   6.2

Purchaser Tax Act

   9.4(a)

Records

   5.10(b)

Replacement LCs

   5.12(b)

Retained Amount

   5.17

Refusal Notice

   2.2(b)

Second Party

   9.4(e)

Section 338 Allocation

   7.1(c)

Section 338 Forms

   7.1(b)

Seller

   Preamble

Seller Confidential Information

   5.10(c)

Shares

   Recitals

Target Parent Companies

   Recitals

Tax Amount

   5.17(e)

Tax Claim

   9.4(e)

TCN Price

   2.4(h)

TCN Shares

   2.4(h)

Third Party Claims

   9.2(c)

Total Consideration Amount

   2.1(a)

Transition Services Agreement

   5.14

Unreturned LC

   5.12(c)(i)

SECTION 1.3 Other Interpretive Provisions. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified. The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”. The meanings
given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.

ARTICLE II

PURCHASE AND SALE

SECTION 2.1 Purchase and Sale.

(a) Upon the terms and subject to the conditions of this Agreement, at the
Closing Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, the Shares. The aggregate consideration for the Shares, including
acceptance of the Shares with the TTL Debt outstanding, shall be $90,400,000
(the “Total Consideration Amount”), which shall be payable as more fully
described below.

(b) Purchaser will pay to Seller at the Closing, a net purchase price (the
“Equity Consideration”) equal to (i) the Total Consideration Amount; (ii) less
the TTL Debt Amount; (iii) less the Free Cash Estimated Deficit Amount as
provided in Section 2.3(a)(i), and (iv) less the Capex Shortfall Amount.

 

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(c) In addition, Purchaser will accept the transfer and assignment of the Shares
with the TTL Debt outstanding and make arrangements to pay the TTL Debt Amount
to the Seller in cash at the Closing. At the option of Purchaser, the payment of
the TTL Debt Amount at the Closing will be made either as—

(i) a payment and discharge by TTL of the TTL Debt; or

(ii) a purchase of the TTL Debt from Seller by a financing source (the “Note
Purchaser”) of the Purchaser and/or TTL.

(d) In addition to the payment of the TTL Debt Amount and the Equity
Consideration (collectively, the “Cash Closing Payment”), the Purchaser shall
also be required (i) to assume certain of the obligations of Seller under the LN
Guarantees as required by Section 5.12(a) and (ii) issue letters of credit as
required by the provisions of Section 5.12(b) and (c). The Cash Closing Payment
shall be paid without reduction or offset for any amount relating to any of the
Excluded Assets.

(e) [Intentionally deleted].

(f) Upon execution of this Agreement, Purchaser shall provide written
instructions to Wells Fargo Bank, National Association (“Bank”) to pay to Seller
by wire transfer the Seven Million Five Hundred Thousand Dollar ($7,500,000.00)
deposit (and any undistributed interest held by Bank in respect of such deposit)
(such deposit, together with any undistributed interest earned thereon, herein
called the “Deposit Escrow Funds”) that was previously deposited by Purchaser
with Bank pursuant to an escrow agreement related to this transaction and
entered into by and among Purchaser, Seller and Bank. The Deposit Escrow Funds
shall be applied towards the Purchaser’s payment obligations at the Closing.

SECTION 2.2 Closing. Upon the terms and subject to the conditions of this
Agreement, the Closing shall be held at the offices of Jeffer, Mangels, Butler &
Marmaro, LLP, 1900 Avenue of the Stars, Los Angeles, California 90067, 10:00
a.m. Pacific Time on the date of the execution of this Agreement (or at such
other place or at such other time as Seller and Purchaser may mutually agree
upon in writing) (the day on which the Closing takes place being referred to
herein as the “Closing Date”).

SECTION 2.3 Adjustments to the Total Consideration Amount for Free Cash Deficit.

(a) Seller shall pay to Purchaser, as a downward adjustment to the Total
Consideration Amount, the Free Cash Final Deficit Amount as follows:

(i) As a deposit against Seller’s obligation under this Section 2.3(a),
Purchaser is authorized to reduce the amount otherwise payable at the Closing
pursuant to Section 2.1(a) hereof by the Free Cash Estimated Deficit Amount.

(ii) Within five (5) business days following the date upon which the amount of
Free Cash as of the close of business on the Closing Date is finally determined
in accordance with the provisions of Section 2.3(b), the payment obligation of
Seller pursuant to this Section 2.3(a) will be settled as follows:

(A) If the Free Cash Final Deficit Amount exceeds the Free Cash Estimated
Deficit Amount, then Seller will pay the amount of such excess to Purchaser.

 

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(B) If the Free Cash Estimated Deficit Amount exceeds the Free Cash Final
Deficit Amount, then Purchaser will pay the amount of such excess to Seller.

(b) The Free Cash Final Deficit Amount shall be determined in accordance with
the following provisions:

(i) Seller shall prepare a written statement setting forth a determination of
Free Cash of the Target Group Companies as of the close of business on the
Closing Date (the “Free Cash Statement”) with reasonable detail reflecting the
calculation of Free Cash and the components thereof as of such date. The Free
Cash Statement shall be prepared by or at the direction of the Seller. Seller
shall use reasonable efforts to cause the Free Cash Statement to be delivered to
Purchaser within forty-five (45) days following the Closing Date. Purchaser
shall make available to Seller, and its accountants and other representatives,
such information, books, records, and personnel of the Target Group Companies
and provide such assistance as Seller shall reasonably request at any time
during the preparation by Seller of the Free Cash Statement.

(ii) Before finalization, the Free Cash Statement must be mutually agreed upon
by Seller and Purchaser.

(iii) If Seller and Purchaser are unable to resolve any dispute concerning the
contents of the Free Cash Statement within the thirty (30) day period following
delivery by Seller to Purchaser of the Free Cash Statement, a mutually approved
Big 4 Accounting Firm that does not regularly perform services for the Seller
Group Companies or the Purchaser or its Affiliates (the “Arbitrating
Accountant”) shall be engaged as arbitrator hereunder to settle such dispute as
soon as practicable. In connection with the resolution of any such dispute, the
Arbitrating Accountant shall have access to all documents, records, work papers,
facilities and personnel necessary to perform its function as arbitrator. The
Arbitrating Accountant’s function shall be to review only those items which are
in dispute and to resolve the dispute with respect to such items. The
Arbitrating Accountant’s award with respect to any such dispute shall be final
and binding upon the parties hereto, and judgment may be entered on the award.
The fees and expenses of the Arbitrating Accountant shall be allocated between
Seller, on the one hand, and Purchaser, on the other hand, so that (A) Seller
shall pay an amount equal to the product of (x) and (y), where (x) is the
aggregate amount of such fees and expenses, and where (y) is a fraction, the
numerator of which is the amount in dispute that is successfully disputed by
Purchaser (as determined by the Arbitrating Accountant), and the denominator of
which is the total value in dispute and (B) Purchaser shall pay the remaining
portion of such fees and expenses that are not payable by Seller.

(iv) Purchaser and Seller shall cooperate with one another in connection with
providing information to one another relating to the calculation of the Free
Cash Final Deficit Amount.

 

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SECTION 2.4 Closing Deliveries by Seller. At the Closing, Seller shall deliver
to Purchaser:

(a)(i) stock certificates evidencing the Shares duly endorsed in blank by an
authorized officer of Seller, or accompanied by stock powers duly executed in
blank by an authorized officer of Seller, in form reasonably satisfactory to
Purchaser and (ii) a receipt for the payment of the Equity Consideration;

(b)(i) the original signed promissory note evidencing the TTL Debt endorsed
“paid in full” if Purchaser chooses the option described in Section 2.1(c)(i) or
endorsed “pay to the order of Note Purchaser without recourse” if Purchaser
chooses the option described in Section 2.1(c)(ii) and (ii) a receipt for the
payment of the TTL Debt Amount;

(c)(i) the resignations of the directors of the Target Group Companies as
required by Section 5.9(a) and (ii) the instrument of release executed by Seller
as required by Section 5.9(b);

(d) executed counterparts of the Transition Services Agreement (if required
pursuant to Section 5.14);

(e) To the extent obtained, written consent from the counterparty to each
contract listed on Schedule 3.3 consenting to the sale of the Shares by Seller
to Purchaser and releasing any claim that it may have to (i) treat the transfer
of the Shares by Purchaser to Seller as a breach of the applicable contract
and/or (ii) terminate the applicable contract by reason of the sale of the
Shares by Seller to Purchaser; and

(f) if obtained, a certificate issued by the Minister of National Revenue of
Canada under subsection 116(2) of the Income Tax Act (Canada) with a certificate
limit at least equal to the portion of the Equity Consideration payable by
Purchaser to Seller to acquire the Shares of TCN Theatre Group, Inc. (“TCN
Shares”) as indicated in Section 2.6 hereof (“TCN Price”).

SECTION 2.5 Closing Deliveries by Purchaser. At the Closing, Purchaser shall
deliver, or cause to be delivered, to Seller:

(a) A signed letter of instruction to Bank directing Bank to deliver the Deposit
Escrow Funds to Seller as described in Section 2.1(f);

(b) the Closing Cash Payment, less the amount of the Deposit Escrow Funds, by
wire transfer in immediately available funds to the Seller Bank Account;

(c) a receipt for the Shares and for the original signed promissory note
evidencing the TTL Debt;

(d) the instrument of release executed on behalf of the Target Parent Companies
as required by Section 5.9(c);

(e) the Assumption Agreement referred to in Section 5.12(a) reasonably
satisfactory to Purchaser and Seller;

(f) evidence reasonably satisfactory to Seller that Purchaser has caused letters
of credit to be issued as required by the provisions of Section 5.12(b) and (c);
and

(g) executed counterparts of the Transition Services Agreement (if required
pursuant to Section 5.14).

 

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SECTION 2.6 Allocation of Equity Consideration Among the Target Parent
Companies. Purchaser and Seller agree that the Equity Consideration is
allocable, based upon the relative fair market values of the Shares of each of
the Target Parent Companies, between the TCN Shares and the Shares of the other
Target Parent Companies as set forth in Schedule 2.6. Each party hereto agrees
not to assert, in connection with any tax return, tax audit or similar
proceeding, any allocation of the Equity Consideration between the TCN Shares
and the Shares of the other Target Parent Companies that differs from the
foregoing allocation.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Purchaser as follows:

SECTION 3.1 Organization. Seller is duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of the
Target Group Companies is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing (reference to good
standing of any Canadian entity refers only to the fact that it has a
certificate of compliance or equivalent) under the laws of its jurisdiction of
organization, has all requisite power to own its properties and to carry on its
business as it is now being conducted and is duly licensed or qualified to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such license or qualification
necessary, except where the failure to be so licensed or to so qualify would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Complete and correct copies of the Governing Documents of the
Target Parent Companies have been made available to Purchaser.

SECTION 3.2 Authority; Enforceability. Seller has the corporate power and
authority to execute and deliver this Agreement and the Transition Services
Agreement and perform its obligations hereunder and thereunder. The execution
and delivery by Seller of this Agreement and the Transition Services Agreement
and the performance by Seller of its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action on the part of Seller.
This Agreement and the Transition Services Agreement have been duly executed and
delivered by Seller and, assuming due authorization, execution and delivery by
Purchaser, constitute legal, valid and binding agreements of Seller, enforceable
against Seller in accordance with their respective terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors’ rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).

SECTION 3.3 Non-Contravention. Except as set forth in Schedule 3.3, the
execution, delivery and performance by Seller of this Agreement and the
Transition Services Agreement do not and will not (a) violate, conflict with or
result in the breach of any provision of the Governing Documents of the Target
Parent Companies, (b) subject to Section 3.4, conflict with or violate any Law
or Governmental Order applicable to the Seller Group Companies, the Target Group
Companies or any of their respective assets or properties, except for such
conflicts or violations as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (c) conflict with,
result in any breach of, constitute a default under, require any consent under,
or give to others any rights of termination, amendment or acceleration of, or
result in the creation of any Encumbrance on any of the Shares or on any of the
Target Group Assets pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, license, permit or franchise to which any of the
Seller Group Companies or the Target Group Companies is a party or by which any
of the Shares or any of the Target Group Assets is bound or affected, except for
such conflicts, breaches, defaults, consents, rights and Encumbrances, as would
not,

 

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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (d) require any consent under any of the operating agreement
for Networks Presentations LLC, the operating agreement for The Booking Group,
LLC or the agreements described under Section 3.11(a)(iii) and (vii).

SECTION 3.4 Governmental Consents. Except as set forth in Schedule 3.4, the
execution, delivery and performance by Seller of this Agreement and the
Transition Services Agreement do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority in connection with the consummation of the transactions
contemplated herein or therein, except for (i) filings under the HSR Act,
(ii) if required, the notification and/or review requirements under the
Competition Act (Canada) and the Investment Canada Act, (iii) the application to
and consent of the Alcohol & Gaming Commission of Ontario to the transfer of the
Canon Theatre Liquor License, (iv) those that may be required by the nature of
the business or ownership of Purchaser and its Affiliates and (v) those the
failure to obtain or make would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

SECTION 3.5 Capital Stock of the Target Parent Companies. Set forth on Schedule
3.5 is the number of authorized, issued and outstanding shares of capital stock
of each Target Parent Company and its jurisdiction of incorporation. All of the
issued and outstanding shares of capital stock of the Target Parent Companies
are, or at the Closing will be, owned of record free and clear of any
Encumbrances by Seller. Except as set forth on Schedule 3.5: (i) all of such
issued and outstanding shares have been validly issued, are fully paid and
nonassessable and have not been issued in violation of any preemptive or similar
rights; (ii) there are no outstanding options, warrants, calls, rights or any
other agreements relating to the sale, issuance or voting of any shares of the
capital stock of the Target Parent Companies, or any securities or other
instruments convertible into, exchangeable for or evidencing the right to
purchase any shares of capital stock of the Target Parent Companies; and
(iii) the transfer and delivery of the Shares by Seller to Purchaser as
contemplated by this Agreement will transfer good title to the Shares to
Purchaser, free and clear of all Encumbrances, except Encumbrances arising as a
result of any action taken by Purchaser or any of its Affiliates.

SECTION 3.6 Target Subsidiaries and Equity Investments.

(a) Schedule 3.6(a) lists each of the Target Subsidiaries. Set forth on Schedule
3.6(a) is the number of authorized, issued and outstanding shares of capital
stock of each Target Subsidiary that is a corporation (or a list of outstanding
ownership interests for other entities) and its jurisdiction of organization.
Except as set forth in Schedule 3.6(a), all the outstanding shares of capital
stock or other equity interests of each of the Target Subsidiaries have been
validly issued, are fully paid and nonassessable, have not been issued in
violation of any preemptive or similar rights, and are owned of record by one of
the Target Group Companies free and clear of any Encumbrances. Except as set
forth on Schedule 3.6(a), there are no outstanding options, warrants, calls,
rights or any other agreements relating to the sale, issuance or voting of any
shares of the capital stock or other equity interests of any Target Subsidiary,
or any securities or other instruments convertible into, exchangeable for or
evidencing the right to purchase any shares of capital stock or other equity
interests of any Target Subsidiary.

(b) Schedule 3.6(b) sets forth a true, correct and complete list of (i) all of
the Target Group Company’s investments in currently active theatrical
productions (the “Active Theatrical Investments”), (ii) the book value, as of
the date indicated thereon, for each Active Theatrical Investment and (iii) the
agreements (oral or written) that create or govern the ownership interest of the
Target Group Companies in each Active Theatrical Investment. The Target Group
Companies own good and valid title to each Active Theatrical Investment, and
none of the Active Theatrical Investments are subject to any lien or pledge to
secure any debts, liabilities or

 

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obligations of any Person. Except as indicated on Schedule 3.6(b), the
execution, delivery and performance by Seller of this Agreement do not and will
not violate, conflict with or result in the breach of, constitute a default
under, require any consent under, or give to others any rights of termination,
amendment or acceleration of, or result in the creation of any Encumbrance on
any of the Active Theatrical Investments pursuant to, any document, agreement or
contract that creates or governs the ownership interest of the Target Group
Companies in the Active Theatrical Investments.

(c) Except as set forth on Schedule 3.6(c), there is no corporation, partnership
or other entity in which the Target Parent Companies, directly or indirectly,
own any material equity interest other than (i) the Target Subsidiaries and
(ii) investments in active or inactive theatrical productions.

SECTION 3.7 Financial Information.

(a) Seller has delivered to Purchaser accurate and complete copies of the
audited consolidated or combined balance sheets of the Target Group Companies as
of December 31, 2005 and December 31, 2006, and the related audited consolidated
or combined statements of income, owners’ equity and cash flows for each of the
years then ended, and the notes and schedules thereto, prepared in conformity
with GAAP, together with the reports thereon of Ernst & Young, independent
public accountants (all of the foregoing being herein collectively called the
“Financial Statements”).

(b) The Financial Statements (i) have been prepared from the books and records
of the Target Group Companies in conformity with GAAP applied on a basis
consistent in all material respects with preceding years throughout the periods
involved and (ii) fairly present, in all material respects, the consolidated or
combined financial position of the Target Group Companies as of the respective
dates thereof and the consolidated or combined results of operations and cash
flows of the Target Group Companies for the periods then ended.

(c) The Target Group Companies have not operated as separate “stand alone”
entities within Seller’s affiliated group. As a result, the Financial Statements
include allocations to the Target Group Companies of certain allocated charges
and credits in accordance with Seller’s customary practices. Such charges and
credits do not necessarily reflect (i) the amounts that would have resulted from
arms-length transactions or (ii) all of the expenses, costs and charges that
would be necessary to properly operate the business of the Target Group
Companies as a “stand alone” business.

(d) Except as set forth in Schedule 3.7(d) and for Liabilities that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, there are no Liabilities of any of the Target Group Companies of
the nature required to be reflected as a liability on a balance sheet prepared
in accordance with GAAP, other than the TTL Debt and Liabilities (i) reflected
or reserved against on the audited consolidated or combined balance sheet of the
Target Group Companies as of December 31, 2006 or (ii) incurred since
December 31, 2006 in the ordinary course of business.

 

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SECTION 3.8 Absence of Certain Changes or Events. Except as expressly
contemplated by this Agreement or the Transition Services Agreement or as
described on Schedule 3.8, since December 31, 2006 and through the date of this
Agreement, the Target Group Companies have conducted their respective businesses
in all material respects only in the ordinary course and consistent with past
practice. Without limiting the generality of the foregoing, except as described
on Schedule 3.8, none of the Target Group Companies has since December 31, 2006:

(i) had a Material Adverse Effect occur;

(ii) merged or consolidated with, or acquired an interest in, any Person or
otherwise acquired any material assets, except for acquisitions in the ordinary
course of business consistent with past practice;

(iii) sold or otherwise disposed of any material properties or assets, except
for dispositions in the ordinary course of business consistent with past
practice;

(iv) incurred, assumed or guaranteed any Indebtedness, except for intercompany
obligations undertaken in the ordinary course of business with other Target
Group Companies or with Seller Group Companies;

(v) mortgaged, pledged or encumbered any material assets, other than pursuant to
Permitted Encumbrances;

(vi) issued, sold or redeemed any capital stock or other equity interests,
notes, bonds or other securities, or any option, warrant or other right to
acquire the same;

(vii) made any capital expenditure or commitment for any capital expenditure
other than capital expenditures or commitments made or undertaken (x) in
connection with any emergency repair, force majeure event or other unforeseen
circumstance beyond the control of the Target Group Companies or (y) for
maintenance, upkeep or repairs at the Company Theaters consistent with past
practices or with the most recent capital expenditures forecast for the Venue
Business;

(viii) increased the compensation or benefits payable to its Employees except
for increases in compensation or benefits in the ordinary course of business
consistent with past practice;

(ix) amended its Governing Documents; or

(x) entered into any contract or other agreement to do any of the foregoing.

SECTION 3.9 Subscription Markets. The Target Group Companies currently operate
or manage an annual “Broadway Theater” subscription series under the trade name
“Broadway Across America” in each of the markets listed on Schedule 3.9 (the
“BAA Markets”). Schedule 3.9 also indicates the following information for each
BAA Market:

(a) The local party, if any, that participates with the Target Group Companies
in the presentation of the theatrical events included in the subscription series
in such BAA Market (the “Local Presenter”);

 

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(b) The venue or venues in such BAA Market at which substantially all of the
theatrical events included in the subscription series in such BAA Market are
presented (the “Local Venue”);

(c) The dates of commencement and expiration of any agreements governing these
relationships and a summary of the renewal provisions (if any);

(d) [intentionally left blank]; and

(e) A schedule by market showing any special services or benefits or other
obligations required to be performed with respect to some or all of the Advance
Unearned Subscriptions, other than provision of the theater seat itself. For
purposes of illustration only and without intending to limit this provision in
any way, such obligations may include free parking for “Patron Club” members;
cocktail receptions in advance of the show etc.

SECTION 3.10 Properties.

(a) Theaters. Other than the Office Leases, Schedule 3.10(a) contains (A) a
complete and correct list of all real estate properties that are owned, leased
or managed by any of the Target Group Companies and (B) a designation as to
which of those properties is (i) owned by a Target Group Company (the “Owned
Theaters”), (ii) leased to a Target Group Company (“Leased Theaters”) or
(iii) managed by, but not leased to, a Target Group Company (the “Managed
Theaters”). In this connection, the following matters are true and correct:

(i) Good and indefeasible title to each of the Owned Theaters is owned by the
specific Target Group Company indicated on Schedule 3.10(a), free and clear of
all Encumbrances other than leases and other encumbrances listed on Schedule
3.10(b) and Ordinary Presenting Agreements.

(ii) Schedule 3.10(a) also sets forth a list, for each of the Leased Theaters,
of the real property lease, including all amendments thereto, under which the
leasehold estate in favor of a Target Group Company has been created (each such
real property lease, as amended, being herein called a “Lease” and collectively
the “Leases”), and except as set forth thereon, (i) each Lease is a valid and
subsisting agreement and is in full force and effect in accordance with the
terms thereof, (ii) the Target Group Company designated thereon enjoys peaceful
and quiet possession of such Leased Theater, and (iii) there has not been any
material default (beyond any applicable notice, grace or cure period) under any
Lease by the lessee or, to the Seller’s Knowledge, the lessor thereunder, in
each case except for defaults which individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The rental set forth
in each Lease is the actual rental being paid, and except as listed on Schedule
3.10(a), there are no separate agreements or understandings with respect to the
same.

(iii) Schedule 3.10(a) also sets forth a list, for each of the Managed Theaters,
of the agreements, including all amendments thereto, under which the Target
Group Companies manage such Managed Theaters and/or are granted the right to
present events in such Managed Theater (each such management agreement and/or
presenting rights agreement, as amended, being herein called a “Management
Agreement” and collectively the “Management Agreements”), and except as set
forth thereon, (i) each Management Agreement is a valid and subsisting agreement
and is in full force and effect in accordance with the terms thereof and
(ii) there has not been any material default (beyond

 

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any applicable notice, grace or cure period) under any Management Agreement by
the manager thereunder or, to the Seller’s Knowledge, the other party
thereunder, in each case except for defaults which individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
The management fees, remuneration, revenue sharing and other amounts payable by
or to the Target Group Companies under each Management Agreement are the actual
amounts being paid, and except as listed on Schedule 3.10(a), there are no
material separate agreements or understandings with respect to the same.

(b) Current Use of Company Theaters. Except as set forth on Schedule 3.10(b), to
Seller’s Knowledge, the current use of each of the Company Theaters does not
violate the certificate of occupancy thereof (if any), any applicable deed
restrictions or any local zoning or similar land use or government regulations
in any way that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Seller has not received, as of the date
hereof, any written notice of any: (1) condemnation proceedings or eminent
domain proceedings pending or threatened against any of the Company Theaters;
(2) work orders or deficiencies pursuant to municipal bylaws, the Ontario
Building Code or the Ontario Fire Code which might result in the condemnation of
a Company Theater; or (3) expropriation proceedings pending or threatened
against any of the Company Theaters. Except as set forth in Schedule 3.10(b) and
except for Ordinary Presenting Agreements, (i) none of the Leased Theaters or
Owned Theaters are leased or subleased to any third party and (ii) no third
party has any right of possession or similar interest in or to the Leased
Theaters (except for the lessor of any Leased Theater as set forth in the
applicable Lease) or the Owned Theaters. None of the Target Group Companies is
in breach of or default under any of the leases or subleases that are listed on
Schedule 3.10(b) and, to the Seller’s Knowledge, no event has occurred that,
with or without notice or lapse of time or both, would result in a breach or a
default by any of the Target Group Companies under any such lease or sublease,
other than an immaterial breach or default.

(c) Survey and Title Insurance. The Target Group Companies have provided to the
Purchaser, with respect to each of the Company Theaters, a true, correct and
complete copy of all of the following that exist and are in the possession of
the Seller or its Affiliates:

(i) the most recently prepared survey reflecting the actual dimensions of, and
area within, the real property on which such Company Theater is located and the
location of all easements, set-back lines, encroachments or overlaps thereon or
thereover, and the outside boundary lines of all improvements; and

(ii) the most recently issued policy of title insurance in favor of a Target
Group Company and covering such Company Theater.

(d) No Liens on Assets. Other than the Minneapolis Liens, the Senior Facility
Liens and the Boston Playhouse Lien, none of the assets of the Target Group
Companies are subject to any lien or pledge given to secure the debts,
liabilities or obligations of any Person.

 

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SECTION 3.11 Contracts.

(a) Principal Contracts. Except for contracts relating to investments in active
or inactive theatrical productions and the contracts listed on Schedule 3.11(a),
as of the date of this Agreement, none of the Target Group Companies is a party
to, or otherwise bound by, any:

(i) other than agreements with Local Presenters or Local Venues that restrict
the operation of the Purchased Presenting Business in the BAA Market covered by
such agreement, any contract containing covenants limiting the freedom of the
Target Group Companies after the date hereof to (x) engage in any line of
business in any geographic area, or (y) compete with any Person, in each case,
the violation of which would materially impair the operation of the business of
the Target Group Companies, taken as a whole;

(ii) partnership, limited liability company or joint venture agreements;

(iii) contract granting the right to, or requiring, any of the Target Group
Companies to present any touring production of any Theatrical Shows, including
family or children’s Theatrical Shows, in multiple BAA Markets;

(iv) contract or commitment that requires any of the Target Group Companies to
provide advertising privileges or exposure to any third party sponsor in any
single BAA Market that involves the payment of cash, services or other
consideration by such third party sponsor;

(v) Employment Contract;

(vi) Office Lease that is not terminable by the Target Group Companies on ninety
(90) days’ notice or less without cost or penalty;

(vii) contract with a Local Presenter or with the owner of a Local Venue that
governs the subscription series operated or managed by the Target Group
Companies in a BAA Market;

(viii) mortgage, pledge, security agreement, deed of trust or other instrument
creating or purporting to create an Encumbrance (other than the documents
creating the Minneapolis Liens and the Senior Facility Liens);

(ix) contract (other than this Agreement) for the sale of any assets of the
Target Group Companies after the date hereof;

(x) other than guarantees of the Senior Facility, guaranty of Indebtedness owed
by any Person (other than by a Target Group Company);

(xi) contract granting to any third party ticketing vendor the right, as agent
for the Target Group Companies, to sell tickets to events presented by any of
the Target Group Companies; or

(xii) contracts (other than Ordinary Course Agreements and the types of
contracts described in the preceding clauses of this Section 3.11(a)) which
require payments by the Target Group Companies after the date hereof in excess
of $200,000 (individually or in the aggregate) during any one-year period and
which is not otherwise described in this Agreement, listed on the Schedules
hereto or terminable by the Seller Group Companies on notice of ninety (90) days
or less without penalty.

 

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(b) No Defaults on Principal Contracts. Except as set forth on Schedule 3.11(b),
none of the Target Group Companies is (and, to Seller’s Knowledge, no other
party is) in breach of or default under any contract listed on Schedule 3.11(a),
and to the Seller’s Knowledge, no event has occurred that, with or without
notice or lapse of time or both, would result in a breach or a default
thereunder, other than an immaterial breach or default.

(c) Each Target Group Company is a party to each contract currently used in the
operation or conduct of such Target Group Company’s business.

SECTION 3.12 Compliance with Law. Except as disclosed on Schedule 3.12, to
Seller’s Knowledge, the Target Group Companies are in compliance with all Laws
applicable to them, except where the failure to so comply would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

SECTION 3.13 Litigation. Except as disclosed on Schedule 3.13, as of the date of
this Agreement, (i) there are no Actions pending or, to Seller’s Knowledge,
threatened against the Seller Group Companies or the Target Group Companies, and
(ii) neither the Seller Group Companies nor any of the Target Group Companies is
a party to or subject to or in default under any Governmental Order.

SECTION 3.14 Employees.

(a) Other than the Canadian Employee Benefit Plans, the Canadian Union Plans and
the Canadian Statutory Plans, Schedule 3.14 identifies each “employee benefit
plan,” as defined in Section 3(3) of ERISA, each management, agency, employment,
consulting, severance or other similar contract, arrangement or policy and each
stock option, stock purchase, deferred compensation plan or arrangement and each
other employee fringe benefit plan, program, agreement, commission, profit
sharing, bonus or incentive plan, or arrangement, excluding the Employment
Contracts, that is currently maintained by, contributed to or required to be
contributed to by Seller, its ERISA Affiliates or the Target Group Companies for
the benefit of the Employees (collectively, the “Employee Benefit Plans”). The
Seller has made available to the Purchaser true, correct and complete copies of
each Canadian Employee Benefit Plan. Except as set forth on Schedule 3.14 and
except as would not individually, or in the aggregate, reasonably be expected to
have a Material Adverse Effect, to Seller’s Knowledge (i) there is no pending or
threatened material litigation or administrative proceeding relating to any
Employee Benefit Plan or Canadian Employee Benefit Plan; (ii) there is no
material unfair labor practice proceeding or labor arbitration proceeding
pending or threatened against the Target Group Companies; (iii) all Employee
Benefit Plans have been established, maintained, operated, and administered in
accordance with their respective terms and in material compliance with all
applicable provisions of ERISA, the Code, and all other Laws; and (iv) all
reports and returns required to be filed with any Governmental Authority and all
information required to be provided to participants with respect to the Employee
Benefit Plans and the Canadian Employee Benefit Plans have been timely and
properly filed or provided.

(b) Each Employee Benefit Plan intended to be a qualified plan within the
meaning of Section 401(a) of the Code is so qualified, both as to form and
operation and has received a favorable determination letter from the Internal
Revenue Service as to its qualification that is current as of the Closing except
for changes required by the Economic Growth and Tax Relief Reconciliation Act
(with respect to which good faith amendments have been made), and each trust
created thereunder which is intended to be exempt from federal income tax under
Section 501(a) of the Code is, and has been so exempt from the date of its
establishment, and to the Seller’s Knowledge, no event has occurred or condition
exists that could adversely affect the qualified status of any Employee Benefit
Plan or the exempt status of any such trust

 

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(c) Except as set forth on Schedule 3.14, (i) the Target Group Companies are not
party to or subject to any collective bargaining agreement with any labor union
and there are no certification applications outstanding respecting the employees
of the Target Group Companies, nor are there any voluntary recognition
agreements, or any Knowledge of any union organizing campaigns respecting the
employees of the Target Group Companies, (ii) there is no labor strike, stoppage
or lockout actually pending or threatened against the Target Group Companies;
and (iii) none of the Target Parent Companies nor any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to any “multiemployer
plan” as defined in sections 4001(a)(3) and 3(37) of ERISA that covers one or
more Employees (each a “Multiemployer Plan”).

(d) Except as set forth on Schedule 3.14, none of the Target Group Companies and
ERISA Affiliates has, at any time, withdrawn from a Multiemployer Plan in a
“complete withdrawal” or a “partial withdrawal” as defined in Sections 4203 and
4205 of ERISA, respectively, so as to result in a liability of any of the Target
Group Companies.

(e) Except as set forth on Schedule 3.14, all contributions required to be made
by any of the Target Parent Companies or any ERISA Affiliate to each
Multiemployer Plan on behalf of one or more current or former Employees have
been made when due.

(f) Except as set forth on Schedule 3.14, Seller has received no written notice
that: (A) a Multiemployer Plan has been terminated or has been in reorganization
under ERISA so as to result in any liability of the Target Group Companies under
Title IV of ERISA; or (B) any proceeding has been initiated by any Person
(including the Pension Benefit Guaranty Corporation) to terminate any
Multiemployer Plan.

(g) Except as set forth on Schedule 3.14, to Seller’s Knowledge (i) the Canadian
Employee Benefit Plans are duly registered where required, and are in good
standing under all applicable laws including all Tax Laws where the same is
required for preferential treatment; (ii) no fact or circumstance exists that
would reasonably be expected to have a Material Adverse Effect on the
preferential tax treatment ordinarily accorded to any such Canadian Employee
Benefit Plan; (iii) all employer and employee contributions and premiums
required to be paid under the terms of each Canadian Employee Benefit Plan or by
applicable Law to the date hereof have been paid or accrued; and (iv) each
Canadian Employee Benefit Plan that is a funded plan is funded in material
compliance with the terms of such Employee Benefit Plan and all applicable Laws,
and no material past service funding liabilities exist thereunder.

(h) All contributions and premiums required to be paid to all Canadian Statutory
Plans have been paid by the Target Group Companies in accordance with Applicable
Laws.

(i) Schedule 3.14 attached hereto contains a true and correct list of (i) all
full time employees of the Target Group Companies (and employees of the Seller
Group Companies who primarily work for the Target Group Companies) as of
September 30, 2007, (ii) the current base compensation for each such employee
and (iii) the amount of the bonus paid to date for each such employee with
respect to calendar year 2006.

 

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SECTION 3.15 Proprietary Rights. Schedule 3.15 contains a list of any
registrations or applications for registration for Proprietary Rights that are
(i) owned, or will be owned as of the Closing, by the Target Group Companies and
(ii) material to the business of the Target Group Companies. Except for licenses
entered into in the ordinary course of business, and except as set forth on
Schedule 3.15, none of the Target Group Companies has granted to any Person the
right to use any of the Proprietary Rights of the Target Group Companies. To
Seller’s Knowledge, except as set forth on Schedule 3.15 and except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, no claims have been asserted by any third party based on the use
by the Target Group Companies, or challenging the Target Group Companies’
ownership of, any Proprietary Right that the Target Group Companies license or
use. To Seller’s Knowledge, there are no material infringing or diluting uses of
the Proprietary Rights of the Target Group Companies by third parties that
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

SECTION 3.16 Environmental Laws. Except as set forth in Schedule 3.16, and
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect: (i) the Target Group Companies (a) are, and have
been within all applicable statute of limitations periods, in material
compliance with all applicable Environmental Laws and (b) possess and are, and
have been within all applicable statute of limitations periods, in material
compliance with any permit, approvals and authorizations required under
applicable Environmental Laws in order to operate the Owned Theaters and the
Leased Theaters as currently operated; (ii) none of the Target Group Companies
is a party to any judicial, administrative, or arbitral proceeding or to any
judgment, decree, settlement, agreement, or order which proceeding, judgment,
decree, settlement, agreement, or order relates to compliance with any
Environmental Law or to responsibility for investigation or cleanup of any
Hazardous Materials at any location, and, to Seller’s Knowledge, no such
proceeding, judgment, decree or order is threatened; and (iii) to Seller’s
Knowledge, there are no Hazardous Materials at, or emanating or disposed from,
any of the Owned Theaters or the Leased Theaters, which Hazardous Materials are
in contravention of any applicable Environmental Law. Notwithstanding the
generality of any other representations and warranties in this Agreement, this
Section 3.16 shall be deemed to contain the only representations and warranties
in this Agreement with respect to Environmental Laws, Hazardous Materials, the
environment, or industrial hygiene.

SECTION 3.17 Contracts with Certain Persons. Except for the Minneapolis Lien
Documents and the contracts listed on Schedule 3.17, there are no contracts in
effect as of the date hereof between the Target Group Companies, on the one
hand, and the Seller Group Companies on the other.

SECTION 3.18 Taxes.

(a) All material Returns required to be filed by, or with respect to any
activities of, the Target Group Companies have been timely filed (except those
under valid extension) with the proper Taxing Authorities or other Governmental
Authorities.

(b) Except as otherwise set forth on Schedule 3.18(b), (i) no material
deficiencies for Taxes with respect to Separate Returns of the Target Group
Companies have been claimed, proposed or assessed by any Taxing Authority or
other Governmental Authority; (ii) there are no pending or, to the best of
Seller’s Knowledge, threatened audits, investigations or claims for or relating
to any material liability in respect of Taxes with respect to Separate Returns
of the Target Group Companies, and there are no matters under discussion with
any Taxing Authority or other Governmental Authority with respect to material
Taxes with respect to Separate Returns of the Target Group Companies; and
(iii) all Taxes that the Target Group Companies have been required to collect or
withhold have been duly collected or withheld and, to the extent required when
due, have been or will be duly paid to the proper Taxing Authority or other
Governmental Authority.

 

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(c) Except as set forth on Schedule 3.18(c), the Target Group Companies (i) have
not made any elections, and are not required, to treat any of their assets as
owned by another person or as tax-exempt bond financed property or tax-exempt
use property within the meaning of Section 168 of the Code or under any
comparable state or local income Tax or other Tax provision; and (ii) are not
bound by any tax sharing, tax indemnity or tax allocation agreement or other
similar arrangement with any other person or entity.

(d) No Target Group Company has in place any currently effective waiver of any
statute of limitations with respect to Taxes or has agreed to an extension of
time with respect to a Tax assessment or deficiency.

(e) No Target Group Company is or has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.

(f) There are no liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of any of the Target Group Companies.

(g) No Target Group Company is or has participated in any “reportable
transaction” within the meaning of Section 1.6011-4(b)(11) of the Regulations.
Each Target Group Company has disclosed on its tax return all positions taken
therein that could give rise to a substantial understatement of Federal Income
Tax within the meaning of Section 6662 of the Code or similar provisions under
state or local law.

(h) The shares of each of (i) Live Nation Theatrical Group, Inc. (f/k/a Pace
Theatrical Group, Inc.), a Texas corporation, (ii) Live Nation Family Holdings,
Inc. (f/k/a SFX Family Holdings, Inc.), a Delaware corporation, and (iii) SFX
Theatrical Group, Inc., a Delaware corporation, are not, and will not be at the
time of Closing, “taxable Canadian property” (as defined in the Income Tax Act
(Canada)).

SECTION 3.19 Insurance. The insurance policies maintained with respect to the
Target Group Companies and their respective businesses, assets and properties
(the “Insurance Policies”) are listed on Schedule 3.19, including a description
of whether such Insurance Policies are “occurrence based” or “claims made”
policies.

SECTION 3.20 Bank Accounts. Schedule 3.20 sets forth a true, correct and
complete list of all bank accounts or similar financial depositary accounts
maintained by, or in the name of, any of the Target Group Companies.

SECTION 3.21 Brokers. Except for Goldman, Sachs & Co., no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller. Seller is solely
responsible for the fees and expenses of Goldman Sachs & Co.

SECTION 3.22 Canadian Revenues and Assets. The Target Group Companies, on a
combined basis, have (i) gross revenues from sales in and from Canada
(determined for such annual period and in such manner as may be prescribed under
the Competition Act (Canada) and its regulations for the purpose of determining
the application of Part IX of the Competition Act (Canada) to the transactions
contemplated herein) of less than Cdn.$50,000,000 and (ii) assets in Canada
having an aggregate value (determined as of such time and in such manner as may
be prescribed in the Competition Act (Canada) and its regulations for the
purpose of determining the application of Part IX of the Competition Act
(Canada) to the transactions contemplated herein) of less than Cdn.$50,000,000.

 

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SECTION 3.23 Cash Related Representations.

(a) As of the close of business on January 10, 2008, the combined aggregate cash
balance held in all bank accounts of the Target Group Companies was in the
amount specified in Schedule 3.23. The amount of such combined aggregate bank
balance is net of all cash sweeps made from such bank accounts to any of the
Seller Group Companies through the close of business on January 10, 2008 but do
not take account of any items-in-transit as of the close of business on
January 10, 2008.

(b) No cash sweeps have been made from any of the bank accounts of the Target
Group Companies to any of the Seller Group Companies at any time after the close
of business on January 10, 2008.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

SECTION 4.1 Organization. Purchaser is duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.

SECTION 4.2 Authority; Enforceability. Purchaser has the corporate power and
authority to execute and deliver this Agreement and the Transition Services
Agreement and to perform its obligations hereunder and thereunder. The execution
and delivery by Purchaser of this Agreement and the Transition Services
Agreement, and the performance by Purchaser of its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement and the Transition Services Agreement have
been duly executed and delivered by Purchaser and constitute legal, valid and
binding agreements of Purchaser, enforceable against Purchaser in accordance
with their respective terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting creditors’ rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).

SECTION 4.3 Non-Contravention. The execution, delivery and performance by
Purchaser of this Agreement and the Transition Services Agreement do not and
will not (a) violate, conflict with or result in the breach of any provision of
the Governing Documents of Purchaser, (b) conflict with or violate any Law or
Governmental Order applicable to Purchaser or any of its assets or properties,
except for such conflicts or violations as would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
Purchaser’s ability to perform its obligations under this Agreement and the
Transition Services Agreement, or (c) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment or acceleration of, or result in the
creation of any Encumbrance on any of the assets or properties of Purchaser
pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease,
license, permit or franchise to which Purchaser is a party or by which any of
its assets or properties is bound or affected, except for such conflicts,
breaches, defaults, consents, rights and Encumbrances, as would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on Purchaser’s ability to perform its obligations under this
Agreement and the Transition Services Agreement.

 

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SECTION 4.4 Governmental Consents. The execution, delivery and performance by
Purchaser of this Agreement and the Transition Services Agreement do not and
will not require any consent, approval, authorization or other order of, action
by, filing with or notification to any Governmental Authority as a condition to
the consummation of the transactions contemplated herein, except for (i) filings
under the HSR Act, (ii) if required, the notification and review requirements
under the Competition Act (Canada) and the Investment Canada Act, (iii) the
application to and consent of the Alcohol & Gaming Commission of Ontario for the
transfer of the Canon Theatre Liquor License, and (iv) those that may be
required by the nature of the business or ownership of the Seller Group
Companies.

SECTION 4.5 Purchase for Investment. Purchaser acknowledges that the Shares have
not been registered under the Securities Act or under any state or foreign
securities laws. Purchaser (i) is not an underwriter as such term is defined
under the Securities Act, (ii) is acquiring the Shares solely for investment
with no present intention to distribute any of the Shares to any Person and
(iii) will not sell or otherwise dispose of any of the Shares, except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable U.S. or foreign securities laws.

SECTION 4.6 Financing. Purchaser has (i) provided to Seller a true, correct and
complete copy of all agreements, letters and other documents that evidence
commitments for the debt and equity financing that will be utilized by Purchaser
to fund the Cash Closing Payment and (ii) available to it sufficient committed
funds based on such commitments to purchase the Shares in accordance with the
terms of this Agreement and to pay all related fees and expenses. Purchaser’s
right to receive such committed funds is not subject to any material condition
other than the satisfaction of the conditions in Section 8.2 hereof.

SECTION 4.7 Canon Theatre. Purchaser has not entered into any agreement to sell
the Canon Theatre.

SECTION 4.8 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.

ARTICLE V

ADDITIONAL AGREEMENTS AND UNDERSTANDINGS

SECTION 5.1 Conduct of Business Prior to the Closing.

(a) Except as contemplated by this Agreement and except as set forth on Schedule
5.1, during the period of time, if any, between the execution of this Agreement
and the Closing, Seller shall exercise commercially reasonable efforts to cause
each of the Target Group Companies to conduct its business in all material
respects only in the ordinary course and consistent with past practice, preserve
substantially intact its business organization, and preserve its business
relationships. Without limiting the generality of the foregoing, except as
contemplated by this Agreement and except as set forth in Schedule 5.1, subject
to the requirements of Law or contract, Seller shall not permit the Target Group
Companies to do any of the following during the period of time, if any, between
the execution of this Agreement and Closing without the prior written consent of
Purchaser (which consent shall not be unreasonably withheld or delayed):

(i) merge or consolidate with, or acquire an interest in, any Person or
otherwise acquire any material assets;

(ii) sell or otherwise dispose of any material properties or assets;

 

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(iii) incur, assume or guarantee any Indebtedness, except for (i) intercompany
obligations undertaken in the ordinary course of business with other Target
Group Companies or with any of the Seller Group Companies (but not guaranties of
Indebtedness of any Person other than Target Group Companies) or
(ii) arrangements to issue letters of credit in the ordinary course of business
consistent with past practices;

(iv) mortgage, pledge or encumber any assets, other than pursuant to Permitted
Encumbrances;

(v) issue, sell or redeem any capital stock or other equity interests, notes,
bonds or other securities, or any option, warrant or other right to acquire the
same;

(vi) make any capital expenditure or commitment for any capital expenditure that
would result in the total amount of capital expenditures or commitments for
capital expenditures for all of the Target Group Companies to exceed the current
forecast of $3,200,000 for the fiscal year ending December 31, 2007, unless made
or undertaken in connection with any emergency repair, force majeure event, as
needed to comply with any legal requirements or other unforeseen circumstances
beyond the control of the Target Group Companies;

(vii) increase the compensation or benefits payable by it to its Employees
except for increases in compensation or benefits in the ordinary course of
business consistent with past practice;

(viii) enter into any Employment Contract that cannot be terminated by the
Target Group Companies upon notice of 30 days or less without penalty or
premium;

(ix) amend its Governing Documents;

(x) make any election with respect to Taxes except as permitted or contemplated
by Article VII;

(xi) make any amendment, modification or other change to any Lease, Management
Agreement, agreement with any Local Presenter, agreement with the owner of any
Local Venue, partnership agreements, joint venture agreements, limited liability
operating agreements and/or any other agreements other than in the ordinary
course of business (for purposes hereof, without limiting the definition of
ordinary course of business, the parties agree any change in payment provisions
or extensions of the term of an agreement shall be deemed outside of the
ordinary course of business);

(xii) without the written consent of the Purchaser, such consent not to be
unreasonably withheld, initiate any litigation other than in the ordinary course
of business;

(xiii) without the written consent of the Purchaser, such consent not to be
unreasonably withheld, settle any litigation other than in the ordinary course
of business and in accordance with past practices for similar cases and/or fact
patterns; provided, however, no settlement which will limit in any manner the
conduct of business of the Target Group Companies shall be made without the
prior written consent of Purchaser;

 

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(xiv) take any action or enter into a transaction that results in an increase in
the liability for Canadian income taxes of a Canadian Subsidiary on or after the
Closing Date except for actions or transactions in the ordinary course of
business consistent with past practice; or

(xv) make any investment in theatrical shows other than required investments
under agreements existing on the date hereof set forth on Schedule 3.11(a);

(xvi) without the written consent of Purchaser, amend or modify in any way
(x) the letter agreement dated December 11, 2007 between The Boston Opera House
Development, LLC and Live Nation Theatrical Group, Inc. and any license
agreement executed in connection with such letter agreement, (y) the sublease
agreement from the Seller to the Target Group Companies for the office space
being used by the Target Group Companies at 2000 West Loop South, Houston, Texas
or (z) the sublease agreement from the Seller to the Target Group Companies for
the office space being used by the Target Group Companies at 220 West 42nd
Street, New York, New York 10036;

(xvii) without the written consent of the Purchaser, such consent not to be
unreasonably withheld, enter into any agreement with a venue not described on
Schedule 3.9 for presentation of any productions at such venue; or

(xviii) without the written consent of the Purchaser, such consent not to be
unreasonably withheld, enter into any agreement relating to (x) a touring
production in a BAA Market and which contains fixed and/or contingent payments
in excess of $200,000 which are payable to a single individual or (y) a
production of a show by Network Presentations, LLC and which is outside of the
ordinary course of business of Network Presentations, LLC.

(b) For purposes of this Agreement, the term “commercially reasonable efforts”
means the reasonable efforts that a reasonably prudent party to this Agreement
would, at the time of executing this Agreement, contemplate using in similar
circumstances in an effort to achieve a desired result set forth in this
Agreement in a reasonably expeditious manner, including the lawful exercise of
voting or other rights attached to shares held by that party or the lawful
exercise of rights granted to such party under any contract, provided that
“commercially reasonable efforts” shall not require the violation of, or failure
to discharge, any duty owed to a third party or the provision of any
consideration to any third party except for the costs of making filings in the
ordinary course of business, the reasonable fees and expenses of counsel and
other advisors and representatives, nominal consent fees provided for in the
existing provisions of any contract and the customary fees and charges of
Governmental Authorities.

SECTION 5.2 Access to Information. From the date hereof until the Closing, and
except as limited by Law in the reasonable good faith judgment of Seller, Seller
shall cause the Target Group Companies to afford the employees, authorized
agents and representatives of Purchaser, at Purchaser’s sole risk and expense,
with reasonable access, during normal business hours and upon reasonable advance
notice, to the offices, properties, facilities, books and records of the Target
Group Companies, as Purchaser reasonably deems necessary or advisable, and to
those employees of the Target Group Companies to whom Purchaser reasonably
requests access. All information obtained by Purchaser and its employees, agents
and representatives pursuant to this Section shall be kept confidential and
treated in accordance with the Confidentiality Agreement.

 

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SECTION 5.3 Efforts to Close; Regulatory Approvals.

(a) Through the Closing Date, subject to the terms and conditions herein
provided, each of the Parties will, and will cause its respective Affiliates
within their control to, use commercially reasonable efforts to take all
reasonable actions and do all reasonable things necessary, proper or advisable,
under applicable Laws, contract or otherwise, to consummate and make effective,
as soon as reasonably practicable, the purchase and sale contemplated hereby,
including the satisfaction of all conditions thereto as set forth herein. Such
actions shall include (A) using their commercially reasonable efforts to obtain
(or assist the other Party to obtain) (i) the Senior Lender Waiver (if
necessary) and (ii) all permits, authorizations, consents, orders and approvals
of all non-governmental third parties and Governmental Authorities that may be
or become necessary to effectuate the contemplated transactions, (B) making all
appropriate filings pursuant to the HSR Act with respect to the transactions
contemplated by this Agreement as soon as practicable after the date hereof, and
(C) supplying as promptly as practicable to the appropriate Governmental
Authorities any information and documentary material that may be requested
pursuant thereto.

(b) Through the Closing Date, except as prohibited by Law, each Party shall
(i) promptly notify the other Party of any communication to that Party from any
Governmental Authority relating to the approval or disapproval of the
transactions contemplated hereby; and (ii) not participate in any meetings or
substantive discussions with any Governmental Authority with respect thereto
without consulting with and offering the other Party a meaningful opportunity to
participate in such meetings or discussions (to the extent permitted by the
Governmental Authority). Notwithstanding the foregoing, through the Closing
Date, neither Purchaser nor its Affiliates (including their respective agents
and representatives) shall seek (or cause to be sought) any advisory or
declaratory opinion or otherwise make (or cause to be made) any voluntary
submission relating to the Competition Act (Canada) or the Investment Canada Act
without the written consent of the Seller.

(c) From and after the Closing, Seller will reasonably cooperate with Purchaser
and provide any information in Seller’s possession that may be required to be
included in any post-Closing filing to be made by Purchaser pursuant to the
Investment Canada Act.

SECTION 5.4 Notice of Developments. Prior to the Closing, each Party shall,
promptly after obtaining Knowledge of the occurrence (or non-occurrence) of any
event, circumstance or fact arising subsequent to the date of this Agreement
which would result in the failure to satisfy the conditions set forth in
Section 8.1(a), 8.1(b), 8.2(a) or 8.2(b), as applicable, give notice thereof to
the other Party.

SECTION 5.5 Insurance; Risk of Loss.

(a) As of the close of business on the Closing Date: (i) Seller will terminate
or cause its Affiliates to terminate all coverage relating to the Target Group
Companies and their respective businesses, assets and employees under the
policies of insurance of Seller maintained for the benefit of all of its
controlled subsidiaries, including the Target Group Companies; provided,
however, that (x) no such termination of any “occurrence based” policy in force
as of the Closing Date shall be effected so as to prevent the Target Group
Companies from recovering under such policies for losses covered thereby from
events occurring prior to the Closing Date, it being understood that the Target
Group Companies shall be responsible for any deductible payable under the terms
of the applicable policy in connection with any such claims; (y) no such
termination of any “claims made” policy in force as of the Closing Date shall be
effected so as to prevent the Target Group Companies from recovering under such
policies for losses covered thereby arising from or out of any claims made prior
to the Closing Date, it being understood that the Target Group Companies shall
be responsible for any deductible payable under the terms of

 

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the applicable policy in connection with any such claims; and (ii) Purchaser
shall become solely responsible for all insurance coverage and related risk of
loss with respect to the Target Group Companies and their respective businesses,
assets and employees in connection with events occurring on or after the Closing
Date.

(b) Purchaser shall exercise commercially reasonable efforts to obtain,
effective as of the Closing Date, replacement policies of insurance (and shall
effect the same as of the Closing Date to the extent required by any joint
venture, limited liability, lease or other agreement to which any Target Group
Company is party), with comparable scope of coverage, limits, deductibles, and
exclusions, to replace the Insurance Policies. To the extent that, after the
Closing Date, the Target Group Companies or Seller require(s) any information
regarding claim data, payroll or other information in order to make filings with
insurance carriers, Seller shall promptly supply such information to the Target
Group Companies, and Purchaser shall cause the Target Group Companies promptly
to supply such information to Seller, as applicable. Purchaser shall, and shall
cause the Target Group Companies to, promptly notify Seller of any claims
pertaining to matters prior to the Closing Date if Purchaser or the Target Group
Companies should tender or attempt to tender the defense of such claim to an
insurer pursuant to an occurrence based policy of insurance maintained by the
Seller Group Companies.

SECTION 5.6 Corporate Names. As soon as reasonably practicable after the Closing
Date, but in any event no later than ninety (90) days thereafter, Purchaser
shall cause each of the Target Group Companies to amend its Governing Documents,
subject to any required consent or approval of any other partner or member,
which Purchaser shall use its reasonable efforts to obtain, so as to delete any
reference to “Live Nation”, “SFX”, or “PACE” in its legal name and, within such
ninety (90) day period, to make all required filings with Governmental
Authorities to effect such amendments.

SECTION 5.7 Trademarks. Purchaser agrees that Purchaser and Purchaser’s
Affiliates (including the Target Group Companies after the Closing) shall not,
at any time, adopt or use any trademarks, trade names, trade dress, domain
names, URLs, e-mail addresses or other marks, symbols or indicia containing the
names “Live Nation”, “SFX,” or “PACE” or any confusingly similar term (the “LN
Marks”), except for the use of the name “PACE” in connection with the operation
of any Presenting Business or as may be otherwise expressly authorized in
writing by Seller. As between Purchaser and its Affiliates (including the Target
Group Companies after the Closing), on the one hand, and Seller, on the other,
Purchaser acknowledges and agrees that the Seller Group Companies own all right,
title and interest (including goodwill) in and to the LN Marks, and to any and
all causes of action and rights of recovery for violations of or infringements
upon any of the LN Marks. Purchaser agrees that neither it nor its Affiliates
(including the Target Group Companies after the Closing) shall directly or
indirectly challenge the ownership or other rights of the Seller Group Companies
in or to, or the validity or strength of, any of the LN Marks. Purchaser agrees
that neither it nor its Affiliates (including the Target Group Companies after
the Closing) will file any applications for registration, nor make any efforts
to acquire applications for registration or registrations, for the LN Marks, and
it and they will cooperate fully as reasonably requested by Seller in connection
with any registration by the Seller Group Companies of the LN Marks. The
Purchaser shall have a reasonable period of time after the Closing, but no more
than 90 days after the Closing, to effect any removal of the LN names from its
publicity or public places (except as constitutes use of the name “PACE” in
connection with the operation of any Presenting Business or as may be otherwise
expressly authorized in writing by Seller). Purchaser shall have the right for
internal purposes only to utilize existing inventories of goods which may
contain or utilize the LN Marks but may not sell, distribute, provide or
disseminate any such goods to any third parties (except as constitutes use of
the name “PACE” in connection with the operation of any Presenting Business or
as may be otherwise expressly authorized in writing by Seller).

 

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SECTION 5.8 IT Matters. Subject to the further provisions of Section 5.10 and
the provisions of the Transition Services Agreement, between the date hereof and
the Closing, the Seller and Purchaser will use commercially reasonable efforts
and cooperate with one another to provide for the orderly separation and
transition as of the Closing Date of the information technology systems
(including their support and maintenance) of the Target Group Companies from the
systems of the Seller Group Companies such that the Target Group Companies are
independent of the systems of the Seller Group Companies, and, in the event that
such separation and transition have not been completed by the Closing, the
Parties will use commercially reasonable efforts to complete such separation and
transition as soon as reasonably practicable after the Closing Date and in any
event upon expiration of the applicable provisions of the Transition Services
Agreement. In this regard, the Parties agree that (i) Seller shall endeavor to
provide historical accounting and human resources information concerning the
Target Group Companies that it maintains in computerized form, and
(ii) notwithstanding any other provision hereof, including Section 5.10, Seller
need not provide historical or archival backups of e-mail communications.

SECTION 5.9 Resignations and Releases. On the Closing Date,

(a) Seller shall cause to be delivered to Purchaser duly signed resignations
(from the applicable board of directors), effective immediately after the
Closing, of all directors of the Target Group Companies;

(b) Seller shall deliver to Purchaser an instrument of release in a mutually
approved form in which Seller, on behalf of itself and all of the Seller Group
Companies, releases and discharges the Target Group Companies from any and all
Indebtedness, payables, accounts, debts, liabilities or other obligations owed
by any of the Target Group Companies to the Seller Group Companies as of the
Closing Date; provided such release will not act to release (i) any of the
obligations or liabilities of Purchaser under this Agreement, (ii) any
obligations accruing after the Closing Date in connection with or pursuant to
the contracts listed on Schedule 3.17 hereto or (iii) the TTL Debt; and

(c) Purchaser shall cause the Target Parent Companies to deliver to Seller an
instrument of release in a mutually approved form in which the Target Parent
Companies, on behalf of themselves and all of the Target Group Companies,
release and discharge the Seller Group Companies from any and all Indebtedness,
payables, accounts, debts, liabilities or other obligations owed by any of the
Seller Group Companies to the Target Group Companies as of the Closing Date;
provided such release will not act to release (i) any of the obligations or
liabilities of Seller under this Agreement or (ii) any obligations accruing
after the Closing Date in connection with or pursuant to the contracts listed on
Schedule 3.17 hereto.

SECTION 5.10 Books and Records.

(a) Purchaser and Seller shall cooperate with each other, and shall cause their
officers, employees, agents, auditors and representatives to cooperate with each
other, for a period of ninety (90) days after the Closing to ensure the orderly
transition of each of the Target Group Companies from Seller to Purchaser and to
minimize any disruption to the respective businesses of Seller, Purchaser, and
the Target Group Companies that might result from the transactions contemplated
hereby. After the Closing, upon reasonable written notice, Purchaser and Seller
shall furnish or cause to be furnished to each other and their employees,
counsel, auditors and representatives access, during normal business hours, to
such information and assistance relating to the Target Group Companies as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any Tax Returns, reports or forms or the defense of
any Tax audit, claim or assessment. Neither party shall be required by this
Section 5.10(a) to take any action that would unreasonably disrupt its normal
operations (or, in the case of Purchaser, the business or operations of any of
the Target Group Companies).

 

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(b) To the extent that Seller maintains books and records of the Target Group
Companies that relate solely to their businesses and are not maintained by the
Target Group Companies, Seller shall exercise commercially reasonable efforts to
deliver or cause to be delivered to Purchaser copies of such books and records
(“Records”) in the possession of any of the Seller Group Companies; provided,
however, that:

(i) Seller shall be entitled to retain a copy of all such books and records that
are delivered;

(ii) “Records” shall not include any customer lists or information, promoter
lists or information, or marketing information relating to the Seller Group
Companies;

(iii) Seller may retain all Records prepared in connection with or for use in
the Auction, including bids received from other parties and analyses relating to
the Target Group Companies, or otherwise relating to any attempt to sell the
Target Group Companies or assets thereof or Seller’s analyses of the value
thereof; and

(iv) Seller may retain any Tax Returns, reports or forms, and Purchaser shall be
provided with copies of such Returns, reports or forms to the extent that they
relate to Separate Returns or separate Tax liability or activities or operations
of any of the Target Group Companies.

(c) Notwithstanding any other provision of the Confidentiality Agreement, the
provisions thereof relating to the Purchaser’s obligations in respect of
Confidential Information shall terminate as of the consummation of the Closing,
except with respect to such information, data, analyses, documents and materials
that (i) were prepared or received by or on behalf of the Seller and its
Affiliates (including the Target Group Companies prior to the Closing) in
connection with the Auction (other than the bid submitted by the Purchaser) or
the consummation of the transactions contemplated hereby and not provided to
Purchaser prior to the Closing; (ii) do not involve current, historical or
actually planned businesses of the Target Group Companies; or (iii) relate to
Excluded Assets (all of the foregoing being herein collectively called the
“Seller Confidential Information”).

(d) The Seller Confidential Information constitutes a subset of Confidential
Information under the Confidentiality Agreement and, as such, is subject to the
provisions of the Confidentiality Agreement, including, without limitation, the
provisions contained therein that require that Confidential Information be
maintained as confidential and prohibit use of Confidential Information in any
way detrimental or adverse to the Seller Group Companies (which the parties
hereby agree to be contained therein). Notwithstanding the foregoing or the
provisions of the Confidentiality Agreement, for purposes of convenience,
Purchaser, and the Target Group Companies shall be entitled to retain in its and
their possession the Seller Confidential Information delivered with the Target
Group Companies as bailees thereof, the Parties agreeing that the
Confidentiality Agreement provides that Seller remains the owner thereof. Seller
shall continue to have reasonable access to the Seller Confidential Information
for purposes of removing, making and retaining additional copies thereof at
Seller’s expense during normal business hours and upon reasonable notice.
Subject to Purchaser’s customary retention policies, Purchaser and the Target
Group Companies shall be under no obligation to destroy or return any such
Seller Confidential Information except to the extent that Seller expressly
requests

 

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and specifically identifies the items to be returned or destroyed and that such
return or destruction is not unduly burdensome. Without limiting the provisions
of the Confidentiality Agreement or this Section 5.10, in the event that it is
readily apparent that information, data, analyses, documents and materials
included in Seller Confidential Information include a communication to or from
an attorney actually known to be counsel for Seller or an Affiliate of Seller
(including a Target Group Company prior to the Closing), then prior to the
Purchaser, or a Target Group Company intentionally and purposefully waiving any
attorney-client privilege that may exist with respect to such information, data,
analyses, documents or material, it will endeavor to consult in good faith with
Seller to determine if such privilege exists and if a Seller Group Company is
the owner of such privilege or if the privilege is owned by a Target Group
Company.

(e) On the Closing Date, Seller shall, to the extent permitted by the Auction
Confidentiality Agreements (as defined below), assign to the Target Parent
Companies, or designate the Target Parent Companies as intended third party
beneficiaries under, the confidentiality agreements entered into between Seller
and certain third party prospective bidders in connection with the Auction
(collectively, the “Auction Confidentiality Agreements”) insofar as the Auction
Confidentiality Agreements pertain to (x) any Confidential Information (as
defined in such Auction Confidentiality Agreements) or other confidential or
proprietary information of, involving or otherwise related to the Target Group
Companies, (y) any employees of any Target Group Company, or (z) any covenants,
agreements or indemnities set forth in such Auction Confidentiality Agreements
involving or otherwise related to, any Target Group Company or any transaction
or potential transaction pertaining thereto and covered by such Auction
Confidentiality Agreements, provided that this Section 5.10(e) shall not apply
to Seller Confidential Information. Promptly after the Closing, but in no event
later than five (5) Business Days thereafter, Seller shall notify, to the extent
not previously notified, each other Person who is a party to an Auction
Confidentiality Agreement to promptly return to Seller or destroy any
Confidential Information, and all written or recorded copies thereof and written
material, memoranda, notes, copies, excerpts and other writings or recordings
whatsoever based upon, containing or otherwise reflecting any Confidential
Information, subject to the terms of the applicable Auction Confidentiality
Agreement. Seller shall not waive or modify any provisions of any Auction
Confidentiality Agreement that relate to any Confidential Information pertaining
to any of the Target Group Companies.

SECTION 5.11 Excluded Assets; Certain Pre-Closing Transfers. Notwithstanding
anything to the contrary in this Agreement, the assets listed on Schedule 5.11
(the “Excluded Assets”) are excluded from this Agreement and the transactions
contemplated hereby, and prior to the Closing Date, Seller shall assign,
transfer or otherwise dispose of (or cause the assignment, transfer or disposal
of) each of the Excluded Assets from the Target Group Companies to the Seller
Group Companies. Purchaser acknowledges and agrees that (i) neither it nor any
of the Target Group Companies shall have any interest whatsoever in or to any of
the Excluded Assets after the Closing and (ii) Purchaser will take such other
and further actions after the Closing, upon Seller’s request, as may be
reasonably necessary to better complete the assignment and transfer of any
Excluded Assets from the Target Group Companies to the Seller Group Companies at
Seller’s sole cost and expense.

SECTION 5.12 LN Guarantees; Letters of Credit.

(a) Concurrently herewith, Seller and Purchaser are entering into an Assumption
Agreement (the “Assumption Agreement”) pursuant to which Purchaser is assuming –

 

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(i) all of Seller’s obligations under the Minneapolis Guaranty, other than
(A) any obligations which by their nature are personal to Seller and thus are
impossible of performance by Purchaser (including without limitation, the
obligations under Sections 8 and 9 of the Minneapolis Guaranty), (B) the
obligations to provide letters of credit to the City of Minneapolis pursuant to
Section 3 of the Minneapolis Guaranty and (C) any expenses and charges under
Section 1(b) of the Minneapolis Guaranty incurred by The City of Minneapolis in
enforcing the obligations of Seller under the Minneapolis Guaranty which are not
assumed by Purchaser (the obligations set forth in clauses (A), (B) and (C) are
referred to herein collectively as the “Minneapolis Excluded Obligations”); and

(ii) the obligations of Seller under the other guarantees set forth on Schedule
5.12(a) (the Minneapolis Guarantee and the other guarantees described in
Schedule 5.12 (a) collectively are referred to herein as the “LN Guarantees”).

(b) The Seller Group Companies have arranged for the issuance of letters of
credit with respect to certain obligations of the Target Group Companies as set
forth on Schedule 5.12(b) (all of such letters of credit being herein
collectively called the “LN LCs”). Prior to or concurrently with the Closing,
Purchaser shall cause financial institutions acceptable to each beneficiary of
the LN LCs to issue letters of credit (the “Replacement LCs”) in the same
amounts, to the same beneficiary and with the same terms and conditions as the
LN LC’s and as replacements for the LN LCs and shall use its commercially
reasonable efforts to cause the return of the LN LCs from each beneficiary in
exchange for the corresponding Replacement LC. Purchaser shall promptly
reimburse the Seller Group Companies for all amounts drawn upon the LN LCs after
the Closing.

(c) If any beneficiary of an LN LC should refuse to accept a Replacement LC, for
any reason whatsoever, in exchange for such Replacement LC, then the following
provisions will apply:

(i) Purchaser shall be required, at Closing, to cause a financial institution
reasonably acceptable to Seller to issue an unconditional and irrevocable letter
of credit (a “Back-to-Back LC”) to Seller, as beneficiary, in the same amount as
the corresponding LN LC (each LN LC that is not returned and for which a
corresponding Back-to-Back LC is so issued, being herein called an “Unreturned
LC”) and in a form reasonably approved by Seller. For all purposes hereof, Royal
Bank of Canada, Toronto Dominion Bank, JP Morgan Chase Bank, N.A. and Bank of
America, N.A shall be financial institutions acceptable to Seller with respect
to any Back-to-Back LC without any further request to or approval from Seller.
After the Closing, the provisions of Section 5.12(d) shall govern the rights and
obligations of the parties with respect to any Back-to-Back LC issued pursuant
to this Section 5.12(c)(i).

(ii) After the Closing, Purchaser will, from time to time upon the request of
Seller, use its commercially reasonable efforts to cause the return of each
Unreturned LC to Seller from the beneficiary thereof in exchange for a
Replacement LC. If Purchaser should successfully obtain the return of any
Unreturned LC to Seller or should any Unreturned LC otherwise be returned to
Seller or expire without being drawn and with no obligation to replace, then
Seller shall be required to return the corresponding Back-to-Back LC previously
issued to Seller pursuant to Section 5.12(c)(i) (and any Unapplied Proceeds
attributable to previous draws on such Unreturned LC) simultaneously with the
return of such Unreturned LC to Seller.

 

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(iii) Seller shall maintain and keep in place each Unreturned LC with the
respective beneficiary thereof until the earlier of (x) the Unreturned LC being
returned to Seller in exchange for a Replacement LC or (y) there being no
further legal obligation or requirement to maintain and keep in place such
Unreturned LC.

(d) The rights and obligations of the parties with respect to each Back-to-Back
LC will be governed by the following provisions after the Closing:

(i) Purchaser may (x) cause the financial institution that issued any
Back-to-Back LC to extend the expiry date thereof at any time and from time to
time and/or (y) replace any Back-to-Back LC with another unconditional and
irrevocable letter of credit issued to Seller, as beneficiary, by a financial
institution reasonably acceptable to Seller, in the same amount as the
Back-to-Back LC that it is replacing and in a form reasonably approved by
Seller. Any letter of credit accepted by Seller in replacement of a Back-to-Back
LC shall thereafter be a Back-to-Back LC for all purposes hereof.

(ii) Seller will have the right to make draws on the Back-to-Back LCs as
follows:

(A) Seller will have the right to make a draw for the full amount of any
Back-to-Back LC if the expiry date of such Back-to-Back LC is less than 90 days
from the date of such draw.

(B) If the beneficiary of an LN LC should make a draw on such LN LC, then Seller
may make a draw on the corresponding Back-to-Back LC in the same amount drawn on
such LN LC.

(iii) All proceeds received by Seller from draws on any Back-to-Back LC shall be
applied, held and disbursed by Seller to reimburse to Seller for any amounts
drawn under the corresponding LN LC. Any other proceeds received by Seller from
draws on any Back-to-Back LC shall be held and invested by Seller (all such
proceeds, together with the earnings thereon, are herein called the “Unapplied
Proceeds”) as security for the obligations of Seller under and in respect of the
corresponding LN LC.

SECTION 5.13 Ticketing Agent. Purchaser has executed and entered into a contract
with a ticketing agent of its choice for the sale of tickets in connection with
the operation of the business of the Target Group Companies after the Closing
Date. Accordingly, Purchaser acknowledges that (i) the Target Group Companies
will not, from and after the Closing Date, be entitled to rely upon or utilize
the benefits of the Seller’s existing contract with its ticketing agent that the
Target Group Companies have been utilizing prior to the Closing Date and
(ii) Seller shall have no liability or responsibility to Purchaser or the Target
Group Companies with respect to any matters after the Closing Date related to
the services of the ticketing agent for the business of the Target Group
Companies.

SECTION 5.14 Transition Services. If requested in writing by Purchaser prior to
the Closing, the Seller and Purchaser shall execute and deliver at the Closing a
transition services agreement substantially in the form of Exhibit A (the
“Transition Services Agreement”) pursuant to which Seller will provide, on the
terms and conditions and for the fees and charges, set forth in the Transition
Services Agreement designated support services (including data processing, risk
management, legal, human resources and accounting services) customarily provided
to the Target Group Companies by the Seller Group Companies. Such services shall
be provided for the fees set forth in the Transition Services Agreement.

 

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SECTION 5.15 Customer Database.

(a) Seller confirms that the Target Group Companies shall be, as of the Closing
Date, in possession of and have available for their use a database containing
the following information: (1) the electronic customer database related to
“Broadway Across America”; (2) the name, address and other available identifying
information for customers who have purchased a ticket within at least the two
years prior to the Closing Date to a live theatrical performance presented by
the Target Group Companies in the Purchased Presenting Business; and (3) a
record of transactions between such customer within at least the last two years
prior to the Closing Date and one or more of the Target Group Companies related
to the Purchased Presenting Business (“Customer Database”); provided, however,
it is understood that transactions by such customers regarding Seller’s concert,
motorsports and other businesses shall not be included in the Customer Database.
Notwithstanding anything to the contrary herein, neither Purchaser nor any of
its Affiliates (including the Target Group Companies after the Closing) shall be
entitled to (x) any credit card information, social security numbers and similar
personal information or (y) any customer information or records of transactions
relating to individuals who were known to be minors at the time such information
was collected, and to the extent Purchaser or its Affiliates inadvertently
obtains such information, (i) neither Purchaser nor its Affiliates (including
the Target Group Companies) shall use, disclose or maintain such information in
any way and (ii) Purchaser shall exercise its reasonable best efforts to cause
such information to be discarded, deleted or destroyed in an appropriate manner.

(b) With regard to the Customer Database, the parties agree as follows:

(i) Purchaser agrees that it will be deemed to have reviewed each of the privacy
policies that relate to the information contained in the Customer Database;

(ii) The Parties acknowledge that they have together agreed not to obtain any
“opt-in” or “opt-out” consent prior to the Closing in connection with the
transactions contemplated in this Agreement;

(iii) After the Closing, Purchaser shall cause the Target Group Companies to
obtain the consent (either through an “opt-in” or “opt-out” mechanism, as
applicable and in accordance with applicable Law and contract) of customers
listed in the Customer Database to the continued use by the Target Group
Companies (or any other Person) after the Closing of such customers’
information;

(iv) After the Closing, Purchaser and its Affiliates (including the Target Group
Companies) shall use the Customer Database only in connection with a business
similar to the Purchased Presenting Business and only for the use for which such
information was collected;

(v) The Customer Database is available to the Target Group Companies on an “AS
IS, WHERE IS AND WITH ALL FAULTS” basis. Notwithstanding anything to the
contrary herein, Seller makes no representation or warranty of any kind
whatsoever with respect to the Customer Database, including, without limitation,
as to its “merchantability,” “fitness for use” or any other warranty related to
its accuracy, completeness, condition, usability, fitness, or absence of
defects, all of which are specifically disclaimed. Further, Seller makes no
representation or warranty whatsoever in respect of whether the use by the
Target Group Companies or any of their Affiliates after the Closing of the
Customer Database (whether or not in accordance with any of terms and conditions
set forth in this Section 5.15) complies with the privacy policies and Laws
applicable to the Customer Database; and

 

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(vi) Pursuant to the provisions of Section 9.2(b)(iii), Purchaser shall
indemnify the Seller Group Companies, its Affiliates and other designated
indemnified Persons for the use of the Customer Database after the Closing.

(c) Nothing herein shall in any way restrict or limit Seller or its Affiliates
at any time to use the Customer Database or any other customer database in its
retained businesses.

SECTION 5.16 Exclusivity and Non-Compete.

(a) Establishment, Operation or Acquisition of any Presenting Business. The
Parties agree that Seller and its Affiliates shall not for a period of five
years after the Closing Date establish, operate or acquire ownership of any
Presenting Business anywhere in the United States of America, Canada or any of
their respective territories. Notwithstanding the foregoing, the Parties agree
as follows:

(i) The foregoing covenant shall not apply to or otherwise restrict Seller or
its Affiliates with respect to the events to be presented or promoted in the
entertainment venues that Seller or any of its Affiliates now own, manage, book
and/or operate (including any venues owned, managed, booked or operated through
a joint venture or partnership with a third party);

(ii) With respect to entertainment venues that Seller or any of its Affiliates
shall hereafter purchase or otherwise acquire the right to manage or operate
(including any venues hereafter owned, managed or operated through a joint
venture or partnership with a third party), the foregoing covenant shall not
apply provided: (A) Purchaser is offered a right to bid to provide any
subscription series for Theatrical Shows in such venue (provided that if there
is a pre-existing contract related to any subscription series for Theatrical
Shows at such venue, then such right to bid will only apply after expiration of
such pre-existing contract); or (B) the presentation of Theatrical Shows is an
Incidental (as hereinafter defined) portion of such venue’s offerings.

(iii) Venues for which Purchaser or its Affiliates do not control the decision
to permit a Presenting Business to be operated in such venue will not be subject
to the covenants contained in this Section 5.16(a) even if Purchaser or its
Affiliates manages or otherwise oversees the operation of such venue.

(iv) The foregoing covenant shall not prevent or restrict the Seller or its
Affiliates from producing Theatrical Shows or investing in the production of
Theatrical Shows, including Theatrical Shows that are placed on tour and/or
included in one or more subscription series of Theatrical Shows; provided if
Seller is the originating producer or co-producer of any such Theatrical Show
and should seek equity from third party investors during the five years after
the Closing Date, then Purchaser shall be afforded the opportunity to co-invest
in the production thereof pari passu with third party investors.

(v) The foregoing covenant shall not prevent or restrict the Seller or its
Affiliates from conducting any business of any kind in the United Kingdom,
Ireland or any of their respective territories or dominions or in other
locations outside of the United States, Canada and their respective territories.

 

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(vi) Notwithstanding Sections 5.16(a)(i) and (ii) above, Seller and its
Affiliates shall not engage in the production or Presenting Business of family
or children’s Theatrical Shows (such as, by way of example only, “Dora The
Explorer” and “Blues Clues”) for a period of five years after the Closing Date;
provided this covenant shall not (A) apply to any family or children’s
Theatrical Show in which a touring concert performer with whom Seller has a
business relationship has a material role as a performer or a creator or
(B) prohibit the making of a financial investment in a family or children’s
Theatrical Show being produced by an unaffiliated party.

(vii) Notwithstanding anything to the contrary contained in this Section 5.16,
nothing in this Agreement shall be construed in such a fashion as to amend or
invalidate any existing presentation agreements or booking agreements with any
Person, including the Target Group Companies, that are in effect now or at the
time a venue hereafter becomes subject to this provision.

(b) First Class Legitimate Theaters in Certain Markets. The Parties agree that
the Seller and its Affiliates will not for a period of five years after the
Closing Date own or otherwise control a First Class Legitimate Theater in any of
the following markets: (i) Baltimore, (ii) Minneapolis, (iii) Boston and
(iv) Toronto. Notwithstanding the foregoing,

(i) It is understood by the Parties that Seller will continue to own and/or
operate the Boston Opera House in Boston after the Closing and such ownership
and/or operation will not be considered a violation of this provision.

(ii) The parties expressly acknowledge and agree that a purchase or other
acquisition of a First Class Legitimate Theater by Seller or any of its
Affiliates shall not be a violation of the covenant contained in this
Section 5.16(b) if (A) the use of such venue is changed as soon as commercially
reasonable after completion of such acquisition such that the presentation of
Theatrical Shows becomes Incidental (as hereinafter defined) to the operation of
such venue or Incidental (as hereinafter defined) to such venue’s other uses or
(B) Purchaser is offered a right to bid to provide any subscription series for
Theatrical Shows in such First Class Legitimate Theater (provided that if there
is a pre-existing contract related to any subscription series for Theatrical
Shows at such First Class Legitimate Theater, then such right to bid will only
apply after expiration of such pre-existing contract).

(iii) The parties expressly acknowledge and agree that the covenant contained in
this Section 5.16(b) shall not be violated as a result of Seller or any of its
Affiliates acquiring the right to manage a First Class Legitimate Theater;
provided, if such right to manage includes the right to control the content to
be presented in such First Class Legitimate Theater, then clause (ii) will apply
in lieu of this clause (iii) in the same manner as if such First Class
Legitimate Theater had been acquired by Seller or its Affiliates.

 

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(c) Definition of “Incidental”. As used herein, the meaning of the term
“Incidental” shall be determined as follows:

(i) For purposes of Section 5.16(a), “Incidental” shall mean, with respect to
any entertainment venue, the presentation of Theatrical Shows in such
entertainment venue for a number of weeks equal to or less than one-third
(1/3) of (x) the highest number of presenting weeks of Theatrical Shows in any
first class legitimate theater in the same market in any of the three most
recently completed calendar years or (y) if there is no first class legitimate
theater in the same market, the highest number of presenting weeks of Theatrical
Shows in a first class legitimate theater in a market with comparable population
and demographics in any of the three most recently completed calendar years.

(ii) For purposes of Section 5.16(b), “Incidental” shall mean, with respect to
any First Class Legitimate Theater, the presentation of Theatrical Shows for a
number of weeks equal to or less than one-third (1/3) of the highest number of
presenting weeks of Theatrical Shows in any of the three most recently completed
calendar years presented by the Target Group Companies (or Purchaser) in the
same market.

(d) No Japanese Presenting Business. The Seller represents that it and its
Affiliates do not now, and agrees as of the Closing Date it will not, operate a
Presenting Business in Japan.

(e) Clarifying Exemption Related to Non-Theatrical Shows. Notwithstanding
anything herein to the contrary, Seller and its Affiliates may book, promote,
produce, sponsor and/or present any non-Theatrical Shows (including without
limitation any concerts, comedy or other entertainment event) in any venue any
where in the world without violating the provisions of this Section 5.16,

(f) Right to Invest in Other Persons. Notwithstanding the above, Seller and its
Affiliates may make investments in other Persons (regardless of the type of
business that such Person may operate) without violating the covenants and
restrictions contained in this Section 5.16, provided such investment does not
represent a controlling ownership interest in such Person or otherwise give veto
power to Seller and/or its Affiliates with respect to the operations or booking
of any of the venues managed, owned or operated by such Person.

(g) Non-Applicability to Chicago. Notwithstanding anything herein to the
contrary, the provisions of clauses (a) through (f) of this Section 5.16 shall
not apply to or otherwise restrict, limit or impact any activities by Seller or
any of its Affiliates in the greater Chicago, Illinois area; provided that the
provisions of Section 5.16(h) shall apply for the benefit of Purchaser in
accordance with its terms.

(h) Chicago Covenant. On and subject to the terms hereof, Seller and its
Affiliates will not, for a period of five years after the Closing Date of the
BIC Transaction, own or otherwise control any of the legitimate theaters in the
greater Chicago area listed on Schedule 5.16(h) hereto (“Applicable Chicago
Theaters”).

(i) Certain Exceptions. Notwithstanding the foregoing, the purchase or other
acquisition of an Applicable Chicago Theater by Seller or any of its Affiliates
shall not be a violation of the covenant contained in this Section 5.16(h) if
one of the following conditions apply:

(A) the use of such Applicable Chicago Theater is changed as soon as
commercially reasonable after completion of such purchase or other acquisition
such that the presentation of Theatrical Shows becomes de minimis (as
hereinafter defined), with the understanding that, for purposes of determining

 

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whether the use of such Applicable Chicago Theater is being changed as soon as
commercially reasonable, it will be commercially reasonable to fulfill and honor
any existing contractual arrangement for the presentation of Theatrical Shows at
such Applicable Chicago Theater that are in place at the time of the purchase or
other acquisition thereof but it will not be commercially reasonable to extend,
renew or replace (other than any extension effected pursuant to the exercise of
a unilateral option held by the other party pursuant to the terms of such
existing contractual arrangement) any such existing contractual arrangement for
the presentation of Theatrical Shows at such Applicable Chicago Theater after
the purchase or other acquisition thereof; or

(B) no subscription series of Theatrical Shows are operated in such Applicable
Chicago Theater other than a subscription series operated by a third party
unrelated to Seller but then only if the Purchaser is offered a right to bid to
provide any such subscription series for Theatrical Shows in such Applicable
Chicago Theater (except that if there is a pre-existing contract related to any
subscription series for Theatrical Shows at such Applicable Chicago Theater,
then such right to bid will only apply after expiration of such pre-existing
contract).

(ii) Management Exception. The covenant contained in this Section 5.16(h) shall
not be violated as a result of Seller or any of its Affiliates acquiring the
right to manage an Applicable Chicago Theater; provided, if such right to manage
includes the right to control the content to be presented in such Applicable
Chicago Theater, then clause (i) will apply in lieu of this clause (ii) in the
same manner as if such Applicable Chicago Theater had been acquired by Seller or
its Affiliates.

(iii) BIC Transaction Waiver/Amendment. Reference is made to the fact that
Seller has undertaken a covenant that is substantially similar to the provisions
of this Section 5.16(h) as a part of the BIC Transaction (the “BIC Chicago
Ownership Covenant”). If the purchaser in the BIC Transaction should agree to
amend or waive any of the provisions of the BIC Chicago Ownership Covenant for
the benefit of Seller, then such amendment or waiver shall also apply to the
provisions contained in this Section 5.16(h) in the same manner and to the same
extent as if Purchaser had agreed to the same amendment or waiver for the
benefit of Seller.

(iv) Definitions. As used herein, the meaning of (x) the term “de minimis” shall
mean, with respect to any Applicable Chicago Theater, that there are less than
eight (8) weeks of Theatrical Shows presented per year in such Applicable
Chicago Theater and (y) the term “BIC Transaction” shall refer to the sale by
Seller of its interest in Broadway in Chicago, LLC and related assets to certain
entities controlled by James L. Nederlander.

(i) Effect on Default under Minneapolis Guaranty. If Purchaser should ever
default under the Assumption Agreement with respect to the Minneapolis Guaranty
and Seller or any of its Affiliates should thereafter acquire the right to
manage, operate, possess, use or exploit any one or more of the Pantages
Theater, The State Theater and the Orpheum Theater in Minneapolis (collectively,
the “Minneapolis Theaters”) in connection with or as a result of such default
under the Assumption Agreement with respect to the Minneapolis Guaranty, then
the provisions of this Section 5.16 shall no longer apply to or otherwise
restrict, limit or impact any activities by Seller or any of its Affiliates with
respect to the Minneapolis Theaters.

 

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SECTION 5.17 Canadian Tax Clearance Certificate. If Seller does not provide
Purchaser with a certificate issued by the Minister of National Revenue under
subsection 116(2) of the Income Tax Act (Canada) on or before Closing with a
certificate limit at least equal to the TCN Price, Purchaser shall withhold from
the Equity Consideration an amount equal to 25% of the TCN Price (the “Retained
Amount”). The Retained Amount shall be deposited in an in interest-bearing
account and shall be dealt with it as follows:

(a) If Seller delivers to Purchaser, not later than the 27th day of the month
following the month in which the Closing occurs (the “Due Date”), either (i) a
certificate issued by the Minister of National Revenue pursuant to subsection
116(4) of the Income Tax Act (Canada) in connection with the sale of the TCN
Shares or (ii) a certificate issued by the Minister of National Revenue under
subsection 116(2) in respect of such sale with a certificate limit at least
equal to the TCN Price, then Purchaser will pay forthwith to Seller the Retained
Amount together with any interest earned on the Retained Amount (net of any
applicable tax);

(b) If Seller delivers to Purchaser not later than the Due Date, a certificate
under subsection 116(2) of the Income Tax Act (Canada) in respect of the
disposition of the TCN Shares with a certificate limit less than the TCN Price,
Purchaser will pay to the Receiver General for Canada within 30 days after the
end of the month in which the Closing occurs an amount equal to 25% of the
amount by which the TCN Price exceeds such certificate limit and pay to the
Seller the balance of the Retained Amount together with any interest earned on
the Retained Amount (net of any applicable tax);

(c) If a certificate under subsection 116(2) or 116(4) of the Income Tax Act
(Canada) is not delivered as contemplated in paragraphs (a) or (b) above and no
Comfort Letter (as defined below) is provided to Purchaser by the Due Date,
Purchaser shall pay the Retained Amount to the Receiver General for Canada
within 30 days after the end of the month in which the Closing occurs;

(d) If a certificate under subsection 116(2) or 116(4) of the Income Tax Act
(Canada) is not delivered as contemplated in paragraphs (a) or (b) above but a
Comfort Letter (as defined below) is provided to Purchaser by the Due Date,
Purchaser shall continue to hold the Retained Amount in escrow in accordance
with the terms of the Comfort Letter, and any interest or other income earned in
connection with the Retained Amount from the Closing to the remittance date (net
of any applicable taxes) will be paid promptly by the Purchaser to the Seller;
or

(e) If, following the Closing, the Minister of National Revenue indicates in
writing to the Purchaser that it will issue a certificate pursuant to
Section 116 of the Income Tax Act (Canada) in respect of the TCN Shares upon the
payment of an amount (the “Tax Amount”) that does not exceed the Retained
Amount, then Purchaser shall remit the Tax Amount to the Receiver General as
payment of the Tax Amount. Upon delivery of such certificate pursuant to
Section 116 of the Income Tax Act (Canada), the Purchaser shall release to the
Seller the Retained Amount (plus interest thereon, less any applicable taxes)
less the Tax Amount.

In this section “Comfort Letter” means a letter from the Canada Revenue Agency
addressed to Purchaser confirming to Purchaser’s satisfaction, acting
reasonably, that Purchaser need not remit any amount in respect of the purchase
and sale of the TCN Shares under subsection 116(5) of the Income Tax Act
(Canada) until further notification by the Canada Revenue Agency and until such
further notification will not be liable under the Income Tax Act (Canada) in
respect of income taxes, interest or penalties arising from such sale. The
provisions of this Section 5.17 shall apply mutatis mutandis in respect of each
payment made by Purchaser to Seller in respect of the purchase and sale of the
TCN Shares pursuant to the Agreement.

 

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ARTICLE VI

EMPLOYEE MATTERS

SECTION 6.1 Participation in Benefit Plans as of the Closing.

(a) At and after the Closing, all Employees who are employed with any of the
Target Group Companies following the Closing Date and those employees of the
Seller Group Companies listed on Schedule 6.1(a) who have been assigned to the
Target Group Companies (all of the foregoing employees being herein collectively
called the “Continued Employees”) will cease to participate in any and all of
the Employee Benefit Plans other than, with respect to any Canadian Employees,
the Canadian Employee Benefit Plans.

(b) At and after the Closing, the Purchaser and its Affiliates (including the
Target Group Companies) shall pay, discharge and be responsible for all salary,
wages, severance costs, benefits and claims (including workers compensation or
other similar benefits and claims) arising out of or relating to the employment
of the Continued Employees (including the Canadian Employees) after the Closing,
including (i) all liabilities for accrued vacation, holiday, sick leave, salary
continuation or short-term disability benefits; (ii) the payment of accrued
payments or bonuses under any annual or long-term management or employee
incentive or bonus plans, programs or arrangements; and (iii) any retirement
plan and non-qualified deferred compensation plan arising out of or relating to
the employment of the Continued Employees after the Closing Date.

(c) At and after the Closing, the Target Group Companies shall be fully
responsible and liable for all employment-related claims relating to any
employee or independent contractor (employed or under contract at any time) of
any Target Group Company which relates to, arises out of, or results from the
employment or engagement of such Person in the Target Business after the
Closing.

For purposes of allocating responsibility under this Section 6.1, a medical
claim is deemed incurred when the services that are the subject of the claim are
performed; in the case of hospitalization, upon commencement of hospitalization;
in the case of life insurance, when the death occurs; in the case of long-term
disability benefits, the later of when the disability is determined to have
occurred or when the employee ceased active employment as a result of the
disability; and, in the case of workers’ compensation, when the event giving
rise to the claim occurs.

SECTION 6.2 Continuation of Benefits. As of the Closing Date, the Purchaser
shall permit the Continued Employees to participate in the employee benefit and
welfare plans (or, with respect to the Canadian Employees, to continue to
participate in the Canadian Employee Benefit Plans or suitable replacement
plans) of the Purchaser or its Affiliates (the “Purchaser Plans”). For purposes
of vesting, eligibility and calculation of severance payments, all Continued
Employees shall retain their respective levels of seniority and shall, where
applicable, receive full credit under the Purchaser Plans for all service with
the Target Group Companies prior to the Closing Date. The Purchaser shall, where
applicable, waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements under
the Purchaser Plans and provide each Continued Employee with credit for any
co-payments and deductibles paid prior to the Closing in satisfying any
applicable deductible or out-of-pocket requirements under the Purchaser Plans.

 

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SECTION 6.3 Liability After the Closing. Except as provided in Schedule 6.3,
following the Closing, Purchaser shall be solely responsible for, and shall
indemnify, defend and hold the Seller and its Affiliates harmless from and
against, any Losses incurred by any of them arising from or relating to any acts
or omissions of the Purchaser or its Affiliates (including the Target Group
Companies) in connection with the employment or termination of Continued
Employees.

SECTION 6.4 Individual Account Plan. With respect to any Employee Benefit Plan
that is attributable to elective deferral contributions and matching
contributions in connection with such elective deferral contributions within the
meaning of Sections 401(k) and 401(m) of the Code, within thirty (30) Business
Days following Closing Date, Purchaser shall cause Purchaser’s qualified
retirement plan, if it does not already so provide, to be amended to permit the
Continued Employees to roll over their account balances (including any
outstanding loans) to Purchaser’s qualified retirement plan, and Purchaser shall
allow Continued Employees to so roll over such account balances (including any
outstanding loans).

SECTION 6.5 COBRA. Seller shall provide all required notifications under
Section 601 of ERISA, et. seq., to Employees (and their qualified beneficiaries)
who lose coverage under Seller’s health plans as a result of the transactions
contemplated herein. Purchaser shall (i) assume any and all obligations to
provide continuation coverage pursuant to Section 601 of ERISA, et. seq., with
respect to Continued Employees and their qualified beneficiaries (excluding any
individual who became a qualified beneficiary prior to Closing), and
(ii) indemnify the Seller Group Companies for any and all Liabilities that the
Seller Group Companies may incur as a result of Purchaser’s failure to provide
continuation coverage to any Continued Employee or qualified beneficiary
(excluding any individual who became a qualified beneficiary prior to Closing),
including, but not limited to, any Liabilities or excise taxes arising pursuant
to Code Section 4980B.

SECTION 6.6 WARN. Prior to Closing, Seller shall comply, and cause the Target
Group Companies to comply, with any obligations under the Worker Adjustment and
Retraining Notification Act of 1988, as amended (“WARN”) and other applicable
worker compensation legislation to the extent events implicating WARN or such
other applicable worker compensation legislation occur prior to or at the
Closing.

SECTION 6.7 No Other Rights. Without limiting or restricting the provisions of
Section 11.11, nothing in this Article VI or elsewhere in the Agreement shall be
deemed to create or confer any rights or remedies (including any agreement for
employment or other benefits) to any Person other than the Parties.

ARTICLE VII

TAX MATTERS

SECTION 7.1 Preparation and Filing of Returns. For any Straddle Period of the
Target Group Companies, Purchaser shall timely prepare and file with the
appropriate Tax Authority all Returns required to be filed and shall pay all
Taxes due with respect to such Returns, and such Returns shall be prepared
reasonably consistently with past practices; provided, however, that Seller
shall reimburse Purchaser (in accordance with the procedures set forth in
Section 9.4(e)) for any amount owed by Seller pursuant to Section 9.4 with
respect to any Straddle Period covered by such Returns. Subject to Section 7.4,
for any taxable period of the Target Group Companies that ends on or before the
Closing Date, Seller shall timely prepare and provide to the Target Group
Companies for filing with the appropriate Tax Authority all Returns required to
be filed and shall pay all Taxes due with respect to such Returns and

 

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such Returns shall be prepared reasonably consistently with past practices.
Purchaser and Seller agree to cause the Target Group Companies (other than the
Canadian Subsidiaries) to file all Returns for the period including the Closing
Date on the basis that the relevant taxable period ended as of the close of
business on the Closing Date, unless the relevant Taxing Authority will not
accept a Return filed on that basis. With respect to the Canadian Subsidiaries,
Purchaser and Seller agree that the taxable period ending with respect to the
Closing Date shall be deemed to have ended at 11:59 p.m on the day immediately
preceding the Closing Date.

SECTION 7.2 Mutual Cooperation, Access and Assistance. Seller, the Target Group
Companies and Purchaser shall fully cooperate to the extent reasonably
requested, and shall cause their respective Affiliates, officers, employees,
agents, auditors and other representatives to cooperate, in preparing and filing
all Returns, including maintaining and making available to each other all
records reasonably necessary in connection with Taxes and in resolving all
disputes and audits with respect to all taxable periods relating to Taxes.
Purchaser and Seller recognize that Seller, Purchaser and their respective
Affiliates will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information with respect to the Target
Group Companies to the extent such records and information pertain to events
occurring prior to the Closing Date; therefore, Seller and Purchaser agree, and
Purchaser agrees to cause the Target Group Companies, (i) to use their best
efforts to retain and maintain such records until such time as Seller and
Purchaser agree that the retention and maintenance is no longer necessary and to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
Seller or the Target Group Companies, as the case may be, shall allow the other
party to take possession of such books and records, and (ii) to allow Seller,
Purchaser, and their respective agents and other representatives (and agents or
other representatives of any of their respective Affiliates), at times and dates
mutually acceptable to the parties, to inspect, review and make copies of such
records as the requesting party may deem reasonably necessary or appropriate
from time to time, such activities to be conducted during normal business hours
and at the requesting party’s expense. Neither the Purchaser nor any of the
Target Group Companies (nor any transferee) shall file or cause to be filed any
amended Return of any of the Target Group Companies for any Pre-Closing Tax
Period without the prior written consent of Seller, which consent may be
withheld in its reasonable discretion.

SECTION 7.3 Refunds, Credits and Offsets. The amount or economic benefit of any
refunds, credits or offsets of Taxes of the Target Group Companies, or of any
consolidated, combined, unitary, affiliated or aggregate group of which the
Target Group Companies is or has been a member, for any taxable period ending on
or before the Closing Date shall be for the account of Seller. The amount or
economic benefit of any refunds, credits or offsets of Taxes of the Target Group
Companies for any taxable period beginning after the Closing Date, or, solely,
for Canadian tax purposes, on or after the Closing Date, shall be for the
account of Purchaser. The amount or economic benefit of any refunds, credits or
offsets of Taxes of the Target Group Companies for any Straddle Period (other
than, solely for Canadian tax purposes, a taxable period that begins on the
Closing Date) shall be equitably apportioned between Seller and Purchaser.
Provided that the non-requesting party, acting in good faith, determines that
there is a reasonable basis for filing a claim with the relevant Taxing
Authority, and that the filing of such claim will not result in an increase in
the Tax liability of such non-requesting party, each party shall, if the other
party so requests and at such other party’s sole expense, cause the Target Group
Companies to file for and obtain any refunds, credits or offsets to Taxes to
which the requesting party is entitled under this Section. Purchaser shall
permit Seller to control the prosecution of any such claim relating solely to
one or more taxable periods ending on or before the Closing Date and, shall
cause each of the Target Group Companies to cooperate as reasonably necessary
for Seller to prosecute such refund claim. Each party shall forward, and shall
cause its Affiliates to forward, to the party entitled pursuant to this Section
to receive the amount or economic benefit of a refund, credit or offset to Tax,
the amount of such refund, or the economic benefit of such credit or offset to
Tax, within 15 days after such refund is received or

 

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after such credit or offset is allowed or applied against other Tax liability,
as the case may be. Notwithstanding the foregoing, the control of the
prosecution of a claim for refund of Taxes paid pursuant to a deficiency
assessed subsequent to the Closing Date as a result of an audit shall be
governed by the provisions of Section 9.4(e). Purchaser agrees that it shall not
cause or permit the Target Group Companies to carry back to any taxable period
ending on or prior to the Closing Date any net operating loss, loss from
operations or other Tax attribute, and further agrees that Seller have no
obligation under this Agreement to return or remit any refund or other Tax
benefit attributable to a breach by Purchaser of the foregoing undertaking.

SECTION 7.4 Examination Adjustments. Seller shall be responsible for filing any
amended consolidated, combined or unitary Returns for taxable years ending on or
prior to the Closing Date that are required as a result of examination
adjustments made by the Internal Revenue Service or by the applicable state,
local or foreign Taxing Authorities for such taxable years as finally
determined. For those jurisdictions in which Separate Returns are filed by the
Target Group Companies, any required amended Returns resulting from such
examination adjustments, as finally determined, shall be prepared by Seller and
furnished to such Target Group Company for review and comment and filing at
least 30 days prior to the due date for filing such Returns.

SECTION 7.5 Other Taxes. All transfer, documentary, sales, use, registration and
other such Taxes (including all applicable real estate transfer Taxes, but
excluding any Taxes based on or attributable to income or gains) and related
fees (including any penalties, interest and additions to Tax) incurred in
connection with this Agreement, the other Transaction Documents and the
transactions contemplated hereby shall be borne equally by Seller and Purchaser,
and Seller and Purchaser shall cooperate timely in making all filings, returns,
reports and forms as may be required to comply with the provisions of such Tax
laws.

SECTION 7.6 Termination of Tax Sharing Agreement. Seller shall cause the
provisions of any Tax sharing agreement between Seller or any of its Affiliates,
on the one hand, and the Target Group Companies on the other hand, to be
terminated on or before the Closing Date. After the Closing Date, no party shall
have any rights or obligations under any such Tax sharing agreement.

SECTION 7.7 Treatment of Tax Indemnity Payments. Seller and Purchaser agree to
treat any amounts payable pursuant to Article IX as an adjustment to the Total
Consideration Amount, unless a final determination causes any such payment not
to be treated as an adjustment to the Total Consideration Amount for Federal
income tax purposes.

SECTION 7.8 Timing of Non-Ordinary Course Transactions on the Closing Date.
Purchaser and Seller agree to report for income Tax purposes all transactions
approved by Purchaser which are not in the ordinary course of business and which
occur on the Closing Date after Purchaser’s purchase of the Shares as occurring
at the beginning of the day following the Closing Date to the extent permitted
by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B), and Purchaser agrees to
indemnify Seller for any additional Taxes owed by any of the Seller Group
Companies resulting from any such transaction.

 

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ARTICLE VIII

CONDITIONS TO CLOSING

SECTION 8.1 Conditions to Obligations of Seller. The obligation of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction (or waiver by Seller), at or prior to the Closing, of each of
the following conditions:

(a) Representations and Warranties. The representations and warranties of
Purchaser contained in this Agreement that are qualified by materiality shall be
true and correct as of the Closing Date and the representations and warranties
of Purchaser contained in this Agreement that are not so qualified shall be true
and correct in all material respects as of the Closing Date, in each case as if
made as of the Closing Date (other than such representations and warranties as
are made as of another date, which shall be true and correct as of such date),
except for changes permitted or contemplated by this Agreement;

(b) Covenants. The covenants and agreements contained in this Agreement to be
complied with by Purchaser at or before the Closing shall have been complied
with in all material respects;

(c) [Intentionally deleted];

(d) Regulatory Approvals. Any waiting period (and any extension thereof) under
the HSR Act or the Investment Canada Act applicable to the purchase of the
Shares contemplated hereby shall have expired or shall have been terminated; and

(e) No Order. There shall not be in effect any Law or Governmental Order
directing that the transactions contemplated by this Agreement not be
consummated or which has the effect of rendering it unlawful to consummate such
transactions.

SECTION 8.2 Conditions to Obligations of Purchaser. The obligation of Purchaser
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction (or waiver by Purchaser), at or prior to the Closing, of
each of the following conditions:

(a) Representations and Warranties. The representations and warranties of Seller
contained in this Agreement that are qualified by materiality, including the
standard of “Material Adverse Effect”, shall be true and correct as of the
Closing Date and the representations and warranties of Seller contained in this
Agreement that are not so qualified shall be true and correct in all material
respects as of the Closing Date, in each case as if made as of the Closing Date
(other than such representations and warranties as are made as of another date
which shall be true and correct as of such date), except for changes permitted
or contemplated by this Agreement;

(b) Covenants. The covenants and agreements contained in this Agreement to be
complied with by Seller at or before the Closing shall have been complied with
in all material respects;

(c) [Intentionally deleted];

(d) Regulatory Approvals. Any waiting period (and any extension thereof) under
the HSR Act or the Investment Canada Act applicable to the purchase of the
Shares contemplated hereby shall have expired or shall have been terminated; and

(e) No Order. There shall not be in effect any Law or Governmental Order
directing that the transactions contemplated by this Agreement not be
consummated or which has the effect of rendering it unlawful to consummate such
transactions; provided, however, that Purchaser shall have used all of its
reasonable best efforts to have any such Governmental Order vacated or lifted
and shall have complied with its obligations under Section 5.3.

 

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(f) No Material Adverse Effect. Since the date of this Agreement, there shall
not have been any Material Adverse Effect.

(g) Release of Senior Facility Liens. Seller’s Senior Lender Agent shall have
executed such documents or instruments as may be required to release the Senior
Facility Liens to the extent encumbering all or any portion of the Shares and
the Target Group Assets.

ARTICLE IX

INDEMNIFICATION

SECTION 9.1 Survival. The representations and warranties contained in this
Agreement will survive the Closing (a) indefinitely, with respect to the
representations and warranties contained in Sections 3.1 (Organization), 3.2
(Authority; Enforceability), 3.5 (Capital Stock of the Target Parent Companies),
3.6(a) (Target Subsidiaries), 3.10(d) (No Liens on Assets), 4.1 (Organization)
and 4.2 (Authority; Enforceability) (all of the foregoing representations being
herein called the “Indefinitely Surviving Representations”); and (b) until the
date falling twelve months after the Closing Date in the case of all other
representations and warranties (other than any representations or warranties
contained in Section 3.18 (Taxes), which shall expire at the Closing). If
written notice of a claim for breach of representation or warranty has been
given in accordance with Section 9.2(c) prior to the expiration of the
applicable survival period, then the applicable representations, warranties,
covenants or agreements shall survive as to such claim, until such claim has
been finally resolved.

SECTION 9.2 Indemnification other than for Tax Matters.

(a) From and after the Closing, Purchaser and its Affiliates and each of their
respective, officers, directors, employees and agents shall be indemnified and
held harmless by Seller for any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including
reasonable attorneys’ fees and expenses) actually suffered or incurred by them
(hereinafter a “Loss”), arising out of or resulting from:

(i) the breach of any representation or warranty made by Seller in this
Agreement;

(ii) the breach of any covenant or agreement by Seller contained in this
Agreement;

(iii) that certain Mortgage and Security Agreement encumbering the Charles
Playhouse in Boston, Massachusetts issued by Boston Playhouse Realty, Inc. to
Joanna Datello, Trustee of the Palm Beach Productions Trust and recorded on
July 12, 1995 in Book 19876, Page 1 of the Suffolk Registry of Deeds (the
“Boston Playhouse Lien”);

(iv) any matter disclosed in Schedule 3.13, other than any claim arising under
item 7 listed under “Pending and Threatened Litigation” which is subject to
indemnification by Purchaser under Section 9.2(b)(iv);

(v) any violation by Seller of the Minneapolis Excluded Obligations, including a
draw under any letter of credit supplied by Purchaser to the City of Minneapolis
solely as a result of a violation of Section 9 of the Minneapolis Guaranty
(provided, however, if as a result of a violation of the Minneapolis Excluded
Obligations, Seller is required to prepay all lease payments under the lease of
the Minneapolis

 

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Theaters, Seller shall be subrogated to the position of the landlord under such
lease as to such lease payments, after which time, the tenant under such lease
shall continue to make lease payments in accordance therewith to Seller as if
there had been no acceleration of the lease payments); or

(vi) any claim described on Schedule 9.2(a)(vi) hereof.

The foregoing provisions of this Section 9.2(a) shall not apply with respect to
any Losses arising out of (and no indemnification hereunder shall be available
with respect to) any (A) breach of any representation or warranty of Seller that
is terminated as provided in Section 9.1 or (B) breach of the representations
and warranties of Seller contained in this Agreement (other than any breach of
the representations and warranties contained in Section 3.3 hereof with respect
to the contracts listed on Schedule 9.2(a)) which would result in the failure of
any of the conditions in Section 8.2(a) to be satisfied, but only if Purchaser
had Knowledge of such breaches (or received notice thereof pursuant to
Section 5.4) prior to the Closing Date. Seller agrees that any knowledge or
information of, or acquired by or on behalf of, Purchaser through due diligence
or otherwise shall not be a defense to Seller from, or serve as any limitation
on Purchaser to make, claims under Section 9.2(a)(ii), (iii) or (iv) of this
Agreement.

(b) From and after the Closing, the Seller Group Companies and each of their
respective officers, directors, employees and agents shall be indemnified and
held harmless by Purchaser for any and all Losses arising out of or resulting
from:

(i) the breach of any representation or warranty made by Purchaser in this
Agreement;

(ii) the breach of any covenant or agreement by Purchaser contained in this
Agreement or the Assumption Agreement;

(iii) the possession, use, operation, management, modification, disposition or
exploitation of any of the Target Group Assets by Purchaser or its Affiliates,
including, without limitation, any Losses arising from or related to the
operation of the Canon Theatre by Purchaser or its Affiliates after the Closing
pursuant to a 90-day carryover permit to sell liquor under the existing liquor
license at the Canon Theatre (except insofar as Purchaser is entitled to
indemnification, subject to the limitations set forth in this Agreement, for
such Losses pursuant to Section 9.2(a)); or

(iv) any claim described on Schedule 9.2(b)(iv) hereof

The foregoing provisions of this Section 9.2(b) shall not apply with respect to
any Losses arising out of (and no indemnification hereunder shall be available
with respect to) any (A) breach of any representation or warranty of Purchaser
that is terminated as provided in Section 9.1 and (B) breaches of the
representations and warranties of Purchaser contained in this Agreement (other
than any breach of the representation and warranty contained in Section 4.7
hereof) which would result in the failure of any of the conditions in
Section 8.1(a) to be satisfied, but only if Seller had Knowledge of such
breaches (or received notice thereof pursuant to Section 5.4) prior to the
Closing Date.

(c) Any party seeking indemnification under this Section 9.2 (an “Indemnified
Party”) shall give the party from whom indemnification is being sought (an
“Indemnifying Party”) notice of any matter which such Indemnified Party has
determined has given or could

 

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give rise to a right of indemnification under this Agreement, stating the amount
of the Loss, if known, and method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises. The liability of an Indemnifying Party
under this Section 9.2 with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Section 9.2
(“Third Party Claims”) shall be governed by and contingent upon the following
additional terms and conditions:

(i) If an Indemnified Party shall receive notice of any Third Party Claim, the
Indemnified Party shall give the Indemnifying Party notice of such Third Party
Claim within 20 days of the receipt by the Indemnified Party of such notice;
provided, however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations under this Section 9.2 except to
the extent the Indemnifying Party is materially prejudiced by such failure.

(ii) The Indemnifying Party shall be entitled to assume and control the defense
of such Third Party Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the Indemnified Party within 20 days
of the receipt of such notice from the Indemnified Party; provided, however,
that if there exists a material conflict of interest (other than one that is of
a monetary nature) that would make it inappropriate for the same counsel to
represent both the Indemnified Party and the Indemnifying Party, then the
Indemnified Party shall be entitled to retain its own counsel, at the expense of
the Indemnifying Party, provided that the Indemnifying Party shall not be
obligated to pay the reasonable fees and expenses of more than one separate
counsel for all Indemnified Parties, taken together.

(iii) In the event the Indemnifying Party exercises the right created in clause
(ii) to undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, all
witnesses, pertinent records, materials and information in the Indemnified
Party’s possession or under the Indemnified Party’s control relating thereto as
is reasonably required by the Indemnifying Party.

(iv) In the event the Indemnified Party is, directly or indirectly, conducting
the defense against any such Third Party Claim, the Indemnifying Party shall
cooperate with the Indemnified Party in such defense and make available to the
Indemnified Party, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified Party.

(v) The Indemnifying Party shall not, without the written consent of the
Indemnified Party, (i) settle or compromise any Third Party Claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the Indemnified Party of a
written release from all liability in respect of such Third Party Claim or
(ii) settle or compromise any Third Party Claim if the settlement imposes
equitable remedies or material obligations on the Indemnified Party other than
financial obligations for which such Indemnified Party will be indemnified
hereunder.

(vi) No Third Party Claim which is being defended in good faith by the
Indemnifying Party in accordance with the terms of this Agreement shall be
settled or compromised by the Indemnified Party without the written consent of
the Indemnifying Party.

 

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(vii) If Indemnifying Party does not defend such Third Party Claim in good faith
in accordance with the terms of this Agreement, the Indemnified Party shall be
entitled to settle or compromise such Third Party Claim without the written
consent of the Indemnifying Party.

(d) For purposes of determining whether a breach or default of a representation,
warranty, covenant or agreement contained in this Agreement has occurred and
calculating the amount of Losses arising from any breach or default of any of
the representations, warranties, covenants and agreements contained in this
Agreement, the applicable provision shall be read and interpreted as if any
qualification or limitation stated therein with respect to materiality or
material adverse effect was not contained therein.

(e) The respective indemnification obligations of the parties with respect to
Tax matters shall be governed by Section 9.4 and this Section 9.2 shall not be
applicable to any such matters.

SECTION 9.3 Limits on Indemnification.

(a) No amount shall be payable by any Indemnifying Party pursuant to
Section 9.2(a)(i) or 9.2(b)(i) unless the aggregate amount of Loss indemnifiable
under Section 9.2(a)(i) or 9.2(b)(i), as applicable, exceeds $2,000,000 (at
which time, all Losses including those used to meet such threshold shall be
subject to indemnification hereunder), except that such limitation shall not
apply to or limit the rights of Seller pursuant to Section 9.2(b)(i) hereof with
respect to or arising out of a breach of the representation made by Purchaser in
Section 4.7 hereof.

(b) Notwithstanding anything to the contrary contained in this Agreement, the
aggregate amount of Losses which may be recovered from Seller arising out of or
resulting from the causes enumerated in Section 9.2(a)(i), or from Purchaser
arising out of or resulting from the causes enumerated in Section 9.2(b)(i)
shall not exceed $20,000,000, except that such limitation shall not apply to
claims arising under the Indefinitely Surviving Representations or the Tax
Indemnifications.

(c) In addition to any other limitations on indemnification that may apply, with
respect to any claim for indemnification that Purchaser may assert regarding
Environmental Laws or Hazardous Materials in connection with the Company
Theaters, Seller shall have no obligation with respect to such claim to the
extent that the Losses for which indemnification is sought arise out of any
action that is not required by applicable Environmental Law or the applicable
lease for the continued use of such Company Theater as it is used as of the date
hereof. In addition, with respect to any claim that is the subject of this
Section 9.3(c); (x) it is a condition precedent to any right of Purchaser to
indemnification for such claim that, to the extent practicable, prior to
incurring substantial costs with respect to such claim for which it may seek
indemnification, Purchaser shall notify Seller of such claim and afford Seller
the opportunity to evaluate the conditions giving rise to such claim; (y) if
requested by Seller, Seller (at its sole expense) shall be entitled (but not
obligated) to undertake, with Purchaser’s continued oversight, participation and
approval (not to be unreasonably withheld or delayed), any investigation,
remediation, or other action required or permitted by applicable Environmental
Law or the terms of any binding lease (and any negotiation with regulatory
authorities or landlords regarding same), and in the course thereof shall use
commercially reasonable efforts to avoid any unreasonable interference with

 

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Purchaser’s operations, and Purchaser shall afford Seller reasonable access to
undertake any such investigation, remediation, or other action; and
(z) Purchaser, the Seller Group Companies and the Target Group Companies shall
exchange information and otherwise cooperate in order to facilitate the
expeditious and cost-effective resolution of such claim.

SECTION 9.4 Tax Indemnification.

(a) Following the Closing, Seller shall indemnify Purchaser and its Affiliates
(including the Target Group Companies) and its officers, directors, employees
and agents and hold them harmless from (i) all liability for Taxes of the Target
Group Companies for the Pre-Closing Tax Period, (ii) all liability (as a result
of Treasury Regulation § 1.1502-6(a) or otherwise) for Taxes of Seller or any
other Seller Group Company, (iii) any breach by Seller or any of its Affiliates
(other than breaches occurring after the Closing by the Target Group Companies)
of any covenant contained in Article VII and (iv) all costs and expenses
(including reasonable attorneys’ fees and expenses) of asserting or defending
any claims for Taxes described in subsections (i) and (ii) of this
Section 9.4(a). Notwithstanding the foregoing, Seller shall not indemnify and
hold harmless any of Purchaser, its Affiliates or officers, directors, employees
or agents from any liability for Taxes attributable to any action taken after
the Closing by Purchaser or any of its Affiliates (including the Target Group
Companies), or any transferee of Purchaser or any of its Affiliates (other than
any such action expressly required by applicable Law or contemplated by this
Agreement) (a “Purchaser Tax Act”) or attributable to a breach by Purchaser of
any covenant contained in Article VII of this Agreement. Estimated Taxes paid by
or on behalf of the Target Group Companies on or prior to the Closing Date shall
be credited to Taxes with respect to the Pre-Closing Tax Period.

(b) Following the Closing, Purchaser shall, and shall cause the Target Group
Companies to, indemnify Seller and its Affiliates and their respective officers,
directors, employees and agents and hold them harmless from (i) all liability
for Taxes of the Target Group Companies for any taxable period ending after the
Closing Date (except to the extent such taxable period began before the Closing
Date, in which case Purchaser’s indemnity will cover only that portion of any
such Taxes that are not attributable to the Pre-Closing Tax Period), (ii) all
liability for Taxes attributable to a Purchaser Tax Act or to a breach by
Purchaser of any covenant contained in Article VII of this Agreement and
(iii) all costs and expenses (including reasonable attorneys’ fees and expenses)
of asserting or defending any claims for Taxes described in (i) of this
Section 9.4(b).

(c) In the case of any Straddle Period:

(i) real, personal and intangible Property Taxes (“Property Taxes”) of the
Target Group Companies for the Pre-Closing Tax Period shall be equal to the
amount of such Property Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of days during the Straddle
Period that are in the Pre-Closing Tax Period and the denominator of which is
the total number of days in the Straddle Period;

(ii) other than in the case of Taxes imposed under the Income Tax Act (Canada)
and corresponding provincial statutes in respect of the Canadian Subsidiaries,
the Taxes of the Target Group Companies (other than Property Taxes) for the
Pre-Closing Tax Period shall be computed as if such taxable period ended as of
the close of business on the Closing Date; and

 

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(iii) in the case of Taxes imposed under the Income Tax Act (Canada) and
corresponding provincial statutes in respect of the Canadian Subsidiaries, the
Taxes of the Canadian Subsidiaries (other than Property Taxes) for the
Pre-Closing Tax Period shall be computed as if such taxable period ended as of
the close of business on the day preceding the Closing Date.

(d) Seller’s indemnity obligation hereunder in respect of Taxes for a Straddle
Period shall initially be effected by its payment to Purchaser of the excess of
(i) such Taxes for the Pre-Closing Tax Period over (ii) the amount of such Taxes
with respect to the Target Group Companies paid by any of the Seller Group
Companies at any time plus the amount of such Taxes paid by the Target Group
Companies on or prior to the Closing Date. Seller shall pay such excess to
Purchaser after written demand thereof is made by Purchaser (but not earlier
than 5 days before the date on which the Taxes for the relevant taxable period
are required to be paid to the relevant Taxing Authority). If the amount of such
Taxes paid by the Seller Group Companies at any time plus the amount of such
Taxes paid by the Target Group Companies on or prior to the Closing Date exceeds
the amount of such Taxes for the Pre-Closing Tax Period, Purchaser shall pay to
Seller the amount of such excess within 30 days after the Return with respect to
the final liability for such Taxes is required to be filed with the relevant
Taxing Authority. The payments to be made pursuant to this paragraph by Seller
or Purchaser with respect to a Straddle Period shall be appropriately adjusted
to reflect any final determination (which shall include the execution of Form
870-AD or successor form) with respect to Straddle Period Taxes.

(e) With respect to tax claims:

(i) If a claim shall be made by any Taxing Authority, which, if successful,
might result in an indemnity payment to a party (the “First Party”), one of its
Affiliates or any of its officers, directors, employees or agents pursuant to
this Section 9.4, the First Party shall promptly and in any event no more than
30 days following the First Party’s receipt of such claim, give written notice
to the other party (the “Second Party”) of such claim (a “Tax Claim”); provided,
however, the failure of the First Party to give such notice shall only relieve
the Second Party from its indemnification obligations hereunder to the extent it
is actually prejudiced by such failure.

(ii) With respect to any Tax Claim relating to a taxable period ending on or
prior to the Closing Date (or, solely for Canadian income tax purposes, ending
on the day prior to the Closing Date) for Taxes for which Seller is responsible
for indemnifying under the terms of this Agreement, Seller shall control all
proceedings and may make all decisions taken in connection with such Tax Claim
(including selection of counsel) and, without limiting the foregoing, may in its
sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any Taxing Authority with respect
thereto, and may, in its sole discretion, either pay the Tax claimed and sue for
a refund where applicable Law permits such refund suits or contest the Tax Claim
in any permissible manner; provided, however, that Seller shall not, without the
consent of Purchaser (which consent shall not be unreasonably withheld) take any
such action with respect to a Separate Return that would materially increase
Taxes for any taxable period beginning on or after the Closing Date (or, solely
for Canadian income tax purposes, beginning on the Closing Date) for which
Purchaser or the Target Group Companies would be responsible under this
Agreement. Subject to the following sentence, Seller and Purchaser shall jointly
control all proceedings taken in connection with any Tax Claim relating solely
to Taxes of the Target Group Companies for a Straddle Period. Purchaser shall
control all proceedings with respect to any Tax Claim relating to a taxable
period beginning after (or, solely for Canadian income tax purposes, on or
after) the Closing Date.

 

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(iii) Seller, Purchaser, the Target Group Companies and each of their respective
Affiliates shall fully cooperate to the extent reasonably requested with each
other in contesting any Tax Claim. Such cooperation shall include the retention
and, upon the request of the party or parties controlling proceedings relating
to such Tax Claim, the provision to such party or parties of records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.

(iv) In no case shall any of Purchaser or any of the Target Group Companies
settle or otherwise compromise any Tax Claim relating to a taxable period ending
on or prior to the Closing Date (or, solely for Canadian income tax purposes,
ending on the day prior to the Closing Date) without Seller’s prior written
consent. None of the Seller Group Companies, the Purchaser and Purchaser’s
Affiliates (including the Target Group Companies) shall settle a Tax Claim
relating to Taxes of the Target Group Companies for a Straddle Period (other
than, solely for Canadian income tax purposes, any such period that begins on
the Closing Date) without the prior written consent of both Seller and
Purchaser. In no case shall Seller settle or otherwise compromise any Tax Claim
relating to a taxable period beginning after (or, solely for Canadian income tax
purposes, on or after) the Closing Date without Purchaser’s prior written
consent. In the event that any party violates the provisions of this paragraph
(relating to the settlement or compromise of Tax Claims), such party shall not
be entitled to any indemnity payments with respect to such Tax Claim pursuant to
this Section but only to the extent that the indemnifying party is actually
prejudiced.

(f) indemnification provisions in this Agreement relating to Taxes shall survive
the Closing until 90 days after the expiration of the applicable statute of
limitations.

SECTION 9.5 Computation of Indemnifiable Losses. Any amount payable pursuant to
this Article IX shall be decreased or returned to the Indemnifying Party in the
amount of (i) any net reduction in Tax liability that is realized by the
recipient of such amount upon the payment of or as a result of, an indemnifiable
Loss and (ii) any insurance proceeds received by the recipient of such amount in
respect of an indemnifiable Loss.

SECTION 9.6 Indemnification as Exclusive Remedy. The indemnification provided in
this Article IX, subject to the limitations set forth herein, shall be the
exclusive post-Closing remedy available to any Party in connection with any
Losses arising out of or resulting from this Agreement, the transactions
contemplated hereby, any of the Company Theaters or otherwise regarding the
Target Group Companies. Notwithstanding the forgoing, the indemnification
provided in this Article IX shall not be the exclusive post-closing remedy or
otherwise limit the Purchaser’s remedies with respect to claims arising from
Seller’s fraud or criminal activity, if any.

 

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ARTICLE X

[INTENTIONALLY DELETED]

ARTICLE XI

GENERAL PROVISIONS

SECTION 11.1 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement, the
agreements contemplated hereby and the transactions contemplated hereby and
thereby shall be paid by the Party incurring such costs and expenses, whether or
not the Closing shall have occurred, provided, however, that Purchaser shall pay
for all fees and expenses relating to antitrust, competition and foreign
investment matters, if any, including filing fees and other fees and expenses
related to obtaining approvals from, contesting, negotiating, resolving and
otherwise addressing claims or positions asserted or held by any Governmental
Authorities and provided further, however, Seller shall pay all costs and
expenses, including fees and disbursements of counsel, financial advisors and
accountants, incurred prior to the Closing by the Target Group Companies in
connection with the negotiation and preparation of this Agreement and completing
the Closing (other than any costs and expenses incurred by the Target Group
Companies at the special request of, and with the prior consent of, the
Purchaser).

SECTION 11.2 Disclaimer Regarding Projections. In connection with Purchaser’s
investigation of the Target Group Companies, Purchaser has received from the
Seller Group Companies, the Target Group Companies and/or the respective
representatives thereof, certain projections and other forecasts and certain
business plan information. Purchaser acknowledges that there are uncertainties
inherent in attempting to make such projections and other forecasts and plans,
that Purchaser is familiar with such uncertainties, that Purchaser is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all projections and other forecasts and plans so furnished to it, and that
Purchaser shall have no claim against anyone with respect thereto. Accordingly,
Purchaser acknowledges that Seller makes no representation or warranty with
respect to such projections, forecasts or plans and that Seller makes only those
representations and warranties explicitly set forth in Article III.

SECTION 11.3 Materiality. As used in this Agreement, unless the context would
require otherwise, the terms “material” or “material to the Target Group
Companies”, “material to the Target Parent Companies” and the concept of the
“material” nature of an effect upon the Target Group Companies or the Target
Parent Companies shall be measured relative to the entire business of the Target
Group Companies, taken as a whole, as such business is currently being
conducted. There have been included in the Schedules, and may be included
elsewhere in this Agreement, items which are not “material” within the meaning
of the immediately preceding sentence; such inclusion shall not be deemed to be
an acknowledgement by Seller that such items are “material” and shall not be
used to further define the meaning of “material” for purposes of this Agreement.

SECTION 11.4 [intentionally left blank]

SECTION 11.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service or by telecopy to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section):

 

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(a)

   if to Seller:    Live Nation Worldwide, Inc.    9348 Civic Center Drive   
Beverly Hills, CA 90210    Attention: Ms. Lee Ann Gliha    with a copy to:   
Live Nation Worldwide, Inc.    9348 Civic Center Drive    Beverly Hills, CA
90210    Attention: Mr. Michael Rowles

(b)

   if to Purchaser:    Key Brand Entertainment Inc    220 West 42nd Street, 14th
Floor    New York, NY 10036    Attention: John Gore    with a copy to:    Jeffer
Mangels Butler & Marmaro, LLP    1900 Avenue of the Stars, 7th Floor    Los
Angeles, California 90067    Facsimile: 310-203-0567    Attention: Frederick W.
Gartside, Esq.    and a copy to:    Tom McGrath    c/o Crossroads Media LLC   
10880 Westwood Boulevard, Suite 870    Los Angeles, California 90024   
Facsimile: 310-446-4930

SECTION 11.6 Public Announcements.

(a) Following execution of this Agreement, Purchaser will not make, or cause to
be made, any press release or public announcement in respect of this Agreement
or the transactions contemplated hereby or otherwise communicate with any news
media without the prior written consent of the other Parties, and the Parties
shall cooperate as to the timing and contents of any such press release or
public announcement; provided, however, that Purchaser may, without the prior
consent of the Seller, make such press release or public announcement as may be
required by Law or any listing agreement with a securities exchange if it has
used all reasonable efforts to consult with Seller and to obtain Seller’s
consent but has been unable to do so in a timely manner.

(b) Seller shall not be restricted or limited in regard to any press release or
public announcement in respect of this Agreement or the transactions
contemplated hereby except that the portion of any press release or public
announcement that describes the terms of the transaction

 

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contemplated herein must be approved by Purchaser, such approval not be
unreasonably withheld or delayed, provided that (i) the foregoing shall not
limit or restrict Seller’s right to make such disclosures or public filings as
may be required by Law or any listing agreement with a securities exchange if
Seller has used all reasonable efforts to consult with Purchaser and to obtain
Purchaser’s consent but has been unable to do so in a timely manner and (ii) any
press release or any other presentation that references the transaction
contemplated herein that contains a description of this transaction that is
substantially similar to the description contained in a prior press release
approved by Purchaser will not require further approval from Purchaser.

SECTION 11.7 Headings; Table of Contents. The descriptive headings contained in
this Agreement and table of contents of this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.

SECTION 11.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

SECTION 11.9 Entire Agreement. This Agreement, the Confidentiality Agreement,
and the Exhibits and Schedules attached hereto constitute the entire agreement
of the Parties with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the Parties with
respect to the subject matter hereof.

SECTION 11.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. This Agreement may not be assigned by operation of law or
otherwise by either Party without the prior written consent of the other Party
(which consent may be granted or withheld in the sole discretion of such other
Party), and any attempted assignment in violation of this Section 11.10 shall be
void.

SECTION 11.11 No Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the Parties and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person other than the Parties any legal or equitable right, benefit or
remedy of any nature whatsoever (including any rights as a third party
beneficiary or otherwise) under or by reason of this Agreement.

SECTION 11.12 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the Parties.

SECTION 11.13 Waiver. Any Party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of any other Party,
(b) waive any inaccuracies in the representations and warranties of another
Party contained herein or in any document delivered by another Party pursuant
hereto or (c) waive compliance with any of the agreements or conditions of
another Party contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the Party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any Party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.

 

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SECTION 11.14 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, without reference to
the choice of law doctrine of California. All actions and proceedings arising
out of or relating to this Agreement shall be heard and determined in any
federal court sitting in the County of Los Angeles, California, unless there is
no federal court jurisdiction, in which case the action or proceeding shall be
heard and determined in any state court sitting in the County of Los Angeles,
California, and the Parties hereby irrevocably submit to the jurisdiction of
such courts in any such action or proceeding and irrevocably waive the defense
of an inconvenient forum. THE PARTIES HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR
CROSS-COMPLAINT IN ANY ACTION OR OTHER PROCEEDING BROUGHT BY ANY PARTY AGAINST
ANY OTHER PARTY OR PARTIES WITH RESPECT TO ANY MATTER ARISING OUT OF, OR IN ANY
WAY CONNECTED WITH OR RELATED TO, THIS AGREEMENT OR ANY PORTION THEREOF WHETHER
BASED UPON CONTRACTUAL, STATUTORY, TORT OR OTHER THEORIES OF LIABILITY. Each
Party irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such Party at
its address specified in Section 11.5. Nothing in this Section shall affect the
right of any Party to serve legal process in any other manner permitted by Law.
The consents to jurisdiction set forth in this Section shall not constitute
general consents to service of process in the State of California and shall have
no effect for any purpose except as provided in this Section and shall not be
deemed to confer rights on any Person other than the Parties.

SECTION 11.15 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Signatures delivered
electronically shall have the same force and effect as “ink” signatures.

SECTION 11.16 Construction. This Agreement and any documents or instruments
delivered pursuant hereto shall be construed without regard to the identity of
the Person who drafted the various provisions of the same. Each and every
provision of this Agreement and such other documents and instruments reflects a
negotiated outcome and as such shall be construed as though the Parties
participated equally in the drafting of the same. Any rule of construction
providing that a document or provision be construed against the drafting party
shall not be applicable to this Agreement or such other documents and
instruments.

SECTION 11.17 Time of the Essence. Time is of the essence with respect to all
dates and time periods set forth or referred to in this Agreement. The Parties
acknowledge that each will be relying upon the timely performance by the other
of its obligations hereunder as a material inducement to enter into this
Agreement.

[Signatures appear on the following page.]

 

57

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IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.

 

LIVE NATION WORLDWIDE, INC. By:   /s/ Kathy Willard Name:   Kathy Willard Title:
  Exec. Vice President

 

KEY BRAND ENTERTAINMENT INC. By:   /s/ John Gore Name:   John Gore Title:  
President

 

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Exhibits and Schedules

 

Description of Exhibit

  

Name of Exhibit

Exhibit A

   Transition Services Agreement

Exhibit B

   Free Cash Calculation

Schedule 2.6

   Allocation of Equity Consideration Among the Target Parent Companies

Schedule 3.3

   Non-Contravention

Schedule 3.4

   Governmental Consents

Schedule 3.5

   Capital Stock of the Target Parent Companies

Schedule 3.6(a)

   Target Subsidiaries

Schedule 3.6(b)

   Theatrical Investments

Schedule 3.6(c)

   Any Other Material Investments

Schedule 3.7(d)

   Undisclosed Liabilities

Schedule 3.8

   Absence of Certain Changes or Events

Schedule 3.9

   Subscription Series Markets

Schedule 3.10(a)

   Theaters

Schedule 3.10(b)

   Current Use of Company Theaters

Schedule 3.11(a)

   Contracts

Schedule 3.11(b)

   Contract Defaults

Schedule 3.12

   Compliance with Law

Schedule 3.13

   Litigation

Schedule 3.14

   Employee Benefit Plans

Schedule 3.15

   Proprietary Rights

Schedule 3.16

   Environmental

Schedule 3.17

   Contracts with Certain Persons

Schedule 3.18(b)

   Taxes – Deficiencies; Assessments; Etc.

Schedule 3.18(c)

   Taxes – Elections

Schedule 3.19

   Insurance

Schedule 3.20

   Bank Accounts

Schedule 3.23

   Bank Balances on January 10, 2008

Schedule 5.1

   Conduct of Business Prior to Closing

Schedule 5.7

   Additional Restricted Seller Names

Schedule 5.11

   Excluded Assets

Schedule 5.12(a)

   LN Guarantees

Schedule 5.12(b)

   LN Letters of Credit

Schedule 5.16(h)

   Chicago Theaters

Schedule 6.1(a)

   Seller Group Employees Included as Continued Employees

Schedule 6.3

   Certain Limitations on Severance Obligations

Schedule 9.2(a)(vi)

   Special Indemnity by Seller to Purchaser

Schedule 9.2(b)(iv)

   Special Indemnity by Purchaser to Seller

Schedule 9.2(a)

   Certain Contracts