Exhibit 10.1

TRANSACTION AGREEMENT

dated as of

January 31, 2017

among

MSG TG, LLC,

TG MERGER SUB, LLC,

the Persons identified on the signature pages hereto as “MANAGEMENT SELLERS”,

the Persons identified on the signature pages hereto as “ROLLOVER HOLDCO
MEMBERS”,

the Persons identified on the signature pages hereto as “DIRECT ROLLOVER
MEMBERS”,

the Persons identified on the signature pages hereto as “GROUP ENTITIES”,

TG ROLLOVER HOLDCO LLC,

TAO GROUP HOLDINGS LLC,

TAO GROUP INTERMEDIATE HOLDINGS LLC,

TAO GROUP OPERATING LLC,

TAO GROUP MANAGEMENT LLC,

TG MEMBER REPRESENTATIVE LLC, as Member Representative,

solely with respect to its rights and obligations under Section 2.03(b)(iv) and
Article 14 (other than Sections 14.03, 14.04 and 14.15, and only insofar as
Article 14 relates to its rights and obligations under Section 2.03(b)(iv)), MSG
ENTERTAINMENT HOLDINGS, LLC,

and

solely with respect to its rights and obligations under Section 9.11 and
Article 14 (other than Sections 14.03, 14.04 and 14.15, and only insofar as
Article 14 relates to its rights and obligations under Section 9.11), THE
MADISON SQUARE GARDEN COMPANY

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TABLE OF CONTENTS

 

         Page  

ARTICLE 1 DEFINITIONS

     3   

Section 1.01.

 

Definitions

     3   

Section 1.02.

 

Other Definitional and Interpretative Provisions

     24   

ARTICLE 2 RESTRUCTURING AND CLOSING TRANSACTIONS

     26   

Section 2.01.

 

Reserved

     26   

Section 2.02.

 

Merger

     26   

Section 2.03.

 

Purchase Price; Earn-Out

     26   

Section 2.04.

 

Conversion of Interests; Distributions and Redemptions

     34   

Section 2.05.

 

Purchase Price and Earn-Out Hypothetical Calculation

     36   

Section 2.06.

 

No Parent or Parent-Affiliate Liability for Allocations

     36   

Section 2.07.

 

Minimum Cash Amount; Aventine Payment and Escrow

     37   

Section 2.08.

 

Calculation of Purchase Price

     37   

Section 2.09.

 

The Closing

     37   

Section 2.10.

 

Closing Deliverables

     38   

Section 2.11.

 

Allocation of Purchase Price

     40   

Section 2.12.

 

Withholding Rights

     40   

Section 2.13.

 

Payment and Issuance Procedures

     41   

Section 2.14.

 

Purchase Price Adjustment

     42   

Section 2.15.

 

Escrow Funds

     45   

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE ROLLOVER HOLDCO MEMBERS AND THE
DIRECT ROLLOVER MEMBERS

     46   

Section 3.01.

 

Existence and Power

     46   

Section 3.02.

 

Authorization

     46   

Section 3.03.

 

Governmental Authorization

     47   

Section 3.04.

 

Non-contravention

     47   

Section 3.05.

 

Existing Equity Interests

     48   

Section 3.06.

 

Management Assets; Other Assets

     48   

Section 3.07.

 

Litigation and Regulatory Actions

     48   

Section 3.08.

 

Finders’ Fees

     49   

Section 3.09.

 

Investment Purpose; Accredited Investor; No Public Market; No Reliance

     49   

Section 3.10.

 

Restrictions

     50   

Section 3.11.

 

Access to Information; No Reliance

     51   

Section 3.12.

 

Rollover Holdco Representations and Warranties

     51   

Section 3.13.

 

Exclusivity of Representations and Warranties

     55   

ARTICLE 4 REPRESENTATIONS AND WARRANTIES AS TO THE ACQUIRED ENTITIES

     56   

Section 4.01.

 

Existence and Power

     56   

 

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TABLE OF CONTENTS

(Continued)

 

         Page  

Section 4.02.

 

Authorization

     56   

Section 4.03.

 

Governmental Authorization

     57   

Section 4.04.

 

Non-contravention

     57   

Section 4.05.

 

Capitalization; Ownership of Equity Interests

     58   

Section 4.06.

 

Subsidiaries

     61   

Section 4.07.

 

Financial Statements

     63   

Section 4.08.

 

Absence of Certain Changes

     64   

Section 4.09.

 

No Undisclosed Liabilities

     65   

Section 4.10.

 

Material Contracts

     66   

Section 4.11.

 

Compliance with Laws and Court Orders

     70   

Section 4.12.

 

Litigation and Regulatory Actions

     70   

Section 4.13.

 

Properties

     70   

Section 4.14.

 

Intellectual Property

     71   

Section 4.15.

 

Taxes

     74   

Section 4.16.

 

Employee Benefit Plans

     75   

Section 4.17.

 

Employee and Labor Matters

     77   

Section 4.18.

 

Environmental Matters

     78   

Section 4.19.

 

Insurance

     78   

Section 4.20.

 

Finders’ Fees

     79   

Section 4.21.

 

Related Party Transactions

     79   

Section 4.22.

 

Permits; Liquor Licenses

     79   

Section 4.23.

 

Corruption Laws

     80   

Section 4.24.

 

Quality and Safety of Food & Beverage Products

     80   

Section 4.25.

 

Access to Information; No Reliance

     81   

Section 4.26.

 

Exclusivity of Representations and Warranties

     81   

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MEMBER REPRESENTATIVE

     82   

Section 5.01.

 

Organization; Authorization

     82   

Section 5.02.

 

Non-contravention

     83   

Section 5.03.

 

Ownership

     83   

ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT

     84   

Section 6.01.

 

Existence and Power

     84   

Section 6.02.

 

Authorization

     84   

Section 6.03.

 

Governmental Authorization

     85   

Section 6.04.

 

Non-contravention

     85   

Section 6.05.

 

Capitalization of Parent and Parent Merger Sub; Ownership of Interests

     85   

Section 6.06.

 

Litigation and Regulatory Actions

     86   

Section 6.07.

 

Finders’ Fees

     86   

Section 6.08.

 

Reserved

     86   

 

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TABLE OF CONTENTS

(Continued)

 

         Page  

Section 6.09.

 

Access to Information; No Reliance

     86   

Section 6.10.

 

Investment Purpose; Accredited Investor; No Public Market; No Reliance

     87   

Section 6.11.

 

Exclusivity of Representations and Warranties

     88   

ARTICLE 7 COVENANTS OF THE ACQUIRED ENTITIES, DIRECT ROLLOVER MEMBERS AND
ROLLOVER HOLDCO MEMBERS

     88   

Section 7.01.

 

Reserved

     88   

Section 7.02.

 

Reserved

     88   

Section 7.03.

 

Reserved

     88   

Section 7.04.

 

Restrictive Covenants

     89   

Section 7.05.

 

Reserved

     89   

Section 7.06.

 

D&O Policy

     89   

Section 7.07.

 

Lease Guarantees

     89   

ARTICLE 8 [RESERVED]

     90   

Section 8.01.

 

Reserved

     90   

Section 8.02.

 

Reserved

     90   

ARTICLE 9 COVENANTS OF PARENT AND THE ACQUIRED ENTITIES

     90   

Section 9.01.

 

Reserved

     90   

Section 9.02.

 

Reserved

     90   

Section 9.03.

 

Reserved

     90   

Section 9.04.

 

Further Assurances

     90   

Section 9.05.

 

Holdings

     90   

Section 9.06.

 

Rollover Holdco

     90   

Section 9.07.

 

Confidentiality

     90   

Section 9.08.

 

Change of Control Bonus Payment

     91   

Section 9.09.

 

Allocation of Management Fees

     91   

Section 9.10.

 

Removal of Legends

     91   

Section 9.11.

 

Representations and Covenants of The Madison Square Garden Company

     92   

ARTICLE 10 [RESERVED]

     95   

Section 10.01.

 

Reserved

     95   

ARTICLE 11 TAX MATTERS

     96   

Section 11.01.

 

Tax Treatment

     96   

Section 11.02.

 

Tax Returns

     96   

Section 11.03.

 

Transfer Taxes

     96   

Section 11.04.

 

Cooperation on Tax Matters

     97   

 

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TABLE OF CONTENTS

(Continued)

 

         Page  

Section 11.05.

 

FIRPTA Certificate and W-9

     97   

Section 11.06.

 

754 Elections

     97   

Section 11.07.

 

Tax Contests

     97   

Section 11.08.

 

Refunds

     98   

ARTICLE 12 SURVIVAL; INDEMNIFICATION

     98   

Section 12.01.

 

Survival

     98   

Section 12.02.

 

Indemnification

     99   

Section 12.03.

 

Limitations on Indemnification

     102   

Section 12.04.

 

Exclusive Remedy

     106   

Section 12.05.

 

Indemnification Procedures for Non-Third Party Claims

     106   

Section 12.06.

 

Indemnification Procedures for Third-Party Claims

     107   

Section 12.07.

 

Calculation of Damages

     109   

Section 12.08.

 

Member Representative

     109   

Section 12.09.

 

Treatment of Adjustments

     110   

ARTICLE 13 [RESERVED]

     110   

Section 13.01.

 

Reserved

     110   

ARTICLE 14 MISCELLANEOUS

     110   

Section 14.01.

 

Notices

     110   

Section 14.02.

 

Amendments and Waivers

     111   

Section 14.03.

 

Expenses

     111   

Section 14.04.

 

Disclosure Schedule

     112   

Section 14.05.

 

Binding Effect; Benefit; Assignment

     112   

Section 14.06.

 

Governing Law

     113   

Section 14.07.

 

Jurisdiction

     113   

Section 14.08.

 

WAIVER OF JURY TRIAL

     113   

Section 14.09.

 

Counterparts; Effectiveness

     113   

Section 14.10.

 

Entire Agreement

     113   

Section 14.11.

 

Severability

     114   

Section 14.12.

 

Specific Performance

     114   

Section 14.13.

 

Waiver of Conflicts Regarding Representation

     114   

Section 14.14.

 

Member Representative

     115   

Section 14.15.

 

Releases

     117   

 

iv

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TRANSACTION AGREEMENT

TRANSACTION AGREEMENT (this “Agreement”), dated as of January 31, 2017, by and
among MSG TG, LLC, a Delaware limited liability company (“Parent”), TG MERGER
SUB, LLC, a Delaware limited liability company (“Parent Merger Sub”), the
persons identified on the signature pages hereto as “Management Sellers” (each,
a “Management Seller” and, collectively, “Management Sellers”), the persons
identified on the signature pages hereto as “Rollover Holdco Members” (together
with the Management Sellers, each, a “Rollover Holdco Member” and, collectively,
“Rollover Holdco Members”), the persons identified on the signature pages hereto
as “Direct Rollover Members” (each, a “Direct Rollover Member” and,
collectively, “Direct Rollover Members”), the persons identified on Annex A as
“Group Entities” (each (including, from and after the consummation of the
Restructuring, ManagementCo), a “Group Entity” and, collectively, the “Group
Entities”), TG ROLLOVER HOLDCO LLC, a Delaware limited liability company
(“Rollover Holdco”), TAO GROUP HOLDINGS LLC, a Delaware limited liability
company (“Holdings”), TAO GROUP INTERMEDIATE HOLDINGS LLC, a Delaware limited
liability company (“Intermediate Holdings”), TAO GROUP OPERATING LLC, a Delaware
limited liability company (“Borrower”), TAO GROUP MANAGEMENT LLC, a Delaware
limited liability company (“ManagementCo”), TG MEMBER REPRESENTATIVE LLC, a
Delaware limited liability company, as representative for the Represented
Parties (as defined below) (the “Member Representative”), solely with respect to
its rights and obligations under Section 2.03(b)(iv) and Article 14 (other than
Sections 14.03, 14.04 and 14.15, and only insofar as Article 14 relates to its
rights and obligations under Section 2.03(b)(iv)), MSG ENTERTAINMENT HOLDINGS,
LLC, a Delaware limited liability company (the “Earn-Out Guarantor”), and solely
with respect to its rights and obligations under Section 9.11 and Article 14
(other than Sections 14.03, 14.04 and 14.15, and only insofar as Article 14
relates to its rights and obligations under Section 9.11), THE MADISON SQUARE
GARDEN COMPANY, a Delaware corporation. Capitalized terms used but not defined
elsewhere in this Agreement have the meanings assigned to them in Section 1.01.

W I T N E S S E T H:

WHEREAS, (i) as of immediately prior to the Restructuring, each of the Persons
identified on Annex A as “Managers” (each, a “Manager” and, collectively, the
“Managers”) is a “Manager” with respect to each Acquired Entity set forth
opposite such Manager’s name on Annex A (as such term is defined in such
Acquired Entity’s LLC Agreement), and each of the persons identified on
Schedule 4.05(a) of the Disclosure Schedule as “Equityholders” (each, an
“Equityholder” and, collectively, the “Equityholders”) owned the number and type
of Equity Interests in each Acquired Entity set forth opposite such
Equityholder’s name on Schedule 4.05(a) of the Disclosure Schedule, and as of
the date of this Agreement, each such Equityholder owns the percentage of
Holdings Pre-Closing Interests set forth opposite such Equityholder’s name on
Annex D, (ii) as of immediately prior to the Restructuring, the Managers are, in
the aggregate, the only Managers of each of the Acquired Entities and the
Equityholders are, in the aggregate, the only holders of Equity Interests in the
Acquired Entities, and (iii) the Managers and Equityholders, as applicable, have
approved by written consent and/or duly noticed and held meetings of the
Managers and Equityholders of each Acquired Entity in compliance with the
applicable Acquired Entity Member Approvals required for such Acquired Entity
(the “Deal Approval”) this Agreement and the transactions contemplated by this
Agreement, including the Restructuring (as defined below) (collectively, the
“Transactions”);

 

1

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WHEREAS, in connection with the Deal Approval, Rollover Holdco and all of the
Equityholders signed and delivered to the Member Representative (with copies to
Parent for review purposes only) one or more Letters of Transmittal (as defined
in Section 2.13(a)) in respect of each of the Acquired Entities in which such
Equityholder owns any Equity Interests (such Letters of Transmittal delivered by
the Equityholders listed on Annex G, the “Delivered Letters of Transmittal”) to
be held in escrow by the Member Representative in accordance therewith and
effective immediately prior to the consummation of the Restructuring;

WHEREAS, prior to the execution of this Agreement, the Management Sellers and
the Acquired Entities entered into that certain Restructuring Agreement,
attached hereto as Exhibit A (the “Restructuring Agreement”), pursuant to which,
prior to the execution of this Agreement, such parties effected the
restructuring transactions expressly contemplated thereby (the “Restructuring”)
such that (i) Rollover Holdco and the Members of the Group Entities listed on
Annex D (including the Direct Rollover Members) (each of Rollover Holdco and the
Members (including the Direct Rollover Members), a “Holdings Pre-Closing Member”
and collectively, the “Holdings Pre-Closing Members”) own, collectively, all of
the issued and outstanding Equity Interests of Holdings, (ii) Holdings owns all
of the issued and outstanding Equity Interests of Intermediate Holdings,
(iii) Intermediate Holdings owns all of the issued and outstanding Equity
Interests of Borrower, (iv) Borrower owns all of the issued and outstanding
Equity Interests of (x) each of the Group Entities and (y) ManagementCo,
(v) ManagementCo owns all of the Management Assets, and (vi) the Rollover Holdco
Members, collectively, own all of the issued and outstanding Equity Interests of
Rollover Holdco.

WHEREAS, contemporaneously with the execution of this Agreement, (i) certain of
the Management Sellers are entering into employment agreements with certain of
the Acquired Entities (with respect to such Management Seller, its “Employment
Agreement” and, collectively, the “Employment Agreements”) and (ii) the Rollover
Holdco Members are entering into the Amended and Restated Limited Liability
Company Agreement of Rollover Holdco, in the form attached hereto as Exhibit C
(the “A&R Rollover Holdco LLC Agreement”);

WHEREAS, it is proposed that Parent shall acquire Equity Interests of Holdings
by means of a merger of Parent Merger Sub with and into Holdings, on the terms
set forth in this Agreement, with Holdings surviving as the surviving entity;

WHEREAS, at the Closing (immediately following the Effective Time), Parent, The
Madison Square Garden Company (for the limited purposes set forth therein),
Rollover Holdco, the Rollover Holdco Members, the Direct Rollover Members and
Holdings shall enter into the Second Amended and Restated Limited Liability
Company Agreement of Holdings, in the form attached hereto as Exhibit D (the
“A&R Holdings LLC Agreement”);

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:

 

2

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ARTICLE 1

DEFINITIONS

Section 1.01. Definitions. (a) As used herein, the following terms have the
following meanings:

“1933 Act” means the Securities Act of 1933.

“1934 Act” means the Securities Exchange Act of 1934.

“Accounting Practices and Procedures” means, with respect to the Acquired
Entities, the accounting methods, policies, practices and procedures, including
classification, valuation and estimation methodology, as applied by the Group
Entities, in the preparation of the Group Audited Financial Statements, as
modified solely to the extent set forth on Annex B. Except for the modifications
set forth on Annex B, in the event of a conflict or inconsistency between GAAP
and such methods, policies, practices and procedures, GAAP will prevail. In the
event any item to be reflected in a calculation or statement required to be
prepared in accordance with the Accounting Practices and Procedures was not
reflected in the Group Audited Financial Statements or Annex B, such item shall
be determined in accordance with GAAP.

“Acquired Entities” means, collectively, (i) the Group Entities and (ii) the New
Entities, and the term “Acquired Entity” means any such Person in clause (i) or
(ii).

“Acquired Entity Business IP Rights” means, collectively, all Acquired Entity
Owned IP Rights and Acquired Entity Licensed IP Rights.

“Acquired Entity Contract” means any Contract to which an Acquired Entity or any
Subsidiary of an Acquired Entity is a party or by which any Acquired Entity or
any Subsidiary of an Acquired Entity or any of their respective properties or
assets is bound or otherwise subject.

“Acquired Entity Licensed IP Rights” means all IP Rights licensed by any Person
to any of the Acquired Entities or any of its Subsidiaries.

“Acquired Entity Member Approvals” means, with respect to an Acquired Entity,
the applicable Manager and Member approval requirement (if any) pursuant to such
Acquired Entity’s Organizational Documents.

“Acquired Entity Owned IP Rights” means all the IP Rights owned or purported to
be owned, in whole or in part, by any Acquired Entity or any Subsidiary of any
Acquired Entity.

“Acquired Entity Return” means, with respect to an Acquired Entity, any Tax
Return filed by or with respect to such Acquired Entity or any of such Acquired
Entity’s Subsidiaries.

 

3

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“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls or is controlled by, or
is under common control with such first Person; provided, however, that
Affiliates of MSG shall only include The Madison Square Garden Company and
Persons majority-owned and directly or indirectly controlled by The Madison
Square Garden Company.

“Aggregate Class A Investment Amount” means an amount equal to the sum of
(i) the Adjusted Purchase Price minus (ii) the Aggregate Preferred Investment
Amount minus (iii) the Net Debt Proceeds Amount.

“Aggregate EMM/Vandal Notes Amount” means the aggregate amount of principal and
accrued interest outstanding under the EMM Note and the Vandal Notes as of the
Closing.

“Aggregate Preferred Investment Amount” means $10,000,000.

“Applicable Law” means, with respect to any Person, any Law that is binding
upon, applicable to or affecting such Person, as amended unless expressly
specified otherwise.

“Associate” means, with respect to any Person: (a) any corporation, partnership,
joint venture or other entity of which such Person is an officer or partner or
is, directly or indirectly, through one or more intermediaries, the beneficial
owner of ten percent (10%) or more of: (i) any class or type of Equity Interests
(including profits interests); or (ii) the combined voting power of interests
ordinarily entitled to vote for management or otherwise; and (b) any trust or
other estate in which such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar fiduciary capacity.

“Aventine Escrow Agent” means TMI Trust Company.

“Aventine Escrow Letter” means that certain letter agreement by and among
Hollywood Cahuenga Restaurant, LLC, TSPW Managers LA, LLC and the Aventine
Escrow Agent.

“Balance Sheet Adjustment” means, an amount (which may be either a positive or
negative number) equal to (i) the Closing Net Working Capital Adjustment, minus
(ii) the Closing Indebtedness (but excluding any Payoff Amount).

“Balance Sheet Adjustment Allocation” means, with respect to each Member, the
allocable portion (which may be either a positive or negative number) of (i) any
Balance Sheet Adjustment minus (ii) Transaction Expenses, which amount shall be
allocated to each Member as determined by the Member Representative in
accordance with the Restructuring Agreement.

“Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by Applicable
Law to close.

 

4

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“Class A Holdings Interests” means the Class A Units (as defined in the A&R
Holdings LLC Agreement).

“Closing Cash” means the combined cash and cash equivalents of the Acquired
Entities and the Acquired Entities’ Subsidiaries (other than the New Venues),
determined in accordance with the Accounting Practices and Procedures upon
consummation of the Closing (but without giving effect to the Transactions
contemplated to occur at or following the Closing). Closing Cash shall be
calculated as a Current Asset as part of the Closing Net Working Capital
calculations.

“Closing Indebtedness” means, with respect to the Acquired Entities, all
Indebtedness of the Acquired Entities and their Subsidiaries (other than the New
Venues except with respect to the Aggregate EMM/Vandal Notes Amount), calculated
in accordance with the Accounting Practices and Procedures upon consummation of
the Closing (but without giving effect to the Transactions contemplated to occur
at or following the Closing). For the avoidance of doubt, Closing Indebtedness
shall (1) not include (A) any exceptions set forth in clauses (A)-(G) of the
definition of Indebtedness, (B) any Indebtedness included in the calculation of
Current Liabilities or (C) any Indebtedness incurred by Borrower at the Closing
pursuant to the Credit Agreement, and (2) include all fees, costs and other
expenses incurred in connection with the repayment at or upon (but not prior to)
the consummation of the Closing of any obligations that constitute Closing
Indebtedness pursuant to the prior sentence (as modified by clause (1) of this
sentence).

“Closing Merger Consideration” means, with respect to each Holdings Pre-Closing
Member, the aggregate amount payable to such Holdings Pre-Closing Member at the
Closing, which shall be equal to the sum of (i) the product of (x) such Holdings
Pre-Closing Member’s Holdings Pre-Closing Percentage multiplied by (y) the
amount by which the Purchase Price exceeds the Expense Holdback Amount plus
(ii) such Holdings Pre-Closing Member’s Balance Sheet Adjustment Allocation less
(iii) such Holdings Pre-Closing Member’s Escrow Amount Allocation less (iv) such
Holdings Pre-Closing Member’s share of the Payoff Amount (which foregoing
amounts in clauses (ii)-(iv) shall be allocated by the Member Representative).

“Closing Net Working Capital” means Net Working Capital upon consummation of the
Closing (but without giving effect to the Transactions contemplated to occur at
or following the Closing).

“Closing Net Working Capital Adjustment” means (i) the Closing Net Working
Capital minus (ii) the Net Working Capital Target.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidential IP Rights” means all confidential, proprietary and/or sensitive
Proprietary Information, including Personal Data, constituting Acquired Entity
Business IP Rights.

 

5

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“Contract” means any contract, lease, deed, mortgage, license, instrument, note,
commitment, undertaking, indenture, joint venture and any other agreement,
binding arrangement or binding understanding, whether written or oral.

“Control Notice” means a written notice given by an Indemnitor (or, in the event
the Indemnitor is a Member, the Member Representative) pursuant to Section 12.06
that:

(i) in the case of any Third Party Claim arising out of, relating to, resulting
from, in connection with or otherwise in respect of any inaccuracy or breach of
any representation or warranty that is subject to the Business Cap pursuant to
Section 12.03(a), provided that Damages of the Indemnitees relating to such
Third Party Claim are not reasonably likely to exceed one-hundred and sixty-two
point five percent (162.5%) of the Business Cap then remaining (taking into
account previously paid indemnification claims and the reasonably likely damages
of pending indemnification claims, in each case, subject to the Business Cap),
includes therein (A) confirmation of such Indemnitor’s responsibility to
indemnify and hold harmless the Indemnitee in full (subject to the limitations
set forth in Article 12) with respect to such Third Party Claim (provided that
such confirmation shall not be deemed an admission of any further
indemnification responsibility as to the underlying claims of such Third Party
Claim to the extent such Indemnitor prevails (as finally determined) in its
defense against such Third Party Claim on behalf of such Indemnitee), and
(B) reasonably demonstrates that, as of such time, the Indemnitor has financial
resources (taking into account the amount of the Indemnity Escrow Fund at the
time and the value (determined in accordance with Section 12.03(d)) of the
Class A Holdings Interests and Preferred Holdings Interests held by the
Indemnitor, in each case, if applicable) in order to indemnify for the
reasonably likely amount of Damages that the Indemnitor would be responsible
under this Agreement (subject to the limitations set forth in Article 12); or

(ii) in the case of any other Third Party Claim, provided that Damages of the
Indemnitees relating to such Third Party Claim are not reasonably likely to
exceed one-hundred and sixty-two point five percent (162.5%) of the Cap then
remaining (taking into account previously paid indemnification claims and the
reasonably likely damages of pending indemnification claims) (A) includes
therein confirmation that such Indemnitor will pay the Indemnitee’s defense
costs (limited to one counsel) and any other defense costs for which the
Indemnitor is responsible pursuant to Section 12.06(c) in connection with such
Third Party Claim, and (B) reasonably demonstrates that, as of such time, the
Indemnitor has financial resources (taking into account the amount of the
Indemnity Escrow Fund at the time and the value (determined in accordance with
Section 12.03(d)) of the Class A Holdings Interests and Preferred Holdings
Interests held by the Indemnitor, in each case, if applicable) in order to
indemnify for the reasonably likely amount of Damages that the Indemnitor would
be responsible under this Agreement (subject to the limitations set forth in
Article 12).

“COTS License” means any license for “shrink-wrap,” “click-through” or other
“off-the-shelf” Software that is widely commercially available to the public
generally with annual license, maintenance, support and other fees of less than
$15,000 in the aggregate.

 

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“Credit Agreement” means the Credit and Guaranty Agreement among Borrower,
Intermediate Holdings, certain Subsidiaries of Borrower, Goldman Sachs Specialty
Lending Group, L.P., and various lenders party thereto, dated as of the date of
this Agreement.

“Current Assets” means the combined current assets of the Acquired Entities and
their Subsidiaries (other than the New Venues), determined in accordance with
the Accounting Practices and Procedures upon consummation of the Closing (but
without giving effect to the Transactions contemplated to occur at or following
the Closing), provided, that Current Assets shall not include any Intercompany
Accounts or accounts receivable related to management fees of Ninth Avenue
Hospitality LLC, Roof Deck Entertainment, LLC, Roof Deck Australia, LLC or 55th
Street Hospitality Holdings, LLC.

“Current Liabilities” means the combined current liabilities of the Acquired
Entities and their Subsidiaries (other than the New Venues), determined in
accordance with the Accounting Practices and Procedures upon consummation of the
Closing (but without giving effect to the Transactions contemplated to occur at
or following the Closing and without duplication of any amounts included in the
calculation of Closing Indebtedness or Transaction Expenses), provided, that
Current Liabilities shall not include any Intercompany Accounts.

“Damages” means all damages, losses and expenses (including all reasonable
expenses of investigation and reasonable attorneys’ fees and expenses in
connection with any Proceeding, whether involving a Third Party Claim or a claim
solely between any one or more of the parties hereto), including, any special,
incidental, consequential, expectation or indirect damages or diminutions in
value (including based on a multiple of profits or similar metrics) to the
extent such Damages are reasonably foreseeable at the time of the breach;
provided that “Damages” shall not include any exemplary or punitive Damages,
except to the extent that any such Damages are required to be paid to a Third
Party pursuant to a Third Party Claim.

“Debt” has the meaning assigned to such term in the definition of “Indebtedness”
contained in this Section 1.01.

“Debt Financing Expenses” means (i) the aggregate fees, costs and expenses of
the Debt Financing Sources and their respective counsel, financial advisors or
other advisors payable or otherwise reimbursable by Holdings or its Subsidiaries
at the Closing under the terms of the Credit Agreement, including any original
issue discount or any upfront fees, ticking fees or similar fees and expenses
payable thereunder, and (ii) any other fees, costs and reasonable and documented
out-of-pocket expenses incurred by Parent or the Management Sellers in
connection with obtaining the term loan financing contemplated by the Credit
Agreement.

“Debt Financing Sources” means, the Persons (other than the Acquired Entities or
any of their Subsidiaries or any of their respective Affiliates or controlling
persons) named in the Credit Agreement, together with their Affiliates,
officers, directors, employees, agents and representatives involved in the term
loan financing contemplated by the Credit Agreement and their successors and
assigns.

 

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“Disclosure Schedule” means the disclosure schedule dated the date of this
Agreement regarding this Agreement that has been provided by the Acquired
Entities and Management Sellers to Parent.

“EMM Note” means that certain promissory note issued by Bowery Hospitality
Associates, LLC in favor of Bakers Dozen Associates LLC, dated April 18, 2016,
in the principal sum of $500,000.

“Environmental Laws” means any and all Laws arising out of or relating to:
(i) emissions, discharges, releases or threatened releases of any Hazardous
Material into the environment (including ambient air, surface water, ground
water, land surface or subsurface strata); (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of any Hazardous Material; (iii) Liability for personal injury or
property damage arising out of the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport, handling, emission,
discharge, release, threatened release, or presence of Hazardous Materials at
real property (whether or not owned, leased or used by the Acquired Entities and
their Subsidiaries); (iv) remediation, reclamation or restoration of real
property (whether or not owned, leased or used by Acquired Entities and their
Subsidiaries); and (v) workplace health and safety and protection of employees
from workplace hazards as they relate to exposure to Hazardous Materials.

“Equity Interests” means, with respect to any Person, any (i) shares of capital
stock, (ii) equity, ownership, voting, profit or participation interests, or
(iii) similar rights or securities in such Person or any of its Subsidiaries, or
any rights or securities convertible into or exercisable or exchangeable for,
options or other rights to acquire from such Person or any of its Subsidiaries,
or obligation on the part of such Person or any of its Subsidiaries to issue,
any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Agent” means Citibank, N.A.

“Escrow Agreement” means the escrow agreement entered into among Parent, the
Member Representative and the Escrow Agent on the Closing Date, in form attached
as Exhibit E hereto.

“Escrow Amount” means the sum of (i) the Purchase Price Adjustment Escrow Amount
plus (ii) the Indemnity Escrow Amount.

“Escrow Amount Allocation” means, with respect to each Member, the allocable
portion of the Escrow Amount, which amount shall be allocated to each Member as
determined by the Member Representative in accordance with the Restructuring
Agreement.

“Expense Holdback Amount” means $5,000,000.

 

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“Fundamental Representations” means representations and warranties contained in
Section 3.01 (Existence and Power), Section 3.02 (Authorization),
Section 3.04(i) (Non-contravention), Section 3.05 (Existing Equity Interests),
Section 3.08 (Finders’ Fees), Section 3.10(a) (Restrictions),
Section 3.12(a)-(c) (Rollover Holdco Existence and Power), Section 3.12(d)
(Rollover Holdco Authorization), the first sentence of Section 3.12(e) (Rollover
Holdco Non-contravention), Section 3.12(f)-(i) (Rollover Holdco Capitalization;
Ownership of Equity Interest), Section 3.12(k) (Rollover Holdco Finders’ Fees),
Section 4.01 (Existence and Power), Section 4.02 (Authorization),
Section 4.04(i) (Non-contravention), Section 4.05 (Capitalization; Ownership of
Equity Interests), Section 4.20 (Finders’ Fees), Section 5.01 (Organization;
Authorization), Section 5.02(i) (Non-contravention), Section 5.03 (Ownership),
Section 6.01 (Existence and Power), Section 6.02 (Authorization),
Section 6.04(i) (Non-contravention), Section 6.05 (Capitalization of Parent and
Parent Merger Sub; Ownership of Interests) and Section 6.07 (Finders’ Fees).

“GAAP” means generally accepted accounting principles in the United States,
consistently applied.

“Governmental Authority” means any transnational, domestic or foreign federal,
state or local governmental, regulatory, legislative, executive, administrative,
judicial or quasi-governmental authority, department, bureau, commission, court,
agency or official, including any political subdivision thereof, and any entity
(including a court or self-regulatory organization) exercising executive,
legislative, judicial, Tax, regulatory or administrative functions of or
pertaining to government.

“Group Entity Interests” means, with respect to a Group Entity, the Equity
Interests of such Group Entity.

“Group Material Adverse Effect” means, with respect to the Acquired Entities,
any change, effect, event, occurrence, development, condition, circumstance,
matter or fact (each, an “Effect”) that, individually or in the aggregate,
together with all other Effects, (i) had or is reasonably likely to have a
material adverse effect on the condition (financial or otherwise), business,
results of operations, assets or liabilities of the Acquired Entities and their
respective Subsidiaries, taken as a whole, or (ii) is reasonably likely to
prevent, delay in any material respect or impede in any material respect the
performance by the Acquired Entities of their respective obligations under this
Agreement or the consummation of the Transactions by the Management Sellers, the
Direct Rollover Members, other Rollover Holdco Members or the Acquired Entities;
provided, however, that none of the following shall, either alone or in
combination, constitute, and none of the following shall be taken into account
in determining whether there has been or is reasonably likely to be a Group
Material Adverse Effect: (1) Effects in the financial or securities markets or
the economy; (2) Effects of global, national or regional political or business
conditions (including the commencement, continuation or escalation of war,
material armed hostilities or other material international or national calamity
or acts of terrorism or earthquakes, hurricanes, other natural disasters or acts
of God); (3) Effects in the industries in which such Person or its Subsidiaries
operate; (4) Effects resulting from any change in Law, GAAP, or authoritative
interpretations thereof after the date of this Agreement; (5) Effects resulting
from the announcement of the execution of this Agreement but only to the extent

 

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relating to the identity of Parent or its Affiliates; (6) Effects (in and of
themselves) resulting from any failure by such Person to meet any published or
internally prepared estimates of revenues, earnings or other financial
projections, performance measures or operating statistics for any period,
provided that the exception in this clause (6) shall not prevent or otherwise
affect a determination that an Effect underlying such failure has resulted in,
or contributed to, a Group Material Adverse Effect; or (7) Effects resulting
from any acts or omissions of Parent or Parent Merger Sub after the date of this
Agreement (other than actions or omissions specifically contemplated by this
Agreement); provided, further, however, that, with respect to clauses (1), (2),
(3), and (4), any such Effect shall not be disregarded if it disproportionately
impacts any of the Acquired Entities or their respective Subsidiaries, taken as
a whole, as compared to other similarly situated companies (by size or
otherwise) operating in the principal industries and geographic areas in which
the Acquired Entities and their respective Subsidiaries operate.

“Hazardous Materials” means any solid, liquid or gaseous material, alone or in
combination, mixture or solution, which is now or hereafter defined, listed or
identified as “hazardous” (including “hazardous substances” or “hazardous
wastes”), “toxic,” a “pollutant” or a “contaminant” pursuant to any Law
including asbestos, urea formaldehyde, polychlorinated biphenyls (PCBs), radon,
petroleum (including its derivatives, by-products or other hydrocarbons).

“Holdings Allocation Percentage” means, with respect to each Member, the
percentage set forth opposite such Member’s name on Annex D.

“Holdings Pre-Closing Interests” means the limited liability company interests
of Holdings issued to the Holdings Pre-Closing Members in connection with the
Restructuring and owned thereby as of immediately prior to the Closing.

“Holdings Pre-Closing Percentage” means, with respect to each Holdings
Pre-Closing Member, the percentage set forth opposite such Holdings Pre-Closing
Member’s name on Annex D.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Indebtedness” means, with respect to any Person, without duplication,
(i) indebtedness for borrowed money or indebtedness issued or incurred in
substitution or exchange for indebtedness for borrowed money (any such
Indebtedness, “Debt”), (ii) amounts owing as deferred purchase price for the
acquisition of a business including all seller notes and “earn-out” payments,
except trade accounts payable and accrued expenses arising in the Ordinary
Course, (iii) notes payable and drafts accepted of such Person representing
extensions of credit whether or not representing obligations for borrowed money,
including any obligations of such Person evidenced by any note, bond, debenture,
mortgage or other similar instrument or debt security, (iv) obligations under
any interest rate, currency or other hedging agreement, to the extent out of the
money, (v) obligations under any performance bond, surety bond, letter of
credit, bankers’ acceptance or similar instrument, but only to the extent drawn
or called prior to the Closing, (vi) all lease obligations required to be
capitalized under GAAP, (vii) all

 

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indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property) and
(viii) guarantees with respect to any indebtedness of any other Person of a type
described in clauses (i) through (vii) above and all obligations of others that
are of the type referred to in clauses (i) through (vii) secured by (or for
which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not such obligation secured thereby has been assumed. For the
avoidance of doubt, Indebtedness shall not include (A) any intercompany
Indebtedness of the Acquired Entities and their respective Subsidiaries, (B) any
Indebtedness incurred by Parent and its Affiliates (and subsequently assumed by
the Acquired Entities or any of their Subsidiaries) at the Closing, (C) any
endorsement of negotiable instruments for collection in the Ordinary Course,
(D) any Liabilities under any contract, agreement or other arrangement between
the Group Entities and their respective Subsidiaries, on the one hand, and
Parent or any of its Affiliates, on the other hand, (E) any trade accounts
payable, (F) any amounts included in the calculation of Transaction Expenses,
and (G) any matter set forth on Schedule 1.01-A of the Disclosure Schedule.

“Indemnity Escrow Amount” means an amount equal to fifteen million dollars
($15,000,000).

“Indemnity Escrow Fund” means the escrow fund established pursuant to the Escrow
Agreement in respect of obligations of the Management Sellers and the Members
pursuant to Section 12.02(a) and Section 12.02(b), or, at the option of Parent,
Section 2.14, including any interest accrued thereon. The initial amount of the
Indemnity Escrow Fund shall be the Indemnity Escrow Amount.

“Intercompany Accounts” means accounts which reflect transactions between two or
more Acquired Entities to the extent such entities are included in the
calculation of Net Working Capital.

“IP Rights” means all of the following as may exist, be created or recognized in
any jurisdiction throughout the world: (i) trademarks and service marks, trade
names, trade dress, brand names, logos, business names, fictitious names,
corporate names, service names, look and feel, indicia of origin and identifiers
of source, whether or not registered, including all goodwill associated
therewith, and registrations and applications to register any of the foregoing;
(ii) patents, patent applications, patent disclosures and inventions, utility
models, utility model applications, petty patents, statutory invention
registrations, certificates of invention, designs, design registrations and
applications, and all other governmental grants for the protection of any
inventions and industrial designs, including any continuations,
continuations-in-part, divisionals, provisionals, non-provisionals,
reexaminations, restorations, renewals and reissues for any of the foregoing;
(iii) published and unpublished works of authorship, copyrightable subject
matter and copyrights and all parts thereof, (in each case, whether registered
or unregistered) including all rights of authorship, use, publication,
reproduction, distribution, performance, moral rights, rights to create
derivative works and rights of ownership of copyrightable works, and all rights
to register any of the foregoing and to obtain renewals, extensions and revivals
of any of the

 

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foregoing together with all registrations thereof; (iv) trade secrets and
confidential and/or proprietary information, including inventions (whether
patentable or unpatentable and whether or not reduced to practice), industrial
designs, know-how, technical and business information, business methods,
electronic databases, discoveries, research and development information,
formulae, recipes, methods, formulations, drawings, specifications, designs,
algorithms, plans, proposals, technical and business data, financial
information, improvements, modifications, developments, processes, techniques,
algorithms, manuals, instructions, blueprints, financial and marketing data,
sales information, pricing and cost information, vendor lists, customer lists,
distributor lists, supplier lists, data and information, prospect lists,
Personal Data, work product, business and marketing plans, market surveys and
studies, projections, operational data and quality control
procedures(collectively, “Proprietary Information”); (v) Software; (vi) URLS and
domain names; (vii) mask works, mask work registrations and applications for
mask work registrations; (viii) all other proprietary information and
intellectual property in all forms and media, and all goodwill associated
therewith, now known or hereafter recognized in any jurisdiction worldwide;
(ix) all rights pertaining to the foregoing, including those arising under
international treaties and convention rights; (x) copies and tangible
embodiments of all of the foregoing (in whatever form or medium); and (xi) all
administrative rights arising from the foregoing, including the right to
prosecute applications and oppose, interfere with or challenge the applications
of others, the rights to obtain renewals, continuations, divisions, and
extensions of legal protection pertaining to any of the foregoing.

“IT Systems” means information technology systems and resources, including all
Software, hardware, networks, computers, equipment and related systems.

“Knowledge” means (i) with respect to the Acquired Entities, the actual
knowledge of the individuals listed on Schedule 1.01-B of the Disclosure
Schedule (ii) with respect to a Rollover Holdco Member or Direct Rollover
Member, the actual knowledge of such Member, and (iii) with respect to Parent,
the actual knowledge of the individuals listed on Schedule 1.01-B of the Parent
Disclosure Schedule.

“Law” means any federal, state, local or foreign law (statutory, common or
otherwise), statute, regulation, constitution, municipal by-law, treaty,
convention, ordinance, code, rule, regulation, Order or other requirement (and
any interpretation of the foregoing) enacted, adopted, promulgated or applied by
a Governmental Authority.

“Lease Guarantors” means the persons set forth on Schedule 1.01-C of the
Disclosure Schedule.

“Lease Personal Guarantee” means those certain personal guarantees set forth
opposite each Lease Guarantor’s name on Schedule 1.01-C of the Disclosure
Schedule.

“Liability” means any debt, liability, obligation and other commitment of any
kind or nature, whether direct or indirect, unaccrued or fixed, absolute or
contingent, matured or unmatured, known or unknown and whether or not determined
or determinable or due or to become due, including those arising under any
Applicable Law, Proceeding, Order or Contract.

 

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“Lien” means any mortgage, lien, pledge, charge, security interest, claim,
option, tenancy, license, right-of-way, easement or other encumbrance of any
kind; provided, however, that, for the avoidance of doubt, the term “Lien” shall
not include, in and of itself, any non-exclusive license of IP Rights.

“LLC Agreement” means, with respect to an Acquired Entity, the operating
agreement of such Acquired Entity, as set forth opposite such Acquired Entity’s
name on Schedule 1.01-D of the Disclosure Schedule.

“Management Assets” means, with respect to each Management Seller, the assets
set forth opposite such Management Seller’s name on Annex E which for the
avoidance of doubt shall not include the assets specifically identified as
excluded from Management Assets as set forth on Schedule 3.06 of the Disclosure
Schedule.

“Material” means material to the business, financial condition or operating
results of the Acquired Entities and their respective Subsidiaries, taken as a
whole.

“Member” means with respect to each Acquired Entity, each Person who has been
admitted to such Acquired Entity as a Member and remained a Member as of
immediately prior to the Restructuring in accordance with the applicable LLC
Agreement of such Acquired Entity, and each other Equityholder owning Equity
Interests in such Acquired Entity as of immediately prior to the Restructuring.
Unless otherwise noted, “Members” shall mean the Members of all of the Acquired
Entities, and shall include all of the Equityholders included on
Schedule 4.05(a) of the Disclosure Schedule.

“Minimum Cash Holdback Amount” means, with respect to any Rollover Holdco Member
and Direct Rollover Member (in his, her or its capacity as a Holdings
Pre-Closing Member), the product obtained by multiplying (i) the Minimum Cash
Holdback by (ii) the ratio of such Rollover Holdco Member’s Rollover Class A
Allocated Investment Percentage divided by the Rollover Class A Investment
Percentage.

“Net Debt Proceeds Amount” means One Hundred Ten Million Dollars ($110,000,000)
minus the Debt Financing Expenses described in clause (i) of the definition of
“Debt Financing Expenses”.

“Net Working Capital” means (i) Current Assets minus (ii) Current Liabilities.

“Net Working Capital Target” means negative $45,000.

“New CapEx Venues” means Bowery Hospitality Associates LLC, Guapo Bodega Las
Vegas LLC and Dearborn Ventures LLC.

“New Entities” means Holdings, Intermediate Holdings, Borrower and ManagementCo.

“New Venue Opening Amount” means, with respect to the New CapEx Venues, an
amount equal to the product of (i) eighty percent (80%) multiplied by (ii) the
sum of (x) the

 

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aggregate capital, start-up, or other similar expenditures and Soft Costs under
Contracts with (or for services rendered without a Contract by) contractors,
professionals and other vendors, of such New CapEx Venues actually paid (“New
Venue Opening Expenses”), less (y) the aggregate dividends or distributions or
any other direct or indirect payment of any kind actually paid by New Venues
with respect to their Equity Interests (or otherwise to any Equityholder of a
New Venue, but for the avoidance of doubt not including (1) payments in the
Ordinary Course of salary, bonuses or reimbursement of expenses to the
Equityholders that are employees of a New Venue or (2) (aa) 100% of management
fees payable to certain Equityholders with respect to the New Venues paid with
respect to (and solely to the extent applicable to) periods prior to January 1,
2017, and (bb) 50% of management fees payable to certain Equityholders with
respect to the New Venues paid with respect to (and solely to the extent
applicable to) periods on or following January 1, 2017, in each case of clauses
(1) and (2) as listed on Schedule 1.01-F of the Disclosure Schedule), in each
case of subclauses (x) and (y), made prior to or concurrently with the
consummation of the Closing (but without giving effect to the Transactions)
determined in accordance with the Accounting Practices and Procedures; provided,
that the aggregate New Venue Opening Expenses for the purposes of the
calculation thereof shall not exceed Eighteen Million Dollars ($18,000,000) (the
“New Venue Opening Amount Cap”). As between the Members and the Member
Representative, to the extent any New Venue Opening Expenses exceeds the New
Venue Opening Amount, the New Venue Opening Amount shall be allocated to each
applicable Group Entity as determined by the Member Representative
proportionally based on the applicable expenditures thereof via the Balance
Sheet Adjustment Allocation. The parties hereto hereby acknowledge and agree
that the New Venue Opening Amount is $13,218,400 and such amount has been
incorporated into the Purchase Price set forth in Section 2.03(a)(i).

“New Venues” means Bowery Hospitality Associates LLC, Guapo Bodega Las Vegas
LLC, Dearborn Ventures LLC, ALA Hospitality LLC, Asia Los Angeles LLC, B&E Los
Angeles LLC, TG Hospitality Group, LLC, 11th Street Hospitality LLC, Chelsea
Hospitality Associates LLC, Lower East Side Hospitality LLC, Bayside Hospitality
Group LLC and Seventh Avenue Hospitality LLC.

“Order” means any order, award, injunction (preliminary or permanent), judgment,
decree, ruling or verdict, writ, stipulation, determination, settlement or other
decision issued, promulgated or entered by or with a Governmental Authority or
arbitrator.

“Ordinary Course” means, with respect to any Person, actions and operations that
satisfy all of the following criteria: (i) are consistent with the past
practices of such Person and (ii) are taken in the ordinary course of the
normal, operations of such Person.

“Organizational Documents” means, with respect to any Person, the articles of
organization, certificate of formation, certificate of incorporation, by-laws,
limited liability company agreement, operating agreement or any other similar
organizational documents of such Person.

“Parent Disclosure Schedule” means the disclosure schedule dated the date of
this Agreement regarding this Agreement that has been provided by Parent to the
Group Entities.

 

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“Payoff Debt” means the estimated Debt (if any) included in the Pre-Closing
Statement, including the Aggregate EMM/Vandal Notes Amount.

“Payoff Letter” means, with respect to any arrangements with respect to Payoff
Debt, if any (whether pursuant to a credit facility, line of credit or other
arrangement, and including all existing Debt of the Acquired Entities), from
each holder or issuer of such Payoff Debt, wire instructions and a payoff letter
duly executed by such holder or issuer stating the amount (including any
outstanding interest thereunder and any prepayment penalties, fees, expenses,
make-whole amounts and similar amounts related to such payment) required to
discharge in full such Debt as of immediately prior to or upon the consummation
of the Closing and providing for, among other things, the release of all Liens
securing such Payoff Debt.

“Per Class A Holdings Interest Value” means (i) Aggregate Class A Investment
Amount divided by (ii) the aggregate number of Class A Holdings Interests that
will be issued and outstanding immediately following the Transactions (as set
forth on Exhibit B to the A&R Holdings LLC Agreement).

“Per Redeemable Holdings Interest Value” means $1.10.

“Permit” means any license, approval, permit, Order, consent, franchise,
qualification, registration, certification or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Authority or pursuant to any Law.

“Permitted Liens” means, (i) Liens disclosed in the December 27, 2015 combined
balance sheets included in the Group Audited Financial Statements, (ii) Liens
for Taxes, assessments and other government charges not yet due and payable or
which are being contested in good faith by appropriate proceedings,
(iii) mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other
similar common law or statutory Liens arising in the Ordinary Course which are
not due and payable and which may hereafter be paid without penalty, or that are
being contested in good faith by appropriate proceedings, (iv) Liens relating to
the transferability of securities under applicable securities Laws, (v) Liens
securing rental payments under capitalized leases, (vi) Liens to which the fee
simple interest (or any superior leasehold interest) in real property is
subject, provided, that such Liens were not created by a Group Entity (unless
such Liens would be Permitted Liens pursuant to a different clause in this
definition, in which case this proviso shall not apply), (vii) Liens in favor of
the lessors and licensors under leases and licenses, (viii) easements,
rights-of-way, restrictive covenants, encroachments and other minor
irregularities in title that do not in any material respect detract from the
current use of the applicable asset or real property, (ix) zoning, entitlement,
building, and other land use regulations and codes imposed by any Governmental
Authority having jurisdiction over the real property, (x) non-exclusive licenses
of IP Rights granted in the Ordinary Course, and (xi) the Liens set forth on
Schedule 1.01-E of the Disclosure Schedule; provided, that with respect to
clauses (ii), (iii) and (v) of this definition of “Permitted Liens”, such Liens
shall be deemed Permitted Liens for purposes of this Agreement solely to the
extent (A) appropriate reserves have been established in accordance with GAAP
with respect to the Liability to which such Lien relates, (B) with respect to a
Liability that is not a Current Liability, such Liens or the Liability to which
such Lien relates was described in the notes to the

 

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December 27, 2015 combined balance sheets included in the Group Audited
Financial Statements, or reflected in the December 25, 2016 combined balance
sheets included in the Group Interim Financial Statements, or (C) with respect
to a Liability that is a Current Liability, such Liens or the Liability to which
such Lien relates was otherwise included in the calculation of Closing Net
Working Capital or Closing Indebtedness, in each case, as finally determined
pursuant to Section 2.14.

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

“Personal Data” means any information (including a Person’s name, street
address, telephone number, e-mail address, photograph, social security number,
tax identification number, driver’s license number, passport number, payment
card number, bank account information and other financial information, customer
or account numbers, account access codes and passwords, Internet Protocol
address, geographic location, family members, group memberships, internet
browsing history, persistent identifier, order and purchase histories, amounts
spent, platform behavior, conduct, preferences, demographic data and any other
data and information) which, whether alone or in combination with other
information, identifies or is associated with an identified natural Person.

“Post-Closing New Venue Opening Expenses” means, with respect to each New CapEx
Venue, any capital, start-up or other similar expenditures and Soft Costs under
Contracts with (or for services rendered without a Contract by) contractors,
professionals and other vendors, of such New CapEx Venue (x)(i) in excess of
$1,920,000 incurred with respect to goods or services to be rendered prior to
the Closing, but not paid, at any time at or prior to the consummation of the
Closing with respect to Dearborn Ventures LLC, or (ii) incurred or should have
been incurred at any time at or prior to the respective venue opening dates of
Bowery Hospitality Associates LLC and Guapo Bodega Las Vegas LLC (which, for
purposes of this clause (x), shall include Liabilities solely to the extent
arising out of, relating to, resulting from, in connection with or otherwise in
respect of: (i) payment obligations with respect to products, services and
related expenses under Contracts with contractors, professionals or other
vendors or (ii) payment obligations with respect to products, services and
related expenses to such types of third parties if they were not otherwise under
contract (and shall not, for the avoidance of doubt for purposes of this clause
(x), otherwise include any other types of Liabilities, including Liabilities
arising out of torts or related indemnification Liabilities under such
contractor, professional or vendor Contracts)).

“Pre-Closing Taxes” means any Tax imposed with respect to a Tax period (or
portion thereof) ending on or prior to the Closing Date. In the case of a
taxable period beginning prior to and ending after the Closing Date, Pre-Closing
Taxes shall be based upon an interim closing of the books, except that property,
ad valorem and other periodic Taxes shall be allocated on a per diem basis.

“Preferred Holdings Interests” means Preferred Holdings Interests (as defined in
the A&R Holdings LLC Agreement).

 

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“Preferred Investment Amount” means (i) with respect to Rollover Holdco,
$1,254,000 and (ii) with respect to Parent, $8,746,000.

“Principals” means the individuals listed on Schedule 1.01-G of the Disclosure
Schedule.

“Privacy Agreements” means privacy and data related policies and other Contracts
in effect between any of the Acquired Entities and any customers, clients,
licensees, end users or other Third Parties that are applicable to the
collection, protection, storage, processing, use and/or disclosure of Personal
Data in connection with the Acquired Entities’ or any of their respective
Subsidiaries’ respective businesses.

“Proceeding” means any complaint, action, suit (at law or in equity), claim,
arbitration, hearing, audit, investigation or similar proceeding (whether civil,
criminal, administrative or investigative) pending, commenced, brought,
conducted, or heard by or before, any Governmental Authority or arbitrator.

“Purchase Price Adjustment Escrow Amount” means $4,000,000.

“Purchase Price Adjustment Escrow Fund” means the escrow fund established
pursuant to the Escrow Agreement in respect of obligations of the Members
pursuant to Section 2.14, including any interest accrued thereon. The initial
amount of the Purchase Price Adjustment Escrow Fund shall be the Purchase Price
Adjustment Escrow Amount.

“Redeemable Holdings Interests” means Redeemable Interests (as defined in the
Amended and Restated Limited Liability Company Agreement of Holdings, dated as
of January 30, 2017).

“Registered Acquired Entity Owned IP Rights” means Acquired Entity Owned IP
Rights issued by, registered, recorded or filed with, renewed by or the subject
of a pending application before any Governmental Authority, Internet domain name
registrar or other authority.

“Regulatory Filing Fees” means any filing fees in connection with all filings
under the HSR Act.

“Relative” of a Person means such Person’s spouse, such Person’s parents,
sisters, brothers, children and the spouses of the foregoing.

“Representatives” means, with respect to any Person, such Person’s officers,
directors, employees, investment bankers, attorneys, accountants, consultants or
other agents or advisors.

“Rollover Class A Allocated Investment Percentage” means, with respect to each
of the Direct Rollover Members and Rollover Holdco, the percentage of the
Rollover Class A Investment Percentage allocated to such Holdings Pre-Closing
Member and set forth opposite such Holdings Pre-Closing Member’s name on Annex
D. For the avoidance of doubt, the

 

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combined percentage of all Rollover Class A Allocated Investment Percentages
allocated to each of the Direct Rollover Members and Rollover Holdco shall at
all times equal thirty-seven point-five percent (37.5%).

“Rollover Class A Investment Amount” means the product obtained by multiplying
(i) the Aggregate Class A Investment Amount by (ii) the Rollover Class A
Investment Percentage.

“Rollover Class A Investment Percentage” means thirty-seven point-five percent
(37.5%), the percentage of Class A Holdings Interests that Rollover Holdco and
the Direct Rollover Members shall collectively own in Holdings upon the
consummation of the Closing.

“Rollover Preferred Investment Amount” means the Preferred Investment Amount
with respect to Rollover Holdco, which is equal to $1,254,000.

“Seller Side Letter” means any Contract (other than any Side Letter) with one or
more holders of Equity Interests or Managers (or persons in similar positions
with different names) that amends, modifies or supplements the terms and
conditions of any Organizational Documents (whether or not in accordance with
such Organizational Documents), including Contracts that affect governance of
any Acquired Entity or Subsidiary thereof, or the voting, transfer, ownership or
control of Equity Interests of an Acquired Entity or Subsidiary thereof. For the
avoidance of doubt, Seller Side Letters shall not include LLC Agreements or any
Employee Plan.

“Side Letter” means any Contract with one or more holders of Equity Interests or
Managers (or persons in similar positions with different names), to which an
Acquired Entity or Subsidiary of an Acquired Entity is a party that amends,
modifies or supplements the terms and conditions of any Organizational Documents
(whether or not in accordance with such Organizational Documents), including
Contracts that affect governance of any Acquired Entity or Subsidiary thereof,
or the voting, transfer, ownership or control of Equity Interests of an Acquired
Entity or Subsidiary thereof.

“Soft Costs” means fees, costs and expenses related to legal services, travel
and research, pre-opening rent, pre-opening utilities and occupancy, pre-opening
payroll and purchases (including uniforms and general supplies) and limited
liability company licenses.

“Software” means (i) all software, firmware, middleware, computer programs,
applications, interfaces, tools, operating systems, software code of any nature,
(including all object code, source code, interpreted code, data files, rules,
definitions and methodology derived from the foregoing) and any derivations,
updates, enhancements and customization of any of the foregoing, together with
all processes, technical data, build scripts, test scripts, algorithms, APIs,
subroutines, techniques, operating procedures, screens, user interfaces, report
formats, development tools, templates, menus, buttons, icons and user
interfaces, (ii) all electronic data, databases and data collections, and
(iii) all documentation, including user manuals, technical manuals, training
manuals, programming comments, descriptions, flow charts and other work products
used to design, plan, organize and develop any of the foregoing.

 

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“Subsidiary” means, with respect to any Person, any entity of which securities
or other ownership interests having majority voting power over such entity are
at any time directly or indirectly owned by such Person.

“Tax” means any tax, charge, impost, levy, duty or other like assessment or
charge of any kind whatsoever imposed by any Taxing Authority (including
withholding on amounts paid to or by any Person), together with any interest,
penalty, addition to tax or additional amount; provided that the foregoing
definition of Tax shall not include any liquor license fee or similar
occupational or licensing fees imposed by any Governmental Authority that are
not based on income, receipts or expenditures.

“Tax Return” means any Tax report, return, declaration or filing required to be
supplied to any Taxing Authority with respect to Taxes.

“Taxing Authority” means any Governmental Authority (domestic or foreign)
responsible for the imposition of any Tax.

“Third Party” means any Person, including as defined in Section 13(d) of the
1934 Act, other than Parent or any of its Affiliates.

“Transaction Documents” means this Agreement, the Employment Agreements, the
Escrow Agreement, the Letters of Transmittal, the Credit Agreement, the Credit
Documents (as defined in the Credit Agreement), the A&R Holdings LLC Agreement,
the A&R Rollover Holdco LLC Agreement, the Restructuring Agreement and any other
agreements, certificates or other documents to be entered into in connection
with this Agreement or the Transactions (including the Restructuring).

“Transaction Expenses” means, in each case, to the extent not paid prior to the
Closing, (i) the aggregate outstanding fees and expenses of counsel, financial
advisors or other advisors incurred prior to the Closing by the Acquired
Entities and their Subsidiaries in connection with this Agreement and the
Transactions (including the Advisor Amounts but excluding Debt Financing
Expenses), (ii) all severance, change of control payments (including, for the
avoidance of doubt, any payments triggered on a transfer of Equity Interests of
the Acquired Entities), change of control bonuses (including the total payments
described in Schedule 9.08-A of the Disclosure Schedule), transaction bonuses,
deal bonuses, retention bonuses or any similar compensation paid or payable
(including, without duplication, the employer portion of any payroll, social
security, unemployment or similar Taxes incurred by any of the Acquired Entities
or their Subsidiaries in connection therewith) by or on behalf of any Acquired
Entity or Subsidiary of an Acquired Entity pursuant to any plan, program,
policy, agreement or arrangement that is adopted, approved, promised, agreed to,
implemented or established by such Acquired Entity or Subsidiary of an Acquired
Entity prior to or at the Closing (in each case, to the extent triggered by the
consummation of the Transactions, whether paid or payable prior to, at or after
the consummation of the Closing) to current or former members, managers,
officers, employees, directors, contractors or consultants of such Acquired
Entity or Subsidiary of an Acquired Entity, in each case, in connection with
this Agreement or the Transactions, except for any payments under the bonus and
incentive arrangements set forth

 

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in Exhibit E to the A&R Holdings LLC Agreement, (iii) any broker’s, finder’s or
similar fee or other commission or compensation, (iv) if a D&O Policy is
purchased prior to the Closing, the D&O Premium, (v) any change of control or
similar payment payable as a result of the consummation of the Transactions,
including any payments, fees, costs and expenses (including reasonable
attorneys’ fees) incurred in connection with obtaining consents from the parties
to the Contracts listed on Schedules 3.04 and 4.04 of the Disclosure Schedule,
(vi) 50% of actual Transfer Taxes paid or required to be paid in connection with
the Transactions; provided, that if the total Transfer Taxes paid or required to
be paid in connection with the Transactions is in excess of $400,000, in
addition to the $200,000 of Transfer Taxes otherwise included hereunder as
Transaction Expenses, the entire amount of such Transfer Taxes in excess of
$400,0000 shall also be deemed Transaction Expenses, and (vii) 50% of any filing
fees paid or required to be paid in connection with all amendments or filings
for liquor licenses with respect to the Acquired Entities or their Subsidiaries
in connection with the Merger. For the avoidance of doubt, “Transaction
Expenses” shall not include any Debt Financing Expenses.

“Transaction Percentage” means, with respect to each Group Entity, the
percentage set forth opposite such Group Entity’s name on Annex A hereto.

“Transaction Tax Deduction” means to the extent deductible for applicable Income
Tax purposes (taking into account the safe harbor in IRS Revenue Procedure
2011-29 to the extent applicable), as reasonably determined by the Member
Representative, the amount of any Transaction Expenses and any other transaction
costs incurred by an Acquired Entity or any of its Subsidiaries in connection
with, or triggered by, the Transactions.

“Transfer Tax” means any transfer, documentary, sales, use, stamp, registration,
value added or other similar Tax (including any penalties and interest).

“Vandal Notes” means (i) that certain promissory note issued by Bowery
Hospitality Associates LLC in favor of Marc Packer Revocable Trust and the
Richard Wolf Revocable Trust, dated April 13, 2016, in the aggregate principal
sum of $2,000,000 ($1,000,000 to each lender) and (ii) that certain loan made by
Andrew Goldberg to Bowery Hospitality Associates in the principal amount of
$20,000.

“Wholly-Owned Operating Agreement” means (a) the limited liability company
agreement in the form attached hereto as Exhibit B (with changes for the name,
location and similar changes not involving any Liabilities or restrictions or
other material changes to the form) entered into by each Group Entity and
Subsidiary of a Group Entity upon the consummation of the Restructuring or
(b) any other operating agreement of a Subsidiary of a Group Entity
substantially similar to the limited liability company agreement in the form
attached hereto as Exhibit B (including, for the avoidance of doubt, any by-laws
with similar rights and obligations to such form) which have been agreed upon by
Parent and the Member Representative prior to the date of this Agreement,
provided that such operating agreements (other than corporation by-laws and
other than 632 N. Dearborn Operations, LLC and IP BISC LLC) described in this
clause (b) are amended and restated no later than 45 days following the date
hereof to reflect the terms of the form attached hereto as Exhibit B.

 

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(b) Each of the following terms is defined in the Section set forth opposite
such term:

 

A&R Holdings LLC Agreement    Recitals A&R Rollover Holdco LLC Agreement   
Recitals Accounting Firm    2.14(b) Acquired Entity Released Claims    14.15(b)
Acquired Entity Released Parties    14.15(a) Acquired Entity Releasor   
14.15(b) Acquired Entity Representations    3.13 Acquired Entity Subsidiary
Equity Interests    4.06(b) Adjusted EBITDA    2.03(c)(i) Adjusted Purchase
Price    2.03(a)(ii) Advisor Amounts    2.10(d)(iv) Affiliate Contract    4.21
Affiliate Transaction    4.21 Agreement    Preamble Attributable Class A Unit   
3.12(i) Attributable Preferred Unit    3.12(i) Aventine Escrow Amount    2.07
Aventine Initial Payment Portion    2.07 Balance Sheet Date    4.07(a) Borrower
   Preamble Business Cap    12.03(a) Cap    12.03(a) Cash Purchase Price   
2.03(a)(ii) Certificate of Merger    2.02(b) Closing    2.09 Closing Cash
Consideration    2.04(c)(ii) Closing Cash Merger Consideration    2.04(a)(i)
Closing Date    2.09 Closing Rollover Consideration    2.04(a)(ii)
Confidentiality Agreements    9.07 D&O Policy    7.06(a) D&O Premium    7.06(a)
De Minimis Breach    12.03(b) Deal Approval    Recitals Debt    1.01 Debt
Distribution Amount    2.04(c)(ii) Deductible    12.03(b) Delivered Letters of
Transmittal    Recitals Direct Rollover Member    Preamble Direct Rollover
Members    Preamble Earn-Out Amount    2.03(c)(v) Earn-Out Amount Cap   
2.03(c)(vi) Earn-Out Period    2.03(c)(iii)

 

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Earn-Out Qualification    2.03(b)(i) Earn-Out Threshold    2.03(c)(iv) EBITDA   
2.03(c)(ii) Effect    1.01 Effective Time    2.02(b) Employee Plan    4.16(a)
Employment Agreement    Recitals Employment Agreements    Recitals
Enforceability Exceptions    3.02 Equityholder    Recitals Equityholders   
Recitals Escrow Funds    2.15 Estimated Adjusted Purchase Price    2.08
Expiration Date    12.01 Final Adjusted Purchase Price    2.14(c) Group Audited
Financial Statements    4.07(a) Group Balance Sheet    4.07(a) Group Breach   
12.02(a)(ii) Group Entities    Preamble Group Entity    Preamble Group Entity
Financial Statements    4.07(a) Group Interim Financial Statements    4.07(a)
Group Warranty Breach    12.02(a)(i) Holdings    Preamble Holdings Merger Subs
   4.06(c) Holdings Pre-Closing Member    Recitals Holdings Pre-Closing Members
   Recitals Indemnitee    12.02(c) Indemnitor    12.05 Indemnity Notice    12.05
Insurance Policies    4.19 Intermediate Holdings    Preamble Leased Real
Property    4.10(a)(i) Letter of Transmittal    2.13(a) Management Seller   
Preamble Management Sellers    Preamble ManagementCo    Preamble Manager   
Recitals Managers    Recitals Material Contracts    4.10(a) Member Breach   
12.02(b)(ii) Member Released Claims    14.15(a) Member Released Parties   
14.15(b) Member Releasor    14.15(a) Member Representative    Preamble Member
Warranty Breach    12.02(b)(i)

 

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Members’ Counsel    14.13 Merger    2.02(a) Minimum Cash Holdback    2.07 MSG
Company Successor    2.03(c)(vii) MSG LLC    9.07 MSG Stock    2.03(c)(viii)
Multiemployer Plan    4.16(b) New Venue Opening Amount Cap    1.01 New Venue
Opening Expenses    1.01 Notice of Disagreement    2.14(b) Parent    Preamble
Parent Breach    12.02(c)(ii) Parent De Minimis Breach    12.03(c) Parent
Indemnitee    12.02(a) Parent Merger Sub    Preamble Parent Minimum Cash Amount
   2.07 Parent Warranty Breach    12.02(c)(i) Payoff Amount(s)    2.10(d)(vi)
Post-Closing Statement    2.14(a) Pre-Closing Statement    2.08 Principal Amount
   12.03(e) Proposal NDAs    4.10(a)(vi) Proprietary Information    1.01
Purchase Price    2.03(a)(i) Qualified MSG Stock    2.03(c)(ix) Qualified
Successor Stock    2.03(c)(x) Real Property Lease    4.10(a)(i) Released Claims
   14.15(b) Released Parties    14.15(b) Releasor    14.15(b) Releasors   
14.15(b) Rep Letter    9.10 Represented Documents    14.14(a) Represented Party
   14.14(a) Restructuring    Recitals Restructuring Agreement    Recitals
Rollover Holdco    Preamble Rollover Holdco Class A Units    3.12(i) Rollover
Holdco Member    Preamble Rollover Holdco Member Indemnitor    12.03(e) Rollover
Holdco Members    Preamble Rollover Holdco Preferred Unit    3.12(i) Rollover
Holdco Preferred Units    3.12(i) Seller Indemnitee    12.02(c) Special
Representations    12.01 Straddle Period    11.02

 

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Straddle Period Returns    11.02 Successor Stock    2.03(c)(xi) Surviving Entity
   2.02(a) The Madison Square Garden Company    2.03(c)(xii) Third Party Claim
   12.06(a) Transactions    Recitals TTM Period    2.03(c)(xiii) Year 5 TTM
Period    2.03(c)(xiv)

Section 1.02. Other Definitional and Interpretative Provisions. Unless the
express context otherwise requires:

(a) 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;

(b) the captions herein are included for convenience of reference only and shall
be ignored in the construction or interpretation hereof;

(c) references to Articles, Sections, Exhibits, Annexes and Schedules are to
Articles, Sections, Exhibits, Annexes and Schedules of this Agreement unless
otherwise specified;

(d) all Exhibits, Annexes and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein;

(e) any capitalized terms used in any Exhibit, Annex or Schedule but not
otherwise defined therein, shall have the meaning as defined in this Agreement;

(f) any singular term in this Agreement shall be deemed to include the plural,
and any plural term the singular;

(g) whenever the words “include”, “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words of
like import;

(h) the word “or” is not exclusive;

(i) “writing”, “written” and comparable terms refer to printing, typing and
other means of reproducing words (including electronic media) in a visible form;

(j) references to any statute shall be deemed to refer to such statute as
amended from time to time and to any rules or regulations promulgated
thereunder;

(k) references to any Contract as of the date of this Agreement, shall be deemed
to refer to that Contract as amended, modified or supplemented as of the date of
this Agreement;

 

24

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(l) references to any Person include the successors and permitted assigns of
that Person;

(m) references from or through any date mean, unless otherwise specified, from
and including or through and including, respectively;

(n) references to “law”, “laws” or to a particular statute or law shall be
deemed also to include any Applicable Law;

(o) references to “it” or “its” and similar references, when applied to any
individual, shall be deemed to refer to “him” or “her”, “he” or “she”, or “his”
or “hers”, as applicable;

(p) any information or materials shall be deemed provided, made available or
delivered to Parent if such information or materials have been delivered to
Parent or uploaded to the electronic data room maintained by the Group Entities
and their financial advisors for purposes of the Transactions at least two
(2) days prior to the date of this Agreement;

(q) the parties hereto intend that each representation, warranty, covenant and
agreement herein shall have independent significance, and if any party hereto
has breached any representation, warranty, covenant or agreement contained
herein, the fact that there exists another representation, warranty, covenant or
agreement relating to the same subject matter (regardless of the relative levels
of specificity) which such party has not breached shall not detract from or
mitigate the fact that such party is in breach of the first representation,
warranty, covenant or agreement, as the case may be;

(r) references (including, for example, references in Section 2.04) to a
Holdings Pre-Closing Member relating to his, her or its rights in respect of
consideration to be paid under this Agreement shall refer to such Person in his,
her or its capacity as a direct holder of Equity Interests of Holdings, and any
calculation or other determination with respect to such Person shall not take
into account any Equity Interests of Holdings indirectly held by such Holdings
Pre-Closing Member through Rollover Holdco; and

(s) the parties hereto have participated jointly in the negotiation and drafting
of this Agreement; accordingly, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party hereto by virtue of the authorship of any
provisions of this Agreement.

 

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ARTICLE 2

RESTRUCTURING AND CLOSING TRANSACTIONS

Section 2.01. Reserved. Reserved.

Section 2.02. Merger.

(a) At the Effective Time, Parent Merger Sub shall be merged with and into
Holdings in accordance with the Delaware Limited Liability Company Act (the
“Merger”), and subject to the terms and provisions of this Agreement, whereupon
the separate existence of Parent Merger Sub shall cease, and Holdings shall be
the surviving entity in such merger (the “Surviving Entity”).

(b) At the Closing, Parent Merger Sub and Holdings shall file a certificate of
merger with the Delaware Secretary of State in the form attached hereto as
Exhibit F (the “Certificate of Merger”), and make all other filings or
recordings required by the Delaware Limited Liability Company Act in connection
with Merger. The Merger shall become effective at such time (the “Effective
Time”) as the Certificate of Merger is duly filed with the Delaware Secretary of
State (or at such later time as may be specified in the Certificate of Merger).

(c) From and after the Effective Time, the Surviving Entity shall possess all
the rights, powers, privileges and franchises and be subject to all of the
obligations, liabilities, restrictions and disabilities of Holdings and Parent
Merger Sub, all as provided under the Delaware Limited Liability Company Act.

Section 2.03. Purchase Price; Earn-Out.

(a) Purchase Price.

(i) Subject to the adjustments set forth in Section 2.14, the purchase price
payable in respect of Holdings shall be an amount (such amount, the “Purchase
Price”) equal to Four Hundred Million Dollars ($400,000,000). In addition to
their allocable portions of the Purchase Price in accordance with the other
terms of this Agreement, the Holdings Pre-Closing Members shall have the right
to receive up to three Earn-Out Amounts (in the aggregate) if and to the extent
payable in accordance with Section 2.03(b) and Section 2.04(a)(v).

(ii) The portion of the Purchase Price payable in cash at the Closing to the
Holdings Pre-Closing Members shall be an amount equal to the sum of (i) the
Purchase Price plus (ii) the estimated Balance Sheet Adjustment included in the
Pre-Closing Statement (which may be either a positive or negative number) (the
sum of clauses (i)-(ii) the “Adjusted Purchase Price”) minus (iii) the estimated
Transaction Expenses included in the Pre-Closing Statement minus (iv) the Payoff
Amount minus (v) the Rollover Class A Investment Amount minus (vi) the Rollover
Preferred Investment Amount (if any) minus (vii) the Escrow Amount minus
(viii) the Expense Holdback Amount (the sum of clauses (i)-(viii) the “Cash
Purchase Price”).

 

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(b) Earn-Out.

(i) Earn-Out Qualification. If Adjusted EBITDA is equal to or in excess of an
applicable Earn-Out Threshold in any TTM Period during the Earn-Out Period (such
achieved applicable Adjusted EBITDA level required pursuant to Section 2.03(c),
an “Earn-Out Qualification”) (evidenced by the audited consolidated financial
statements of Holdings and its Subsidiaries delivered in accordance with Section
3.5(d) of the A&R Holdings LLC Agreement, or in the case of any TTM Period that
is not a Company Fiscal Year (as defined in the A&R Holdings LLC Agreement),
evidenced by the applicable four quarterly consolidated financial statements of
Holdings and its Subsidiaries certified by the chief financial officer of
Holdings and delivered to the Administrative Agent and Lenders (each as defined
in the Credit Agreement) in accordance with the Credit Agreement (or any
replacement thereof) or if the Credit Agreement (or replacement thereof) is not
in effect, then evidenced by the applicable four quarterly consolidated
financial statements of Holdings and its Subsidiaries substantially in the form
previously required under such Credit Agreement or replacement thereof), no
later than the 30th day following delivery to Parent of the applicable
consolidated financial statements of Holdings and its Subsidiaries evidencing
such Earn-Out Qualification, Parent shall pay the applicable Earn-Out Amount in
respect of such Earn-Out Qualification, at its option, (x) in cash to the Member
Representative (to be paid to the Holdings Pre-Closing Members (other than to
Rollover Holdco) by the Member Representative in accordance with the
Restructuring Agreement), (y) in a number of shares of (A) Qualified MSG Stock
or, (B) unless, and to the extent, such issuance would violate securities laws,
Qualified Successor Stock (issued in accordance with this Section 2.03(b)), as
applicable, in either case of clauses (A) or (B), valued at the volume-weighted
average price (as reported by Bloomberg) over the ten trading days prior to the
date of issuance, issued to the Holdings Pre-Closing Members in accordance with
allocation instructions provided by the Member Representative (in accordance
with the Restructuring Agreement), or (z) in any combination of the foregoing;
provided, that if the issuance of MSG Stock or Qualified Successor Stock
violates applicable securities laws, then such amounts shall be paid in cash;
provided, further, however, that notwithstanding anything to the contrary
contained in this Agreement, in no event shall Earn-Out Amounts in excess of the
Earn-Out Amount Cap be paid (or payable) under this Agreement. The parties
hereto further agree that, for U.S. federal income Tax purposes, the payments
received by the Members pursuant to this Section 2.03(b)(i) are intended to
constitute installment payments from an installment sale described in
Section 453 of the Code, a portion of which may be treated as imputed interest
under the Code, unless the Members make an election pursuant to Section 453(d)
of the Code, and the parties hereto shall report consistently with such
treatment, as applicable.

(ii) In the event Qualified Successor Stock is to be issued to pay all or a
portion of an Earn-Out Amount, the MSG Company Successor shall have agreed to be
bound by the requirements with respect to Qualified Successor Stock under this
Section 2.03(b) and Section 9.10, including the following requirements: (1) the
MSG Company Successor shall effect the registration of Qualified Successor Stock
to allow all such Persons receiving Qualified Successor Stock two periods of 30
consecutive days to

 

27

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trade such Qualified Successor Stock within the first 180 days of issuance (so
long as one of such 30-day periods falls within the first 120 days of issuance);
and (2) such issuance to such Persons will not cause such Persons, individually
or in the aggregate, to be considered an “affiliate” for the purpose of Rule
144A (without taking into account any stock or other securities of the MSG
Company Successor or any of its Affiliates owned or acquired by such Person or
any directorship in the MSG Company Successor or any of its Affiliates held by
such Person).

(iii) Legends. Each Management Seller, the Rollover Holdco Member, Rollover
Holdco, the Direct Rollover Member, each of the other Holdings Pre-Closing
Members and the Member Representative acknowledges and agrees that the
certificates evidencing the Qualified MSG Stock or Qualified Successor Stock (if
any) issued in connection with an Earn-Out Qualification pursuant to
Section 2.03(b)(i) or Put or Call (as such terms are defined in the A&R Holdings
LLC Agreement) in accordance with the A&R Holdings LLC Agreement shall bear the
following legend (subject to the covenant set forth in Section 9.10):

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN EXEMPTION TO SUCH REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED.”

(iv) Guaranty.

(A) Subject to the other terms of this Section 2.03(b)(iv), the Earn-Out
Guarantor hereby irrevocably and unconditionally guarantees to the Member
Representative and the Holdings Pre-Closing Members, as applicable, the due and
punctual payment in full of each Earn-Out Amount when the same shall become due
and payable pursuant to the terms (including for the avoidance of doubt the
right to cause payment in cash or Qualified MSG Stock or Qualified Successor
Stock or in any combination thereof in accordance with subclauses (x), (y) and
(z) of Section 2.03(b)(i)) of this Agreement (including amounts that would
become due and payable but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the
“Guaranteed Obligations”). The Earn-Out Guarantor agrees that its obligations
hereunder are irrevocable, absolute, independent and unconditional and, except
with respect to the termination of its obligations in accordance with
Section 2.03(b)(iv)(D)(4), shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guaranteed Obligations; provided, that the Member
Representative hereby agrees that the Earn-Out Guarantor may assert, as a
defense to any payment or performance by it under this Section 2.03(b)(iv), any
defense (other than any defense by operation of any bankruptcy, insolvency or
similar Law) that Parent could assert against the Member Representative solely
as to whether the Guaranteed

 

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Obligations are then due and payable under the terms of this Agreement except to
the extent such defense has been raised by Parent and rejected by a court of
competent jurisdiction in a final and non-appealable judgment.

(B) The Earn-Out Guarantor’s guaranty under Section 2.03(b)(iv)(A) is a guaranty
of payment when due and payable and not of collectability. Such guaranty is a
primary obligation and not merely a contract of surety. The Member
Representative may only enforce this guaranty against the Earn-Out Guarantor
following the Parent’s failure to pay any Earn-Out Amount when due and payable
pursuant to the terms of this Agreement but only on (or after) the tenth day
following the date on which the Member Representative delivered written notice
to the Earn-Out Guarantor of Parent’s failure to pay any such Earn-Out Amount
when due and payable pursuant to the terms of this Agreement. The obligations of
the Earn-Out Guarantor hereunder are independent of the obligations of the
Parent in respect of the Guaranteed Obligations and the obligations of any other
guarantor (if any) of the obligations of the Parent, and a separate action or
actions may be brought and prosecuted against the Earn-Out Guarantor whether or
not any action is brought against the Parent or any such guarantor (if any) and
whether or not the Parent or any such guarantor (if any) is joined in any such
action or actions (but in any event, subject to the other terms of this
Section 2.03(b)(iv) including the proviso to the last sentence of
Section 2.03(b)(iv)(A) and the conditions precedent set forth in the third
sentence of this clause (B)).

(C) The Earn-Out Guarantor shall not consolidate or amalgamate with or merge
into any other Person or sell, convey, transfer or lease all or substantially
all of its properties and assets to any Person unless the Person formed by such
consolidation or amalgamation or into which the Earn-Out Guarantor is merged or
the Person which acquires by sale, conveyance or transfer, or which leases, all
or substantially all of the properties and assets of the Earn-Out Guarantor (aa)
shall be a corporation or limited liability company organized and existing under
the laws of the United States of America, a State thereof or the District of
Columbia, (bb) shall expressly assume the performance and observance of and
agree to be bound by this Section 2.03(b)(iv) and Sections 14.01, 14.02, 14.05,
14.06, 14.07, 14.08, 14.09, 14.10, 14.11, 14.12, 14.13 or 14.14 as the Earn-Out
Guarantor hereunder, and (cc) shall expressly make the representations and
warranties set forth in this Section 2.03(b)(iv), applied mutatis mutandis to
such Person. Upon any consolidation or amalgamation of the Earn-Out Guarantor
with, or merger of the Earn-Out Guarantor into, any other Person or any sale,
conveyance, transfer or lease of all or substantially all of the properties and
assets of the Earn-Out Guarantor in accordance with this Section 2.03(b)(iv)(C),
the successor or resulting Person formed by or resulting upon such consolidation
or amalgamation or into which the Earn-Out Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Earn-Out Guarantor under this
Agreement with the same effect as if such successor Person had been named as the
Earn-Out Guarantor herein, and thereafter the predecessor Person shall be
relieved of all obligations and covenants under this Agreement and may liquidate
and dissolve.

 

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(D) Other Guaranty Terms.

(1) Notwithstanding anything to the contrary contained in this Agreement, in no
event shall any Person be entitled to any amounts under or in respect of this
Section 2.03(b) other than (aa) the applicable Earn-Out Amount(s) payable in
accordance with the definition of “Earn-Out Amount” under Section 2.03(c)(v) and
(bb) reasonable and documented fees, costs and expenses incurred by the
applicable prevailing party(ies) hereto in connection with any Proceeding with
respect to a dispute under this Section 2.03(b) determined by a court of
competent jurisdiction in favor of such prevailing party(ies) in a final and
non-appealable judgment (with such reasonable and documented fees, costs and
expenses to be paid by the non-prevailing party(ies) hereto).

(2) The Earn-out Guarantor hereby represents and warrants to the Member
Representative that (i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and to perform its
obligations hereunder; (ii) it is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to conduct its business as now conducted; (iii) this Agreement has
been duly executed and delivered by the Earn-Out Guarantor and, assuming the due
execution and delivery of this Agreement by the other parties hereto, the
Earn-Out Guarantor’s obligations hereunder constitute the legal, valid and
binding obligation of the Earn-Out Guarantor, enforceable against the Earn-Out
Guarantor in accordance with its terms except for Enforceability Exceptions; and
(iv) the execution and delivery of this Agreement and performance of its
obligations under this Agreement by the Earn-Out Guarantor does not and will not
violate, result in a breach (with or without the lapse of time, the giving of
notice or both) of, or constitute a default (with or without notice or lapse of
time or both) under, or require the consent or approval of any person or entity
under any Contract, Law or Order that would have a material effect on the
ability of the Earn-Out Guarantor to fulfill its obligations hereunder, in each
case to which the Earn-Out Guarantor is a party or by which the Earn-Out
Guarantor is bound or to which its assets or properties are subject and which
has not been obtained prior to the date hereof.

(3) At the Closing, the Earn-Out Guarantor shall deliver to the Member
Representative a certificate executed on behalf of the Earn-Out Guarantor by an
executive officer of the Earn-Out Guarantor certifying that the representations
and warranties of the Earn-Out Guarantor in Section 2.03(b)(iv)(D)(2) are true
and correct as of the Effective Time as if made at and as of such time (other
than representations and warranties that by their terms address matters only as
of another specified time, which shall be true and correct only as of such
time).

(4) Notwithstanding anything in Section 12.01 to the contrary, the
representations, warranties, covenants and agreements contained in this
Section 2.03(b)(iv) or in any certificate delivered pursuant to
Section 2.03(b)(iv)(D)(3), and the covenants and agreements of the Earn-Out
Guarantor under Sections 14.01, 14.02, 14.05, 14.06, 14.07, 14.08, 14.09, 14.10,
14.11, 14.12, 14.13 or 14.14 (in each

 

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case, only insofar as they relate to its obligations under Section 2.03(b)(iv)),
shall survive the consummation of the Closing but shall terminate automatically
(and without any recourse thereafter to the Earn-Out Guarantor) upon the
Guaranty Termination Date; provided, that such representations, warranties,
covenants and agreements shall not terminate for so long as there remains
outstanding any unresolved claim(s) with respect to any such representations,
warranties, covenants or agreements (as applicable) if set forth in a reasonably
detailed written notice (specifying the circumstances giving rise to such claim,
the estimated amount of damages sought thereunder to the extent then reasonably
ascertainable and the inaccuracy or breach giving rise to such claim or, to the
extent the specification of such inaccuracy or breach is not reasonably
practicable as of such date, a reasonably detailed specification of the
potential inaccuracy or breach based on the facts available at the time of such
notice) delivered to the Earn-Out Guarantor prior to the Guaranty Termination
Date.

(5) Notwithstanding anything in Article 12 to the contrary, the Member
Representative (and no other party) shall be permitted to commence any
Proceeding with respect to the Guaranteed Obligations or otherwise with respect
to this Section 2.03(b)(iv), and such Proceeding shall not be addressed by, or
subject to, Article 12. In the event such a Proceeding is commenced,
Section 14.01, Section 14.06, Section 14.07, Section 14.08, Section 14.12 and
Section 14.13 shall apply. For the avoidance of doubt, any claims with respect
to the Earn-Out Guarantor under this Agreement shall be limited to claims of a
breach of the representations, warranties, covenants or agreements contained in
this Section 2.03(b)(iv) or the covenants and agreements of the Earn-Out
Guarantor under Sections 14.01, 14.02, 14.05, 14.06, 14.07, 14.08, 14.09, 14.10,
14.11, 14.12, 14.13 or 14.14 (in each case, only insofar as they relate to its
obligations under Section 2.03(b)(iv)).

(6) “Guaranty Termination Date” means the earlier of: (aa) if Earn-Out Amount
payments equal, in the aggregate, to the Earn-Out Amount Cap have been made in
accordance with Section 2.03(b) and (c), the date of the last such payment
(including by the issuance of Qualified MSG Stock or Qualified Successor Stock,
if applicable), (bb) the 30th day following delivery to Parent of the applicable
consolidated financial statements of the Company and its Subsidiaries for the
Year 5 TTM Period if an Earn-Out Qualification has not been achieved in respect
of any prior TTM Period in accordance with Section 2.03(b) and (c), or (cc) if
an Earn-Out Qualification has been achieved in accordance with Section 2.03(b)
and (c) but not paid prior to the date referred to in clause (bb) above, the
date the applicable Earn-Out Amount payable in respect of such Earn-Out
Qualification in accordance with Section 2.03(b) and (c) is paid in full in
accordance with Section 2.03(b) and (c) (including by payment of the Earn-Out
Guarantor or issuance of Qualified MSG Stock or Qualified Successor Stock, if
applicable).

(c) Certain Definitions: Capitalized terms used in Section 2.03(b) or
Section 2.03(c) but not defined in this Agreement shall have the meanings
assigned to them in the A&R Holdings LLC Agreement (in the form attached hereto
as Exhibit D).

 

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(i) “Adjusted EBITDA” means, with respect to any TTM Period, (a) EBITDA for such
period plus (b) any expenses of Holdings or any of its Subsidiaries with respect
to (x) salaries, bonuses or other compensation (other than distributions in
respect of Units) required to be paid to the Principals during such period
pursuant to (A) such Principals’ Employment Agreements and the bonus and
incentive arrangements set forth on Exhibit E to the A&R Holdings LLC Agreement
(it is understood that any amounts that are paid to the Principals even though
there is no contractual obligation to do so will not be added to EBITDA for
purposes of this definition), or (B) during the period beginning on December 26,
2016 through the Closing, pursuant to management fee obligations to such
Principals required to be paid with respect to such period pursuant to the
written Contracts provided to Parent prior to the date of this Agreement and
(y) to the extent recorded as an expense by Holdings and its Subsidiaries during
such period, any MSG Payments (as defined in the A&R Holdings LLC Agreement)
(including any interest accrued thereon during such period) so recorded.

(ii) “EBITDA” means, with respect to any TTM Period, the sum of the amounts for
such period of (a) the consolidated net income of Holdings and its Subsidiaries
during such TTM Period, plus (b) interest expense which has been deducted in the
determination of such net income, plus (c) U.S. federal, state and local income
and non-U.S. income taxes which have been deducted in determining such net
income, plus (d) depreciation and amortization expenses which have been deducted
in determining such net income. The foregoing components of EBITDA will be
determined in accordance with GAAP.

(iii) “Earn-Out Period” means the period beginning on December 26, 2016 and
ending on or prior to December 31, 2021 (such specified end date to be
determined in accordance with the definition of “Year 5 TTM Period”).

(iv) “Earn-Out Threshold” has the meaning set forth on Annex C hereto.

(v) “Earn-Out Amount” means, upon the occurrence of an Earn-Out Qualification in
connection with the achievement of Adjusted EBITDA equal to or in excess of the
amount required pursuant to clauses (W), (X), or (Y) of the definition of
“Earn-Out Threshold”, an aggregate amount equal to $8,487,166.67; provided,
however, that Parent and its Affiliates shall have no liability or obligation
with respect to Earn-Out Amounts to the extent in excess of the Earn-Out Amount
Cap.

(vi) “Earn-Out Amount Cap” means $25,461,500.

(vii) “MSG Company Successor” means the parent corporation, limited liability
company or partnership (other than “The Madison Square Garden Company”) that
holds (or upon consummation of a Permitted Transfer or MSG Change of Control
(each as defined in the A&R Holdings LLC Agreement) (or other Transfer or
transaction permitted in accordance with Article VI) will hold) more than 50% of
the Interests of MSG. For the avoidance of doubt, in the event a corporation’s,
limited liability company’s or partnership’s (other than “The Madison Square
Garden Company”)

 

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common stock is listed for trading on a U.S. national securities exchange and
such entity directly or indirectly holds (or upon consummation of a Permitted
Transfer or MSG Change of Control (or other Transfer or transaction permitted in
accordance with Article VI of the A&R Holdings LLC Agreement) will hold) more
than 50% of the Interests of MSG, such entity shall be the MSG Company
Successor.

(viii) “MSG Stock” means shares of unregistered Class A Common Stock, par value
$0.01 per share (or another class of voting common stock that replaces such
Class A Common Stock) that are listed for trading on a national securities
exchange, of The Madison Square Garden Company.

(ix) “Qualified MSG Stock” means MSG Stock that is duly authorized, validly
issued, fully paid and non-assessable, not subject to any preemptive or other
similar rights, issued free and clear of any Liens (other than Liens under
applicable securities laws and this Agreement) and issued subject to compliance
by the recipient with applicable securities laws (e.g., six-month holding
period).

(x) “Qualified Successor Stock” means Successor Stock that is duly authorized,
validly issued, fully paid and non-assessable, not subject to any preemptive or
other similar rights and issued free and clear of any Liens (other than Liens
under applicable securities laws and this Agreement).

(xi) “Successor Stock” means the common stock of a MSG Company Successor listed
for trading on a U.S. national securities exchange; provided, that, in order to
constitute Successor Stock, such MSG Company Successor shall (i) have an average
market capitalization of at least $1 billion in the 90 days immediately
preceding the issuance of Successor Stock to a Principal or Rollover Holdco
Member under the Agreement, and (ii) if such MSG Company Successor is a foreign
issuer, the Successor Stock listed on such exchange shall have an average float
and trading volume that is at least 90% of the average float and average daily
trading volume of MSG in the 90 days immediately preceding the issuance and
shall not consist of American Depositary Receipts or similar instruments.

(xii) “The Madison Square Garden Company” means The Madison Square Garden
Company, a Delaware corporation; provided, however, that if pursuant to any
Transfer permitted pursuant to the A&R Holdings LLC Agreement, The Madison
Square Garden Company no longer directly or indirectly holds any of the
Interests held by MSG and in connection with such Transfer or transaction there
is an MSG Company Successor, all references to “The Madison Square Garden
Company” in the Agreement shall be deemed to refer to such MSG Company Successor
(except as used in the definition of “MSG Stock” or in Section 9.11).

(xiii) “TTM Period” means any complete trailing twelve-month fiscal period
ending on the last day of the most recently completed Holdings’ fiscal quarter
(in accordance with the Company Fiscal Year with appropriate adjustments for any
Subsidiaries of Holdings that follow a calendar year fiscal year for financial
reporting purposes in accordance with the proviso to Section 3.3 of the A&R
Holdings LLC

 

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Agreement); provided, however, that in no event shall any month included in a
TTM Period in which an Earn-Out Qualification occurs be included in another TTM
Period for purposes of a subsequent Earn-Out Qualification.

(xiv) “Year 5 TTM Period” means the latest complete trailing twelve-month fiscal
period ending on or prior to December 31, 2021 (provided that for purposes of
calculating the last day of such period, such calculation shall be made in
accordance with the Company Fiscal Year (and as of the date of this Agreement,
such date would be December 26, 2021), with appropriate adjustments for any
Subsidiaries of Holdings that follow a calendar year fiscal year for financial
reporting purposes in accordance with the proviso to Section 3.3 of the A&R
Holdings LLC Agreement).

(d) No Limitation on Decision-Making. Each of the Management Sellers, the other
Holdings Pre-Closing Members (other than Rollover Holdco) and the Member
Representative acknowledge the absolute right of Holdings and its Subsidiaries
(and to the extent of Parent’s, the Principals’ and their respective designees’
rights under the A&R Holdings LLC Agreement and the limited liability company
agreements of Holdings’ Subsidiaries (as in effect from time to time), Parent’s,
the Principals’ and their respective designees’ decisions and actions with
respect to Holdings and its Subsidiaries in accordance therewith) to operate,
manage and invest in its businesses in the exercise of its sole discretion, and
agree that the Board and Directors (each as defined in the A&R Holdings LLC
Agreement) set forth in the A&R Holdings LLC Agreement), the Principals, Parent,
any Affiliates of Parent, Holdings and its Subsidiaries shall have no liability
or obligation to any of the Management Sellers, the other Holdings Pre-Closing
Members or the Member Representative with respect to any Earn-Out Amount (or any
portion thereof) under this Agreement or any bonus or other incentive amounts
under Exhibit E to the A&R Holdings LLC Agreement in connection with their
operation of the businesses of Holdings and its Subsidiaries from and after the
consummation of the Closing. Without limiting the generality of the foregoing,
Parent and the Principals presently intend to base their decisions regarding
operations of the businesses of Holdings and its Subsidiaries, including the
investment and allocation of resources, on the basis of the strategic objectives
of the Principals, Parent and any Affiliates of Parent. Each of the Management
Sellers, the Rollover Holdco Members, Rollover Holdco, the Direct Rollover
Members, the other Holdings Pre-Closing Members and the Member Representative
acknowledge that certain situations could arise where such decisions may
adversely affect the Adjusted EBITDA of Holdings and its Subsidiaries.

Section 2.04. Conversion of Interests; Distributions and Redemptions.

(a) As of the Effective Time, all Holdings Pre-Closing Interests outstanding
immediately prior to the Effective Time shall no longer be outstanding and shall
be converted into and thereafter represent only the right to receive with
respect to each Holdings Pre-Closing Member (subject to Section 2.14, Article 12
(including the last sentence of Section 12.03(a)), and such Holdings Pre-Closing
Member’s compliance with Section 2.13), in each case, without interest:

(i) other than to Rollover Holdco, a cash payment (the “Closing Cash Merger
Consideration”) in an amount equal to the excess of (x) such Holdings
Pre-Closing Member’s Closing Merger Consideration less (y) such Holdings
Pre-Closing Member’s Minimum Cash Holdback Amount (if any) less (z) such
Holdings Pre-Closing Member’s Debt Distribution Amount (if any);

 

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(ii) in the case of Rollover Holdco and the Direct Rollover Members only, (A) a
number of Class A Holdings Interests equal to (x) such Holdings Pre-Closing
Member’s Rollover Class A Allocated Investment Percentage multiplied by (y) the
aggregate number of Class A Holdings Interests that will be issued and
outstanding immediately following the Transactions and (B) with respect to
Rollover Holdco only, a number of Preferred Holdings Interests having an
aggregate initial liquidation preference equal to the Rollover Preferred
Investment Amount (such Class A Holdings Interests and Preferred Holdings
Interests, the “Closing Rollover Consideration”);

(iii) a number of Redeemable Holdings Interests equal to the result of (x) such
Holdings Pre-Closing Member’s Debt Distribution Amount divided by (y) the Per
Redeemable Holdings Interest Value;

(iv) following the Closing, any amounts payable by the Acquired Entities as
allocated by the Member Representative in accordance with Section 2.14(c); and

(v) following the Closing, his, her or its share of any distributions to be made
to the Holdings Pre-Closing Members except Rollover Holdco from the Indemnity
Escrow Fund, Purchase Price Adjustment Escrow Fund and Expense Holdback Amount,
and any Earn-Out Amount(s), in each case, if any, as allocated by the Member
Representative in accordance with the Restructuring Agreement.

(b) As of the Effective Time, all Equity Interests of Parent Merger Sub
outstanding immediately prior to the Effective Time shall as of the Effective
Time be converted into and become (i) sixty-two million five hundred thousand
(62,500,000) Class A Holdings Interests and (ii) eight million seven-hundred and
forty-six thousand (8,746,000) Preferred Holdings Interests.

(c) Substantially immediately following (but in any event on the same day as)
the transactions contemplated by Section 2.04(a) and Section 2.04(b):

(i) (x) Parent shall cause Borrower to cause the Debt Financing Sources to fund,
and Borrower shall receive, the Net Debt Proceeds Amount, (y) Borrower shall
distribute the Net Debt Proceeds Amount to Intermediate Holdings and
(z) Intermediate Holdings shall distribute the Net Debt Proceeds Amount to
Holdings; and

(ii) (x) Holdings shall pay the Net Debt Proceeds Amount to the Member
Representative for further payment to the Holdings Pre-Closing Members in full
redemption of the Redeemable Holdings Interests in amounts determined by the
Member Representative in proportion to the Redeemable Holdings Interests held by
such Holdings Pre-Closing Members (any amounts received by a Holdings
Pre-Closing Member pursuant to clause (x) or clause (y), his, her or its “Debt
Distribution Amount”) and (y)

 

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Rollover Holdco shall distribute the portion of the Net Debt Proceeds Amount
received by Rollover Holdco as a Holdings Pre-Closing Member to the Rollover
Holdco Members in amounts based on the same proportion that the number of
Rollover Holdco Class A Units held by such Rollover Holdco Members as of
immediately following the consummation of the Closing bears to the total number
of Rollover Holdco Class A Units held by all Rollover Holdco Members as of
immediately following the consummation of the Closing (such amount with respect
to any Member, together with his, her or its Debt Distribution Amount and its
Closing Cash Merger Consideration, his, her or its “Closing Cash
Consideration”).

Section 2.05. Purchase Price and Earn-Out Hypothetical Calculation. For
illustration purposes only, Annex F hereto sets forth a hypothetical calculation
of the Purchase Price, the allocation of the Closing Cash Consideration and the
Closing Rollover Consideration and an Earn-Out Amount to each Member, in each
case, based on the assumptions outlined therein.

Section 2.06. No Parent or Parent-Affiliate Liability for Allocations. No
Acquired Entity or Subsidiary of an Acquired Entity, nor Rollover Holdco, Parent
nor Parent Merger Sub, nor any of the respective Affiliates of the foregoing
(other than the Holdings Pre-Closing Members), shall have any Liability to any
Member (x) to the extent relating to any error in the Member Allocation
Schedule attached hereto as Annex D (whether in respect of such Member’s
Holdings Pre-Closing Percentage, Rollover Class A Investment Percentage,
Rollover Class A Allocated Investment Percentage, Holdings Allocation Percentage
or otherwise), (y) in the event of any error by the Member Representative in the
calculation of amounts due to such Member or payable by such Member hereunder,
or otherwise in respect of any decision, allocation or determination by the
Member Representative (whether on behalf of itself, the Members, the Management
Sellers, Rollover Holdco or the Acquired Entities with respect to payments,
Liabilities or otherwise) or (z) with respect to Parent’s delivery of any
consideration hereunder to the Member Representative in accordance with
instructions by the Member Representative or the Members or Managers, or the
allocation of payments in accordance with Annex D, or the allocation of
Qualified MSG Stock or Qualified Successor Stock to Equityholders in accordance
with instructions by the Member Representative. For the avoidance of doubt,
payment to the Member Representative of any amount payable to it in accordance
with the terms of (including the terms with respect to timing of payments under)
this Agreement, payments made to any Member or the Member Representative in
accordance with account wiring instructions delivered by the Member
Representative or any Member, and the allocation of Qualified MSG Stock or
Qualified Successor Stock to Equityholders in accordance with instructions by
the Member Representative, shall be deemed to satisfy all obligations of Parent
to make any part of such payment to any particular Member (or the Member
Representative, as applicable). Notwithstanding anything to the contrary
contained herein, the allocations and determinations by the Member
Representative required to be made amongst the Members pursuant to this
Agreement shall be made in the Member Representative’s sole discretion (without
input from or Liability to Parent or any of its Affiliates, including from and
after the consummation of the Closing, Rollover Holdco, any Acquired Entity or
Subsidiary of an Acquired Entity), and all such allocations or determinations
shall be made with respect to 100% of the applicable amount to be allocated or
determined, as applicable.

 

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Section 2.07. Minimum Cash Amount; Aventine Payment and Escrow. The Acquired
Entities shall have used commercially reasonable efforts to distribute all cash
and cash equivalents of the Acquired Entities prior to the Closing such that
Closing Cash shall be no more than $1,000,000, provided that any failure to
distribute such cash and cash equivalents shall not affect the amount of cash
and cash equivalents included in the calculation of the Closing Net Working
Capital Adjustment. Immediately after the consummation of the Closing (in
accordance with Section 2.10(d)(vii), and without duplication), Parent shall
(a) make a capital contribution to Holdings in an amount equal to (w) sixty-two
and one-half percent (62.5%) multiplied by (x) the difference between Ten
Million Dollars ($10,000,000) and the amount of cash on the balance sheet of
Bowery Hospitality Associates LLC and Guapo Bodega Las Vegas LLC at the Closing
(such amount contributed by Parent in clause (a), the “Parent Minimum Cash
Amount”), (b) withhold from the Closing Cash Merger Consideration payable to
(1) the applicable Rollover Holdco Members in their respective capacities as
Holdings Pre-Closing Members (in accordance with Section 2.04(a)(i) and
Section 2.10(d)(ii) and in the same proportion that the number of Rollover
Holdco Class A Units held by such Rollover Holdco Member as of immediately
following the consummation of the Closing bears to the total number of Rollover
Holdco Class A Units held by all Rollover Holdco Members as of immediately
following the consummation of the Closing), and (2) the Direct Rollover Members,
an aggregate amount equal to (y) thirty-seven and one-half percent (37.5%)
multiplied by (z) the difference between Ten Million Dollars ($10,000,000) and
the cash on the balance sheet of Bowery Hospitality Associates LLC and Guapo
Bodega Las Vegas LLC at the Closing (such amount contributed by Parent in clause
(b), the “Minimum Cash Holdback”), (c) make a capital contribution in such
amount to Holdings on behalf of Rollover Holdco (which amount shall be treated
as having first been contributed to Rollover Holdco on behalf of the Rollover
Holdco Members), (d) pay or cause to be paid an amount equal to $125,000 to the
Principals (such amount, in the aggregate, the “Aventine Initial Payment
Portion”), and (e) pay or cause to be paid an amount equal to $500,000 (the
“Aventine Escrow Amount”) to the Aventine Escrow Agent, to be held and disposed
of in accordance with the Aventine Escrow Letter (with any amount remaining
thereunder to be returned to Parent and the Rollover Holdco Members in
accordance with the Aventine Escrow Letter and the Restructuring Agreement, and
for the avoidance of doubt, with no right of Holdings or any of its Subsidiaries
to all or any portion of the Aventine Escrow Amount (or any portion of gross
sales required to be returned to Parent and the Rollover Holdco Members in
accordance with the Aventine Escrow Letter and the Restructuring Agreement)).

Section 2.08. Calculation of Purchase Price. Prior to the date of this
Agreement, the Member Representative has delivered to Parent a statement (the
“Pre-Closing Statement”) of Holdings’ estimate (which shall have been made in
good faith by the Member Representative) of the following: (a) Closing Net
Working Capital (b) Closing Indebtedness (which shall include the amount of any
Payoff Debt), (c) the Balance Sheet Adjustment, (d) Transaction Expenses,
(e) the Adjusted Purchase Price (the “Estimated Adjusted Purchase Price”), and
(f) the Cash Purchase Price.

Section 2.09. The Closing. The closing of the Merger (the “Closing”) shall take
place (a) at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285
Avenue of the Americas, New York, New York 10019-6064 at noon New York time on
the date

 

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of this Agreement or (b) at such other place, at such other time or on such
other date as Parent and the Member Representative may mutually agree. The date
of the Closing is referred to herein as the “Closing Date”.

Section 2.10. Closing Deliverables. At the Closing, the following transactions
shall be effected by the parties:

(a) Each Acquired Entity and the Member Representative shall deliver to Parent,
or cause to be delivered to Parent, a certificate (x) executed on behalf of each
Acquired Entity by an executive officer of such Acquired Entity, (y) executed on
behalf of the Member Representative by an executive officer of the Member
Representative, and (z) each Rollover Holdco Member and Direct Rollover Member
certifying that: (i) the Fundamental Representations in Article 3, Article 4 and
Article 5, and the representations and warranties in Section 4.08(a) and
Section 4.08(b), are true and correct as of the Effective Time as if made at and
as of such time (other than representations and warranties that by their terms
address matters only as of another specified time, which shall be true and
correct only as of such time) and (ii) the other representations and warranties
in Article 3, Article 4 and Article 5 (disregarding all materiality, Material or
a Group Material Adverse Effect and similar qualifications contained therein,
other than such qualifications in Section 4.04(iv), Section 4.16(a), the
definition of (except as provided in subclause (iv) thereof) and references to
“Material Contracts” and for the avoidance of doubt, any dollar thresholds in
Section 4.09 or Section 4.10(a)), are true and correct as of the Effective Time
as if made at and as of such time (other than representations and warranties
that by their terms address matters only as of another specified time, which
shall be true and correct only as of such time), with only such exceptions as
have not had and are not reasonably likely to have, individually or in the
aggregate, a Group Material Adverse Effect.

(b) Reserved.

(c) The Member Representative and Rollover Holdco, and each Acquired Entity,
Management Seller and other Rollover Holdco Member shall deliver to Parent, or
cause to be delivered to Parent, each of the other Transaction Documents to
which such Person (as applicable) is a party to be executed at the Closing, in
each case duly executed by each such Person (as applicable).

(d) Parent shall:

(i) deliver, or cause to be delivered, to the Member Representative a
certificate executed on behalf of Parent by an executive officer of Parent
certifying that: (x) the Fundamental Representations of Parent in Article 6 are
true and correct as of the Effective Time as if made at and as of such time
(other than representations and warranties that by their terms address matters
only as of another specified time, which shall be true and correct only as of
such time) and (y) the other representations and warranties of Parent in Article
6 (other than any Fundamental Representations) (disregarding all materiality and
similar qualifications contained therein other than such qualifications in
Section 6.04(iv)) are true and correct when made and as of the Effective Time as
if made at and as of such time (other than representations and warranties that
by their terms address matters only as of another specified time, which shall be
true and

 

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correct only as of such time), with only such exceptions as have not had and are
not reasonably likely to have, individually or in the aggregate, a material
adverse effect on the ability of Parent or Parent Merger Sub to consummate the
Transactions;

(ii) pay, or cause to be paid, to the Member Representative for the benefit of
and distribution to the Holdings Pre-Closing Members pursuant to
Section 2.13(b), by wire transfer of immediately available funds to a bank
account designated in writing by the Member Representative at least three
(3) Business Days prior to the Closing, an amount equal to the Cash Purchase
Price minus (A) the Net Debt Proceeds Amount and minus (B) the Minimum Cash
Holdback;

(iii) pay, or cause to be paid, to the Escrow Agent, by wire transfer of
immediately available funds to a bank account previously designated in writing
by the Escrow Agent at least three (3) Business Days prior to the Closing, an
amount equal to the Escrow Amount;

(iv) pay, or cause to be paid, the estimated Transaction Expenses set forth on
the Pre-Closing Statement (including any unpaid amounts set forth in the payoff
letters or invoices of Moelis & Company and Houlihan Lokey (the “Advisor
Amounts”)), by wire transfer of immediately available funds or as otherwise
directed by the Member Representative, in each case as designated in writing by
the Member Representative at least three (3) Business Days prior to the Closing;

(v) pay, or cause to be paid, the Expense Holdback Amount to the Member
Representative by wire transfer of immediately available funds to a bank account
previously designated in writing by the Member Representative at least three
(3) Business Days prior to the Closing;

(vi) pay, or cause to be paid, in the event that all Debt has not been repaid
prior to the consummation of the Closing, to the holder(s) of Payoff Debt set
forth in the Payoff Letter(s), the amount(s) set forth therein (the “Payoff
Amount(s)”);

(vii) immediately following the consummation of the Closing, (A) make a capital
contribution in the amount of the Parent Minimum Cash Amount to Holdings,
(B) make a capital contribution in the amount of the Minimum Cash Holdback to
Holdings on behalf of Rollover Holdco, (C) pay or cause to be paid to the
Principals the Aventine Initial Payment Portion, and (D) pay or cause to be paid
to the Aventine Escrow Agent the Aventine Escrow Amount, in each case of clauses
(A)-(D), in accordance with Section 2.07; and

(viii) deliver to the Member Representative each of the Transaction Documents to
which Parent and Parent Merger Sub is a party to be executed at the Closing, in
each case duly executed by Parent.

(e) The Member Representative shall deliver (or cause to be delivered) to
Parent, and the Principals shall cause the Member Representative to deliver to
Parent, each of the Delivered Letters of Transmittal.

 

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(f) In accordance with Section 2.04(c):

(i) (x) Borrower shall receive the Net Debt Proceeds Amount, (y) Borrower shall
distribute the Net Debt Proceeds Amount to Intermediate Holdings and
(z) Intermediate Holdings shall distribute the Net Debt Proceeds Amount to
Holdings; and

(ii) (x) Holdings shall pay the Net Debt Proceeds Amount to the Member
Representative for further payment to the Holdings Pre-Closing Members in full
redemption of the Redeemable Holdings Interests in amounts determined by the
Member Representative (in proportion to the Redeemable Holdings Interests held
by such Holdings Pre-Closing Members) in accordance with the Member Allocation
Schedule on Annex D and (y) Rollover Holdco shall distribute the portion of the
Net Debt Proceeds Amount received by it from the Member Representative to the
Rollover Holdco Members in amounts determined by the Member Representative
(based on the same proportion that the number of Rollover Holdco Class A Units
held by such Rollover Holdco Member as of immediately following the consummation
of the Closing bears to the total number of Rollover Holdco Class A Units held
by all Rollover Holdco Members as of immediately following the consummation of
the Closing).

(g) The Member Representative shall deliver to Parent a certificate executed on
behalf of the Member Representative by an executive officer of the Member
Representative certifying that the Restructuring has been consummated in
accordance with the Restructuring Agreement.

Section 2.11. Allocation of Purchase Price. The parties hereto agree to allocate
the Closing Merger Consideration and any other amounts payable to the Holdings
Pre-Closing Members pursuant to this Agreement (including any Earn-out
Amount(s)) among the assets and liabilities of the Group Entities in a manner
reasonably determined by the Member Representative in accordance with
Sections 734, 743, 751 and 755 of the Code, and the regulations thereunder;
provided, that (i) the Member Representative shall allocate no less than the
GAAP book value shown on the Group Balance Sheet to any assets classified as
property, plant, and equipment in accordance with GAAP and shall allocate no
less than the value taken into account pursuant to Section 2.14(c) to any
balance sheet items taken into account in the Final Adjusted Purchase Price,
(ii) the Member Representative shall consider in good faith any reasonable
comments of Parent to such allocation, and (iii) if Parent believes that such
allocation is unreasonable and Parent and the Member Representative are unable
to agree, the allocation shall be submitted to the Accounting Firm for
resolution; provided, that the Accounting Firm may only revise the allocation if
it concludes that the allocation is unreasonable and may only make such changes
to the allocation as it determines are necessary to render the allocation
reasonable. The determination and allocation of the Closing Merger Consideration
and other amounts derived pursuant to this Section 2.11 shall be binding on the
parties hereto for all Tax reporting purposes.

Section 2.12. Withholding Rights. Notwithstanding any provision contained herein
to the contrary, each Acquired Entity, Parent and their respective agents shall
be entitled to deduct and withhold from the consideration otherwise payable to
any Person pursuant

 

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to this Agreement such amounts as it is required to deduct and withhold with
respect to the making of such payment pursuant to any provision of federal,
state, local or foreign tax law. If any Acquired Entity, Parent or one of their
respective agents, as the case may be, so withholds amounts and pays such
amounts to the applicable Taxing Authority, such amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the Holdings
Pre-Closing Interests in respect of which the applicable Acquired Entity, Parent
or the agent, as the case may be, made such deduction and withholding. Each of
the Acquired Entity, Parent and their respective agents, as appropriate, shall,
within a reasonable time prior to any such deduction and withholding, notify the
Person of its intention to withhold and furnish all information reasonably
required by such Person to ascertain how such withholding may be mitigated and,
if necessary, to contest such withholding.

Section 2.13. Payment and Issuance Procedures.

(a) Member Documents. The Member Representative has, prior to the date hereof,
delivered to Rollover Holdco and each Member a letter of transmittal and general
release in substantially the form set forth on Exhibit G (“Letter of
Transmittal”).

(b) Payment of Merger Consideration. If the Closing is consummated and a Letter
of Transmittal, duly completed and validly executed by Rollover Holdco or a
Member (including each Direct Rollover Member) in accordance with the
instructions (together with such other customary documents as are specified in
the Letter of Transmittal) has been received by the Member Representative, such
Person shall be entitled to receive in exchange therefor the consideration set
forth in Section 2.04(a) and Section 2.04(c) with respect to all Holdings
Pre-Closing Interests issuable thereto in connection with the Restructuring and
surrendered pursuant to such Letter of Transmittal, and the Holdings Pre-Closing
Interests so surrendered shall forthwith be canceled. If the Closing is
consummated, all Holdings Pre-Closing Interests issuable to the Holdings
Pre-Closing Members in connection with the Restructuring shall be deemed at any
time after the Effective Time to represent only the right to receive the
consideration set forth in Section 2.04(a) and Section 2.04(c). If a Letter of
Transmittal (duly completed and validly executed in accordance with the
instructions (together with such other customary documents as are specified in
the Letter of Transmittal)) is properly delivered by Rollover Holdco or a Member
to the Member Representative not later than three (3) Business Days prior to the
Closing Date (or less if such payment is agreed to by prior written consent of
Parent), then (A) the Member Representative will pay such Member’s Closing Cash
Consideration (if any) in immediately available funds as promptly as practicable
after receipt of the Closing Cash Consideration by the Member Representative at
the Closing and (B) upon the consummation of the Closing, with respect to
Rollover Holdco and the Direct Rollover Members, Rollover Holdco and the Direct
Rollover Members shall become the record owners of Class A Holdings Interests
representing the Closing Rollover Consideration to be issued to Rollover Holdco
and the Direct Rollover Members upon the consummation of the Closing. If a
Letter of Transmittal is properly delivered by a Member to the Member
Representative less than three Business Days prior to the Closing or following
the Closing Date, then the Member Representative will pay to such Member such
Member’s Closing Cash Consideration (if any) in immediately available funds no
later than five (5) Business Days following such delivery. The Member
Representative has provided Parent with all Letters of Transmittal received by
the

 

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Member Representative as of three (3) Business Days prior to the Closing Date,
and the Member Representative shall promptly provide Parent with any additional
Letters of Transmittal received by the Member Representative at least three
(3) Business Days prior (or less if such earlier payment is agreed to by prior
written consent of Parent) to the Member Representative making any payment with
respect to such Letters of Transmittal. For the avoidance of doubt, upon
satisfaction of its obligations under Section 2.10(d)(i), Parent shall not be
responsible for payment with respect to any individual Letter of Transmittal
(other than any payment obligations to the Member Representative (for example
purposes only, any payment required to be made by Parent to the Member
Representative under Section 2.14(c)(i)), if any, required to occur following
the Closing as set forth in this Agreement).

Section 2.14. Purchase Price Adjustment.

(a) Within ninety (90) calendar days after the Closing Date, Parent shall
deliver to the Member Representative a statement (the “Post-Closing Statement”)
of its good faith determination of the following: (i) Closing Net Working
Capital, (ii) Closing Indebtedness (which shall include the amount of any Payoff
Debt), (iii) the Balance Sheet Adjustment, (iv) Transaction Expenses, (v) the
Adjusted Purchase Price, and (vi) the Cash Purchase Price. In connection with
Parent’s preparation of the Post-Closing Statement, Holdings, the Management
Sellers and Member Representative shall afford, and shall cause each Acquired
Entity and its Subsidiaries to afford, to Parent and any Representatives
retained by Parent in connection with the preparation of the Post-Closing
Statement in accordance with this Section 2.14, full access during normal
business hours upon reasonable advance notice to all the properties, books,
contracts, personnel, Representatives (including the accountants of the Acquired
Entities) and records of the Acquired Entities, each Subsidiary of the Acquired
Entities and such Representatives (including, in the event Parent and its
applicable Representatives shall sign a release and non-reliance letter in a
form customarily requested by the accountants of the Acquired Entities, the work
papers of the accountants of the Acquired Entities) relevant to the preparation
of the Post-Closing Statement and calculation of the Final Adjusted Purchase
Price in accordance with this Section 2.14. For the avoidance of doubt, the
Management Sellers shall cooperate with Parent and its Representatives in
connection with any reasonable requests by Parent or its Representatives in
connection with Parent’s preparation of the Post-Closing Statement and
calculation of the Final Adjusted Purchase Price in accordance with this
Section 2.14.

(b) The Post-Closing Statement shall become final and binding upon the parties
on the thirtieth (30th) day following the date on which the Post-Closing
Statement was delivered to the Member Representative, unless the Member
Representative delivers written notice of its disagreement with the Post-Closing
Statement (a “Notice of Disagreement”) to Parent prior to such date. Any Notice
of Disagreement shall (i) specify in reasonable detail the nature and amount of
any disagreement so asserted and (ii) only include good faith disagreements
based on the components of the Post-Closing Statement not being mathematically
correct or prepared in accordance with this Section 2.14 and the definitions of
Closing Net Working Capital, Closing Indebtedness (which shall include the
amount of any Payoff Debt), Balance Sheet Adjustment, Transaction Expenses,
Adjusted Purchase Price and Cash Purchase Price (and the definitions in such
definitions). If a Notice of Disagreement is received by Parent in a timely
manner, then the Post-Closing Statement (as revised in accordance with this
sentence)

 

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shall become final and binding upon the Members and Parent on the earlier of
(i) the date the Member Representative and Parent resolve in writing any
differences they have with respect to the matters specified in the Notice of
Disagreement and (ii) the date any disputed matters are finally resolved in
writing by the Accounting Firm pursuant to this Section 2.14(b). During the
thirty (30)-day period following the delivery of a Notice of Disagreement, the
Member Representative and Parent shall seek in good faith to resolve in writing
any differences that they may have with respect to the matters specified in the
Notice of Disagreement. If at the end of such thirty (30)-day period the Member
Representative and Parent have not resolved in writing the matters specified in
the Notice of Disagreement, the Member Representative and Parent shall submit to
an independent accounting firm (the “Accounting Firm”) for arbitration, in
accordance with the standards set forth in this Section 2.14(b), only such
matters specified in the Notice of Disagreement that remain in dispute. The
Accounting Firm shall be Ernst & Young LLP or, if such firm is unable or
unwilling to act, such other nationally recognized independent public accounting
firm as shall be agreed upon by the Member Representative and Parent in writing.
The Member Representative and Parent shall use reasonable efforts to cause the
Accounting Firm to render a written decision resolving the matters submitted to
the Accounting Firm within thirty (30) calendar days of the receipt of such
submission. The scope of the disputes to be resolved by the Accounting Firm
shall be limited to fixing mathematical errors and determining whether the items
in dispute were determined in accordance with this Section 2.14 and the
definitions of Closing Net Working Capital, Closing Indebtedness (which shall
include the amount of any Payoff Debt), Balance Sheet Adjustment, Transaction
Expenses, Adjusted Purchase Price and Cash Purchase Price (and the definitions
in such definitions), and the Accounting Firm is not to make any other
determination not disputed in such Notice of Disagreement. The Accounting Firm’s
decision shall be based solely on written submissions by the Member
Representative and Parent and their respective representatives and not by
independent review and shall be final and binding on all of the parties hereto.
The Accounting Firm may not assign a value greater than the greatest value for
such item claimed by either party or smaller than the smallest value for such
item claimed by either party. Judgment may be entered upon the determination of
the Accounting Firm in any court having jurisdiction over the party against
which such determination is to be enforced. The fees and expenses of the
Accounting Firm incurred pursuant to this Section 2.14(b) shall be borne by the
Members (payable first out of the Expense Holdback Amount), on the one hand, and
Parent, on the other hand, in proportion to the final allocation made by such
Accounting Firm of the disputed items weighted in relation to the claims made by
the Member Representative and Parent, such that the prevailing party pays the
lesser proportion of such fees, costs and expenses. For example, if Parent
claims that the appropriate adjustments are, in the aggregate, $1,000 greater
than the amount determined by the Members and if the Accounting Firm ultimately
resolves the dispute by awarding to Parent an aggregate of $300 of the $1,000
contested, then the fees, costs and expenses of the Accounting Firm will be
allocated 30% (i.e., 300 ÷ 1,000) to the Members and 70% (i.e., 700 ÷ 1,000) to
Parent.

(c) For the purposes of this Agreement, “Final Adjusted Purchase Price” means
the Adjusted Purchase Price as finally agreed or determined in accordance with
Section 2.14(a) or (b).

 

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(i) If the Final Adjusted Purchase Price exceeds the Estimated Adjusted Purchase
Price, within five (5) Business Days after such Final Adjusted Purchase Price is
finally determined, (x) Parent shall pay by wire transfer of immediately
available funds equal to sixty two and one-half percent (62.5%) of the amount of
such excess to the Member Representative for the benefit of and distribution to
the Members, and (y) Parent and the Member Representative shall deliver joint
written instructions to the Escrow Agent to release, in accordance with the
terms of the Escrow Agreement, a wire transfer in an amount equal to the
Purchase Price Adjustment Escrow Fund to the Member Representative for the
benefit of and distribution to the Members, which amounts (in the case of each
of clauses (x) and (y)) shall be allocated by the Member Representative in
accordance with the Restructuring Agreement based on the Balance Sheet
Adjustment Allocation with respect to each Member (as the same shall be adjusted
to give effect to the Final Adjusted Purchase Price).

(ii) If the Estimated Adjusted Purchase Price exceeds the Final Adjusted
Purchase Price, Parent and the Member Representative shall, within five
(5) Business Days after such Final Adjusted Purchase Price is determined,
deliver joint written instructions to the Escrow Agent to release, in accordance
with the terms of the Escrow Agreement, (x) a wire transfer of immediately
available funds to Parent or another Person designated by Parent from the
Purchase Price Adjustment Escrow Fund in an amount equal to the lesser of
(A) sixty two and one-half percent (62.5%) of such excess and the (B) the
Purchase Price Adjustment Escrow Fund, and in the event the Purchase Price
Adjustment Escrow Fund is less than such excess amount, Parent may also proceed
(aa) first, against the Indemnity Escrow Fund for the amount of such shortfall
(and Parent and the Member Representative shall deliver joint written
instructions to the Escrow Agent to release such amount), and (bb) then, in the
event the Indemnity Escrow Fund is less than such remaining excess amount,
against the Members, severally and not jointly (in accordance with the Holdings
Allocation Percentage of each such Member) in order to recover the amount by
which the Purchase Price Adjustment Escrow Fund and the Indemnity Escrow Fund,
if applicable, is less than such excess, and (y) a wire transfer in an amount
equal to any remaining portion of the Purchase Price Adjustment Escrow Fund (if
any) to the Member Representative for the benefit of and distribution to the
Members, which amount shall be allocated by the Member Representative in
accordance with the Restructuring Agreement based on the Balance Sheet
Adjustment Allocation with respect to each Member (as the same shall be adjusted
to give effect to the Final Adjusted Purchase Price).

(d) During the period of time from and after the Closing Date through the final
determination and payment of the Final Adjusted Purchase Price with respect to
any such Acquired Entity in accordance with this Section 2.14, Holdings shall
afford, and shall cause its Subsidiaries to afford, the Member Representative
and any Representatives retained by the Member Representative in connection with
the review of the Final Adjusted Purchase Price in accordance with this
Section 2.14, full access during normal business hours upon reasonable advance
notice to all the properties, books, contracts, personnel, Representatives
(including the accountants of the Acquired Entities) and records of the Acquired
Entities, each Subsidiary of the Acquired Entities and such Representatives
(including, in the event the Member

 

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Representatives and its Representatives shall sign a release and non-reliance
letter in a form customarily requested by the accountants of the Acquired
Entities, the work papers of the accountants of the Acquired Entities) relevant
to the review of the Post-Closing Statement and Parent’s determination of the
Final Adjusted Purchase Price in accordance with this Section 2.14. Each of
Parent, the Management Sellers, the other Rollover Holdco Members and the Member
Representative agree that they will not take any action that impedes Holdings
from fulfilling its obligations under this Section 2.14.

Section 2.15. Escrow Funds. The Purchase Price Adjustment Escrow Fund shall be
used solely for the purposes set forth in Section 2.14(c)(i) or 2.14(c)(ii). The
Indemnity Escrow Fund (collectively with the Purchase Price Adjustment Escrow
Fund, the “Escrow Funds”) shall (i) be used solely for the same purposes as the
Purchase Price Adjustment Escrow Fund and to satisfy any claims of a Parent
Indemnitee for indemnification pursuant to Section 12.02(a) or Section 12.02(b)
made from and after Closing but on or before the Expiration Date and
(ii) terminate at 11:59 p.m. (Eastern time) on the Expiration Date (other than
with respect to claims made on or before the Expiration Date). Any amounts in
the Indemnity Escrow Fund not so used (other than amounts reserved subject to
pending claims made on or before the Expiration Date and not then finally
resolved in accordance with the Escrow Agreement) shall be distributed to the
Member Representative for the benefit of and distribution to the Members as
allocated at the direction of the Member Representative (in accordance with
Annex D) on the next Business Day after the Expiration Date or as otherwise
determined by the Member Representative in accordance with the Restructuring
Agreement. The Indemnity Escrow Fund shall be held and disbursed solely for the
respective purposes and in accordance with the terms hereof and the Escrow
Agreement. The parties hereto agree that, for Tax reporting purposes, Parent
shall be deemed to be the owner of the Escrow Funds, as reduced from time to
time by the amount of monies distributed from such Escrow Fund in accordance
with this Agreement and the Escrow Agreement, and that all interest on or other
taxable income, if any, earned from the investment of the Escrow Amount shall be
treated for Tax purposes as earned by Parent until the Escrow Amount is
distributed in accordance with this Agreement and the Escrow Agreement. The
parties hereto further agree that, for U.S. federal income Tax purposes, the
payments received by the Members from the Escrow Funds are intended to
constitute installment payments from an installment sale described in
Section 453 of the Code, a portion of which may be treated as imputed interest
under the Code, unless the Members make an election pursuant to Section 453(d)
of the Code, and the parties hereto shall report consistently with such
treatment, as applicable.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE ROLLOVER HOLDCO MEMBERS AND THE DIRECT
ROLLOVER MEMBERS

Subject to Section 14.04, each Management Seller, Direct Rollover Member and
other Rollover Holdco Member hereby represents and warrants, severally and not
jointly (subject to the last sentence of Section 12.03(e)), to Parent and Parent
Merger Sub, solely with respect to itself only (other than (x) the
representations and warranties in Section 3.12, and (y) the representations and
warranties in Section 3.09 solely with respect to Rollover Holdco), that:

Section 3.01. Existence and Power.

(a) With respect to each Rollover Holdco Member that is not an individual,
(i) such Rollover Holdco Member is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and has all
requisite power and authority required to carry on its business as now
conducted, (ii) such Rollover Holdco Member is duly qualified to do business as
a foreign limited liability company or other business entity and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not, individually or
in the aggregate, reasonably be expected to (x) have a material adverse effect
on the condition (financial or otherwise), of such Rollover Holdco Member and
its Subsidiaries, taken as a whole, or (y) impair or delay in any material
respect such Rollover Holdco Member’s ability to consummate the Transactions.

(b) With respect to each Rollover Holdco Member that is not an individual, such
Rollover Holdco Member has the requisite power and authority to execute and
deliver this Agreement and the Transaction Documents to which such Rollover
Holdco Member is or will be a party, to perform such Rollover Holdco Member’s
obligations hereunder and thereunder, and to consummate the Transactions.

(c) With respect to each Rollover Holdco Member and Direct Rollover Member who
is an individual, such Member is a natural Person and has the legal capacity to
execute and deliver this Agreement and the Transaction Documents to which such
Member is or will be a party, to perform such Member’s obligations hereunder and
thereunder, and to consummate the Transactions.

(d) With respect to each Rollover Holdco Member and Direct Rollover Member, such
Member has prior to the date of this Agreement furnished to Parent a true,
complete and correct copy of any Seller Side Letter(s) to which such Member is a
party, and such Seller Side Letter(s) are in full force and effect.

Section 3.02. Authorization. With respect to a Rollover Holdco Member that is
not an individual, the execution, delivery and performance of this Agreement and
the other Transaction Documents to which such Rollover Holdco Member is or will
be a party by such Rollover Holdco Member and the consummation of the
Transactions have been duly and validly authorized by all necessary corporate
(or other) action on the part of such Rollover Holdco Member, and no other
corporate (or other) proceedings on the part of such Rollover Holdco Member or
any holder of its equity, are required to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents to which such
Rollover Holdco Member is or will be a party or for such Rollover Holdco Member
to consummate the Transactions. This Agreement and the other Transaction
Documents to which such Rollover Holdco Member or Direct Rollover Member is a
party have been (or, in the case of other Transaction Documents that will be
executed and delivered by such Member after the date of this Agreement, such
other Transaction Documents will, when executed and delivered by such Member,
have been), duly and validly executed and delivered by such Member. This
Agreement and the other Transaction Documents to which such Rollover Holdco
Member or Direct Rollover Member is a party constitute (or, in the case of other
Transaction Documents that will be executed and delivered by such Member after
the date of this Agreement, such other Transaction

 

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Documents will, when executed and delivered by such Member, constitute) the
legal, valid and binding obligation of such Member, enforceable against such
Member in accordance with their respective terms, except as the enforceability
thereof may be limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general principles of equity (“Enforceability Exceptions”).

Section 3.03. Governmental Authorization. The execution, delivery and
performance by such Rollover Holdco Member or Direct Rollover Member of this
Agreement and the other Transaction Documents to which it is or will be a party
and the consummation by such Member of the Transactions requires no action by or
in respect of, or filing with, any Governmental Authority other than: (i) (a)
the filing of a certificate of merger with respect to the Merger with the
Delaware Secretary of State and (b) the filing of certificates of merger of
certain of the Acquired Entities in connection with the Restructuring with the
Delaware Secretary of State, New York Secretary of State or California Secretary
of State, as applicable (which such filings were made in connection with the
Restructuring); (ii) compliance with any applicable requirements of the HSR Act
(which such requirements have been fulfilled as of the date hereof); and
(iii) any actions or filings the absence of which, individually or in the
aggregate, do not and are not reasonably likely to impair or delay in any
material respect such Member’s ability to perform its obligations under this
Agreement and the other Transaction Documents to which it is or will be a party
or to consummate the Transactions.

Section 3.04. Non-contravention. The execution, delivery and performance by such
Rollover Holdco Member or Direct Rollover Member of this Agreement and the other
Transaction Documents to which it is or will be a party and the consummation by
such Member of the Transactions do not and will not (i) with respect to each
Rollover Holdco Member that is not an individual, contravene, conflict with, or
result in any violation or breach of any provision of such Rollover Holdco
Member’s Organizational Documents, (ii) other than with respect to compliance
with any applicable requirements of the HSR Act (which such requirements have
been fulfilled as of the date hereof) and any liquor licenses set forth on
Schedule 4.22 of the Disclosure Schedule, contravene, conflict with or result in
a violation or breach of any provision of, or give any Governmental Authority or
other Person the right to exercise any remedy or obtain relief under, any
Applicable Law or Order to which such Member, or any of the properties or assets
owned or used by such Member (other than any Acquired Entity Contracts), is
subject, (iii) contravene, conflict with, violate or result in the loss of any
benefit to which such Member is entitled under, or give any Governmental
Authority the right to revoke, suspend, cancel, terminate, or modify, any Permit
or liquor license held by such Member, (iv) require any consent, waiver, notice
or other action by any Person under, constitute a default under, conflict with,
result in a breach of, or cause or permit the termination, modification,
amendment, revocation, cancellation, or acceleration of, or result in any other
change of any right or obligation or the loss of any benefit to which such
Member is entitled under, any provision of any Contract or other instrument
binding upon such Member or any of its assets (in each case, other than any
Acquired Entity Contracts (without limiting the requirement to disclose any such
Contracts on Schedule 4.04 of the Disclosure Schedule)), (v) result in the
creation or imposition of any Lien on any asset of such Member or any of its
Subsidiaries, or (vi) with the passage of time, the giving of notice or the
taking of any action by another Person, have any of the effects described in
clauses (i) through (v) of this Section 3.04, with only such

 

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exceptions in the case of clauses (iii), (iv), (v) and (vi) as, individually or
in the aggregate, do not and are not reasonably likely to impair or delay in any
material respect the ability of such Member to perform its obligations under
this Agreement and the other Transaction Documents to which it is or will be a
party or to consummate the Transactions.

Section 3.05. Existing Equity Interests. As of immediately prior to the
Restructuring, Schedule 3.05 of the Disclosure Schedule sets forth a complete
and accurate statement of such Rollover Holdco Member or Direct Rollover
Member’s beneficial and record ownership of Group Entity Interests and Equity
Interests in Holdings (if any). As of immediately prior to the Restructuring,
such Member was the beneficial owner of, and had good, valid and marketable
title to, such Group Entity Interests (and Equity Interests in Holdings, as
applicable), free and clear of all Liens (other than restrictions on transfer
arising under applicable securities laws or the LLC Agreement with respect to
such Acquired Entity).

Section 3.06. Management Assets; Other Assets. As of immediately prior to the
Restructuring, such Management Seller held good, valid and marketable title to
the Management Assets, free and clear of all Liens (other than with respect to
Management Assets that are or relate to Equity Interests, restrictions on
transfer of such Equity Interests arising under applicable securities laws or
the LLC Agreement with respect to such Group Entity (as applicable)) (it being
understood that any Management Assets that are Acquired Entity Business IP
Rights are subject to the representations and warranties in Section 4.14).
Except for such Management Assets (if any) contributed to Rollover Holdco in
connection with the Restructuring or as set forth on Schedule 3.06 of the
Disclosure Schedule, neither such Management Seller (nor, in the case of any
Management Seller that is an individual, any member of the immediate family of
such Management Seller) nor any Affiliate of such Management Seller (nor, in the
case of any Affiliate of a Management Seller that is an individual, any member
of the immediate family of such Affiliate) owns (or as of immediately prior to
the Restructuring, owned) any material assets that are owned, used or held for
use by any Acquired Entity or any Subsidiary of any Acquired Entity. Neither
such Management Seller (nor, in the case of any Management Seller that is an
individual, any member of the immediate family of such Management Seller) nor
any Affiliate of such Management Seller (nor, in the case of any Affiliate of a
Management Seller that is an individual, any member of the immediate family of
such Affiliate) is (or as of immediately prior to the Restructuring, was) party
to any Contract with any Acquired Entity or any of its Subsidiaries, other than
the LLC Agreements and Side Letters listed on Section 4.10 of Disclosure
Schedule or as set forth on Schedule 3.06 to the Disclosure Schedule.

Section 3.07. Litigation and Regulatory Actions. Other than any Proceeding set
forth on Schedule 4.12 of the Disclosure Schedule against, otherwise affecting
or relating to such Rollover Holdco Member or Direct Rollover Member, there is
no (i) Proceeding pending against, or, to the Knowledge of such Member,
threatened against or affecting, such Member before (or, in the case of
threatened Proceedings, would be before) or by any Governmental Authority or
arbitrator, and (ii) Order relating to such Member, that in either case,
individually or in the aggregate, is reasonably likely to impair or delay in any
material respect such Member’s ability to perform its obligations under this
Agreement and the other Transaction Documents to which it is or will be a party
or to consummate the Transactions. Such Member has not, and none of its
Affiliates have, made an assignment or transfer of any of the Released Claims.

 

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Section 3.08. Finders’ Fees. Except for Moelis & Company and Houlihan Lokey,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of such Rollover Holdco
Member or Direct Rollover Member that is entitled to any fee or commission from
any Acquired Entity or any of its Subsidiaries in connection with this Agreement
or the Transactions based upon arrangements made by or on behalf of such Member
(any amounts due to Moelis & Company or Houlihan Lokey in connection with this
Agreement or the Transactions will be Transaction Expenses (to the extent not
paid prior to the Closing) and will be paid off at or prior to the Closing).

Section 3.09. Investment Purpose; Accredited Investor; No Public Market; No
Reliance.

(a) Rollover Holdco and such Rollover Holdco Member or Direct Rollover Member is
acquiring the Rollover Holdco Class A Units (if any), Rollover Holdco Preferred
Units (if any), Class A Holdings Interests, the Redeemable Holdings Interests,
the Preferred Holdings Interests (if any) and shares of Qualified MSG Stock or
Qualified Successor Stock (if any) allocable to Rollover Holdco and such Member
hereunder for investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling such Class A Holdings Interests, Redeemable Holdings Interests,
Preferred Holdings Interests (if any) and shares of Qualified MSG Stock or
Qualified Successor Stock (if any).

(b) Rollover Holdco and such Rollover Holdco Member or Direct Rollover Member
acknowledges and agrees (i) that the Rollover Holdco Class A Units (if any),
Rollover Holdco Preferred Units (if any), Class A Holdings Interests, the
Redeemable Holdings Interests, the Preferred Holdings Interests (if any) and
shares of Qualified MSG Stock or Qualified Successor Stock (if any) allocable to
Rollover Holdco and such Member hereunder have not been, and will not be,
registered under the 1933 Act, by reason of specific exemptions from the
registration provisions of the 1933 Act which depend upon, among other things,
the bona fide nature of the investment intent and the accuracy of the
representations as expressed in this Section 3.09, are “restricted securities”
under applicable U.S. federal and state securities Laws and that, pursuant to
these laws, may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the 1933 Act
and any applicable state or foreign securities Laws, except pursuant to an
exemption from such registration under the 1933 Act and such other Laws,
(ii) that (except to the extent provided under Section 2.03(b)(ii) with respect
to Qualified Successor Stock (if any)) there is no obligation to register or
qualify the foregoing for resale, and (iii) that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including the time and manner of sale, the holding period for the
foregoing and requirements that are outside of a holder’s control, and, except
as set forth in Section 2.03(b)(ii) with respect to the registration of
Qualified Successor Stock (in accordance with and subject to the terms provided
therein), as to which no party is under any obligation to satisfy and which may
not be satisfied or able to be satisfied.

 

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(c) Rollover Holdco and such Rollover Holdco Member or Direct Rollover Member
understands that no public market now exists for the Rollover Holdco Class A
Units, Rollover Holdco Preferred Units, Class A Holdings Interests, Redeemable
Holdings Interests or the Preferred Holdings Interests, and that neither Parent
nor Parent Merger Sub nor any Person on their behalf has made any assurances
that a public market will ever exist for the Rollover Holdco Class A Units,
Rollover Holdco Preferred Units, Class A Holdings Interests, Redeemable Holdings
Interests or Preferred Holdings Interests.

(d) Rollover Holdco and such Rollover Holdco Member or Direct Rollover Member is
an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated
under the 1933 Act.

(e) Rollover Holdco and such Rollover Holdco Member or Direct Rollover Member
acknowledges and agrees that it (i) has had an opportunity to discuss the
business of the Acquired Entities and their respective Subsidiaries with the
management of the Acquired Entities, (ii) has been afforded the opportunity to
ask questions of and receive answers from the Acquired Entities, (iii) has
conducted its own independent investigation of the Acquired Entities, their
respective Subsidiaries, their respective businesses and the Transactions, and
(iv) has sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risk of the investment in
Rollover Holdco Class A Units (if any), Rollover Holdco Preferred Units (if
any), Class A Holdings Interests, the Redeemable Holdings Interests, the
Preferred Holdings Interests (if any) and shares of Qualified MSG Stock or
Qualified Successor Stock (if any).

(f) Rollover Holdco and such Rollover Holdco Member or Direct Rollover Member
acknowledges and agrees that none of the Acquired Entities, the Member
Representative nor any other Person makes any representation or warranty with
respect to any projections, forecasts or other estimates, plans or budgets of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows (or any component thereof) or future
financial condition (or any component thereof) of any Acquired Entity or any of
their respective Subsidiaries or the future business, operations or affairs of
any Acquired Entity or any of their respective Subsidiaries heretofore or
hereafter delivered to or made available to Rollover Holdco or such Member or
their respective Representatives or Affiliates.

Section 3.10. Restrictions.

(a) Except as set forth on Section 3.10(a) of the Disclosure Schedule, such
Principal is not party to any Contract that restricts such Principal or any
Acquired Entity or Subsidiary of an Acquired Entity, or any of the properties or
assets of any Acquired Entity or Subsidiary of an Acquired Entity, from
investing in, opening or operating any type of restaurant, bar or nightlife
venue in any location, of any theme or at any time (or with respect to
properties or assets, from being used in connection with the opening or
operation of such a venue of the applicable Acquired Entity or Subsidiary
thereof), or requiring any such opportunity to first be provided to any third
party.

 

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(b) Except as set forth on Section 3.10(b) of the Disclosure Schedule, such
other Rollover Holdco Member is not party to any Contract that restricts such
other Rollover Holdco Member or any Acquired Entity or Subsidiary of an Acquired
Entity, or any of the properties or assets of any Acquired Entity or Subsidiary
of an Acquired Entity, from investing in, opening or operating any type of
restaurant, bar or nightlife venue in any location, of any theme or at any time
(or with respect to properties or assets, from being used in connection with the
opening or operation of such a venue of the applicable Acquired Entity or
Subsidiary thereof), or requiring any such opportunity to first be provided to
any third party.

Section 3.11. Access to Information; No Reliance.

(a) Such Rollover Holdco Member or Direct Rollover Member acknowledges and
agrees that it (i) has had an opportunity to discuss the business of Parent,
Parent Merger Sub and their respective Affiliates with the management of Parent,
(ii) has been afforded the opportunity to ask questions of and receive answers
from Parent, Parent Merger Sub and their respective Affiliates and (iv) has
conducted its own independent investigation of Parent, Parent Merger Sub and
their respective Affiliates, their respective businesses and the Transactions.
Such Member further acknowledges and agrees that, except in respect of any
fraud, it has not relied on any representation, warranty or other statement by
Parent, Parent Merger Sub or their respective Affiliates, other than
representations and warranties set forth in Section 2.03(b)(iv), Article 6 and
Section 9.11 (each, as qualified by Disclosure Schedule), and, except in respect
of any fraud, that all other representations and warranties of any kind
whatsoever, express or implied, at law or in equity, with respect to any of
Parent, Parent Merger Sub and their respective Affiliates, or their respective
business, operations, assets, liabilities, condition (financial or otherwise) or
prospects, are specifically disclaimed.

(b) Except for the representations and warranties set forth in
Section 2.03(b)(iv), Article 6 and Section 9.11 (each, as qualified by
Disclosure Schedule), with the exception of fraud, such Rollover Holdco Member
or Direct Rollover Member acknowledges and agrees that none of Parent, Parent
Merger Sub, their respective Affiliates nor any other Person makes any
representation or warranty with respect to any projections, forecasts or other
estimates, plans or budgets of future revenues, expenses or expenditures, future
results of operations (or any component thereof), future cash flows (or any
component thereof) or future financial condition (or any component thereof) of
Parent, Parent Merger Sub or their respective Affiliates nor the future
business, operations or affairs of Parent, Parent Merger Sub or their respective
Affiliates heretofore or hereafter delivered to or made available to any
Acquired Entity, Management Seller, Rollover Holdco Member or Member, or their
respective Representatives or Affiliates.

Section 3.12. Rollover Holdco Representations and Warranties. The Rollover
Holdco Members, severally and not jointly (subject to the last sentence of
Section 12.03(e)), represent and warrant to Parent and Parent Merger Sub, that:

(a) (i) Rollover Holdco is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all limited liability company
power and authority required to carry on its business as now conducted, and to
own, lease and use its properties and assets, and to perform all its obligations
under any Contract to which it is a party

 

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or by which it, or any of the assets or properties owned or used by it, is or
could become bound, and (ii) Rollover Holdco is duly qualified to do business as
a foreign limited liability company and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified, individually or in the aggregate, (x) has not had
and is not reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business, results of operations, assets or liabilities
of Rollover Holdco, or (y) is reasonably likely to prevent, delay in any
material respect or impede in any material respect the performance by Rollover
Holdco of its obligations under this Agreement or the consummation of the
Transactions. The Rollover Holdco Members have prior to the date of this
Agreement furnished to Parent a true, complete and correct copy of the
certificate of formation and the initial limited liability company agreement of
Rollover Holdco (and any other Organizational Documents with different names, if
applicable). The certificate of formation and the initial limited liability
company agreement of Rollover Holdco (and any other Organizational Documents
with different names, if applicable) referred to in the foregoing sentence are
in full force and effect.

(b) Rollover Holdco has the requisite power and authority to execute and deliver
this Agreement and the Transaction Documents to which Rollover Holdco is or will
be a party, to perform Rollover Holdco’s obligations hereunder and thereunder,
and to consummate the Transactions.

(c) Rollover Holdco was formed solely for the purpose of engaging in the
Restructuring and the Transactions, has not engaged in any other business
activities other than in connection with its formation, the Restructuring or the
other Transactions, does not have any assets other than the Management Assets
addressed by the Restructuring Agreement, the Holdings Pre-Closing Interests,
the Class A Holdings Interests, the Preferred Holdings Interests and Redeemable
Holdings Interests (in each case from time to time in accordance with the
transactions contemplated by the Restructuring Agreement and this Agreement),
has not entered into any Contract other than the Transaction Documents to which
Rollover Holdco is a party, and does not have any Liabilities (other than de
minimis Liabilities incident to its formation, or in the case of Holdings,
Liabilities under the Transaction Documents (but not (with or without notice or
lapse of time or both) from any breach or default under the Transaction
Documents).

(d) The execution, delivery and performance by Rollover Holdco of this Agreement
and the other Transaction Documents to which Rollover Holdco is or will be a
party and the consummation of the Transactions have been duly and validly
authorized by all necessary corporate (or other) action on the part of Rollover
Holdco, and no other limited liability company (or other) proceedings on the
part of Rollover Holdco or any holder of its Equity Interests, are necessary to
authorize the execution, delivery and performance by Rollover Holdco of this
Agreement and the other Transaction Documents to which Rollover Holdco is or
will be a party or for Rollover Holdco to consummate the Transactions. This
Agreement and the other Transaction Documents to which Rollover Holdco is a
party have been (or, in the case of other Transaction Documents that will be
executed and delivered by Rollover Holdco after the date of this Agreement, such
other Transaction Documents will, when executed and delivered by Rollover
Holdco, have been), duly and validly executed and delivered by Rollover Holdco.
This Agreement and the other Transaction Documents to which Rollover Holdco is a
party constitute (or, in the case of other Transaction Documents that will be
executed and delivered by Rollover

 

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Holdco after the date of this Agreement, such other Transaction Documents will,
when executed and delivered by Rollover Holdco, constitute) the legal, valid and
binding obligation of Rollover Holdco, enforceable against Rollover Holdco in
accordance with their respective terms, except for Enforceability Exceptions.

(e) The execution, delivery and performance by Rollover Holdco of this Agreement
and the other Transaction Documents to which it is or will be a party and the
consummation by Rollover Holdco of the Transactions do not and will not
contravene, conflict with, or result in any violation or breach of any provision
of Rollover Holdco’s Organizational Documents. The execution, delivery and
performance by Rollover Holdco of this Agreement and the other Transaction
Documents to which it is or will be a party and the consummation by Rollover
Holdco of the Transactions requires no action by or in respect of, or filing
with, any Governmental Authority other than: (i) (a) the filing of a certificate
of merger with respect to the Merger with the Delaware Secretary of State and
(b) the filing of certificates of merger of certain of the Acquired Entities in
connection with the Restructuring with the Delaware Secretary of State, New York
Secretary of State or California Secretary of State, as applicable (which such
filings were made in connection with the Restructuring); (ii) compliance with
any applicable requirements of the HSR Act (which such requirements have been
fulfilled as of the date hereof); and (iii) any actions or filings the absence
of which, individually or in the aggregate, (x) has not had and is not
reasonably likely to have a material adverse effect on the condition (financial
or otherwise), business, results of operations, assets or liabilities of
Rollover Holdco, or (y) is reasonably likely to prevent, delay in any material
respect or impede in any material respect the performance by Rollover Holdco of
its obligations under this Agreement or the consummation of the Transactions.

(f) As of immediately prior to the Restructuring, (i) all of the issued and
outstanding Equity Interests of Rollover Holdco are owned, of record and
beneficially, by Member Representative, and Rollover Holdco does not have any
other authorized, designated, issued or outstanding Equity Interests, or other
than as set forth in the Limited Liability Company Agreement of Rollover Holdco
dated as of September 23, 2016 (the “Initial Rollover Holdco LLC Agreement”),
any outstanding or authorized options, warrants, convertible or exchangeable
securities, Contracts, subscriptions, rights, calls, commitments, agreements or
understandings of any character whatsoever, fixed or contingent, to which
Rollover Holdco, any Management Seller, Acquired Entity or any of its
Subsidiaries are a party that directly or indirectly (1) require or call for the
issuance, redemption, delivery, sale, pledge or other disposition of any Equity
Interests of Rollover Holdco, or any securities convertible into, or other
rights to acquire, any Equity Interests of Rollover Holdco, (2) obligate
Rollover Holdco to grant, offer or enter into any of the foregoing, or
(3) relate to the voting, transfer, ownership or control of the Equity Interests
of Rollover Holdco, (ii) all of the issued and outstanding Equity Interests of
Rollover Holdco are duly authorized and validly issued and fully-paid and
non-assessable with no Liability attaching to the ownership thereof (other than
as expressly provided in the Initial Rollover Holdco LLC Agreement), and have
not been issued in violation of any federal or state securities Laws or any
other Applicable Law, (iii) there are no outstanding obligations of Rollover
Holdco to repurchase, redeem or otherwise acquire any of the Equity Interests of
Rollover Holdco or to vote or dispose of such Equity Interests (iv) none of the
Equity Interests of Rollover Holdco have been issued in violation of, and none
are subject to, any purchase option,

 

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call, right of first refusal, preemptive, subscription, or other similar right,
and (v) there are no declared or accrued but unpaid dividends or distributions
with respect to the Equity Interests of Rollover Holdco.

(g) Other than as set forth on Schedule 3.12(g) of the Disclosure Schedule,
Rollover Holdco has not created any “phantom units,” unit appreciation rights or
other similar rights, the value of which is related to or based upon the price
or value of any Equity Interests of Rollover Holdco.

(h) Other than as expressly provided in the A&R Holdings LLC Agreement and the
A&R Rollover Holdco LLC Agreement, Rollover Holdco has not granted to any Person
the right to demand or request that Rollover Holdco effect a registration under
the 1933 Act, of any securities held by such Person or to include any securities
of such Person in any such registration by Rollover Holdco, and there are
otherwise no Contracts, voting trusts or proxies with respect to the voting or
registration under the 1933 Act or any analogous Applicable Law, relating to any
Equity Interests of Rollover Holdco.

(i) As of the date hereof, (i) the Rollover Holdco Members are the sole owners
of record of the common units of Rollover Holdco (the “Rollover Holdco Class A
Units”) and preferred units of Rollover Holdco (the “Rollover Holdco Preferred
Units”) as determined in accordance with the Restructuring Agreement and the A&R
Rollover Holdco LLC Agreement, (ii) each Rollover Holdco Class A Unit held by
each such Rollover Holdco Member corresponds to a Class A Holdings Interest
(with respect to such Rollover Holdco Class A Unit, its “Attributable Class A
Common Unit”) and each “Rollover Holdco Preferred Unit” held by each such
Rollover Holdco Member corresponds to a Preferred Unit (as defined in the A&R
Holdings LLC Agreement) (with respect to such Rollover Holdco Preferred Unit,
its “Attributable Preferred Unit”), in each case, in accordance with the A&R
Rollover Holdco LLC Agreement and the A&R Holdings LLC Agreement, (iii) all of
the Rollover Holdco Class A Units and the Rollover Holdco Preferred Units have
been duly authorized and validly issued and will be fully-paid and
non-assessable with no Liability attaching to the ownership thereof (other than
as expressly provided in A&R Rollover Holdco LLC Agreement), and have not been
issued in violation of any federal or state securities Laws or any other
Applicable Law, (iv) except as set forth in the A&R Rollover Holdco LLC
Agreement or the A&R Holdings LLC Agreement, (x) there are no obligations
(contingent or otherwise) of Rollover Holdco to repurchase, redeem or otherwise
acquire the Rollover Holdco Class A Units and the Rollover Holdco Preferred
Units or other Equity Interests of Rollover Holdco, or to vote or dispose of
such Equity Interests of Rollover Holdco and (y) none of the Rollover Holdco
Class A Units and the Rollover Holdco Preferred Units have been issued in
violation of, and none are subject to, any purchase option, call, right of first
refusal, preemptive, subscription, or other similar right, and (v) there are no
declared or accrued but unpaid dividends or distributions with respect to the
Rollover Holdco Class A Units and the Rollover Holdco Preferred Units.

(j) There is no (i) Proceeding pending against, or, to the Knowledge of Rollover
Holdco, threatened against or affecting, Rollover Holdco before (or, in the case
of threatened Proceedings, would be before) or by any Governmental Authority or
arbitrator, and (ii) Order relating to Rollover Holdco, that in either case,
individually or in the aggregate, is reasonably likely to impair or delay in any
material respect Rollover Holdco’s ability to perform

 

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its obligations under this Agreement and the other Transaction Documents to
which it is or will be a party or to consummate the Transactions. Rollover
Holdco has not, and none of its Affiliates have, made an assignment or transfer
of any of the Released Claims.

(k) Except for Moelis & Company and Houlihan Lokey, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of Rollover Holdco that is entitled to any fee or
commission from Rollover Holdco, any Acquired Entity or any of its Subsidiaries
in connection with this Agreement or the Transactions based upon arrangements
made by or on behalf of Rollover Holdco (any amounts due to Moelis & Company or
Houlihan Lokey in connection with this Agreement or the Transactions will be
Transaction Expenses (to the extent not paid prior to the Closing) and will be
paid off at or prior to the Closing).

Section 3.13. Exclusivity of Representations and Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3, ARTICLE 4 AND
ARTICLE 5 (EACH, AS QUALIFIED BY THE DISCLOSURE SCHEDULE) AND ANY
REPRESENTATIONS CONTAINED IN ANY MEMBER’S LETTER OF TRANSMITTAL (WHICH
REPRESENTATIONS AND WARRANTIES IN ANY MEMBER’S LETTER OF TRANSMITTAL ARE MADE
SOLELY BY AND WITH RESPECT TO SUCH MEMBER ONLY) (COLLECTIVELY, THE “ACQUIRED
ENTITY REPRESENTATIONS”), AND WITH THE EXCEPTION OF FRAUD, NONE OF THE ACQUIRED
ENTITIES, ANY ROLLOVER HOLDCO MEMBER, ANY MEMBER, ANY MANAGER NOR ANY OTHER
PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, AT LAW OR IN EQUITY (INCLUDING (X) AS TO THE ACCURACY OR COMPLETENESS
OF ANY CONFIDENTIAL INFORMATION MEMORANDUM, DOCUMENTS, PROJECTIONS, MATERIALS OR
OTHER INFORMATION (FINANCIAL OR OTHERWISE) REGARDING ANY GROUP ENTITY OR ANY OF
ITS SUBSIDIARIES FURNISHED TO PARENT OR ITS REPRESENTATIVES OR MADE AVAILABLE TO
PARENT OR ITS REPRESENTATIVES IN ANY “DATA ROOMS”, “VIRTUAL DATA ROOMS”,
MANAGEMENT PRESENTATIONS OR IN ANY OTHER FORM IN EXPECTATION OF, OR IN
CONNECTION WITH, THE TRANSACTIONS OR (Y) WITH RESPECT TO THE MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OF ANY ASSETS, THE NATURE OR EXTENT OF ANY
LIABILITIES, THE PROSPECTS OF ANY OF THE ACQUIRED ENTITIES, THEIR SUBSIDIARIES
OR THEIR RESPECTIVE BUSINESSES, OR THE EFFECTIVENESS OR SUCCESS OF ANY OF THEIR
OPERATIONS). EXCEPT FOR THE ACQUIRED ENTITY REPRESENTATIONS, AND WITH THE
EXCEPTION OF FRAUD, EACH ACQUIRED ENTITY HEREBY DISCLAIMS ALL LIABILITY AND
RESPONSIBILITY FOR ANY PROJECTIONS, FORECASTS OR OTHER ESTIMATES, PLANS OR
BUDGETS OF FUTURE REVENUES, EXPENSES OR EXPENDITURES, FUTURE RESULTS OF
OPERATIONS (OR ANY COMPONENT THEREOF), FUTURE CASH FLOWS (OR ANY COMPONENT
THEREOF) OR FUTURE FINANCIAL CONDITION (OR ANY COMPONENT THEREOF) OF ANY
ACQUIRED ENTITY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR THE FUTURE BUSINESS,
OPERATIONS OR AFFAIRS OF ANY ACQUIRED ENTITY OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES HERETOFORE OR HEREAFTER DELIVERED TO OR MADE AVAILABLE TO PARENT,
PARENT MERGER SUB OR THEIR RESPECTIVE REPRESENTATIVES OR AFFILIATES.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES AS TO THE ACQUIRED ENTITIES

Except as set forth in the Disclosure Schedule (in accordance with
Section 14.04), the Group Entities, jointly and severally and the Members,
severally and not jointly (subject to the last sentence of Section 12.03(e)),
represent and warrant to Parent and Parent Merger Sub, that:

Section 4.01. Existence and Power.

(a) Each Acquired Entity (a) identified on Schedule 4.01(a) of the Disclosure
Schedule is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware, (b) identified on
Schedule 4.01(b) of the Disclosure Schedule is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
New York, (c) identified on Schedule 4.01(c) of the Disclosure Schedule is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of California, and (d) has all limited liability
company power and authority required to carry on its business as now conducted,
and to own, lease and use its properties and assets, and to perform all its
obligations under any Contract to which it is a party or by which it, or any of
the assets or properties owned or used by it, is or could become bound. Each
Acquired Entity is duly qualified to do business as a foreign limited liability
company and in good standing in each jurisdiction listed on Schedule 4.01(e) of
the Disclosure Schedule, which jurisdictions are the only jurisdictions where
such qualification is necessary, except for those jurisdictions where failure to
be so qualified has not had and is not reasonably likely to have, individually
or in the aggregate, a Group Material Adverse Effect. Each of the New Entities
was formed solely for the purpose of engaging in the Restructuring and the
Transactions, has not engaged in any other business activities other than in
connection with its formation, the Restructuring or the other Transactions, and
does not have any Liabilities (other than de minimis Liabilities incident to its
formation, or in the case of Holdings, Liabilities under the Transaction
Documents). Each Acquired Entity has prior to the date of this Agreement
furnished to Parent a true, complete and correct copy of (x) the LLC Agreement
(and any other Organizational Documents with different names, if applicable),
(y) any Side Letters, and (z) the Wholly-Owned Operating Agreement, in each case
of clauses (x), (y) and (z), for each Acquired Entity or Subsidiary of an
Acquired Entity. The Wholly-Owned Operating Agreements are in full force and
effect.

(b) Each Acquired Entity has the requisite power and authority to execute and
deliver this Agreement (if such Acquired Entity is a party to this Agreement)
and the other Transaction Documents to which such Acquired Entity is or will be
a party, to perform such Acquired Entity’s obligations hereunder and thereunder,
and to consummate the Transactions.

Section 4.02. Authorization. The execution, delivery and performance by each
Acquired Entity of this Agreement (if such Acquired Entity is a party to this
Agreement)

 

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and the other Transaction Documents to which it is or will be a party, and the
consummation by such Acquired Entity of the Transactions, have been duly
authorized by all necessary limited liability company action on the part of such
Acquired Entity (including the Acquired Entity Member Approvals), and no other
limited liability company proceedings on the part of such Acquired Entity or any
holder of its Equity Interests are necessary to authorize the execution,
delivery and performance by such Acquired Entity of this Agreement and the other
Transaction Documents to which such Acquired Entity is or will be a party or for
such Acquired Entity to consummate the Transactions. This Agreement (if such
Acquired Entity is a party to this Agreement) and the other Transaction
Documents to which such Acquired Entity is a party have been (or, in the case of
other Transaction Documents that will be executed and delivered by such Acquired
Entity after the date of this Agreement, such other Transaction Documents will,
when executed and delivered by such Acquired Entity, have been), duly and
validly executed and delivered by each Acquired Entity. This Agreement (if such
Acquired Entity is a party to this Agreement) and the other Transaction
Documents to which such Acquired Entity is a party constitute (or, in the case
of other Transaction Documents that will be executed and delivered by such
Acquired Entity after the date of this Agreement, such other Transaction
Documents will, when executed and delivered by such Acquired Entity, constitute)
the legal, valid and binding agreement of each Acquired Entity, enforceable
against it in accordance with their respective terms, except for Enforceability
Exceptions.

Section 4.03. Governmental Authorization. The execution, delivery and
performance by each Acquired Entity of this Agreement (if such Acquired Entity
is a party to this Agreement) and the other Transaction Documents to which it is
or will be a party, and the consummation by each Acquired Entity of the
Transactions, requires no action by or in respect of, or filing with, any
Governmental Authority other than (i)(a) the filing of a certificate of merger
with respect to the Merger with the Delaware Secretary of State and (b) the
filings of certificates of merger of certain of the Acquired Entities in
connection with the Restructuring with the Delaware Secretary of State, New York
Secretary of State or California Secretary of State, as applicable (which such
filings were made in connection with the Restructuring); (ii) compliance with
any applicable requirements of the HSR Act (which such requirements have been
fulfilled as of the date hereof); and (iii) any actions or filings the absence
of which would not, individually or in the aggregate, (x) reasonably be expected
to impair or delay in any material respect such Acquired Entity’s ability to
perform its obligations under this Agreement and the other Transaction Documents
to which it is or will be a party or to consummate the Transactions or (y) be
Material.

Section 4.04. Non-contravention. The execution, delivery and performance by each
Acquired Entity and each Management Seller of this Agreement (if such Acquired
Entity is a party to this Agreement) and the other Transaction Documents to
which it is or will be a party and the consummation of the Transactions do not
and will not (i) contravene, conflict with, or result in any violation or breach
of any provision of any Organizational Documents of any Acquired Entity or any
of its Subsidiaries, (ii) other than with respect to compliance with any
applicable requirements of the HSR Act (which such requirements have been
fulfilled as of the date hereof) and any liquor licenses set forth on
Schedule 4.22 of the Disclosure Schedule, contravene, conflict with or result in
a violation or breach of, or give any Governmental Authority or other Person the
right to exercise any remedy or obtain relief under,

 

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any provision of any Applicable Law or Order to which any Acquired Entity or any
of its Subsidiaries, or any of the properties or assets owned or used by any
Acquired Entity or any of its Subsidiaries, is subject, (iii) contravene,
conflict with, violate or result in the loss of any benefit to which any
Acquired Entity or any of its Subsidiaries is entitled under, or give any
Governmental Authority the right to revoke, suspend, cancel, terminate, or
modify, any Permit or liquor license held by any Acquired Entity or any of its
Subsidiaries, (iv) require any consent, waiver, notice or other action by any
Person under, constitute a default under, conflict with, result in a breach of,
or cause or permit the termination, modification, revocation, cancellation, or
acceleration of, or result in any other change of any right or obligation or the
loss of any benefit to which any Acquired Entity or any of its Subsidiaries is
entitled under, any provision of any Material Contract binding upon any of the
Acquired Entities or any of their Subsidiaries or any of their assets,
(v) result in the creation or imposition of any Lien on any asset of any
Acquired Entity or any of its Subsidiaries, or (vi) with the passage of time,
the giving of notice or the taking of any action by another Person, have any of
the effects described in clauses (i) through (v) of this Section 4.04, with only
such exceptions in the case of clauses (iii), (iv), (v) and (vi) as,
individually or in the aggregate, (x) do not and are not reasonably likely to
impair or delay in any material respect the ability of such Acquired Entity to
perform its obligations under this Agreement (if such Acquired Entity is a party
to this Agreement) and the other Transaction Documents to which it is or will be
a party or to consummate the Transactions or (y) that are otherwise not
Material.

Section 4.05. Capitalization; Ownership of Equity Interests.

(a) Prior to the date of this Agreement, the Restructuring was effected in
accordance with the Restructuring Agreement. As of immediately prior to the
Restructuring, (i) the issued and outstanding Group Entity Interests with
respect to each Group Entity and its owners of record were as set forth on
Schedule 4.05(a) of the Disclosure Schedule (other than such failures to be true
and correct that, individually or in the aggregate, are de minimis in nature)
and (ii) except as set forth on Schedule 4.05(a) of the Disclosure Schedule, no
Group Entity held any authorized, designated, issued or outstanding Equity
Interests, and other than as expressly provided in the applicable LLC Agreement
or Side Letter of such Group Entity referenced in Schedule 4.05(a) of the
Disclosure Schedule (each of which were extinguished upon the consummation of
the Restructuring and replaced with a Wholly-Owned Operating Agreement) or the
replacement Wholly-Owned Operating Agreements entered into in connection with
the Restructuring (with true, complete and correct copies of the forms of such
Organizational Documents having been furnished to Parent prior to the date of
this Agreement), there are no outstanding or authorized options, warrants,
convertible or exchangeable securities, Contracts, subscriptions, rights, calls,
commitments, agreements or understandings of any character whatsoever, fixed or
contingent, to which any Group Entity or any of its Subsidiaries are a party
that directly or indirectly (1) require or call for the issuance, redemption,
delivery, sale, pledge or other disposition of any Equity Interests of any Group
Entity, or any securities convertible into, or other rights to acquire, any
Equity Interests of any Group Entity, (2) obligate any Group Entity to grant,
offer or enter into any of the foregoing, or (3) relate to the voting, transfer,
ownership or control of the Equity Interests of any Group Entity.

 

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(b) All of the Group Entity Interests of each Group Entity have been duly
authorized and validly issued and are fully-paid and non-assessable with no
Liability attaching to the ownership thereof (other than (i) as expressly
provided in the applicable LLC Agreement or Side Letter of such Group Entity
referenced in Schedule 4.05(b) of the Disclosure Schedule (each of which were
extinguished upon the consummation of the Restructuring and replaced with a
Wholly-Owned Operating Agreement) or (ii) to the extent such Liabilities are
solely owed by Members and not owed (directly or indirectly, including by
contribution claim) by any Acquired Entity or Subsidiary of an Acquired Entity
upon, at or after the consummation of the Closing) and have not been issued in
violation of any federal or state securities Laws or any other Applicable Law.
Other than as set forth in the applicable LLC Agreement or Side Letter of such
Group Entity referenced in Schedule 4.05(b) of the Disclosure Schedule (each of
which were extinguished upon the consummation of the Restructuring and replaced
with a Wholly-Owned Operating Agreement), there are no obligations (contingent
or otherwise) of any Group Entity or any Subsidiary of such Group Entity to
repurchase, redeem or otherwise acquire any Group Entity Interests of such Group
Entity or any such Subsidiary, or to vote or dispose of such Group Entity
Interests or the Equity Interests of any such Group Entity. Other than as
expressly provided in the applicable LLC Agreement or Side Letter of such Group
Entity referenced in Schedule 4.05(b) of the Disclosure Schedule (each of which
were extinguished upon the consummation of the Restructuring and replaced with a
Wholly-Owned Operating Agreement), none of the Group Entity Interests of any
Group Entity or any Equity Interests of a Subsidiary of a Group Entity were
issued in violation of, and none are subject to, any purchase option, call,
right of first refusal, preemptive, subscription, or other similar right. Except
as set forth on Schedule 4.05(b) of the Disclosure Schedule, there are no
declared or accrued but unpaid dividends or distributions with respect to the
Group Entity Interests or the Equity Interests of any such Group Entity.

(c) Other than as set forth on Schedule 4.05(c) of the Disclosure Schedule, no
Acquired Entity or Subsidiary of an Acquired Entity has created any “phantom
units,” unit appreciation rights or other similar rights, the value of which is
related to or based upon the price or value of any Equity Interests of the Group
Entities or any of their Subsidiaries.

(d) Other than as expressly provided in the applicable LLC Agreement or Side
Letter of such Group Entity referenced in Schedule 4.05(d) of the Disclosure
Schedule (each of which rights, Contracts, voting trusts or proxies were
extinguished upon the consummation of the Restructuring and replaced with a
Wholly-Owned Operating Agreement), no Acquired Entity or Subsidiary of an
Acquired Entity has granted to any Person the right to demand or request that
such Acquired Entity or Subsidiary effect a registration under the 1933 Act, of
any securities held by such Person or to include any securities of such Person
in any such registration by such Acquired Entity or Subsidiary, and there are
otherwise no Contracts, voting trusts or proxies with respect to the voting or
registration under the 1933 Act or any analogous Applicable Law, relating to any
Equity Interests of any Acquired Entity or Subsidiary of a Group Entity.

(e) (i) Prior to the Restructuring, all of the issued and outstanding Equity
Interests of Holdings were owned, of record and beneficially, by the Member
Representative, (ii) as of the date hereof, all of the issued and outstanding
Equity Interests of Holdings are owned, of record and beneficially, by the
Equityholders, in such amounts as set forth opposite such Equityholders’ names
on Annex D, and Holdings does not have any other authorized, designated,

 

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issued or outstanding Equity Interests, or other than as set forth in the LLC
Agreement of Holdings, any outstanding or authorized options, warrants,
convertible or exchangeable securities, Contracts, subscriptions, rights, calls,
commitments, agreements or understandings of any character whatsoever, fixed or
contingent, to which any Management Seller, Acquired Entity or any of its
Subsidiaries are a party that directly or indirectly (1) require or call for the
issuance, redemption, delivery, sale, pledge or other disposition of any Equity
Interests of Holdings, or any securities convertible into, or other rights to
acquire, any Equity Interests of Holdings, (2) obligate Holdings to grant, offer
or enter into any of the foregoing, or (3) relate to the voting, transfer,
ownership or control of the Equity Interests of Holdings, (iii) all of the
issued and outstanding Equity Interests of Intermediate Holdings are owned, of
record and beneficially, by Holdings, and Intermediate Holdings does not have
any other authorized, designated, issued or outstanding Equity Interests, or any
outstanding or authorized options, warrants, convertible or exchangeable
securities, Contracts, subscriptions, rights, calls, commitments, agreements or
understandings of any character whatsoever, fixed or contingent, that directly
or indirectly (1) require or call for the issuance, redemption, delivery, sale,
pledge or other disposition of any Equity Interests of Intermediate Holdings, or
any securities convertible into, or other rights to acquire, any Equity
Interests of Intermediate Holdings, (2) obligate Intermediate Holdings to grant,
offer or enter into any of the foregoing, or (3) relate to the voting, transfer,
ownership or control of the Equity Interests of Intermediate Holdings,
(iv) after giving effect to the Restructuring but immediately prior to the
consummation of the Closing, all of the issued and outstanding Equity Interests
of ManagementCo are owned, of record and beneficially, by Intermediate Holdings,
and ManagementCo does not have any other authorized, designated, issued or
outstanding Equity Interests, or other than as set forth in the LLC Agreement of
ManagementCo, any outstanding or authorized options, warrants, convertible or
exchangeable securities, Contracts, subscriptions, rights, calls, commitments,
agreements or understandings of any character whatsoever, fixed or contingent,
to which any Management Seller, Acquired Entity or any of its Subsidiaries are a
party that directly or indirectly (1) require or call for the issuance,
redemption, delivery, sale, pledge or other disposition of any Equity Interests
of ManagementCo, or any securities convertible into, or other rights to acquire,
any Equity Interests of ManagementCo, (2) obligate ManagementCo to grant, offer
or enter into any of the foregoing, or (3) relate to the voting, transfer,
ownership or control of the Equity Interests of ManagementCo, and (v) as of the
date hereof, (x) all of the issued and outstanding Equity Interests of each
Group Entity (including ManagementCo) are owned, of record and beneficially, by
Borrower, (y) no such Group Entity has any other authorized, designated, issued
or outstanding Equity Interests and (z) the Group Entity Interests with respect
to each Group Entity and its beneficial owners and owners of record outstanding
immediately prior to the Restructuring are no longer outstanding and were
converted into Holdings Pre-Closing Interests, and all other rights with respect
to the Group Entity Interests (including profits interests or other rights under
the applicable LLC Agreements or Side Letters) have all been extinguished
without any further force or effect or any Liability of any Acquired Entity or
any Subsidiary thereof with respect thereto.

(f) (i) all of the Equity Interests of each of the New Entities are (and all of
the Class A Holdings Interests and Redeemable Holdings Interests issued as of
the Effective Time will be) duly authorized and validly issued and fully-paid
and non-assessable with no Liability attaching to the ownership thereof (other
than as expressly provided in the LLC Agreement of such New Entity), and have
not (and all of the Class A Holdings Interests and Redeemable

 

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Holdings Interests issued as of the Effective Time will not have) been issued in
violation of any federal or state securities Laws or any other Applicable Law,
(ii) there are no outstanding obligations of any New Entity to repurchase,
redeem or otherwise acquire any Equity Interests of such New Entity or to vote
or dispose of such Equity Interests of such New Entity, (iii) none of the Equity
Interests of a New Entity have been (and all of the Class A Holdings Interests
and Redeemable Holdings Interests issued as of the Effective Time will not be)
issued in violation of, and none are subject to, any purchase option, call,
right of first refusal, preemptive, subscription, or other similar right, and
(iv) except as set forth on Schedule 4.05(f) of the Disclosure Schedule, there
are no declared or accrued but unpaid dividends or distributions with respect to
the Equity Interests of a New Entity.

(g) As of the date hereof, (i) all of the Equity Interests of the New Entities
are duly authorized and validly issued, fully-paid and non-assessable with no
Liability attaching to the ownership thereof (other than as expressly provided
in the LLC Agreement of such New Entity), and have not been issued in violation
of any federal or state securities Laws or any other Applicable Law, (ii) there
are no outstanding obligations of any New Entity to repurchase, redeem or
otherwise acquire any Equity Interests of such New Entity or to vote or dispose
of such Equity Interests of such New Entity, (iii) none of the Equity Interests
of a New Entity have been issued in violation of, and none are subject to, any
purchase option, call, right of first refusal, preemptive, subscription, or
other similar right, and (iv) except as set forth on Schedule 4.05(g) of the
Disclosure Schedule, there are no declared or accrued but unpaid dividends or
distributions with respect to the Equity Interests of a New Entity.

Section 4.06. Subsidiaries.

(a) Schedule 4.06(a)-1 of the Disclosure Schedule sets forth, with respect to
each Subsidiary of a Group Entity, (i) the name and jurisdiction of organization
of such Subsidiary, (ii) the number of Equity Interests of such Subsidiary which
are authorized, issued and outstanding, and (iii) the identity of each owner (of
record and beneficially) of the Equity Interests of such Subsidiary and the
number of Equity Interests held by each holder, and Schedule 4.06(a)-2 of the
Disclosure Schedule sets forth, with respect to each Subsidiary of an Acquired
Entity as of the date hereof, (i) the name and jurisdiction of organization of
such Subsidiary, (ii) the number of Equity Interests of such Subsidiary which
are authorized, issued and outstanding, and (iii) the identity of each owner (of
record and beneficially) of the Equity Interests of such Subsidiary and the
number of Equity Interests held by each holder. Each such Subsidiary has been
duly organized, is validly existing and (where applicable) is in good standing
under the laws of its jurisdiction of organization, has all limited liability
company power and authority and all Permits required to carry on its business as
now conducted, and to own, lease and use its properties and assets, and to
perform all its obligations under any Contract to which it is a party or by
which it, or any of the assets or properties owned or used by it, is bound. Each
such Subsidiary is duly qualified to do business as a foreign entity and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where failure to be so qualified has not had and is not
reasonably likely to have, individually or in the aggregate, a Group Material
Adverse Effect.

(b) Except as set forth on Schedule 4.06(b) of the Disclosure Schedule, all of
the outstanding Equity Interests in the Subsidiaries of each Acquired Entity
(with respect to each

 

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Acquired Entity, the “Acquired Entity Subsidiary Equity Interests”) are directly
or indirectly owned by such Acquired Entity, free and clear of any Lien and free
of any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests). Other than as expressly provided in the applicable LLC Agreement or
Side Letter of such Acquired Entity referenced in Schedule 4.06(b) of the
Disclosure Schedule (each of which obligations were extinguished upon the
consummation of the Restructuring and replaced with a Wholly-Owned Operating
Agreement), there are no outstanding obligations of such Acquired Entity or any
of its Subsidiaries or any other Person to repurchase, redeem or otherwise
acquire any of the Acquired Entity Subsidiary Equity Interests. (i) All of the
Acquired Entity Subsidiary Equity Interests have been duly authorized and
validly issued and are fully paid and non-assessable with no Liability attaching
to the ownership thereof and have not been issued in violation of any federal or
state securities Laws or any other Applicable Law or any preemptive or similar
right, (ii) there are no outstanding obligations of a Subsidiary of an Acquired
Entity to repurchase, redeem or otherwise acquire any Acquired Entity Subsidiary
Equity Interests or to vote or dispose of such Acquired Entity Subsidiary Equity
Interests, (iii) none of the Acquired Entity Subsidiary Equity Interests have
been issued in violation of, and none are subject to, any purchase option, call,
right of first refusal, preemptive, subscription, or other similar right, and
(iv) except as set forth on Schedule 4.06(b) of the Disclosure Schedule, there
are no declared or accrued but unpaid dividends or distributions with respect to
the Acquired Entity Subsidiary Equity Interests.

(c) Prior to the consummation of the Restructuring, (x) Holdings did not have
any Subsidiaries except for Intermediate Holdings, Borrower, ManagementCo and
certain limited liability companies to be merged with and into the Group
Entities in connection with the Restructuring (“Holdings Merger Subs”) and
(y) Intermediate Holdings did not have any Subsidiaries except for Borrower,
ManagementCo and the Holdings Merger Subs. As of the date hereof, (i) Holdings
does not have any Subsidiaries except for Intermediate Holdings, Borrower, the
Group Entities, ManagementCo and the entities set forth on Schedule 4.06(a)-1,
(ii) Intermediate Holdings does not have any Subsidiaries except for Borrower,
the Group Entities, ManagementCo and the entities set forth on
Schedule 4.06(a)-1, and (iii) ManagementCo does not have any Subsidiaries other
than the ownership of any Equity Interests included in Management Assets.

(d) Other than (x) payments in the Ordinary Course of salary, bonuses or
reimbursement of expenses to the Equityholders that are employees of a New Venue
or (y) (A) management fees paid to certain Equityholders with respect to the New
Venues paid with respect to (and solely to the extent applicable to) periods
prior to January 1, 2017, and (B) management fees paid to certain Equityholders
with respect to the New Venues paid with respect to (and solely to the extent
applicable to) periods on or following January 1, 2017, in each case of clauses
(x) and (y) as listed on Schedule 1.01-F of the Disclosure Schedule, (i) no New
Venue has declared or paid any dividends or distributions or any other direct or
indirect payment of any kind with respect to the Equity Interests of any such
New Venue (or otherwise to any Equityholder of a New Venue), and (ii) as of the
date of this Agreement, no New Venue is required to declare or pay any such
dividends, distributions or other payments to any Equityholder (except for the
Vandal Note).

 

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Section 4.07. Financial Statements.

(a) The Management Sellers have made available to Parent (i) the audited
combined balance sheets of the Group Entities and their Subsidiaries set forth
on Schedule 4.07(i) of the Disclosure Schedule for the fiscal years ended
December 28, 2014 and December 27, 2015, and the related audited combined
statements of income, members’ equity and cash flows for the fiscal years ended
on such dates, together with the notes thereto, in each case examined by and
accompanied by the report of EisnerAmper, independent certified public
accountants (the “Group Audited Financial Statements”), and (ii) the unaudited
combined balance sheet of the Group Entities and their Subsidiaries (the “Group
Balance Sheet”) set forth on Schedule 4.07(ii) of the Disclosure Schedule as of
December 25, 2016 (the “Balance Sheet Date”), and the related unaudited combined
statements of income, members’ equity and cash flows of the Group Entities and
their Subsidiaries for the twelve-month period ended on such date (the “Group
Interim Financial Statements” and, together with the Group Audited Financial
Statements, the “Group Entity Financial Statements”). The Group Audited
Financial Statements fairly present in all material respects, in conformity with
GAAP consistently applied during such periods (except as set forth in the notes
thereto), the combined financial position of the Group Entities set forth on
Schedule 4.07(i) of the Disclosure Schedule and their combined Subsidiaries as
of the dates thereof and their combined results of operations, members’ equity
and cash flows for the periods then ended. The Group Audited Financial
Statements for the fiscal year ended December 27, 2015 were prepared in
compliance with the applicable requirements of Regulation S-X of the 1933 Act.
The Group Interim Financial Statements fairly present in all material respects,
in conformity with GAAP, the combined financial position of the Group Entities
and their Subsidiaries as of the dates thereof and their combined results of
operations, members’ equity and cash flows for the periods then ended (subject
to the absence of footnotes and normal and recurring year-end audit adjustments
that would not, individually or in the aggregate, be material to the business,
financial condition or operating results of the Group Entities and their
Subsidiaries). No financial statements of any Person other than the Group
Entities are required by GAAP to be included or reflected in the Group Entity
Financial Statements. The Group Entity Financial Statements are derived from the
books and records of the Group Entities and their Subsidiaries in all material
respects. The Group Entities have delivered to Parent copies of all letters from
the auditors of the Group Entities to the boards of managers thereof since
December 31, 2014, together with copies of all responses thereto.

(b) Each Group Entity and its Subsidiaries maintains, to the Acquired Entities’
Knowledge, a system of internal controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(c) No Acquired Entity or any of its Subsidiaries, nor, to the Knowledge of the
Acquired Entities, any director, manager, officer, employee, auditor, accountant
or representative thereof, has received or otherwise had or obtained Knowledge
of any complaint, allegation, assertion or claim, whether written or oral,
regarding improper accounting or auditing

 

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practices, procedures, methodologies or methods, or improper internal accounting
controls, of such Acquired Entity or any of its Subsidiaries, including any
complaint, allegation, assertion or claim that such Acquired Entity or any of
its Subsidiaries has engaged in questionable accounting or auditing practices or
fraud. To the Acquired Entities’ Knowledge, no attorney representing any
Acquired Entity or any of its Subsidiaries, whether or not employed by such
Acquired Entity or any of its Subsidiaries, has reported a violation of
securities laws, breach of fiduciary duty or similar violation by such Acquired
Entity or any of its Subsidiaries or any of the officers, directors, managers,
employees or agents to the board of managers of such Acquired Entity or any of
its Subsidiaries or any committee of the foregoing. To the Acquired Entities’
Knowledge, no manager, director or officer, including the chief financial
officer (or another officer acting in a similar capacity) of an Acquired Entity
or any Subsidiary of an Acquired Entity has been involved in or accused of fraud
involving the business of an Acquired Entity or any Subsidiary of an Acquired
Entity regardless of materiality.

(d) No Acquired Entity is subject to any “off-balance sheet arrangement” (as
defined in Item 303(a)(4)(ii) of Regulation S-K under the 1933 Act).

Section 4.08. Absence of Certain Changes. Since the Balance Sheet Date, the
business of each Acquired Entity and its respective Subsidiaries has been
conducted in the Ordinary Course and there has not been:

(a) any event, occurrence, development, or state of circumstance or facts which
has had or is reasonably likely to have, individually or in the aggregate, a
Group Material Adverse Effect;

(b) any damage, destruction or loss (whether or not covered by insurance)
affecting the business or assets of the Acquired Entities or any of their
Subsidiaries which has had or is reasonably likely to have, individually or in
the aggregate, a Group Material Adverse Effect;

(c) any acquisition (by merger, consolidation, acquisition of stock or assets or
otherwise), directly or indirectly, of any material amount of assets,
securities, properties, interests or businesses, other than pursuant to
(i) existing Contracts, including regarding the development of new venues, in
each case as set forth on Schedule 4.08(c) of the Disclosure Schedule or
(ii) purchases of inventory or supplies in the Ordinary Course;

(d) any sale, transfer, license or exploitation, or other disposition of, or
permitting of the incurrence of, any Lien (other than a Permitted Lien) on any
of its material assets, securities (including Equity Interests), properties
(including any restaurant brand or any other material Intellectual Property),
interests or businesses, other than (i) pursuant to existing Contracts set forth
on Schedule 4.08(d) of the Disclosure Schedule, (ii) sales of inventory in the
Ordinary Course, or (iii) non-exclusive licenses or licenses solely between
Acquired Entities and/or their Subsidiaries of Acquired Entity Business IP
Rights in the Ordinary Course;

(e) other than in connection with actions permitted by Section 4.08(c), any
loans, advances or capital contributions to, or investments in, any other Person
(other than such Acquired Entity or any of its Subsidiaries), except advances
for travel and other normal business expenses to officers, employees and
managers in the Ordinary Course that do not individually or in the aggregate
exceed $200,000;

 

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(f) any (i) increase in the rate or terms of compensation or benefits of any of
its employees, directors, officers, managers or members, (ii) payment or
agreement to pay any new pension, retirement allowance or other employee benefit
to any director, officer, employee, manager or member whether past or present or
(iii) entrance into, adoption or amendment in any material respect any
employment, bonus, severance or retirement contract or adopt any employee
benefit plan, except, in the case of each of clauses (i) through (iii), (A) in
the Ordinary Course (including in connection with new hires, promotions or other
changes in job status in the Ordinary Course), (B) as pursuant to any existing
Employee Plan, (C) to avoid the imposition of any Tax or to comply with any
Tax-qualification requirements or (D) for immaterial changes to Employee Plans
available to all employees generally;

(g) any (i) change in any material respect in any Acquired Entity’s or any of
its Subsidiaries’ methods of accounting or accounting practice or (ii) making or
changing of any material Tax elections except for any such change required by
reason of a change in GAAP or Applicable Law;

(h) any (i) settlement, or offer or proposal to settle, (x) any Proceeding
(including any Proceedings referred to in Section 4.10(a)(xv)) subjecting any of
the Acquired Entities or their Subsidiaries to injunctive or other equitable
relief, or claims involving or against such Acquired Entity or any of its
Subsidiaries or involving more than $100,000 in the aggregate, or (y) any
Proceeding or dispute that relates to the Transactions, or (ii) release, waiver
or compromise of any Proceedings against any Third Party involving more than
$100,000 in the aggregate;

(i) any incurrence of any Indebtedness (including any assumption or guarantee
thereof) other than Indebtedness for borrowed money that was incurred under an
instrument that was required to be, and was (or is concurrently herewith),
repaid in full at or prior to the consummation of the Closing;

(j) any making or authorization of, or other commitment to, any capital
expenditure not reflected on Schedule 4.08(j) of the Disclosure Schedule;

(k) any adoption or effecting of any plan or agreement of complete or partial
liquidation, dissolution, consolidation, merger, restructuring, recapitalization
or other reorganization, or other liquidation, wind up or dissolution, except
pursuant to the Restructuring; or

(l) agreement, resolution or commitment (by Contract or otherwise) to do any of
the foregoing.

Section 4.09. No Undisclosed Liabilities. There are no liabilities or
obligations of, and there is no existing condition, situation or set of
circumstances which is reasonably likely to result in any liabilities or
obligations of any Acquired Entity or any Subsidiary of an Acquired Entity,
other than: (a) liabilities or obligations reflected in the Group

 

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Balance Sheet or in the notes thereto; (b) current liabilities incurred in the
Ordinary Course since the Balance Sheet Date; (c) liabilities or obligations
arising under the terms of (but not (with or without notice or lapse of time or
both) from any breach or default under) the Material Contracts; (d) liabilities
or obligations incurred in connection with the Transactions pursuant to the
terms of (but not (with or without notice or lapse of time or both) from any
breach or default under) the Transaction Documents; (e) liabilities or
obligations specified in Schedule 4.09 of the Disclosure Schedule; and (f) other
liabilities or obligations of the Acquired Entities and their respective
Subsidiaries that in the aggregate do not exceed $350,000.

Section 4.10. Material Contracts.

(a) Schedule 4.10 of the Disclosure Schedule sets forth a true, complete and
correct list of each Material Contract that is in effect as of the date of this
Agreement. Prior to the date of this Agreement, Group Entities have furnished to
Parent a true, complete and correct copy of all written Material Contracts (and
all prior versions of any privacy policies of the Acquired Entities and their
respective Subsidiaries), together with all amendments, waivers or other changes
thereto, and correct and complete written summaries of all Material Contracts
that are unwritten. For purposes of this Agreement, “Material Contracts” means
any of the following Acquired Entity Contracts:

(i) (x) any lease for personal property providing for annual rentals of $75,000
or more; and (y) any lease, sublease, license, ground lease or other occupancy
arrangement, (each, a “Real Property Lease”) under which an Acquired Entity or
any of its Subsidiaries leases, subleases, licenses or occupies any real
property (the “Leased Real Property”) together with any subleases, guaranties,
related Acquired Entity Contracts and assignments thereof;

(ii) any Contract or group of related Contracts for the purchase of materials,
supplies, goods, services, equipment or other assets or properties providing for
either (x) annual payments by an Acquired Entity and the Subsidiaries of such
Acquired Entity of $150,000 or more or (y) aggregate payments by an Acquired
Entity and the Subsidiaries of such Acquired Entity of $200,000 or more, in each
case that cannot be terminated by such Acquired Entity or any Subsidiary of such
Acquired Entity on 90 days’ (or less) notice without (A) payment of any penalty
(or withholding of any payment that would otherwise be due to an Acquired Entity
or a Subsidiary thereof), (B) incurrence of other Liability (in the case of
clauses (A) and (B), other than penalties or Liabilities that are, individually
and in the aggregate, de minimis), or (C) a material adverse impact on the
business of such Acquired Entity or Subsidiary of such Acquired Entity taking
into account the ability of such Acquired Entity or Subsidiary of such Acquired
Entity to enter into a comparable replacement contract;

(iii) any Contract or group of related Contracts for the sale, license or lease
(as lessor) by an Acquired Entity or any of its Subsidiaries of services,
materials, products, supplies or other assets or properties (including Equity
Interests) owned, licensed or leased by such Acquired Entity or any of its
Subsidiaries, that provides for (x) aggregate annual payments to such Acquired
Entity and the Subsidiaries of such Acquired Entity for $150,000 or more or
(y) aggregate payments to such Acquired Entity

 

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and the Subsidiaries of such Acquired Entity of $200,000 or more, in each case
that cannot be terminated by such Acquired Entity or any Subsidiary of such
Acquired Entity on 90 days’ (or less) notice without (A) payment of any penalty
(or withholding of any payment that would otherwise be due to an Acquired Entity
or a Subsidiary thereof), (B) obligation of performance or incurrence of other
Liability (in the case of clauses (A) and (B), other than penalties or
Liabilities that are, individually and in the aggregate, de minimis), or (C) a
material adverse impact on the business of such Acquired Entity or Subsidiary of
such Acquired Entity taking into account the ability of such Acquired Entity or
Subsidiary of such Acquired Entity to enter into a comparable replacement
contract;

(iv) (x) any Contract to which any Acquired Entity or any Subsidiary of an
Acquired Entity is a party and pursuant to which any Third Party is (A) granted
any right to use any Acquired Entity Owned IP Right in any material respect or
(B) authorized to use any Acquired Entity Owned IP Right exclusively, (y) any
Contract to which any Acquired Entity or any Subsidiary of an Acquired Entity is
a party and pursuant to which such Acquired Entity or Subsidiary of such
Acquired Entity is (A) authorized to use any material Acquired Entity Licensed
IP Rights (other than any COTS License) or (B) authorized to use any Acquired
Entity Licensed IP Rights exclusively; and (z) any Contract to which any
Acquired Entity or any Subsidiary of an Acquired Entity is a party and pursuant
to which such Acquired Entity or Subsidiary of such Acquired Entity (A) licenses
or otherwise provides any of its material Acquired Entity Business IP Rights to
any other Acquired Entity, any Subsidiary of an Acquired Entity or any of their
Affiliates or (B) licenses or otherwise provides any of its Acquired Entity
Business IP Rights on an exclusive basis to any other Acquired Entity, any
Subsidiary of an Acquired Entity or any of their Affiliates;

(v) any partnership, joint venture or other similar Contract, or any Contract
that relates to the ownership of, investment in or loans and advances to any
Person (other than advances to employees in the Ordinary Course), including
minority equity investments but for the avoidance of doubt excluding commercial
partnerships that do not involve equity;

(vi) (x) any Contract relating to the acquisition or disposition of any
business, directly or indirectly (whether by merger, sale of stock, sale of
assets or otherwise), (A) for consideration in excess of $75,000, or (B) with
respect to the proposed venues listed on Schedule 4.08(c) of the Disclosure
Schedule, (y) any Contract (other than Contracts that have been fully performed)
related to the construction and/or renovation of any new or existing venue in
excess of $75,000, or (z) any confidentiality or non-disclosure Contracts
entered into in connection with the proposed sale of some or all the Acquired
Entities (other than with Parent or any Affiliate of Parent) (“Proposal NDAs”);
provided that the Acquired Entities may redact information with respect to the
counterparty to a Proposal NDA (and not provide the name of the counterparty in
the Disclosure Schedule) to the extent required by the terms of such Proposal
NDA, with unredacted copies to be provided at Closing;

 

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(vii) any Contract with an (x) advertiser or sponsor (or similar party) or
(y) promoter, in either case, reasonably anticipated to involve annual payments
in excess of $75,000 for any such Contract or $100,000 for any group of related
Contracts, in each case of clauses (x) and (y) that cannot be terminated by such
Acquired Entity or any Subsidiary of such Acquired Entity on 90 days’ (or less)
notice without (A) payment of any penalty (or withholding of any payment that
would otherwise be due to an Acquired Entity or a Subsidiary thereof), (B)
incurrence of other Liability (in the case of clauses (A) and (B), other than
penalties or Liabilities that are, individually and in the aggregate, de
minimis), or (C) a material adverse impact on the business of such Acquired
Entity or Subsidiary of such Acquired Entity taking into account the ability of
such Acquired Entity or Subsidiary of such Acquired Entity to enter into a
comparable replacement contract;

(viii) any Contract relating to Indebtedness;

(ix) any Contract (A) containing non-competition, non-solicitation (other than
in the Ordinary Course non-solicitation obligations that would not be binding on
Parent or any of its Affiliates (other than Holdings or its Subsidiaries)) or
other limitations restricting any Acquired Entity or any of their Subsidiaries
(or, after the Closing, Parent or any of its Affiliates) or any of their
respective properties or assets, from conducting any business (including
investing in, opening or operating any type of restaurant, bar or nightlife
venue in any location, of any theme or at any time (or with respect to
properties or assets, from being used in connection with the opening or
operation of such a venue of the applicable Acquired Entity or Subsidiary
thereof) or requiring any such opportunity to first be provided to any third
party), or that limits the freedom of an Acquired Entity or any Subsidiary of
such Acquired Entity, or any Management Seller (or, after the Closing, Parent or
any of its Affiliates), to compete at any time and in any manner in any line of
business, or with any Person, in any area in the world, (B) that grants to the
other party or any third party “most favored nation” status, has terms that
extend for more than two (2) years after Closing and cannot be terminated by
such Acquired Entity or any Subsidiary of such Acquired Entity on 90 days’ (or
less) notice without (I) payment of any penalty (or withholding of any payment
that would otherwise be due to an Acquired Entity or a Subsidiary thereof), or
(II) incurrence of other Liability (in the case of clauses (I) and (II), other
than penalties or Liabilities that are, individually and in the aggregate, de
minimis), or (C) that grants to the other party or any Third Party any exclusive
right or rights (including any “requirements” or exclusive purchasing Contract)
or in which any third party grants any Acquired Entity or any of its
Subsidiaries any exclusive right or rights, has terms that extend for more than
two (2) years after Closing and cannot be terminated by such Acquired Entity or
any Subsidiary of such Acquired Entity on 90 days’ (or less) notice without
(1) payment of any penalty (or withholding of any payment that would otherwise
be due to an Acquired Entity or a Subsidiary thereof), or (2) incurrence of
other Liability (in the case of clauses (1) and (2), other than penalties or
Liabilities that are, individually and in the aggregate, de minimis);

(x) any Affiliate Contract (including each employment or independent contractor
agreement that is an Affiliate Contract) or other Contract with or among the
Members of an Acquired Entity or its Subsidiary or any of their respective
Affiliates,

 

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including any Contract that provides for preemptive rights or imposes any
limitation or restriction on the Equity Interests with respect to such Acquired
Entity, including to the Knowledge of the Acquired Entities, any restriction on
the right of a Member of such Acquired Entity (or Subsidiary thereof) to vote,
sell or otherwise dispose of such Equity Interests including, for the avoidance
of doubt, the LLC Agreement and any Side Letters of such Acquired Entity (or
Subsidiary thereof);

(xi) other than the LLC Agreements or any Side Letters listed under clause
(x) above, any Contract that grants a right of first refusal, right of first
negotiation or similar rights to any Person with respect to the sale of the
Equity Interests or assets of any Acquired Entity or any Subsidiary of an
Acquired Entity;

(xii) any Contract granting any Person a material Lien (other than a Permitted
Lien) on any of the properties or assets of any Acquired Entity or any of its
Subsidiaries, tangible or intangible;

(xiii) any collective bargaining agreement or similar Contract with any unions,
guilds, shop committees or other collective bargaining groups;

(xiv) any Contract to which any Acquired Entity or any Subsidiary of an Acquired
Entity is a party that involves (A) the development, creation or modification of
any material Acquired Entity Business IP Rights or (B) the administration,
hosting, processing or storage of Acquired Entity Business IP Rights consisting
of Personal Data in any material respect;

(xv) any Contract that relates to the settlement of any Proceeding involving any
Acquired Entity or any of its Subsidiaries (A) that obligates any Acquired
Entity or any of its Subsidiaries to pay an amount in excess of $75,000
(including amounts paid prior to the date hereof), (B) that does or will
materially restrict the operations of any Acquired Entity or any of its
Subsidiaries, or (C) that involves any injunction or equitable relief affecting
any Acquired Entity or any of its Subsidiaries or the assets and properties of
the foregoing, or with respect to which the conditions precedent to the
settlement thereof have not been satisfied;

(xvi) any Contract with any Governmental Authority that involves a dollar amount
in excess of $75,000; or

(xvii) other than the LLC Agreements or any Side Letters listed under clause
(x) above, any Contract granting any power of attorney with respect to the
affairs of any Acquired Entity.

(b) With such exceptions as, individually and in the aggregate, have not had and
are not reasonably likely to have, a Group Material Adverse Effect, (i) each
Acquired Entity Contract to which an Acquired Entity or any Subsidiary of an
Acquired Entity is a party is a valid and binding agreement of an Acquired
Entity or a Subsidiary of an Acquired Entity, as the case may be, and is in full
force and effect and is valid and binding on and enforceable against an Acquired
Entity or Subsidiary of an Acquired Entity, as the case may be, in accordance
with

 

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their terms and, to the Knowledge of the Acquired Entities, binding on and
enforceable against the other parties thereto in accordance with their terms,
(ii) neither any Acquired Entity, nor any Subsidiary of an Acquired Entity or,
to the Knowledge of the Acquired Entities, no other party thereto is in default
or breach under the terms of any Acquired Entity Contract, (iii) no event has
occurred that, with the giving of notice or the lapse of time or both, would
constitute a breach of, or default under, any Acquired Entity Contract, and
(iv) to the Knowledge of the Acquired Entities, as of the date hereof, there are
no unresolved disputes under any Acquired Entity Contracts other than disputes
in the Ordinary Course which, individually, are de minimis.

(c) The Acquired Entities and their Subsidiaries or their Representatives have
sent requests in writing (email to suffice) to their respective counterparties
to the Proposal NDAs in accordance with the Proposal NDAs to return or destroy
all confidential information provided under such Proposal NDAs (as applicable).

Section 4.11. Compliance with Laws and Court Orders. Each Acquired Entity and
each of its respective Subsidiaries is, and since December 31, 2013 (or, if
later, the date such Acquired Entity or its Subsidiaries began conducting its
business) has been, in compliance with all Applicable Laws, except for failures
to comply or violations that would not reasonably be expected to be,
individually or in the aggregate, Material.

Section 4.12. Litigation and Regulatory Actions. Except for normal restaurant or
nightclub inspections conducted by a Governmental Authority in the Ordinary
Course and the Proceedings set forth on Schedule 4.12 of the Disclosure
Schedule, there is not, and since December 31, 2013 there has not been, any
Proceeding pending against, or, to the Knowledge of the Acquired Entities,
threatened against or affecting, such Acquired Entity or any of its Subsidiaries
before (or, in the case of threatened Proceedings, would be before) or by any
Governmental Authority or arbitrator that would reasonably be expected to be,
individually or in the aggregate, Material. Except for normal restaurant or
nightclub inspections conducted by a Governmental Authority in the Ordinary
Course and the Proceedings set forth on Schedule 4.12 of the Disclosure
Schedule, no Acquired Entity and none of its Subsidiaries has received since
December 31, 2013 any notice, Order, complaint or other written communication
from any Governmental Authority that it is not in compliance with any Applicable
Law, or that it is subject to any obligation to undertake, or to bear all or any
portion of the cost of, any corrective or response action that would reasonably
be expected to be, individually or in the aggregate, Material. Neither any
Acquired Entity nor any Subsidiary of an Acquired Entity is, or since
December 31, 2013 has been, operating under or subject to any Order that would
reasonably be expected to be, individually or in the aggregate, Material.

Section 4.13. Properties.

(a) Except as would not reasonably be expected to be, individually or in the
aggregate, Material, each Acquired Entity and each of its Subsidiaries has good
and marketable title to, or valid leasehold interests in, all of the assets that
it purports to own, lease or license (including all material, tangible property
and assets reflected on the Group Balance Sheet or acquired after the Balance
Sheet Date), free and clear of all Liens (except for (i) Permitted Liens, or
(ii) assets that have been disposed of since the Balance Sheet Date in the
Ordinary Course.

 

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(b) To the Acquired Entities’ Knowledge, all of the tangible assets of any kind
or description owned or leased by each Acquired Entity and each of its
Subsidiaries, and all of the buildings, structures, improvements, fixtures,
building systems and equipment, and all components thereof, included in each of
the Leased Real Properties, are in operating condition (Ordinary Course wear and
tear and latent defects excepted).

(c) The assets owned or leased by each Acquired Entity and each of its
Subsidiaries constitute all the assets used in connection with the business of
such Acquired Entity and each of its Subsidiaries, except as would not
reasonably be expected to be, individually or in the aggregate, Material. Such
assets constitute all the assets necessary for each Acquired Entity and each of
its Subsidiaries to continue to conduct its business following the Closing as it
is currently being conducted, except as would not reasonably be expected to be,
individually or in the aggregate, Material.

(d) Neither the Acquired Entities nor any of their respective Subsidiaries owns
or has ever owned (including any predecessor entities of the Acquired Entities
or their respective Subsidiaries) any fee interest in real property.

(e) With respect to the Leased Real Property: (i) Schedule 4.13(e) of the
Disclosure Schedule sets forth a description of each parcel of Leased Real
Property (including the Real Property Lease to which it relates), identifying
the lessor and lessee thereof and the street address of such Leased Real
Property; and (ii) except for Permitted Liens, no Person other than an Acquired
Entity or its Subsidiary has the right to use any of the Leased Real Properties
and except as set forth on Schedule 4.13(e) of the Disclosure Schedule there are
no shared facilities or services at any of the Leased Real Properties (other
than shared facilities or services provided by a landlord at the Leased Real
Properties).

(f) Since January 1, 2015, no landlord of a Leased Real Property has provided
written notice, nor to the Acquired Entities’ Knowledge, provided oral notice,
that (i) it shall terminate, materially change the terms (whether related to
term, payment, price, discounts or otherwise) with respect to, or otherwise take
or not take any action that is reasonably likely to materially decrease the
value of the applicable Real Property Lease to the applicable Acquired Entity,
(ii) any condemnation, eminent domain or any other taking by a Governmental
Authority with or without payment of consideration therefor affecting any of the
Leased Real Properties is pending or is reasonably likely to occur, or (iii) any
zoning, building code, or other moratorium Proceeding, or similar matters which
are reasonably likely to materially adversely affect the ability to operate any
of the Leased Real Properties as currently operated by an Acquired Entity (or a
Subsidiary of such Acquired Entity), has occurred or is reasonably likely to
occur.

Section 4.14. Intellectual Property.

(a) Schedule 4.14(a) of the Disclosure Schedule contains an accurate and
complete list of all Registered Acquired Entity Owned IP Rights. All assignments
of the Registered Acquired Entity Owned IP Rights to each Acquired Entity or
Subsidiary of an Acquired Entity have been properly executed and recorded. All
issuance, renewal, maintenance and other filings and payments that are or have
become due with respect to the Registered Acquired Entity Owned IP Rights have
been timely made and paid by or on behalf of each Acquired Entity or Subsidiary
of an Acquired Entity.

 

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(b) The Acquired Entities and their Subsidiaries (i) are the sole and exclusive
owner of all right, title and interest in and to all Acquired Entity Owned IP
Rights, free and clear of all Liens other than Permitted Liens and (ii) possess
a valid and enforceable license or other right to use all other IP Rights used
in connection with the operation of the Acquired Entities’ and their respective
Subsidiaries’ respective businesses. None of the Acquired Entity Owned IP Rights
are subject to any claims of joint ownership and all actions necessary to
maintain and protect (x) the Acquired Entity Owned IP Rights (except as it
pertains to Registered Acquired Entity Owned IP Rights that any Acquired Entity
or any of Subsidiaries, in their reasonable business judgment, decided to permit
to lapse, be cancelled, or abandoned) and (y) the Acquired Entities’ rights in
respect of the Acquired Entity Licensed IP Rights, have been taken, including
payment of all applicable royalty, license, service and maintenance fees or
other applicable consideration.

(c) Except as set forth on Schedule 4.14(c) of the Disclosure Schedule, (i) none
of the Acquired Entity Owned IP Rights are or have been the subject of, any
written challenge, claim or counterclaim of invalidity or unenforceability,
opposition, cancellation, interference or other Proceeding determining,
challenging or contesting the ownership thereof, nor has any such Proceeding
been threatened in writing, or to the Acquired Entities’ Knowledge, orally, and
(ii) none of the Acquired Entities or any of their respective Subsidiaries have
taken or failed to take any action that has resulted in, or is reasonably likely
to result in, the abandonment or loss of any of the Acquired Entity Owned IP
Rights (including a failure to exercise adequate quality controls and an
assignment in gross without the accompanying goodwill).

(d) Except as set forth on Schedule 4.14(d) of the Disclosure Schedule, (i) none
of the Acquired Entities nor any of their respective Subsidiaries is a party to
or bound by any Contract that limits, restricts or impairs its ability to use,
sell, transfer, assign, license or convey, or that otherwise adversely affects,
any of the Acquired Entity Owned IP Rights and (ii) none of the Acquired Entity
Owned IP Rights are subject to, or have been the subject of, any Order or
agreement restricting the use thereof by the applicable Acquired Entity or any
Subsidiary or restricting the licensing thereof by such Acquired Entity or any
Subsidiary of such Acquired Entity to any Person.

(e) Neither the Acquired Entity Business IP Rights (other than Personal Data)
nor the conduct of the Acquired Entities’ respective businesses (including the
collection, protection, storage, processing, use and/or disclosure of Personal
Data in their respective businesses) infringes, misappropriates or otherwise
violates (or has in the past infringed, misappropriated or otherwise violated)
the IP Rights, proprietary rights, rights of privacy, publicity rights or
similar rights of any Person. Except as set forth on Schedule 4.14(e) of the
Disclosure Schedule, there is no Proceeding pending against, or written
complaint, claim or written notice or threat against, or to the Acquired
Entities’ Knowledge, orally threatened against, any Acquired Entity, any of its
Subsidiaries or any of their respective officers, directors or employees
(x) based upon, or challenging or seeking to deny or restrict, any Acquired
Entity or any of its Subsidiaries’ rights in and to the Acquired Entity Owned IP
Rights, (y) alleging that the use of the Acquired Entity Owned IP Rights
conflicts with, misappropriates, infringes or otherwise violates any IP Right of
any Person, or (z) concerning the ownership, validity, registerability,
enforceability or use of, or right to use, any Acquired Entity Owned IP Rights.

 

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(f) To the Acquired Entities’ Knowledge, no Person (including any current or
former employee or consultant of the Acquired Entities or any of their
Subsidiaries) is currently infringing, violating or misappropriating (or has in
the past infringed, misappropriated or otherwise violated) any Acquired Entity
Business IP Rights in any material respect.

(g) (i) The Acquired Entities have taken reasonable measures and implemented
reasonable procedures consistent with industry standards to maintain in
confidence all Confidential IP Rights; (ii) none of the Confidential IP Rights
have been disclosed other than to employees, representatives and agents of the
Acquired Entities all of whom are bound by written confidentiality and
assignment of IP Rights agreements, and (iii) there has not been, since
December 31, 2013 and, to the Acquired Entities’ Knowledge, during any time
prior thereto: (x) an unauthorized disclosure of any Proprietary Information in
the possession, custody or control of the Acquired Entities or any of their
respective Subsidiaries or (y) a breach of the Acquired Entities’ or any of
their respective Subsidiaries’ IT Systems whereby any Proprietary Information
constituting Acquired Entity Business IP Rights has been accessed by or
disclosed in an unauthorized manner to any Third Party. There is no Proceeding
relating to an improper use or disclosure of, or a breach in the security of,
any Proprietary Information in the possession, custody or control of the
Acquired Entities or any of their respective Subsidiaries pending against, or
written complaint, claim or written notice or threat against, or to the Acquired
Entities’ Knowledge, orally threatened against, any Acquired Entities or any of
their respective Subsidiaries.

(h) Each current and former employee of the Acquired Entities or any of their
respective Subsidiaries who works or worked in connection with the Acquired
Entities’ or any of their respective Subsidiaries’ respective businesses and
each current and former independent contractor of the Acquired Entities or any
of their respective Subsidiaries who provides or provided services to the
Acquired Entities’ or any of their respective Subsidiaries’ respective
businesses, in each instance, that was or is involved in the invention,
creation, development, design or modification of any material IP Rights has
executed a valid and binding written agreement expressly assigning to the
applicable Acquired Entity(ies) (or the applicable Subsidiary(ies) thereof) all
right, title and interest in and to all IP Rights invented, created, developed,
modified, conceived and/or reduced to practice during the term of such
employee’s employment or such independent contractor’s work for the Acquired
Entities or any of their respective Subsidiaries, and has waived all moral
rights therein to the extent legally permissible. All invention, creation,
development, design and modification of any material Acquired Entity Owned IP
Rights was undertaken by either current or former employees of the Acquired
Entities or their respective Subsidiaries who work or worked in the Acquired
Entities’ or any of their respective Subsidiaries’ respective businesses within
the scope of their employment or current or former independent contractors of
the Acquired Entities or their respective Subsidiaries who provide or provided
services to the Acquired Entities or their respective Subsidiaries within the
scope of their engagement.

(i) The IT Systems owned or used by the Acquired Entities or their respective
Subsidiaries in the conduct of Acquired Entities’ or any of their respective
Subsidiaries’

 

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respective businesses (i) are sufficient in all material respects for the
current operations and currently contemplated operations of the Acquired
Entities’ or any of their respective Subsidiaries’ respective businesses;
(ii) operate properly without any material defect, malfunction, unavailability
or error; and (iii) are reasonably secure against unauthorized access,
intrusion, tampering, impairment, disruption, computer virus or malfunction.

(j) The Acquired Entities and their respective Subsidiaries have at all times
complied with (i) card industry regulations and contractual requirements
applicable to their collection, protection, storage, processing, use and/or
disclosure of Personal Data, including (x) the Payment Card Industry Data
Security Standard (PCI-DSS) together with any related mandates, policies,
standards and guidelines applicable thereto, and (y) any similar certification
programs implemented by the major credit card companies governing the use,
disclosure, storage, transmission, privacy and/or security of Personal Data, and
(ii) all Privacy Agreements. Upon the consummation of the Closing, the Acquired
Entities and their respective Subsidiaries will continue to have the right to
use the Personal Data collected or obtained by such the Acquired Entities and
their respective Subsidiaries on substantially the same terms and conditions as
they enjoyed immediately prior to consummation of the Closing.

Section 4.15. Taxes.

(a) For U.S. federal income tax purposes, at all times since its respective
formation, each Acquired Entity and its Subsidiaries have been continuously
classified as a partnership or a disregarded entity.

(b) (i) All income and other material Acquired Entity Returns of each Acquired
Entity have been filed when due in accordance with Applicable Law (taking into
account all available extensions); (ii) all Acquired Entity Returns of such
Acquired Entity that have been filed were true, complete and correct; and
(iii) all Taxes shown as due and payable on any Acquired Entity Return or
otherwise any material amount of Taxes due from or owing by any Acquired Entity
or any of its Subsidiaries have been timely paid, or timely withheld and
remitted, to the appropriate Taxing Authority.

(c) (i) There is no Proceeding now pending or threatened in writing against any
Acquired Entity or any of its Subsidiaries in respect of any material amount of
Tax; and (ii) there are no pending requests for rulings or determinations or
closing agreements pending or in effect in respect of any Tax between any
Acquired Entity or any of its Subsidiaries and any Taxing Authority.

(d) There are no Liens for Taxes upon any assets of any Acquired Entity or any
of its Subsidiaries, other than Permitted Liens.

(e) No Acquired Entity nor any of its Subsidiaries is party to any Tax
allocation or sharing agreement or arrangement.

(f) Schedule 4.15(f) of the Disclosure Schedule contains a list of all
jurisdictions (whether foreign or domestic) in which each Acquired Entity or any
of its Subsidiaries currently files or has ever filed income, franchise and
similar Tax Returns.

 

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(g) Each Acquired Entity and its Subsidiaries have complied in all material
respects with all Applicable Laws relating to the payment and withholding of
Taxes and reporting of information (including any laws, rules and regulations
relating to amounts paid or owing to any stockholder, member, owner, employee,
creditor, independent contractor or other third party), and have, within the
time and in the manner prescribed by Applicable Law, withheld and paid over to
the proper Taxing Authorities all material amounts required to be so withheld
and paid over under Applicable Law.

(h) No Acquired Entity nor any of its Subsidiaries has participated (within the
meaning of Treasury Regulations Section 1.6011-4(c)(3)) in any “listed
transaction” within the meaning of Treasury Regulations Section 1.6011-4(b) (or
any predecessor regulation).

(i) Neither Holdings nor any of its Subsidiaries will be required to include in
a taxable period ending after the Closing Date any material amount of taxable
income as a result of any (i) adjustment under Section 481 of the Code resulting
from a change in method of accounting for a taxable period ending on or prior to
the Closing Date; (ii) installment sale or open transaction disposition made on
or prior to the Closing Date; (iii) election made pursuant to Section 108(i) of
the Code (or any corresponding or similar provision of state, local or non-U.S.
law) on or prior to the Closing Date; or (iv) deferred revenue received prior to
the Closing Date.

(j) The Acquired Entities and their respective Subsidiaries have no material
unpaid Liabilities due and owing pursuant to any unclaimed property and escheat
Laws.

(k) This Section 4.15, and Sections 4.08, 4.16 and 4.17 constitute the exclusive
representations and warranties of the Group Entities with respect to Taxes. No
representation or warranty contained in this Section 4.15 (other than Sections
4.15(a), (c) and (i)) shall be deemed to apply directly or indirectly with
respect to any taxable period (or portion thereof) after the Closing.

Section 4.16. Employee Benefit Plans.

(a) Schedule 4.16(a) of the Disclosure Schedule contains a true, complete and
correct list, separately by employing entity, of each material Employee Plan.
“Employee Plan” means each “employee benefit plan” (within the meaning of
Section 3(3) of ERISA); each equity or equity-based compensation (e.g., stock or
unit purchase or option), severance, employment, retention, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred compensation,
profit sharing, pension, retirement, group health, cafeteria, flexible spending,
dependent care, life insurance, disability, sick pay, vacation pay, holiday pay,
employee loan plan, agreement, program, policy or other arrangement; and all
other employee benefit plans, agreements, programs, policies or other
arrangements, in each case, whether or not subject to ERISA, under which any
present or former employee, director, manager or member of an Acquired Entity or
any of its Subsidiaries has any present or future right to benefits from an
Acquired Entity or any of its Subsidiaries or Affiliates or under which an
Acquired Entity or any of its Subsidiaries has any present or future Liability.
No Acquired Entity or any of its Subsidiaries or Affiliates has formally adopted
or authorized, nor to the Knowledge of the Acquired Entities, communicated to
present or former employees, any additional Employee Plan or any material change
(including termination) of any material existing Employee Plan. No Employee Plan
covers employees other than employees of an Acquired Entity or one of its
Subsidiaries.

 

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(b) With respect to each Employee Plan (other than any “multiemployer plan” as
defined in Section 3(37) of ERISA (a “Multiemployer Plan”)), the Management
Sellers have made available to Parent prior to the date of this Agreement a
true, complete and correct current copy (including all amendments) of the plan
document (or, to the extent no such copy exists, a description of the plan) and,
to the extent applicable: (i) any related trust agreement, insurance contract or
other funding vehicle; (ii) all third party administrative services agreements;
(iii) the most recent IRS determination letter; (iv) the most recent summary
plan description; and (v) for the two most recent plan years (A) the Form 5500
and attached schedules and (B) audited financial statements. The Management
Sellers have made available to Parent prior to the date of this Agreement a
true, complete and correct current copy (including all amendments) of each
employee handbook applicable to employees of an Acquired Entity or one of its
Subsidiaries. Schedule 4.16(b) of the Disclosure Schedule identifies any
Employee Plans which are Multiemployer Plans.

(c) None of the Acquired Entities nor any of their Subsidiaries sponsors,
maintains, or contributes to, or has in the last six years sponsored,
maintained, or contributed to, any and no Employee Plan is an “employee pension
benefit plan” or “pension plan” within the meaning of Section 3(2) of ERISA. For
each Employee Plan that is a “welfare plan” within the meaning of ERISA
Section 3(1), and except as set forth in Schedule 4.16(c) of the Disclosure
Schedule, no Acquired Entity nor any of its Subsidiaries has any Liability under
any plan which provides medical or death benefits with respect to current or
former employees or members of such Acquired Entity or any of its Subsidiaries
beyond their termination of employment (other than coverage mandated by Code
Section 4980B or ERISA Sections 601- 608 or any similar state Law).

(d) (i) Each Employee Plan (other than any Multiemployer Plan) has been
established and administered in all material respects in accordance with its
terms and in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Applicable Law, rules and regulations; and
(ii) each Employee Plan which is intended to be qualified within the meaning of
Code Section 401(a) has received a current favorable determination letter from
the IRS as to its qualification, and to the Knowledge of the Acquired Entities,
nothing has occurred that could reasonably be expected to cause the loss of such
qualification. Except as would not be material, all benefits, contributions and
premiums required by and due under the terms of each Employee Plan or Applicable
Law have been timely paid in accordance with the terms of such Employee Plan and
Applicable Law or have been properly accrued as liabilities and reflected in the
financial statements of each Acquired Entity in accordance with the terms of
such Employee Plan and Applicable Law. None of the Acquired Entities nor any of
their Subsidiaries has any Liability under Code Section 4980B with respect to
any group health plan currently or previously maintained or contributed to by
any Person (other than an Acquired Entity or a Subsidiary of an Acquired Entity)
treated as a single employer with an Acquired Entity or a Subsidiary of an
Acquired Entity under Code Section 414(b), (c) or (m).

(e) With respect to any Employee Plan, (i) no Proceedings (other than routine
claims for benefits in the ordinary course) are pending or, to the Knowledge of
the Acquired

 

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Entities, threatened and (ii) to the Knowledge of the Acquired Entities, no
facts or circumstances exist that are reasonably likely to give rise to any such
actions, suits or claims, except, in each case, as are not, and are not
reasonably likely to be, individually or in the aggregate, material.

(f) Except as set forth in Schedule 4.16(f) of the Disclosure Schedule, neither
the execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement will (either alone or in combination with another
event) (i) result in any payment from any of the Acquired Entities or any of
their Subsidiaries becoming due, or increase the amount of any compensation due,
in each case to any current or former employee, director, manager or member of
any of the Acquired Entities or any of their Subsidiaries, (ii) increase any
benefits otherwise due under any Employee Plan, (iii) result in the acceleration
of the time of payment, exercisability, funding or vesting of any compensation
or benefits from any of the Acquired Entities or any of their Subsidiaries to
any current or former employee, director, manager or member of any of the
Acquired Entities or any of their Subsidiaries or (iv) result in an “excess
parachute payment” within the meaning of Section 280G(b) of the Code.

(g) None of the Acquired Entities nor any of their Subsidiaries has an
obligation to gross up, indemnify or otherwise reimburse any present or former
employee, officer, director, manager, member or contractor for amounts relating
to the Tax differential between ordinary income Tax rates and capital gains Tax
rates or for any Taxes imposed under Section 409A or 4999 of the Code.

Section 4.17. Employee and Labor Matters.

(a) Except as set forth on Schedule 4.17(a) of the Disclosure Schedule, since
December 31, 2012, (i) there has not been nor is there pending, or the Knowledge
of the Acquired Entities, threatened, any labor strike, walk-out, slowdown, work
stoppage, lockout or other material labor dispute involving employees of an
Acquired Entity or any of its Subsidiaries, (ii) no Acquired Entity nor any of
its Subsidiaries has received written notice of any unfair labor practice
charges against such Acquired Entity or any of its Subsidiaries that are pending
before the National Labor Relations Board or any similar state, local or foreign
Governmental Authority, and (iii) no Acquired Entity nor any of its Subsidiaries
has received written notice of any pending or in progress and, to the Knowledge
of the Acquired Entities, threatened, suits, actions or other proceedings in
connection with an Acquired Entity or any of its Subsidiaries before any court,
the Equal Employment Opportunity Commission or any similar state, local or
foreign Governmental Authority responsible for the prevention of unlawful
employment practices, except, in the case of each of clauses (ii) and
(iii) above, for any such matters that would not reasonably be expected to be
Material.

(b) None of the Acquired Entities or any of their Subsidiaries is, or has since
December 31, 2012 been, a party or bound to any collective bargaining agreement.
To the Knowledge of the Acquired Entities, no union organizing efforts are
currently being, or since December 31, 2012 been, conducted with respect to any
employees of an Acquired Entity or Subsidiary of an Acquired Entity.

(c) Except as set forth on Schedule 4.17(c) of the Disclosure Schedule, each
Acquired Entity and its Subsidiaries are, and have been, in compliance in all
material respects

 

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with all Applicable Laws respecting employment practices, including provisions
thereof relating to terms and conditions of employment and wages and hours
(including the classification of persons as employees or independent contractors
or “exempt” or “non-exempt” under Applicable Law).

Section 4.18. Environmental Matters.

(a) Each Acquired Entity and each of its Subsidiaries have all environmental
Permits required for their operations to comply with all applicable
Environmental Laws, such Permits are in full force and effect and each Acquired
Entity and each of its Subsidiaries are in compliance with the terms of such
Permits.

(b) The Leased Real Property and the operations of each Acquired Entity and each
of their Subsidiaries are in compliance in all material respects with all
applicable Environmental Laws.

(c) No written notice, claim, inquiry, order or request for information has been
made, and there is no action pending or, to the Knowledge of the Acquired
Entities, threatened, which: (i) alleges the actual or potential violation of or
noncompliance with any Environmental Law or any Permit required by any
applicable Environmental Law, or alleges any potential Liability cost or damage
arising under or relating to any Environmental Law, or seeks to revoke, amend,
modify or terminate any Permit required by any applicable Environmental Law,
(ii) relates to the operations of each Acquired Entity and their Subsidiaries or
the Leased Real Property, and (iii) has not been settled, dismissed, paid or
otherwise resolved without ongoing obligations or costs prior to the date of
this Agreement.

(d) Copies of all Phase I or Phase II-type environmental investigative reports,
studies, assessments or other similar documents relating to the Leased Real
Property in the possession or control of the Acquired Entities or any of their
Subsidiaries are identified on Schedule 4.18 of the Disclosure Schedule and have
been provided to Parent prior to the date of this Agreement.

Section 4.19. Insurance. Schedule 4.19 of the Disclosure Schedule sets forth a
true, correct and complete list and description of the Insurance Policies as of
the date of this Agreement, including the name of the insurer, type of policy,
description of coverage, limits of coverage, retention or deductible amounts,
amount of annual premium, date of expiration and policy number. The Acquired
Entities and their Subsidiaries currently maintain, and have since December 31,
2013 (or, if later, the date such Acquired Entity or its Subsidiaries began
conducting its business) maintained, insurance required by Applicable Law or any
Contract to which any of them is a party or by which any of them is bound. All
insurance policies (the “Insurance Policies”) with respect to the properties,
assets, or business of the Acquired Entities and their respective Subsidiaries
are in full force and effect and all premiums due and payable thereon have been
paid in full, and no Acquired Entity nor any Subsidiary thereof is in default in
any material respect regarding their obligations under any such policies. No
Acquired Entity nor any Subsidiary thereof has received a written notice of
cancellation, reduction in coverage or non-renewal of any Insurance Policy.

 

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Section 4.20. Finders’ Fees. Except for Moelis & Company and Houlihan Lokey,
there is no investment banker, broker, finder or other intermediary that is
entitled to any fee or commission or other similar payment, and (other than for
potential indemnification obligations under the applicable engagement letters
with respect to which the Acquired Entities have no Knowledge that any
outstanding indemnification claim exists) there is otherwise no Liability for
which any Acquired Entity or any of its Affiliates is responsible in connection
with this Agreement or the Transactions (other than amounts due to Moelis &
Company or Houlihan Lokey in connection with the Transactions which will be
Transaction Expenses (to the extent not paid prior to the Closing) and will be
paid off at or prior to the Closing).

Section 4.21. Related Party Transactions. Other than the LLC Agreements and Side
Letters (each of which were extinguished upon the consummation of the
Restructuring and replaced with a Wholly-Owned Operating Agreement), any
Management Assets and any Employee Plans, none of the Management Sellers,
Managers, other Members or Rollover Holdco, nor any of their respective
Relatives, Associates or (in the case of an entity) officers, directors,
managers or Affiliates (other than any Acquired Entity or any Subsidiary):
(i) is a party to any Contract with any Acquired Entity or any Subsidiary of an
Acquired Entity (an “Affiliate Contract”) or other business transaction
(including any payments, but excluding Ordinary Course “comps” (i.e. free food
and drinks) to such Persons) with any Acquired Entity or any Subsidiary of an
Acquired Entity (an “Affiliate Transaction”), (ii) has any right in or to any of
the assets or properties which are owned, used or held for use in the conduct by
any Acquired Entity or any of their Subsidiaries of its business as conducted,
or (iii) has received any funds from or on behalf of any Acquired Entity or any
of their Subsidiaries other than compensation or reimbursement of expenses paid
to Management Sellers, Managers or Members in their capacity as employees,
officers, directors or managers, or distributions to Management Sellers,
Managers or Members, in each case, in the Ordinary Course.

Section 4.22. Permits; Liquor Licenses.

(a) Schedule 4.22 of the Disclosure Schedule sets forth a true, complete and
correct list of each material Permit and each liquor license held by an Acquired
Entity or any Subsidiary of an Acquired Entity. Except as would not reasonably
be expected to be, individually or in the aggregate, Material, (i) each Acquired
Entity and each of its Subsidiaries is in possession of all Permits and liquor
licenses necessary for it to own, lease and operate its properties and to carry
on its business as conducted, (ii) such Permits and liquor licenses are valid
and in full force and effect, (iii) no Acquired Entity and none of its
Subsidiaries is in default under, and no condition exists that with notice or
lapse of time or both could permit any revocation, non-renewal or termination,
or other adverse modification, of any Permit or liquor license, or constitute a
default under, the Permits or liquor licenses, and there are no Proceedings
pending or, to the Knowledge of the Acquired Entities, threatened before any
Governmental Authority that seek the revocation, termination, cancellation,
suspension or adverse modification thereof, and (iv) no Acquired Entity or
Subsidiary of an Acquired Entity has a pending application for registration to
sell franchises for a restaurant, or for an exemption under any jurisdiction’s
franchise Laws.

 

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(b) Except as have not and would not, individually or in the aggregate,
reasonably be expected to have, a Group Material Adverse Effect, (i) the
Acquired Entities have no Knowledge that any currently pending application for a
material Permit or any liquor license, or amendment or modification of a
material Permit or liquor license required in connection with the Transactions
will be ultimately denied, and (ii) there are no pending disciplinary actions,
unresolved citations or unsatisfied penalties relating to Permits or liquor
licenses that is reasonably likely to have or result in a material adverse
impact on any Acquired Entity or the ability to maintain or renew any Permit or
liquor license; provided, that no representation or warranty is made with
respect to the matters set forth in this Section 4.22 insofar as they relate to
Parent or any of its Affiliates. Each Acquired Entity and each of its respective
Subsidiaries is and since December 31, 2013 (or, if later, the date such
Acquired Entity or its Subsidiaries began conducting its business) has been, in
compliance in all material respects with any policy of any Governmental
Authority relating to liquor licenses, except as would not reasonably be
expected to be, individually or in the aggregate, Material.

Section 4.23. Corruption Laws.

(a) Since December 31, 2013, except as would not, individually or in the
aggregate, reasonably be expected to be Material, (x) the Acquired Entities and
their Subsidiaries have been and are in compliance with all applicable
anti-bribery and anti-money laundering Laws and (y) neither any Acquired Entity
nor any of their Subsidiaries, nor, to the Knowledge of the Acquired Entities,
any officer, director, employee, reseller, distributor or agent acting on behalf
of any Acquired Entity or any Subsidiary of an Acquired Entity has provided,
offered, gifted or promised, directly or indirectly, anything of value to any
government official, political party or candidate for government office, nor
provided or promised anything of value to any other person while knowing that
all or a portion of that thing of value would or will be offered, given, or
promised, directly or indirectly, to any government official, political party or
candidate for government office, in either case, for the purpose of:

(i) influencing any act or decision of such official, party or candidate in his
or her official capacity, inducing such official, party or candidate to do or
omit to do any act in violation of their lawful duty, or securing any improper
advantage for the benefit of any Acquired Entity or any of their Subsidiaries;
or

(ii) inducing such Government Official, political party or candidate to use his
or her influence with his or her government or instrumentality to affect or
influence any act or decision of such government or instrumentality, in order to
assist any Acquired Entity or any of their Subsidiaries in obtaining or
retaining business for or with, or directing business to, any Person.

Section 4.24. Quality and Safety of Food & Beverage Products. To the Knowledge
of the Acquired Entities, the storage practices, preparation, ingredients, and
composition for each of the food or beverage products of each of the Acquired
Entities and their respective Subsidiaries (i) are in compliance in all material
respects with all Applicable Laws, including Laws relating to food and beverage
storage and preparation, and (ii) are in compliance in all material respects
with all internal quality management policies and procedures of the Acquired
Entities. The Group Entities have furnished to Parent prior to the date of this

 

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Agreement true, correct and complete copies of all reports resulting from any
material audits and inspections of the quality or safety management practices by
any Governmental Authority conducted since December 31, 2013 and until the date
of this Agreement by the Acquired Entities and their respective Subsidiaries, or
by any other Person, with respect to the venues managed or operated by the
Acquired Entities and their respective Subsidiaries.

Section 4.25. Access to Information; No Reliance.

(a) Each Acquired Entity acknowledges and agrees that it (i) has had an
opportunity to discuss the business of Parent, Parent Merger Sub and their
respective Affiliates with the management of Parent, (ii) has been afforded the
opportunity to ask questions of and receive answers from Parent, Parent Merger
Sub and their respective Affiliates and (iii) has conducted its own independent
investigation of Parent, Parent Merger Sub and their respective Affiliates,
their respective businesses and the Transactions. Each Acquired Entity further
acknowledges and agrees that, except in respect of any fraud, it has not relied
on any representation, warranty or other statement by Parent, Parent Merger Sub
or their respective Affiliates, other than representations and warranties set
forth in Section 2.03(b)(iv), Article 6 and Section 9.11 (each, as qualified by
Disclosure Schedule), and that, except in respect of any fraud, all other
representations and warranties of any kind whatsoever, express or implied, at
law or in equity, with respect to any of Parent, Parent Merger Sub and their
respective Affiliates, or their respective business, operations, assets,
liabilities, condition (financial or otherwise) or prospects, are specifically
disclaimed.

(b) Except for the representations and warranties set forth in
Section 2.03(b)(iv), Article 6 and Section 9.11 (each, as qualified by the
Disclosure Schedule), and with the exception of fraud, each Acquired Entity
acknowledges and agrees that none of Parent, Parent Merger Sub, their respective
Affiliates nor any other Person makes any representation or warranty with
respect to any projections, forecasts or other estimates, plans or budgets of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows (or any component thereof) or future
financial condition (or any component thereof) of Parent, Parent Merger Sub or
their respective Affiliates nor the future business, operations or affairs of
Parent, Parent Merger Sub or their respective Affiliates heretofore or hereafter
delivered to or made available to any Acquired Entity, Management Seller,
Rollover Holdco Member or Member, or their respective Representatives or
Affiliates.

Section 4.26. Exclusivity of Representations and Warranties. EXCEPT FOR THE
ACQUIRED ENTITY REPRESENTATIONS, AND WITH THE EXCEPTION OF FRAUD, NONE OF THE
ACQUIRED ENTITIES, ANY MANAGEMENT SELLER, ANY MEMBER, ANY MANAGER NOR ANY OTHER
PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, AT LAW OR IN EQUITY (INCLUDING (X) AS TO THE ACCURACY OR COMPLETENESS
OF ANY CONFIDENTIAL INFORMATION MEMORANDUM, DOCUMENTS, PROJECTIONS, MATERIALS OR
OTHER INFORMATION (FINANCIAL OR OTHERWISE) REGARDING ANY ACQUIRED ENTITY OR ANY
OF ITS SUBSIDIARIES FURNISHED TO PARENT OR ITS REPRESENTATIVES OR MADE AVAILABLE
TO PARENT OR ITS REPRESENTATIVES IN ANY “DATA ROOMS”,

 

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“VIRTUAL DATA ROOMS”, MANAGEMENT PRESENTATIONS OR IN ANY OTHER FORM IN
EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS OR (Y) WITH RESPECT TO
THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY ASSETS, THE
NATURE OR EXTENT OF ANY LIABILITIES, THE PROSPECTS OF ANY OF THE ACQUIRED
ENTITIES, THEIR SUBSIDIARIES OR THEIR RESPECTIVE BUSINESSES, OR THE
EFFECTIVENESS OR SUCCESS OF ANY OF THEIR OPERATIONS). EXCEPT FOR THE ACQUIRED
ENTITY REPRESENTATIONS, AND WITH THE EXCEPTION OF FRAUD, EACH ACQUIRED ENTITY
HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY PROJECTIONS, FORECASTS
OR OTHER ESTIMATES, PLANS OR BUDGETS OF FUTURE REVENUES, EXPENSES OR
EXPENDITURES, FUTURE RESULTS OF OPERATIONS (OR ANY COMPONENT THEREOF), FUTURE
CASH FLOWS (OR ANY COMPONENT THEREOF) OR FUTURE FINANCIAL CONDITION (OR ANY
COMPONENT THEREOF) OF ANY ACQUIRED ENTITY OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES OR THE FUTURE BUSINESS, OPERATIONS OR AFFAIRS OF ANY ACQUIRED
ENTITY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES HERETOFORE OR HEREAFTER DELIVERED
TO OR MADE AVAILABLE TO PARENT, PARENT MERGER SUB OR THEIR RESPECTIVE
REPRESENTATIVES OR AFFILIATES.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF MEMBER REPRESENTATIVE

Member Representative represents and warrants to Parent and Parent Merger Sub,
that:

Section 5.01. Organization; Authorization.

(a) Member Representative is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Delaware.

(b) Member Representative has the requisite limited liability company power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which Member Representative is or will be a party, to perform its
obligations hereunder and thereunder and to consummate the Transactions. The
execution, delivery and performance by Member Representative of this Agreement
and the other Transaction Documents to which Member Representative is or will be
a party, and the consummation by Member Representative of the Transactions, have
been (or, in the case of other Transaction Documents that will be executed and
delivered by Member Representative after the date of this Agreement, such other
Transaction Documents will, when executed and delivered by Member
Representative, have been) duly authorized by all requisite limited liability
company action on the part of Member Representative, and no other limited
liability company action on the part of Member Representative or its members is
necessary to authorize the execution, delivery and performance of this Agreement
and the other Transaction Documents to which Member Representative is or will be
a party and the consummation by Member Representative of the Transactions. This
Agreement and the other Transaction Documents to which Member Representative is
a party constitute (or, in the case of other Transaction Documents that will be
executed and delivered by

 

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Member Representative after the date of this Agreement, such other Transaction
Documents will, when executed and delivered by Member Representative,
constitute) the legal, valid and binding obligations of Member Representative,
enforceable against Member Representative in accordance with their respective
terms, except for Enforceability Exceptions.

Section 5.02. Non-contravention. The execution, delivery and performance by
Member Representative of this Agreement and the other Transaction Documents to
which it is or will be a party, and the consummation by Member Representative of
the Transactions, do not and will not: (i) contravene, conflict with, or result
in any violation or breach of any provision of any Organizational Documents of
Member Representative, (ii) other than with respect to compliance with any
applicable requirements of the HSR Act (which such requirements have been
fulfilled as of the date hereof) and any liquor licenses set forth on
Schedule 4.22 of the Disclosure Schedule, contravene, conflict with or result in
a violation or breach of, or give any Governmental Authority or other Person the
right to exercise any remedy or obtain relief under, any provision of any
Applicable Law or Order to which Member Representative, or any of the properties
or assets owned or used by Member Representative, is subject, (iii) contravene,
conflict with, violate or result in the loss of any benefit to which Member
Representative is entitled under, or give any Governmental Authority the right
to revoke, suspend, cancel, terminate, or modify, any Permit held by Member
Representative, (iv) require any consent, waiver, notice or other action by any
Person under, constitute a default under, conflict with, result in a breach of,
or cause or permit the termination, modification, revocation, cancellation, or
acceleration of, or result in any other change of any right or obligation or the
loss of any benefit to which Member Representative is entitled under, any
provision of any Contract or other instrument binding upon Member Representative
or any of its assets, (v) result in the creation or imposition of any Lien on
any asset of Member Representative, or (vi) with the passage of time, the giving
of notice or the taking of any action by another Person, have any of the effects
described in clauses (i) through (v) of this Section 5.02, with only such
exceptions in the case of clauses (iii), (iv), (v) and (vi) as, do not and would
not reasonably be expected to impair or delay, in any material respect, the
ability of Member Representative to perform its obligations under this Agreement
and the other Transaction Documents to which it is or will be a party or to
consummate the Transactions.

Section 5.03. Ownership. All of the issued and outstanding Equity Interests of
Member Representative are owned, beneficially and of record, collectively, by
the Management Sellers as set forth on Schedule 5.03 of the Disclosure Schedule,
and except as set forth on Schedule 5.03 of the Disclosure Schedule, Member
Representative does not have any other authorized, designated, issued or
outstanding Equity Interests, or any outstanding or authorized options,
warrants, convertible or exchangeable securities, Contracts, subscriptions,
rights, calls, commitments, agreements or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (i) require or call
for the issuance, redemption, delivery, sale, pledge or other disposition of any
Equity Interests of Member Representative, or any securities convertible into,
or other rights to acquire, any Equity Interests of Member Representative,
(ii) obligate Member Representative to grant, offer or enter into any of the
foregoing, or (iii) relate to the voting, transfer, ownership or control of the
Equity Interests of Member Representative.

 

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ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF PARENT

Subject to Section 14.04, except as set forth in the Parent Disclosure Schedule,
Parent represents and warrants that:

Section 6.01. Existence and Power.

(a) Each of Parent and Parent Merger Sub is a limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all limited liability company power and
authority required to carry on its business as now conducted. Parent Merger Sub
has been formed solely for the purpose of engaging in the Transactions, and
since the date of its organization, Parent Merger Sub has not engaged in any
activities other than in connection with or as contemplated by this Agreement,
and does not have any Liabilities (other than de minimis Liabilities incident to
its formation or Liabilities under the Transaction Documents).

(b) Each of Parent and Parent Merger Sub has the requisite power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which Parent or Parent Merger Sub, as applicable, is or will be a party, to
perform Parent’s or Parent Merger Sub’s, as applicable, obligations hereunder
and thereunder, and to consummate the Transactions.

Section 6.02. Authorization. The execution, delivery and performance by each of
Parent and Parent Merger Sub of this Agreement and the other Transaction
Documents to which Parent or Parent Merger Sub, as applicable, is or will be a
party, and the consummation by Parent and Parent Merger Sub of the Transactions,
have been duly authorized by all necessary limited liability company action, and
no other limited liability company proceedings on the part of any of Parent or
Parent Merger Sub or any holder of Parent’s or Parent Merger Sub’s Equity
Interests are necessary to authorize the execution, delivery and performance by
each of Parent and Parent Merger Sub of this Agreement and the other Transaction
Documents to which Parent or Parent Merger Sub, as applicable, is or will be a
party or for Parent and Parent Merger Sub to consummate the Transactions. This
Agreement and the other Transaction Documents to which each of Parent or Parent
Merger Sub is a party have been (or, in the case of other Transaction Documents
that will be executed and delivered by Parent or Parent Merger Sub after the
date of this Agreement, such other Transaction Documents will, when executed and
delivered by Parent or Parent Merger Sub, as applicable, have been), duly and
validly executed by Parent or Parent Merger Sub, as applicable. This Agreement
and the other Transaction Documents to which each of Parent or Parent Merger Sub
is a party constitute (or, in the case of other Transaction Documents that will
be executed and delivered by Parent or Parent Merger Sub after the date of this
Agreement, such other Transaction Documents will, when executed and delivered by
Parent or Parent Merger Sub, as applicable, constitute) the legal, valid and
binding obligation of Parent or Parent Merger Sub, as applicable, enforceable
against Parent or Parent Merger Sub, as applicable, in accordance with their
respective terms, except for Enforceability Exceptions.

 

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Section 6.03. Governmental Authorization. The execution, delivery and
performance by each of Parent and Parent Merger Sub of this Agreement and the
other Transaction Documents to which Parent or Parent Merger Sub, as applicable,
is or will be a party, and the consummation by Parent and Parent Merger Sub of
the Transactions, require no action by or in respect of, or filing with, any
Governmental Authority, other than (i) the filing of a certificate of merger
with respect to the Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Parent is
qualified to do business, (ii) compliance with any applicable requirements of
the HSR Act (which such requirements have been fulfilled as of the date hereof),
(iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other state or federal securities Laws and (iv) any actions or filings
the absence of which, individually or in the aggregate, do not and are not
reasonably likely to impair or delay in any material respect Parent and Parent
Merger Sub’s ability to perform its obligations under this Agreement and the
other Transaction Documents to which it is or will be a party or to consummate
the Transactions.

Section 6.04. Non-contravention. The execution, delivery and performance by each
of Parent and Parent Merger Sub of this Agreement and the consummation by each
of Parent and Parent Merger Sub of the Transactions do not and will not
(i) contravene, conflict with, or result in any violation or breach of any
provision of the Organizational Documents of any of Parent or Parent Merger Sub,
(ii) other than with respect to compliance with any applicable requirements of
the HSR Act (which such requirements have been fulfilled as of the date hereof)
and any liquor licenses set forth on Schedule 4.22 of the Disclosure Schedule,
contravene, conflict with or result in a violation or breach of any provision
of, or give any Governmental Authority or other Person the right to exercise any
remedy or obtain relief under, any Applicable Law or Order to which Parent or
Parent Merger Sub, or any of the properties or assets owned or used by Parent or
Parent Merger Sub, is subject, (iii) contravene, conflict with, violate or
result in the loss of any benefit to which Parent or Parent Merger Sub is
entitled under, or give any Governmental Authority the right to revoke, suspend,
cancel, terminate, or modify, any Permit held by Parent or Parent Merger Sub,
(iv) require any consent, waiver, notice or other action by any Person under,
constitute a default under, conflict with, result in a breach of, or cause or
permit the termination, modification, revocation, cancellation, or acceleration
of, or result in any other change of any right or obligation or the loss of any
benefit to which Parent or Parent Merger Sub is entitled under, any provision of
any material Contract binding upon Parent or Parent Merger Sub or any of the
assets of Parent or Parent Merger Sub, (v) result in the creation or imposition
of any Lien on any asset of Parent or Parent Merger Sub, or (vi) with the
passage of time, the giving of notice or the taking of any action by another
Person, have any of the effects described in clauses (i) through (v) of this
Section 6.04, with only such exceptions in the case of clauses (iii), (iv),
(v) and (vi) as, individually or in the aggregate, do not and are not reasonably
likely to impair or delay, in any material respect, the ability of any of Parent
or Parent Merger Sub to perform its obligations under this Agreement and the
other Transaction Documents to which it is or will be a party or to consummate
the Transactions.

Section 6.05. Capitalization of Parent and Parent Merger Sub; Ownership of
Interests. All issued and outstanding Equity Interests of Parent are owned,
directly or indirectly, free and clear of all Liens (other than restrictions on
transfer arising under applicable

 

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securities laws), by The Madison Square Garden Company, and no other Person has
any right to acquire any Equity Interests in Parent. There are no outstanding
obligations of Parent or any Subsidiary of Parent or any other Person to
repurchase, redeem or otherwise acquire any of the Equity Interests of Parent.
All of the Equity Interests of Parent have been duly authorized and validly
issued and are fully paid and non-assessable and have not been issued in
violation of any federal or state securities Laws or any other Applicable Law.
All issued and outstanding Equity Interests of Parent Merger Sub are owned of
record by Parent, and no other Person has any right to acquire any Equity
Interests in Parent Merger Sub. There are no outstanding obligations of Parent
Merger Sub or any Subsidiary of Parent Merger Sub or any other Person to
repurchase, redeem or otherwise acquire any of the Equity Interests of Parent
Merger Sub. All of the Equity Interests of Parent Merger Sub have been duly
authorized and validly issued and are fully paid and non-assessable and have not
been issued in violation of any federal or state securities Laws or any other
Applicable Law.

Section 6.06. Litigation and Regulatory Actions. There is no (i) Proceeding
pending against, or, to the Knowledge of Parent, threatened against or
affecting, Parent or any of its Affiliates before (or, in the case of threatened
Proceedings, would be before) or by any Governmental Authority or arbitrator and
(ii) Order relating to Parent, that in either case, is reasonably likely to
impair or delay, in any material respect, Parent’s ability to perform its
obligations under this Agreement and the other Transaction Documents to which it
is or will be a party or to consummate the Transactions.

Section 6.07. Finders’ Fees. Except for Goldman Sachs & Co. (whose fees, other
than to the extent Debt Financing Expenses, will be paid by Parent without any
Liability following the Closing to Holdings or any of its Subsidiaries), there
is no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Parent who might be entitled to
any fee or commission from any Acquired Entity, the Members, Management Sellers
or the Managers or any of their respective Affiliates upon consummation of the
Transactions.

Section 6.08. Reserved.

Section 6.09. Access to Information; No Reliance.

(a) Each of Parent and Parent Merger Sub acknowledges and agrees that it (i) has
had an opportunity to discuss the business of the Acquired Entities and their
Subsidiaries with the management of the Acquired Entities, (ii) has had
reasonable access to (x) the books and records of the Acquired Entities and
their respective Subsidiaries and (y) the electronic dataroom maintained by the
Acquired Entities for purposes of the Transactions, (iii) has been afforded the
opportunity to ask questions of and receive answers from the Acquired Entities
and (iv) has conducted its own independent investigation of the Acquired
Entities and their respective Subsidiaries, their respective businesses and the
Transactions. Each of Parent and Parent Merger Sub further acknowledges and
agrees that, except in respect of any fraud, it has not relied on any
representation, warranty or other statement by any Person on behalf of any
Acquired Entity or any of their respective Subsidiaries, any Member, any
Management Seller, any Manager or any of their respective Affiliates, other than
the Acquired Entity

 

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Representations, and that, except in respect of any fraud, all other
representations and warranties of any kind whatsoever, express or implied, at
law or in equity, with respect to any of the Acquired Entities, their respective
Subsidiaries or their respective business, operations, assets, liabilities,
condition (financial or otherwise) or prospects, are specifically disclaimed.

(b) Except for the Acquired Entity Representations, and with the exception of
fraud, each of Parent and Parent Merger Sub acknowledges and agrees that none of
the Acquired Entities, the Member Representative nor any other Person makes any
representation or warranty with respect to any projections, forecasts or other
estimates, plans or budgets of future revenues, expenses or expenditures, future
results of operations (or any component thereof), future cash flows (or any
component thereof) or future financial condition (or any component thereof) of
any Acquired Entity or any of their respective Subsidiaries or the future
business, operations or affairs of any Acquired Entity or any of their
respective Subsidiaries heretofore or hereafter delivered to or made available
to Parent, Parent Merger Sub or their respective Representatives or Affiliates.

Section 6.10. Investment Purpose; Accredited Investor; No Public Market; No
Reliance.

(a) Parent is acquiring the Class A Holdings Interests and the Preferred
Holdings Interests for investment and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling such Class A Holdings Interests or Preferred Holdings
Interests.

(b) Parent acknowledges and agrees that (i) the Class A Holdings Interests and
the Preferred Holdings Interests have not been, and will not be, registered
under the 1933 Act, by reason of specific exemptions from the registration
provisions of the 1933 Act which depend upon, among other things, the bona fide
nature of the investment intent and the accuracy of the representations as
expressed in this Section 6.10, are “restricted securities” under applicable
U.S. federal and state securities Laws and that, pursuant to these laws, may not
be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the 1933 Act and any applicable state or
foreign securities Laws, except pursuant to an exemption from such registration
under the 1933 Act and such other Laws, (ii) that there is no obligation to
register or qualify the foregoing for resale, and (iii) that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of sale,
the holding period for the foregoing and requirements that are outside of a
holder’s control, and as to which no party is under any obligation to satisfy
and which may not be satisfied or able to be satisfied.

(c) Parent understands that no public market now exists for the Class A Holdings
Interests or Preferred Holdings Interests, and that neither the Acquired
Entities, the Member Representative nor any other Person on their behalf has
made any assurances that a public market will ever exist for the Class A
Holdings Interests or Preferred Holdings Interests.

(d) Parent is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the 1933 Act.

 

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Section 6.11. Exclusivity of Representations and Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS Article 6, Section 9.11,
Section 2.03(b)(iv) AND THE REPRESENTATIONS AND WARRANTIES OTHERWISE MADE IN THE
TRANSACTION DOCUMENTS OR IN CONNECTION WITH THE TRANSACTIONS, AND WITH THE
EXCEPTION OF FRAUD, NEITHER PARENT NOR PARENT MERGER SUB NOR ANY OTHER PERSON
MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED,
AT LAW OR IN EQUITY (INCLUDING (X) AS TO THE ACCURACY OR COMPLETENESS OF ANY
CONFIDENTIAL INFORMATION MEMORANDUM, DOCUMENTS, PROJECTIONS, MATERIALS OR OTHER
INFORMATION (FINANCIAL OR OTHERWISE) REGARDING PARENT, PARENT MERGER SUB, OR
THEIR AFFILIATES PROVIDED TO ANY ACQUIRED ENTITY, ANY MANAGEMENT SELLER, ANY
MEMBER, ANY MANAGER, OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR AFFILIATES IN
ANY FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS OR (Y) WITH
RESPECT TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY
ASSETS, THE NATURE OR EXTENT OF ANY LIABILITIES, THE PROSPECTS OF PARENT, PARENT
MERGER SUB, THEIR AFFILIATES OR THEIR RESPECTIVE BUSINESSES, OR THE
EFFECTIVENESS OR SUCCESS OF ANY OF THEIR OPERATIONS). EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 6, SECTION 9.11,
SECTION 2.03(B)(IV) AND THE REPRESENTATIONS AND WARRANTIES OTHERWISE MADE IN THE
TRANSACTION DOCUMENTS OR IN CONNECTION WITH THE TRANSACTIONS, AND WITH THE
EXCEPTION OF FRAUD, EACH OF PARENT AND PARENT MERGER SUB HEREBY DISCLAIMS ALL
LIABILITY AND RESPONSIBILITY FOR ANY PROJECTIONS, FORECASTS OR OTHER ESTIMATES,
PLANS OR BUDGETS OF FUTURE REVENUES, EXPENSES OR EXPENDITURES, FUTURE RESULTS OF
OPERATIONS (OR ANY COMPONENT THEREOF), FUTURE CASH FLOWS (OR ANY COMPONENT
THEREOF) OR FUTURE FINANCIAL CONDITION (OR ANY COMPONENT THEREOF) OF PARENT,
PARENT MERGER SUB, OR THEIR AFFILIATES OR THE FUTURE BUSINESS, OPERATIONS OR
AFFAIRS OF PARENT, PARENT MERGER SUB, OR THEIR AFFILIATES HERETOFORE OR
HEREAFTER DELIVERED TO OR MADE AVAILABLE TO ANY ACQUIRED ENTITY, ANY MANAGEMENT
SELLER, ANY MEMBER, ANY MANAGER, OR THEIR RESPECTIVE REPRESENTATIVES OR
AFFILIATES.

ARTICLE 7

COVENANTS OF THE ACQUIRED ENTITIES, DIRECT ROLLOVER MEMBERS AND ROLLOVER HOLDCO
MEMBERS

Section 7.01. Reserved.

Section 7.02. Reserved.

Section 7.03. Reserved.

 

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Section 7.04. Restrictive Covenants. In exchange for the consideration provided
to the Principals pursuant to this Agreement (including the portion of the Final
Adjusted Purchase Price allocable to such Persons) and the other Transaction
Documents, the receipt and sufficiency of which is hereby acknowledged, each of
the Principals agree to, among other things, comply with the covenants and
agreements in Section 4.6 of the A&R Holdings LLC Agreement from and after the
date of this Agreement in accordance therewith. Each Principal acknowledges and
agrees that the content and scope (including, without limitation, the worldwide
scope) of the restrictions under Section 4.6 of the A&R Holdings LLC Agreement
are reasonable, and that compliance with such covenants and agreements is
necessary to protect the business and goodwill of Holdings and its Subsidiaries
and Affiliates and are an integral factor in Parent’s determination to make the
investment contemplated by this Agreement.

Section 7.05. Reserved.

Section 7.06. D&O Policy.

(a) Prior to the Closing Date, the Group Entities and Members have obtained an
insurance policy to be effective as of the Closing (the “D&O Policy”). The cost
of such D&O Policy is a one-time premium (the “D&O Premium”), and to the extent
that the D&O Premium was not fully paid prior to the Closing, it shall
constitute a Transaction Expense payable in accordance with Section 2.10 (and,
for the avoidance of doubt, to the extent not paid at Closing, subject to
indemnification under Section 12.02(a)(iii)).

(b) For the period of coverage provided by the D&O Policy, Holdings shall cause
to be maintained in effect provisions in the Organizational Documents of each
Acquired Entity (or in the Organizational Documents of any successor to the
business of any Acquired Entity) and each of their respective Subsidiaries
regarding exculpation and indemnification (and advancement of expenses, if any)
to the extent required in order to allow for coverage under the D&O Policy to
the beneficiaries of such D&O Policy with all claims under any such
Organizational Documents to be paid solely by the insurer under such D&O Policy
in accordance with the D&O Policy; provided that such indemnification (and
advancement of expenses, if any) shall be fully covered by the D&O Policy and
paid by the D&O Policy insurer with no Liability (including any premium or
deductible) to Holdings, any of its Subsidiaries, Parent or any of their
respective Affiliates, other than claims (i) excluded from coverage under the
D&O Policy and agreed to in writing between Parent and the Member Representative
prior to Closing or (ii) with respect to Members, officers, managers, directors
and employees of each Acquired Entity and each of their respective Subsidiaries
(other than the Principals or their Affiliates (for purposes of this exception
to clause (ii), “Affiliates” of the Principals shall exclude any Acquired Entity
or Subsidiary of any Acquired Entity)).

Section 7.07. Lease Guarantees. Holdings shall, with the cooperation of the
Lease Guarantors, use its commercially reasonable efforts to cause the Lease
Guarantors to be fully, finally and unconditionally released in form and
substance acceptable to the Member Representative from any Damages in respect of
the Real Property Leases, including any Lease Personal Guarantee; provided,
that, notwithstanding such commercially reasonable efforts, if Holdings is
unable to obtain such releases, Holdings will indemnify and hold harmless the
Lease Guarantors for any Damages in respect of the Real Property Leases,
including any Lease Personal Guarantee.

 

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ARTICLE 8

[Reserved]

Section 8.01. Reserved.

Section 8.02. Reserved.

ARTICLE 9

COVENANTS OF PARENT AND THE ACQUIRED ENTITIES

Section 9.01. Reserved.

Section 9.02. Reserved.

Section 9.03. Reserved.

Section 9.04. Further Assurances. Except as set forth on Schedule 9.04 or
Schedule 3.06 of the Disclosure Schedule, each Management Seller hereby agrees
that to the extent any assets relating to or used in connection with any
business of any Acquired Entity or any Subsidiary of any Acquired Entity prior
to the Closing are owned or held by such Management Seller or its Affiliates
(other than the Acquired Entities or their Subsidiaries) but were not included
in the Management Assets contributed in connection with the Restructuring, such
Management Seller, or the Member Representative on behalf of such Management
Seller, shall promptly (and in any event within thirty (30) days of such
Management Seller becoming aware of such assets that should have been included
in the Management Assets contributed in connection with the Restructuring)
provide written notice to Parent of such assets and within such thirty (30) day
period take all actions as may be reasonably required to transfer such assets to
such Acquired Entity or Subsidiary, as applicable (with the costs or expenses of
such transfer to be borne by such Management Seller).

Section 9.05. Holdings. From and after the Effective Time, until amended in
accordance with the terms thereof and Applicable Law, the limited liability
company agreement of Holdings shall be the A&R Holdings LLC Agreement.

Section 9.06. Rollover Holdco. From and after the Effective Time, until amended
in accordance with the terms thereof, the A&R Holdings LLC Agreement and
Applicable Law, the limited liability company agreement of Rollover Holdco shall
be the A&R Rollover Holdco LLC Agreement.

Section 9.07. Confidentiality. The parties acknowledge that each of MSG Sports &
Entertainment LLC (“MSG LLC”) and the TAO Group (which is comprised of the Group
Entities) previously executed those certain non-disclosure letter agreements,
each

 

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dated December 22, 2015 (as amended, collectively, the “Confidentiality
Agreements”), which Confidentiality Agreements will continue in full force and
effect in accordance with their respective terms; provided, however, that the
Confidentiality Agreement by MSG LLC in favor of the TAO Group shall
automatically terminate upon consummation of the Closing and be superseded by
Parent’s confidentiality obligations pursuant to the A&R Holdings LLC Agreement.

Section 9.08. Change of Control Bonus Payment. Following the third anniversary
of the Closing Date, in the event that the payment described on Schedule 9.08-B
of the Disclosure Schedule is not due and owing and such payee has not provided
notice or instituted any Proceeding with respect to such payment that has been
resolved prior to the third anniversary of the Closing Date, Parent shall pay
the Member Representative 62.5% of such amount within (5) Business Days of the
third anniversary of the Closing Date, by wire transfer of immediately available
funds to a bank account designated in writing by the Member Representative, and
such amount shall be allocated by the Member Representative pursuant to the
Restructuring Agreement.

Section 9.09. Allocation of Management Fees. Promptly following the receipt by
any Acquired Entity of payment in consideration for management fees of Ninth
Avenue Hospitality LLC, Roof Deck Entertainment, LLC, Roof Deck Australia, LLC
or 55th Street Hospitality Holdings, LLC which includes management fees relating
to the period prior to the consummation of the Closing, such Acquired Entity
shall pay, in immediately available funds, the portion of the amount of such
payment actually received that solely relates to the period prior to the
consummation of the Closing to the Persons entitled to such payment had the
payment been received prior to the consummation of the Closing.

Section 9.10. Removal of Legends. With respect to the certificates (or book
entries) evidencing Qualified MSG Stock or Qualified Successor Stock (if any)
issued to a Management Seller or other Holdings Pre-Closing Member in connection
with (x) an Earn-Out Qualification pursuant to Section 2.03(b)(i) or (y) a Put
or Call (as such terms are defined in the A&R Holdings LLC Agreement) in
accordance with the A&R Holdings LLC Agreement, upon the request of any
Management Seller or other Holdings Pre-Closing Member in connection with the
proposed permitted transfer of such securities, Parent or the MSG Company
Successor (as applicable) shall cause the removal of the legend described in
Section 2.03(b)(iii) from such certificate(s) (or book entries, as applicable)
representing all or a portion of such shares as promptly as practicable
following the receipt of such request (and such certificate(s), if applicable)
during (a) the effectiveness of a registration statement or (b) the period of
eligibility for the transfer of such Qualified MSG Stock or Qualified Successor
Stock (or the applicable portion of such securities evidenced by such
certificate(s) or book entry(ies), in the case of clause (a) above, upon receipt
of a representation that such shares have been sold pursuant to such
registration statement and in the case of clause (b) above, upon receipt of a
representation letter in the form attached as Exhibit H (a “Rep Letter”) duly
executed by the Management Seller or other Holdings Pre-Closing Member holding
such Qualified MSG Stock or Qualified Successor Stock and delivered to the
applicable issuer (or with respect to another exemption to such registration
under the 1933 Act, subject to the provision of a legal opinion in form and
substance reasonably acceptable to Parent or such MSG Company Successor (as
applicable) with respect to

 

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such exemption). Notwithstanding the foregoing, the delegending of any
volume-limited portions of the applicable securities shall not be required in
respect of clause (b) of the immediately preceding sentence to the extent such
volume limitation is materially affected by any stock or other securities (other
than any Qualified MSG Stock or Qualified Successor Stock issued in connection
with an Earn-Out Qualification or Put or Call) of The Madison Square Garden
Company or the MSG Company Successor or any of their Affiliates owned or
acquired by any Management Seller or Other Holdings Pre-Closing Member or
(i) such Management Seller’s or other Holdings Pre-Closing Member’s spouse or
relative (including a relative of such spouse) living in the same household,
(ii) a trust or estate in which such Management Seller or other Holdings
Pre-Closing Member or any Persons referred to in clause (i), (A) collectively
owns 10% or more of the total beneficial interest, or (B) serves as trustee,
executor or in a similar capacity, or (iii) any corporation, partnership,
limited liability company or other entity (other than The Madison Square Garden
Company or the MSG Company Successor (as applicable)) in which such Management
Seller or other Holdings Pre-Closing Member or any Persons referred to in clause
(i) collectively beneficially own 10% or more of any class of Equity Interests.

Section 9.11. Representations and Covenants of The Madison Square Garden
Company.

(a) The Madison Square Garden Company hereby represents and warrants to the
Qualified Principals that (i) from the date of Parent’s formation through the
date of this Agreement, Parent has not engaged in any business activities other
than in connection with (x) its formation, (y) the formation of and ownership of
Parent Merger Sub until the Effective Time, and (z) the transactions
contemplated by the Transaction Documents, (ii) as of immediately prior to the
Closing, Parent does not have any assets other than the Equity Interests of
Parent Merger Sub and other assets which do not, and would not reasonably be
expected to, individually or in the aggregate, result in Liabilities which would
breach clause (iv) below, (iii) from the date of Parent’s formation through the
date of this Agreement, Parent has not entered into any Contract other than its
limited liability company agreement, the Contracts with its registered agent(s)
and similar representatives for purposes incident to Parent’s formation and
continued company existence, the Transaction Documents to which Parent is a
party and other Contracts which do not, and would not reasonably be expected to,
individually or in the aggregate, result in Liabilities which would breach
clause (iv) below, and (iv) Parent does not have any Liabilities or Liens (other
than de minimis Liabilities or Liens incident to its formation and continued
company existence, Liabilities or Liens with respect to its ownership of its
Interest under the A&R Holdings LLC Agreement or pursuant to the Transaction
Documents, or Liens under applicable securities laws).

(b) From the date of this Agreement and until the MSG Company Termination Date,
except as consented to in writing by all of the Qualified Principals (as defined
in the A&R Holdings LLC Agreement), The Madison Square Garden Company shall not
permit Parent or any Parent Successor (or, in the event there is an MSG Company
Successor, the MSG Company Successor shall not permit Parent or any Parent
Successor) to: (i) conduct any business or operations or enter into any
Contracts (other than Contracts that would have been permitted under clause
(iii) of Section 9.11(a) if entered into prior to the date of this Agreement)
except as contemplated by the Transaction Documents (as amended, modified or
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connection with Parent’s (or a Parent Successor’s) ownership of its Interest (as
defined in the A&R Holdings LLC Agreement (other than any actions taken in
connection with a Cash Flow Deficiency or Credit Agreement Default)), or its
receipt and distribution of distributions made in respect of the Interest,
(ii) own any assets other than Parent’s (or a Parent Successor’s) Interest, any
distributions made in respect of the Interest, and other assets the ownership of
which would not breach clause (iii) below, (iii) incur any Liabilities, or incur
or suffer to exist any Liens on its assets, (in each case of this clause (iii),
other than (A) de minimis Liabilities or Liens incident to its formation and
continued company existence, (B) Liabilities or Liens with respect to its
ownership of its Interest under the A&R Holdings LLC Agreement (as amended,
modified or supplemented) (excluding any actions taken in connection with a Cash
Flow Deficiency or Credit Agreement Default under the A&R Holdings LLC
Agreement) or the Transaction Documents (as amended, modified or supplemented),
(C) Liens for Taxes, assessments and other government charges not yet due and
payable or which are being contested in good faith by appropriate proceedings
and (D) Liens under applicable securities laws), (iv) transfer its Interest to
another Person, unless such Person is (x) a Parent Successor that is
wholly-owned (directly or indirectly) by The Madison Square Garden Company and
The Madison Square Garden Company agrees in writing to the same covenants and
agreements provided in this Section 9.11 with respect to such Parent Successor,
or (y) such Parent Successor is wholly-owned (directly or indirectly) by an MSG
Company Successor that has a class of shares that could constitute Successor
Stock in accordance with the such term’s definition, and such MSG Company
Successor agrees in writing to the same covenants and agreements provided in
this Section 9.11(b) with respect to such Parent Successor, (v) consolidate with
or merge with or into, or convey, transfer or lease all or substantially all of
its assets to, any Person (other than with respect to transfers of its Interest
permitted in clause (iv)), (vi) create or acquire any Person or own any Equity
Interest in any Person other than Holdings, (vii) fail to hold itself out to the
public as a legal entity separate and distinct from all other Persons or
(viii) employ any Person as an employee. In the event there is an MSG Company
Successor, The Madison Square Garden Company shall cause such MSG Company
Successor to agree to be bound by the provisions of this Section 9.11(b) and to
make the representations and warranties set forth in Section 9.11(f), applied
mutatis mutandis (and upon such agreement and making of such representations by
the MSG Company Successor, The Madison Square Garden Company shall have no
further liability or obligation hereunder).

(c) At the Closing, The Madison Square Garden Company shall deliver to the
Member Representative a certificate executed on behalf of The Madison Square
Garden Company by an executive officer of The Madison Square Garden Company
certifying that the representations and warranties of The Madison Square Garden
Company in Section 9.11(a) and Section 9.11(f) are true and correct as of the
Effective Time as if made at and as of such time (other than representations and
warranties that by their terms address matters only as of another specified
time, which shall be true and correct only as of such time).

(d) Notwithstanding anything in Section 12.01 to the contrary, the
representations, warranties, covenants and agreements contained in this
Section 9.11 or in any certificate delivered pursuant to Section 9.11(c), and
the covenants and agreements of The Madison Square Garden Company (or MSG
Company Successor, as applicable) under Article 14 (other than Sections 14.03,
14.04 and 14.15, and only insofar as Article 14 relates to its rights

 

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and obligations under Section 9.11), shall survive the consummation of the
Closing but shall terminate automatically (and without any recourse thereafter
to The Madison Square Garden Company (or MSG Company Successor, as applicable))
upon the MSG Company Termination Date; provided, that such representations,
warranties, covenants and agreements shall not terminate for so long as there
remains outstanding any unresolved claims or disputes (whether or not fixed as
to liability or liquidated as to amount, if set forth in a reasonably detailed
written notice (specifying the circumstances giving rise to such claim, the
estimated amount of damages sought thereunder to the extent then reasonably
ascertainable and the inaccuracy or breach giving rise to such claim or, to the
extent the specification of such inaccuracy or breach is not reasonably
practicable as of such date, a reasonably detailed specification of the
potential inaccuracy or breach based on the facts available at the time of such
notice) delivered to The Madison Square Garden Company (or MSG Company
Successor, as applicable) prior to the expiration of the MSG Company Termination
Date) with respect to any such representations, warranties, covenants or
agreements (as applicable) initiated prior to the MSG Company Termination Date.
Notwithstanding anything in Article 12 to the contrary, the Member
Representative (and no other party other than the Member Representative) shall
be permitted to commence any Proceeding with respect to this Section 9.11, and
such Proceeding shall not be addressed by, or subject to, Article 12. In the
event such a Proceeding is commenced, Section 14.01, Section 14.06,
Section 14.07, Section 14.08, Section 14.12 and Section 14.13 shall apply. For
the avoidance of doubt, other than for fraud with respect to the representations
and warranties set forth in this Section 9.11, any claims with respect to The
Madison Square Garden Company (or MSG Company Successor, as applicable) under
this Agreement shall be limited to claims of a breach of the representations,
warranties, covenants or agreements contained in this Section 9.11 or the
covenants and agreements of The Madison Square Garden Company (or MSG Company
Successor, as applicable) under Article 14 (other than Sections 14.03, 14.04 and
14.15, and only insofar as Article 14 relates to its rights and obligations
under Section 9.11).

(e) Certain Definitions: Capitalized terms used in this Section 9.11 but not
defined in this Agreement shall have the meanings assigned to them in the A&R
Holdings LLC Agreement (in the form attached hereto as Exhibit D).

(i) “MSG Company Termination Date” means the later of: (i) the later of (A) the
date of payment in full of all amounts payable (including by issuance of
Qualified MSG Stock or Qualified Successor Stock, if applicable) with respect to
any Principal Good Leaver Put(s), Principal Early Leaver Put(s) or Principal
Pre-Year 5 CoC Put exercised prior to the applicable date required by the A&R
Holdings LLC Agreement (if any), or (B) if no such Put is made in accordance
with the A&R Holdings LLC Agreement, the latest date on which a Principal is
permitted to exercise a Principal Good Leaver Put, Principal Early Leaver Put or
Principal Pre-Year 5 CoC Put under the A&R Holdings LLC Agreement, and (ii) the
earlier of: (x) if one or more Earn-Out Amount payments equal to the Earn-Out
Amount Cap have been made in accordance with Section 2.03(b) and (c), the date
of the last such payment (including by the issuance of Qualified MSG Stock or
Qualified Successor Stock if applicable), (y) if an Earn-Out Qualification has
not been achieved in respect of any TTM Period in accordance with Section
2.03(b) and (c), the 30th day following delivery to Parent of the applicable
consolidated financial

 

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statements of the Company and its Subsidiaries for the Year 5 TTM Period or
(z) if an Earn-Out Qualification has been achieved in accordance with Section
2.03(b) and (c) but not paid prior to the date referred to in clause (y), the
date the applicable Earn-Out Amount payable in respect of such Earn-Out
Qualification in accordance with Section 2.03(b) and (c) is paid in full in
accordance with Section 2.03(b) and (c) (including by issuance of Qualified MSG
Stock or Qualified Successor Stock, if applicable).

(ii) “Parent Successor” means a recipient of all or a portion of the Interest of
Parent in accordance with the terms of the A&R Holdings LLC Agreement; provided,
that The Madison Square Garden Company (or an MSG Company Successor, if
applicable) shall not permit Parent (or a Parent Successor, if applicable) to
transfer all or a portion of the Interest of Parent (or a Parent Successor, if
applicable) unless the recipient (A) agrees to be bound by the requirements of
this Section 9.11 and (B) makes the representations and warranties set forth in
this Section 9.11 with respect to Parent, applied mutatis mutandis to such
recipient.

(f) The Madison Square Garden Company hereby represents and warrants to the
Member Representative that (i) it has full power and authority, and has taken
all action necessary, to execute and deliver this Agreement and to perform its
obligations hereunder; (ii) it is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to conduct its business as now conducted; (iii) this Agreement has
been duly executed and delivered by The Madison Square Garden Company and,
assuming the due execution and delivery of this Agreement by the other parties
hereto, The Madison Square Garden Company’s obligations hereunder constitute the
legal, valid and binding obligation of The Madison Square Garden Company,
enforceable against The Madison Square Garden Company in accordance with its
terms except for Enforceability Exceptions; and (iv) the execution and delivery
of this Agreement and performance of its obligations under this Agreement by The
Madison Square Garden Company does not and will not violate, result in a breach
(with or without the lapse of time, the giving of notice or both) of, or
constitute a default (with or without notice or lapse of time or both) under, or
require the consent or approval of any person or entity under any Contract, Law
or Order that would have a material effect on the ability of The Madison Square
Garden Company to fulfill its obligations hereunder, in each case to which The
Madison Square Garden Company is a party or by which The Madison Square Garden
Company is bound or to which its assets or properties are subject and which has
not been obtained prior to the date hereof.

ARTICLE 10

[Reserved]

Section 10.01. Reserved.

 

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ARTICLE 11

TAX MATTERS

Section 11.01. Tax Treatment. For U.S. federal income tax purposes, the parties
hereto agree to treat the Merger and the Transactions, with respect to the
Members, as a sale to Parent of Holdings Pre-Closing Interests for cash to the
extent of the cash consideration received by the Members hereunder followed by a
redemption of the Redeemable Holdings Interests. Parent shall cause Holdings to
allocate all items of income, gain, loss, deduction or credit attributable to
the taxable period of Holdings in which the Closing occurs based on a closing of
Holding’s books as of the end of the Closing Date. To the extent permitted by
Applicable Law, any Transaction Tax Deductions shall be treated as accruing on
or prior to the Closing Date and shall be allocated to the taxable period of the
Holdings that ends or is deemed to end on the Closing Date, and Parent shall not
be allocated and shall not claim any such Transaction Tax Deductions. No party
shall take a position on any Tax Return, before any Governmental Authority or in
any proceeding, that is in any manner inconsistent with the Tax treatment
described in this paragraph without the prior written consent of all of the
other parties or unless specifically required pursuant to a determination by an
applicable Governmental Authority.

Section 11.02. Tax Returns. All Acquired Entity Returns that relate to any Tax
period that ends on or before the Closing Date shall be prepared and filed by
Holdings in a manner reasonably determined by the Member Representative and
consistent with each Acquired Entity’s and each of its Subsidiary’s past
practice except as otherwise required by the provisions of this Agreement or as
otherwise required by a change in Applicable Law. Notwithstanding the foregoing,
if the Transactions result in a deemed partnership termination pursuant to
Section 708(b)(1)(B) of the Code, an election under Section 754 of the Code
shall be made with respect to the predecessor partnership. Except as provided in
this Agreement, without the prior written consent of the Member Representative,
Parent shall not file any amended Acquired Entity Return or make any Tax
election with respect to any Tax period that ends on or before the Closing Date
unless otherwise required by Applicable Law. Acquired Entity Returns that relate
to any Tax period that begins before and ends after the Closing Date (such
period, a “Straddle Period”, and such Acquired Entity Returns, “Straddle Period
Returns”) shall be prepared and filed by Holdings (A) in a manner reasonably
determined by the Member Representative with respect to the pre-Closing portion
of such Straddle Period Return to the extent that items in the post-Closing
portion of the Straddle Period or subsequent periods are not affected and (B) in
all cases, consistent with each Acquired Entity’s and each Subsidiary of an
Acquired Entity’s past practice except as otherwise required by the provisions
of this Agreement or A&R Holdings LLC Agreement or as otherwise required by a
change in Applicable Law.

Section 11.03. Transfer Taxes. 50% of actual Transfer Taxes paid or required to
be paid in connection with the Transactions (including any real property
transfer Tax and any similar Tax) shall be deemed Transaction Expenses in
accordance with the definition thereof, and the remaining 50% shall be borne by
Parent; provided, however, that Parent’s liability to pay Transfer Taxes
hereunder shall in no event exceed $200,000, and the entire amount of Transfer
Taxes in excess of $400,000 shall be deemed Transaction Expenses. Parent will
file, or cause to be filed, all necessary Tax Returns with respect to all such
Transfer Taxes and will pay or cause to be paid all such Transfer Taxes.

 

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Section 11.04. Cooperation on Tax Matters. Parent and the Holdings Pre-Closing
Members shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the preparation and filing of any Tax Return,
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party’s request) the
provision of records and information that are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Holdings shall (i) retain all books and records
with respect to Tax matters pertinent to the Acquired Entities and the
Subsidiaries relating to pre-closing periods until the expiration of any
applicable statute of limitations, and to abide by all record retention
agreements entered into with any Taxing Authority for all periods required by
such Taxing Authority, and (ii) use commercially reasonable efforts to provide
the Members with at least thirty (30) days prior written notice before
destroying any such books and records, during which period any Member that so
requests can elect to take possession, at their own expense, of a copy of such
books and records.

Section 11.05. FIRPTA Certificate and W-9. On or prior to the Closing Date, the
Holdings Pre-Closing Members or the Acquired Entities, as applicable, shall
deliver to Parent IRS Forms W-9 and certificates in compliance with Treasury
Regulation Sections 1.1445-2 or 1.1445-11T(d)(2), as applicable, certifying that
the Transactions are exempt from withholding under Section 1445 of the Code;
provided, that, notwithstanding anything in this Agreement to the contrary,
Parent’s sole right if the Members or the Acquired Entities, as applicable, fail
to provide such certificates shall be to make an appropriate withholding of Tax.
Parent agrees that, if on or before the Closing Date it receives the statements
described in this Section 11.05, no withholding under Section 1445 of the Code
is required in connection with the transactions described in Article 2.

Section 11.06. 754 Elections. The Holdings Pre-Closing Members and Parent shall
cause Holdings (i) to make valid elections under Section 754 of the Code,
effective for the taxable years of Holdings and 632 N. Dearborn Operations, LLC
including the Closing Date and (ii) to use commercially reasonable efforts to
make a valid election under Section 754 of the Code, effective for the taxable
year of IP BISC LLC including the Closing Date.

Section 11.07. Tax Contests. Notwithstanding anything to the contrary herein,
the Member Representative shall control the conduct, through counsel of its own
choosing and at the expense of the Holdings Pre-Closing Members, of any
Proceeding with respect to Taxes of an Acquired Entity or any Subsidiary
thereof, in each case, relating to any Tax period (or portion thereof) ending on
or prior to the Closing Date; provided, however, that (i) the Member
Representative shall not settle or compromise any such Proceeding in a manner
that would adversely affect the Tax Liability of any Acquired Entity or Parent
or any of its Affiliates for any Tax period (or portion thereof) following the
Closing without the consent of Parent (which shall not be unreasonably withheld,
conditioned or delayed) and (ii) with respect to any such Proceeding that
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Date, (A) the A&R Holdings LLC Agreement shall govern the conduct of such
Proceeding and (B) the Member Representative and Parent shall reasonably
cooperate to sever the pre-Closing and post-Closing portions of any such
Proceeding, if possible, or to treat such Proceeding as severed for purposes of
exercising their rights under this Section 11.07.

Section 11.08. Refunds. Holdings shall, within ten (10) days after the receipt
thereof, pay to the Member Representative for the benefit of and distribution to
the Members as allocated at the direction of the Member Representative any net
refunds or credits of Taxes attributable to any Acquired Entity or any
Subsidiary thereof that relate to a Tax period (or portion thereof) ending on or
prior to the Closing Date (determined in a manner consistent with the definition
of Pre-Closing Taxes) in each case if actually received, applied against,
credited to, or used to offset Taxes; provided, that, in each case, this
sentence shall not apply to (a) any refund or credit included in the calculation
of Final Adjusted Purchase Price, and (b) any refund or credit attributable to
any Tax item or attribute arising in a Tax period (or portion thereof) beginning
after the Closing Date. Parent will cooperate, and will cause each Acquired
Entity and any Subsidiary thereof to cooperate in using commercially reasonable
efforts to obtain any Tax refund that the Member Representative reasonably
requests Holdings to obtain, including through filing appropriate forms with the
applicable Taxing Authority.

ARTICLE 12

SURVIVAL; INDEMNIFICATION

Section 12.01. Survival. All of the representations, warranties, covenants and
agreements of the parties (including the Holdings Pre-Closing Members pursuant
to the Letters of Transmittal) contained in this Agreement, the Letters of
Transmittal or in any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive (and not be affected in any respect by) the
consummation of the Closing indefinitely and any investigation conducted by any
party hereto and any information or knowledge which any party may have or
receive. Notwithstanding the foregoing, other than for fraud: (i) the
representations and warranties of the parties hereto contained in this Agreement
(other than any Fundamental Representations and the representations and
warranties in Section 4.15 (Taxes), Section 4.16(c), the first sentence of
Section 4.16(d) insofar as it relates to Taxes, the last sentence of
Section 4.16(d) and Section 4.16(g) (Employee Benefit Plans) (the
representations and warranties referred to in this clause (i) other than the
Fundamental Representations, collectively, the “Special Representations”)) or in
any certificate or other writing delivered pursuant hereto or in connection
herewith shall survive the consummation of the Closing until the first
anniversary of the Closing Date (the “Expiration Date”); (ii) the Fundamental
Representations and the representations and warranties contained in the Letters
of Transmittal shall survive the consummation of the Closing until the later of
six years following the Closing Date and 60 days after the expiration of the
applicable latest possible statutes of limitations of the underlying subject
matter of such representations and warranties, determined on an individual
representation and warranty basis; (iii) the Special Representations and the
indemnification of Pre-Closing Taxes set forth in Section 12.02(a)(iii) shall
survive the consummation of the Closing until the later of six years following
the Closing Date and 60 days after the expiration of the applicable latest
possible statutes of limitations of the underlying subject matter of such
representations and

 

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warranties (or liability for such Pre-Closing Taxes), determined on an
individual representation and warranty basis; and (iv) all covenants and
agreements of the parties hereto parties (including the Holdings Pre-Closing
Members pursuant to the Letters of Transmittal) contained in this Agreement, the
Letters of Transmittal or in any certificate or other writing delivered pursuant
hereto or in connection herewith shall survive the consummation of the Closing
indefinitely or for the shorter period explicitly specified therein. The
representations and warranties, covenants and agreements of the parties
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith, and the applicable indemnity
obligations for the inaccuracy or breach thereof that terminate pursuant to this
Section 12.01, and the liability of any party to this Agreement with respect
thereto pursuant to this Article 12, shall not terminate with respect to any
claim, whether or not fixed as to liability or liquidated as to amount, if set
forth in a reasonably detailed written notice (specifying the circumstances
giving rise to such claim, the estimated amount of Damages sought thereunder to
the extent then reasonably ascertainable and the inaccuracy or breach giving
rise to such claim or, to the extent the specification of such inaccuracy or
breach is not reasonably practicable as of such date, a reasonably detailed
specification of the potential inaccuracy or breach based on the facts available
at the time of such notice) delivered to the applicable Indemnitor (or the
Member Representative if a Member is the Indemnitor) prior to the expiration of
the applicable survival period provided above.

Section 12.02. Indemnification.

(a) Indemnification by the Members. Effective at and after the consummation of
the Closing and subject to Section 12.03, the Members shall, severally (pro rata
based on such Member’s Holdings Allocation Percentage, or otherwise as
determined by the Member Representative upon written notice to Parent), but not
jointly (subject to the last sentence of Section 12.03(e)), indemnify Parent and
its Affiliates and Representatives (excluding Holdings and its Subsidiaries,
provided that for purposes of determining a De Minimis Breach pursuant to
Section 12.03(b), the Damages of Holdings and its Subsidiaries shall be taken
into account) (each, a “Parent Indemnitee”) against and hold each of them
harmless from any and all Damages incurred by a Parent Indemnitee arising out
of, relating to, resulting from, in connection with or otherwise in respect of:

(i) any inaccuracy or breach of any representation or warranty set forth in
Article 4 or Article 5 as of the Closing (other than any representation or
warranty made as of a certain date, in which case, as of such date), or in the
certificates delivered pursuant to Section 2.10(a) (with respect to such
representations and warranties) or Section 2.10(g) (each such breach of a
representation or warranty, a “Group Warranty Breach”);

(ii) any breach of a covenant or agreement pursuant to this Agreement, the
Restructuring Agreement or the Escrow Agreement made or to be performed by
(x) an Acquired Entity prior to the consummation of the Closing or (y) the
Member Representative, at any time (each such breach of a covenant or agreement,
together with any Group Warranty Breach, a “Group Breach”);

 

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(iii) (w) Pre-Closing Taxes of any Acquired Entity or any Subsidiary thereof,
(x) obligations of any Acquired Entity or any Subsidiary thereof under unclaimed
property and escheat Laws, to the extent actually paid to a Governmental
Authority, arising out of gift cards issued prior to the Closing Date,
(y) Transaction Expenses, to the extent not paid in connection with the Closing
or pursuant to Section 2.12, including the matters set forth on Schedule
12.02(a)(iii) of the Disclosure Schedule, and (z) the portion of any
Post-Closing New Venue Opening Expenses indirectly borne by Parent after the
Closing (based on Parent’s Percentage Share (as defined in the A&R Holdings LLC
Agreement)) that would not have been borne by Parent in accordance with the
definition of New Venue Opening Amount had such Post-Closing New Venue Opening
Expenses been paid prior to the Closing and incorporated in the calculation of
the New Venue Opening Amount (i.e., because, based on the definition of New
Venue Opening Amount, Parent (A) bears only fifty percent (50%) of any New Venue
Opening Expenses and (B) is not obligated to bear any portion of New Venue
Opening Expenses in excess of the New Venue Opening Amount Cap); or

(iv) (x) any error or inaccuracy in the Member Allocation Schedule attached as
Annex D (including with respect to the Holdings Pre-Closing Percentages,
Holdings Allocation Percentage, Rollover Class A Allocated Investment
Percentages, or Rollover Class A Investment Percentage), in any allocation or
apportionment of consideration or Liability by the Member Representative or any
Liability under the Restructuring Agreement except to the extent resulting from
any action taken by Parent in breach of the Transaction Documents, or in account
wiring instructions delivered by the Member Representative or any Member;
(y) any Liability (including any Proceeding with respect thereto) with respect
to any Member or other holder of Equity Interests in an Acquired Entity or any
Subsidiary thereof, with respect to such Member or holder’s capacity as a Member
or holder of Equity Interests or otherwise relating to his, her or its
relationship and rights as a Member or holder of Equity Interests (whether
pursuant to an LLC Agreement, Side Letter or other Contract in respect of any
Acquired Entity, such Member’s Letter of Transmittal, or any Liability with
respect to Rollover Holdco in connection with the transaction contemplated by
this Agreement, the Restructuring Agreement or the other Transaction Documents
to the extent such claim is brought by a Member except to the extent resulting
from any action taken by Parent in breach of the Transaction Documents) in an
Acquired Entity or any Subsidiary thereof, whether such Liability (or
Proceeding) involves Parent or an Affiliate of Parent, Rollover Holdco or an
Acquired Entity or any Subsidiary thereof (or any manager, director, officer or
employee of an Acquired Entity or any Subsidiary thereof) including, without
limitation, any Proceeding brought by or against such Person or his, her or its
heirs, successors or assigns, or other Persons on behalf of such Persons with
respect to the consummation of the Closing or the other Transactions (including
the Restructuring or Deal Approval, and including the adequacy or allocation of
any consideration hereunder with respect to the Transactions or the obligations
on any Member or holder of Equity Interests in an Acquired Entity or any
Subsidiary thereof under the Letter of Transmittal, including any release
thereunder or appointment of Member Representative as a representative), or this
Agreement or the other Transaction Documents (excluding, for the avoidance of
doubt, any indemnification claim against Parent to the extent duly made pursuant
to Section 12.02(c)); or (z) any Member Released Claim.

 

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(b) Additional Indemnification by the Members. Effective at and after the
consummation of the Closing and subject to Section 12.03, each Member shall,
severally but not jointly (subject to the last sentence of Section 12.03(e)),
indemnify Parent Indemnitees against and hold each of them harmless from any and
all Damages incurred by a Parent Indemnitee arising out of, relating to,
resulting from, in connection with or otherwise in respect of:

(i) (x) any inaccuracy or breach of any representation or warranty of such
Member set forth in Article 3 (other than Section 3.12) as of the Closing (other
than any representation or warranty made as of a certain date, in which case, as
of such date), a Letter of Transmittal or in the certificates delivered pursuant
to Section 2.10(a) with respect to such representations and warranties, and
(y) with respect to any Rollover Holdco Member, any inaccuracy or breach of any
representation or warranty with respect to Rollover Holdco set forth in
Section 3.12 (each such breach of a representation or warranty, a “Member
Warranty Breach”);

(ii) any breach of a covenant or agreement made or to be performed by such
Member pursuant to this Agreement (other than a Group Breach), the Restructuring
Agreement or a Letter of Transmittal (each such breach of a covenant or
agreement, together with any Member Warranty Breach, a “Member Breach”); or

(iii) For the avoidance of doubt, effective at and after the consummation of the
Closing and subject to Section 12.03, with respect to any Rollover Holdco Member
or Direct Rollover Member that is not an individual, the individual(s) listed
opposite such Rollover Holdco Member’s or Direct Rollover Member’s name as set
forth on Schedule 12.02(b)(iii) of the Disclosure Schedule, shall be jointly and
severally liable with such Rollover Holdco Member or Direct Rollover Holdco
Member (subject to the last sentence of Section 12.03(e)) for any Damages of
Parent Indemnitees to the extent that, and only with respect to such Rollover
Holdco Member or Direct Rollover Member is liable hereunder (subject to the
limitations hereunder), pro rata based on the percentage set forth opposite such
Rollover Holdco Member’s or Direct Rollover Member’s name on Schedule
12.02(b)(iii) of the Disclosure Schedule.

(c) Indemnification by Parent. Effective at and after the consummation of the
Closing and subject to Section 12.03, Parent shall indemnify the Members, the
Management Sellers, the Managers and their respective Affiliates and
Representatives (excluding Holdings and its Subsidiaries) (each a “Seller
Indemnitee” and, together with any Parent Indemnitee, each an “Indemnitee”))
against and hold each of them harmless from any and all Damages incurred by a
Seller Indemnitee arising out of, relating to, resulting from, in connection
with or otherwise in respect of:

(i) any inaccuracy or breach of any representation or warranty of Parent and set
forth in Article 6 as of the Closing (other than any representation or warranty
made as of a certain date, in which case, as of such date) or in the certificate
delivered pursuant to Section 2.10(d)(i) with respect to such representations
and warranties (each such breach of a representation or warranty, a “Parent
Warranty Breach”); or

(ii) any breach of a covenant or agreement made or to be performed by Parent or
Parent Merger Sub pursuant to this Agreement or the Escrow Agreement (each such
breach of a covenant or agreement, together with any Parent Warranty Breach, a
“Parent Breach”).

 

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It is understood and agreed that any claim for indemnification against Parent
pursuant to this Section 12.02(c) shall only be enforceable by the Member
Representative on behalf of the Seller Indemnitees in its sole and absolute
discretion, provided, that a Seller Indemnitee shall be permitted to enforce
this Section 12.02(c) directly in the case of defenses or counterclaims in
connection with any claim brought by Parent against such Seller Indemnitee
directly.

Section 12.03. Limitations on Indemnification.

(a) Notwithstanding anything in this Agreement to the contrary, other than for
fraud, and subject to this Section 12.03 (including Section 12.03(e)) and
Section 12.04), (i) in no event shall the cumulative indemnification obligations
of the Members for all Group Warranty Breaches and Member Warranty Breaches
(except for any inaccuracy or breach of the Fundamental Representations included
in Article 4, the Special Representations or the representations and warranties
in Section 4.06(d)), in the aggregate, exceed $15,000,000 (the “Business
Cap”), (ii) in no event shall the cumulative indemnification obligations of the
Members pursuant to Section 12.02(a)(i), (ii) and (iii)(z) and Section 12.02(b),
except for any inaccuracy or breach of the representations and warranties in
Section 4.06(d) or Section 4.15 (Taxes) with respect to federal, state and local
income Taxes, in the aggregate, exceed $190,000,000 (the “Cap”), (iii) except
with respect to breaches of the covenants and agreements made or to be performed
pursuant to Section 7.04 (which shall only be paid directly by the applicable
Principal(s)), in no event shall the indemnification obligations of the Members
pursuant to Section 12.02(a) and Section 12.02(b), (x) in the aggregate, exceed
the aggregate Closing Cash Consideration (including any adjustments pursuant to
Section 2.12), plus any Earn-Out Amount(s) actually paid in accordance with
Section 2.03(b) (including by issuance of Qualified MSG Stock or Qualified
Successor Stock in accordance with Section 2.03(b)), plus any distributions from
the Purchase Price Adjustment Escrow Fund received by the Members (or the Member
Representative on behalf of the Members) pursuant to the terms of this
Agreement, or, (y) with respect to any individual Member, exceed an amount equal
to (A) the Purchase Price plus any Earn-Out Amount(s) actually paid in
accordance with Section 2.03(b) (including by issuance of Qualified MSG Stock or
Qualified Successor Stock in accordance with Section 2.03(b)), multiplied by
(B) such Member’s Holdings Allocation Percentage. For the avoidance of doubt,
with respect to the foregoing clause (iii)(y), irrespective of whether a Member
delivers a Letter of Transmittal to the Member Representative, the limitation on
indemnification of a Parent Indemnitee with respect to the Members shall be
calculated as if such Member had submitted a Letter of Transmittal and such
Member had received its allocable portion of the Purchase Price (and any
Earn-Out Amount(s) actually paid in accordance with Section 2.03(b) (including
by issuance of Qualified MSG Stock or Qualified Successor Stock in accordance
with Section 2.03(b)) multiplied by such Member’s Holdings Allocation
Percentage), and in the event of an indemnification obligation of such Member,
the Member Representative

 

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shall pay the applicable amount out of the proceeds with respect to such Member
held by the Member Representative to the applicable Parent Indemnitee
notwithstanding the failure to receive such Letter of Transmittal but otherwise
subject to the limitations on indemnification set forth in this Agreement. For
the avoidance of doubt, with respect to this Section 12.03, the value of the
Qualified MSG Stock or Qualified Successor Stock will be equal to the value
attributed at the time of issuance pursuant to Section 2.03(b).

(b) With respect to indemnification of Parent Indemnitees by the Members for
Group Warranty Breaches and Member Warranty Breaches pursuant to
Section 12.02(a)(i) and Section 12.02(b)(i), other than for fraud or for the
inaccuracy or breach of the Fundamental Representations, the Special
Representations or the representations and warranties in Section 4.06(d), the
Members shall not be liable (i) for any Group Warranty Breaches or Member
Warranty Breaches with respect to which the aggregate Damages incurred by the
Acquired Entities and their Subsidiaries, collectively, when taken together with
their aggregate Damages with respect to any related Group Warranty Breach(es) or
Member Warranty Breach(es), do not amount to more than $35,000 (such related
Group Warranty Breach(es) or Member Warranty Breach(es) that do not exceed in
the aggregate $35,000, a “De Minimis Breach”) (for the avoidance of doubt,
solely for purposes of determining whether Damages exceed $35,000 for
determining a De Minimis Breach, and without taking into consideration the fact
that the Damages incurred by the Parent Indemnitees may have been less in
respect of any such Group Warranty Breaches or Member Warranty Breaches) or
(ii) unless the aggregate amount of Damages of Parent Indemnitees with respect
to all Group Warranty Breaches or Member Warranty Breaches, other than De
Minimis Breaches, exceeds $1,000,000 (the “Deductible”) and then only for
amounts of Damages in excess of the Deductible.

(c) With respect to indemnification by Parent for Parent Breaches pursuant to
Section 12.02(c)(i), other than for fraud or for the inaccuracy or breach of the
Fundamental Representations (i) Parent shall not be liable (A) for any Parent
Warranty Breaches for which the Damages with respect thereto, when taken
together with the Damages with respect to any related Parent Warranty Breaches,
do not amount to more than $35,000 (such Parent Warranty Breaches that do not
exceed $35,000, a “Parent De Minimis Breach”) or (B) unless the aggregate amount
of Damages with respect to all Parent Warranty Breaches, other than Parent De
Minimis Breaches, exceeds the Deductible, and then only for amounts of Damages
in excess of the Deductible, and (y) the maximum liability for all Parent
Warranty Breaches (except for any inaccuracy in or breach of the Fundamental
Representations) shall not exceed the Business Cap and (z) the maximum liability
for all Parent Breaches shall not exceed the Cap.

(d) For purposes of indemnification under this Article 12, (i) each of the
representations and warranties that contain any qualifications as to
materiality, material or Group Material Adverse Effect (or any correlative
terms) (other than such qualifications in Section 4.04(iv), Section 4.07(a),
Section 4.08(a), Section 4.08(b), Section 4.16(a), the last sentence of
Section 4.24, Section 6.04(iv), the definition of (except as provided in
subclause (iv) thereof) and references to “Material Contracts” and for the
avoidance of doubt, any dollar thresholds in Section 4.09 or Section 4.10(a)),
each of which shall not be disregarded) and (ii) the representation and warranty
in Section 4.05(a)(i) that contains qualification as to de minimis failures,
shall be deemed to have been given as though there were no such qualifications
in determining the Damages attributable to any such breach or inaccuracy and in
determining whether there has been any breach of, or inaccuracy in, any
representations or warranties hereunder.

 

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(e) If a Parent Indemnitee becomes entitled to indemnification pursuant to
Sections 12.02(a) or 12.02(b), except with respect to breaches of the covenants
and agreements made or to be performed pursuant to Section 7.04 (which shall
only be paid directly by the applicable Principal(s)), such indemnification
payment will be made first out of the Indemnity Escrow Fund and, in the event
the amount of the Indemnity Escrow Fund is not sufficient to satisfy such
entitlement in full, in cash by the Indemnitor (subject to the other terms of
this Article 12)); provided, solely in the event the amount of the Indemnity
Escrow Fund is not sufficient to satisfy such entitlement in full, that in the
case of an Indemnitor that is a Rollover Holdco Member (a “Rollover Holdco
Member Indemnitor”), at such Rollover Holdco Member Indemnitor’s option (upon
written notice to the Parent Indemnitee of the specifics of such election
(including whether to transfer Class A Holdings Interests and/or Preferred
Holdings Interests or a combination thereof, pursuant to clauses (ii) and (iii)
below) no later than ten (10) days after incurrence of such indemnification
obligation is finally determined to be due and owing, or if such election is not
made within such period, upon Parent’s option), such indemnification obligation
shall be payable in full pursuant to one or more of the following payment
methods (subject to the terms herein): (i) payment of cash to the Parent
Indemnitee by such Rollover Holdco Member Indemnitor, (ii) Rollover Holdco shall
(x) Transfer (as defined in the A&R Holdings LLC Agreement) to Parent Class A
Holdings Interests (valued at the Per Class A Holdings Interest Value in respect
of such indemnification obligation) and/or Preferred Holdings Interests (valued
at the Stated Early Put Value (as defined in the A&R Holdings LLC Agreement)) or
a combination thereof, free and clear of all Liens in accordance with the terms
of Article VI of the A&R Holdings LLC Agreement applicable to such Transfer, and
(y) cancel for no consideration the Rollover Holdco Class A Common Units or
Rollover Holdco Preferred Units (as applicable) corresponding to such
Attributable Class A Common Units or Attributable Preferred Units (as
applicable) of such Rollover Holdco Member, (iii) (x) Rollover Holdco shall
distribute a number of Class A Holdings Interests (valued at the Per Class A
Holdings Interest Value in respect of such indemnification obligation) and/or
Preferred Holdings Interests (valued at the Stated Early Put Value (as defined
in the A&R Holdings LLC Agreement)) or a combination thereof to such Rollover
Holdco Member Indemnitor in full redemption of an equivalent number of Rollover
Holdco Class A Units or Rollover Holdco Preferred Units (as applicable) held by
such Rollover Holdco Member Indemnitor and concurrently (y) such Rollover Holdco
Member Indemnitor shall Transfer such Class A Holdings Interests or Preferred
Holdings Interests (as applicable), free and clear of all Liens, to Parent in
accordance with the terms of Article VI of the A&R Holdings LLC Agreement
applicable to such Transfer, (iv) with respect to a Direct Rollover Member, such
Direct Rollover Member shall Transfer to Parent Class A Holdings Interests
(valued at the Per Class A Holdings Interest Value in respect of such
indemnification obligation), free and clear of all Liens in accordance with the
terms of Article VI of the A&R Holdings LLC Agreement applicable to such
Transfer, and/or (v) assignment of amounts distributable to such Rollover Holdco
Member Indemnitor under the A&R Holdings LLC Agreement (including under
Section 2.1 therein) to such Parent Indemnitee (such principal amount of
indemnification payable by assignment of distributions, the “Principal Amount”),
with interest accruing on such Principal Amount at a rate of five percent (5%)
per annum, compounded semiannually from the date such indemnification obligation
is finally determined to

 

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be due and payable; provided, further, that if the entire Principal Amount is
not paid prior to the earlier of (x) the second anniversary of the date such
indemnification obligation is finally determined to be due and payable, and
(y) in the case of a finally determined indemnification obligation, the date
such Rollover Holdco Member Indemnitor Transfers (as defined in the A&R Holdings
LLC Agreement) any of his, her or its Class A Holdings Interests, the entire
amount of such obligation, including the Principal Amount (to the extent unpaid)
and any interest accrued as of such date, shall be due and payable by the
Rollover Holdco Member Indemnitor by either of the methods set forth in clauses
(i), (ii) and (iii) above (such payment to be made in the sole discretion of the
Parent Indemnitee), and/or the Parent Indemnitee shall be entitled to set off
and withhold any amounts owed or payable to such Rollover Holdco Member
Indemnitor (whether under this Agreement or another Transaction Document, other
than an Employment Agreement) in respect of such outstanding amount.
Notwithstanding anything to the contrary contained in this Agreement, with
respect to any claim under Section 12.02(a) or 12.02(b) other than breaches of
the covenants and agreements made or to be performed pursuant to Section 7.04
(which shall only be paid directly by the applicable Principal(s)), the Parent
Indemnitee shall be entitled to collect the entire amount of his, her or its
Damages from the Indemnity Escrow Fund without regard to the Members’ pro rata
share of the Indemnity Escrow Fund (based on such Member’s Holdings Allocation
Percentage or otherwise).

(f) No Acquired Entity or Parent Contribution. Notwithstanding anything in this
Agreement to the contrary (but for the avoidance of doubt, without limiting
Parent’s specified indemnification obligations under Section 12.02(c)) or any
rights of any Member, officers, managers, directors and employees of each
Acquired Entity and each of their respective Subsidiaries pursuant to
Section 7.06): (i) each of the Members, Management Sellers, Rollover Holdco,
Rollover Holdco Members, Direct Rollover Members, Member Representative and
Acquired Entities acknowledges and agrees that he, she or it does not have any
right of indemnification, contribution or reimbursement from or remedy against
Parent, Parent Merger Sub, or their respective Affiliates, or the Acquired
Entities or any of their respective Subsidiaries, as a result of any
indemnification he, she or it is required to make under this Agreement or the
other Transaction Documents, arising out of, based upon or resulting from the
breach or inaccuracy of any representation, warranty, covenant, agreement or
other obligation of the Members, Management Sellers, Rollover Holdco, Rollover
Holdco Member, Direct Rollover Member or, prior to the Closing, any Acquired
Entity contained in this Agreement or in the other Transaction Documents, or in
any certificate, document or other instrument delivered in connection herewith
or therewith, including any representation or warranty by or with respect to
(A) (x) the Acquired Entities or their respective Subsidiaries contained in
Article 4 of this Agreement or in any of the other Transaction Documents,
(y) Rollover Holdco contained in Article 3 of this Agreement or in any of the
other Transaction Documents, or (z) the Member Representative contained in
Article 5 of this Agreement or in any of the other Transaction Documents, or
(B) any covenant, agreement or other obligation by or with respect to the
Acquired Entities or their respective Subsidiaries, Rollover Holdco or the
Member Representative that is required to be performed at or prior to the
consummation of the Closing, and (ii) each of the Members, Management Sellers,
Rollover Holdco, Rollover Holdco Members, Direct Rollover Members, Member
Representative and Acquired Entities hereby releases, waives and forever
discharges any right to indemnification, contribution or reimbursement that he,
she or it may have at any time against Parent, Parent Merger Sub, or their
respective Affiliates, or the

 

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Acquired Entities or their respective Subsidiaries, under or arising out of the
breach or inaccuracy of any representation, warranty, covenant, agreement or
other obligation of any Member, Management Seller, Rollover Holdco, Rollover
Holdco Member, Direct Rollover Member, the Member Representative or Acquired
Entity contained in this Agreement, or the other Transaction Documents, arising
out of, based upon or resulting from the breach or inaccuracy of any
representation, warranty, covenant, agreement or other obligation of the
Members, Management Sellers, Rollover Holdco, Rollover Holdco Members, Direct
Rollover Member or any Acquired Entity contained in this Agreement or in the
other Transaction Documents, or in any certificate, document or other instrument
delivered in connection herewith or therewith, including any representation or
warranty by or with respect to (1) (aa) the Acquired Entities or their
respective Subsidiaries contained in Article 4 of this Agreement or in any of
the other Transaction Documents, (bb) Rollover Holdco contained in Article 3 of
this Agreement or in any of the other Transaction Documents, or (cc) the Member
Representative contained in Article 5 of this Agreement or in any of the other
Transaction Documents, or (2) any covenant, agreement or other obligation by or
with respect to the Acquired Entities or their respective Subsidiaries, Rollover
Holdco or the Member Representative that is required to be performed at or prior
to the consummation of the Closing.

Section 12.04. Exclusive Remedy. Without limiting the effect of any other
limitation set forth in this Agreement, other than for fraud or with respect to
any claims under Section 9.11 (which claims may only be brought in accordance
with Section 9.11(d) and with respect to breaches of Section 9.11) or with
respect to any claims under Section 2.03(b)(iv) (which claims may only be
brought in accordance with Section 2.03(b)(iv) and with respect to breaches of
Section 2.03(b)(iv)), from and after the consummation of the Closing, the
indemnification provisions of Section 12.02 (together with the related
provisions of the Escrow Agreement) shall, except with respect to Section 2.11
or Section 2.14, be the sole and exclusive monetary remedy of the parties
following the consummation of the Closing for any and all inaccuracies or
breaches or alleged inaccuracies or breaches of any representations or
warranties or breaches or alleged breaches of any covenants or agreements of the
parties in this Agreement, the Restructuring Agreement, the Letters of
Transmittal, the officer certificates delivered pursuant to Section 2.10 or the
Transactions (other than the Employment Agreements and the A&R Holdings LLC
Agreement).

Section 12.05. Indemnification Procedures for Non-Third Party Claims. Prior to
any applicable expiration date under Section 12.01, if an Indemnitee has
incurred Damages, other than in connection with a Third Party Claim (as defined
below), such Indemnitee shall promptly deliver to the applicable Member(s) or
Parent subject to an indemnity obligation to such Indemnitee pursuant to
Section 12.02 (an “Indemnitor”) or, in the event the Indemnitor is a Member, the
Member Representative a notice signed by any officer thereof (or in the event
the Indemnitee is not an entity, signed by the Indemnitee) (an “Indemnity
Notice”) (i) stating that such Indemnitee has incurred Damages and
(ii) specifying in reasonable detail (to the extent available) the individual
items of Damages included in the amount so stated and the nature of the breach
of warranty or covenant to which such item is related. After the giving of any
Indemnity Notice, the amount of Damages to which the Indemnitee shall be
entitled in respect thereof shall be determined: (x) by a written agreement
between the Indemnitor and Indemnitee expressly stating that it is an agreement
made pursuant to this Section 12.05 or (y) by a final judgment or

 

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decree of any court having jurisdiction over the party against which such
determination is to be enforced; provided, however, that the failure by an
Indemnitee to deliver an Indemnity Notice promptly shall not prevent any
Indemnitee from being indemnified hereunder for any Damages, except to the
extent that the failure to so promptly notify the Indemnitor materially
prejudices the Indemnitor.

Section 12.06. Indemnification Procedures for Third-Party Claims.

(a) An Indemnitee shall give prompt notice in writing to the Indemnitor (or, in
the event the Indemnitor is a Member, to the Member Representative) of the
assertion of any claim or the commencement of any suit, action or proceeding by
any Third Party (“Third Party Claim”) in respect of which indemnity may be
sought pursuant to Section 12.02. Such notice shall set forth in reasonable
detail such Third Party Claim and the basis for indemnification (taking into
account the information then available to the Indemnitee). The failure to so
notify any Indemnitor (or, in the event the Indemnitor is a Member, the Member
Representative) shall not relieve any Indemnitor of its obligations hereunder,
except to the extent such failure shall have materially prejudiced the
Indemnitor.

(b) The Indemnitor shall be entitled to participate in the defense of any Third
Party Claim, and if the Indemnitor (or, in the event the Indemnitor is a Member,
the Member Representative), elects to do so by giving the Indemnitee a Control
Notice (if permitted to make such election in accordance with the definition of
such term or by Parent’s prior written consent) within thirty (30) days after
receipt of written notice of such Third Party Claim (and the other information
required pursuant to Section 12.06(a)), then, subject to the other limitations
set forth in this Section 12.06, such Indemnitor shall be entitled to control
and appoint lead counsel for such defense, in each case at its own expense (in
each case, subject to Section 12.06(d)).

(c) If the Indemnitor shall assume the control of the defense of any Third Party
Claim in accordance with the provisions of Section 12.06(b), (x) the Indemnitor
shall obtain the prior written consent of the Indemnitee (which shall not be
unreasonably withheld, conditioned or delayed) before entering into any
settlement of such Third Party Claim, if such settlement does not release the
Indemnitee and its Affiliates from all Liabilities with respect to such Third
Party Claim or the settlement requires an admission of fault or imposes
injunctive or other equitable relief against the Indemnitee or any of its
Affiliates, (y) the Indemnitee shall be entitled to participate in the defense
of any Third Party Claim and to employ separate counsel of its choice for such
purpose (the fees and expenses of such separate counsel shall be paid by the
Indemnitee unless (A) such Third Party Claim seeks an order, injunction or other
equitable relief against any Indemnitee or any of its Affiliates (other than
Holdings or its Subsidiaries), (B) the Indemnitee is named as a defendant in
such Third Party Claim, or (C) the Indemnitee determines with advice of counsel
that there may be one or more legal defenses available to Indemnitee that are
different from or additional to those available to the Indemnitor or, in the
case named as defendants, Holdings or its Subsidiaries, or that a conflict of
interest among any of such parties may exist in respect of such Third Party
Claim, in which case of clauses (A), (B) or (C), the fees and expenses of such
separate counsel shall be paid by the Indemnitor)), and (z) the Indemnitor (or,
in the event the Indemnitor is a Member, the Member Representative) shall keep
the Indemnitee reasonably apprised (including by reasonably prompt delivery of
copies of all filed documentation and reasonable consultation rights) of all
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Third Party Claim. Notwithstanding anything to the contrary contained in this
Article 12 or in the A&R Holdings LLC Agreement, Section 11.07 shall govern the
conduct of any Proceeding with respect to Taxes of an Acquired Entity or any
Subsidiary thereof to the extent provided therein and the A&R Holdings LLC
Agreement shall govern the conduct of any Proceeding if and to the extent so
provided in Section 11.07 or if such Proceeding is not otherwise addressed by
Section 11.07.

(d) If the Indemnitor (or in the event the Indemnitor is a Member, the Member
Representative) elects not to assume the defense, settlement, adjustment or
compromise of an asserted Liability, fails to timely and properly notify the
Indemnitee of his, her or its election as herein provided (including the
information required pursuant to Section 12.06) and fails to cure such failure
within five (5) days following written notice to such Indemnitor of such
failure, or, at any time after assuming such defense, fails to diligently defend
against such Third Party Claim in good faith (and fails to cure such failure
within twenty (20) days following written notice to such Indemnitor of such
failure), fails to reasonably demonstrate that such Indemnitee has access to
sufficient resources to pay the amount of any Damages of the Indemnitee in
connection with such Third Party Claim (as required pursuant to clauses (i)(B)
and (ii)(B) respectively of the definition of “Control Notice” herein) or if the
Indemnitee is otherwise entitled pursuant to this Agreement to have control over
the defense, settlement or compromise of such Third Party Claim, then
(i) Holdings shall, in the case of any Third Party Claim arising out of,
relating to, resulting from, in connection with or otherwise in respect of any
inaccuracy or breach of any representation or warranty that is subject to the
Business Cap pursuant to Section 12.03(a), at Holdings’ expense, pay, defend,
settle, adjust or compromise such Third Party Claim and such expenses of
Holdings shall be included in the calculation of the Indemnitees’ Damages (as
determined in accordance with Section 12.07(c)) in the event such inaccuracy
and/or breach has occurred, and (ii) in the case of any other Third Party Claim,
Indemnitee may pay, defend, settle, adjust or compromise such Third Party Claim
(subject to the prior written consent of the Indemnitor (which shall not be
unreasonably withheld, conditioned or delayed) before entering into any
settlement of such Third Party Claim) and such expenses of Indemnitee shall be
included in the calculation of the Indemnitees’ Damages payable to the
Indemnitee hereunder in the event such inaccuracy, breach and/or other
indemnifiable event pursuant Section 12.02 has occurred. If Holdings has assumed
the defense of a Third Party Claim in accordance with this Section 12.06(d),
then the parties agree that the defense of such claim by Holdings, including all
decisions as to the manner in which such Third Party Claim is defended, shall be
directed by Indemnitee subject only to (x) the approval of the settlement of
such Third Party Claim by Indemnitor in accordance with the immediately
preceding sentence of this Section 12.06(d) and (y) any approval rights with
respect to such settlement pursuant to Section 4.1(g)(i)(C)(III) of the A&R
Holdings LLC Agreement.

(e) Each party shall cooperate, and cause their respective affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested in connection therewith. In addition, the party
controlling the defense of any Third Party Claim shall make reasonably available
its employees involved in the defense of such third Party Claims on a mutually
convenient basis (at reasonable regular intervals) for providing additional
information and explanation of any issues, material defense decisions and/or
strategies, and reasonably timely updates on the status of any such Proceedings.

 

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Section 12.07. Calculation of Damages.

(a) No Indemnitee shall be required to mitigate any Damages for which such
Indemnitee seeks indemnification under this Agreement. The amount of any Damages
payable under Section 12.02 shall be net of any amounts actually recovered by
the Indemnitee under applicable insurance policies or other Contracts or from
any other Person (net of any applicable deductible or increase in insurance
premiums (including retro-premium adjustments); provided that the Indemnitee
shall have no obligation to pursue or continue the pursuit of any such recovery.
If the Indemnitee receives any amounts under applicable insurance policies or
from any other Person responsible for any Damages subsequent to receipt of funds
from the Indemnitors, then such Indemnitee shall promptly reimburse the
Indemnitors for any funds delivered or expense incurred by the Indemnitors in
connection with the delivery of such funds up to the amount received by the
Indemnitee, net of any expenses (including any increase in insurance premiums
(including retro-premium adjustments)) incurred by such Indemnitee (or its
Affiliates) in collecting such amount.

(b) Neither the Members nor Parent shall be liable under Section 12.02 for any
Damages (x) to the extent that there is a specific liability or reserve relating
to such matter that is included (A) in the Group Balance Sheet (solely in
respect of litigation-related, bad debt or customer deposit reserves made in
accordance with GAAP and specifically attributed to the applicable litigation,
account receivable or customer deposit that is the subject of such
indemnification claim under Section 12.02(a)(i)) or (B) in the calculation of
Closing Indebtedness or Closing Net Working Capital, in each case, as finally
determined pursuant to Section 2.14, or (y) to the extent such Damages are
otherwise taken into account in the calculations of the amount of the Final
Adjusted Purchase Price.

(c) For the avoidance of doubt, subject to the determination of De Minimis
Breaches set forth in Section 12.03, the amount of any Damages incurred by a
Parent Indemnitee arising out of, relating to, resulting from, in connection
with or otherwise in respect of any Damages incurred by Holdings or its
Subsidiaries shall be deemed for all purposes herein, to the extent that any
Parent Indemnitee is entitled to indemnification in accordance with this
Article 12, to be the proportionate amount of such Damages sustained by any
Acquired Entities or any of their Subsidiaries (i.e., based on Parent’s
Percentage Share (as defined in the A&R Holdings LLC Agreement)) as of
immediately following the consummation of the Closing.

Section 12.08. Member Representative. With respect to the matters for which the
Members are obligated to provide or are entitled to indemnification pursuant to
Section 12.02(a) or 12.02(b), notwithstanding anything to the contrary contained
in this Agreement, the Member Representative shall make or receive all notices,
waivers and consents applicable to the Members on behalf thereof and Parent
shall be obligated only to provide written notice to the Member Representative
(who shall be deemed the “Indemnitor” or “Indemnitee”, as the case may be, which
respect to all notices, waivers and consents applicable to the Member under
Article 12).

 

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Section 12.09. Treatment of Adjustments. Unless otherwise required by Applicable
Law, any amount paid by the Members or Parent under Section 12.02 will be
treated as an adjustment to the Adjusted Purchase Price for all federal, state,
local and foreign Tax purposes, and the parties shall file their Tax Returns
accordingly unless otherwise required by Applicable Law.

ARTICLE 13

[Reserved]

Section 13.01. Reserved.

ARTICLE 14

MISCELLANEOUS

Section 14.01. Notices. All notices or other communications required or
permitted hereunder shall be given in writing and given by certified or
registered mail, return receipt requested, nationally recognized overnight
delivery service, such as Federal Express or personal delivery against receipt
to the party to whom it is given, in each case, at such party’s following
address or such other address as such party may hereafter specify by notice to
the other parties hereto given in accordance herewith:

if to Parent, Parent Merger Sub, The Madison Square Garden Company, the Earn-Out
Guarantor or, following the Closing, any Acquired Entity, to:

The Madison Square Garden Company

Two Pennsylvania Plaza

New York, New York 10121

Attention:    President    General Counsel

with copies, which shall not constitute notice, to:

The Madison Square Garden Company

Two Pennsylvania Plaza

New York, New York 10121

Attention: General Counsel

and

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, NY 10004

Attention: Kenneth A. Lefkowitz

 

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if to the Member Representative, any Member, Management Seller, Rollover Holdco
Member, Rollover Holdco or, prior to the Closing, any Acquired Entity to:

TAO Group

1350 Avenue of the Americas, Suite 710

New York, NY 10019

Attention:    Marc Packer    Richard Wolf    Noah Tepperberg    Jason Strauss

with copies, which shall not constitute notice, to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention:    Ariel J. Deckelbaum    Robert B. Schumer

Any such notice or other communication shall be deemed to have been given as of
the date so personally delivered (or, if delivered after normal business hours,
on the next business day), on the next business day when sent by overnight
delivery services or five days after the date so mailed if by certified or
registered mail.

Section 14.02. Amendments and Waivers.

(a) Any provision of this Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by Parent and the Member Representative (subject to (x) clause (i) of
Section 14.14(a), and (y) with respect to Section 9.11 or Section 2.03(b)(iv) or
any addition to the scope of the representations, warranties, covenants and
agreements provided by The Madison Square Garden Company or the Earn-Out
Guarantor respectively under this Agreement as of the date of this Agreement,
the written consent of The Madison Square Garden Company or the Earn-Out
Guarantor, as applicable) or, in the case of a waiver, by Parent (in the case of
any waiver against Parent or Parent Merger Sub) or by the Member Representative
(in the case of any waiver against any Management Seller, Rollover Holdco, other
Rollover Holdco Member, Direct Rollover Member or Acquired Entity (subject to
clause (i) of Section 14.14(a)).

(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
Applicable Law.

Section 14.03. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense; provided, that (x) the Transaction Expenses of
each Acquired Entity shall

 

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be borne by the Members pursuant to the deduction thereof in the definitions of
“Cash Purchase Price”, or if not paid in connection with the Closing or pursuant
to Section 2.12, to be paid in accordance with Article 12; and (y) the Debt
Financing Expenses shall be borne entirely by Holdings, and promptly after the
consummation of the Closing, Holdings shall reimburse Parent and the Management
Sellers, Direct Rollover Members and other Rollover Holdco Members and their
respective Affiliates in respect of any Debt Financing Expenses incurred by
them.

Section 14.04. Disclosure Schedule. The parties hereto agree that any reference
in a particular Schedule of the Disclosure Schedule shall only be deemed to be
an exception to (or, as applicable, a disclosure for purposes of) (a) the
representations and warranties (or covenants, as applicable) that are contained
in the corresponding Section of this Agreement and (b) any other representations
and warranties that are contained in this Agreement, but only if the relevance
of that reference as an exception to (or a disclosure for purposes of) such
representations and warranties is readily apparent on the face of such
disclosure. The mere inclusion of an item in the Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission that
such item represents a material exception or material fact, event or
circumstance or that such item is reasonably likely to be material or have a
Group Material Adverse Effect.

Section 14.05. Binding Effect; Benefit; Assignment.

(a) This Agreement shall be binding upon, and shall inure to the benefit of the
parties hereto, the respective heirs, executors, administrators, personal
representatives, successors and permitted assigns of each of the parties hereto.
No provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any Person other than the
parties hereto and their respective successors and assigns, except as otherwise
provided in Section 14.02(a) and the proviso to Section 14.02(a) (which are
intended to be for the benefit of the Persons identified therein).
Notwithstanding the foregoing, (i) the indemnified Persons (in accordance with
Section 7.06) shall be third party beneficiaries to the covenants and
obligations set forth in Section 7.06; and (ii) the Members, Management Sellers
and their Affiliates, and Members’ Counsel (including their partners and
employees) shall be third party beneficiaries of Section 14.13. Any assignment
in violation of this Agreement shall be null and void ab initio.

(b) No party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement (including any rights with respect to all or
any portion of an Earn-Out Amount) without the consent of each other party
hereto, provided that (i) Parent and Parent Merger Sub may assign any or all of
their respective rights, interests and obligations hereunder to one or more
wholly-owned direct or indirect subsidiaries of The Madison Square Garden
Company (provided that such assignment shall not relieve Parent of its
obligations hereunder) and (ii) each Member may assign any or all of his, her or
its respective rights with respect to all or any portion of the Earn-Out Amounts
due and payable to such Member (A) with respect to any Member that is an
individual: (1) to a trust solely for the benefit of such individual or the
members of such individual’s immediate family with such individual acting as
trustee of such trust and retaining control thereunder for so long as such
individual is physically able; or (2) to an entity that is owned solely by such
individual and the members of such individual’s

 

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immediate family with such individual retaining authority to appoint all of the
directors (or persons serving in a similar capacity) for so long as such
individual is physically able or (B) to any wholly-owned Affiliate.

Section 14.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflicts of law rules of such state.

Section 14.07. Jurisdiction. The parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the Transactions (whether
brought by any party or any of its Affiliates or against any party or any of its
Affiliates, but excluding matters determined by the Accounting Firm pursuant to
Section 2.11 or Section 2.14) shall be brought in the Delaware Chancery Court
or, if such court shall not have jurisdiction, any federal court located in the
State of Delaware or other Delaware state court, and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 14.01 shall be deemed effective service of process on
such party.

Section 14.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THE ACTIONS OF THE PARTIES HERETO PURSUANT TO THIS AGREEMENT OR IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT.

Section 14.09. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by the other party hereto,
this Agreement shall have no effect and no party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication).

Section 14.10. Entire Agreement. This Agreement, the Transaction Documents and
the Confidentiality Agreement embody the entire agreement and understanding of
the parties and their respective Affiliates with respect to the transactions and
merges in, supersedes and cancels all prior written or oral commitments,
arrangements or understandings with respect thereto.

 

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Section 14.11. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other
Governmental Authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the Transactions is
not affected in any manner materially adverse to any party. Upon such a
determination, 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 are consummated
as originally contemplated to the fullest extent possible.

Section 14.12. Specific Performance. The parties hereto agree that irreparable
damage for which monetary damages, even if available, would not be an adequate
remedy, would occur if any provision of this Agreement were not performed in
accordance with the terms hereof. Each of the parties agrees that it will not
oppose the granting of an injunction, specific performance and other equitable
relief when expressly available pursuant to the terms of this Agreement on the
basis that there is adequate remedy at law. Any party seeking an injunction or
injunctions to prevent breaches of this Agreement when expressly available
pursuant to the terms of this Agreement and to enforce specifically the terms
and provisions of this Agreement when expressly available pursuant to the terms
of this Agreement shall not be required to provide any bond or other security in
connection with any such order or injunction.

Section 14.13. Waiver of Conflicts Regarding Representation. Recognizing that
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Stern Tannenbaum & Bell LLP,
Andrews Kurth Kenyon LLP, Jackson Lewis P.C., Grubman Shire & Meiselas, P.C. and
Fishman & Decea, LLP (“Members’ Counsel”) have acted as legal counsel to the
Members, the Management Sellers, the Acquired Entities and their respective
Subsidiaries prior to the Closing, and that Members’ Counsel may act as legal
counsel to the Members, the Management Sellers and/or their Affiliates after the
Closing, (i) each of Parent and each Acquired Entity hereby waives, on its own
behalf and agrees to cause its respective Affiliates to waive, any conflicts
that may arise in connection with any of Members’ Counsel representing the
Members, the Management Sellers and/or their Affiliates after the Closing
relating to Members’ Counsel’s representation prior to the Closing, and
(ii) each of Parent, each Acquired Entity and each of their respective
Subsidiaries hereby agrees that, in the event that a dispute arises between or
among any of Parent or any of their respective Affiliates (including, after the
Closing, each Acquired Entity and each of their respective Subsidiaries), on the
one hand, and any Member, Management Seller and/or their Affiliates (including,
prior to the Closing, each Acquired Entity and each of their respective
Subsidiaries), on the other hand, each of the parties hereto agree that any of
Members’ Counsel may, to the extent permitted by applicable ethics rules,
represent any Member, Management Seller and/or their Affiliates in such dispute
even though the interests of such Member, Management Seller and/or such
Affiliate may be directly adverse to Parent, an Acquired Entity or any of their
respective Affiliates at that time (including, after the Closing, each Acquired
Entity and each of their respective Subsidiaries), and even though Members’
Counsel may have represented the Acquired Entities and their respective
Subsidiaries in a matter

 

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substantially related to such dispute, or may be handling ongoing matters for
the Members, Management Sellers and/or their Affiliates, Parent and each
Acquired Entity hereby waive, on behalf of themselves and each of their
respective Affiliates, any conflict of interest in connection with such
representation by any of Members’ Counsel relating to Members’ Counsel’s
representation prior to the Closing. Parent further agrees that, as to all
communications among any of Members’ Counsel, the Acquired Entities and their
respective Subsidiaries that directly and specifically relate to the
transactions contemplated by this Agreement, the attorney-client privilege, the
expectation of client confidence and all other rights to any evidentiary
privilege, belong solely to the Member Representative in any dispute with Parent
or its Affiliates (including, after the Closing, each Acquired Entity and each
of their respective Subsidiaries) and shall be solely controlled by the Member
Representative in any dispute with Parent or its Affiliates (including, after
the Closing, each Acquired Entity and each of their respective Subsidiaries).
Notwithstanding the foregoing, if a dispute arises after the Closing between
Parent or any Acquired Entity, on the one hand, and a third party other than
(and unaffiliated with) the Members, Management Sellers and their Affiliates, on
the other hand, then Parent or Affiliate (to the extent applicable) may assert
the attorney-client privilege to prevent disclosure to such third party of
confidential communications by a Members’ Counsel, and, in relation to such
dispute, no Member, Management Seller, or Affiliate of either shall be permitted
to waive its attorney-client privilege with respect to such confidential
communications without Parent’s prior written consent. The parties hereto agree
to take, and to cause their respective Affiliates to take, all steps necessary
to implement the intent of this Section 14.13. Parent acknowledges, on behalf of
itself and its Affiliates (including, after the Closing, each Acquired Entity
and each of their respective Subsidiaries), that each has had the opportunity to
discuss and obtain adequate information concerning the significance and material
risks of, and reasonable available alternatives to, the waivers, permissions and
other provisions of this Agreement, including the opportunity to consult with
counsel other than a Members’ Counsel. This Section 14.13 is for the benefit of
the Members, Management Sellers and their Affiliates, and Members’ Counsel
(including their partners and employees), each of which are intended third-party
beneficiaries of this Section 14.13.

Section 14.14. Member Representative.

(a) Pursuant to the Deal Approval, and in any event upon the delivery (whether
prior to the date of this Agreement or otherwise) of an executed Letter of
Transmittal to Parent in accordance with this Agreement and without any further
action on the part of any Member, each Member shall thereby, and each Management
Seller or other Rollover Holdco Member and, solely with respect to the period
prior to the consummation of the Closing, Rollover Holdco and each Acquired
Entity does hereby, irrevocably appoint the Member Representative as the sole
representative of such Member, Management Seller or other Rollover Holdco Member
or, solely with respect to the period prior to the consummation of the Closing,
Rollover Holdco and each Acquired Entity as the case may be (each, a
“Represented Party”), to act as the agent and on behalf of such Represented
Party regarding any matter relating to or under this Agreement, the Escrow
Agreement, the Credit Agreement and the Letters of Transmittal (the “Represented
Documents”) including for the purposes of (i) executing and delivering the
Represented Documents (it being understood that no amendment thereto shall be
made that by Law requires further approval by such Represented Party without
such further

 

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approval), and taking all actions required or permitted to be taken under such
Represented Documents, (ii) on behalf of the Members, (x) directing the Escrow
Agent to make payment of the Escrow Funds in accordance with Section 2.14,
Article 12 and the Escrow Agreement, (y) agreeing to, negotiating, entering into
settlements and compromises of and complying with orders of courts and awards of
arbitrators with respect to Section 2.14, Article 12 and the Escrow Agreement
and (z) acting for the Members with regard to all matters pertaining to
indemnification pursuant to Section 2.14, Article 12 and the Escrow Agreement,
including the power to compromise any claim on behalf of the Members thereunder
and to transact matters of litigation or other claims and to bring any
Proceeding on behalf of the Members under Section 2.03(b)(iv), Article 12,
Section 9.11 or Section 14.05, (iii) giving, receiving and forwarding all
notices and communications required to be given or received by the Represented
Parties under the Represented Documents and in connection with any of the
Transactions, including receiving service of process in connection with any
claims thereunder, (iv) engaging attorneys, accountants, financial and other
advisors, paying agents and other Persons necessary or appropriate, in the sole
discretion of the Member Representative in the performance of its duties under
the Represented Documents, and authorizing and directing the disbursement of
funds to pay the fees and expenses of such Persons (v) granting any consent,
approval or waiver on behalf of the Members, the Management Sellers or other
Rollover Holdco Member or, prior to the Closing, the Acquired Entities under
this Agreement prior to, at and following the Closing (including pursuant to
Section 14.02); and (vi) taking all actions or refraining from doing any further
act or deed on its own behalf or on behalf of any Represented Party that the
Member Representative deems necessary or appropriate in its discretion relating
to the subject matter of the Represented Documents, as fully and completely as
the Represented Parties could do if personally present. All decisions and
actions by the Member Representative are binding upon all Represented Parties,
and no Represented Party shall have the right to object, dissent, protest or
otherwise contest the same. As the representative of the Represented Parties
under this Agreement, the Member Representative shall act as the agent for all
Represented Parties, shall have authority to bind each such Represented Party in
accordance with this Agreement, and Parent may rely on such appointment and
authority until the receipt of notice of the appointment of a successor in
accordance with Section 14.14(d). Parent may conclusively rely upon, without
independent verification or investigation, all decisions made by the Member
Representative in connection with the Represented Documents in writing.

(b) The Member Representative shall be entitled to retain counsel and to incur
such costs as the Member Representative deems to be necessary or appropriate in
connection with the performance of its obligations under this Agreement, and the
Member Representative shall be reimbursed by the Members for all such fees and
expenses (including reasonable attorneys’ fees and expenses and any fees and
costs of the Accounting Firm pursuant to Section 2.09 or Section 2.14). In
furtherance of the foregoing, Parent shall deposit the Expense Holdback Amount
with the Member Representative in accordance with Section 2.10(d)(v) in order
for the Member Representative to pay any such fees and expenses. As soon as
practicable following the completion of all procedures described under
Section 2.14, Section 12.01 and the Escrow Agreement, the Member Representative
shall deliver the balance of the Expense Holdback Amount (if any) to the
Holdings Pre-Closing Members (in proportion to the amount the Closing Merger
Consideration payable to such Holdings Pre-Closing Member pursuant to
Section 2.02(c) was reduced by such Expense Holdback Amount).

 

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(c) The Member Representative (in its capacity as such) shall not be liable to
any Represented Party, Parent, Parent Merger Sub or any other person in the
absence of its gross negligence or willful misconduct. The Members shall,
severally (pro rata in accordance with each Member’s Holdings Allocation
Percentage), but not jointly, indemnify, defend and hold harmless the Member
Representative and its successors and assigns from and against any and all
Damages arising as a result of or incurred in connection with any actions taken
or omitted to be taken by the Member Representative, in each case as such
Damages are incurred or suffered; provided, however, that in the event it is
finally adjudicated that such Damages or any portion thereof were primarily
caused by the gross negligence or willful misconduct of the Member
Representative, the Member Representative will reimburse the Members the amount
of such indemnified Damages attributable to such gross negligence or willful
misconduct. If not paid directly to the Member Representative by the Members,
any such Damages may be recovered by the Member Representative from amounts
released from the Escrow Funds to the Members after the Expiration Date in
accordance with Section 2.15 and the terms of the Escrow Agreement and/or the
Expense Holdback Amount; provided, however, that this does not relieve the
Members from their obligation to promptly pay such Damages as such Damages are
suffered or incurred, nor does it prevent the Member Representative from seeking
any remedies available to it at Law or otherwise.

(d) All of the immunities granted to the Member Representative under this
Agreement shall survive the Closing and/or any termination of this Agreement.
The grant of authority provided for herein is coupled with an interest and shall
be irrevocable and survive the death, incompetency, bankruptcy or liquidation of
any of the Represented Parties, but shall terminate with respect to the Acquired
Entities upon the consummation of the Closing.

(e) The Member Representative may be changed from time to time upon written
notice from the Members to Parent; provided, however, that the Member
Representative may not be removed unless Members representing a greater than
fifty percent (50%) Holdings Allocation Percentage agree in writing to such
removal and to the identity of the substituted Member Representative and such
substituted Member the substitution is reasonably acceptable to Parent. Upon any
resignation of the Member Representative, or any other vacancy in the position
of the Member Representative, such vacancy may be filled by such a majority.

Section 14.15. Releases.

(a) Each Principal, Rollover Holdco Member, Direct Rollover Member and each
other Equityholder (together with the Principals, Rollover Holdco Members and
Direct Rollover Members, the “Member Releasor”) hereby agrees that, in
consideration of benefits he, she or it will receive in connection with the
Transactions, effective upon the consummation of the Closing, he, she or it
knowingly and voluntarily irrevocably releases and forever discharges (i) the
Acquired Entities (ii) the respective Subsidiaries of the Acquired Entities,
(iii) Rollover Holdco, and (iv) the respective managers, officers, agents and
representatives of the Acquired Entities, their respective Subsidiaries and
Rollover Holdco (collectively clauses (i), (ii), (iii) and (iv), the “Acquired
Entity Released Parties”) from any and all claims, controversies, actions,
causes of action, cross-claims, counter-claims, rights, demands, debts,
compensatory damages, liquidated damages, punitive or exemplary damages, other
damages, claims for costs or attorneys’ fees, or Liabilities of any nature
whatsoever in law, equity or otherwise, and whether

 

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known or unknown, suspected or unsuspected, or claimed or unclaimed (and
including without limitation for or on account of fraud), against any of the
Acquired Entity Released Parties that the Member Releasor or any of his, her or
its successors or assigns has ever had, may now have or hereafter can, shall or
may have to any extent relating in any way to or in connection with any matter,
cause or thing whatsoever from the beginning of the world to and including the
consummation of the Closing (subject to the proviso below, all of the foregoing
collectively referred to herein as the “Member Released Claims”); provided,
however, that the foregoing release shall not include, and no release or
discharge is given hereunder in respect of any obligations required to be
performed or amounts due or owed by any Acquired Entity Released Party (x) under
this Agreement, the Restructuring Agreement and/or any other Transaction
Document after the Closing Date (including pursuant to Section 7.06) (provided
that the exception in this clause (x) shall not apply to Rollover Holdco and its
managers, officers, agents and representatives with respect to each Equityholder
that is not a Principal, Rollover Holdco Member or Direct Rollover Member), (y)
with respect to employees of the Acquired Entities or Subsidiaries of the
Acquired Entities, earned but unpaid Ordinary Course salary and bonuses or
reimbursement of expenses in the Ordinary Course to the extent not past due as
of the Closing Date, or (z) with respect to any obligations included in the
calculation of the Balance Sheet Adjustment or Transaction Expenses as finally
determined pursuant to Section 2.14. For the avoidance of doubt, except for the
Affiliate Contracts and Affiliate Transactions listed on Schedule 14.15 of the
Disclosure Schedule, this Agreement and the other Transaction Documents, each of
the Affiliate Contracts and Affiliate Transactions are hereby terminated as of
the consummation of the Closing and none of the Affiliate Contracts or Affiliate
Transactions shall have any further force or effect, notwithstanding any
survival or other provision contained therein to the contrary or any past
practice.

(b) Each of the Acquired Entities (for purposes of this Section 14.15(b), the
“Acquired Entity Releasor” and with the Member Releasor, each a “Releasor” and
together the “Releasors”) hereby agrees that, in consideration of benefits it
will receive in connection with the Transactions, effective upon the
consummation of the Closing, it knowingly and voluntarily irrevocably releases
and forever discharges the Principals, and solely as to their capacity as a
Member or holder of Equity Interests in any of the Acquired Entities or their
Subsidiaries, the Equityholders (together with the Principals, the “Member
Released Parties” and the Member Released Parties together with the Acquired
Entity Released Parties, the “Released Parties”) from any and all claims,
controversies, actions, causes of action, cross-claims, counter-claims, rights,
demands, debts, compensatory damages, liquidated damages, punitive or exemplary
damages, other damages, claims for costs or attorneys’ fees, or Liabilities of
any nature whatsoever in law, equity or otherwise, and whether known or unknown,
suspected or unsuspected, or claimed or unclaimed against any of the Principals
that each Acquired Entity Releasor or any of its successors or assigns has ever
had, may now have or hereafter can, shall or may have to any extent relating in
any way to or in connection with any matter, cause or thing whatsoever from the
beginning of the world to and including the consummation of the Closing (subject
to the proviso below, all of the foregoing collectively referred to herein as
the “Acquired Entity Released Claims” and together with the Member Released
Claims, the “Released Claims”); provided, however, that the foregoing release
shall not include, and no release or discharge is given hereunder in respect of
any obligations required to be performed or amounts due or owed by any Acquired
Entity Released Party (i) under this Agreement and/or any other

 

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Transaction Document, (ii) with respect to any Member Released Party other than
a Principal, to the extent not relating to such Member Released Party’s capacity
as a Member or holder of Equity Interests, or (iii) with respect to any claim
for fraud. For the avoidance of doubt, except for the Affiliate Contracts and
Affiliate Transactions listed on Schedule 14.15 of the Disclosure Schedule, this
Agreement and the other Transaction Documents, each of the Affiliate Contracts
and Affiliate Transactions are hereby terminated as of the consummation of the
Closing and none of the Affiliate Contracts or Affiliate Transactions shall have
any further force or effect, notwithstanding any survival or other provision
contained therein to the contrary or any past practice.

(c) Each Releasor acknowledges and intends that the releases given in this
Section 14.15 shall be effective as a bar to each and every one of the Released
Claims herein above mentioned or implied. Each Releasor expressly consents that
the releases given in this Section 14.15 shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to unknown and unsuspected Released Claims (notwithstanding any state
statute that expressly limits the effectiveness of a general release of unknown,
unsuspected or unanticipated Released Claims), if any, as well as those relating
to any other Released Claims herein above mentioned or implied. Each Releasor
expressly waives and relinquishes all rights and benefits he, she or it may have
under Section 1542 of the California Civil Code, which reads as follows:

“SECTION 1542. CERTAIN CLAIMS NOT AFFECTED BY GENERAL RELEASE. A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

(d) Each Releasor acknowledges and agrees that this waiver is an essential and
material term of the release given in this Section 14.15 and that without such
waiver Parent would not enter into this Agreement or consummate the
Transactions. Each Releasor further agrees that in the event it should assert
any claim seeking damages against any of the Released Parties, the release given
in this Section 14.15 shall serve as a complete defense to any such Released
Claim. Other than with respect to the Releasor’s rights that arise from claims
that are excluded pursuant to the proviso set forth in clause (a) of this
Section, each Releasor further agrees that there does not exist any claim of the
type described in or implied by clause (a) hereof and it is not aware of any
pending or threatened claims of the type described in or implied by clause
(a) hereof.

(e) Each Releasor agrees that neither the releases given in this Section 14.15,
nor the furnishing of the consideration for the releases given in this
Section 14.15, shall be deemed or construed at any time to be an admission by
any Released Party or the Releasor of any improper or unlawful conduct.

(f) Each Releasor acknowledges and agrees that such Releasor may hereafter
discover facts different from or in addition to those now known, or believed to
be true, regarding the subject matter of the releases given in this
Section 14.15 and further acknowledges and agrees that the releases given in
this Section 14.15 shall remain in full force and effect, notwithstanding the
existence of any different or additional facts.

 

119

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the signature page.]

 

120

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IN WITNESS WHEREOF, the parties hereto have caused this Transaction Agreement to
be duly executed by their respective authorized officers as of the date set
forth on the cover page of this Agreement.

 

PARENT: MSG TG, LLC By:  

/s/ David O’Connor

  Name:   David O’Connor   Title:   President & Chief Executive Officer PARENT
MERGER SUB: TG MERGER SUB, LLC By:  

/s/ David O’Connor

  Name:   David O’Connor   Title:   President & Chief Executive Officer Solely
with respect to its rights and obligations under Section 2.03(b)(iv) and Article
14 (other than Sections 14.03, 14.04 and 14.15, and only insofar as Article 14
relates to its rights and obligations under Section 2.03(b)(iv)): EARN-OUT
GUARANTOR: MSG ENTERTAINMENT HOLDINGS, LLC By:  

/s/ David O’Connor

  Name:   David O’Connor   Title:   President & Chief Executive Officer

 

[Signature Page to the Transaction Agreement]

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Solely with respect to its rights and obligations under Section 9.11 and Article
14 (other than Sections 14.03, 14.04 and 14.15, and only insofar as Article 14
relates to its rights and obligations under Section 9.11): THE MADISON SQUARE
GARDEN COMPANY By:  

/s/ David O’Connor

  Name:   David O’Connor   Title:   President & Chief Executive Officer

 

[Signature Page to the Transaction Agreement]

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MEMBER REPRESENTATIVE: TG MEMBER REPRESENTATIVE LLC By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President

 

[Signature Page to the Transaction Agreement]

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GROUP ENTITIES: 289 HOSPITALITY, LLC 55TH STREET HOSPITALITY HOLDINGS, LLC ALA
HOSPITALITY LLC ASIA FIVE EIGHT LLC ASIA LAS VEGAS LLC ASIA LOS ANGELES LLC ASIA
ONE SIX LLC AVENUE HOSPITALITY GROUP, LLC BAYSIDE HOSPITALITY B&E LOS ANGELES
LLC BOWERY HOSPITALITY ASSOCIATES LLC BUDDHA BEACH LLC BUDDHA ENTERTAINMENT LLC
CHELSEA HOSPITALITY PARTNERS LLC CHINA MANAGEMENT, LLC DEARBORN VENTURES LLC
GUAPO BODEGA LLC GUAPO BODEGA LAS VEGAS LLC MADISON ENTERTAINMENT ASSOCIATES LLC
NINTH AVENUE HOSPITALITY LLC RMC LICENSING LLC RMNJ LICENSING LLC ROOF DECK
AUSTRALIA LLC ROOF DECK ENTERTAINMENT LLC RPC LICENSING LLC STANTON SURF CLUB
LLC STRIP VIEW ENTERTAINMENT LLC TAO LICENSING LLC TG HOSPITALITY LLC By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President

 

[Signature Page to the Transaction Agreement]

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ROLLOVER HOLDCO: TG ROLLOVER HOLDCO LLC By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President HOLDINGS: TAO GROUP HOLDINGS LLC
By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President

 

[Signature Page to the Transaction Agreement]

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INTERMEDIATE HOLDINGS: TAO GROUP INTERMEDIATE HOLDINGS LLC By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President BORROWER: TAO GROUP OPERATING
LLC By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President

 

[Signature Page to the Transaction Agreement]

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MANAGEMENTCO: TAO GROUP MANAGEMENT LLC By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Co-President By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Co-President By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Co-President By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Co-President

 

[Signature Page to the Transaction Agreement]

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MANAGEMENT SELLERS: H.D. PROJECT MANAGEMENT INC. By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   President MP TRUST By:  

/s/ Marc Packer

  Name:   Marc Packer   Title:   Trustee

/s/ Marc Packer

Marc Packer MAMBO PRODUCTIONS, INC. By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   President WOLF FAMILY TRUST By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   Trustee

/s/ Richard Wolf

Richard Wolf SOUTH SEA MANAGEMENT, LLC MEMBERS: H.D. PROJECT MANAGEMENT INC. By:
 

/s/ Marc Packer

  Name:   Marc Packer   Title:   President

 

[Signature Page to the Transaction Agreement]

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MAMBO PRODUCTIONS, INC. By:  

/s/ Richard Wolf

  Name:   Richard Wolf   Title:   President NT & JS MANAGEMENT, LLC By:  
Strategic Event Management & Marketing Inc., its sole member By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Manager By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Manager STRATEGIC HOSPITALITY GROUP OF
NEVADA, LLC By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Manager By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Manager STRATEGIC MANAGEMENT SERVICES OF
NEVADA INC. By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Manager By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Manager STRATEGIC EVENT MANAGEMENT &
MARKETING, INC By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Manager

 

[Signature Page to the Transaction Agreement]

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By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Manager

/s/ Noah Tepperberg

NOAH TEPPERBERG NOAH TEPPERBERG REVOCABLE TRUST By:  

/s/ Noah Tepperberg

  Name:   Noah Tepperberg   Title:   Trustee

/s/ Jason Strauss

Jason Strauss JASON STRAUSS REVOCABLE TRUST By:  

/s/ Jason Strauss

  Name:   Jason Strauss   Title:   Trustee

/s/ Judith Tepperberg

Judith Tepperberg

/s/ Chris Santos

Chris Santos FAST HANDS, INC. By:  

/s/ Chris Santos

Name:   Chris Santos Title:   President MONEY MATTERS PRODUCTIONS, LLC By:  

/s/ Louis Abin

  Name:   Louis Abin   Title:   President

 

[Signature Page to the Transaction Agreement]

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HOSPITALITY IS THE KEY LLC By:  

/s/ Paul Goldstein

  Name: Paul Goldstein

/s/ Kim Russen

Kim Russen

/s/ Paul Goldstein

Paul Goldstein

/s/ Ralph Scamardella

Ralph Scamardella

/s/ Richard Thomas

Richard Thomas

/s/ Matthew Strauss

Matthew Strauss

/s/ Andrew Goldberg

Andrew Goldberg ROLLOVER HOLDCO MEMBERS: TG ROLLOVER HOLDCO LLC By:  

/s/ Marc Packer

  Name: Marc Packer   Title: Co-President By:  

/s/ Richard Wolf

  Name: Richard Wolf   Title: Co-President By:  

/s/ Noah Tepperberg

  Name: Noah Tepperberg   Title: Co-President

 

[Signature Page to the Transaction Agreement]

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By:  

/s/ Jason Strauss

  Name: Jason Strauss   Title: Co-President

/s/ Marc Packer

Marc Packer MP TRUST By:  

/s/ Marc Packer

Marc Packer Trustee H.D. PROJECT MANAGEMENT INC. By:  

/s/ Marc Packer

Marc Packer President

/s/ Jason Strauss

Jason Strauss JASON STRAUSS REVOCABLE TRUST By:  

/s/ Jason Strauss

Jason Strauss Trustee

/s/ Noah Tepperberg

Noah Tepperberg NOAH TEPPERBERG REVOCABLE TRUST By:  

/s/ Noah Tepperberg

Noah Tepperberg Trustee

/s/ Richard Wolf

Richard Wolf MAMBO PRODUCTIONS, INC. By:  

/s/ Richard Wolf

Richard Wolf President WOLF FAMILY TRUST By:  

/s/ Richard Wolf

Richard Wolf Trustee

 

[Signature Page to the Transaction Agreement]

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STRATEGIC EVENT MANAGEMENT & MARKETING, INC. STRATEGIC MANAGEMENT SERVICES OF
NEVADA INC. By:  

/s/ Jason Strauss

Jason Strauss By:  

/s/ Noah Tepperberg

Noah Tepperberg

/s/ Adam Gewanter

Adam Gewanter

/s/ Amanda Smear Baudier

Amanda Smear Baudier

/s/ Andrew Goldberg

Andrew Goldberg

/s/ Bill Bonbrest

Bill Bonbrest

/s/ Carlos Steve Morales

Carlos Steve Morales

/s/ Chris Santos

Chris Santos FAST HANDS, INC. By:  

/s/ Chris Santos

Chris Santos President

/s/ Ralph Scamardella

Ralph Scamardella DN2M88 CONSULTING INC. By:  

/s/ Ralph Scamardella

Ralph Scamardella President

/s/ Hing Yip Yim

Hing Yip Yim

 

[Signature Page to the Transaction Agreement]

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/s/ Paul Goldstein

Paul Goldstein HOSPITALITY IS THE KEY LLC By:  

/s/ Paul Goldstein

Paul Goldstein JBOLES HOSPITALITY, LLC By:  

/s/ Jared Boles

Jared Boles Managing Partner

/s/ Jennifer Rucker

Jennifer Rucker

/s/ Kim Russen

Kim Russen

/s/ Jonathan Schwartz

Jonathan Schwartz

/s/ Judith Tepperberg

Judith Tepperberg KZD BUNCH INC. By:  

/s/ Thomas Gillespie

Thomas Gillespie President LITTLE CRAB LLC By:  

/s/ Jonathan Kavourakis

Jonathan Kavourakis

/s/ Matt Strauss

Matt Strauss

/s/ Michael Garten

Michael Garten

/s/ Michael Rea

Michael Rea

/s/ Michael St. Pierre

Michael St. Pierre

 

[Signature Page to the Transaction Agreement]

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/s/ Richard Thomas

Richard Thomas MONEY MATTERS PRODUCTIONS, LLC By:  

/s/ Louis Abin

Louis Abin President

/s/ Romain Pavee

Roman Pavee

/s/ Emmanuel Maris

Emmanuel Maris DUSTIN PAUL TERRY INC. By:  

/s/ Dustin Terry

Dustin Terry President

/s/ Lauren Kaminsky Goldman

Lauren Kaminsky Goldman

/s/ Mark Wasserman

Mark Wasserman MATTHEW ASSANTE PRODUCTIONS INC. By:  

/s/ Matthew Hundzynksi

Matthew Hundzynski President DIRECT ROLLOVER MEMBERS:

/s/ Marc Packer

Marc Packer

/s/ Richard Wolf

Richard Wolf

/s/ Jason Strauss

Jason Strauss

/s/ Noah Tepperberg

Noah Tepperberg

 

[Signature Page to the Transaction Agreement]

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ANNEX A

 

   Group Entities 1.    289 Hospitality, LLC (Marquee NY) 2.    Bayside
Hospitality Group LLC (Moxy) 3.    55th Street Hospitality Holdings, LLC (Dream
NY, Midtown) 4.    ALA Hospitality LLC (Avenue LA) 5.    Asia Five Eight LLC
(TAO NY, Uptown) 6.    Asia Las Vegas LLC (TAO LV) 7.    Asia Los Angeles LLC
(TAO LA) 8.    Asia One Six LLC (TAO NY, Downtown) 9.    Avenue Hospitality
Group, LLC (Owner of Avenue Brand)

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10.    B&E Los Angeles LLC (B&E LA) 11.    Bowery Hospitality Associates LLC
(Vandal) 12.    Buddha Beach LLC (TAO Beach LV) 13.    Buddha Entertainment LLC
(TAO Night LV) 14.    Chelsea Hospitality Partners LLC (Avenue NY) 15.   

China Management, LLC

(Administrative)

16.    Dearborn Ventures LLC (TAO Chicago) 17.    Guapo Bodega LLC (B&E NY) 18.
   Guapo Bodega Las Vegas LLC (B&E LV) 19.    Madison Entertainment Associates
LLC (LAVO NY)

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20.    Ninth Avenue Hospitality LLC (Dream NY Downtown) 21.    RMC Licensing LLC
(Owner of Vandal Brand) 22.    RMNJ Licensing LLC (Owner of LAVO Brand) 23.   
Roof Deck Australia LLC (Marquee AUS) 24.    Roof Deck Entertainment LLC
(Marquee LV) 25.    RPC Licensing LLC (Owner of B&E Brand) 26.    Stanton Surf
Club LLC (Stanton Social)

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27.    Strip View Entertainment LLC (LAVO LV) 28.    TAO Licensing LLC (Owner of
Master License of TAO Brand) 29.    TG Hospitality LLC (Dream LA) 30.   
ManagementCo