Document:

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                                                                   Exhibit 10.4
================================================================================

                            STOCK PURCHASE AGREEMENT

                                     Between

                           LADBROKE RACING CORPORATION

                                       and

                                 MI VENTURE INC.

                          Dated as of November 5, 1999

================================================================================
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                             DISCLOSURE SCHEDULE

            The Disclosure Schedule shall include the following Sections:

3.4   Subsidiaries
3.5   Conflicts
3.6   Government Consents and Approvals
3.7   Reference Balance Sheet
3.8   Liabilities
3.9   Conduct not in Ordinary Course; Changes, Events and Conditions
3.10  Litigation
3.11  Noncompliance with Laws
3.12  Environmental Matters
3.13  Material Contracts
3.14  Intellectual Property
3.15  Real Property
3.16  Assets
3.17  Employee Benefit Matters
3.18  Labor Matters
3.19  Key Employees
3.20  Taxes
3.23  Insurance Policies
5.1   Conduct of Business Prior to the Closing
6.4   Assumed Severance Obligations

4.5   Liabilities
4.6   Litigation
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                                TABLE OF CONTENTS

Section                                                                   Page

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.1  Certain Defined Terms...........................................1

                                   ARTICLE II

                                PURCHASE AND SALE

SECTION 2.1  Purchase and Sale of the Shares.................................8
SECTION 2.2  Purchase Price..................................................8
SECTION 2.3  Closing.........................................................8
SECTION 2.4  Closing Deliveries by the Seller................................9
SECTION 2.5  Closing Deliveries by the Purchaser.............................9
SECTION 2.6  Adjustment of Purchase Price....................................9

                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE SELLER

SECTION 3.1  Organization, Authority and Qualification of the Seller and
      Guarantor.............................................................10
SECTION 3.2  Organization, Authority and Qualification of the Companies.....10
SECTION 3.3  Capital Stock of the Companies; Ownership of the Shares........11
SECTION 3.4  Subsidiaries...................................................11
SECTION 3.5  No Conflict....................................................12
SECTION 3.6  Governmental Consents and Approvals............................12
SECTION 3.7  Financial Information, Books and Records, Projections and
      Operating Data........................................................12
SECTION 3.8  No Undisclosed Liabilities.....................................13
SECTION 3.9  Conduct in the Ordinary Course; Absence of Certain Changes,
      Events and Conditions.................................................13
SECTION 3.10  Litigation....................................................14
SECTION 3.11  Compliance with Laws..........................................14
SECTION 3.12  Environmental Matters.........................................15
SECTION 3.13  Material Contracts............................................15
SECTION 3.14  Intellectual Property.........................................16
SECTION 3.15  Real Property.................................................17
SECTION 3.16  Assets........................................................18
SECTION 3.17  Employee Benefit Matters......................................18
SECTION 3.18  Labor Matters.................................................23
SECTION 3.19  Key Employees.................................................23
SECTION 3.20  Taxes.........................................................23
SECTION 3.21  Brokers.......................................................24
SECTION 3.22  Investment Purpose............................................24

                                       i
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SECTION 3.23  Insurance.....................................................25

                                   ARTICLE IV

               REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

SECTION 4.1  Organization and Authority of the Purchaser....................25
SECTION 4.2  No Conflict....................................................26
SECTION 4.3  Governmental Consents and Approvals............................26
SECTION 4.4  Investment Purpose.............................................26
SECTION 4.5  No Undisclosed Liabilities.....................................26
SECTION 4.6  Litigation.....................................................26
SECTION 4.7  No Material Adverse Change.....................................26
SECTION 4.8  Purchaser Prospectus...........................................27
SECTION 4.9  Brokers........................................................27

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

SECTION 5.1  Conduct of Business Prior to the Closing.......................27
SECTION 5.2  Access to Information..........................................28
SECTION 5.3  Confidentiality................................................29
SECTION 5.4  Regulatory and Other Authorizations; Notices and Consents......29
SECTION 5.5  Director.......................................................30
SECTION 5.6  Purchaser Shares; Transfer Restrictions........................30
SECTION 5.7  Distribution of Excess PRA Assets..............................30
SECTION 5.8  Casualty Insurance Proceeds....................................30
SECTION 5.9  Notification...................................................31
SECTION 5.10 Intercompany Obligations.......................................31
SECTION 5.11 No Negotiation.................................................31
SECTION 5.12 Further Action.................................................31
SECTION 5.13 Non-Competition................................................31
SECTION 5.14 Maintenance of Book Value......................................31
SECTION 5.15 Ladbroke Names.................................................32
SECTION 5.16 San Pablo Gaming Facility......................................32
SECTION 5.17 Transition Services............................................32
SECTION 5.18 Termination of Interests in Real Property......................33

                                   ARTICLE VI

                                EMPLOYEE MATTERS

SECTION 6.1  Payroll Obligations, Employee Agreements and WARN Act..........33
SECTION 6.2  Seller's Plans and Employee-Related Liabilities................33
SECTION 6.3  Purchaser's Plans..............................................34
SECTION 6.4  Bonus and Severance Obligations; Accrued Vacation Pay..........35

                                       ii
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SECTION 6.5  Mutual Cooperation.............................................35
SECTION 6.6  Employee Benefits Indemnity....................................35
SECTION 6.7  Third-Party Claims.............................................36

                                   ARTICLE VII

                                   TAX MATTERS

SECTION 7.1  Indemnity......................................................36
SECTION 7.2  Returns and Payments...........................................37
SECTION 7.3  Refunds........................................................37
SECTION 7.4  Contests.......................................................38
SECTION 7.5  Time of Payment................................................38
SECTION 7.6  Cooperation and Exchange of Information........................39
SECTION 7.7  Conveyance Taxes...............................................39
SECTION 7.8  Miscellaneous..................................................39

                                  ARTICLE VIII

                              CONDITIONS TO CLOSING

SECTION 8.1  Conditions to Obligations of the Seller........................40
SECTION 8.2  Conditions to Obligations of the Purchaser.....................41

                                   ARTICLE IX

                                 INDEMNIFICATION

SECTION 9.1  Survival of Representations, Warranties and Indemnification
      Obligations...........................................................42
SECTION 9.2  Indemnification by the Seller..................................43
SECTION 9.3  [Intentionally Omitted]........................................44
SECTION 9.4  Limits on Indemnification; Jurisdiction; Guaranty..............44

                                    ARTICLE X

                             TERMINATION AND WAIVER

SECTION 10.1  Termination...................................................45
SECTION 10.2  Effect of Termination.........................................46
SECTION 10.3  Waiver........................................................46

                                   ARTICLE XI

                               GENERAL PROVISIONS

SECTION 11.1  Expenses......................................................46
SECTION 11.2  Notices.......................................................47
SECTION 11.3  Public Announcements..........................................48

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SECTION 11.4  Headings......................................................48
SECTION 11.5  Severability..................................................48
SECTION 11.6  Entire Agreement..............................................49
SECTION 11.7  Assignment....................................................49
SECTION 11.8  No Third Party Beneficiaries..................................49
SECTION 11.9  Amendment.....................................................49
SECTION 11.10  Jurisdiction; Service of Process.............................49
SECTION 11.11  WAIVER OF JURY TRIAL ........................................49
SECTION 11.12  Governing Law................................................49
SECTION 11.13  Counterparts.................................................49
SECTION 11.14  Specific Performance.........................................49

                                       iv
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EXHIBIT

1.1         JOINT ESCROW INSTRUCTIONS
1.2         PURCHASER SHARE PERCENTAGE CALCULATION
2.2         FORM OF PURCHASER NOTE
2.6         COMPANIES' ACCOUNTING POLICIES
5.7         EXCESS PRA ASSETS
8.1(d)      FORM OF OPINION OF THE PURCHASER'S COUNSEL
8.1(e)      FORM OF REGISTRATION RIGHTS AGREEMENT
8.2(d)      FORM OF OPINION OF THE SELLER'S COUNSEL
8.2(g)      CERTIFICATE OF NON-FOREIGN STATUS
8.2(h)      TITLE POLICY EXCEPTIONS AND ENDORSEMENTS

                                       v
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            STOCK PURCHASE AGREEMENT, dated as of November 5, 1999, between
Ladbroke Racing Corporation, a Delaware corporation (the "Seller"), and MI
                                                          ------
Venture Inc., a Delaware corporation (the "Purchaser").
                                           ---------

                              W I T N E S S E T H:

            WHEREAS, the Seller owns directly or indirectly all the issued and
outstanding shares (the "Shares") of (i) common stock, no par value (the "LL
                         ------                                           --
Common Stock"), of Ladbroke Land Holdings, Inc., a California corporation
------------
("LL"), and (ii) common stock, no par value (the "PRA Common Stock" and,
  --                                              ----------------
together with the LL Common Stock, the "Common Stock"), of Pacific Racing
                                        ------------
Association Inc., a California corporation ("PRA") (each of LL and PRA
                                             ---
individually, a "Company" and collectively, the "Companies"); and
                 -------                         ---------

            WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, the Shares, upon the terms and
subject to the conditions set forth herein;

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Purchaser and the Seller,
intending to be legally bound, hereby agree as follows:
ARTICLE I
                                   DEFINITIONS

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

            "Acquisition Documents" has the meaning specified in Section 9.1.
             ---------------------

            "Action" means any claim, action, suit, arbitration, inquiry,
             ------
proceeding or investigation by or before any Governmental Authority.

            "Adjustment Date" has the meaning specified in Section 2.6(b).
             ---------------

            "Affiliate" means, with respect to any specified Person, any other
             ---------
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.

            "Agreement" or "this Agreement" means this Stock Purchase Agreement,
             ---------      --------------
dated as of November 5, 1999, between the Seller and the Purchaser (including
the Exhibits hereto and the Disclosure Schedule) and all amendments hereto made
in accordance with the provisions of Section 11.9.

            "Assets" has the meaning specified in Section 3.16(a).
             ------

            "Book Value" means the excess of total assets over total liabilities
             ----------
of a Person shown on any specified balance sheet of such Person.

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            "Business" means the operation of a thoroughbred horseracing and
             --------
pari-mutuel wagering business and related activities at Golden Gate Fields in
Alameda County, California.

            "Business Day" means any day that is not a Saturday, a Sunday or
             ------------
other day on which banks are required or authorized by law to be closed in
London, Toronto or The City of New York.

            "Claim Notice" has the meaning specified in Section 9.2(b).
             ------------

            "Class A Subordinate Voting Stock" means the class A subordinate
             --------------------------------
voting stock of the Purchaser to be distributed as a stock dividend to
stockholders of Magna International Inc.

            "Closing" has the meaning specified in Section 2.3.
             -------

            "Closing Balance Sheet" means the audited balance sheet (including
             ---------------------
the related notes and schedules thereto) of the Companies and the Subsidiaries,
to be prepared pursuant to Section 2.6(a) and to be dated as of the Closing
Date.

            "Closing Date" has the meaning specified in Section 2.3.
             ------------

            "COBRA" has the meaning specified in Section 6.2(c).
             -----

            "Code" means the Internal Revenue Code of 1986, as amended through
             ----
the date hereof.

            "Common Stock" has the meaning specified in the recitals to this
             ------------
Agreement.

            "Companies' Accounting Policies" means those policies specified on
             ------------------------------
Exhibit 2.6 attached hereto.

            "Company" and "Companies" have the meaning specified in the recitals
             -------       ---------
to this Agreement.

            "Company Plan" has the meaning specified in Section 3.17(a).
             ------------

            "Development Agreement" has the meaning specified in Section 5.18.
             ---------------------

            "Disclosure Schedule" means the Disclosure Schedule attached hereto,
             -------------------
dated as of the date hereof, and forming a part of this Agreement.

            "Employee" or "Employees" means any individual who is (a) an active
             --------      ---------
employee of any Company or any Subsidiary immediately prior to the Closing Date
and (b) employees on any authorized leave of absence, including, without
limitation, short- or long-term disability leave, worker's compensation leave or
vacation leave as of the Closing Date.

            "Employee Agreements" has the meaning specified in Section 3.17(a).
             -------------------

                                       2
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            "Encumbrance" means any charge, claim, condition, equitable
             -----------
interest, lien, option, pledge, security interest, right of first refusal or
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.

            "Environment" means soil, land surface or subsurface strata, surface
             -----------
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.

            "Environmental Law" means any Law in effect as of the Closing Date
             -----------------
that requires or relates to: (a) advising appropriate authorities, employees,
and the public of intended or actual releases of Hazardous Materials, violations
of discharge limits related to Hazardous Materials, or other prohibitions
related to Hazardous Materials and of the commencements of activities, such as
resource extraction or construction, that could have significant impact on the
Environment;

     (b) preventing or reducing to acceptable levels the release of Hazardous
Materials into the Environment;

     (c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;

     (d) protecting natural resources, species, or ecological amenities;

     (e) reducing to acceptable levels the risks inherent in the transportation
of Hazardous Materials;

     (f) cleaning up Hazardous Materials that have been released, preventing the
possibility of release, or paying the costs of such clean up or prevention; or

     (g) making responsible parties pay private parties, or groups of them, for
damages done to their health (as related to Hazardous Materials) or the
Environment, or permitting self-appointed representatives of the public interest
to recover for injuries done to the Environment.

            "ERISA" has the meaning specified in Section 3.17(a).
             -----

            "ERISA Affiliate" means, with respect to a Company, any other Person
             ---------------
that, together with such Company, would be treated as a single employer under
Code ss. 414.

            "Excess PRA Assets" means those assets set forth on Exhibit 5.7
             -----------------
attached hereto.

            "Exchange Act" means the Securities Exchange Act of 1934 and any
             ------------
successor law and regulations issued pursuant thereto.

                                       3
<PAGE>

            "Governmental Authority" means any United States federal, state or
             ----------------------
local or any foreign government, governmental, regulatory, gaming or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.

            "Governmental Order" means any order, writ, judgment, injunction,
             ------------------
decree, stipulation, determination or award entered by or with any Governmental
Authority.

            "Guarantor" means Ladbroke Hotels U.S.A. Corporation, a Delaware
             ---------
corporation.

            "Hazardous Materials" means any waste or other substance that is
             -------------------
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any mixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.

            "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
             -------
1976, as amended, and the rules and regulations promulgated thereunder.

            "Indebtedness" means, with respect to any Person, (a) all
             ------------
indebtedness of such Person, whether or not contingent, for borrowed money, (b)
all obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all 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), (e) all obligations of such Person as
lessee under leases that have been or should be, in accordance with U.S. GAAP,
recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all Indebtedness of others
referred to in clauses (a) through (f) above guaranteed directly or indirectly
in any manner by such Person, and (i) all Indebtedness referred to in clauses
(a) through (f) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any
Encumbrance on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.

            "Indemnified Party" has the meaning specified in Section 9.2(a).
             -----------------

            "Intellectual Property" means all Marks, all patents, patent
             ---------------------
applications, and inventions and discoveries that may be patentable, all
copyrights in both published works and unpublished works, all rights in mask
works and Trade Secrets owned, used, or licensed by any Company as licensee or
licensor.

            "IRS" means the United States Internal Revenue Service or any
             ---
successor agency, and, to the extent relevant, the United States Department of
the Treasury.

                                       4
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            "Joint Escrow Instructions" means the joint escrow instructions
             -------------------------
substantially in the form attached hereto as Exhibit 1.1 to be dated as of the
Closing Date between the Purchaser and the Seller.

            "Knowledge" means (i) in the case of the Seller and the Companies,
             ---------
the actual knowledge of George Harbison, John Ford, Peter Tunney, Thomas Kanar,
Russell Foreman, Hilary Stewart-Jones or Paul Lierman and (ii) in the case of
the Purchaser, the actual knowledge of James Nicol, Graham Orr, Louis Tonelli or
Dilip Sinha.

            "Ladbroke Leases" means the lease dated January 1, 1971 between LL
             ---------------
and LRC and the Third Amended and Restated Pacific Sublease dated March 4, 1991
between LRC and PRA, each relating to the Real Property.

            "Law" or "Laws" means any federal, state, local or foreign statute,
             ---      ----
law, ordinance, regulation, rule, code, order, other requirement or rule of law.

            "Liabilities" means any and all debts, liabilities and obligations,
             -----------
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including, without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.

            "Limited Partnership Agreement" has the meaning specified in Section
             -----------------------------
8.2(j).

            "Loss" or "Losses" has the meaning specified in Section 9.2(a).
             ----      ------

            "LL" has the meaning specified in the recitals of this Agreement.
             --

            "LL Common Stock" has the meaning specified in the recitals of this
             ---------------
Agreement.

            "LRC" means Ladbroke Racing California, Inc., a Delaware
             ---
Corporation.

            "Marks" means the name "Golden Gate Fields," all fictional business
             -----                  ------------------
names, trading names, registered and unregistered trademarks, service marks, and
applications.

            "Material Adverse Effect" means any circumstance, change in, or
             -----------------------
effect on the Companies or any Subsidiary that is or would reasonably be
expected to be materially adverse to the results of operations or financial
condition of the Companies and the Subsidiaries, taken as a whole; provided,
                                                                   --------
however, that "Material Adverse Effect" shall not include any circumstance,
-------
change in or effect on the Company or any Subsidiary directly or indirectly
arising out of or attributable to (i) any actions taken or omitted to be taken
by the Seller pursuant to the terms of this Agreement or any actions taken by
the Purchaser or (ii) any effects resulting from the announcement of the
transactions contemplated by this Agreement.

            "Material Contracts" has the meaning specified in Section 3.13(a).
             ------------------

            "Multiemployer Plans" has the meaning specified in Section 3.17(a).
             -------------------

                                       5
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            "Option Agreement" means the Option Agreement and Agreement of
             ----------------
Purchase and Sale dated as of July 25, 1997 between GGF Property, LLC and Golden
Gate Land Company, Inc.

            "PBGC" means the Pension Benefit Guaranty Corporation, or any
             ----
successor thereto.

            "Pension Plans" has the meaning given in ERISA ss. 3(2)(A).
             -------------

            "Person" means any individual, partnership, firm, corporation,
             ------
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.

            "Plans" has the meaning specified in Section 3.17(a).
             -----

            "PRA" has the meaning specified in the recitals to this Agreement.
             ---

            "PRA Common Stock" has the meaning specified in the recitals to this
             ----------------
Agreement.

            "Purchase Price" has the meaning specified in Section 2.2.
             --------------

            "Purchase Price Bank Account" means a bank account designated in
             ---------------------------
writing by the Seller at least 3 Business Days prior to the Closing.

            "Purchaser" has the meaning specified in the recitals to this
             ---------
Agreement.

            "Purchaser Note" has the meaning specified in Section 2.2.
             --------------

            "Purchaser Share Percentage" means the percentage of shares that
             --------------------------
reflects the percentage which $7,000,000 bears to total stockholders' equity of
the Purchaser, to be calculated as set forth on Exhibit 1.2 hereto.

            "Purchaser Shares" means shares of Class A Subordinate Voting Stock
             ----------------
equal to the Purchaser Share Percentage of the total number of shares of equity
stock of the Purchaser outstanding at Closing, on a "fully-diluted" basis. For
purposes of this definition, the "fully-diluted" equity stock of the Purchaser
outstanding at Closing shall include the Purchaser Shares but shall not include
any other shares issued in connection with the acquisition (from third parties
that are not Affiliates of the Purchaser) of any horse racing or pari-mutuel
wagering business prior to the Closing (other than the shares issued to The
Edward J. DeBartolo Corporation pursuant to the Stock Purchase Agreement dated
as of October 21, 1999 among The Edward J. DeBartolo Corporation, Oklahoma
Racing LLC and the Purchaser).

            "Purchaser's Accountants" means Ernst & Young LLP, independent
             -----------------------
accountants of the Purchaser.

            "Purchaser Material Adverse Effect" has the meaning specified in
             ---------------------------------
Section 4.7.

                                       6
<PAGE>

            "Purchaser's Plans" has the meaning specified in Section 6.3(a).
             -----------------

            "Purchaser Prospectus" means the Purchaser's preliminary prospectus
             --------------------
registering with the SEC shares of Class A Subordinate Voting Stock.

            "Registration Rights Agreement" means the registration rights
             -----------------------------
agreement executed and delivered by the Seller and the Purchaser on the Closing
Date, substantially in the form attached hereto as Exhibit 8.1(e), as such
agreement may thereafter be amended, amended and restated, supplemented or
otherwise modified from time to time.

            "Qualified Plan" has the meaning specified in Section 3.17(d).
             --------------

            "Real Property" means the real property described on Section 3.15(a)
             -------------
of the Disclosure Schedule, including all improvements and appurtenances
thereto, rights in connection therewith and interests therein.

            "Reference Balance Sheet" means the combined Statement of Certain
             -----------------------
Assets and Liabilities (including the schedules thereto) of the Companies, dated
as of December 31, 1998, copies of which are set forth in Section 3.7(a) of the
Disclosure Schedule.

            "Reference Balance Sheet Date" means December 31, 1998.
             ----------------------------

            "Returns" has the meaning specified in Section 7.2
             -------

            "SEC" means the United States Securities and Exchange Commission.
             ---

            "Securities Act" means the Securities Act of 1933 and any successor
             --------------
law and regulations issued pursuant thereto.

            "Seller" has the meaning specified in the recitals to this
             ------
Agreement.

            "Seller's Accountants" means Ernst & Young LLP independent
             --------------------
accountants of the Seller.

            "Shares" has the meaning specified in the recitals to this
             ------
Agreement.

            "Subsidiary" or "Subsidiaries" means any and all corporations,
             ----------      ------------
partnerships, joint ventures, associations and other entities controlled by any
of the Companies directly or indirectly through one or more intermediaries.

            "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
             ---      -----
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer,

                                       7
<PAGE>

value added, or gains taxes; license, registration and documentation fees; and
customs duties, tariffs, and similar charges.

            "Third Party Claims" has the meaning specified in Section 9.2(b).
             ------------------

            "Title Policy" has the meaning specified in Section 8.2(h).
             ------------

            "Title IV Plans" means all Pension Plans that are subject to
             --------------
Title IV of ERISA, 29 U.S.C.ss.1301 et seq., other than Multiemployer Plans.

            "Trade Secrets" means all know-how, trade secrets, confidential
             -------------
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints.

            "U.S. GAAP" means United States generally accepted accounting
             ---------
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.

            "WARN Act" has the meaning specified in Section 6.1(c).
             --------

            "Workers' Compensation Claim" has the meaning specified in Section
             ---------------------------
6.2(b).

                                   ARTICLE II
                                PURCHASE AND SALE

            SECTION 2.1 Purchase and Sale of the Shares. Upon the terms and
                        -------------------------------
subject to the conditions of this Agreement, at the Closing, the Seller shall
sell to the Purchaser, and the Purchaser shall purchase from the Seller, the
Shares.

            SECTION 2.2 Purchase Price. Subject to the adjustments set forth in
                        --------------
Section 2.6, the aggregate purchase price for the Shares shall be (i)
$60,000,000 in cash, (ii) the Purchaser Shares, and (iii) a $20,000,000
principal amount non-interest bearing promissory note of the Purchaser (the
"Purchaser Note") maturing at a rate of $10,000,000 on the first anniversary of
the Closing Date and $5,000,000 on each of the second and third anniversaries of
the Closing Date, such promissory note to be substantially in the form of
Exhibit 2.2 (together, the "Purchase Price").

            SECTION 2.3 Closing. Upon the terms and subject to the conditions of
                        -------
this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
                                              -------
offices of O'Melveny & Myers LLP, 275 Battery Street, San Francisco, California
at 10:00 A.M. San Francisco time on the fifth Business Day following the later
to occur of (A) expiration or termination of all applicable waiting periods
under the HSR Act and (B) satisfaction or waiver of all other conditions to the
obligations of the parties set forth in Article VIII, or at such other place or
at such other time or on such other date as the Seller and the Purchaser may
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date").
     ------------
                                       8
<PAGE>

            SECTION 2.4 Closing Deliveries by the Seller. At the Closing,
                        --------------------------------
against delivery of the Purchase Price, the Seller shall, in accordance with the
Joint Escrow Instructions, deliver or cause to be delivered to the Purchaser:

            (a) stock certificates evidencing the Shares duly endorsed in blank,
or accompanied by stock powers duly executed in blank, in form satisfactory to
the Purchaser and with all required stock transfer tax stamps affixed;

            (b) a receipt for the Purchase Price; and

            (c) the opinions, certificates and other documents required to be
delivered pursuant to Section 8.2.

            SECTION 2.5 Closing Deliveries by the Purchaser. At the Closing,
                        -----------------------------------
against delivery of the stock certificates evidencing the Shares, the Purchaser
shall deliver to the Seller, in accordance with the Joint Escrow Instructions:

            (a) the cash portion of the Purchase Price by wire transfer in
immediately available funds to the Purchase Price Bank Account;

            (b) a stock certificate representing the Purchaser Shares;

            (c) the Purchaser Note; and

            (d) the opinions, certificates and other documents required to be
delivered pursuant to Section 8.1.

            SECTION 2.6 Adjustment of Purchase Price. The Purchase Price shall
                        ----------------------------
be subject to adjustment after the Closing as specified in this Section 2.6:

            (a) Closing Balance Sheet. As promptly as practicable, but in any
                ---------------------
event within ninety calendar days following the Closing Date, the Seller shall
deliver to the Purchaser the Closing Balance Sheet, together with a report
thereon of the Seller's Accountants stating that the Closing Balance Sheet
fairly presents the financial position of the Companies at the Closing Date in
conformity with U.S. GAAP applied on a basis consistent with the Companies'
Accounting Policies. Promptly upon receipt of the Closing Balance Sheet and such
report, the Purchaser shall deliver copies of the same to the Purchaser's
Accountants. As promptly as practicable, but in any event within fifteen
calendar days, the Purchaser shall deliver to the Seller its objection, if any,
to the Closing Balance Sheet and any proposed adjustments. If the parties are
unable to agree on the Closing Balance Sheet, then each party shall refer the
open issues to a senior technical accounting partner of such party's accountants
selected by such party to resolve, and such partners' determination of the
validity of the Purchaser's objection and proposed adjustments shall be final
and binding on all parties. If the technical accounting partners are unable to
agree on the Closing Balance Sheet, then either the Purchaser or the Seller may
refer the matter to a nationally recognized accounting firm independent of the
Purchaser and the Seller (the "Independent Firm"), provided that, if the
Purchaser and the Seller are unable to agree on the Independent Firm within a
period of 15 calendar days from the receipt by the Seller of the Purchaser's
objection and proposed adjustments, the Independent Firm shall be chosen at

                                       9
<PAGE>

random by the Purchaser's Accountants and the Seller's Accountants from among
the "Big Five" accounting firms that are independent of the Purchaser and the
Seller. The Independent Firm's determination of the validity of the Purchaser's
objection and proposed adjustments shall be final and binding on all parties.
The fees and expenses of the Independent Firm shall be paid by the party against
whom the Independent Firm's final determination is made; provided that, if such
final determination is not wholly in favor of one or the other party, the
Independent Firm shall apportion its fees and expenses between the parties in
accordance with the Independent Firm's determination of the relative merits of
each party's position, which determination shall be final and binding on all
parties.

            (b) Minimum Book Value. The Seller shall pay to the Purchaser within
                ------------------
five Business Days of delivery to the Purchaser of the Closing Balance Sheet
(the "Adjustment Date") the positive difference, if any, between the Book Value
as shown on the Reference Balance Sheet (as adjusted to reflect (i) the deemed
contribution to capital or forgiveness of debt, as appropriate, made pursuant to
Section 5.10 hereof and (ii) exclusion of the Excess PRA Assets) minus the Book
Value as shown on the Closing Balance Sheet.

                                  ARTICLE III
                 REPRESENTATIONS AND WARRANTIES OF THE SELLER

            As an inducement to the Purchaser to enter into this Agreement, the
Seller hereby represents and warrants to the Purchaser as follows:

            SECTION 3.1 Organization, Authority and Qualification of the Seller
                        -------------------------------------------------------
and Guarantor. Each of the Seller and the Guarantor is a corporation duly
-------------
organized and validly existing under the laws of its jurisdiction of
incorporation or formation and has all necessary corporate or partnership power
and authority to enter into this Agreement to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. Each of the
Seller and the Guarantor is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by it
or the operation of its business makes such licensing or qualification
necessary, except to the extent that the failure to be so licensed or qualified
would not materially adversely affect the ability of either the Seller or the
Guarantor to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by each of the Seller and the
Guarantor, the performance by each of the Seller and the Guarantor of its
obligations hereunder and the consummation by each of the Seller and the
Guarantor of the transactions contemplated hereby have been duly authorized by
all requisite action on the part of each of the Seller and the Guarantor. This
Agreement has been duly executed and delivered by each of the Seller and the
Guarantor, and (assuming due authorization, execution and delivery by the
Purchaser) this Agreement constitutes a valid and binding obligation of each of
the Seller and the Guarantor enforceable against each of the Seller and the
Guarantor in accordance with its terms.

            SECTION 3.2 Organization, Authority and Qualification of the
                        ------------------------------------------------
Companies. Each of LL and PRA is a corporation duly organized, validly existing
---------
and in good standing under the laws of its jurisdiction of incorporation and has
all necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on the
portion of the Business as it has been and is currently conducted. Each of LL
and

                                       10
<PAGE>

PRA is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the properties owned or leased by it or the operation
of its business makes such licensing or qualification necessary, except for such
failures which would not have a Material Adverse Effect. All corporate actions
taken by each of LL and PRA have been duly authorized, and neither LL nor PRA
has taken any action that in any material respect conflicts with, constitutes a
default under or results in a violation of any provision of its Certificate of
Incorporation or By-laws. True and correct copies of the Certificate of
Incorporation and By-laws of each of LL and PRA, each as in effect on the date
hereof, have been delivered by the Seller to the Purchaser.

            SECTION 3.3 Capital Stock of the Companies; Ownership of the Shares.
                        -------------------------------------------------------
The authorized capital stock of LL consists of 1,000 shares of LL Common Stock
and the authorized capital stock of PRA consists of 100,000 shares of PRA Common
Stock. As of the date hereof, 100 shares of LL Common Stock and 69,347 shares of
PRA Common Stock are issued and outstanding, all of which are validly issued,
fully paid and nonassessable. None of the issued and outstanding shares of
Common Stock was issued in violation of any preemptive rights. There are no
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the capital stock of
any Company or obligating the Seller or any Company to issue or sell any shares
of capital stock of, or any other interest in, the Companies. There are no
outstanding contractual obligations of any Company to repurchase, redeem or
otherwise acquire any shares of its Common Stock or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any other Person. The Shares constitute all the issued and outstanding capital
stock of the Companies and are owned of record and beneficially solely by the
Seller free and clear of all Encumbrances. Upon consummation of the transactions
contemplated by this Agreement and registration of the Shares in the name of the
Purchaser in the respective stock records of the Companies, the Purchaser,
assuming it shall have purchased the Shares for value in good faith and without
notice of any adverse claim, will own all the issued and outstanding capital
stock of the Companies free and clear of all Encumbrances, and the Shares will
be fully paid and nonassessable. There are no voting trusts, stockholder
agreements, proxies or other agreements or understandings in effect with respect
to the voting or transfer of any of the Shares.

            SECTION 3.4 Subsidiaries.
                        ------------

            (a) Section 3.4(a) of the Disclosure Schedule sets forth a true and
complete list of all Subsidiaries, listing for each Subsidiary its name, type of
entity, the jurisdiction and date of its incorporation or organization, its
authorized capital stock, partnership capital or equivalent, the number and type
of its issued and outstanding shares of capital stock, partnership interests or
similar ownership interests and the current ownership of such shares,
partnership interests or similar ownership interests.

            (b) Other than the Subsidiaries, there are no other corporations,
partnerships, joint ventures, associations or other entities in which any
Company owns, of record or beneficially, any direct or indirect equity or other
interest or any right (contingent or otherwise) to acquire the same. Other than
the Subsidiaries, none of the Companies is a member of (nor is any part of the
Business conducted through) any partnership. Except as set forth in Section
3.4(b) of the Disclosure Schedule, none of the Companies is a participant in any
joint venture or similar arrangement.

                                       11
<PAGE>

            (c) Each Subsidiary that is a corporation: (i) is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, (ii) has all necessary power and authority to own, operate or
lease the properties and assets owned, operated or leased by such Subsidiary and
to carry on its business as it has been and is currently conducted by such
Subsidiary and (iii) is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its business makes such licensing or qualification necessary or
desirable, except for such failures which would not have a Material Adverse
Effect. Each Subsidiary that is not a corporation: (i) is duly organized and
validly existing under the laws of its jurisdiction of organization, (ii) has
all necessary power and authority to own, operate or lease the properties and
assets owned, operated or leased by such Subsidiary and to carry on its business
as it has been and is currently conducted by such Subsidiary and (iii) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary or desirable,
except for such failures which would not have a Material Adverse Effect.

            SECTION 3.5 No Conflict. Assuming that all consents, approvals,
                        -----------
authorizations and other actions described in Section 3.6 have been obtained and
all filings and notifications listed in Section 3.6 of the Disclosure Schedule
have been made, the execution, delivery and performance of this Agreement by the
Seller and the Guarantor do not and will not (a) violate, conflict with or
result in the breach of any provision of the charter or by-laws (or similar
organizational documents) of the Seller, the Guarantor, the Companies or any
Subsidiary, (b) conflict in a material respect with or violate in a material
respect any material Law or Governmental Order applicable to the Seller, the
Guarantor, the Companies or any Subsidiary, or (c) except as set forth in
Section 3.5(c) of the Disclosure Schedule, conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Shares or on any of the assets or properties of the Seller, the
Guarantor, the Companies or any Subsidiary pursuant to, any material note, bond,
mortgage, indenture, license, permit, lease, sublease or other material
contract, agreement, or instrument or arrangement to which the Seller, the
Guarantor, the Companies or any Subsidiary is a party or by which any of the
Shares or any of such assets or properties is bound or affected.

            SECTION 3.6 Governmental Consents and Approvals. The execution,
                        -----------------------------------
delivery and performance of this Agreement by the Seller and the Guarantor do
not and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to any Governmental Authority, except (a)
as described in Section 3.6 of the Disclosure Schedule and (b) the notification
requirements of the HSR Act.

            SECTION 3.7 Financial Information, Books and Records, Projections
                        -----------------------------------------------------
and Operating Data.
------------------

            (a) True and complete copies of the audited balance sheet of the
Companies for each of the three fiscal years ended as of December 31, 1998, 1997
and 1996 and the related audited statements of income and cash flows of the
Companies, together with all related notes and schedules thereto, accompanied by
the reports thereon of the Seller's Accountants

                                       12
<PAGE>

(collectively referred to herein as the "Financial Statements") have been
                                         --------------------
delivered by the Seller to the Purchaser. The Financial Statements and the
Reference Balance Sheet (i) were prepared in accordance with the books of
account and other financial records of the Companies, (ii) present fairly the
financial condition and results of operations of the Companies and the
Subsidiaries as of the dates thereof or for the periods covered thereby, (iii)
have been prepared in accordance with U.S. GAAP applied on a basis consistent
with the past practices of the Seller and the Companies and (iv) include all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation of the financial condition of the Companies and the
Subsidiaries and the results of the operations of the Companies and the
Subsidiaries as of the dates thereof or for the periods covered thereby.

            (b) The books of account and other financial records of the
Companies and the Subsidiaries: (i) reflect all items of income and expense and
all assets and Liabilities required to be reflected therein in accordance with
U.S. GAAP applied on a basis consistent with the past practices of the Companies
and the Subsidiaries, respectively and (ii) are in all material respects
complete and correct, and do not contain or reflect any material inaccuracies or
discrepancies.

            SECTION 3.8 No Undisclosed Liabilities. To the Seller's Knowledge,
                        --------------------------
there are no Liabilities of any Company or any Subsidiary, other than
Liabilities (i) reflected or reserved against on the Reference Balance Sheet;
(ii) disclosed in the Disclosure Schedule, (iii) Liabilities relating to
environmental matters, Intellectual Property, employee benefit matters, labor
matters and Taxes which are not required to be disclosed pursuant to Sections
3.12, 3.14, 3.17, 3.18 and 3.20, respectively; or (iv) incurred since the date
of the Reference Balance Sheet in the ordinary course of the business,
consistent with the past practice, of the Companies and the Subsidiaries.

            SECTION 3.9 Conduct in the Ordinary Course; Absence of Certain
                        --------------------------------------------------
Changes, Events and Conditions. Since the Reference Balance Sheet Date, except
------------------------------
as disclosed in Section 3.9 of the Disclosure Schedule, the business of the
Companies and the Subsidiaries has been conducted in the ordinary course and
consistent with past practice. As amplification and not limitation of the
foregoing, except as disclosed in Section 3.9 of the Disclosure Schedule and
except as would not have a Material Adverse Effect, since the Reference Balance
Sheet Date, neither the Companies nor any Subsidiary has:

               (i) changed any Company's authorized or issued capital stock;
          granted any stock option or right to purchase shares of capital stock
          of any Company; issued any security convertible into such capital
          stock; granted any registration rights; or purchased, redeemed,
          retired, or otherwise acquired any shares of any such capital stock;

               (ii) amended the organizational documents of any Company;

               (iii) paid or increased any bonuses, salaries, or other
          compensation to any stockholder, director, officer, or (except in the
          ordinary course of business) employee or entered into any employment,
          severance, or similar Material Contract with any director, officer, or
          employee;

                                       13
<PAGE>

               (iv) adopted, or increased the payments to or benefits under, any
          profit sharing, bonus, deferred compensation, savings, insurance,
          pension, retirement, or other employee benefit plan for or with any
          employees of any Company;

               (v) suffered any damage to or destruction or loss of any asset or
          property of any Company not covered by insurance, which would
          reasonably be likely to have a Material Adverse Effect;

               (vi) entered into, terminated, or received notice of termination
          of (i) any license, distributorship, dealer, sales representative,
          joint venture, credit, or similar agreement, or (ii) any Material
          Contract or transaction involving a total remaining commitment by or
          to any Company of at least $100,000;

               (vii) sold, leased, or otherwise disposed of any material asset
          or property of any Company or mortgaged, pledged, or suffered the
          imposition of any lien or other encumbrance on any material asset or
          property of any Company, including the sale, lease, or other
          disposition of any of material Intellectual Property;

               (viii) canceled or waived any claims or rights with a value to
          any Company in excess of $100,000;

               (ix) made any material change in the accounting methods used by
          the Companies at the time of preparation of their most recent
          financial statements;

               (x) suffered any Material Adverse Effect; or

               (xi) entered into any agreement to do any of the foregoing.

            SECTION 3.10 Litigation. Section 3.10 of the Disclosure Schedule
                         ----------
sets forth each Action by or against the Companies or any Subsidiary (or by or
against the Seller or any Affiliate thereof and relating to the Business, the
Companies or any Subsidiary), or, to Seller's Knowledge, affecting any of the
Assets, pending before any Governmental Authority (or, to the Knowledge of the
Seller, threatened to be brought by or before any Governmental Authority) which
involves a claim or potential claim of aggregate liability in excess of $25,000.
Except as set forth in Section 3.10 of the Disclosure Schedule, none of the
Companies, the Subsidiaries nor any of the Assets nor the Seller is subject to
any Governmental Order (nor, to the Knowledge of the Seller, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
which has or has had a Material Adverse Effect.

            SECTION 3.11 Compliance with Laws.
                         --------------------

            (a) Except as set forth in Section 3.11(a) of the Disclosure
Schedule, and except as would not reasonably be likely to have a Material
Adverse Effect, the Companies and the Subsidiaries have each conducted and
continue to conduct the Business in accordance with all Laws and Governmental
Orders applicable to the Companies or any Subsidiary, and neither the Companies
nor any Subsidiary is in violation of any such Law or Governmental Order.

                                       14
<PAGE>

            (b) Section 3.11(b) of the Disclosure Schedule sets forth a brief
description of each Governmental Order applicable to the Companies or any
Subsidiary or any of the Assets or the Business, and no such Governmental Order
has or has had a Material Adverse Effect.

            SECTION 3.12 Environmental Matters.
                         ---------------------

            (a) Except as disclosed in Section 3.12 of the Disclosure Schedule
and except as would not, individually or in the aggregate, have a Material
Adverse Effect: (i) to the Seller's Knowledge, the Companies and the
Subsidiaries are in compliance with all applicable Environmental Laws and have
obtained and are in compliance with all required Environmental Permits, (ii)
there are no environmental Actions pending or, to the Seller's Knowledge,
threatened, against any of the Companies or the Subsidiaries, (iii) to the
Seller's Knowledge, no Hazardous Materials have been released into the
Environment by any of the Companies or the Subsidiaries or any other Person on
any of the Real Property except as authorized under Environmental Law and as
would not require investigation or remediation as of the date of this Agreement,
and (iv) the Seller has provided the Purchaser with copies of any and all
written environmental assessment or audit reports in the Seller's or Companies'
possession, that relate to the Business or the Real Property.

            (b) The Purchaser acknowledges that (i) the representations and
warranties contained in this Section 3.12 are the only representations and
warranties being made with respect to compliance with or liability under
Environmental Laws or with respect to any environmental, health or safety
matter, including natural resources, related in any way to the Business or the
Real Property or to this Agreement or its subject matter, and (ii) no other
representation contained in this Agreement shall apply to any such matters and
no other representation or warranty, express or implied, is being made with
respect thereto.

            SECTION 3.13 Material Contracts.
                         ------------------

            (a) Section 3.13(a) of the Disclosure Schedule lists each of the
following contracts and agreements of the Companies and the Subsidiaries (such
contracts and agreements, together with all contracts, agreements, leases and
subleases concerning the management or operation of any Real Property
(including, without limitation, brokerage contracts) listed or otherwise
disclosed in Section 3.15(a) or 3.15(b) of the Disclosure Schedule to which the
Companies or any Subsidiary is a party and all agreements relating to
Intellectual Property set forth in Section 3.14(b) of the Disclosure Schedule,
being "Material Contracts"):
       ------------------

               (i) each contract and agreement for the furnishing of services to
          or by the Companies, any Subsidiary or otherwise related to the
          Business under the terms of which the Companies or any Subsidiary: (A)
          is likely to pay or otherwise give consideration of more than $50,000
          in the aggregate during the calendar year ended December 31, 1999, (B)
          is likely to pay or otherwise give consideration of more than $100,000
          in the aggregate over the remaining term of such contract or (C)
          cannot be cancelled by the Companies or such Subsidiary without
          penalty or further payment and without more than 30 days' notice;

                                       15
<PAGE>

               (ii) all broker, distributor, dealer, manufacturer's
          representative, franchise, agency, sales promotion, market research,
          marketing consulting and advertising contracts and agreements to which
          the Companies or any Subsidiary is a party;

               (iii) all management contracts and contracts with independent
          contractors or consultants (or similar arrangements) to which the
          Companies or any Subsidiary is a party and which are not cancellable
          without penalty or further payment or without more than 30 days'
          notice;

               (iv) all contracts and agreements relating to Indebtedness of the
          Companies or any Subsidiary;

               (v) all contracts and agreements with any Governmental Authority
          to which the Companies or any Subsidiary is a party;

               (vi) all contracts and agreements that limit or purport to limit
          the ability of the Companies or any Subsidiary to compete in any line
          of business or with any Person or in any geographic area or during any
          period of time;

               (vii) all contracts and agreements between or among the Companies
          or any Subsidiary and the Seller or any Affiliate of the Seller; and

               (viii) all Employee Agreements.

            For purposes of this Section 3.13 and Sections 3.14, 3.15 and 3.16,
the term "lease" shall include any and all leases, subleases, sale/leaseback
          -----
agreements or similar arrangements.

            (b) Except as disclosed in Section 3.13(b) of the Disclosure
Schedule, each Material Contract: (i) is valid and binding on the Companies or a
Subsidiary and is in full force and effect and (ii) upon consummation of the
transactions contemplated by this Agreement, except to the extent that any
consents set forth in Section 3.5 of the Disclosure Schedule are not obtained,
shall continue in full force and effect without penalty or other adverse
consequence. Neither the Companies nor any Subsidiary is in breach of, or
default under, any Material Contract.

            (c) Except as disclosed in Section 3.13(c) of the Disclosure
Schedule, to the Knowledge of the Companies no other party to any Material
Contract is in breach thereof or default thereunder.

            SECTION 3.14 Intellectual Property.
                         ---------------------

            (a) One or more of the Companies is the owner of all right, title,
and interest in and to each of the Intellectual Property, free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third party all of the
Intellectual Property.

                                       16
<PAGE>

            (b) Except as would not reasonably be likely to have a Material
Adverse Effect:

                    (i) Section 3.14(b) of the Disclosure Schedule contains a
               complete and accurate list and summary description of all Marks.
               One or more of the Companies is the owner of all right, title,
               and interest in and to each of the Marks, free and clear of all
               liens, security interests, charges, encumbrances, equities, and
               other adverse claims.

                    (ii) All Marks that have been registered with the United
               States Patent and Trademark Office are currently in compliance
               with all formal legal requirements (including the timely
               post-registration filing of affidavits of use and
               incontestability and renewal applications), are valid and
               enforceable, and are not subject to any maintenance fees or taxes
               or Actions falling due within ninety days after the Closing Date.

                    (iii) No Mark has been or is now involved in any opposition,
               invalidation, or cancellation and, to the Seller's Knowledge, no
               such action is threatened with the respect to any of the Marks.

                    (iv) To the Seller's Knowledge, there is no potentially
               interfering trademark or trademark application of any third
               party.

                    (v) All products and materials containing a Mark bear the
               proper federal registration notice where permitted by law.

            SECTION 3.15 Real Property.
                         -------------

            (a) Section 3.15(a) of the Disclosure Schedule accurately
identifies, by street address or other identifying information, all real
property and leased property owned or leased by the Companies and the
Subsidiaries. The Seller has delivered or made available to the Purchaser copies
of the deeds and other instruments (as recorded) in the possession of the Seller
or the Companies and relating to such property by which the Companies and the
Subsidiaries acquired such property, and the Seller acknowledges that the
Purchaser has received that certain commitment for title insurance dated August
26, 1999 (order no. 76941-97) prepared by First American Title Insurance Company
(the "Title Commitment").
      ----------------

            (b) Except as set forth in Section 3.15(b) of the Disclosure
Schedule, and in the Title Commitment, to Seller's Knowledge, the Real Property
is free and clear of all Encumbrances and is not subject to any rights of way,
exceptions, reservations, or other encumbrances of any nature except: (a)
mortgages or security interests shown on the Reference Balance Sheet as securing
specified liabilities or obligations, with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
(b) liens for current taxes not yet due and (c) (i) minor imperfections of
title, if any, that do not materially impair the use of the Real Property
subject thereto for its current purposes and (ii) zoning laws and other land use
restrictions that do not materially impair the use of the property subject
thereto for its current purposes.

                                       17
<PAGE>

            SECTION 3.16 Assets.
                         ------

            (a) Except as disclosed in Section 3.16 of the Disclosure Schedule,
and except as would not have a Material Adverse Effect, either a Company or a
Subsidiary, as the case may be, owns, leases or has the legal right to use all
the properties and assets, including, without limitation, the Intellectual
Property and the Real Property, used or intended to be used in the conduct of
the Business or otherwise owned, leased or used by the Companies or any
Subsidiary (all such properties and assets being the "Assets").
                                                      ------

            (b) The Assets constitute all the properties, assets and rights
forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of, the Business.

            (c) Immediately following the consummation of the transactions
contemplated by this Agreement, either a Company or a Subsidiary, as the case
may be, will continue to own, or lease, under valid and subsisting leases, or
otherwise retain its respective interest in the Assets without incurring any
penalty or other adverse consequence, including, without limitation, any
increase in rentals, royalties, or licenses or other fees imposed as a result
of, or arising from, the consummation of the transactions contemplated by this
Agreement. Immediately following the Closing, either a Company or a Subsidiary,
as the case may be, shall own and possess all documents, books, records,
agreements and financial data of any sort used by such Company or such
Subsidiary in the conduct of the Business or otherwise.

            SECTION 3.17 Employee Benefit Matters.
                         ------------------------

            (a) Section 3.17(a) of the Disclosure Schedule lists (i) all
employee compensation and benefit plans (including, without limitation, each
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), which are or were
                                                     -----
maintained, contributed to or sponsored by the Seller, a Company or a Subsidiary
for the benefit of any Employee, officer or director (or former Employee,
officer or director) of the Companies and Subsidiaries as to which a Company or
a Subsidiary has any obligation (the "Plans"), (ii) all Plans as to which any
                                      -----
Company or Subsidiary is or was the "administrator" or "plan sponsor," as those
terms are defined in Section 3 of ERISA, without regard to whether or not such
Plan is an ERISA plan, at any time within the past three years (the "Company
                                                                     -------
Plans"), (iii) all material employment, termination, severance or other
-----
contracts or agreements (including, without limitation, collective bargaining
agreements and other labor union agreements), in respect of any Employee, to
which a Company or a Subsidiary is a party or, with respect to which, a Company
or a Subsidiary has any obligation (collectively, the "Employee Agreements") and
                                                       -------------------
(iv) any multiemployer plans (as defined in Section 3(37) of ERISA), pursuant to
which the Seller, a Company or a Subsidiary contribute, or have an obligation to
contribute, in respect of any Employee, officer or director of the Companies or
Subsidiaries (the "Multiemployer Plans"). Section 3.17(a) of the Disclosure
                   -------------------
Schedule identifies which Plans are Company Plans and Multiemployer Plans and
the approximate number of Employees, officers and directors of the Companies and
Subsidiaries currently participating in each Plan, and, for each Multiemployer
Plan, sets forth, to the extent such information is in the possession of the
Seller, a Company or a Subsidiary, the amount of potential withdrawal liability
of the Companies as of its last valuation date.

                                       18
<PAGE>

            (b) Except as noted in Schedule 3.17(b), each Plan, Employee
Agreement and Multiemployer Plan is in writing and the Seller has made available
to the Purchaser a true and complete copy of:

                    (i) each such Plan, Employee Agreement and, if in the
               possession of the Seller, a Company or a Subsidiary,
               Multiemployer Plan, including any related trust agreements,
               summary plan descriptions of Plans for which the Seller, a
               Company or a Subsidiary are required to prepare descriptions, and
               summaries and descriptions furnished to participants and
               beneficiaries regarding Company Plans for which a summary plan
               description is not required;

                    (ii) all personnel and employment manuals and policies;

                    (iii) all collective bargaining agreements pursuant to which
               contributions are being made or obligations are owed by a Company
               or Subsidiary;

                    (iv) written information regarding any Company Plan that is
               not otherwise in writing;

                    (v) all registration statements filed with respect to any
               Company Plan;

                    (vi) all insurance policies purchased by or to provide
               benefits under any Plan;

                    (vii) all contracts with third party administrators,
               actuaries, investment managers, consultants, and other
               independent contractors that relate to any Company Plan;

                    (viii) all reports submitted within the four years preceding
               the date of this Agreement by third party administrators,
               actuaries, investment managers, consultants, or other independent
               contractors with respect to any Company Plan, and all such
               reports in the possession of the Seller, a Company or a
               Subsidiary relating to a Multiemployer Plan;

                    (ix) samples of notifications to employees of their rights
               under ERISAss.601 et seq. and Codess.4980B relating to any
               Company Plan;

                    (x) if required to be filed, the Form 5500 filed in each of
               the most recent three plan years with respect to each Company
               Plan and the most recent Form 5500 for each other Plan, including
               all schedules thereto and the opinions of independent
               accountants;

                    (xi) all notices that were given by any Company or any ERISA
               Affiliate of a Company with respect to any Plan, or by any Plan,
               to the IRS, the PBGC, or any participant or beneficiary, pursuant
               to statute, within the four years preceding the date of this
               Agreement, including notices that are expressly mentioned
               elsewhere in this Section 3.17;

                                       19
<PAGE>

                    (xii) all notices that were given by the IRS, the PBGC, or
               the Department of Labor to either Company, any ERISA Affiliate of
               a Company with respect to any Plan, or with respect to any other
               Plan if such notice could result in liability to either Company,
               or to any Plan, within the four years preceding the date of this
               Agreement;

                    (xiii) the most recent determination letter for each Plan
               that is a Qualified Plan; and

                    (xiv) with respect to Title IV Plans which are Company
               Plans, the Form PBGC-1 filed for each of the three most recent
               plan years.

            (c) Each Plan has been operated in all material respects in
accordance with its terms and the requirements of all applicable Laws,
including, without limitation, ERISA and the Code, and all Companies and
Subsidiaries have made appropriate entries in their financial records and
financial statements for all obligations and liabilities of such Companies and
Subsidiaries under such Plans that have accrued but are not yet due. No Action
is pending or, to the Knowledge of the Seller, threatened with respect to any
Plan (other than claims for benefits in the ordinary course) and, to the
Knowledge of the Seller, no fact or event exists that could give rise to any
such Action.

            (d) Each Plan that is intended to be qualified under Section 401(a)
of the Code (collectively, the "Qualified Plans") has timely received a
favorable determination letter from the IRS stating that the Plan is so
qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is exempt, and, to
the Knowledge of the Seller, no fact or event has occurred since the date of
such determination letter or letters from the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any such trust.

            (e) Except as set forth in Section 3.17(e) of the Disclosure
Schedule:

                    (i) No statement, either written or, to Seller's Knowledge,
               oral, has been made by either Company or Subsidiary to any person
               with regard to any Company Plan that was not in accordance with
               such Company Plan and that could have an adverse economic
               consequence to either Company, Subsidiary or the Purchaser.

                    (ii) No transaction prohibited by ERISA ss. 406 and no
               "prohibited transaction" under Code ss. 4975(c) has occurred with
               respect to any Plan.

                    (iii) No Company or Subsidiary has any liability to the IRS
               with respect to any Plan, including any liability imposed by
               Chapter 43 of the Code.

                    (iv) No Company or Subsidiary has any liability to the PBGC
               with respect to any Plan or has any liability under ERISA ss. 502
               or ss. 4071.

                                       20
<PAGE>

                    (v) All filings required by ERISA and the Code as to each
               Plan have been timely filed, and all notices and disclosures to
               participants required by either ERISA or the Code have been
               timely provided.

                    (vi) All contributions and payments made or accrued with
               respect to all Plans are deductible under Code ss. 162 or ss.
               404. No amount or any asset of any Plan is subject to tax as
               unrelated business taxable income.

                    (vii) Each Plan that is not a Qualified Plan can be
               terminated within thirty days, without payment of any additional
               contribution or amount and without the vesting or acceleration of
               any benefits promised by such Plan.

                    (viii) To the Knowledge of the Seller, no event has occurred
               or circumstance exists that could result in a material increase
               in premium costs of the Company Plans that are insured, or a
               material increase in benefit costs of such Company Plans that are
               self-insured.

                    (ix) No Plan other than a Multiemployer Plan is subject to
               Title IV of ERISA or Section 412 of the Code.

                    (x) The Companies and Subsidiaries have paid amounts due to
               the PBGC pursuant to ERISA ss. 4007.

                    (xi) No Company or Subsidiary has ceased operations at any
               facility or has withdrawn from any Title IV Plan in a manner that
               would subject any entity to liability under ERISA ss. 4062(e),
               ss. 4063, or ss. 4064.

                    (xii) No Company or Subsidiary has filed a notice of intent
               to terminate any Plan or has adopted any amendment to treat a
               Plan as terminated. The PBGC has not instituted proceedings to
               treat any Plan as terminated. No event has occurred or
               circumstance exists that may constitute grounds under ERISA ss.
               4042 for the termination of, or the appointment of a trustee to
               administer, any Plan.

                    (xiii)No amendment has been made, or is reasonably expected
               to be made, to any Plan that has required or could require the
               provision of security under ERISA ss. 307 or Code ss. 401(a)(29).

                    (xiv) No accumulated funding deficiency, whether or not
               waived, exists with respect to any Plan, and no event has
               occurred or circumstance exists that may result in an accumulated
               funding deficiency as of the last day of the current plan year of
               any such Plan.

                    (xv) The actuarial report for each Plan fairly presents the
               financial condition and the results of operations of each such
               Plan in accordance with U.S. GAAP.

                    (xvi) Since the last valuation date for each Plan, no event
               has occurred or circumstance exists that would increase the
               amount of benefits under any such Plan or

                                       21
<PAGE>

               that would cause the excess of Plan assets over benefit
               liabilities (as defined in ERISA ss. 4001) to decrease, or the
               amount by which benefit liabilities exceed assets to increase.

                    (xvii) No reportable event (as defined in ERISA ss. 4043 and
               in regulations issued thereunder) has occurred with respect to
               any Plan.

                    (xviii) No Seller or Company has Knowledge of any facts or
               circumstances that may give rise to any liability of either
               Company, Subsidiary or the Purchaser to the PBGC under Title IV
               of ERISA.

                    (xix) No Company or Subsidiary participates in, or has an
               obligation to contribute to or otherwise participate in, any
               Multiemployer Plan.

                    (xx) No Company or Subsidiary has withdrawn from any
               Multiemployer Plan with respect to which there is any outstanding
               liability as of the date of this Agreement. To the Knowledge of
               the Seller, no event has occurred or circumstance exists that
               presents a risk of the occurrence of any withdrawal from, or the
               termination, reorganization, or insolvency of, any Multiemployer
               Plan that could result in any liability of either Company, any
               Subsidiary or the Purchaser to a Multiemployer Plan.

                    (xxi) No Company or Subsidiary has received notice from any
               Multiemployer Plan that it is in reorganization or is insolvent,
               that increased contributions may be required to avoid a reduction
               in plan benefits or the imposition of any excise Tax, or that
               such plan intends to terminate or has terminated.

                    (xxii) To the Knowledge of the Seller, no Multiemployer Plan
               to which either Company or any Subsidiary contributes or has
               contributed during the three years immediately preceding the date
               hereof is a party to any pending merger or asset or liability
               transfer or is subject to any proceeding brought by the PBGC.

                    (xxiii) Except to the extent required under ERISA ss. 601 et
               seq. and Code ss. 4980B, no Company or Subsidiary provides health
               or welfare benefits through any Plan for any retired or former
               employee or is obligated to provide health or welfare benefits to
               any active employee through any Plan following such employee's
               retirement or other termination of service.

                    (xxiv) No payment that is owed or may become due to any
               director, officer, employee, or agent of either Company or
               Subsidiary will be non-deductible to such Company or Subsidiary
               or subject to tax under Code ss. 280G or ss. 4999; nor will
               either Company or Subsidiary be required to "gross up" or
               otherwise compensate any such Person because of the imposition of
               any excise tax on a payment to such Person.

                    (xxv) The consummation of the transactions contemplated by
               this Agreement will not result in the payment, vesting, or
               acceleration of any benefit, except as may be required by a
               Qualified Plan pursuant to Section 411(d)(3) of the Code.

                                       22
<PAGE>

            (f) No event has occurred that could result in any liability of
either Company or any Subsidiary as the result of it being treated, together
with one or more other Persons or entities, as a single employer under Code
ss.414 or similar provisions of ERISA.

            SECTION 3.18 Labor Matters. Except as set forth in Section 3.18 of
                         -------------
the Disclosure Schedule, (a) neither the Companies nor any Subsidiaries are
parties to any collective bargaining agreement or other labor union contract,
and, to the Seller's Knowledge, currently there are no organizational campaigns,
petitions or other unionization activities seeking recognition of a collective
bargaining unit which could affect the Companies or Subsidiaries; (b) there are
no controversies, strikes, slowdowns or work stoppages pending or, to the
Seller's Knowledge, threatened between the Companies or any Subsidiaries and any
Employee, and neither the Companies nor any Subsidiaries have experienced any
such controversy, strike, slowdown or work stoppage within the past three years;
(c) neither the Companies nor any Subsidiaries have breached, in any material
respect, or otherwise failed to comply, in any material respect, with the
provisions of any collective bargaining or union contract and there are no
grievances outstanding against the Companies or Subsidiaries under any such
agreement or contract that could have a Material Adverse Effect; (d) there are
no unfair labor practice complaints pending or, to the Seller's Knowledge,
threatened against the Companies or Subsidiaries before the National Labor
Relations Board or any other Governmental Authority or any current union
representation questions involving Employees that could have a Material Adverse
Effect; (e) neither the Companies nor any Subsidiaries are parties to, or
otherwise bound by, any consent decree with, or citation by, any Governmental
Authority relating to Employees or employment practices; (f) there is no charge
or proceeding with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or, to the Seller's
Knowledge, threatened with respect to the Companies or Subsidiaries; and (g)
there is no charge of discrimination in employment or employment practices, for
any reason, including, without limitation, age, gender, race, religion or other
legally protected category, which has been asserted or is now pending or, to the
Seller's Knowledge, threatened before the United States Equal Employment
Opportunity Commission or any other Governmental Authority in any jurisdiction
in which the Companies or Subsidiaries have employed or currently employ any
person.

            SECTION 3.19 Key Employees. Section 3.19 of the Disclosure Schedule
                         -------------
lists the name, place of employment, the current annual salary rates, bonuses,
deferred or contingent compensation, pension, accrued vacation, "golden
parachute" and other like benefits paid or payable (in cash or otherwise) in
1998, the date of employment and a description of position and job function of
each current salaried employee, officer, director, consultant or agent of the
Companies or any Subsidiary whose annual cash compensation exceeded (or, in
1999, is expected to exceed) $75,000.

            SECTION 3.20 Taxes.
                         -----

            (a) Except as set forth in Section 3.20 of the Disclosure Schedule:
(i) all material returns and reports in respect of Taxes required to be filed
with respect to the Companies and each Subsidiary (including the consolidated
federal income tax return of the Seller and any state Tax return that includes
the Companies or any Subsidiary on a consolidated or combined basis) have been
timely filed; (ii) all Taxes shown on such returns and reports or

                                       23
<PAGE>

otherwise due have been timely paid; (iii) all such Tax returns are true,
complete and correct in all material respects; (iv) no adjustment relating to
such returns has been proposed formally or informally by any Tax authority
(insofar as either relates to the activities or income of the Companies or any
Subsidiary or could result in Liability of the Companies or any Subsidiary on
the basis of joint and/or several liability) and, to the Knowledge of the
Seller, the Companies and the Subsidiaries, no basis exists for any such
adjustment; (v) there are no pending or, to the Knowledge of the Seller, the
Companies and the Subsidiaries, threatened Actions or proceedings for the
assessment or collection of Taxes against the Companies or any Subsidiary or
(insofar as either relates to the activities or income of the Companies or any
Subsidiary or could result in Liabilities of the Companies or any Subsidiary on
the basis of joint and/or several liability) any corporation that was included
in the filing of a return with the Seller on a consolidated or combined basis;
(vi) no consent under Section 341(f) of the Code has been filed with respect to
the Companies or any Subsidiary; and (vii) from and after January 1, 1996, the
Companies and each Subsidiary has been and continues to be a member of the
affiliated group (within the meaning of Section 1504(a)(1) of the Code) with
which the Seller files a consolidated return, and has not been includible in any
other consolidated return for any taxable period for which the statute of
limitations has not expired.

            (b) Except as disclosed with reasonable specificity in Section 3.20
of the Disclosure Schedule, there are no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any Tax to
which the Companies or any Subsidiary may be subject.

            (c) (i) Section 3.20 of the Disclosure Schedule lists all income,
franchise and similar tax Returns (federal, state, local and foreign) filed with
respect to each of the Companies and the Subsidiaries for taxable periods ended
on or after January 1, 1996, indicates for which jurisdictions Returns have been
filed on the basis of a unitary group, indicates the most recent income,
franchise or similar tax Return for each relevant jurisdiction for which an
audit has been completed or the statute of limitations has lapsed and indicates
all tax Returns that currently are the subject of audit; (ii) the Seller has
delivered to the Purchaser copies of all federal, state and foreign income,
franchise and similar tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Companies or any Subsidiary
since January 1, 1996; (iii) the Seller has delivered to the Purchaser a true
and complete copy of any tax-sharing or allocation agreement or arrangement
involving the Companies or any Subsidiary. The Seller has delivered to the
Purchaser copies of all pro forma federal income tax Returns of the
Subsidiaries, prepared in connection with the Seller's or any other consolidated
federal income tax Return, accompanied by a schedule reconciling the items in
the pro forma Return to the items as included in the consolidated tax Return for
all taxable years ending on or after January 1, 1996.

            SECTION 3.21 Brokers. No broker, finder or investment banker is
                         -------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Seller.

            SECTION 3.22 Investment Purpose. The Seller is acquiring the shares
                         ------------------
of the Purchaser solely for the purpose of investment and not with a view to, or
for offer or sale in connection with, any distribution thereof. The Seller
understands that: (a) the Purchaser Shares

                                       24
<PAGE>

have not been registered under the Securities Act and are being offered and sold
in reliance on an exemption from the registration requirements of the Securities
Act; (b) the Purchaser Shares may not be transferred or resold except as
permitted under the Securities Act and applicable state securities laws pursuant
to registration or an exemption therefrom; and (c) the certificate evidencing
the Purchaser Shares will bear a legend to the effect that they have not been
registered under Securities Act and may be transferred or resold only in
compliance with the Securities Act and applicable state securities laws.

            SECTION 3.23 Insurance. Section 3.23 of the Disclosure Schedule sets
                         ---------
forth the following information with respect to each insurance policy under
which the Companies or any Subsidiary has been an insured, a named insured or
otherwise the principal beneficiary of coverage at any time within the past
year:

            (a) the name, address and telephone number of the agent or broker;

            (b) the name of the insurer and the names of the principal insured
and each named insured;

            (c) the policy number and the period of coverage;

            (d) the type, scope (including an indication of whether the coverage
was on a claims made, occurrence or other basis) and amount (including a
description of how deductibles, retentions and aggregates are calculated and
operate) of coverage; and

            (e) the premium charged for the policy, including, without
limitation, a description of any retroactive premium adjustments or other
loss-sharing arrangements.

            All of the insurance policies listed on Section 3.23 of the
Disclosure Schedule shall be amended or cancelled as of the Closing Date to
remove the Companies as an insured, a named insured or the principal beneficiary
of coverage thereunder.

                                   ARTICLE IV
               REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

            As an inducement to the Seller to enter into this Agreement, the
Purchaser hereby represents and warrants to the Seller as follows:

            SECTION 4.1 Organization and Authority of the Purchaser. The
                        -------------------------------------------
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary corporate power
and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Purchaser, the performance by the
Purchaser of its obligations hereunder and the consummation by the Purchaser of
the transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Seller) this Agreement constitutes a valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms.

                                       25
<PAGE>

            SECTION 4.2 No Conflict. Assuming compliance with the notification
                        -----------
requirements of the HSR Act and the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.3, except as may result from any facts or circumstances relating
solely to the Seller, the execution, delivery and performance of this Agreement
by the Purchaser do not and will not (a) violate, conflict with or result in the
breach of any provision of the Certificate of Incorporation or By-laws of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse or time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser is a party or by which
any of such assets or properties are bound or affected, except for conflicts or
violations which would not have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by this Agreement.

            SECTION 4.3 Governmental Consents and Approvals. The execution,
                        -----------------------------------
delivery and performance of this Agreement by the Purchaser do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority, except (a) as
described in a writing delivered to the Seller by the Purchaser on the date of
this Agreement, (b) the notification requirements of the HSR Act and (c) the
approval of the California Horse Racing Board.

            SECTION 4.4 Investment Purpose. The Purchaser is acquiring the
                        ------------------
Shares solely for the purpose of investment and not with a view to, or for offer
or sale in connection with, any distribution thereof.

            SECTION 4.5 No Undisclosed Liabilities. To Purchaser's Knowledge,
                        --------------------------
there are no Liabilities of the Purchaser, other than Liabilities (i) reflected
or reserved against on June 30, 1999, (ii) disclosed in Section 4.5 of the
Disclosure Schedule, or (iii) incurred since June 30, 1999 in the ordinary
course of the business, consistent with the past practice, of the Purchaser.

            SECTION 4.6 Litigation. Except as set forth in Section 4.6 of the
                        ----------
Disclosure Schedule, there are no material Actions by or against the Purchaser
(or by or against the Purchaser or any Affiliate thereof and relating to the
business of the Purchaser), or materially affecting any of the assets of the
Purchaser, pending before any Governmental Authority (or, to the Knowledge of
the Purchaser, threatened to be brought by or before any Governmental
Authority). Except as set forth in Section 4.6 of the Disclosure Schedule, none
of the Purchaser nor any of the assets of the Purchaser is subject to any
Governmental Order (nor, to the Knowledge of the Purchaser, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
which has or has had a Purchaser Material Adverse Effect.

            SECTION 4.7 No Material Adverse Change. Since the date of this
                        --------------------------
Agreement, there has not been any material adverse change in the results of
operations or financial condition of the Purchaser (a "Purchaser Material
Adverse Effect"), and no event has occurred or

                                       26
<PAGE>

circumstance exists that may result in a Purchaser Material Adverse Effect. For
purposes of this Section 4.7, the term "Purchaser" includes the operations of
its subsidiaries, The Santa Anita Companies, Inc. and Gulfstream Park Racing
Association, Inc.

            SECTION 4.8 Purchaser Prospectus.
                        --------------------

            (a) The Purchaser Prospectus, as well as all other forms, reports
and documents to be filed by the Purchaser with the SEC after the date hereof
and prior to the Closing Date: (i) will be prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder, (ii) will not at the time they are filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, and (iii) will not at the time they are filed omit any documents
required to be filed as exhibits thereto.

            (b) Each of the financial statements (including, in each case, any
notes thereto) contained in the Purchaser Prospectus, and all other financial
statements to be filed by the Purchaser with the SEC after the date hereof and
prior to the Closing Date, will be prepared in accordance with U.S. GAAP (except
as may be indicated in the notes thereto), and each will fairly present in all
material respects the consolidated financial position, results of operations and
cash flows of the Purchaser as at the respective dates thereof and for the
respective periods indicated therein in accordance with U.S. GAAP (subject, in
the case of unaudited statements, to normal and recurring year-end adjustments
which are not expected to be material); provided that, in making this
representation, the Purchaser is relying on the Seller's representations in
Sections 3.7 and 3.8.

            SECTION 4.9 Brokers. No broker, finder or investment banker is
                        -------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.

                                   ARTICLE V
                              ADDITIONAL AGREEMENTS

            SECTION 5.1 Conduct of Business Prior to the Closing. The Seller
                        ----------------------------------------
covenants and agrees that, except as described in Section 5.1 of the Disclosure
Schedule, between the date hereof and the time of the Closing, none of the
Companies nor any Subsidiary shall conduct its business other than in the
ordinary course and consistent with the Companies' and such Subsidiary's prior
practice. Without limiting the generality of the foregoing, except as described
in Section 5.1 of the Disclosure Schedule, the Seller shall cause the Companies
and each Subsidiary to (i) continue its advertising and promotional activities,
and pricing and purchasing policies, in accordance with past practice; (ii) not
shorten or lengthen the customary payment cycles for any of its payables or
receivables; (iii) use its commercially reasonable efforts to (A) preserve
intact their business organizations and the business organization of the
Business and (B) continue in full force and effect without material modification
all existing policies or binders of insurance currently maintained in respect of
the Companies, each Subsidiary and the Business and (iv) exercise, but only
after notice to the Purchaser and receipt of the Purchaser's prior

                                       27
<PAGE>

written approval, any rights of renewal pursuant to the terms of any of the
leases or subleases set forth in Section 3.15 of the Disclosure Schedule which
by their terms would otherwise expire. Except as described in Section 5.1 of the
Disclosure Schedule, the Seller covenants and agrees that, prior to the Closing,
without the prior written consent of the Purchaser, neither the Companies nor
any Subsidiary will do any of the things enumerated in the second sentence of
Section 3.9 (including, without limitation, clauses (i) through (xi) thereof).

            SECTION 5.2 Access to Information.
                        ---------------------

            (a) From the date hereof until the Closing, the Seller shall cause
the Companies and each of the Companies' officers, directors, employees, agents,
representatives, accountants and counsel to: (i) afford the officers, employees
and authorized agents, accountants, counsel, and representatives of the
Purchaser reasonable access, upon reasonable notice and during normal business
hours, to the officers, directors, employees, accountants and counsel of the
Companies who have material relevant knowledge relating to the Companies or the
Business and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel, and representatives of the Purchaser unaudited financial
statements of the Companies on a monthly basis prepared by the management of the
Companies and the Seller.

            (b) The Seller shall provide to the Purchaser, promptly upon the
Purchaser's reasonable request, all financial and other data and information
relating to LL and PRA as may be necessary or advisable to enable the Purchaser
to prepare and file the Purchaser Prospectus (and any amendments thereto) with
the SEC, consistent with the Purchaser's obligations under Section 4.8 hereof
and under applicable federal and state securities laws; provided, that, if the
Seller reasonably believes that it is necessary to retain accountants or other
advisors to respond to any such request, the Purchaser shall reimburse the
Seller for the reasonable fees and expenses of such accountants or other
advisors.

            (c) In order to facilitate the resolution of any claims made against
or incurred by the Seller prior to the Closing, for a period of seven years
after the Closing, the Purchaser shall (i) retain the books and records of the
Companies and the Subsidiaries relating to periods prior to the Closing in a
manner reasonably consistent with the prior practice of the Companies and the
Subsidiaries and (ii) upon reasonable notice, afford the officers, employees and
authorized agents and representatives of the Seller reasonable access (including
the right to make, at the Seller's expense, photocopies), during normal business
hours, to such books and records.

            (d) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser, the Companies or any Subsidiary after the
Closing or for any other reasonable purpose, for a period of seven years
following the Closing, the Seller shall (i) retain the books and records of the
Seller which relate to the Companies and the Subsidiaries and their operations
for periods prior to the Closing and which shall not otherwise have been
delivered to the Purchaser, the Companies or any Subsidiary and (ii) upon
reasonable notice, afford the officers, employees and authorized agents and
representatives of the Purchaser, the Companies or any Subsidiary reasonable
access (including the right to make photocopies, at the expense of the
Purchaser, the Companies or such Subsidiary), during normal business hours, to
such books and records.

                                       28
<PAGE>

            SECTION 5.3 Confidentiality. The Purchaser and the Seller agree to,
                        ---------------
and shall cause their respective agents, representatives, Affiliates, employees,
officers and directors to: (i) treat and hold as confidential (and not disclose
or provide access to any Person to) this Agreement and all information relating
to trade secrets, product development, price, customer and supplier lists,
pricing and marketing plans, policies and strategies, details of client and
consultant contracts, business acquisition plans, and all other confidential
information with respect to the Business, the Companies and each Subsidiary,
(ii) in the event that the Purchaser or the Seller or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled or is requested by any Governmental Authority to disclose any such
information, provide the other party with prompt written notice of such
requirement so that such party, the Companies or any Subsidiary may seek a
protective order or other remedy or waive compliance with this Section 5.3,
(iii) in the event that such protective order or other remedy is not obtained,
or such party waives compliance with this Section 5.3, furnish only that portion
of such confidential information which is legally required to be provided and
exercise commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded such information; provided, however, that this
sentence shall not apply to any information that, at the time of disclosure, is
available publicly and was not disclosed in breach of this Agreement by the
Purchaser or the Seller, as applicable, or their respective agents,
representatives, Affiliates, employees, officers or directors or is required to
be disclosed in compliance with Section 5.4 of this Agreement, federal and state
laws or regulations or the regulations governing any national securities
exchange or quotation system or is requested by a regulatory body that has
authority over the Seller or the Purchaser. The Purchaser and the Seller agree
and acknowledge that remedies at law for any breach of their respective
obligations under this Section 5.3 are inadequate and that in addition thereto
the other party shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach.

            SECTION 5.4 Regulatory and Other Authorizations; Notices and
                        ------------------------------------------------
Consents.
--------

            (a) The Purchaser shall use its best efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for its execution and delivery of,
and the performance of its obligations pursuant to, this Agreement, and the
Seller will cooperate fully with the Purchaser in promptly seeking to obtain all
such authorizations, consents, orders and approvals; provided that neither the
Purchaser nor the Seller shall be required to divest any assets or give any
guarantee in connection therewith. Each party hereto agrees to make an
appropriate filing, if necessary, pursuant to the HSR Act with respect to the
transactions contemplated by this Agreement within five Business Days of the
date hereof and to supply as promptly as practicable to the appropriate
Governmental Authorities any additional information and documentary material
that may be requested pursuant to the HSR Act, and the Purchaser agrees to make
an appropriate filing with the California Horse Racing Board within 30 days of
the date hereof.

            (b) The Seller shall use commercially reasonable efforts to give all
notices and obtain all consents set forth in Section 3.5(c) of the Disclosure
Schedule. The Purchaser shall cooperate and use all reasonable efforts to assist
the Seller in giving such notices and obtaining such consents; provided,
                                                               --------
however, that neither the Purchaser nor the Seller shall have any obligation to
-------
give any guarantee or other consideration of any nature in connection with any
such notice or consent or to consent to any change in the terms of any agreement
or arrangement.

                                       29
<PAGE>

            (c) The Seller and the Purchaser agree that, in the event any
consent, approval or authorization necessary to preserve for the Business, the
Companies or any Subsidiary any right or benefit under any lease, license,
contract, commitment or other agreement or arrangement to which the Seller, the
Companies or any Subsidiary is a party is not obtained prior to the Closing, the
Seller will, subsequent to the Closing, cooperate with the Purchaser and the
Companies in attempting to obtain such consent, approval or authorization as
promptly thereafter as practicable. If such consent, approval or authorization
cannot be obtained, the Seller shall use its commercially reasonable efforts to
provide such Company or such Subsidiary, as the case may be, with the rights and
benefits of the affected lease, license, contract, commitment or other agreement
or arrangement for the term of such lease, license, contract or other agreement
or arrangement, and, if the Seller provides such rights and benefits, such
Company or such Subsidiary, as the case may be, shall assume all obligations and
burdens thereunder.

            SECTION 5.5 Director. Simultaneously with the Closing, the Purchaser
                        --------
shall increase its number of directors by one, and shall appoint Mr. Peter
George to the Purchaser's Board of Directors.

            SECTION 5.6 Purchaser Shares; Transfer Restrictions.
                        ---------------------------------------

            (a) If the Class A Subordinate Voting Stock of the Purchaser is not
quoted on The Nasdaq National Market on or before June 30, 2000, then upon
written notice from the Seller on or before July 31, 2000, the Purchaser will
repurchase the Purchaser Shares from the Seller for $7,000,000 in cash.

            (b) The Seller covenants and agrees that, prior to the first
anniversary of the Closing Date, it will not, other than in accordance with the
Registration Rights Agreement: (i) sell, assign, transfer, pledge, mortgage,
convey or otherwise dispose of or encumber (each, a "Transfer") any of the
Purchaser Shares or any interest therein or (ii) agree to so Transfer any of the
Purchaser Shares or any interest therein. All Transfers or purported Transfers
of the Purchaser Shares in violation of the terms of this Agreement shall be
void and of no effect, and the Purchaser shall not be required to enter any such
Transfer on its books or otherwise register such Transfer. The certificates
evidencing the Purchaser Shares shall bear an appropriate legend referring to
this Agreement and the foregoing restrictions on Transfer.

            SECTION 5.7 Distribution of Excess PRA Assets. Prior to the Closing,
                        ---------------------------------
the Seller shall cause PRA to distribute to the Seller the Excess PRA Assets.
Such distribution shall be accomplished in a manner such that the Purchaser is
reasonably satisfied that the distribution does not create any additional Tax
Liabilities for the Companies or the Subsidiaries.

            SECTION 5.8 Casualty Insurance Proceeds. With respect to any
                        ---------------------------
casualty occurring from and after the date hereof and prior to the Closing Date
that results in the Seller's or the Companies' receipt of casualty insurance
proceeds, including any proceeds for lost profits, business interruption or the
like, under any casualty insurance policy maintained by or for the benefit of
the Companies or any Subsidiary, the Seller shall cause any and all of the
Seller's right to such casualty insurance proceeds to be assigned to the
Companies and any amounts received thereunder to promptly be remitted to the
Companies.

                                       30
<PAGE>

            SECTION 5.9 Notification. Prior to the Closing, the Seller and the
                        ------------
Purchaser, as applicable (in such case, the "Breaching Party"), shall promptly
notify the other party in writing of all events, circumstances, facts and
occurrences arising subsequent to the date of this Agreement which would result
in a breach of a representation or warranty or covenant of the Breaching Party
in this Agreement or which would have the effect of making any representation or
warranty of the Breaching Party in this Agreement untrue or incorrect in any
material respect.

            SECTION 5.10 Intercompany Obligations. Aggregate Indebtedness owed
                         ------------------------
by any Company or Subsidiary as of the Closing Date to any of its Affiliates
(including the Seller and its Affiliates, but not including any Company or any
Subsidiary) shall on the Closing Date be netted against aggregate Indebtedness
owed by any Affiliate of any Company or any Subsidiary (including the Seller and
its Affiliates, but not including any Company or any Subsidiary) to any Company
or any Subsidiary as of the Closing Date. Any remaining Indebtedness shall be
cancelled as of the Closing Date, without any payment in respect thereof, and
the amount of such cancelled Indebtedness shall be characterized as a
contribution to capital by the Seller to PRA or as forgiveness of debt by PRA,
as appropriate.

            SECTION 5.11 No Negotiation. Until such time, if any, as this
                         --------------
Agreement is terminated pursuant to Section 10.1, the Seller will not, and will
cause the Companies and each of their representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than the Purchaser) relating to any transaction involving the sale of the
Business or Assets (other than in the ordinary course of business) of the
Companies or the Subsidiaries, or any of the capital stock of the Companies or
the Subsidiaries, or any merger, consolidation, business combination, or similar
transaction involving the Companies or the Subsidiaries.

            SECTION 5.12 Further Action. Subject to the provisos of Sections
                         --------------
5.4(a) and (b), each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all appropriate action, do or cause to be done all
things necessary, proper or advisable under applicable Law, and execute and
deliver such documents and other papers, as may be required to carry out the
provisions of this Agreement and consummate and make effective the transactions
contemplated by this Agreement.

            SECTION 5.13 Non-Competition. For a period of two (2) years after
                         ---------------
the Closing Date, the Purchaser shall not engage, directly or indirectly, in any
business (a) on the Real Property that competes with Ladbroke Gaming California,
Inc. or its subsidiaries in supplying card club services of the kind supplied
thereby on the Closing Date or (b) that, solely by reason of owning the Real
Property or the PRA Common Stock, competes with Ladbroke Gaming California, Inc.
or its subsidiaries in supplying card club services of the kind supplied thereby
on the Closing Date.

            SECTION 5.14 Maintenance of Book Value. The Purchaser covenants and
                         -------------------------
agrees that the Book Value of the Purchaser shall be not less than $550,000,000
on the Closing Date and not less than $50,000,000 at all times thereafter until
(a) compliance in full with the obligation contained in Section 5.6 of this
Agreement and (b) payment in full or other satisfaction or termination of all
amounts due under the Purchaser Note.

                                       31
<PAGE>

            SECTION 5.15 Ladbroke Names. The Purchaser acknowledges that from
                         --------------
and after the Closing, the name "Ladbroke" and all similar or related names,
marks and logos (all of such names, marks and logos being the "Ladbroke Names")
                                                               --------------
shall be owned by the Seller, that neither the Purchaser nor any of its
Affiliates shall have any rights in the Ladbroke Names, and that neither the
Purchaser nor any of its Affiliates will contest the ownership or validity of
any rights of the Seller in or to the Ladbroke Names.

            SECTION 5.16 San Pablo Gaming Facility. The Seller shall not, shall
                         -------------------------
cause its Affiliates not to, and shall use its best efforts to cause Lytton
Casino Management, LLC ("Lytton") not to, consent to the commencement of
pari-mutuel wagering on horse races at the Facility or on the Property, each as
defined in that certain Property Acquisition & Management Agreement dated as of
December, 1998 among the Lytton Band of Pomo Indians (the "Band"), Lytton and
One Sky Sonoma, LLC (the "Management Agreement"); provided that, if the Business
is expanded to include any form of Class III Gaming (as defined in the
Management Agreement) other than pari-mutuel wagering on horse racing, the
Seller may and may cause its Affiliates to consent to the commencement by the
Band of pari-mutuel wagering on horse races at the Facility.

            SECTION 5.17 Transition Services.
                         -------------------

            (a) For a period of sixty (60) days following the Closing Date, the
Seller shall provide, or shall use its best efforts, including the payment of
money, to cause its designee to provide, such information technology services at
the Companies as were provided by the Seller on or prior to the date hereof, if
requested by the Companies or the Purchaser. The Seller shall cause the Provider
to provide these services to the Companies at an hourly rate not to exceed $100
per hour of work performed. The Seller shall ensure that reasonably adequate
personnel are deployed to accomplish the services requested by the Companies in
a reasonably timely and satisfactory manner. The Seller shall maintain a written
log setting forth the amount of time spent by the Provider's personnel in
providing services to the Companies hereunder, and this log shall be reviewed by
the Seller with Thomas Kanar at least weekly. All invoices delivered by the
Seller to the Companies or the Purchaser for services hereunder shall be based
solely on hours entered into the written log.

            (b) For a period of sixty (60) days following the Closing Date, the
Seller shall permit the Companies and their respective personnel to use the
fractional T1-Line to the corporate office of the Seller in Richmond, California
as the Companies' internet connection. The Purchaser shall, or shall cause the
Companies to, reimburse the Seller for the marginal invoiced cost of this
connection which is attributable to the Companies' use.

            (c) The Seller shall use its best efforts to obtain an assignment to
the Companies or the Purchaser of the leases relating to computer hardware used
by the Companies and the Business which are incorporated into the Master Lease
Agreement No. 4551097 effective June 7, 1999 between Dell Financial Services
L.P. and the Seller, such assignment to be in form and substance reasonably
satisfactory to the Purchaser.

            (d) As approved in writing by the Purchaser and Thomas Kanar, the
Seller shall purchase prior to the Closing an e-mail/internet server, firewall
hardware and peripheral

                                       32
<PAGE>

equipment, including without limitation routers and modems, at an approximate
total cost of $48,000. The Purchaser will reimburse the Seller for the cost of
these purchases associated solely with the transition of the Business from the
Seller to the Purchaser (which purchases shall be specified in any approval
given by the Purchaser) and not associated with ongoing equipment replacement in
the ordinary course of business.

            SECTION 5.18 Termination of Interests in Real Property.
                         -----------------------------------------

            (a) The Seller shall use its best efforts to promptly terminate the
development agreement dated August 1, 1994 between LRC and the City of Albany,
as amended (the "Development Agreement"); provided that, if the Seller is not
                 ---------------------
successful in terminating the Development Agreement, neither the Seller nor its
Affiliates, nor such parties' designees, successors or assigns, shall, or shall
agree to, exercise any rights under the Development Agreement or sell, assign,
transfer, pledge, mortgage, convey or otherwise dispose of or encumber the
Seller's interests arising out of or relating to the Development Agreement.

            (b) The Seller shall, promptly upon termination of the Development
Agreement and/or final determination of the Action set forth in paragraph 9 of
Section 3.10 of the Disclosure Schedule, deliver to the Purchaser executed
documents in recordable form effective to remove from title to the Real Property
any Encumbrance arising out of or relating to the Development Agreement and/or
such Action.

                                   ARTICLE VI
                                EMPLOYEE MATTERS

            SECTION 6.1 Payroll Obligations, Employee Agreements and WARN Act.
                        -----------------------------------------------------

            (a) The Purchaser shall assume responsibility for all payroll
obligations (including, without limitation, the satisfaction of all payroll
withholding tax obligations) for the Companies and Subsidiaries payable after
the Closing Date.

            (b) The Purchaser shall honor, without modification, all Employee
Agreements executed prior to the date hereof which apply to any Employee.

            (c) Effective as of the Closing Date and thereafter, the Purchaser
shall be responsible for (i) any liability arising under the Worker Adjustment
and Retraining Notification Act (the "WARN Act") in connection with the
                                      --------
termination of the employment of any Employee by the Purchaser on or after the
Closing Date and (ii) issuance of any notices required by the WARN Act with
respect to the termination of any Employee after the Closing Date.

            SECTION 6.2 Seller's Plans and Employee-Related Liabilities.
                        -----------------------------------------------

            (a) The Seller agrees to continue coverage of the Employees under
the Plans in accordance with their terms through the date prior to the Closing
Date. As of the Closing Date, each Employee shall cease to be covered by each of
the Plans which are not Company Plans. Except with respect to the liabilities
under any Plans that are assumed by the Purchaser, the Seller shall remain
obligated for all benefits and benefit entitlements under the Plans that were
earned or accrued, except as noted in Section 6.4(b), by Employees prior to the
Closing

                                       33
<PAGE>

Date. With respect to the Plans that provide welfare benefits, the Seller agrees
that either it or the applicable insurance carrier, as set forth in the
applicable Plan, remain obligated to reimburse Employees for eligible health
care and other eligible welfare benefit expenses and services incurred up to the
Closing Date in accordance with the terms of such Plans; provided that
Employees' claims for reimbursement for such expenses and services are delivered
to the appropriate party within applicable time limits, as set forth in the
applicable Plan. An expense or service is deemed to be incurred, with respect to
a health plan, when the medical services are performed, and, with respect to
plans that provide welfare benefits other than medical or dental benefits, when
the event giving rise to such expense or service occurs.

            (b) The Seller agrees to remain obligated for expenses incurred in
connection with any claim of an Employee arising under the workers' compensation
laws of any state (a "Workers' Compensation Claim") that was filed with the
appropriate Governmental Authority prior to the Closing Date. The Seller shall
have no obligation with respect to any Workers' Compensation Claim filed on or
after the Closing Date, regardless of the date on which the event triggering
such claim occurred. All such Workers' Compensation Claims filed after the
Closing Date shall be the responsibility of the Purchaser.

            (c) The Seller agrees to remain obligated to provide continuation
health care coverage, in accordance with Section 4980B of the Code and Sections
601 to 608 of ERISA ("COBRA"), to all Employees and their qualified
beneficiaries (i) who incur a qualifying event prior to the Closing Date and
(ii) to whom the Seller, either Company, or any Subsidiary are, on the Closing
Date, (A) providing such continuation coverage or (B) under an obligation to
provide such continuation coverage at the election of the Employee or his
qualified beneficiary. The Purchaser shall have responsibility for any and all
obligations under COBRA with respect to Employees and their qualified
beneficiaries who incur qualifying events on or after the Closing Date.

            (d) Prior to the Closing Date, the Seller agrees to remain obligated
with respect to contributions to any Multiemployer Plan in respect of the
Employees. As of the Closing Date, the Purchaser shall assume all of the
obligations of the Companies and Subsidiaries under all Multiemployer Plans with
respect to the Employees covered by such plans.

            SECTION 6.3 Purchaser's Plans.
                        -----------------

            (a) On the Closing Date, the Employees shall be covered by the
employee benefit plans, programs, and policies established or maintained by the
Purchaser applicable to similarly situated employees of the Purchaser (the
"Purchaser's Plans"). Nothing contained in this Section 6.3 shall obligate or
commit the Purchaser to continue the Purchaser's Plans after the Closing Date or
to maintain in effect any such plan or any level or type of benefits.

            (b) In connection with the Purchaser's obligation to provide welfare
benefits to the eligible Employees under the Purchaser's Plans pursuant to
Section 6.3(a), the Purchaser shall cause each group health plan of the
Purchaser, or, with respect to an insured plan, use its best efforts to cause
the insurer, to waive any pre-existing condition exclusions thereunder with
respect to the Employees to extent that such Employees are enrolled in the
applicable group health plan of the Seller as of the Closing Date.

                                       34
<PAGE>

            (c) For purposes of this Article VI, Employees shall receive credit
for purposes of eligibility to participate and vesting (and with respect to
benefit accruals, solely for purposes of calculating entitlement to vacation,
sick days and severance pay) under the Purchaser's Plans for service accrued or
deemed accrued prior to the Closing Date with the Seller, the Companies or any
Subsidiary; provided, however, that such crediting of service shall not operate
to duplicate any benefit or the funding of any such benefit.

            SECTION 6.4 Bonus and Severance Obligations; Accrued Vacation Pay.
                        -----------------------------------------------------

            (a) Prior to the Closing Date, the Seller agrees to accrue pro rata
annual incentive and bonus payments as of the Closing Date on behalf of
Employees who are or will become entitled to such payments pursuant to any
Plans, Company Plans or Employee Agreements, all of which are described in
Section 6.4 of the Disclosure Schedule. The Purchaser agrees to make, or to
cause the Companies to make, payments which become payable to Employees on or
after the Closing Date pursuant to the provisions of any such Plans, Company
Plans or Employee Agreements.

            (b) Prior to the Closing Date, the Companies shall pay Employees for
any vacation days that are earned and used in accordance with the vacation pay
policy of PRA. As of the Closing Date, the Purchaser shall assume all
obligations pursuant to the vacation pay policy of PRA, with respect to
Employees, for vacations days that are accrued, but unused.

            SECTION 6.5 Mutual Cooperation. The Seller and the Purchaser agree,
                        ------------------
in a complete, diligent and timely manner, to exchange such employee census,
actuarial or other data as shall be reasonably necessary to calculate benefits
under any plan and to take any and all actions as shall be reasonably necessary
or advisable to effect the provisions of this Article VI.

            SECTION 6.6 Employee Benefits Indemnity. For a period of three years
                        ---------------------------
following the Closing Date:

            (a) The Purchaser shall indemnify and hold the Seller harmless from
any losses the Seller may incur as a result of (i) the Purchaser's failure to
honor any obligation expressly assumed under this Article VI by the Purchaser or
a breach by the Purchaser of any covenant of the Purchaser set forth in this
Article VI and (ii) any actions taken by the Purchaser with respect to any
Employee on or after the Closing Date.

            (b) The Seller shall indemnify and hold the Purchaser harmless from
any losses the Purchaser may incur as a result of (i) the Seller's failure to
honor any obligations expressly retained or assumed under this Article VI by the
Seller or a breach by the Seller of any covenant of the Seller set forth in this
Article VI and (ii) any actions taken by the Seller with respect to any Employee
prior to the Closing Date.

                                       35
<PAGE>

            SECTION 6.7 Third-Party Claims. Nothing in this Agreement is
                        ------------------
intended, or shall be construed, to confer upon any person, other than the
parties hereto and their successors and permitted assigns, any rights or
remedies by reason of this Article VI.

                                  ARTICLE VII
                                  TAX MATTERS

            SECTION 7.1 Indemnity.
                        ---------

            (a) The Seller agrees to indemnify and hold harmless the Purchaser,
the Companies and each Subsidiary against the following Taxes in excess of the
amount, if any, reserved for Taxes on the Closing Balance Sheet, and, except as
otherwise provided in Section 7.4, against any loss, damage, liability or
expense, including reasonable fees for attorneys and other outside consultants,
incurred in contesting or otherwise in connection with any such Taxes: (i) Taxes
imposed on the Companies or any Subsidiary with respect to taxable periods of
such Person ending on or before the Closing Date; (ii) with respect to taxable
periods beginning before the Closing Date and ending after the Closing Date,
Taxes imposed on the Companies or any Subsidiary which are allocable, pursuant
to Section 7.1(b), to the portion of such period ending on the Closing Date; and
(iii) Taxes imposed on any member of any affiliated group with which any of the
Companies and the Subsidiaries file or have filed a Return on a consolidated or
combined basis that includes the Companies' and the Subsidiaries' taxable
periods ending on or before the Closing Date. The Purchaser shall be responsible
for Taxes and associated expenses not allocated to the Seller pursuant to the
first sentence hereof.

            (b) In the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be:

                    (i) in the case of Taxes that are either (x) based upon or
               related to income or receipts, or (y) imposed in connection with
               any sale or other transfer or assignment of property (real or
               personal, tangible or intangible) (other than conveyances
               pursuant to this Agreement, as provided under Section 7.7),
               deemed equal to the amount which would be payable if the taxable
               year ended with the Closing Date; and

                    (ii) in the case of Taxes imposed on a periodic basis with
               respect to the assets of the Companies or any Subsidiary, or
               otherwise measured by the level of any item, deemed to be the
               amount of such Taxes for the entire period (or, in the case of
               such Taxes determined on an arrears basis, the amount of such
               Taxes for the immediately preceding period), multiplied by a
               fraction the numerator of which is the number of calendar days in
               the period ending on the Closing Date and the denominator of
               which is the number of calendar days in the entire period.

            (c) Any indemnity payable under this Section 7.1 shall be net of any
tax benefit enjoyed by Purchaser, the Companies or any Subsidiary.

                                       36
<PAGE>

            SECTION 7.2 Returns and Payments.
                        --------------------
            (a) From the date of this Agreement through and after the Closing
Date, the Seller shall prepare and file or otherwise furnish in proper form to
the appropriate Governmental Authority (or cause to be prepared and filed or so
furnished) in a timely manner all Tax returns, reports and forms ("Returns")
relating to the Companies and the Subsidiaries that are due on or before or
relate to any taxable period ending on or before the Closing Date (and the
Purchaser shall do the same with respect to any taxable period ending after the
Closing Date). Returns of the Companies and the Subsidiaries not yet filed for
any taxable period that begins before the Closing Date shall be prepared in a
manner consistent with past practices employed with respect to the Companies and
the Subsidiaries (except to the extent counsel for the Seller or the Companies
renders a legal opinion that there is no reasonable basis in law therefor or
determines that a Return cannot be so prepared and filed without being subject
to penalties). With respect to any Return required to be filed by the Purchaser
or the Seller with respect to the Companies and the Subsidiaries and as to which
an amount of Tax is allocable to the other party under Section 7.1(b), the
filing party shall provide the other party and its authorized representatives
with a copy of such completed Return and a statement certifying the amount of
Tax shown on such Return that is allocable to such other party pursuant to
Section 7.1(b), together with appropriate supporting information and schedules
at least 20 Business Days prior to the due date (including any extension
thereof) for the filing of such Return, and such other party and its authorized
representatives shall have the right to review and comment on such Return and
statement prior the filing of such Return.

            (b) The Seller shall pay or cause to be paid when due and payable
all Taxes with respect to the Companies and the Subsidiaries for any taxable
period that includes the Companies' or the Subsidiaries' taxable periods ending
on or before the Closing Date to the extent such Taxes exceed the amount, if
any, accrued for such Taxes as current Taxes payable on the Closing Balance
Sheet, and the Purchaser shall so pay or cause to be paid Taxes for any taxable
period ending after the Closing Date (subject to its right of indemnification
from the Seller by the date set forth in Section 7.5 for Taxes attributable to
the portion of any Tax period that includes the Closing Date pursuant to
Sections 7.1(a) and 7.1(b)).

            SECTION 7.3 Refunds. Any Tax refund (including any interest with
                        -------
respect thereto), and any equivalent benefit through a reduction in tax
liability for a post-Closing Date period, relating to the Companies or any
Subsidiary for any taxable period prior to the Closing Date (except for any
refund included on the Reference Balance Sheet, which shall be the property of
the Purchaser, and if paid to the Seller, shall be paid over promptly to the
Purchaser) shall be the property of the Seller, and if received by the Purchaser
or the Companies or any Subsidiary shall be paid over to the Seller within five
Business Days of the earlier of receipt or entitlement thereto; provided,
                                                                --------
however, that any Tax benefit obtained by the Purchaser, the Companies or any
-------
Subsidiary as a result of utilizing any net operating loss carryforward or other
carryforward which is allocable to the Companies or any Subsidiary shall be
retained by the Purchaser, the Companies or such Subsidiary. The Purchaser
shall, if the Seller so requests and at the Seller's expense, cause the relevant
entity to file for and obtain any refunds or equivalent amounts to which the
Seller is entitled under this Section 7.3. Purchaser shall permit the Seller to
control (at the Seller's expense) the prosecution of any such refund claim, and
shall cause the

                                       37
<PAGE>

relevant entity to authorize by appropriate power of attorney such persons as
the Seller shall designate to represent such entity with respect to such refund
claim.

            SECTION 7.4 Contests.
                        --------
            (a) After the Closing, the Purchaser shall promptly notify the
Seller in writing upon the commencement of any tax audit or administrative or
judicial proceeding that could affect the Seller, and shall also separately
notify the Seller, in writing, of a proposed assessment or claim in an audit or
administrative or judicial proceeding of the Purchaser or of any of the
Companies and the Subsidiaries which, if determined adversely to the taxpayer,
would be grounds for indemnification under this Article VII.

            (b) The Seller may elect to direct, through counsel of its own
choosing and at its own expense, any audit, claim for refund and administrative
or judicial proceeding involving any asserted liability with respect to which
indemnity may be sought under this Article VII (any such audit, claim for refund
or proceeding relating to an asserted tax liability are referred to herein
collectively as a "Contest"). If the Seller elects to direct the Contest of an
asserted tax liability, it shall within 30 calendar days of receipt of the
notice of asserted tax liability notify Purchaser of its intent to do so, and
Purchaser shall cooperate and shall cause each Subsidiary and any successor to a
Subsidiary or its successor to cooperate, at the Seller's expense, in each phase
of such Contest. The Purchaser also may participate in any such audit or
proceeding and, if the Seller does not assume the defense of any such audit or
proceeding, the Purchaser may defend the same in such manner as it may deem
appropriate, including, but not limited to, settling such audit or proceeding
after giving five Business days' prior written notice to the Seller setting
forth the terms and conditions of settlement. In the event that issues relating
to a potential adjustment for which the Seller would be liable are required to
be dealt with in the same proceeding as separate issues relating to a potential
adjustment for which the Purchaser would be liable, the Purchaser shall have the
right, at its expense, to control the audit or proceeding with respect to the
latter issues. If the Seller chooses to direct the Contest, Purchaser shall
promptly empower and shall cause the appropriate Subsidiary or its successor
promptly to empower (by power of attorney and such other documentation as may be
appropriate) such representatives of the Seller as it may designate to represent
Purchaser or the Subsidiary or its successor in the Contest insofar as the
Contest involves an asserted tax liability for which the Seller would be liable
under this Article VII. If the Seller assumes the defense of a Contest, the
Seller shall not enter into any compromise or agree to settle any claim pursuant
to any Tax audit or proceeding which would adversely affect the Purchaser for
any taxable year without the written consent of the Purchaser, which consent
shall not be unreasonable withheld.

            SECTION 7.5 Time of Payment. Payment by the Seller of any amounts
                        ---------------
due under this Article VII shall be made (i) at least three Business Days before
the due date of the applicable estimated or final Return required to be filed by
the Purchaser on which is required to be reported income for a period ending
after the Closing Date for which the Seller is responsible under Sections 7.1(a)
and 7.1(b) and with respect to which Tax must be paid, and (ii) within five
Business Days following an agreement between the Seller and the Purchaser that
an indemnity amount is payable or a "determination" as defined in Section
1313(a) of the Code. If liability under this Article VII is in respect of costs
or expenses other than Taxes, payment by the Seller of any amounts due under
this Article VII shall be made within five Business Days after the date

                                       38
<PAGE>

when the Seller has been notified by the Purchaser that the Seller has a
liability for a determinable amount under this Article VII and is provided with
calculations or other materials supporting such liability.

            SECTION 7.6 Cooperation and Exchange of Information. Upon the terms
                        ---------------------------------------
set forth in Section 5.2 of this Agreement, the Seller and the Purchaser will
provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Return, amended Return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes, participating in or conducting any audit or other proceeding in respect
of Taxes or making representations to or furnishing information to parties
subsequently desiring to purchase any of the Companies or the Subsidiaries or
any part of the Business from the Purchaser. Such cooperation and information
shall include providing copies of relevant Returns or portions thereof, together
with accompanying schedules, related work papers and documents relating to
rulings or other determinations by Tax authorities. Each of the Seller and the
Purchaser shall retain all Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Companies and the
Subsidiaries for each taxable period first ending after the Closing Date and for
all prior taxable periods until the later of (i) the expiration of the statute
of limitations of the taxable periods to which such Returns and other documents
relate, without regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax periods, or (ii) six
years following the due date (without extension) for such Returns. Any
information obtained under this Section 7.6 shall be kept confidential except as
may be otherwise necessary in connection with the filing of Returns or claims
for refund or in conducting an audit or other proceeding.

            SECTION 7.7 Conveyance Taxes. The Seller and the Purchaser shall
                        ----------------
each pay 50% of any real property transfer or gains, sales, use, transfer, value
added, stock transfer, and stamp taxes, any transfer, recording, registration,
and other fees, and any similar Taxes which become payable in connection with
the transactions contemplated by this Agreement, and shall file such
applications and documents as shall permit any such Tax to be assessed and paid
on or prior to the Closing Date in accordance with any available pre-sale filing
procedure. Each party hereto shall execute and deliver all instruments and
certificates necessary to enable the other party or parties to comply with the
foregoing.

            SECTION 7.8 Miscellaneous.
                        -------------
            (a) The Seller and the Purchaser agree to treat all payments made by
either of them to or for the benefit of the other (including any payments to the
Companies or any Subsidiary) under this Article VII, under other indemnity
provisions of this Agreement and for any misrepresentations or breaches of
warranties or covenants as adjustments to the Purchase Price or as capital
contributions for Tax purposes and that such treatment shall govern for purposes
hereof.

            All amounts payable under any tax sharing agreement or arrangement
between the Seller and the Companies or any Subsidiary for any taxable period
ending on or prior to the Closing Date shall be calculated on a basis consistent
with that used to date and shall be considered as Indebtedness owing to or from
an Affiliate as of the Closing Date for purposes of Section 5.10. Except as
otherwise provided above, any tax sharing agreement or arrangement

                                       39
<PAGE>

between the Seller and the Companies or any Subsidiary shall be terminated
immediately prior to the Closing.

            (b) Notwithstanding any provision in this Agreement to the contrary,
the obligations of the Seller to indemnify and hold harmless the Purchaser, the
Companies and the Subsidiaries pursuant to this Article VII, and the
representations and warranties contained in Section 3.20, shall terminate at the
close of business on the 60th day following the expiration of the applicable
statute of limitations with respect to the Tax liabilities in question (giving
effect to any waiver, mitigation or extension thereof).

            (c) For purposes of this Article VII, "the Purchaser" and "the
Seller", respectively, shall include each member of the affiliated group of
corporations of which it is or becomes a member (other than the Companies and
the Subsidiaries, except to the extent expressly referenced).

                                  ARTICLE VIII
                              CONDITIONS TO CLOSING

            SECTION 8.1 Conditions to Obligations of the Seller. The obligations
                        ---------------------------------------
of the Seller to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:

            (a) Representations, Warranties and Covenants. The representations
                -----------------------------------------
and warranties of the Purchaser contained in this Agreement shall have been true
and correct when made and shall be true and correct as of the Closing, with the
same force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of another date, which shall be
true and correct as of such date, except as would not have a Purchaser Material
Adverse Effect, and the covenants and agreements contained in this Agreement to
be complied with by the Purchaser on or before the Closing shall have been
complied with in all material respects, and the Seller shall have received a
certificate from the Purchaser to such effect signed by a duly authorized
officer thereof;

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

            (c) No Proceeding or Litigation. No Action shall have been commenced
                ---------------------------
by or before any Governmental Authority against either the Seller or the
Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, is likely to render it
impossible or unlawful to consummate such transactions; provided, however, that
the provisions of this Section 8.1(c) shall not apply if the Seller has directly
or indirectly solicited or encouraged any such Action; and

            (d) Legal Opinion. The Seller shall have received from O'Melveny &
                -------------
Myers LLP a legal opinion, addressed to the Seller and dated the Closing Date,
substantially in the form of Exhibit 8.1(d).

                                       40
<PAGE>

            (e) Registration Rights Agreement. The Purchaser shall have executed
                -----------------------------
and delivered to the Seller the Registration Rights Agreement.

            SECTION 8.2 Conditions to Obligations of the Purchaser. The
                        ------------------------------------------
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:

            (a) Representations, Warranties and Covenants. The representations
                -----------------------------------------
and warranties of the Seller contained in this Agreement shall have been true
and correct when made and shall be true and correct as of the Closing Date with
the same force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, which shall be
true and correct as of such date, except as would not have a Material Adverse
Effect, and the covenants and agreements contained in this Agreement to be
complied with by the Seller on or before the Closing shall have been complied
with in all material respects, and the Purchaser shall have received a
certificate of the Seller to such effect signed by a duly authorized officer
thereof;

            (b) HSR Act. Any waiting period applicable to the purchase of the
                -------
Shares contemplated hereby shall have expired or shall have been terminated;

            (c) No Proceeding or Litigation. No Action shall have been commenced
                ---------------------------
or threatened by or before any Governmental Authority against either the Seller
or the Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated hereby which is likely to render it impossible or
unlawful to consummate such transactions; provided, however, that the provisions
of this Section 8.2(c) shall not apply if the Purchaser has solicited or
encouraged any such Action;

            (d) Legal Opinion. The Purchaser shall have received from Shearman &
                -------------
Sterling a legal opinion, addressed to the Purchaser and dated the Closing Date,
substantially in the form of Exhibit 8.2(d);

            (e) Consents and Approvals. The Purchaser and the Seller shall have
                ----------------------
received, each in form and substance satisfactory to the Purchaser in its
reasonable discretion, all authorizations, consents, orders and approvals of all
Governmental Authorities and officials which are necessary for the consummation
of the transactions contemplated by this Agreement and all third party consents
and estoppel certificates identified on Section 3.5(c) of the Disclosure
Schedule;

            (f) Resignations of the Companies' Directors. The Purchaser shall
                ----------------------------------------
have received the resignations, effective as of the Closing, of all the
directors and officers of the Companies and each Subsidiary, except for such
persons as shall have been designated in writing prior to the Closing by the
Purchaser to the Seller;

            (g) Certificate of Non-Foreign Status. The Purchaser shall have
                ---------------------------------
received from the Seller a certificate of non-foreign status, substantially in
the form of Exhibit 8.2(g) hereto, executed in accordance with the provisions of
the Foreign Investment in Real Property Tax Act; and

                                       41
<PAGE>

            (h) Title Insurance. The Purchaser shall have received an ALTA
                ---------------
extended owner's coverage title insurance policy (the "Title Policy") issued by
                                                       ------------
First American Title Insurance Company, or another reputable nationally
recognized title insurance company selected by the Purchaser, insuring LL's fee
title in the Real Property in the amount of $87,000,000, subject only to such
exceptions as are identified on Exhibit 8.2(h) and containing such endorsements
as are identified on Exhibit 8.2(h). Other than the incremental cost of the
zoning endorsement referred to on Exhibit 8.2(h), which shall be borne by the
Purchaser, the entire expense of the Title Policy shall be borne by the Seller.

            (i) Termination of Interests in Real Property. The Purchaser shall
                -----------------------------------------
have received executed documents in recordable form effective to terminate
immediately prior to the Closing (i) the Ladbroke Leases and (ii) the concession
and lease agreement dated January 1, 1975 between Hillside Catering Co. and PRA,
as amended.

            (j) Termination of Agreements. The Purchaser shall have received
                -------------------------
evidence of the termination and cancellation of the following agreements: (i)
that certain Loan Agreement between Ladstock Holding Corporation and PRA,
effective as of January 3, 1989, as amended or supplemented, and any and all
promissory notes issued in respect thereof, and (ii) the Limited Partnership
Agreement of Ladbroke I L.P., a California limited partnership, dated as of
July, 1996 between PRA, as general partner, and LRC, as limited partner (the
"Limited Partnership Agreement").

                                   ARTICLE IX
                                 INDEMNIFICATION

            SECTION 9.1 Survival of Representations, Warranties and
                        -------------------------------------------
Indemnification Obligations. (a) The representations and warranties of the
---------------------------
Seller contained in this Agreement, and all statements contained in this
Agreement, the Exhibits to this Agreement and the Disclosure Schedule
(collectively, the "Acquisition Documents"), shall survive the Closing until
                    ---------------------
March 31, 2001; provided, however, that (a) the representations and warranties
                -----------------
dealing with Tax matters shall survive as provided in Section 7.8, (b) insofar
as any claim is made by the Purchaser for the breach of any representation or
warranty of the Seller contained herein relating to environmental matters, such
representations and warranties shall, for purposes of such claims by the
Purchaser, survive the Closing Date until the third anniversary of the Closing
Date, (c) the representation and warranty in the penultimate sentence of Section
3.3 shall survive the Closing indefinitely and (d) the covenant contained in
Section 5.18 shall survive the Closing indefinitely. Neither the period of
survival nor the liability of the Seller with respect to the Seller's
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of the Purchaser. If written notice of a claim specifying
in reasonable detail the basis of such claim has been given prior to the
expiration of the applicable representations and warranties by the Purchaser to
the Seller, then the relevant representations and warranties shall survive as to
such claim, until such claim has been finally resolved.

            (b) The indemnification obligations set forth in Sections
9.2(a)(iv)-(vii) shall survive the Closing until the later of (i) termination of
all payment obligations under the applicable Action or agreement and (ii) entry
of a final Governmental Order, or similar order of

                                       42
<PAGE>

any arbitral or other body, in any Action or similar proceeding brought in
respect of such payment obligations.

            SECTION 9.2 Indemnification by the Seller.
                        -----------------------------

            (a) The Purchaser, its Affiliates and their successors and assigns,
and the officers, directors, employees and agents of the Purchaser, its
Affiliates and their successors and assigns (each an "Indemnified Party"), shall
                                                      -----------------
be indemnified and held harmless by the Seller for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, attorneys' and consultants' fees and
expenses) actually suffered or incurred by them (including, without limitation,
any Action brought or otherwise initiated by any of them) (hereinafter a
"Loss"), arising out of or resulting from:
 ----
                    (i) the breach of any representation or warranty made by the
               Seller contained in the Acquisition Documents;

                    (ii) the breach of any covenant or agreement by the Seller
               contained in the Acquisition Documents;

                    (iii) the late filing of, or the omission to file, a Form
               5500 with respect to the Pacific Racing Association 401(k) plan
               for plan years 1997 and 1998;

                    (iv) Article XII of the Option Agreement;

                    (v) the Actions disclosed in paragraphs 1, 2, 5, 6, 7 and 9

                    (vi) the Limited Partnership Agreement, or the relationship
               established thereby; or

                    (vii) the Development Agreement.

To the extent that the Seller's undertakings set forth in this Section 9.2 may
be unenforceable, the Seller shall contribute the maximum amount that it is
permitted to contribute under applicable law to the payment and satisfaction of
all Losses incurred by the Purchaser, the Companies and the Subsidiaries.

            (b) An Indemnified Party shall give the Seller notice (a "Claim
                                                                      -----
Notice") of any matter which an Indemnified Party has determined has given or
------
could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of the Seller under this Article IX with
respect to Losses arising from claims of any third party which are subject to
the indemnification provided for in this Article IX ("Third Party Claims") shall
                                                      ------------------
be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Seller a Claim Notice relating to
such Third Party Claim within 30 days of the receipt by the Indemnified Party of
notice of the Third Party Claim;

                                       43
<PAGE>

provided, however, that any failure of the Indemnified Party to provide such
Claim Notice shall not release the Seller from any of its obligations under this
Article IX except to the extent the Seller is materially prejudiced by such
failure and shall not relieve the Seller from any other obligation or Liability
that it may have to any Indemnified Party otherwise than under this Article IX.
If the Seller acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Losses that may result from such Third
Party Claim, then the Seller shall be entitled to assume and control the defense
of such Third Party Claim at its expense and through Shearman & Sterling if it
gives notice of its intention to do so to the Indemnified Party within five days
of the receipt of such notice from the Indemnified Party; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the Indemnified Party, in
its sole and absolute discretion, for the same counsel to represent both the
Indemnified Party and the Seller, then the Indemnified Party shall be entitled
to retain its own counsel, in each jurisdiction for which the Indemnified Party
determines counsel is required, at the expense of the Seller. In the event the
Seller exercises the right to undertake any such defense against any such Third
Party Claim as provided above, the Indemnified Party shall cooperate with the
Seller in such defense and make available to the Seller, at the Seller's
expense, all witnesses, pertinent records, materials and information in the
Indemnified Party's possession or under the Indemnified Party's control relating
thereto as is reasonably required by the Seller. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Seller shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified Party, at the Seller's
expense, all such witnesses, records, materials and information in the Seller's
possession or under the Seller's control relating thereto as is reasonably
required by the Indemnified Party. No such Third Party Claim may be settled by
the Seller without the prior written consent of the Indemnified Party. No
Indemnified Party shall make any voluntary admissions in connection with any
Third Party Claim that materially prejudice the Seller.

            (c) The Purchaser hereby gives the Seller a Claim Notice in respect
of the Actions listed in clause 9.2(a)(v) above, and the Seller hereby
acknowledges its obligation to indemnify the Indemnified Parties against any
Losses that may result from such Actions and gives notice of its intention to
assume and control the defense of such Actions at its expense.

            SECTION 9.3 [Intentionally Omitted].
                         ---------------------

            SECTION 9.4 Limits on Indemnification; Jurisdiction; Guaranty.
                        -------------------------------------------------

            (a) Notwithstanding anything to the contrary contained in this
Agreement, the Seller shall not be liable for (i) Losses arising out of or
enumerated in Section 9.2(a)(i)-(iii) which are less than $20,000 individually,
(ii) the first $1,000,000 in the aggregate of Losses arising out of or
enumerated in Section 9.2(a)(i)-(iii) which are in excess of $20,000
individually and (iii) Losses arising out of or enumerated in Section
9.2(a)(i)-(iii) which are in the aggregate in excess of $50,000,000. This
Section 9.4 shall not apply to any Loss arising out of or enumerated in Sections
9.2(a)(iv)-(vii).

            (b) Any indemnity payment under Section 9.2 shall be net of any tax
benefit or insurance proceeds received by the Indemnified Party; provided that
the amount of any insurance proceeds received by the Indemnified Party in
respect of any Loss shall be deemed to

                                       44
<PAGE>

be reduced by the amount of (i) any incremental cumulative additional insurance
costs which are reasonably attributable to such Loss or (ii) any Tax liability
which is attributable to the receipt of such insurance proceeds by the
Indemnified Party.

            (c) Anything in this Article IX to the contrary notwithstanding, the
rights and obligations of the parties with respect to indemnification for any
and all Tax matters shall be governed by Article VII.

            (d) (i) The Seller and the Guarantor hereby consent to the
non-exclusive jurisdiction of any court in which an Action is brought against
any Indemnified Party for purposes of any claim that an Indemnified Party may
have under this Agreement with respect to such Action or the matters alleged
therein and agree that process may be served on the Seller and Guarantor with
respect to such a claim at the address specified in this Agreement.

            (ii) The Guarantor hereby guarantees to the Purchaser the prompt
payment in full of all amounts from time to time owing by the Seller to the
Purchaser hereunder, in each case strictly in accordance with the terms hereof
(such obligations being herein collectively called the "Guaranteed
Obligations"). The Guarantor hereby further agrees that if the Seller shall fail
to pay in full when due any of the Guaranteed Obligations, the Guarantor will
promptly pay the same. The Guarantor hereby expressly waives diligence,
presentment, demand, protest, and all notices whatsoever with regard to any of
the Guaranteed Obligations and any requirement that the Purchaser exhaust any
right, power or remedy or proceed against the Seller hereunder.

            (iii) The obligations of the Guarantor hereunder are unconditional
regardless of (A) the value, genuineness or regularity of any of the Guaranteed
Obligations, (B) any lack of validity or enforceability of any Guarantied
Obligations arising from the failure of the Seller to properly authorize,
execute and deliver this Agreement or any other agreement executed in connection
herewith, (C) whether or not any Guarantied Obligation is unenforceable or not
allowable, in either case due to the existence of a bankruptcy, reorganization
or similar proceeding involving the Seller, and (D) any other circumstance with
regard to any of the Guaranteed Obligations which may or might in any manner
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent hereof that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all circumstances.

                                   ARTICLE X
                             TERMINATION AND WAIVER

            SECTION 10.1 Termination. This Agreement may be terminated at any
                         -----------
time prior to the Closing:

            (a) by either the Seller or the Purchaser if the Closing shall not
have occurred by December 31, 1999; provided, however, that the right to
                                    -----------------
terminate this Agreement under this Section 10.1(a) shall not be available to
any party whose failure to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date; or

                                       45
<PAGE>

            (b) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining or enjoining the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and nonappealable; or

            (c) by the Purchaser, upon a breach of any representation, warranty,
covenant or agreement of the Seller set forth in this Agreement, or if any
representation or warranty of the Seller shall have become untrue, in each case
such that the conditions set forth in Section 8.2 would not be satisfied if such
breach or untruth were to exist on the Closing Date (a "Terminating Seller
Breach"); provided, however, that if such Terminating Seller Breach is cured by
          -----------------
the Seller by the earlier of the Closing Date or 15 days from the date on which
the Seller became obligated under Section 5.9 to notify the Purchaser thereof,
the Purchaser may not terminate this Agreement solely by reason of such
Terminating Seller Breach;

            (d) by the Seller, upon a breach of any representation, warranty,
covenant or agreement of the Purchaser set forth in this Agreement, or if any
representation or warranty of the Purchaser shall have become untrue, in each
case such that the conditions set forth in Section 8.1 would not be satisfied if
such breach or untruth were to exist on the Closing Date (a "Terminating
Purchaser Breach"); provided, however, that if such Terminating Purchaser Breach
is cured by the Purchaser by the earlier of the Closing Date or 15 days from the
date on which the Purchaser became obligated under Section 5.9 to notify the
Seller thereof, the Seller may not terminate this Agreement solely by reason of
such Terminating Purchaser Breach; or

            (e) by the mutual written consent of the Seller and the Purchaser.

            SECTION 10.2 Effect of Termination. In the event of termination of
                         ---------------------
this Agreement as provided in Section 10.1, all further obligations under this
Agreement shall terminate and there shall be no liability on the part of either
party hereto except (a) as set forth in Sections 5.3 and 11.1 and (b) that
nothing herein shall relieve either party from liability for any breach of this
Agreement.

            SECTION 10.3 Waiver. Either party to this Agreement may (a) extend
                         ------
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights

                                   ARTICLE XI
                               GENERAL PROVISIONS

            SECTION 11.1 Expenses. Except as otherwise specified in this
                         --------
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial

                                       46
<PAGE>

advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred. The Purchaser will
pay the HSR filing fee, and, except as provided in Section 8.2(h), the Seller
will pay the cost of the Title Policy. The Seller will cause the Companies and
the Subsidiaries not to incur any out-of-pocket expenses for legal fees and
expenses of outside counsel or other advisors in connection with this Agreement.

            SECTION 11.2 Notices. All notices, requests, claims, demands and
                         -------
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by facsimile or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11.2):

            (a)   if to the Seller:

                  Ladbroke Racing Corporation
                  c/o Hilton Group plc
                  Maple Court Central Park
                  Reeds Crescent
                  Watford, Hertfordshire
                  England WD1  1HZ
                  Facsimile:  011-44-171-856-8495
                  Attention:  Mr. Russell Foreman

                  with a copy to:

                  Shearman & Sterling
                  599 Lexington Avenue
                  New York, New York 10022
                  Facsimile:  (212) 848-7179
                  Attention:  John A. Marzulli, Jr., Esq.

                                       47
<PAGE>

            (b)   if to the Guarantor:

                  Ladbroke Hotels U.S.A. Corporation
                  c/o Hilton Group plc
                  Maple Court Central Park
                  Reeds Crescent
                  Watford, Hertfordshire
                  England WD1  1HZ
                  Facsimile:  011-44-171-856-8495
                  Attention:  Mr. Russell Foreman

            (c)   if to the Purchaser:

                  MI Venture Inc.
                  c/o Magna International Inc.
                  337 Magna Drive
                  Aurora, Ontario, Canada L4G7K1
                  Facsimile:  905-726-7177
                  Attention:  Mr. James Nicol

                  with a copy to:

                  O'Melveny & Myers LLP
                  400 South Hope Street
                  Los Angeles, California 90071-2899
                  Facsimile:  213-430-6407
                  Attention:  Frederick B. McLane, Esq.

            SECTION 11.3 Public Announcements. No party to this Agreement shall
                         --------------------
make, or cause to be made, any press release or public announcement in respect
of this Agreement, the transactions contemplated hereby or in connection with
any Third Party Claim or otherwise communicate with any news media without the
prior written consent of the other party, and the parties shall cooperate as to
the timing and contents of any such press release or public announcement.

            SECTION 11.4 Headings. The descriptive headings contained in this
                         --------
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

            SECTION 11.5 Severability. If any term or other provision of this
                         ------------
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.

                                       48
<PAGE>

            SECTION 11.6 Entire Agreement. This Agreement constitutes the entire
                         ----------------
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the Seller and the Purchaser with respect to the subject matter hereof.

            SECTION 11.7 Assignment. This Agreement may not be assigned by
                         ----------
operation of law or otherwise without the express written consent of the Seller
and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser).

            SECTION 11.8 No Third Party Beneficiaries. Except for the provisions
                         ----------------------------
of Article IX relating to Indemnified Parties, this Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.

            SECTION 11.9 Amendment. This Agreement may not be amended or
                         ---------
modified except (a) by an instrument in writing signed by, or on behalf of, the
Seller and the Purchaser or (b) by a waiver in accordance with Section 10.3.

            SECTION 11.10 Jurisdiction; Service of Process. Any action or
                          ------------
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement shall be brought against Guarantor or the Seller only in
the courts of the State of New York, County of New York, or, if it has or can
acquire jurisdiction, in the United States District Court for the Southern
District of New York, and Guarantor and the Seller consent to the jurisdiction
of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waive any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on Guarantor
or the Seller at their respective addresses specified in this Agreement.

            SECTION 11.11 WAIVER OF JURY TRIAL. EACH OF THE PURCHASER AND THE
                          --------------------
SELLER HEREBY IRREVOCABLY WAIVES 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 THIS AGREEMENT OR THE ACTIONS OF THE PURCHASER OR
THE SELLER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
THEREOF.

            SECTION 11.12 Governing Law. This Agreement shall be governed by the
                          -------------
laws of the State of New York.

            SECTION 11.13 Counterparts. This Agreement may be executed in one or
                          ------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.

            SECTION 11.14 Specific Performance. The parties hereto agree that
                          --------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.

                                       49
<PAGE>

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

                                          LADBROKE RACING CORPORATION

                                          By:_________________________________
                                                Name:
                                                Title:

                                          MI VENTURE INC.

                                          By:_________________________________
                                                Name:
                                                Title:

Guarantor hereby unconditionally guarantees the payment obligations of the
Seller pursuant to this Agreement, including the Seller's indemnification
obligations, and acknowledges and agrees to the provisions of Sections 9.4(d)
and 11.10 hereof.

LADBROKE HOTELS U.S.A. CORPORATION

By: ______________________
Name:
Title:

                                      S-1<PAGE>

                                                                  EXECUTION COPY
================================================================================
                                                                   Exhibit 10.21

                         REGISTRATION RIGHTS AGREEMENT

                         Dated as of December 15, 1999
                                  by and among

                              Global Crossing Ltd.

                                      and

               Merrill Lynch, Pierce, Fenner & Smith Incorporated
                           Salomon Smith Barney Inc.
                              Goldman, Sachs & Co.
                             Chase Securities Inc.
                        Morgan Stanley Dean Witter & Co.
                            CIBC World Markets Corp.
              Donaldson, Lufkin & Jenrette Securities Corporation
                     Credit Suisse First Boston Corporation

================================================================================
<PAGE>

     This Registration Rights Agreement (this "Agreement") is made and entered
                                               ---------
into as of December 15, 1999, by and among Global Crossing Ltd., a Bermuda
company (the "Company"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
              -------
Salomon Smith Barney Inc., Goldman, Sachs & Co., Chase Securities Inc., Morgan
Stanley Dean Witter & Co., CIBC World Markets Corp., Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse First Boston Corporation
(each, an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each
           -----------------                          ------------------
of whom has agreed to purchase, severally and not jointly, an aggregate of
2,000,000 shares of the Company's 7% Cumulative Convertible Preferred Stock,
with the option to purchase up to an additional 600,000 shares of the Company's
7% Cumulative Convertible Preferred Stock, for the sole purpose of covering
over-allotments (collectively the "Preferred Stock") pursuant to the Purchase
                                   ---------------
Agreement (as defined below).

     This Agreement is made pursuant to the Purchase Agreement, dated as of
December 9, 1999 (the "Purchase Agreement"), by and among the Company and the
                       ------------------
Initial Purchasers.  In order to induce the Initial Purchasers to purchase the
Preferred Stock, the Company has agreed to provide the registration rights set
forth in this Agreement.  The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers to purchase the Preferred
Stock as set forth in the Purchase Agreement.

     The parties hereby agree as follows:

SECTION 1.  DEFINITIONS

     As used in this Agreement, the following capitalized terms shall have the
following meanings:

     Act:  The Securities Act of 1933, as amended.
     ---

     Affiliate:  As defined in Rule 144 of the Act.
     ---------

     Bye-laws:  The Bye-laws of the Company to be amended by the Company on or
     --------
prior to  the Closing Date, which will contain the terms of the Preferred Stock.

     Certificate of Designations:  The Certificate of Designations, to be
     ---------------------------
entered into by the Company governing the Preferred Stock, as such Certificate
of Designations is amended, modified or supplemented from time to time in
accordance with the terms thereof.

     Closing Date:  The date hereof.
     ------------

     Commission:  The Securities and Exchange Commission.
     ----------

     Common Stock:  The common stock, $0.01 par value, of the Company.
     ------------

     Dividend Payment Date:  As defined in the Certificate of Designations.
     ---------------------

     Effectiveness Deadline:  As defined in Section 3(a) hereof.
     ----------------------

                                       1
<PAGE>

     Exchange Act:  The Securities Exchange Act of 1934, as amended.
     ------------

     Filing Deadline:  As defined in Section 3(a) hereof.
     ---------------

     Holders:  As defined in Section 2 hereof.
     -------

     Indemnified Holder:  As defined in Section 8(a) hereof.
     ------------------

     Liquidation Preference:  As defined in the Certificate of Designations.
     ----------------------

     Preferred Stock:  As defined in the preamble hereof.
     ---------------

     Preferred Stock Shares:  The Common Stock or other securities which any
     ----------------------
Holder may acquire upon conversion of the Preferred Stock, together with any
other securities which such Holder may acquire on account of any such
securities, including, without limitation, as the result of any dividend or
other distribution on Common Stock or any split-up of such Common Stock as
provided for in the Certificate of Designations.

     Prospectus:  The prospectus included in a Registration Statement at the
     ----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

     Recommencement Date: As defined in Section 6(b) hereof.
     -------------------

     Registrable Securities:  The Preferred Stock, Preferred Stock Shares and
     ----------------------
any other securities issued or issuable with respect to the Preferred Stock or
the Preferred Stock Shares by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization; provided that a security ceases to be a Registrable
Security when it is no longer a Transfer Restricted Security.

     Registration Default:  As defined in Section 5 hereof.
     --------------------

     Registration Statement:  Any registration statement of the Company relating
     ----------------------
to the registration for resale of Registrable Securities pursuant to the Shelf
Registration Statement, (i) that is filed pursuant to the provisions of this
Agreement and (ii) including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all exhibits and
material incorporated by reference therein.

     Rule 144:  Rule 144 promulgated under the Act.
     --------

     Shelf Registration Statement:  As defined in Section 3 hereof.
     ----------------------------

     Special Dividends:  As defined in Section 5 hereof.
     -----------------

     Suspension Notice:  As defined in Section 6(b) hereof.
     -----------------

                                       2
<PAGE>

     Transfer Agent:  EquiServe.
     --------------

     Transfer Restricted Securities:  The Preferred Stock or Preferred Stock
     ------------------------------
Shares, until the earliest to occur of (a) the date on which such Preferred
Stock or Preferred Stock Shares, as applicable, is effectively registered under
the Act and disposed of in accordance with a Shelf Registration Statement, (b)
the date on which such Preferred Stock or Preferred Stock Shares, as applicable,
is distributed to the public pursuant to Rule 144 under the Act or (c) the date
on which such Preferred Stock or Preferred Stock Shares, as applicable, is
eligible for resale pursuant to Rule 144 without volume restrictions.

SECTION 2.  HOLDERS

     (x)  Registrable Securities.  The securities entitled to the benefits of
          ----------------------
this Agreement are the Registrable Securities.

     (y)  Holders of Registrable Securities.  A Person is deemed to be a holder
          ---------------------------------
of Registrable Securities (each, a "Holder") whenever such Person owns
Registrable Securities or has the right to acquire such Registrable Securities,
whether or not such acquisition has actually been effected and disregarding any
legal restrictions upon the exercise of such right.

SECTION 3.  SHELF REGISTRATION

     The Company shall:

     (x)  use its reasonable best efforts to cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 90 days after the Closing Date (the "Filing Deadline"), a shelf
                                          ---------------
registration statement pursuant to Rule 415 under the Act (the "Shelf
                                                                -----
Registration Statement") relating to all Registrable Securities, and
----------------------

     (y)  use its reasonable best efforts to cause such Shelf Registration
Statement to become effective on or prior to 90 days after the Filing Deadline
(such 90th day being referred to herein as the "Effectiveness Deadline").
                                                ----------------------

     The Company shall use its best efforts to keep any Shelf Registration
Statement required by this Section 3(a) continuously effective, supplemented and
amended as required by, and subject to the provisions of, Sections 6(a) and (b)
hereof to the extent necessary to ensure that it is available for sales of
Registrable Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(b)) following the date on which such Shelf Registration
Statement first becomes effective under the Act, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto.

     (a)  Provision by Holders of Certain Information in Connection with the
          ------------------------------------------------------------------
Shelf Registration Statement.  No Holder of Registrable Securities may include
----------------------------
any of its Registrable

                                       3
<PAGE>

Securities in any Shelf Registration Statement pursuant to this Agreement unless
and until such Holder furnishes to the Company in writing,  within 20 days after
receipt of a request therefor,  the information  specified in Item 507 or 508 of
Regulation  S-K, as applicable,  of the Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
Each selling Holder agrees to promptly furnish additional  information  required
to be disclosed  in order to make the  information  previously  furnished to the
Company by such Holder not materially misleading.

SECTION 4.  BLACK OUT PERIOD

     During any consecutive 365 day period, the Company may suspend the
effectiveness of the Shelf Registration Statement for an aggregate period of not
more than 90 consecutive days if there is a possible acquisition or business
combination or other transaction, business development or event involving the
Company that may require disclosure in the Shelf Registration Statement and the
Company determines in the exercise of its reasonable judgment that such
disclosure is not in the best interests of the Company and its stockholders or
obtaining any financial statements relating to an acquisition or business
combination required to be included in the Shelf Registration Statement would be
impracticable. In such a case, the Company shall promptly notify Holders of the
suspension of the Shelf Registration Statement's effectiveness, provided that
such notice shall not require the Company to disclose the possible acquisition
or business combination or other transaction, business development or event if
the Company determines in good faith that such acquisition or business
combination or other transaction, business development or event should remain
confidential.  Upon the abandonment, consummation, or termination of the
possible acquisition or business combination or other transaction, business
development or event, or the availability of the required financial statements
with respect to a possible acquisition or business combination, the suspension
of the use of the Shelf Registration Statement pursuant to this Section 4 shall
cease and the Company shall promptly comply with Section 6(a)(ii) hereof and
notify the Holders that disposition of Registrable Securities may be resumed.

SECTION 5.  SPECIAL DIVIDENDS

     If (i) the Registration Statement required by this Agreement is not filed
with the Commission on or prior to the Filing Deadline, (ii) the Registration
Statement has not been declared effective by the Commission on or prior to the
Effectiveness Deadline, or (iii) the Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose (except in the
circumstances specified in Section 4) without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iii), a "Registration Default"), then the Company hereby
                                 --------------------
agrees to pay to each Holder of Registrable Securities affected thereby special
dividends ("Special Dividends") which will accrue and be payable semi-annually
            -----------------
on the Preferred Stock (or per such number of Preferred Stock Shares then
issuable upon exercise of or in respect of the Preferred Stock) in addition to
the stated dividends on the Preferred Stock (or per such number of Preferred
Stock Shares then issuable upon exercise of or

                                       4
<PAGE>

in respect of the Preferred  Stock),  as the case may be, from and including the
date such Registration  Default occurs to, but excluding,  the date on which (1)
the Shelf  Registration  Statement is filed,  in the case of (i) above,  (2) the
Shelf Registration  Statement is declared effective,  in the case of (ii) above,
or  (3)  a  post-  effective  amendment  to  the  Registration  Statement  or an
additional  Registration  Statement is filed that causes the Shelf  Registration
Statement to again be declared  effective  or made usable,  in the case of (iii)
above.  During the time that Special  Dividends are accruing  continuously,  the
rate of such Special  Dividends shall be 0.50% per annum during the first 90-day
period and shall increase by 0.25% per annum for each subsequent  90-day period,
but in no event  shall  such  rate  exceed  1.00%  per  annum  in the  aggregate
regardless  of the number of  Registration  Defaults.  If, after the cure of all
Registration  Defaults  then  in  effect,  there  is a  subsequent  Registration
Default,  the Special  Dividend rate for such  subsequent  Registration  Default
shall initially be 0.25%, regardless of the Special Dividend rate in effect with
respect  to any  prior  Registration  Default  at the  time of the  cure of such
Registration Default. All accrued Special Dividends shall be paid to the Holders
entitled  thereto,  in the manner  provided  for the payment of dividends as set
forth  in the  Bye-Laws.  All  obligations  of the  Company  set  forth  in this
paragraph that are outstanding  with respect to any Registrable  Security at the
time such security ceases to be a Registrable  Security shall survive until such
time as all such  obligations  with respect to such  Registrable  Security shall
have been satisfied in full.

SECTION 6.  REGISTRATION PROCEDURES

     In connection with the Shelf Registration Statement, the Company shall
comply with all the provisions of Section 6(a) below and shall use its best
efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 3(b) hereof), and pursuant thereto the Company
will prepare and file with the Commission a Registration Statement relating to
the registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof and pursuant thereto the
Company shall:

     (a)  General Provisions.
          ------------------

          (i)  except in the circumstances specified in Section 4, use its
     reasonable best efforts to keep such Registration Statement continuously
     effective and provide all requisite financial statements for the period
     specified in Section 3 of this Agreement.  Except in the circumstances
     specified in Section 4, upon the occurrence of any event that would cause
     any such Registration Statement or the Prospectus contained therein (A) to
     contain a material misstatement or omission or (B) not to be effective and
     usable for resale of Registrable Securities during the period required by
     this Agreement, the Company shall file promptly an appropriate amendment to
     such Registration Statement curing such defect, and, if Commission review
     is required, use its reasonable best efforts

                                       5
<PAGE>

     to cause such amendment to be declared effective as soon as reasonably
     practicable thereafter.

          (ii)  except in the circumstances specified in Section 4, prepare and
     file with the Commission such amendments and post-effective amendments to
     the applicable Registration Statement as may be necessary to keep such
     Registration Statement effective for the period set forth in Section 3
     hereof, or such shorter period as will terminate when all Registrable
     Securities covered by such Registration Statement have been sold or until
     such Registrable Securities no longer constitute Registrable Securities or
     are no longer outstanding; cause the Prospectus to be supplemented by any
     required Prospectus supplement, and as so supplemented to be filed pursuant
     to Rule 424 under the Act, and to comply fully with Rules 424, 430A and
     462, as applicable, under the Act in a timely manner; and comply with the
     provisions of the Act with respect to the disposition of all securities
     covered by such Registration Statement during the applicable period in
     accordance with the intended method or methods of distribution by the
     sellers thereof set forth in such Registration Statement or supplement to
     the Prospectus;

          (iii)  advise the selling Holders promptly and, if requested by such
     Persons, confirm such advice in writing, (A) when the Prospectus or any
     Prospectus supplement or post-effective amendment has been filed, and, with
     respect to any applicable Registration Statement or any post-effective
     amendment thereto, when the same has become effective, (B) of any request
     by the Commission for amendments to the Registration Statement or
     amendments or supplements to the Prospectus or for additional information
     relating thereto, (C) of the issuance by the Commission of any stop order
     suspending the effectiveness of the Registration Statement under the Act or
     of the suspension by any state securities commission of the qualification
     of the Registrable Securities for offering or sale in any jurisdiction, or
     the initiation of any proceeding for any of the preceding purposes, or (D)
     except in the circumstances specified in Section 4, of the existence of any
     fact or the happening of any event that makes any statement of a material
     fact made in the Registration Statement, the Prospectus, any amendment or
     supplement thereto or any document incorporated by reference therein
     untrue, or that requires the making of any additions to or changes in the
     Registration Statement in order to make the statements therein not
     misleading, or that requires the making of any additions to or changes in
     the Prospectus in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading.  If at any time
     the Commission shall issue any stop order suspending the effectiveness of
     the Registration Statement, or any state securities commission or other
     regulatory authority shall issue an order suspending the qualification or
     exemption from qualification of the Registrable Securities under state
     securities or Blue Sky laws, the Company shall use its best efforts to
     obtain the withdrawal or lifting of such order at the earliest practicable
     time;

          (iv)  subject to Section 6(a)(i), if any fact or event contemplated by
     Section 6(a)(iii)(D) above shall exist or have occurred, prepare a
     supplement or post-effective amendment to the Registration Statement or
     related Prospectus or any document incorporated therein by reference or
     file any other required document so that, as thereafter

                                       6
<PAGE>

     delivered to the purchasers of Registrable Securities, the Prospectus will
     not contain an untrue statement of a material fact or omit to state any
     material fact necessary to make the statements therein, in the light of the
     circumstances under which they were made, not misleading;

          (v)  furnish to the Initial Purchasers and each selling Holder named
     in any Registration Statement or Prospectus in connection with such sale,
     if any, before filing with the Commission, copies of any Registration
     Statement or any Prospectus included therein or any amendments or
     supplements to any such Registration Statement or Prospectus (including all
     documents incorporated by reference, if requested by such person), which
     documents will be subject to the review and comment of such Holders in
     connection with such sale, if any, for a period of at least five Business
     Days, and the Company will not file any such Registration Statement or
     Prospectus or any amendment or supplement to any such Registration
     Statement or Prospectus (including all such documents incorporated by
     reference, if requested by such person) to which the selling Holders of the
     Registrable Securities covered by such Registration Statement in connection
     with such sale, if any, shall reasonably object within five Business Days
     after the receipt thereof.  A selling Holder shall be deemed to have
     reasonably objected to such filing if such Registration Statement,
     amendment, Prospectus or supplement, as applicable, as proposed to be
     filed, contains a material misstatement or omission or fails to comply with
     the applicable requirements of the Act;

          (vi)  promptly prior to the filing of any document that is to be
     incorporated by reference into a Registration Statement or Prospectus, if
     requested by any selling Holders within five Business Days after receipt of
     notification thereof from the Company, provide copies of such document to
     such selling Holders in connection with such sale, if any, make the
     Company's representatives available for discussion of such document and
     other customary due diligence matters, and include such information in such
     document prior to the filing thereof as such selling Holders may reasonably
     request;

          (vii)  make available at reasonable times for inspection by the
     selling Holders participating in any disposition pursuant to such
     Registration Statement and any attorney or accountant retained by such
     selling Holders, all financial and other records, pertinent corporate
     documents of the Company and cause the Company's officers, directors and
     employees to supply all information reasonably requested by any such
     selling Holder, attorney or accountant in connection with such Registration
     Statement or any post-effective amendment thereto subsequent to the filing
     thereof and prior to its effectiveness;

          (viii)  if requested by any selling Holders in connection with such
     sale, if any, promptly include in any Registration Statement or Prospectus,
     pursuant to a supplement or post-effective amendment if necessary, such
     information as such selling Holders may reasonably request to have included
     therein, including, without limitation, information relating to the "Plan
     of Distribution" of the Registrable Securities; and make all required
     filings of such Prospectus supplement or post-effective amendment as soon
     as practicable

                                       7
<PAGE>

     after the Company is notified of the matters to be included in such
     Prospectus supplement or post-effective amendment;

          (ix)  furnish to each selling Holder in connection with such sale, if
     any, without charge, at least one copy of the Registration Statement, as
     first filed with the Commission, and of each amendment thereto, including
     all documents incorporated by reference therein and all exhibits (including
     exhibits incorporated therein by reference);

          (x)  deliver to each selling Holder, without charge, as many copies of
     the Prospectus (including each preliminary prospectus) and any amendment or
     supplement thereto as such Persons reasonably may request; the Company
     hereby consents to the use (in accordance with law) of the Prospectus and
     any amendment or supplement thereto by each of the selling Holders in
     connection with the offering and the sale of the Registrable Securities
     covered by the Prospectus or any amendment or supplement thereto;

          (xi)  upon the request of any selling Holder, enter into such
     agreements (including underwriting agreements) and make such
     representations and warranties and take all such other actions in
     connection therewith in order to expedite or facilitate the disposition of
     the Registrable Securities pursuant to any applicable Registration
     Statement contemplated by this Agreement, all to such extent as may be
     reasonably acceptable to the Company and as may be reasonably requested by
     any Holder of Registrable Securities in connection with any sale or resale
     pursuant to any applicable Registration Statement contemplated by this
     Agreement and in such connection, the Company shall:

          (A) upon request of any selling Holder, furnish (or in the case of
       paragraphs (2) and (3), use its best efforts to cause to be furnished) to
       each selling Holder, upon the effectiveness of the Shelf Registration
       Statement:

               (1) a certificate, dated such date, signed on behalf of the
          Company by (x) the Chief Executive Officer, President or any Vice
          President and (y) a principal financial or accounting officer of the
          Company, confirming, as of the date thereof, the matters set forth in
          paragraph (e) of Section 6 of the Purchase Agreement and such other
          similar matters as the selling Holders may reasonably request;

               (2) opinions, dated such date, of counsel for the Company
          covering matters similar to those set forth in paragraphs (a), (b) and
          (c) of Section 6 of the Purchase Agreement and such other matters as
          the selling Holders may reasonably request, and in any event including
          a statement to the effect that certain such counsel has participated
          in conferences with officers and other representatives of the Company
          and representatives of the independent public accountants for the
          Company at which the contents of such Registration Statement and the
          related Prospectus were discussed, although such counsel has not
          independently verified the accuracy, completeness or fairness of such
          statements; and that such counsel

                                       8
<PAGE>

          advises that, on the basis of the foregoing, no facts came to such
          counsel's attention that caused such counsel to believe that the
          applicable Registration Statement, at the time such Registration
          Statement or any post-effective amendment thereto became effective
          contained an untrue statement of a material fact or omitted to state a
          material fact required to be stated therein or necessary to make the
          statements therein not misleading, or that the Prospectus contained in
          such Registration Statement as of its date contained an untrue
          statement of a material fact or omitted to state a material fact
          necessary in order to make the statements therein, in the light of the
          circumstances under which they were made, not misleading. Without
          limiting the foregoing, such counsel may state further that such
          counsel assumes no responsibility for, and has not independently
          verified, the accuracy, completeness or fairness of the financial
          statements, notes and schedules and other financial data included in
          any Registration Statement contemplated by this Agreement or the
          related Prospectus; and

               (3) a customary comfort letter, dated such date, from the
          Company's independent accountants, in the customary form and covering
          matters of the type customarily covered in comfort letters to
          underwriters in connection with underwritten offerings, and affirming
          the matters set forth in the comfort letters delivered pursuant to
          Section 6(f) of the Purchase Agreement; and

          (B) deliver such other documents and certificates as may be reasonably
       requested by the selling Holders to evidence compliance with clause (A)
       above and with any customary conditions contained in the any agreement
       entered into by the Company pursuant to this clause (xi);

          (xii)  prior to any public offering of Registrable Securities,
     cooperate with the selling Holders and their counsel in connection with the
     registration and qualification of the Registrable Securities under the
     securities or Blue Sky laws of such jurisdictions as the selling Holders
     may reasonably request and do any and all other acts or things necessary or
     advisable to enable the disposition in such jurisdictions of the
     Registrable Securities covered by the applicable Registration Statement;
     provided, however, that the Company shall not be required to register or
     qualify as a foreign corporation where it is not now so qualified or to
     take any action that would subject it to the service of process in suits or
     to taxation, other than as to matters and transactions relating to the
     Registration Statement, in any jurisdiction where it is not now so subject;

          (viii)  in connection with any sale of Registrable Securities that
     will result in such securities no longer being Registrable Securities,
     cooperate with the selling Holders to facilitate the timely preparation and
     delivery of certificates representing Registrable Securities to be sold and
     not bearing any restrictive legends; and to register such Registrable
     Securities in such denominations and such names as the selling Holders may
     request at least two Business Days prior to such sale of Registrable
     Securities;

                                       9
<PAGE>

          (xiv)  use its best efforts to cause the disposition of the
     Registrable Securities covered by the Registration Statement to be
     registered with or approved by such other governmental agencies or
     authorities as may be necessary to enable the seller or sellers thereof to
     consummate the disposition of such Registrable Securities, subject to the
     proviso contained in clause (xii) above;

          (xv)  provide a CUSIP number for all Registrable Securities not later
     than the effective date of a Registration Statement covering such
     Registrable Securities and provide the Transfer Agent or the Trustee, as
     the case may be, with printed certificates for the Registrable Securities
     which are in a form eligible for deposit with the Depository Trust Company;

          (xvi)  otherwise use its best efforts to comply with all applicable
     rules and regulations of the Commission, and make generally available to
     Holders with regard to any applicable Registration Statement, as soon as
     practicable, a consolidated earnings statement meeting the requirements of
     Rule 158 under the Act (which need not be audited) covering a twelve-month
     period beginning after the effective date of the Registration Statement (as
     such term is defined in paragraph (c) of Rule 158 under the Act);

          (xvii)  make appropriate officers of the Company available to the
     selling Holders for meetings with prospective purchasers of the Registrable
     Securities; and

          (xviii)  provide promptly to each Holder upon request each document
     filed with the Commission pursuant to the requirements of Section 13 or
     Section 15(d) of the Exchange Act.

     (b)  Restrictions on Holders.  Each Holder agrees by acquisition of a
          -----------------------
Registrable Security that, upon receipt of the notice referred to in Section 4
or Section 6(a)(i) or any notice from the Company of the existence of any fact
of the kind described in Section 6(a)(iii)(D) hereof (in each case, a

"Suspension Notice"), such Holder will forthwith discontinue disposition of
------------------
Transfer Restricted Securities pursuant to the Registration Statement until (i)
such Holder has received copies of the supplemented or amended Prospectus
contemplated by Section 6(a)(iv) hereof, or (ii) such Holder is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus (in each case, the "Recommencement Date").  Each
                                                   -------------------
Holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Registrable Securities that was current at the time
of receipt of the Suspension Notice.  In the event the Company shall deliver a
Suspension Notice other than pursuant to Section 4, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 hereof,
shall be extended by a number of

                                       10
<PAGE>

days equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.

SECTION 7.  REGISTRATION EXPENSES

     (a)  All expenses incident to the Company's performance of or compliance
with this Agreement shall be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state securities or Blue Sky laws; (iii)
all expenses of printing (including printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and, in accordance with Section 7(b) below, the Holders of
Registrable Securities; (v) all fees and disbursements of independent certified
public accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance); and (vi) fees
and expenses of the Transfer Agent, including the fees and expenses of its
counsel.

     The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.

     (b)  In connection with any Registration Statement required by this
Agreement the Company will reimburse the Initial Purchasers and the Holders of
Registrable Securities being registered pursuant to the Shelf Registration
Statement for the reasonable fees and disbursements of not more than one
counsel, who shall be Latham & Watkins, unless another firm shall be chosen by
the Holders of a majority in principal amount of the Registrable Securities for
whose benefit such Registration Statement is being prepared.

SECTION 8.  INDEMNIFICATION AND CONTRIBUTION.

          (a) The Company agrees to indemnify and hold harmless (i) each Holder,
(ii) the directors, officers, employees and agents of each Holder and (iii) each
person who controls any Holder within the meaning of either the Act or the
Exchange Act (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder") against any and all
                                  ------------------
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus or
Prospectus or any information provided by the Company to any Holder or
prospective purchaser of Preferred Stock or Preferred Stock Shares, as the case
may be, or in any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and agree to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably

                                       11
<PAGE>

incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
                                    --------  -------
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission (i) made in any Registration
Statement, preliminary prospectus or Prospectus, or in any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by any Holder specifically for inclusion therein or
(ii) made in any preliminary prospectus, if such untrue statement or omission or
alleged omission made in such preliminary prospectus is eliminated or remedied
in the Prospectus relating to it (as amended or supplemented, as applicable) and
a copy of such Prospectus shall not have been furnished to the person alleging
such loss, claim, damage or liability as required under applicable law. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.

          (b)  Each Holder of Registrable Securities severally agrees to
indemnify and hold harmless the Company, its directors, officers, employees and
agents and each person who controls the Company within the meaning of either the
Act or the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each of the Indemnified Holders, but only with reference to written
information relating to such Indemnified Holder furnished to the Company by such
Indemnified Holder specifically for inclusion in any Registration Statement,
preliminary prospectus or Prospectus (or in any amendment or supplement
thereto).  This indemnity agreement will be in addition to any liability which
any Indemnified Holder may otherwise have.

          (c)  Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above.  The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party.  Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which

                                       12
<PAGE>

are different from or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all indemnified parties, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Indemnified Holder and such control persons shall be
designated in writing by a majority of the Indemnified Holders and any such
separate firm of the Company, its directors, its officers and such control
persons of the Company shall be designated in writing by the Company. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.

          (d)  In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to hold harmless an indemnified party for any
reason, the Company and the Holders agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively

"Losses") to which the Company and one or more of the Holders may be subject in
-------
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and by the Indemnified Holders, on the other hand,
from the sale of Registrable Securities; provided, however, that in no case
shall any Holder (except as may be provided in any agreement among the Holders
relating to the sale of its Registrable Securities) be responsible for any
amount in excess of the amount by which the total received by such Holder with
respect to its sale of Registrable Securities pursuant to a Registration
Statement exceeds the sum of (A) the amount paid to such Holder for such
Registrable Securities plus (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Indemnified Holder shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company, on the one hand, and of the Indemnified Holder, on the other hand, in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations.  Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by either the Company or the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.  The Company and each Holder
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above.  Notwithstanding the
provisions of this paragraph (d), no person

                                       13
<PAGE>

guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls a Holder within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of a Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and each officer and
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d). The remedies provided in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

SECTION 9.  RULE 144A

     The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.

SECTION 10.  MISCELLANEOUS

     (a)  Remedies.  The Company acknowledges and agrees that any failure by the
          --------
Company to comply with its obligations under Section 3 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
any Initial Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 3 hereof.  The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

     (b)  No Inconsistent Agreements.  The Company shall not, on or after the
          --------------------------
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

     (c)  Amendments and Waivers.  The provisions of this Agreement may not be
          ----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10 (c)(i), the Company has obtained the written consent
of the Holders of all outstanding Registrable Securities and (ii) in the case of
all other provisions hereof, the Company has

                                       14
<PAGE>

obtained the written consent of the Holders of a majority of the outstanding
principal amount of Registrable Securities (excluding Registrable Securities
held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver
or consent to departure from the provisions hereof that relates exclusively to
the rights of Holders whose securities are being registered pursuant to the
Shelf Registration Statement and that does not affect, directly or indirectly,
the rights of other Holders whose securities are not being registered pursuant
to the Shelf Registration Statement may be given by the Holders of a majority of
the outstanding principal amount of Registrable Securities subject to such Shelf
Registration Statement.

     (d)  Third Party Beneficiary.  The Holders shall be third party
          -----------------------
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.

     (e)   Notices.  All notices and other communications provided for or
           -------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier or air courier
guaranteeing overnight delivery:

          (i)  if to a Holder, at the address set forth on the records of the
     Transfer Agent; and

          (ii)  if to the Company:

               Global Crossing Ltd.
               Wessex House
               45 Reid Street
               Hamilton HM12 Bermuda
               Telecopier No.:  (441) 296-8606
               Attention:  Secretary of the Company

               With a copy to:

               Simpson Thacher & Bartlett
               425 Lexington Avenue
               New York, NY  10017
               Telecopier No.:  (212) 455-2502
               Attention:  D. Rhett Brandon, Esq.

     All such notices and communications shall be deemed to have been duly
given:  at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.

     (f)  Successors and Assigns.  This Agreement shall inure to the benefit of
          ----------------------
and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation, and without the need for an express assignment,
subsequent Holders of Registrable

                                       15
<PAGE>

Securities; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in violation
of the terms hereof or of the Purchase Agreement, Bye-laws or the Certificate of
Designations. If any transferee of any Holder shall acquire Registrable
Securities in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.

     (g)  Counterparts.  This Agreement may be executed in any number of
          ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (h)  Headings.  The headings in this Agreement are for convenience of
          --------
reference only and shall not limit or otherwise affect the meaning hereof.

     (i)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
          -------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     (j)  Severability.  In the event that any one or more of the provisions
          ------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

     (k)  Entire Agreement.  This Agreement is intended by the parties as a
          ----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Registrable
Securities.  This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

     (l)  Consent to Jurisdiction and Service.  To the fullest extent permitted
          ------------------------------------
by applicable law, the Company hereby irrevocably submits to the jurisdiction of
any Federal or State court located in the Borough of Manhattan in The City of
New York, New York in any suit, action or proceeding based on or arising out of
or relating to this Agreement or any Registrable Securities, and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in any such court.  The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may have to the laying of the venue of
any such suit, action or proceeding brought in such a court and any claim that
any suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. The Company agrees that final judgment in any such suit,
action or proceeding brought in such a court shall be conclusive and binding
upon the Company and may be enforced in the courts of Bermuda (or any other
courts to the jurisdiction

                                       16
<PAGE>

of which the Company is subject) by a suit upon such judgment, provided that
                                                               --------
service of process is effected upon the Company in the manner specified herein
or as otherwise permitted by law. The Company hereby irrevocably designates and
appoints CT Corporation System, 1633 Broadway - 23rd Floor, New York, New York
(the "Process Agent"), as the authorized agent of the Company upon whom process
      -------------
may be served in any such suit or proceeding, it being understood that the
designation and appointment of the Process Agent as such authorized agent shall
become effective immediately without any further action on the part of the
Company. The Company hereby represents to each Initial Purchaser that it has
notified the Process Agent of such designation and appointment and that the
Process Agent has accepted the same in writing. The Company hereby irrevocably
authorizes and directs the Process Agent to accept such service. The Company
further agrees that service of process upon the Process Agent and written notice
of said service to the Company mailed by prepaid registered first class mail or
delivered to the Process Agent at its principal office, shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the right of any Initial Purchaser or
any person controlling any Initial Purchaser to serve process in any other
matter permitted by law. The Company further agrees to take any and all action,
including the execution and filing of any and all such documents and instruments
as may be necessary to continue such designation and appointment of the Process
Agent in full force and effect so long as the Company has any outstanding
obligations under this Agreement, the Registrable Securities, Bye-laws or the
Certificate of Designations. To the extent that the Company has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of note, attachment prior to judgment, attachment in
aid of execution, executor or otherwise) with respect to itself or its property,
the Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.

             [Registration Rights Agreement Signature Pages Follow]

                                       17
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                              Global Crossing Ltd.

                              By:
                                Name:
                                Title:

<PAGE>

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Chase Securities Inc.
Morgan Stanley Dean Witter & Co.
CIBC World Markets Corp.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston Corporation

By:  Merrill Lynch, Pierce, Fenner & Smith Incorporated

By:_______________________________________
   Name:
   Title:

By:  Salomon Smith Barney Inc.

By:_______________________________________
   Name:
   Title:

For themselves and the other Initial Purchasers

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