[TYPE] 8-K
[DOCUMENT-COUNT] 1
[FILER]
[CIK] 0000801441
[CCC] XXXXXXXX
[PERIOD] 08/10/94
[ITEMS] 1
[DESCRIPTION] MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER
Dated as of August 10, 1994
by and among
LIVE Entertainment Inc.
Carolco Acquisition Corp.
and
Carolco Pictures Inc.
TABLE OF CONTENTS
ARTICLE 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Merger. . . . . . . . . . . . . . 2
Section 1.2 Effective Date of the Merger;
Closing.. . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
THE SURVIVING CORPORATION. . . . . . . . . . . . . . 2
Section 2.1 Certificate of Incorporation. . . . . 2
Section 2.2 Bylaws. . . . . . . . . . . . . . . . 2
Section 2.3 Board of Directors and Officers.. . . 3
ARTICLE 3
CHANGES AT LIVE AT OR BEFORE EFFECTIVE DATE. . . . . 3
Section 3.1 Certificate of Incorporation. . . . . 3
Section 3.2 Bylaws. . . . . . . . . . . . . . . . 3
Section 3.3 Board of Directors and Officers.. . . 4
Section 3.4 LIVE Home Video Inc.. . . . . . . . . 4
ARTICLE 4
CONVERSION AND EXCHANGE OF SHARES AND CERTIFICATES . 4
Section 4.1 Conversion. . . . . . . . . . . . . . 4
Section 4.2 LIVE to Make Certificates Available.. 6
Section 4.3 Dividends; Transfer Taxes.. . . . . . 8
Section 4.4 No Further Ownership Rights in
Carolco Common Stock. . . . . . . . . . . . . . 9
Section 4.5 Closing of Carolco Transfer Books.. . 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIVE . . . . . . . 10
Section 5.1 Organization, Standing and Power. . . 10
Section 5.2 Subsidiaries. . . . . . . . . . . . . 10
Section 5.3 Capital Structure and Commitments.. . 11
Section 5.4 Authority; Non-Contravention. . . . . 12
Section 5.5 LIVE SEC Documents. . . . . . . . . . 14
Section 5.6 No Material Adverse Change. . . . . . 15
Section 5.7 Absence of Undisclosed Liabilities. . 15
Section 5.8 Absence of Certain Events.. . . . . . 15
Section 5.9 No Solicitation . . . . . . . . . . . 15
Section 5.10 Registration Statement and Proxy
Statement.. . . . . . . . . . . . . . . . . . . 16
Section 5.11 Reorganization. . . . . . . . . . . . 16
Section 5.12 Litigation. . . . . . . . . . . . . . 16
Section 5.13 Loan Agreements, Customers and
Suppliers.. . . . . . . . . . . . . . . . . . . 16
Section 5.14 Permits.. . . . . . . . . . . . . . . 17
Section 5.15 Absence of Changes in LIVE Benefit
Plans.. . . . . . . . . . . . . . . . . . . . . 17
Section 5.16 Intellectual Property.. . . . . . . . 18
Section 5.17 Environmental Matters.. . . . . . . . 18
Section 5.18 Taxes.. . . . . . . . . . . . . . . . 18
Section 5.19 Foreign Corrupt Practices Act.. . . . 19
Section 5.20 Brokers.. . . . . . . . . . . . . . . 19
Section 5.21 Officers, Directors and Key
Employees.. . . . . . . . . . . . . . . . . . . 19
Section 5.22 State Takeover Statutes.. . . . . . . 19
Section 5.23 Insurance.. . . . . . . . . . . . . . 20
Section 5.24 Title to Properties and Related
Matters.. . . . . . . . . . . . . . . . . . . . 20
Section 5.25 Accuracy of LIVE Disclosure.. . . . . 20
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CAROLCO. . . . . . 21
Section 6.1 Organization, Standing and Power. . . 21
Section 6.2 Subsidiaries. . . . . . . . . . . . . 21
Section 6.3 Capital Structure and Commitments.. . 21
Section 6.4 Authority; Non-Contravention. . . . . 23
Section 6.5 Carolco SEC Documents.. . . . . . . . 24
Section 6.6 No Material Adverse Change. . . . . . 25
Section 6.7 Absence of Undisclosed Liabilities. . 25
Section 6.8 Absence of Certain Events.. . . . . . 25
Section 6.9 No Solicitation . . . . . . . . . . . 25
Section 6.10 Registration Statement and Proxy
Statement.. . . . . . . . . . . . . . . . . . . 26
Section 6.11 Reorganization. . . . . . . . . . . . 26
Section 6.12 Litigation. . . . . . . . . . . . . . 26
Section 6.13 Loan Agreements, Customers and
Suppliers.. . . . . . . . . . . . . . . . . . . 26
Section 6.14 Permits.. . . . . . . . . . . . . . . 27
Section 6.15 Absence of Changes in Carolco Benefit
Plans.. . . . . . . . . . . . . . . . . . . . . 27
Section 6.16 Intellectual Property.. . . . . . . . 27
Section 6.17 Environmental Matters.. . . . . . . . 28
Section 6.18 Taxes.. . . . . . . . . . . . . . . . 28
Section 6.19 Foreign Corrupt Practices Act.. . . . 28
Section 6.20 Brokers.. . . . . . . . . . . . . . . 28
Section 6.21 Officers, Directors and Key
Employees.. . . . . . . . . . . . . . . . . . . 29
Section 6.22 State Takeover Statutes.. . . . . . . 29
Section 6.23 Insurance.. . . . . . . . . . . . . . 29
Section 6.24 Title to Properties and Related
Matters.. . . . . . . . . . . . . . . . . . . . 29
Section 6.25 Accuracy of Carolco Disclosure. . . . 30
ARTICLE 7
REPRESENTATIONS AND WARRANTIES REGARDING CAC . . . . 30
Section 7.1 Organization and Standing.. . . . . . 30
Section 7.2 Capital Structure.. . . . . . . . . . 30
Section 7.3 Authority.. . . . . . . . . . . . . . 31
ARTICLE 8
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . 31
Section 8.1 Conduct of Business by LIVE Pending
the Merger. . . . . . . . . . . . . . . . . . . 31
Section 8.2 Conduct of Business by Carolco
Pending the Merger. . . . . . . . . . . . . . . 35
Section 8.3 Competing Offers. . . . . . . . . . . 39
Section 8.4 Reorganization. . . . . . . . . . . . 39
Section 8.5 Conduct of Business of CAC Pending
the Merger. . . . . . . . . . . . . . . . . . . 40
Section 8.6 Update of LIVE LETTER and CAROLCO
LETTER. . . . . . . . . . . . . . . . . . . . . 40
Section 8.7 Bringdown of Fairness Opinion.. . . . 40
ARTICLE 9
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . 40
Section 9.1 Carolco and LIVE Stockholder
Approvals.. . . . . . . . . . . . . . . . . . . 40
Section 9.2 Registration Statement and Proxy
Statement . . . . . . . . . . . . . . . . . . . 41
Section 9.3 Amendment to Indentures . . . . . . . 42
Section 9.4 Listing Application.. . . . . . . . . 43
Section 9.5 Access to Information.. . . . . . . . 43
Section 9.6 Affiliates. . . . . . . . . . . . . . 43
Section 9.7 Fees and Expenses.. . . . . . . . . . 43
Section 9.8 Carolco Stock Options.. . . . . . . . 44
Section 9.9 Other Obligations of Carolco and LIVE 45
Section 9.10 Registration Rights.. . . . . . . . . 46
Section 9.11 Best Efforts. . . . . . . . . . . . . 46
Section 9.12 Public Announcements. . . . . . . . . 47
Section 9.13 State Takeover Laws.. . . . . . . . . 47
Section 9.14 Indemnification.. . . . . . . . . . . 47
Section 9.15 [Intentionally Deleted.]. . . . . . . 48
Section 9.16 [Intentionally Deleted.]. . . . . . . 48
Section 9.17 LIVE Rights.. . . . . . . . . . . . . 48
Section 9.18 Continuation of Business or Business
Assets. . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 10
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . 48
Section 10.1 Conditions to Each Party's Obligation
to Effect the Merger. . . . . . . . . . . . . . 48
Section 10.2 Conditions to Obligation of Carolco
to Effect the Merger. . . . . . . . . . . . . . 50
Section 10.3 Conditions to Obligations of LIVE and
CAC to Effect the Merger. . . . . . . . . . . . 52
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . 53
Section 11.1 Termination.. . . . . . . . . . . . . 53
Section 11.2 Effect of Termination.. . . . . . . . 55
Section 11.3 Amendment.. . . . . . . . . . . . . . 55
Section 11.4 Waiver. . . . . . . . . . . . . . . . 55
Section 11.5 Approval by LIVE Special Committee. . 56
ARTICLE 12
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 56
Section 12.1 Non-Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . 56
Section 12.2 Notices.. . . . . . . . . . . . . . . 56
Section 12.3 Interpretation. . . . . . . . . . . . 60
Section 12.4 Counterparts. . . . . . . . . . . . . 60
Section 12.5 Entire Agreement; No Third-Party
Beneficiaries.. . . . . . . . . . . . . . . . . 60
Section 12.6 Governing Law.. . . . . . . . . . . . 60
Section 12.7 Assignment. . . . . . . . . . . . . . 60
Glossary
Amended and Restated Carolco 5% Indenture. . . . . . 45
Amended and Restated Standby Purchase and Investment
Agreement. . . . . . . . . . . . . . . . . . . . . . 45
1986 Plan. . . . . . . . . . . . . . . . . . . . . . 44
1989 Plan. . . . . . . . . . . . . . . . . . . . . . 44
Advisory Committee . . . . . . . . . . . . . . . . . 13
Affiliates . . . . . . . . . . . . . . . . . . . . . 43
Agreement. . . . . . . . . . . . . . . . . . . . . . .1
Amended and Restated Bylaws of Carolco . . . . . . . .3
Amended and Restated Bylaws of LIVE. . . . . . . . . .3
Amended and Restated Certificate of Incorporation of
LIVE . . . . . . . . . . . . . . . . . . . . . . . . .3
Average Trading Price. . . . . . . . . . . . . . . . .5
blue sky . . . . . . . . . . . . . . . . . . . . . . 14
CAC. . . . . . . . . . . . . . . . . . . . . . . . . .1
CAC Common Stock . . . . . . . . . . . . . . . . . . .6
Carolco. . . . . . . . . . . . . . . . . . . . . . . .1
Carolco 5% Notes . . . . . . . . . . . . . . . . . . 22
Carolco 7% Notes . . . . . . . . . . . . . . . . . . 22
Carolco 11.5%/10% Notes. . . . . . . . . . . . . . . 45
Carolco 13% Notes. . . . . . . . . . . . . . . . . . 45
Carolco 13%/12% Notes. . . . . . . . . . . . . . . . 45
Carolco Balance Sheet. . . . . . . . . . . . . . . . 25
Carolco Benefit Plans. . . . . . . . . . . . . . . . 27
Carolco Common Certificates. . . . . . . . . . . . . .6
Carolco Common Stock . . . . . . . . . . . . . . . . .1
Carolco Entertainment Inc. . . . . . . . . . . . . . .3
Carolco Investors. . . . . . . . . . . . . . . . . . 23
CAROLCO LETTER . . . . . . . . . . . . . . . . . . . 21
Carolco Preferred Stock. . . . . . . . . . . . . . . .1
Carolco Proprietary Rights . . . . . . . . . . . . . 27
Carolco Registration Rights Agreements . . . . . . . 23
Carolco SEC Documents. . . . . . . . . . . . . . . . 24
Carolco Series A Preferred Stock . . . . . . . . . . .6
Carolco Stock Plans. . . . . . . . . . . . . . . . . 44
Carolco Stockholder Meeting. . . . . . . . . . . . . 40
Certificate. . . . . . . . . . . . . . . . . . . . . .8
Certificate of Merger. . . . . . . . . . . . . . . . .2
Chemical . . . . . . . . . . . . . . . . . . . . . . 13
Chemical Fairness Opinion. . . . . . . . . . . . . . 13
Cinepole . . . . . . . . . . . . . . . . . . . . . . 13
Closing. . . . . . . . . . . . . . . . . . . . . . . .2
Code . . . . . . . . . . . . . . . . . . . . . . . . .1
competing proposal . . . . . . . . . . . . . . . . . 44
Constituent Corporations . . . . . . . . . . . . . . .1
Contingent Payment Rights. . . . . . . . . . . . . . 12
control share acquisition. . . . . . . . . . . . . . 19
D&O Insurance. . . . . . . . . . . . . . . . . . . . 47
date hereof. . . . . . . . . . . . . . . . . . . . . 60
date of this Agreement,. . . . . . . . . . . . . . . 60
DGCL . . . . . . . . . . . . . . . . . . . . . . . . .2
Effective Date . . . . . . . . . . . . . . . . . . . .2
Environmental Laws . . . . . . . . . . . . . . . . . 18
ERISA. . . . . . . . . . . . . . . . . . . . . . . . 18
Exchange Act . . . . . . . . . . . . . . . . . . . . 14
Exchange Agent . . . . . . . . . . . . . . . . . . . .6
Exchange Ratio . . . . . . . . . . . . . . . . . . . .5
fair price . . . . . . . . . . . . . . . . . . . . . 19
Governmental Entity. . . . . . . . . . . . . . . . . 14
HSR Act. . . . . . . . . . . . . . . . . . . . . . . 14
include. . . . . . . . . . . . . . . . . . . . . . . 60
indebtedness . . . . . . . . . . . . . . . . . . . . 17
Investor Representation Agreement. . . . . . . . . . 13
Letter . . . . . . . . . . . . . . . . . . . . . . . 40
LHV. . . . . . . . . . . . . . . . . . . . . . . . . .4
LHV Bylaws . . . . . . . . . . . . . . . . . . . . . .4
LIVE . . . . . . . . . . . . . . . . . . . . . . . . .1
LIVE 12% Indenture . . . . . . . . . . . . . . . . . 42
LIVE 12% Notes . . . . . . . . . . . . . . . . . . . 32
LIVE Balance Sheet . . . . . . . . . . . . . . . . . 15
LIVE Benefit Plans . . . . . . . . . . . . . . . . . 18
LIVE Common Stock. . . . . . . . . . . . . . . . . . .4
LIVE Credit Facility . . . . . . . . . . . . . . . . 52
LIVE Increasing Rate Notes . . . . . . . . . . . . . 42
LIVE Increasing Rate Notes Indenture . . . . . . . . 42
LIVE Investors . . . . . . . . . . . . . . . . . . . 13
LIVE LETTER. . . . . . . . . . . . . . . . . . . . . 10
LIVE Preferred Stock . . . . . . . . . . . . . . . . .9
LIVE Proprietary Rights. . . . . . . . . . . . . . . 18
LIVE Registration Rights Agreements. . . . . . . . . 12
LIVE Right . . . . . . . . . . . . . . . . . . . . . 11
LIVE Rights Agreement. . . . . . . . . . . . . . . . 11
LIVE SEC Documents . . . . . . . . . . . . . . . . . 14
LIVE Series A Common Stock . . . . . . . . . . . . . 11
LIVE Series D Preferred Stock. . . . . . . . . . . . .6
LIVE Series B Preferred Stock. . . . . . . . . . . . 11
LIVE Series C Preferred Stock. . . . . . . . . . . . .6
LIVE Series R Preferred Stock. . . . . . . . . . . . 11
LIVE Special Committee . . . . . . . . . . . . . . . 13
LIVE Stockholder Meeting . . . . . . . . . . . . . . 41
Mailing. . . . . . . . . . . . . . . . . . . . . . . .8
Material Adverse Change. . . . . . . . . . . . . . . 10
Material Adverse Effect. . . . . . . . . . . . . . . 10
Merger . . . . . . . . . . . . . . . . . . . . . . . .1
MGM. . . . . . . . . . . . . . . . . . . . . . . . . 45
MGM Distribution Agreements. . . . . . . . . . . . . 45
moratorium . . . . . . . . . . . . . . . . . . . . . 19
New Carolco Entertainment Inc. Registration Rights
Agreement. . . . . . . . . . . . . . . . . . . . . . 46
New LIVE Certificates. . . . . . . . . . . . . . . . .7
New Plan . . . . . . . . . . . . . . . . . . . . . . 44
New Stock Option . . . . . . . . . . . . . . . . . . 44
offer. . . . . . . . . . . . . . . . . . . . . . . . 39
Old LIVE Certificates. . . . . . . . . . . . . . . . .7
Option Registration Statement. . . . . . . . . . . . 42
Pay-Per-View Shares. . . . . . . . . . . . . . . . . 22
Pioneer. . . . . . . . . . . . . . . . . . . . . . . 13
Plan Option. . . . . . . . . . . . . . . . . . . . . 44
Proxy Statement. . . . . . . . . . . . . . . . . . . 16
RCS. . . . . . . . . . . . . . . . . . . . . . . . . 13
Registration Statement . . . . . . . . . . . . . . . 16
Restated Certificate of Incorporation of Carolco . . .2
Restated Certificate of Incorporation of LIVE. . . . .3
Securities Act . . . . . . . . . . . . . . . . . . . 14
Seidler. . . . . . . . . . . . . . . . . . . . . . . 23
Seidler Fairness Opinion . . . . . . . . . . . . . . 23
Series A Certificates. . . . . . . . . . . . . . . . .7
Series C Certificate of Designations . . . . . . . . .6
Significant Carolco Employees. . . . . . . . . . . . 29
Significant LIVE Employees . . . . . . . . . . . . . 19
Stockholder Meetings . . . . . . . . . . . . . . . . 41
Strawberries . . . . . . . . . . . . . . . . . . . . 10
Subsidiary . . . . . . . . . . . . . . . . . . . . . 10
Surviving Corporation. . . . . . . . . . . . . . . . .2
takeover proposal. . . . . . . . . . . . . . . . . . 39
TCI Purchase Agreement . . . . . . . . . . . . . . . 22
Trading Day. . . . . . . . . . . . . . . . . . . . . .6
Trading Price. . . . . . . . . . . . . . . . . . . . .5
VCL. . . . . . . . . . . . . . . . . . . . . . . . . 10
without limitation.. . . . . . . . . . . . . . . . . 60
Exhibits
Exhibit 1.2 Certificate of Merger
Exhibit 2.1 Restated Certificate of
Incorporation of Carolco
Exhibit 2.2 Amended and Restated Bylaws
of Carolco
Exhibit 2.3 Board of Directors of
Carolco at Effective Date
Exhibit 3.1 Amended and Restated
Certificate of
Incorporation of Carolco
Entertainment Inc.
Exhibit 3.2 Amended and Restated Bylaws
of Carolco Entertainment
Inc.
Exhibit 3.3A Board of Directors and
Committees of Carolco
Entertainment Inc. at
Effective Date
Exhibit 3.3B Officers of Carolco
Entertainment Inc. at
Effective Date
Exhibit 3.4 Amended Bylaws of LHV
Exhibit 5.3A Warrant Agreements and
Options for LIVE Common
Stock
Exhibit 5.3B LIVE Registration Rights
Agreements
Exhibit 5.4(c) Investor Representation
Agreement
Exhibit 6.3A Options for Carolco Common
Stock
Exhibit 6.3B Carolco Registration Rights
Agreements
Exhibit 9.3(a) Amendment to LIVE 12% Indenture
Exhibit 9.3(b) Amendment to LIVE Increasing
Rate Notes Indenture
Exhibit 9.8(d) 1994 Stock Option and Stock
Appreciation Rights Plan
Exhibit 9.9(a) Assumption Agreement with
respect to Carolco-Mario Kassar
Employment Agreement
Exhibit 9.9(b) Amended and Restated Carolco 5%
Indenture
Exhibit 9.9(c) Amended and Restated Standby
Purchase and Investment
Agreement with respect to the
Carolco 7% Notes
Exhibit 9.9(d) First Supplemental Indenture
with respect to the Carolco
11.5%/10% Notes
Exhibit 9.9(e) First Supplemental Indenture
with respect to the Carolco
13%/12% Notes
Exhibit 9.9(f) First Supplemental
Indenture with respect to
the Carolco 13% Notes
Exhibit 9.9(g) Assumption Agreement with
respect to the MGM Distribution
Agreements
Exhibit 9.9(h) Assumption Agreement with
respect to RCS Agreements
Exhibit 9.9(i) Assumption Agreement with
respect to Canal+
Agreements
Exhibit 9.9(j) Assumption Agreement with
respect to Pioneer
Agreements
Exhibit 9.10 New Carolco Entertainment
Inc. Registration Rights
Agreement
Exhibit 10.1(f) Terms of Aggregate Working
Capital Commitments
Exhibit 10.2(d) Form of Opinion of Counsel
to LIVE and CAC
Exhibit 10.3(d) Form of Opinion of Counsel
to Carolco
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 10,
1994 (this "Agreement"), by and among LIVE
Entertainment Inc., a Delaware corporation ("LIVE"),
Carolco Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of LIVE ("CAC"), and
Carolco Pictures Inc., a Delaware corporation
("Carolco") (CAC and Carolco being hereinafter
collectively referred to as the "Constituent
Corporations").
W I T N E S S E T H:
WHEREAS, LIVE is a corporation duly organized and
existing under the laws of the State of Delaware
with an authorized capitalization as set forth in
Section 5.3 hereof;
WHEREAS, Carolco is a corporation duly organized and
existing under the laws of the State of Delaware
with an authorized capitalization as set forth in
Section 6.3 hereof;
WHEREAS, CAC is a corporation duly organized and
existing under the laws of the State of Delaware
with an authorized capitalization as set forth in
Section 7.2 hereof and is a wholly-owned subsidiary
of LIVE;
WHEREAS, the respective Boards of Directors of LIVE,
CAC and Carolco have approved and declared fair to
and in the best interests of their respective
corporations and stockholders, and LIVE acting as
the sole stockholder of CAC has approved, the merger
of CAC with and into Carolco (the "Merger"), upon
the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of
the common stock, par value $.01 per share, of
Carolco ("Carolco Common Stock") and each issued and
outstanding share of the preferred stock, par value
$1.00 per share, of Carolco ("Carolco Preferred
Stock"), will be cancelled and converted into the
right to receive such consideration as is
hereinafter described;
WHEREAS, for federal income tax purposes, the
parties hereto intend that the Merger shall qualify
as a tax free reorganization within the meaning of
the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, LIVE, CAC and Carolco desire to make
certain representations, warranties and agreements
in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and
agreements herein contained, the parties hereto
agree as follows:
ARTICLE 1
THE MERGER
Section 1.a The Merger. At the Effective Date
(as defined in Section 1.2), CAC shall be merged
with and into Carolco in accordance with the
applicable provisions of the General Corporation Law
of the State of Delaware (the "DGCL") with Carolco
as the surviving corporation in the Merger (the
"Surviving Corporation"), the separate existence of
CAC shall thereupon cease, and Carolco, as the
Surviving Corporation, shall continue its corporate
existence under the laws of the State of Delaware.
From and after the Effective Date, the Merger shall
have all the effects provided in Section 259(a) of
the DGCL.
Section 1.b Effective Date of the Merger;
Closing.
(i) The Merger shall become effective when a
properly executed Certificate of Merger in the form
attached hereto as Exhibit 1.2 is duly filed with
the Secretary of State of the State of Delaware in
accordance with the relevant provisions of the DGCL
(the "Certificate of Merger"), which filing shall be
made as soon as practicable after the Closing
hereinafter contemplated; provided, however, that,
upon mutual consent of the Constituent Corporations,
the Certificate of Merger may provide for a later
date and time of effectiveness of the Merger in
accordance with the DGCL, in which case the Merger
shall become effective at the date and time
specified in the Certificate of Merger. When used
in this Agreement, the term "Effective Date" shall
mean the date and time at which such actions are
completed and such Merger becomes effective.
(ii) The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place (i)
at the offices of Sidley & Austin, 2049 Century Park
East, Los Angeles, California, at 10:00 A.M. local
time on the later of (A) the next business day after
the date of the later of the stockholders' meetings
referred to in Section 9.1 and (B) the day on which
the last of the conditions set forth in Article 9 is
fulfilled or waived or (ii) at such other time and
place as LIVE and Carolco shall agree.
ARTICLE 2
THE SURVIVING CORPORATION
Section 2.a Certificate of Incorporation. The
Certificate of Incorporation of Carolco as in effect
immediately prior to the Effective Date ("Restated
Certificate of Incorporation of Carolco"), attached
hereto as Exhibit 2.1, as amended by the Certificate
of Merger, at and after the Effective Date shall
become the Certificate of Incorporation of the
Surviving Corporation unless and until thereafter
amended in accordance with its terms and applicable
law.
Section 2.b Bylaws. At or immediately prior to
the Effective Date, the Board of Directors of
Carolco shall repeal the Bylaws of Carolco as in
effect immediately prior to the Effective Date and
adopt new Bylaws ("Amended and Restated Bylaws of
Carolco") substantially in the form attached hereto
as Exhibit 2.2 and at and after the Effective Date,
such Amended and Restated Bylaws of Carolco shall
become the Bylaws of the Surviving Corporation, and
shall continue in full force as the Bylaws of the
Surviving Corporation until amended or repealed in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of the Surviving
Corporation and in accordance with applicable law.
Section 2.c Board of Directors and Officers. At
the Effective Date, the members of the Board of
Directors of Carolco shall resign from their
positions as and cease being directors of Carolco,
and the persons named on Exhibit 2.3 shall become
the directors of the Surviving Corporation, each of
whom shall serve until the earlier of his
resignation or removal or until his respective
successor is duly elected and qualified in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of the Surviving
Corporation as then in effect and in accordance with
applicable law. At the Effective Date, the officers
of Carolco immediately prior to the Effective Date
shall become the officers of the Surviving
Corporation until the earlier of their resignation
or removal or until their respective successors are
duly elected and qualified in accordance with the
terms of the Bylaws and the Certificate of
Incorporation of the Surviving Corporation as then
in effect and in accordance with applicable law.
ARTICLE 3
CHANGES AT LIVE AT OR BEFORE EFFECTIVE DATE
Section 3.a Certificate of Incorporation. The
Certificate of Incorporation of LIVE as in effect
immediately prior to the Effective Date ("Restated
Certificate of Incorporation of LIVE") shall be
amended and, immediately before the Effective Date,
the Restated Certificate of Incorporation of LIVE,
as amended ("Amended and Restated Certificate of
Incorporation of LIVE") substantially in the form
attached hereto as Exhibit 3.1 shall be filed with
the Secretary of State of the State of Delaware. At
and after the Effective Date, the Amended and
Restated Certificate of Incorporation of LIVE shall
continue in full force as the Certificate of
Incorporation of LIVE unless and until thereafter
amended in accordance with its terms and applicable
law. At the Effective Date, pursuant to the Amended
and Restated Certificate of Incorporation of LIVE,
the name of LIVE shall be changed to "Carolco
Entertainment Inc."
Section 3.b Bylaws. At or immediately prior to
the Effective Date, the Board of Directors of LIVE
shall repeal the Bylaws of LIVE as in effect
immediately prior to the Effective Date and adopt
new Bylaws ("Amended and Restated Bylaws of LIVE")
substantially in the form attached hereto as Exhibit
3.2 and at and after the Effective Date, such
Amended and Restated Bylaws of LIVE, shall continue
in full force as the Bylaws of LIVE until amended or
repealed in accordance with the terms of the Bylaws
and the Certificate of Incorporation of LIVE and in
accordance with applicable law.
Section 3.c Board of Directors and Officers. At
the Effective Date, the members of the board of
directors of LIVE shall resign, seriatim, from their
positions as and cease being directors of LIVE and
as each such person resigns, the persons named on
Exhibit 3.3A shall become, seriatim, the directors
of LIVE and members of the committees of the board
of directors of LIVE as indicated on Exhibit 3.3A,
each of whom shall serve until the earlier of his
resignation or removal or until his respective
successor is duly elected and qualified in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of LIVE as then in
effect and in accordance with applicable law. At
the Effective Date, the officers of LIVE immediately
prior to the Effective Date shall resign from their
positions as and cease being officers of LIVE, and
the persons named on Exhibit 3.3B shall become the
officers of LIVE until the earlier of their
resignation or removal or until their respective
successors are duly elected and qualified in
accordance with the terms of the Bylaws and the
Certificate of Incorporation of LIVE as then in
effect and in accordance with applicable law.
Section 3.d LIVE Home Video Inc. The Certificate
of Incorporation of LIVE Home Video Inc., a Delaware
corporation and a wholly-owned subsidiary of LIVE
("LHV"), as in effect immediately prior to the
Effective Date shall continue in full force as the
Certificate of Incorporation of LHV unless and until
thereafter amended in accordance with its terms and
applicable law. At or immediately prior to the
Effective Date, the Board of Directors of LHV shall
repeal the Bylaws of LHV as in effect immediately
prior to the Effective Date and adopt new Bylaws
substantially in the form attached hereto as Exhibit
3.4 (as amended, the "LHV Bylaws"), and at and after
the Effective Date, such LHV Bylaws shall become the
Bylaws of LHV, and shall continue in full force as
the Bylaws of LHV until amended or repealed in
accordance with their terms and the terms of the
Certificate of Incorporation of LHV as then in
effect and in accordance with applicable law. The
Board of Directors of LHV shall not change in
connection with the Merger and each member of the
Board of Directors of LHV shall continue to serve
until the earlier of his resignation or removal or
until his respective successor is duly elected and
qualified in accordance with the terms of the Bylaws
and the Certificate of Incorporation of LHV as then
in effect and in accordance with applicable law.
ARTICLE 4
CONVERSION AND EXCHANGE OF SHARES AND CERTIFICATES
Section 4.a Conversion. At the Effective Date,
by virtue of the Merger and without any action on
the part of any holder of any capital stock of
Carolco, LIVE or CAC:
(i) Conversion of Carolco Common Stock.
(1) Subject to the provisions of clause (ii) of
this Section 4.1(a), every 5.5 shares of Carolco
Common Stock issued and outstanding immediately
prior to the Effective Date (other than any such
shares held in Carolco's treasury) shall be
converted into one share of common stock of LIVE,
par value $.01 per share ("LIVE Common Stock")
(hereinafter the number of shares of Carolco Common
Stock which shall be converted into one share of
LIVE Common Stock shall be referred to as the
"Exchange Ratio"). All such shares of Carolco
Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and
retired and each holder of a Carolco Common
Certificate (as defined in Section 4.2(a))
representing any such shares shall cease to have any
rights with respect thereto, except as provided in
Section 4.2. All shares of LIVE Common Stock to be
received by holders of Carolco Common Stock upon
conversion of such Carolco Common Stock pursuant to
the Merger shall be duly authorized, validly issued
and outstanding, fully paid and nonassessable, free
of preemptive rights, and will not be liable to any
further call, nor shall the holder thereof be liable
for any further payments with respect thereto. Each
share of Carolco Common Stock held in Carolco's
treasury shall be cancelled and cease to exist at
and after the Effective Date and no consideration
shall be delivered with respect thereto.
(2) If the Average Trading Price (as defined below)
(A) is less than 54.5 cents per share, the Exchange
Ratio shall not be 5.5 shares and instead shall be
equal to the number obtained by dividing $3.00 by
the Average Trading Price; provided, however, that
in no event shall the Exchange Ratio exceed 6.5
shares; or (B) is greater than 72.7 cents per share,
the Exchange Ratio shall not be 5.5 shares and
instead shall be equal to the number obtained by
dividing $4.00 by the Average Trading Price;
provided, however, that in no event shall the
Exchange Ratio decrease below 4.5 shares.
For purposes of this Agreement:
(i) "Average Trading Price" means the average
Trading Price (as defined below) for the 20
consecutive Trading Days (as defined below) ending
on a date that is three Trading Days prior to the
date of the Carolco Stockholder Meeting and the LIVE
Stockholder Meeting (or in the event the Carolco
Stockholder Meeting and LIVE Stockholder Meeting are
not on the same date, the date of the later
Stockholder Meeting), or ending on such earlier date
as may be required by the Securities and Exchange
Commission,
(ii) "Trading Price" means, on any day, the last
reported sale price of one share of Carolco Common
Stock regular way on the New York Stock Exchange or,
if such security is not listed on the New York Stock
Exchange, the last sale price of such security
regular way, as reported in a composite published
report of transactions which includes transactions
on the exchange or other principal markets on which
such security is traded or, if there is no such
composite report as to any day, the last reported
sale price, regular way (or if there is no such
reported sale on such day, the average of the
closing reported bid and asked prices) on the
principal United States securities trading market
(whether a stock exchange, National Association of
Securities Dealers Automated Quotation System or
otherwise) on which such security is traded, and
(iii) "Trading Day" means a day on which the New
York Stock Exchange is open for at least one-half of
its normal business hours.
(3) Stockholders of Carolco entitled to receive a
fractional share of LIVE Common Stock upon the
conversion of the Carolco Common Stock shall receive
in lieu thereof cash in an amount equal to the
Average Trading Price times the number of shares of
Carolco Common Stock not converted (which number
shall be less than the Exchange Ratio). All checks
issued in payment for fractional interests shall be
denominated in U.S. dollars and drawn on a United
States bank.
(ii) Conversion of Carolco Preferred Stock. Each
share of Series A Convertible Preferred Stock of
Carolco, par value $1.00 ("Carolco Series A
Preferred Stock"), issued and outstanding
immediately prior to the Effective Date shall be
converted into one share of Series D Convertible
Preferred Stock of LIVE, par value $1.00 ("LIVE
Series D Preferred Stock"), the statement of
designations, rights, preferences and powers of
which is included in Exhibit 3.1. All such shares
of Carolco Series A Preferred Stock, when so
converted, shall no longer be outstanding and shall
automatically be cancelled and retired and each
holder of a certificate representing any such shares
shall cease to have any rights with respect thereto,
except as provided in Section 4.2. All shares of
the LIVE Series D Preferred Stock to be received by
holders of Carolco Series A Preferred Stock upon
conversion of such Carolco Series A Preferred Stock
pursuant to the Merger shall be duly authorized,
validly issued and outstanding, fully paid and
nonassessable, free of preemptive rights, and will
not be liable to any further call, nor shall the
holder thereof be liable for any further payment
with respect thereto.
(iii) LIVE Stock and CAC Stock. Each Share of
LIVE Common Stock issued and outstanding immediately
prior to the Effective Date shall remain unchanged
by virtue of the Merger. Each Share of Series C
Convertible Preferred Stock of LIVE, par value $1.00
("LIVE Series C Preferred Stock") shall remain
unchanged except as the Amended Certificate of
Designations, Preferences and Rights of LIVE
Series C Preferred Stock ("Series C Certificate of
Designations") shall be amended by the Amended and
Restated Certificate of Incorporation of LIVE to be
filed as provided herein. Each Share of common
stock of CAC, par value $0.01 per share ("CAC Common
Stock") issued and outstanding immediately prior to
the Effective Date shall be converted into one share
of common stock, par value $0.01 per share, of the
Surviving Corporation.
Section 4.b LIVE to Make Certificates Available.
(i) Exchange of Common Stock Certificates. Prior
to the Effective Date, LIVE shall authorize American
Stock Transfer & Trust Company (or such other person
or persons as shall be acceptable to LIVE and
Carolco) to act as Exchange Agent hereunder (the
"Exchange Agent"). At or prior to the Effective
Date, LIVE shall deposit with the Exchange Agent in
trust for the holders of certificates which
immediately prior to the Effective Date represented
shares of Carolco Common Stock (the "Carolco Common
Certificates"), and, subject to Section 4.3, each
such holder will be entitled to receive, upon
surrender to the Exchange Agent in the manner set
forth in subsection (d) below of one or more Carolco
Common Certificates for cancellation, certificates
representing the number of shares of LIVE Common
Stock into which the shares represented by such
Carolco Common Certificates were converted in the
Merger. LIVE Common Stock into which Carolco Common
Stock shall be converted in the Merger shall be
deemed to have been issued at the Effective Date,
and Carolco Common Certificates shall, at and after
the Effective Date, be deemed to represent only the
right to receive, upon surrender of such Carolco
Common Certificates, the certificates contemplated
by the preceding sentence.
(ii) Exchange of Series A Certificates. At or prior
to the Effective Date, LIVE shall deposit with the
Exchange Agent in trust for the holders of
certificates which immediately prior to the
Effective Date represented shares of Carolco Series
A Preferred Stock ("Series A Certificates"), and,
subject to Section 4.3, each such holder will be
entitled to receive, upon surrender to the Exchange
Agent in the manner set forth in subsection (d)
below of one or more Series A Certificates for
cancellation, certificates representing the number
of shares of LIVE Series D Preferred Stock into
which the shares represented by such Series A
Certificates were converted in the Merger. LIVE
Series D Preferred Stock into which Carolco Series A
Preferred Stock shall be converted in the Merger
shall be deemed to exist as of the Effective Date,
and Series A Certificates shall, at and after the
Effective Date, be deemed to represent only the
right to receive, upon surrender of such Series A
Certificates, the certificates contemplated by the
preceding sentence.
(iii) Exchange of Old LIVE Certificates. At or
prior to the Effective Date, LIVE shall deposit with
the Exchange Agent in trust for the holders of
certificates which immediately prior to the
Effective Date represented shares of LIVE Common
Stock or LIVE Series C Preferred Stock or of
certificates which immediately prior to the
Effective Date represented Contingent Payment Rights
(as defined in Section 5.3) (collectively, "Old LIVE
Certificates"), and, subject to Section 4.3, each
such holder will be entitled to receive, upon
surrender to the Exchange Agent in the manner set
forth in subsection (d) below of one or more Old
LIVE Certificates for cancellation, certificates
representing the number of shares of LIVE Common
Stock or LIVE Series C Preferred Stock or Contingent
Payment Rights (reflecting the change of LIVE's name
at the Effective Date), equal to the number of
shares or rights represented by the Old LIVE
Certificates so exchanged ("New LIVE Certificates").
Notwithstanding the foregoing, at and after the
Effective Date, until the holder of an Old LIVE
Certificate surrenders such Old LIVE Certificate to
the Exchange Agent for cancellation in the manner
set forth in subsection (d) below, each Old LIVE
Certificate shall continue to represent the same
number of shares of LIVE Common Stock, LIVE Series C
Preferred Stock or Contingent Payment Rights as such
Old LIVE Certificate represented immediately prior
to the Effective Date.
(iv) Exchange Procedures. As soon as practicable
after the Effective Date, but in any event no later
than five business days thereafter, the Exchange
Agent shall mail to each holder of record (at such
address as appears on the books of LIVE or Carolco
or as such holder shall otherwise designate) of a
Carolco Common Certificate, a Series A Certificate
and/or an Old LIVE Certificate, as the case may be
(any such certificates are sometimes referred to
hereinafter individually as a "Certificate," and
collectively as "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to such
Certificates shall pass, only upon actual delivery
of such Certificates to the Exchange Agent and shall
be in such form and have such other provisions as
LIVE and Carolco shall mutually specify, including
procedures to be followed in the event a holder has
lost his certificates) and (ii) instructions for use
in effecting the surrender of the Certificates in
exchange for certificates representing shares of
LIVE Common Stock and/or LIVE Series D Preferred
Stock and/or for New LIVE Certificates (the
"Mailing"). Upon surrender of such a Certificate
for cancellation to the Exchange Agent, at the
offices of the Exchange Agent and as otherwise
specified in the transmittal letter from the
Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of
whole shares of LIVE Common Stock, or that number of
whole shares of LIVE Series D Preferred Stock, which
such holder has the right to receive pursuant to
this Article 4, or New LIVE Certificates in
accordance with the provisions of Section 4.2(c),
and the Certificate so surrendered shall be
cancelled.
Section 4.c Dividends; Transfer Taxes.
(i) Dividends. No dividends or other
distributions, if any, that are declared on or after
the Effective Date on LIVE Common Stock (other than
LIVE Common Stock represented by an Old LIVE
Certificate) or LIVE Series D Preferred Stock or are
payable to the holders of record thereof will be
paid with respect to shares of such LIVE Common
Stock (other than LIVE Common Stock represented by
an Old LIVE Certificate) or LIVE Series D Preferred
Stock, until the holders thereof surrender their
Carolco Common Certificates or Series A
Certificates, as applicable, as provided in
Section 4.2. Nothing in this Agreement shall
require holders of Old LIVE Certificates to
surrender such Old LIVE Certificates, as permitted
in Section 4.2, as a condition to receipt of any
dividend or other distribution, if any, payable to
such holder with respect to shares of LIVE Common
Stock, LIVE Series C Preferred Stock or Contingent
Payment Rights represented by such Old LIVE
Certificate. Subject to the effect of any
applicable laws, there shall be paid to such record
holder of the certificates representing such LIVE
Common Stock or LIVE Series D Preferred Stock at the
time of such surrender, if required, or the
appropriate payment date, if later, or as promptly
as practicable thereafter, the amount of any
dividends or other distributions theretofore paid
with respect to whole shares of such LIVE Common
Stock or LIVE Series D Preferred Stock and having a
record date on or after the Effective Date. In no
event shall the person entitled to receive any such
dividends or other distributions be entitled to
receive interest on such dividends or other
distributions.
(ii) Transfer Taxes. No transfer taxes shall be
payable by a (i) holder of Carolco Common Stock or
Carolco Series A Preferred Stock in connection with
such holder's receipt of shares of LIVE Common Stock
or LIVE Series D Preferred Stock, as the case may
be, upon surrender of a Carolco Common Certificate
or Series A Certificate or (ii) holder of LIVE
Common Stock, LIVE Series C Preferred Stock or
Contingent Payment Rights in connection with such
holder's exchange of an Old LIVE Certificate for a
New LIVE Certificate, except in any event if any
certificate representing shares of LIVE Common
Stock, LIVE Preferred Stock or Contingent Payment
Rights is to be paid to or issued in a name other
than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a
condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise
in proper form for transfer (including any signature
guarantees necessary) and that the person requesting
such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the
issuance of certificates for such shares of LIVE
Common Stock or LIVE Preferred Stock in a name other
than that of the registered holder of the Carolco
Common Certificate, Series A Certificate, or Old
LIVE Certificate surrendered, or shall establish to
the satisfaction of the Exchange Agent or LIVE, as
appropriate, that such tax has been paid or is not
applicable. For purposes of this Agreement, "LIVE
Preferred Stock" means, collectively, the LIVE
Series C Preferred Stock and the LIVE Series D
Preferred Stock.
(iii) Delay in Delivery. Any certificates
delivered to the Exchange Agent by LIVE pursuant to
Sections 4.2(a) or 4.2(b) representing shares of
LIVE Common Stock or LIVE Series D Preferred Stock
(or any dividends or distributions thereon) which
remain undistributed to the previous stockholders of
Carolco for six months after the date of the Mailing
(as defined above in Section 4.2(e)) shall be
returned to LIVE, upon demand. Any persons who were
previously stockholders of Carolco who have not
theretofore complied with this Article 4 shall
thereafter look only to LIVE (subject to abandoned
property, escheat and other similar laws) for
payment of their claim for LIVE Common Stock or LIVE
Series D Preferred Stock (or any dividends or
distributions thereon). Notwithstanding the
foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of a Carolco
Common Certificate or Series A Certificate for any
shares of LIVE Common Stock or LIVE Series D
Preferred Stock (or any dividends or distributions
thereon) delivered to a public official pursuant to
any applicable abandoned property, escheat or
similar law.
Section 4.d No Further Ownership Rights in
Carolco Common Stock. All shares of LIVE Common
Stock or LIVE Series D Preferred Stock issued upon
the surrender for exchange of shares of Carolco
Common Stock or Carolco Series A Preferred Stock in
accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights
pertaining to such shares of Carolco Common Stock or
Carolco Series A Preferred Stock, subject, however,
to the Surviving Corporation's obligation to pay any
dividends or make any other distribution with a
record date prior to the Effective Date which may
have been declared or made by Carolco on such shares
of Carolco Common Stock or Carolco Series A
Preferred Stock in accordance with the terms of this
Agreement.
Section 4.e Closing of Carolco Transfer Books.
Upon the Effective Date, the stock transfer books of
Carolco shall be closed and no transfer of Carolco
Common Stock or Carolco Preferred Stock shall
thereafter be made. If, after the Effective Date,
Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged
as provided in this Article 4.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIVE
LIVE represents and warrants to Carolco as follows:
Section 5.a Organization, Standing and Power.
(i) LIVE is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has the requisite corporate
power and authority to own its property and carry on
its business as now being conducted. LIVE and each
of its Subsidiaries is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities makes such qualification necessary,
except where the failure to be so qualified would
not, individually or in the aggregate, have a
Material Adverse Effect on LIVE.
(ii) For purposes of this Agreement (i) "Material
Adverse Change" or "Material Adverse Effect" means,
when used with respect to LIVE or Carolco, as the
case may be, any change or effect that is or may be
materially adverse to the assets, properties,
business, condition (financial or otherwise) or
results of operations of LIVE and its Subsidiaries
taken as a whole or Carolco and its Subsidiaries
taken as a whole, as the case may be, and (ii)
"Subsidiary" means any corporation or other legal
entity of which LIVE or Carolco, as the case may be
(either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or
more of the stock or other equity interests the
holders of which are generally entitled to vote for
the election of the board of directors or other
governing body of such corporation or other legal
entity, or otherwise directly or indirectly controls
the operations of such corporation or other legal
entity, except that in the case of LIVE,
Subsidiaries shall not include Strawberries, Inc.
("Strawberries") or VCL/Carolco Communications GmbH
("VCL"), or any subsidiaries of Strawberries or VCL.
(iii) LIVE has disclosed to Carolco in writing
all information regarding Strawberries and/or VCL
(i) which should have been disclosed in the LIVE
LETTER had Strawberries and/or VCL been included
within the definition of "Subsidiary" in
Section 5.1(b) hereof and (ii) which, individually
or in the aggregate, has, had or could reasonably be
expected to have a Material Adverse Effect on LIVE
or the Surviving Corporation.
Section 5.b Subsidiaries. LIVE has delivered to
Carolco a disclosure letter of even date herewith
(together with the exhibits included as a part
thereof, the "LIVE LETTER") which lists, among other
things, each Subsidiary of LIVE. All the
outstanding shares of capital stock or other
ownership interests of each such Subsidiary have
been duly authorized, validly issued and are fully
paid and nonassessable and are, except as set forth
in the LIVE LETTER, owned by LIVE, by another
Subsidiary of LIVE or by LIVE and another such
Subsidiary, free and clear of all liens, charges,
claims and encumbrances except as set forth in the
LIVE LETTER. Except as set forth in the LIVE
LETTER, there are no outstanding options, rights or
agreements of any kind relating to the issuance,
sale or transfer of any capital stock or other
equity securities or ownership interests of any such
Subsidiary of LIVE to any person. Each Subsidiary
of LIVE (i) is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the
requisite corporate power and authority to own its
properties and carry on its business as now being
conducted, and (iii) is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities make such qualification necessary, except
where the failure to be so qualified would not,
individually or in the aggregate, have a Material
Adverse Effect on LIVE. Except for the capital
stock of its Subsidiaries and except as disclosed in
LIVE's Annual Report on Form 10-K for the year ended
December 31, 1993, and in LIVE's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, LIVE
does not own, directly or indirectly, any capital
stock or other ownership interest in any
corporation, partnership or other entity which is
material to LIVE.
Section 5.c Capital Structure and Commitments.
As of the date hereof, the authorized capital stock
of LIVE consists of 120,000,000 shares of LIVE
Common Stock, 15,000,000 shares of LIVE Series A
Common Stock, par value $.01 per share ("LIVE Series
A Common Stock") (none of which LIVE Series A Common
Stock is issued and outstanding) and 15,000,000
shares of LIVE preferred stock (of the authorized
LIVE preferred stock, 9,000,000 shares have been
designated as LIVE Series B Cumulative Convertible
Preferred Stock ("LIVE Series B Preferred Stock")
(which LIVE Series B Preferred Stock shall be
redeemed as provided in Section 10.2(e) herein),
15,000 shares have been designated as LIVE Series C
Preferred Stock and 500,000 shares have been
designated as LIVE Series R Junior Participating
Cumulative Preferred Stock ("LIVE Series R Preferred
Stock") (none of which LIVE Series R Preferred Stock
is issued and outstanding)). As of the date hereof,
each share of LIVE Common Stock outstanding includes
a LIVE Right (which LIVE Right shall be terminated
as provided in Section 9.17 herein). For purposes
of this Agreement, a "LIVE Right" is a right to
purchase LIVE Common Stock pursuant to the Rights
Agreement (the "LIVE Rights Agreement") dated as of
July 19, 1990, as amended, between LIVE and American
Stock Transfer and Trust Company, as Rights Agent.
As of the date of this Agreement:
(i) approximately 12,000,000 shares of LIVE Common
Stock are duly authorized, validly issued and
outstanding, fully paid and nonassessable,
(ii) approximately 1,900,000 shares of LIVE Common
Stock are reserved for issuance upon the exercise of
outstanding options to purchase LIVE Common Stock,
which options are listed in Exhibit 5.3A,
(iii) approximately 2,400,000 shares of LIVE
Common Stock are reserved for issuance upon the
exercise of warrants issued under the warrant
agreements listed in Exhibit 5.3A,
(iv) approximately 6,000,000 shares of LIVE Series B
Preferred Stock are duly authorized, issued and
outstanding, fully paid and nonassessable,
(v) 15,000 shares of LIVE Series C Preferred Stock
are duly authorized, issued and outstanding, fully
paid and nonassessable,
(vi) up to 60,000,000 shares of LIVE Common Stock
are reserved for issuance upon conversion of the
LIVE Series B Preferred Stock, and
(vii) approximately 5,100,000 shares of LIVE
Common Stock are reserved for issuance upon
conversion of the LIVE Series C Preferred Stock.
As of the date of this Agreement, except for this
Agreement, the stock options referred to in clause
(b) of this Section 5.3 and listed on Exhibit 5.3A,
the warrant agreements referred to in clause (c) of
this Section 5.3 and listed on Exhibit 5.3A, the
Contingent Payment Rights issued in connection with
the acquisition by LIVE of certain of the assets of
Vestron Inc. in July 1991 ("Contingent Payment
Rights"), the shares of LIVE Common Stock underlying
the LIVE Series B Preferred Stock and the LIVE
Series C Preferred Stock, the shares of LIVE
Series A Common Stock underlying the LIVE Series C
Preferred Stock, the LIVE Rights, and other
agreements and transactions relating to capital
stock described in the LIVE SEC Documents or in the
LIVE LETTER, there are no options, warrants, rights,
contracts, commitments, agreements, arrangements or
undertakings of any kind to which LIVE or any of its
Subsidiaries is a party or by which any of them is
bound relating to the issuance of any capital stock
or other voting securities of LIVE or of any of its
Subsidiaries or any securities convertible into or
exchangeable for any capital stock or other voting
securities of LIVE or of any of its Subsidiaries, or
any options, warrants or other rights to purchase
capital stock or other voting securities of LIVE or
any of its Subsidiaries, nor has LIVE or any of its
Subsidiaries granted any stock appreciation rights
to any person or entity. As of March 31, 1994,
there are approximately 1,281 holders of record of
LIVE Common Stock, approximately 281 holders of
record of LIVE Series B Preferred Stock and one (1)
holder of record of LIVE Series C Preferred Stock.
Exhibit 5.3B lists all agreements of LIVE as of the
date hereof by which LIVE may be required to
register any of its securities ("LIVE Registration
Rights Agreements").
Section 5.d Authority; Non-Contravention.
(i) Each of LIVE and CAC has all requisite
corporate power and authority to enter into and
execute this Agreement and, subject to any approval
by the stockholders of LIVE of the Merger and the
related amendments to the Restated Certificate of
Incorporation of LIVE, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement by LIVE and CAC, the
performance by LIVE and CAC of their respective
obligations hereunder and the consummation by LIVE
and CAC of the transactions contemplated hereby have
been duly authorized by all necessary corporate
action on the part of LIVE and CAC, except for the
approval of LIVE's stockholders, which will be
solicited in accordance with the provisions of
Section 9.1 hereof, and no other act or proceeding
on the part of LIVE or CAC is necessary to authorize
the execution, delivery and consummation of this
Agreement or the transactions contemplated hereby.
(ii) The Board of Directors of LIVE has received the
opinion of Chemical Securities Inc. ("Chemical"),
the financial advisor to the Board, dated July 1,
1994, to the effect that in Chemical's opinion the
financial terms of the Merger are fair, from a
financial point of view, to the holders of LIVE
Common Stock, other than the LIVE Investors (as
defined below). A true, correct and complete copy
of such opinion (the "Chemical Fairness Opinion")
has been delivered to Carolco. For purposes of this
Agreement, "LIVE Investors" means, collectively,
Pioneer, Cinepole, and RCS, where "Pioneer" refers
to Pioneer LDCA, Inc., "Cinepole" refers to Cinepole
Productions B.V. and "RCS" refers, collectively, to
RCS International Communications N.V. and RCS Video
International Services B.V.
(iii) LIVE has received a letter agreement (the
"Investor Representation Agreement") from each LIVE
Investor and each such Investor Representation
Agreement, substantially in the form of Exhibit
5.4(c) hereto, has been executed by such LIVE
Investor.
(iv) This Agreement has been duly and validly
executed and delivered by each of LIVE and CAC and
(assuming the valid authorization, execution and
delivery of this Agreement by Carolco) constitutes a
valid and binding obligation of each of LIVE and CAC
enforceable against LIVE and CAC in accordance with
its terms, except (i) as their respective
obligations may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar
laws, or by equitable principles relating to or
limiting creditors' rights generally, and (ii) that
the remedies of specific performance, injunction and
other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before
which any proceeding therefor may be brought.
(v) The Board of Directors of LIVE has approved the
terms of this Agreement and of the transactions
contemplated hereby, and the Advisory Committee of
the Board of Directors of LIVE (the "Advisory
Committee") has approved and declared advisable and
in the best interests of LIVE and its stockholders
the Merger, upon the terms and subject to the
conditions herein; the Special Committee (the "LIVE
Special Committee") formed pursuant to and in
accordance with Section 3.6 of the Certificate of
Designations, Preferences and Relative,
Participating, Optional or other Special Rights of
the Series B Preferred Stock of LIVE has approved
the terms of this Agreement and of the transactions
contemplated hereby.
(vi) Except as set forth in the LIVE LETTER, the
execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated
hereby and compliance with the provisions hereof
will not, breach, conflict with, or result in any
violation of, or default (with or without notice or
lapse of time, or both) under, or result in or give
rise to a right of termination, cancellation or
acceleration of any liability or obligation or to
the loss of a material benefit under, or result in
the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets
of LIVE or any of its Subsidiaries under, any
provision of (i) the Restated Certificate of
Incorporation of LIVE or Bylaws of LIVE (true and
complete copies of which as of the date hereof have
been delivered to Carolco) or any provision of the
comparable charter or organizational documents of
any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession,
franchise or license applicable to LIVE or any of
its Subsidiaries or (iii) any judgment, order,
decree, statute, law, ordinance, injunction, writ,
or authorization, consent, approval, rule or
regulation of any court or governmental authority
applicable to LIVE or any of its Subsidiaries or any
of their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, liens,
security interests, charges or encumbrances that,
individually or in the aggregate, would not (A) have
a Material Adverse Effect on LIVE, (B) materially
impair the ability of LIVE or CAC to perform their
respective obligations hereunder or (C) prevent the
consummation of any of the transactions contemplated
hereby. The redemption of the LIVE Series B
Preferred Stock as contemplated in Section 10.2(c)
herein and the termination of the LIVE Rights as
contemplated in Section 9.17 herein shall have
complied with, and shall not have resulted in a
violation of, either the Certificate of
Designations, Preferences and Rights governing the
LIVE Series B Preferred Stock or the LIVE Rights
Agreement, respectively, or any applicable
securities laws.
(vii) No filing or registration with, or
authorization, consent or approval of, any domestic
(federal and state), foreign or international court,
commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is
required by or with respect to LIVE or any of its
Subsidiaries in connection with the execution and
delivery of this Agreement by LIVE or is necessary
for the consummation by LIVE of the Merger or the
other transactions contemplated by this Agreement,
except (i) in connection, or in compliance with, the
provisions of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated
thereunder, the "Securities Act") and the Securities
Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the
"Exchange Act"), (ii) in connection with, or in
compliance with, the provisions of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) the filing of the
Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with
the relevant authorities of other states in which
LIVE is qualified to do business, (iv) the
amendments to the Restated Certificate of
Incorporation of LIVE as provided in Section 3.1,
(v) any required filings under state securities or
"blue sky" laws and (vi) filings, registrations,
authorizations, consents or approvals which if not
made or obtained would have a Material Adverse
Effect on LIVE or would prevent or materially
adversely affect the transactions contemplated
hereby.
Section 5.e LIVE SEC Documents. LIVE has filed
all required reports, statements, forms and
documents with the SEC that LIVE was required to
file during the three-year period immediately
preceding the date hereof (the "LIVE SEC
Documents"). As of their respective dates, and as
subsequently revised, amended or superseded by
later-filed LIVE SEC Documents through and including
the date of this Agreement, the LIVE SEC Documents
complied in all material respects with the
requirements of the Securities Act or the Exchange
Act, as the case may be, and as so revised,
superseded or amended none of the LIVE SEC Documents
including the financial information contained
therein contained or currently contain any 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, in light
of the circumstances under which they were made, not
misleading. The financial statements of LIVE
included in the LIVE SEC Documents comply as to form
in all material respects with applicable accounting
requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting
principles (except, in the case of the unaudited
statements, as permitted by Regulation S-X
promulgated by the SEC) applied on a consistent
basis during the periods involved (except as may be
indicated therein or in the notes thereto) and
fairly present the consolidated financial position
of LIVE and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their
operations and statements of cash flows for the
periods included therein (subject, in the case of
unaudited statements, to normal year-end audit
adjustments and to any other adjustments described
therein). Notwithstanding the foregoing, LIVE makes
no representation or warranty in this Agreement
regarding any information (including financial
information and financial statements) supplied by
Carolco for inclusion in the LIVE SEC Documents.
Section 5.f No Material Adverse Change. Except
as set forth in the LIVE LETTER, since the date of
the most recent balance sheet and notes to
consolidated financial statements contained in
LIVE's Annual Report on Form 10-K for the year ended
December 31, 1993, or LIVE's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, as
filed with the SEC (the "LIVE Balance Sheet"), there
has been no Material Adverse Change in LIVE, and
neither LIVE nor any of its Subsidiaries knows of
any such Material Adverse Change that is threatened,
nor has there been any damage, destruction or loss
affecting the assets, properties, business,
operations or condition (financial or otherwise) of
LIVE or any of its Subsidiaries, whether or not
covered by insurance, which would have a Material
Adverse Effect on LIVE, and which has not been
subsequently reported in any of the LIVE SEC
Documents filed with the SEC prior to the date
hereof.
Section 5.g Absence of Undisclosed Liabilities.
Except as set forth in the LIVE SEC Documents or the
LIVE LETTER, as of the date of the LIVE Balance
Sheet neither LIVE nor any of its Subsidiaries had
any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles
to be set forth on a financial statement or in the
notes thereto and which, individually or in the
aggregate, would have a Material Adverse Effect on
LIVE, which were not set forth on the LIVE Balance
Sheet.
Section 5.h Absence of Certain Events. Except as
disclosed in the LIVE SEC Documents or the LIVE
LETTER, since the date of the LIVE Balance Sheet,
LIVE and its Subsidiaries have conducted their
business only in the ordinary course.
Section 5.i No Solicitation. LIVE is not now
engaged in any activities, discussions or
negotiations with any parties (other than Carolco)
in respect of a "takeover proposal" or an "offer"
(both as defined in Section 8.3), except with
respect to Strawberries and VCL.
Section 5.j Registration Statement and Proxy
Statement. None of the information to be supplied
by LIVE or CAC for inclusion or incorporation by
reference in the registration statement on Form S-4
under the Securities Act to be filed with the SEC
pursuant to Section 9.2 (the "Registration
Statement"), or the joint proxy statement/prospectus
together with any amendments or supplements thereto
included within the Registration Statement (the
"Proxy Statement") will (a) in the case of the
Registration Statement, at the time it becomes
effective, contain any statement which, at the time
and in the light of the circumstances under which it
is made, is false or misleading with respect to any
material fact, or which omits to state any material
fact required to be stated therein or necessary in
order to make the statements therein not false or
misleading, or (b) in the case of the Proxy
Statement, at the time of the mailing of the Proxy
Statement and at the times of the Stockholder
Meetings, contain any statement which, at the time
and in the light of the circumstances under which it
is made, is false or misleading with respect to any
material fact, or which omits to state any material
fact required to be stated therein or necessary in
order to make the statements therein not false or
misleading. The Registration Statement will comply
(with respect to LIVE and CAC) as to form in all
material respects with the provisions of the
Securities Act and the Proxy Statement will comply
(with respect to LIVE and CAC) as to form in all
material respects with the provisions of the
Exchange Act. Notwithstanding the foregoing,
neither LIVE nor CAC, individually or collectively,
makes any representation or warranty regarding any
information (including financial information and
financial statements) supplied by Carolco for
inclusion in the Registration Statement or the Proxy
Statement.
Section 5.k Reorganization. Neither LIVE nor any
of its Subsidiaries has taken any action or failed
to take any action which action or failure to take
action would jeopardize the qualification of the
Merger as a tax free reorganization under the Code.
Section 5.l Litigation. Except as set forth in
the LIVE LETTER or the LIVE SEC Documents, as of the
date hereof, there is no claim, suit, action or
proceeding pending or, to the knowledge of LIVE,
threatened against or affecting LIVE or any of its
Subsidiaries (whether or not covered by insurance)
which (i) could reasonably be expected to have a
Material Adverse Effect on LIVE (and LIVE is not
aware of any reasonable basis for any such suit,
action or proceeding), or (ii) challenge the
transactions contemplated hereby at law or in equity
or before or by any federal, state, local, foreign
or other governmental department, commission, board,
agency, instrumentality, or authority; nor is there
any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding
against LIVE or any of its Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the
future would have, any such effect.
Section 5.m Loan Agreements, Customers and
Suppliers.
(i) Neither LIVE nor any of its Subsidiaries is in
violation of or in default under (nor does there
exist any condition which upon the passage of time,
the giving of notice or both would cause such a
violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease
instrument, permit, concession, franchise, license
or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it
or any of its properties or assets is bound, except
for violations or defaults that could not,
individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on
LIVE or except as are set forth in the LIVE LETTER.
Set forth in the LIVE LETTER is a list of each loan
or credit agreement, note, bond, mortgage, indenture
and other agreement and instrument pursuant to which
any indebtedness of LIVE or any of its Subsidiaries
(other than indebtedness solely among or between
LIVE and/or any of its Subsidiaries), in an
aggregate principal amount in excess of $3,000,000
is outstanding or may be incurred and the respective
principal amounts currently outstanding thereunder.
For purposes of this Agreement, "indebtedness" shall
mean, with respect to any person, without
duplication, (i) any liability, contingent or
otherwise, (x) for borrowed money (whether or not
the recourse of the lender is to the whole of the
assets of the person or only to a portion thereof),
(y) evidenced by a note, debenture or similar
instrument (including a purchase money obligation),
or (z) for the payment of money relating to a
capitalized lease obligation; (ii) any liability of
others of the kind described in the preceding clause
which the person has guaranteed or which is
otherwise its legal liability; (iii) any obligation
secured by a lien to which the property or assets of
the person are subject, whether or not the
obligations secured thereby shall have been assumed
by or shall otherwise be the person's legal
liability, and (iv) any and all deferrals, renewals,
extensions and refundings of, or amendments,
modifications or supplements to, any liability of
the kind described in any of the preceding clauses
(i), (ii) or (iii).
(ii) Neither LIVE nor any of its Subsidiaries is in
default under (nor does there exist any condition
which upon the passage of time, the giving of notice
or both would cause such a violation of or default
under) any material agreement with any of its
customers or suppliers of products or services which
are of material importance to LIVE or any of its
Subsidiaries, and no such customer or supplier, to
the knowledge of LIVE or any of its Subsidiaries, is
in default under (nor does there exist any condition
which upon the passage of time, the giving of notice
or both would cause such customer or supplier to be
in violation of or default under) any of such
material agreements or except as are set forth in
the LIVE LETTER.
Section 5.n Permits. LIVE and each of its
Subsidiaries possess all franchises, permits,
licenses, certificates, approvals or other
authorizations necessary to own or lease and operate
their properties and to conduct their businesses,
except for incidental franchises, permits, licenses,
certificates, approvals and other authorizations
that would be readily obtainable by any qualified
applicant without undue burden in the event of any
lapse, termination, cancellation or forfeiture or
which if not obtained would not, in the aggregate,
have a Material Adverse Effect on LIVE.
Section 5.o Absence of Changes in LIVE Benefit
Plans. Except as disclosed in the LIVE SEC
Documents or the LIVE LETTER, since the date of the
most recent audited financial statements included in
the LIVE SEC Documents, there has not been any
adoption or amendment by LIVE or any of its
Subsidiaries of any collective bargaining agreement
or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical fringe
benefit or other plan, arrangement or understanding
(whether or not legally binding) providing benefits
to any current or former employee or director of, or
any other person providing services to, LIVE or any
of its Subsidiaries (collectively, "LIVE Benefit
Plans") which will have a Material Adverse Effect on
LIVE. LIVE has delivered to Carolco true, correct
and complete copies of all LIVE Benefit Plans. Each
of the LIVE Benefit Plans is in material compliance
with all applicable laws including the Employee
Retirement Income Security Act of 1974, as amended
("ERISA") and the Code.
Section 5.p Intellectual Property. LIVE and its
Subsidiaries own, or are licensed or otherwise have
the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights,
copyrights and other proprietary intellectual
property rights and computer programs (collectively,
the "LIVE Proprietary Rights") which are material to
the conduct of the business of LIVE and its
Subsidiaries taken as a whole. No claims are
pending or, to the knowledge of LIVE, threatened
that LIVE or any Subsidiary is infringing or
otherwise adversely affecting the rights of any
person with regard to any LIVE Proprietary Right,
except for such claims or threats which could not
reasonably be expected to have a Material Adverse
Effect on LIVE. To the knowledge of LIVE, no person
is infringing the rights of LIVE with respect to any
LIVE Proprietary Right that would have a Material
Adverse Effect on LIVE. No lien, encumbrance or
restriction with respect to any LIVE Proprietary
Right has a Material Adverse Effect on LIVE, or so
far as LIVE can now foresee could reasonably be
expected to have a Material Adverse Effect on LIVE.
Section 5.q Environmental Matters. To the
knowledge of LIVE, LIVE and each of its Subsidiaries
are in compliance with all applicable federal,
state, regional and local laws, statutes,
ordinances, judgments, rulings and regulations
relating to any matters of pollution, protection of
the environment or environmental regulation or
control (collectively, "Environmental Laws"), except
for violations of the Environmental Laws that could
not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on
LIVE.
Section 5.r Taxes. Except as set forth in the
LIVE LETTER or the LIVE SEC Documents: (a) each of
LIVE and its Subsidiaries has timely filed all
federal, state, local or foreign tax returns
required to be filed by it (except for all such
returns the failure of which timely filing would,
individually or in the aggregate, not have a
Material Adverse Effect on LIVE), and has paid (or
LIVE has paid on its behalf) all taxes shown as due
on the returns in respect of the periods covered by
such returns; (b) there are no tax liens upon any
property or assets of LIVE or any of its
Subsidiaries which would have a Material Adverse
Effect on LIVE, except liens for current taxes not
yet due; (c) neither LIVE nor any of its
Subsidiaries is delinquent in the payment of any
material tax, assessment or governmental charge
which would have a Material Adverse Effect on LIVE;
(d) no deficiencies for any taxes have been
proposed, asserted or assessed against LIVE or any
of its Subsidiaries which would have a Material
Adverse Effect on LIVE or its Subsidiaries, and no
requests for waivers of the time to assess any such
taxes are pending; and (e) no audits of the tax
returns of LIVE or any of its Subsidiaries are
currently being conducted by a taxing authority and
neither LIVE nor its Subsidiaries have received any
notices of pending or proposed audits from a taxing
authority.
Section 5.s Foreign Corrupt Practices Act. To
the best knowledge of the officers of LIVE, neither
LIVE, any Subsidiary of LIVE nor any director,
officer, agent, employee or other person associated
with or acting on behalf of any of them has (i) used
any corporate or other funds for unlawful
contributions, payments, gifts or entertainment or
made any unlawful expenditures relating to political
activity, or made any direct or indirect unlawful
payments to governmental officials or others or
established or maintained any unlawful or unrecorded
funds in violation of Section 30A of the Exchange
Act or (ii) accepted or received any unlawful
contributions, payments, gifts or expenditures.
LIVE is in compliance in all material respects with
the provisions of Section 13(b) of the Exchange Act
and to the best knowledge of the officers of LIVE,
there is no failure of compliance with such
provisions.
Section 5.t Brokers. No broker, investment
banker or other person, other than Chemical or
Jefferson Capital Corporation, the fees and expenses
of which will be paid by LIVE in accordance with
LIVE's written agreements with Chemical and
Jefferson Capital Corporation (copies of which have
been delivered by LIVE to Carolco prior to the date
hereof), is entitled to any broker's, finder's or
other similar fee or commission in connection with
the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of
LIVE, any Subsidiary of LIVE or CAC.
Section 5.u Officers, Directors and Key
Employees. The LIVE LETTER sets forth (i) the name
and total compensation of each officer and director
of LIVE; (ii) the name of each officer and director
of any of LIVE's Subsidiaries; (iii) the name and
total compensation of each other officer, director,
employee, consultant, agent or other representative
of LIVE or any of its Subsidiaries whose current
annual rate of compensation (including bonuses and
commissions) exceeds $150,000; (iv) all wage or
salary increases or bonuses received by the persons
identified in Section 5.21(i) and (iii)
("Significant LIVE Employees") since December 31,
1993, and any accrual for or commitment or agreement
by LIVE or any of its Subsidiaries to pay such
increases or bonuses; and (v) a notation with
respect to each of such Significant LIVE Employees,
whether they have an employment agreement with LIVE
or any of its Subsidiaries and, if so, the date and
term of such agreement. Except as set forth in the
LIVE LETTER, (x) to the knowledge of LIVE or any of
its Subsidiaries, none of such Significant LIVE
Employees has made a threat to LIVE or any of its
Subsidiaries or to any of their officers or
directors to cancel or otherwise terminate such
Significant LIVE Employee's relationship with LIVE
or any of its Subsidiaries and (y) none of such
Significant LIVE Employees have "change of control"
clauses or agreements with LIVE or any of its
Subsidiaries (or similar clauses or agreements
permitting such Significant LIVE Employees to
terminate their employment relationship with LIVE or
any of its Subsidiaries) that would be triggered by
the Merger which have not been waived on the date
hereof.
Section 5.v State Takeover Statutes. Neither
Section 203 of the DGCL nor any other "fair price,"
"moratorium," "control share acquisition" or other
state takeover statute or similar statute or
regulation applies to the Merger by virtue of LIVE
and CAC engaging in the transactions contemplated
hereby.
Section 5.w Insurance. LIVE and each of its
Subsidiaries have been and are insured by
financially sound and reputable insurers with
respect to their properties and the conduct of their
business in such amounts and against such risks as
are reasonable in relation to their respective
businesses, and each will use its best efforts to
maintain such insurance. Such insurance is in full
force and effect and no notice of cancellation or
termination has been received with respect to any of
said insurance. Except as disclosed in the LIVE
LETTER, there are no claims pending thereunder
except where such claim would not, individually or
in the aggregate, have a Material Adverse Effect on
LIVE.
Section 5.x Title to Properties and Related
Matters. Except with respect to the LIVE
Proprietary Rights, LIVE and each of its
Subsidiaries have good and marketable title (or
valid and subsisting leasehold interests) to all of
the personal properties and assets (tangible and
intangible) and the real properties utilized in
their businesses or reflected in the LIVE SEC
Documents or acquired after the date thereof (other
than properties sold or otherwise disposed of in the
ordinary course of business), which are material to
them, free and clear of all title defects, liens,
encumbrances and restrictions, except (i) as
reflected in the LIVE SEC Documents, (ii) to the
extent not described in clause (i), those described
in the LIVE LETTER, (iii) to the extent not
described in clause (i), statutory liens not yet due
or delinquent or the validity of which are being
contested or litigated in good faith by appropriate
proceedings and for which LIVE has set aside on its
books reserves that are adequate with respect
thereto; and (iv) liens, encumbrances, covenants,
rights of way, building or use restrictions,
easements, exceptions, variances, reservations and
other matters or limitations of any kind, if any,
which, when considered together with the liens
described in clauses (i), (ii) and (iii), do not
have a Material Adverse Effect on LIVE's business or
operations. All properties of LIVE and each of its
Subsidiaries are reflected in the LIVE SEC Documents
in the manner and to the extent required by
generally accepted accounting principles
consistently applied. Neither the whole nor any
portion of the leaseholds or any other assets of
LIVE or any of its Subsidiaries is subject to any
governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any
public authority with or without payment of
compensation therefor, nor to the knowledge of LIVE
or any of its Subsidiaries has any such
condemnation, expropriation or taking been proposed,
which would have a Material Adverse Effect on LIVE
and its Subsidiaries taken as a whole.
Section 5.y Accuracy of LIVE Disclosure. Neither
this Agreement, nor any document or other paper
furnished (or to be furnished pursuant hereto at the
Closing) by or on behalf of LIVE or CAC to Carolco
pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary to make the statements made, in
the context in which made, not false or misleading.
There is no fact that LIVE has not disclosed to
Carolco in writing that has a Material Adverse
Effect on LIVE, or so far as LIVE can now foresee
will have a Material Adverse Effect on LIVE or on
the ability of LIVE to perform this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CAROLCO
Carolco represents and warrants to LIVE and CAC as
follows:
Section 6.a Organization, Standing and Power.
Carolco is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has the requisite corporate
power and authority to own its property and carry on
its business as now being conducted. Carolco and
each of its Subsidiaries is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities makes such qualification necessary,
except where the failure to be so qualified would
not, individually or in the aggregate, have a
Material Adverse Effect on Carolco.
Section 6.b Subsidiaries. Carolco has delivered
to LIVE a disclosure letter of even date herewith
(together with the exhibits included as a part
thereof, the "CAROLCO LETTER") which lists, among
other things, each Subsidiary of Carolco. All the
outstanding shares of capital stock of each such
Subsidiary have been duly authorized, validly issued
and are fully paid and nonassessable and are, except
as set forth in the CAROLCO LETTER, owned by
Carolco, by another Subsidiary of Carolco or by
Carolco and another such Subsidiary, free and clear
of all liens, charges, claims and encumbrances.
Except as set forth in the CAROLCO LETTER, there are
no outstanding options, rights or agreements of any
kind relating to the issuance, sale or transfer of
any capital stock or other equity securities or
ownership interests of any such Subsidiary of
Carolco to any person. Each Subsidiary of Carolco
(i) is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the
requisite corporate power and authority to own its
properties and carry on its business as now being
conducted, and (iii) is duly qualified to do
business, and is in good standing, in each
jurisdiction where the character of its properties
owned or held under lease or the nature of its
activities make such qualification necessary, except
where the failure to be so qualified would not,
individually or in the aggregate, have a Material
Adverse Effect on Carolco. Except for the capital
stock of its Subsidiaries and except as disclosed in
Carolco's Annual Report on Form 10-K for the year
ended December 31, 1993 and Carolco's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1994, Carolco does not own, directly or indirectly,
any capital stock or other ownership interest in any
corporation, partnership or other entity which is
material to Carolco.
Section 6.c Capital Structure and Commitments.
As of the date hereof, the authorized capital stock
of Carolco consists of 650,000,000 shares of Carolco
Common Stock and 10,000,000 shares of Carolco
preferred stock (of the Carolco preferred stock,
120,000 shares have been designated as Carolco
Series A Preferred Stock). As of the date of this
Agreement:
(a) approximately 137,687,728 shares of Carolco
Common Stock are duly authorized, validly issued and
outstanding, fully paid and non-assessable
(excluding 2,327,381 treasury shares),
(b) approximately 31,222,000 shares of Carolco
Common Stock are reserved for issuance upon the
exercise of outstanding options to purchase Carolco
Common Stock, which options are listed in Exhibit
6.3A.
(c) 82,500 shares of Carolco Series A Preferred
Stock are duly authorized, validly issued and are
outstanding, fully paid and non-assessable,
(d) 37,500 shares of Carolco Series A Preferred
Stock are reserved for issuance upon the
distribution of payment-in-kind dividends;
(e) approximately 137,500,000 shares of Carolco
Common Stock are reserved for issuance upon
conversion of the Carolco Series A Preferred Stock;
(f) approximately 50,000,000 shares of Carolco
Common Stock are reserved for issuance upon
conversion of $30,000,000, in aggregate, of 5%
Payment-in-Kind Convertible Subordinated Notes of
Carolco (the "Carolco 5% Notes") due 2002;
(g) approximately 66,666,666 shares of Carolco
Common Stock are reserved for issuance upon
conversion of $50,000,000, in aggregate, of 7%
Convertible Subordinated Notes of Carolco (the
"Carolco 7% Notes") due 2006; and
(i) approximately 74,074,074 shares of Carolco
Common Stock are reserved for issuance ("Pay-Per-
View Shares") in connection with the Purchase
Agreement dated as of August 19, 1993, by and
between Carolco and TCI (the "TCI Purchase
Agreement").
As of the date of this Agreement, except for this
Agreement, the stock options referred to in clause
(b) of this Section 6.3 and listed on Exhibit 6.3A,
the shares of Carolco Common Stock underlying the
Carolco Series A Preferred Stock, the Carolco 5%
Notes and the Carolco 7% Notes and the Pay-Per-View
Shares, and other agreements and transactions
relating to capital stock described in the Carolco
SEC Documents or in the CAROLCO LETTER, there are no
options, warrants, rights, commitments, agreements,
arrangements or undertakings of any kind to which
Carolco or any of its Subsidiaries is a party or by
which any of them is bound relating to the issuance
of any capital stock or other voting securities of
Carolco or of any of its Subsidiaries or any
securities convertible into or exchangeable for any
capital stock or other voting securities of Carolco
or any of its Subsidiaries, or any options, warrants
or other rights to purchase capital stock or other
voting securities of Carolco or any of its
Subsidiaries. As of the date of this Agreement,
there were approximately 1,040 holders of record of
Carolco Common Stock, and three (3) holders of
record of Carolco Series A Preferred Stock.
Exhibit 6.3B lists all agreements of Carolco by
which Carolco may be required to register any of its
securities ("Carolco Registration Rights
Agreements").
Section 6.d Authority; Non-Contravention.
(i) Carolco has all requisite corporate power and
authority to enter into this Agreement and, subject
to any approval by the stockholders of Carolco to
consummate the Merger, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement by Carolco, the
performance by Carolco of its obligations hereunder
and the consummation by Carolco of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Carolco,
except for the approval of Carolco's stockholders,
which will be solicited in accordance with the
provisions of Section 9.1 hereof, and no other act
or proceeding on the part of Carolco is necessary to
authorize the execution, delivery and consummation
of this Agreement or the transactions contemplated
hereby.
(ii) The Board of Directors of Carolco has received
the opinion of The Seidler Companies Incorporated
("Seidler"), Carolco's financial advisor, dated June
30, 1994, to the effect that in Seidler's opinion
the financial terms of the Merger are fair, from a
financial point of view, to the holders of Carolco
Common Stock, other than the Carolco Investors (as
defined below). A true, correct and complete copy
of such opinion (the "Seidler Fairness Opinion") has
been delivered to LIVE. For purposes of this
Agreement, the "Carolco Investors" are Pioneer,
Cinepole, RCS, MGM Holdings Corporation and New
Carolco Investments B.V.
(iii) Carolco has received an Investor
Representation Agreement from each Carolco Investor
and each such Investor Representation Agreement,
substantially in the form of Exhibit 5.4(c) hereto,
has been executed by such Carolco Investor.
(iv) This Agreement has been duly and validly
executed and delivered by Carolco and (assuming the
valid authorization, execution and delivery of this
Agreement by LIVE and CAC) constitutes a valid and
binding obligation of Carolco enforceable against
Carolco in accordance with its terms, except (i) as
such obligation may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar
laws, or by equitable principles relating to or
limiting creditors' rights generally, and (ii) that
the remedies of specific performance, injunction and
other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before
which any proceeding therefor may be brought.
(v) The Board of Directors of Carolco has approved
the terms of this Agreement and of the transactions
contemplated hereby.
(vi) Except as set forth in the CAROLCO LETTER, the
execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated
hereby and compliance with the provisions hereof
will not breach, conflict with, or result in any
violation of, or default (with or without notice or
lapse of time, or both) under, or result in or give
rise to a right of termination, cancellation or
acceleration of any liability or obligation or to
the loss of a material benefit under, or result in
the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets
of Carolco or any of its Subsidiaries under, any
provision of (i) the Restated Certificate of
Incorporation of Carolco or Restated Bylaws of
Carolco (true and complete copies of which as of the
date hereof have been delivered to LIVE) or any
provision of the comparable charter or
organizational documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Carolco or any of its Subsidiaries or
(iii) any judgment, order, decree, statute, law,
ordinance, injunction, writ, or authorization,
consent, approval, rule or regulation of any court
or governmental authority applicable to Carolco or
any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of
clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, liens, security
interests, charges or encumbrances that,
individually or in the aggregate, would not (A) have
a Material Adverse Effect on Carolco, (B) materially
impair the ability of Carolco to perform its
obligations hereunder or (C) prevent the
consummation of any of the transactions contemplated
hereby.
(vii) No filing or registration with, or
authorization, consent or approval of, any
Governmental Entity is required by or with respect
to Carolco or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by
Carolco or is necessary for the consummation by
Carolco of the Merger or the other transactions
contemplated by this Agreement, except (i) in
connection, or in compliance, with the provisions of
the Securities Act and the Exchange Act, (ii) in
connection with, or in compliance with, the
provisions of the HSR Act, (iii) the filing of the
Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with
the relevant authorities of other states in which
Carolco is qualified to do business, (iv) any
required filings under state securities or "blue
sky" laws, and (v) filings, registrations,
authorizations, consents or approvals which if not
made or obtained would have a Material Adverse
Effect on Carolco or would prevent or materially
adversely affect the transactions contemplated
hereby.
Section 6.e Carolco SEC Documents. Carolco has
filed all required reports, statements, forms and
documents with the SEC that Carolco was required to
file during the three-year period immediately
preceding the date hereof (the "Carolco SEC
Documents"). As of their respective dates, and as
subsequently revised, amended or superseded by
later-filed Carolco SEC Documents through and
including the date of this Agreement, the Carolco
SEC Documents complied in all material respects with
the requirements of the Securities Act or the
Exchange Act, as the case may be, and as so revised,
superseded or amended none of the Carolco SEC
Documents including the financial information
contained therein contained or currently contain any
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, in
light of the circumstances under which they were
made, not misleading. The financial statements of
Carolco included in Carolco SEC Documents comply as
to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted
accounting principles (except, in the case of the
unaudited statements, as permitted by Regulation S-X
promulgated by the SEC) applied on a consistent
basis during the periods involved (except as may be
indicated therein or in the notes thereto) and
fairly present the consolidated financial position
of Carolco and its consolidated Subsidiaries as at
the dates thereof and the consolidated results of
their operations and statements of cash flows for
the periods included therein (subject, in the case
of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described
therein). Notwithstanding the foregoing, Carolco
makes no representation or warranty in this
Agreement regarding any information (including
financial information and financial statements)
supplied by LIVE for inclusion in any Carolco SEC
Documents.
Section 6.f No Material Adverse Change. Except
as set forth in the CAROLCO LETTER, since the date
of the most recent balance sheet and notes to
consolidated financial statements contained in
Carolco's Annual Report on Form 10-K for the year
ended December 31, 1993, or Carolco's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1994, as filed with the SEC ("Carolco Balance
Sheet"), there has been no Material Adverse Change
in Carolco and neither Carolco nor any of its
Subsidiaries knows of any such Material Adverse
Change that is threatened, nor has there been any
damage, destruction or loss affecting the assets,
properties, business, operations or condition
(financial or otherwise) of Carolco or any of its
Subsidiaries, whether or not covered by insurance
which would have a Material Adverse Effect on
Carolco, and which has not been subsequently
reported in any of the Carolco SEC Documents filed
with the SEC prior to the date hereof.
Section 6.g Absence of Undisclosed Liabilities.
Except as set forth in the Carolco SEC Documents or
the CAROLCO LETTER, as of the date of the Carolco
Balance Sheet neither Carolco nor any of its
Subsidiaries had any liabilities or obligations of
any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a financial statement
or in the notes thereto and which, individually or
in the aggregate, would have a Material Adverse
Effect on Carolco, which were not set forth on the
Carolco Balance Sheet.
Section 6.h Absence of Certain Events. Except as
disclosed in Carolco SEC Documents or the CAROLCO
LETTER, since the date of the Carolco Balance Sheet,
Carolco and its Subsidiaries have conducted their
business only in the ordinary course.
Section 6.i No Solicitation. Carolco is not now
engaged in any activities, discussions or
negotiations with any parties (other than LIVE) in
respect of a "takeover proposal" or an "offer" (both
as defined in Section 8.3).
Section 6.j Registration Statement and Proxy
Statement. None of the information to be supplied
by Carolco for inclusion or incorporation by
reference in the Registration Statement or the Proxy
Statement will (a) in the case of the Registration
Statement, at the time it becomes effective, contain
any statement which, at the time and in the light of
the circumstances under which it is made, is false
or misleading with respect to any material fact, or
which omits to state any material fact required to
be stated therein or necessary in order to make the
statements therein not false or misleading, or (b)
in the case of the Proxy Statement, at the time of
the mailing of the Proxy Statement and at the times
of the Stockholder Meetings, contain any statement
which, at the time and in the light of the
circumstances under which it is made, is false or
misleading with respect to any material fact, or
which omits to state any material fact required to
be stated therein or necessary in order to make the
statements therein not false or misleading. The
Registration Statement will comply (with respect to
Carolco) as to form in all material respects with
the provisions of the Securities Act and the Proxy
Statement will comply (with respect to Carolco) as
to form in all material respects with the provisions
of the Exchange Act. Notwithstanding the foregoing,
Carolco makes no representation or warranty
regarding any information (including financial
information and financial statements) supplied by
LIVE or CAC for inclusion in the Registration
Statement or the Proxy Statement.
Section 6.k Reorganization. Neither Carolco nor
any of its Subsidiaries has taken any action nor
failed to take any action which action or failure to
take action would jeopardize the qualification of
the Merger as a tax free reorganization under the
Code.
Section 6.l Litigation. Except as set forth in
the CAROLCO LETTER or the Carolco SEC Documents, as
of the date hereof, there is no claim, suit, action
or proceeding pending or, to the knowledge of
Carolco, threatened against or affecting Carolco or
any of its Subsidiaries (whether or not covered by
insurance) which (i) could reasonably be expected to
have a Material Adverse Effect on Carolco (and
Carolco is not aware of any reasonable basis for any
such suit, action or proceeding), or (ii) challenge
the transactions contemplated hereby at law or in
equity or before or by any federal, state, local,
foreign or other governmental department,
commission, board, agency, instrumentality, or
authority; nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Carolco or any of
its Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future would
have, any such effect.
Section 6.m Loan Agreements, Customers and
Suppliers.
(i) Neither Carolco nor any of its Subsidiaries is
in violation of or in default under (nor does there
exist any condition which upon the passage of time,
the giving of notice or both would cause such a
violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease
instrument, permit, concession, franchise, license
or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it
or any of its properties or assets is bound, except
for violations or defaults that could not,
individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on
Carolco or except as are set forth in the CAROLCO
LETTER. Set forth in the CAROLCO LETTER is a list
of each loan or credit agreement, note, bond,
mortgage, indenture and other agreement and
instrument pursuant to which any indebtedness of
Carolco or any of its Subsidiaries (other than
indebtedness solely among or between Carolco and/or
any of its Subsidiaries) in an aggregate principal
amount in excess of $3,000,000 is outstanding or may
be incurred and the respective principal amounts
currently outstanding thereunder.
(ii) Neither Carolco nor any of its Subsidiaries is
in default under (nor does there exist any condition
which upon the passage of time, the giving of notice
or both would cause such a violation of or default
under) any material agreement with any of its
customers or suppliers of products or services which
are of material importance to Carolco or any of its
Subsidiaries, and no such customer or supplier, to
the knowledge of Carolco or any of its Subsidiaries,
is in default under (nor does there exist any
condition which upon the passage of time, the giving
of notice or both would cause such customer or
supplier to be in violation of or default under) any
of such material agreements or except as are set
forth in the CAROLCO LETTER.
Section 6.n Permits. Carolco and each of its
Subsidiaries possess all franchises, permits,
licenses, certificates, approvals or other
authorizations necessary to own or lease and operate
their properties and to conduct their businesses,
except for incidental franchises, permits, licenses,
certificates, approvals and other authorizations
that would be readily obtainable by any qualified
applicant without undue burden in the event of any
lapse, termination, cancellation or forfeiture or
which if not obtained would not have a Material
Adverse Effect on Carolco.
Section 6.o Absence of Changes in Carolco Benefit
Plans. Except as disclosed in the Carolco SEC
Documents or the CAROLCO LETTER, since the date of
the most recent audited financial statements
included in the Carolco SEC Documents, there has not
been any adoption or amendment by Carolco or any of
its Subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical fringe
benefit or other plan, arrangement or understanding
(whether or not legally binding) providing benefits
to any current or former employee or director of, or
any other person providing services to, Carolco or
any of its Subsidiaries (collectively, "Carolco
Benefit Plans") which will have a Material Adverse
Effect on Carolco. Carolco has delivered to LIVE
true, correct and complete copies of all Carolco
Benefit Plans. Each of the Carolco Benefit Plans is
in material compliance with all applicable laws
including ERISA and the Code.
Section 6.p Intellectual Property. Carolco and
its Subsidiaries own, or are licensed or otherwise
have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights,
copyrights and other proprietary intellectual
property rights and computer programs (collectively,
the "Carolco Proprietary Rights") which are material
to the conduct of the business of Carolco and its
Subsidiaries taken as a whole. No claims are
pending or, to the knowledge of Carolco, threatened
that Carolco or any of its Subsidiaries is
infringing or otherwise adversely affecting the
rights of any person with regard to any Carolco
Proprietary Right, except for such claims or threats
which could not reasonably be expected to have a
Material Adverse Effect on Carolco. To the
knowledge of Carolco, no person is infringing the
rights of Carolco with respect to any Carolco
Proprietary Right that would have a Material Adverse
Effect on Carolco. No lien, encumbrance or
restriction with respect to any Carolco Proprietary
Right has a Material Adverse Effect on Carolco, or
so far as Carolco can now foresee could reasonably
be expected to have a Material Adverse Effect on
Carolco.
Section 6.q Environmental Matters. To the
knowledge of Carolco, Carolco and each of its
Subsidiaries are in compliance with all applicable
Environmental Laws, except for violations of the
Environmental Laws that could not, individually or
in the aggregate, reasonably be expected to result
in a Material Adverse Effect on Carolco.
Section 6.r Taxes. Except as set forth in the
CAROLCO LETTER or the Carolco SEC Documents: (a)
each of Carolco and its Subsidiaries has timely
filed all federal, state, local or foreign tax
returns required to be filed by it (except for all
such returns the failure of which timely filing
would, individually or in the aggregate, not have a
Material Adverse Effect on Carolco), and has paid
(or Carolco has paid on its behalf) all taxes shown
as due on the returns in respect of the periods
covered by such returns; (b) there are no tax liens
upon any property or assets of Carolco or any of its
Subsidiaries which would have a Material Adverse
Effect on Carolco, except liens for current taxes
not yet due; (c) neither Carolco nor any of its
Subsidiaries is delinquent in the payment of any
material tax, assessment or governmental charge
which would have a Material Adverse Effect on
Carolco; (d) no deficiencies for any taxes have been
proposed, asserted or assessed against Carolco or
any of its Subsidiaries which would have a Material
Adverse Effect on Carolco or its Subsidiaries, and
no requests for waivers of the time to assess any
such taxes are pending; and (e) no audits of the tax
returns of Carolco or any of its Subsidiaries are
currently being conducted by a taxing authority, and
neither Carolco nor its Subsidiaries have received
any notices of pending or proposed audits from a
taxing authority.
Section 6.s Foreign Corrupt Practices Act. To
the best knowledge of the officers of Carolco,
neither Carolco, any Subsidiary of Carolco nor any
director, officer, agent, employee or other person
associated with or acting on behalf of any of them
has (i) used any corporate or other funds for
unlawful contributions, payments, gifts or
entertainment or made any unlawful expenditures
relating to political activity, or made any direct
or indirect unlawful payments to governmental
officials or others or established or maintained any
unlawful or unrecorded funds in violation of Section
30A of the Exchange Act or (ii) accepted or received
any unlawful contributions, payments, gifts or
expenditures. Carolco is in compliance in all
material respects with the provisions of Section
13(b) of the Exchange Act and to the best knowledge
of the officers of Carolco, there is no failure of
compliance with such provisions.
Section 6.t Brokers. No broker, investment
banker or other person, other than Seidler or
Daniels & Associates, the fees and expenses of which
will be paid by Carolco in accordance with Carolco's
written agreement with Seidler and Daniels &
Associates (copies of which have been delivered by
Carolco to LIVE prior to the date hereof), is
entitled to any broker's, finder's or other similar
fee or commission in connection with the
transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Carolco.
Section 6.u Officers, Directors and Key
Employees. The CAROLCO LETTER sets forth (i) the
name and total compensation of each officer and
director of Carolco; (ii) the name of each officer
and director of any of Carolco's Subsidiaries; (iii)
the name and total compensation of each other
officer, director, employee, consultant, agent or
other representative of Carolco or any of its
Subsidiaries whose current annual rate of
compensation (including bonuses and commissions)
exceeds $150,000; (iv) all wage or salary increases
or bonuses received by the persons identified in
Section 6.21(i) and (iii) ("Significant Carolco
Employees") since December 31, 1993, and any accrual
for or commitment or agreement by Carolco or any of
its Subsidiaries to pay such increases or bonuses;
and (v) a notation with respect to each of such
Significant Carolco Employees, whether they have an
employment agreement with Carolco or any of its
Subsidiaries and, if so, the date and term of such
agreement. Except as set forth in the CAROLCO
LETTER, (x) to the knowledge of Carolco or any of
its Subsidiaries, none of such Significant Carolco
Employees has made a threat to Carolco or any of its
Subsidiaries or to any of their officers or
directors to cancel or otherwise terminate such
Significant Carolco Employee's relationship with
Carolco or any of its Subsidiaries and (y) none of
such Significant Carolco Employees have "change of
control" clauses or agreements with Carolco or any
of its Subsidiaries (or similar clauses or
agreements permitting such Significant Carolco
Employees to terminate their employment relationship
with Carolco or any of its Subsidiaries) that would
be triggered by the Merger which have not been
waived on the date hereof.
Section 6.v State Takeover Statutes. Neither
Section 203 of the DGCL nor any other "fair price,"
"moratorium," "control share acquisition" or other
state takeover statute or similar statute or
regulation applies to the Merger by virtue of
Carolco engaging in the transactions contemplated
hereby.
Section 6.w Insurance. Carolco and each of its
Subsidiaries have been and are insured by
financially sound and reputable insurers with
respect to their properties and the conduct of their
business in such amounts and against such risks as
are reasonable in relation to their respective
businesses, and each will use its best efforts to
maintain such insurance. Such insurance is in full
force and effect and no notice of cancellation or
termination has been received with respect to any of
said insurance. Except as disclosed in the CAROLCO
LETTER, there are no claims pending thereunder
except where such claim would not, individually or
in the aggregate, have a Material Adverse Effect on
Carolco.
Section 6.x Title to Properties and Related
Matters. Except with respect to the Carolco
Proprietary Rights, Carolco and each of its
Subsidiaries have good and marketable title (or
valid and subsisting leasehold interests) to all of
the personal properties and assets (tangible and
intangible) and the real properties utilized in
their businesses or reflected in the Carolco SEC
Documents or acquired after the date thereof (other
than properties sold or otherwise disposed of in the
ordinary course of business) which are material to
them, free and clear of all title defects, liens,
encumbrances and restrictions, except (i) as
reflected in the Carolco SEC Documents, (ii) to the
extent not described in clause (i), those described
in the CAROLCO LETTER, (iii) to the extent not
described in clause (i), statutory liens not yet due
or delinquent or the validity of which are being
contested or litigated in good faith by appropriate
proceedings and for which Carolco has set aside on
its books reserves that are adequate with respect
thereto; and (iv) liens, encumbrances, covenants,
rights of way, building or use restrictions,
easements, exceptions, variances, reservations and
other matters or limitations of any kind, if any,
which, when considered together with the liens
described in clauses (i), (ii) and (iii), do not
have a Material Adverse Effect on Carolco's business
or operations. All properties of Carolco and each
of its Subsidiaries are reflected in the Carolco SEC
Documents in the manner and to the extent required
by generally accepted accounting principles
consistently applied. Neither the whole nor any
portion of the leaseholds or any other assets of
Carolco or any of its Subsidiaries is subject to any
governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any
public authority with or without payment of
compensation therefor, nor to the knowledge of
Carolco or any of its Subsidiaries has any such
condemnation, expropriation or taking been proposed,
which would have a Material Adverse Effect on
Carolco and its Subsidiaries taken as a whole.
Section 6.y Accuracy of Carolco Disclosure.
Neither this Agreement, nor any document or other
paper furnished (or to be furnished pursuant hereto
at the Closing) by or on behalf of Carolco to LIVE
pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary to make the statements made, in
the context in which made, not false or misleading.
There is no fact that Carolco has not disclosed to
LIVE in writing that has a Material Adverse Effect
on Carolco or so far as Carolco can now foresee will
have a Material Adverse Effect on Carolco or on the
ability of Carolco to perform this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES REGARDING CAC
LIVE and CAC jointly and severally represent and
warrant to Carolco as follows:
Section 7.a Organization and Standing. CAC is a
corporation duly organized, validly existing and in
good standing under the laws of the State of
Delaware. CAC was organized solely for the purpose
of engaging in the transactions contemplated by this
Agreement and has not engaged in any business or
entered into any agreements since it was
incorporated which is not in connection with this
Agreement, has not incurred any liabilities since it
was incorporated, and (except as set forth in the
LIVE LETTER) does not own any properties.
Section 7.b Capital Structure. As of the date of
this Agreement, the authorized capital stock of CAC
consists of one share of CAC Common Stock, which is
validly issued and outstanding, fully paid and
nonassessable. As of the date of this Agreement,
except for this Agreement, there are no options,
warrants, rights, commitments, agreements,
arrangements or undertakings of any kind to which
CAC is a party or by which it is bound relating to
the issuance of any capital stock or other voting
securities of CAC or any securities convertible into
or exchangeable for any capital stock or other
voting securities of CAC, or any options, warrants
or other rights to purchase capital stock or other
voting securities of CAC.
Section 7.c Authority.
(i) CAC has all requisite corporate power and
authority to enter into and execute this Agreement
and to consummate the transactions contemplated
hereby. The execution and delivery of this
Agreement, the performance by CAC of its obligations
hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by its
Board of Directors and LIVE as its sole stockholder,
and no other corporate proceedings on the part of
CAC are necessary to authorize this Agreement and
the transactions contemplated hereby. This
Agreement has been duly and validly executed and
delivered by CAC and (assuming the due
authorization, execution and delivery hereof by
Carolco) constitutes a valid and binding obligation
of CAC enforceable against CAC in accordance with
its terms, except (i) as such obligation may be
affected by bankruptcy, insolvency, reorganization,
moratorium or similar laws, or by equitable
principles relating to or limiting creditors' rights
generally, and (ii) that the remedies of specific
performance, injunction and other forms of equitable
relief are subject to certain tests of equity
jurisdiction, equitable defenses and the discretion
of the court before which any proceeding therefor
may be brought.
(ii) The execution and delivery of this Agreement do
not, and the consummation of the transactions
contemplated hereby in compliance with the
provisions hereof will not, breach, conflict with,
or result in any violation of, or default (with or
without notice or lapse of time, or both) under or
result in or give rise to a right of termination,
cancellation or acceleration of any liability or
obligation or to the loss of a material benefit
under, any provision of the Certificate of
Incorporation or Bylaws of CAC, true and complete
copies of which as of the date hereof have been
delivered to Carolco.
ARTICLE 8
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 8.a Conduct of Business by LIVE Pending
the Merger.
(i) Ordinary Course. During the period from the
date of this Agreement through the Effective Date or
earlier termination of this Agreement, LIVE shall,
and shall cause its Subsidiaries to, in all material
respects carry on their respective businesses in the
usual, regular and ordinary course in substantially
the same manner as heretofore conducted and, to the
extent consistent therewith, use all reasonable best
efforts to preserve intact their current business
organizations, keep available the services of their
current officers and employees necessary to its
business and preserve their relationships with
customers, suppliers and others having business
dealings with them to the end that their goodwill
and ongoing businesses shall be unimpaired at the
Effective Date. Without limiting the generality of
the foregoing, and, except as otherwise expressly
contemplated by this Agreement, LIVE shall not, and
shall not permit any of its Subsidiaries to, without
the prior written consent of Carolco or except as
disclosed in the LIVE LETTER:
(1) (i) declare, set aside or pay any dividends
on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital
stock, except for dividends from Subsidiaries to
LIVE, and except for dividends declared, set aside
or paid with respect to the LIVE Series B Preferred
Stock and LIVE Series C Preferred Stock in
accordance with their current terms;
(ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(iii) purchase, redeem or otherwise acquire any
shares of capital stock of LIVE or any other debt or
equity securities thereof or any rights, warrants or
options to acquire any such shares or other
securities, except that LIVE may, before the
Effective Date, redeem all outstanding shares of the
LIVE Series B Preferred Stock as contemplated in
Section 10.2(e) herein, and except that LIVE may,
before the Effective Date, redeem or repay up to
$6,000,000, in aggregate, of its $37,000,000, in
aggregate, 12% Senior Subordinated Secured Notes due
1994 ("LIVE 12% Notes");
(D) amend the terms of any LIVE capital stock or
any other securities of LIVE, except as contemplated
herein.
(2) issue, deliver, sell, pledge, dispose of or
otherwise encumber (or propose to do any of the
foregoing) any shares of its capital stock, any
other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting
securities or convertible securities or equity
equivalent (other than, in the case of LIVE, the
issuance of LIVE Common Stock or LIVE Series A
Common Stock during the period from the date of this
Agreement through the Effective Date upon the
exercise of existing LIVE stock options or warrants
or conversion of LIVE Series B Preferred Stock or
LIVE Series C Preferred Stock outstanding on the
date of this Agreement in accordance with their
current terms, and actions with respect to the LIVE
Rights in accordance with their current terms);
(3) other than as provided herein or contemplated
hereby, amend the Restated Certificate of
Incorporation of LIVE or Bylaws of LIVE or
comparable charter or organizational documents of
any of its Subsidiaries;
(4) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any
other manner, any business or any corporation,
partnership, association or other business
organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate,
to LIVE and its Subsidiaries taken as a whole or
which would make it impossible or a violation of
applicable laws, rules or regulations for Carolco to
effect the Merger;
(5) except with respect to plans previously
disclosed to Carolco with respect to Strawberries
and VCL, sell, lease, assign or otherwise dispose of
or agree to sell, lease, assign or otherwise dispose
of any of its assets that are material, individually
or in the aggregate, to LIVE and its Subsidiaries
taken as a whole or which would make it impossible
or a violation of applicable laws, rules or
regulations for Carolco to effect the Merger;
(6) except as permitted in Section 10.2(f) hereof,
incur any indebtedness (as defined in
Section 5.13(a)).
(7) make or incur any capital expenditure or
expenditures exceeding $100,000 in the aggregate,
other than in the ordinary course of business
consistent with past practice;
(8) except as disclosed in the LIVE SEC Documents,
pay, discharge or satisfy any material claims,
litigation, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business
consistent with past practice or in accordance with
their terms, of liabilities (a) reflected or
reserved against in, or contemplated by, the most
recent consolidated financial statements (or the
notes thereto) of LIVE included in LIVE SEC
Documents or (b) incurred in the ordinary course of
business consistent with past practice;
(9) take any action with respect to the grant of
any severance or termination pay to any director,
officer or employee of LIVE or any of its
Subsidiaries or with respect to any increase of
benefits payable under its severance or termination
pay practices in effect on the date hereof, except
for actions involving expenditures by LIVE or any of
its Subsidiaries of (a) individually, no more than
$100,000 in excess of the amount of compensation
that would have been paid during the remainder of
the term had the contract not been terminated, or
(b) in the aggregate, no more than $500,000 in
excess of the amount of compensation that would have
been paid during the remainder of the term of all
terminated contracts had they not been terminated;
(10) except as may be required by law or this
Agreement, enter into, adopt or increase in any
material manner the benefits payable under any
bonus, profit sharing, compensation, termination,
stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement,
deferred compensation, employment, severance or
other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or
welfare of any director, officer or employee, or
(except for increases in the ordinary course of
business consistent with past practice) increase in
any manner the compensation or fringe benefits of
any director or officer or pay any benefit not
required by any existing plan and arrangement
(including the granting of stock options, stock
appreciation rights, shares of restricted stock or
performance units) or enter into any contract,
agreement, commitment or arrangement to do any of
the foregoing;
(11) except as may be required as a result of a
change in law or in generally accepted accounting
principles, change any of the accounting principles
or practices used by it;
(12) write down the value of any inventory or write
off as uncollectible any notes or accounts
receivable, except with respect to plans previously
disclosed to Carolco with respect to Strawberries
and VCL and except for immaterial write-downs and
write-offs in the ordinary course of business and
consistent with past practice;
(13) dispose of or permit to lapse any LIVE
Proprietary Rights or disclose to any person any
LIVE Proprietary Rights except where such disposal,
lapse or disclosure would not, individually or in
the aggregate, have a Material Adverse Effect on
LIVE;
(14) pay, loan or advance any amount to, or sell,
transfer or lease any properties or assets to, or
enter into any agreement or arrangement with, any of
its officers or directors or any affiliate thereof,
except pursuant to existing agreements with such
persons, except for directors' fees and compensation
to officers at rates not exceeding the rates of
compensation paid during the six-month period ended
December 31, 1993, or except for transactions in the
ordinary course of business, or except as disclosed
in the LIVE SEC Documents or except as otherwise
permitted or contemplated hereunder; or
(15) enter into any contract, agreement, commitment
or arrangement with respect to any of the foregoing.
(ii) No Default. Other than with Carolco's prior
written consent or as disclosed in the LIVE LETTER,
neither LIVE nor any of its Subsidiaries shall do
any act or omit to do any act, or knowingly permit
any act or omission to act, which will cause a
breach of any material contract or commitment of
LIVE or any of its Subsidiaries, except for such
breaches (other than of the provisions of this
Agreement) as would not, individually or in the
aggregate, have a Material Adverse Effect on LIVE.
(iii) Compliance with Laws. LIVE and each of
its Subsidiaries shall duly comply with all laws
applicable to it and its properties, operations,
business and employees, except where the breach
thereof would not, individually or in the aggregate,
have a Material Adverse Effect on LIVE.
(iv) Tax Returns. LIVE and each of its Subsidiaries
shall prepare, file and pay amounts shown as due on
all federal, state, local and foreign tax returns
and amendments thereto required to be filed by it,
except that the failure to file those state, local
or foreign returns which individually or in the
aggregate would not have a Material Adverse Effect
on LIVE shall not be deemed a breach of this Section
8.1(d).
(v) Other Actions. LIVE shall not, and shall not
permit any of its Subsidiaries to, take any action
that would, or that could reasonably be expected to,
result in (i) any of the representations and
warranties of LIVE or CAC set forth in this
Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming
untrue in any material respect or (iii) any of the
conditions set forth in Article 10 not being
satisfied.
(vi) Advice of Changes; SEC Filings. LIVE shall
promptly advise Carolco in writing of any change or
event having, or which, insofar as can reasonably be
foreseen, would have, a Material Adverse Effect on
LIVE without regard to whether such change or event
would be permitted hereunder. LIVE shall promptly
advise Seidler in writing of any change or event or
any other information which would materially impact
the Seidler Fairness Opinion including material
write-downs, litigation or changes in financial
condition or capitalization without regard to
whether such change or event would be permitted
hereunder. LIVE shall promptly provide Carolco (or
its counsel) with copies of all filings made by LIVE
or CAC with the SEC or any other Governmental Entity
in connection with this Agreement and the
transactions contemplated hereby and thereby.
Section 8.b Conduct of Business by Carolco
Pending the Merger.
(i) Ordinary Course. During the period from the
date of this Agreement through the Effective Date or
earlier termination of this Agreement, Carolco
shall, and shall cause its Subsidiaries to, in all
material respects carry on their respective
businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore
conducted and, to the extent consistent therewith,
use all reasonable best efforts to preserve intact
their current business organizations, keep available
the services of their current officers and employees
necessary to its business and preserve their
relationships with customers, suppliers and others
having business dealings with them to the end that
their goodwill and ongoing businesses shall be
unimpaired at the Effective Date. Without limiting
the generality of the foregoing, and, except as
otherwise expressly contemplated by this Agreement,
Carolco shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent
of LIVE or except as disclosed in the CAROLCO
LETTER:
(1) (A) declare, set aside or pay any dividends
on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital
stock, except for dividends from Subsidiaries to
Carolco, and except for payment-in-kind dividends
declared, set aside or paid on the Carolco Series A
Preferred Stock,
(B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any
other securities in respect of, in lieu of, or in
substitution for shares of its capital stock,
(C) purchase, redeem or otherwise acquire any
shares of capital stock of Carolco or any of its
Subsidiaries or any other debt or equity securities
thereof or any rights, warrants or options to
acquire any such shares or other securities, or
(D) amend the terms of any Carolco capital stock or
any other securities of Carolco.
(2) issue, deliver, sell, pledge, dispose of or
otherwise encumber (or propose to do any of the
foregoing) any shares of its capital stock, any
other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting
securities or convertible securities or equity
equivalent (other than, in the case of Carolco, the
issuance of Carolco Common Stock during the period
from the date of this Agreement through the
Effective Date upon the exercise of existing Carolco
stock options or warrants, the conversion of Carolco
Series A Preferred Stock, the Carolco 5% Notes or
the Carolco 7% Notes in accordance with their
current terms or the issuance of Pay-Per-View Shares
during the period from the date of this Agreement
through the Effective Date);
(3) other than as provided herein, amend the
Restated Certificate of Incorporation of Carolco or
Restated Bylaws of Carolco or comparable charter or
organizational documents of any of its Subsidiaries;
(4) enter into any contract, agreement, commitment
or arrangement with respect to United States and
Canadian video rights;
(5) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any
other manner, any business or any corporation,
partnership, association or other business
organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate,
to Carolco and its Subsidiaries taken as a whole or
which would make it impossible or a violation of
applicable laws, rules or regulations for LIVE to
effect the Merger;
(6) sell, lease, assign or otherwise dispose of or
agree to sell, lease, assign or otherwise dispose of
any of its assets that are material, individually or
in the aggregate, to Carolco and its Subsidiaries
taken as a whole or which would make it impossible
or a violation of applicable laws, rules or
regulations for LIVE to effect the Merger;
(7) incur any indebtedness (as defined in Section
5.13(a)), except for indebtedness incurred in the
ordinary course of business consistent with past
practice; or make any material loans, advances or
capital contributions to, or investments in, any
other person, other than to any wholly-owned
Subsidiary of Carolco; and other than loans,
advances, capital contributions, and investments
made in the ordinary course of business, consistent
with past practice;
(8) make or incur any capital expenditure or
expenditures exceeding $100,000 in the aggregate
other than in the ordinary course of business
consistent with past practice;
(9) except as disclosed in the Carolco SEC
Documents, pay, discharge or satisfy any material
claims, litigation, liabilities or obligations
(absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of
business consistent with past practice or in
accordance with their terms, of liabilities (a)
reflected or reserved against in, or contemplated
by, the most recent consolidated financial
statements (or the notes thereto) of Carolco
included in Carolco SEC Documents or (b) incurred in
the ordinary course of business consistent with past
practice;
(10) take any action with respect to the grant of
any severance or termination pay to any director,
officer or employee of Carolco or any of its
Subsidiaries or with respect to any increase of
benefits payable under its severance or termination
pay practices in effect on the date hereof, except
for actions involving expenditures by Carolco or any
of its Subsidiaries of (a) individually, no more
than $100,000 in excess of the amount of
compensation that would have been paid during the
remainder of the term had the contract not been
terminated, or (b) in the aggregate, no more than
$500,000 in excess of the amount of compensation
that would have been paid during the remainder of
the term of all terminated contracts had they not
been terminated;
(11) except as may be required by law or this
Agreement, enter into, adopt or increase in any
material manner the benefits payable under any
bonus, profit sharing, compensation, termination,
stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement,
deferred compensation, employment, severance or
other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or
welfare of any director, officer or employee, or
(except for increases in the ordinary course of
business consistent with past practice) increase in
any manner the compensation or fringe benefits of
any director or officer or pay any benefit not
required by any existing plan and arrangement
(including the granting of stock options, stock
appreciation rights, shares of restricted stock or
performance units) or enter into any contract,
agreement, commitment or arrangement to do any of
the foregoing;
(12) except as may be required as a result of a
change in law or in generally accepted accounting
principles, change any of the accounting principles
or practices used by it;
(13) write down the value of any inventory or write
off as uncollectible any notes or accounts
receivable, except for immaterial write-downs, and
write-offs in the ordinary course of business and
consistent with past practice;
(14) dispose of or permit to lapse any Carolco
Proprietary Rights or disclose to any person any
Carolco Proprietary Rights except where such
disposal, lapse or disclosure would not,
individually or in the aggregate, have a Material
Adverse Effect on Carolco;
(15) pay, loan or advance any amount to, or sell,
transfer or lease any properties or assets to, or
enter into any agreement or arrangement with, any of
its officers or directors or any affiliate thereof,
except pursuant to existing agreements with such
persons, except for directors' fees and compensation
to officers at rates not exceeding the rates of
compensation paid during the six-month period ended
December 31, 1993, or except for transactions in the
ordinary course of business or except as otherwise
permitted or contemplated hereunder; or
(16) enter into any contract, agreement, commitment
or arrangement with respect to any of the foregoing.
(ii) No Default. Other than with LIVE's prior
written consent or as disclosed in the CAROLCO
LETTER, neither Carolco nor any of its Subsidiaries
shall do any act or omit to do any act, or knowingly
permit any act or omission to act, which will cause
a breach of any material contract or commitment of
Carolco or any of its Subsidiaries, except for such
breaches (other than of the provisions of this
Agreement) as would not, individually or in the
aggregate, have a Material Adverse Effect on
Carolco.
(iii) Compliance with Laws. Carolco and each of
its Subsidiaries shall duly comply with all laws
applicable to it and its properties, operations,
business and employees, except where the breach
thereof would not, individually or in the aggregate,
have a Material Adverse Effect on Carolco.
(iv) Tax Returns. Carolco and each of its
Subsidiaries shall prepare, file and pay amounts
shown as due on all federal, state, local and
foreign tax returns and amendments thereto required
to be filed by it, except that the failure to file
those state, local or foreign returns which
individually or in the aggregate would not have a
Material Adverse Effect on Carolco shall not be
deemed a breach of this Section 8.2(d).
(v) Other Actions. Carolco shall not, and shall
not permit any of its Subsidiaries to, take any
action that would, or that could reasonably be
expected to, result in (i) any of the
representations and warranties of Carolco set forth
in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such
representations and warranties that are not so
qualified becoming untrue in any material respect,
or (iii) any of the conditions set forth in Article
10 not being satisfied.
(vi) Advice of Changes; SEC Filings. Carolco shall
promptly advise LIVE in writing of any change or
event having, or which, insofar as can reasonably be
foreseen, would have, a Material Adverse Effect on
Carolco without regard to whether such change or
event would be permitted hereunder. Carolco shall
promptly advise Chemical in writing of any change or
event or any other information which would
materially impact the Chemical Fairness Opinion,
including material write-downs, litigation or
changes in financial condition or capitalization
without regard to whether such change or event would
be permitted hereunder. Carolco shall promptly
provide LIVE (or its counsel) with copies of all
filings made by Carolco with the SEC or any other
Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
Section 8.c Competing Offers. Either LIVE or
Carolco may accept a competing "takeover proposal"
or "offer" if the Board of Directors of LIVE or
Carolco, as the case may be, declare such "takeover
proposal" or "offer" advisable, in the best interest
of LIVE or Carolco, as the case may be, and that the
terms, in the aggregate, of such "takeover proposal"
or "offer" are better than the terms of the Merger
as provided herein, provided, however, that LIVE or
Carolco, as the case may be, shall pay the costs and
expenses incurred in connection with the Merger in
accordance with Section 9.7 hereof. In the case of
Carolco, "takeover proposal" or "offer" shall mean
any proposal or offer, other than a proposal or
offer by LIVE or any of its affiliates, for a tender
or exchange offer, a merger, consolidation or other
business combination involving Carolco or any
Subsidiary of Carolco or any proposal to acquire in
any manner all or a substantial equity interest in,
or all or a substantial portion of the assets of,
Carolco or any of its Subsidiaries other than the
transactions contemplated by this Agreement. In the
case of LIVE, "takeover proposal" or "offer" shall
mean any proposal or offer, other than a proposal or
offer by Carolco or any of its affiliates, for a
tender or exchange offer, a merger, consolidation or
other business combination involving LIVE or any
Subsidiary of LIVE (other than Strawberries or VCL)
or any proposal to acquire in any manner all or a
substantial equity interest in, or all or a
substantial portion of the assets of, LIVE or any of
its Subsidiaries (other than Strawberries or VCL)
other than the transactions contemplated by this
Agreement. Nothing herein shall prevent LIVE from
selling all or any part of its Strawberries or VCL
subsidiaries on terms previously disclosed to
Carolco or otherwise acceptable to Carolco.
Section 8.d Reorganization. During the period
from the date of this Agreement through the
Effective Date, unless the other parties hereto
shall otherwise agree in writing, none of LIVE, CAC,
any other Subsidiary of LIVE, Carolco nor any
Subsidiary of Carolco shall knowingly take or fail
to take any action which action or failure to act
would jeopardize qualification of the Merger as a
tax free reorganization under the Code.
Section 8.e Conduct of Business of CAC Pending
the Merger. During the period from the date of this
Agreement through the Effective Date, CAC shall not
engage in any activities of any nature except as
provided in or contemplated by this Agreement.
Section 8.f Update of LIVE LETTER and CAROLCO
LETTER. LIVE will update the LIVE LETTER and
Carolco will update the CAROLCO LETTER (the CAROLCO
LETTER and the LIVE LETTER are sometimes referred to
herein collectively as the "Letters" and
individually as a "Letter") from time to time
hereafter until the Closing, including as of the
date of the mailing of the Proxy Statement and as of
the date of the Closing, to the extent any
information disclosed on such Letters requires
updating because of a change in facts or
circumstances, and to the extent any new information
that would have been included in either of such
Letters on the date hereof had such information
existed or been known on the date hereof later comes
to the knowledge of LIVE or Carolco, as the case may
be. The update of such Letters shall not modify or
add additional exceptions to representations,
warranties or covenants contained herein; any
updating of the LIVE LETTER or CAROLCO LETTER which
subsequently makes materially inaccurate as of the
date of this Agreement any representation or
warranty that is qualified as to materiality, or
makes inaccurate as of the date of this Agreement
any representation or warranty that is not qualified
as to materiality, shall be deemed a material breach
of this Agreement by the party whose representation
or warranty was so made inaccurate; and neither
party shall, by any update of its respective Letter,
be relieved from the conditions set forth in
Sections 10.2(a) and 10.2(b) and 10.3(a) and 10.3(b)
concerning the truth and correctness of such
parties' respective representations and warranties
contained herein on and as of the Effective Date.
Section 8.g Bringdown of Fairness Opinion. LIVE
will request that Chemical confirm the Chemical
Fairness Opinion and Carolco will request that
Seidler confirm the Seidler Fairness Opinion each as
of the day immediately preceding the Effective Date
without any material change in any conclusions or
opinions contained therein.
ARTICLE 9
ADDITIONAL AGREEMENTS
Section 9.a Carolco and LIVE Stockholder
Approvals.
(i) Carolco shall promptly call a meeting of its
stockholders (the "Carolco Stockholder Meeting") for
the purpose of voting upon this Agreement and the
transactions contemplated hereby and, subject to the
fiduciary duties of Carolco's Board of Directors
under applicable law, shall use its best efforts to
obtain stockholder approval of this Agreement and
the transactions contemplated hereby. The Carolco
Stockholder Meeting shall be held as soon as
practicable following the date upon which the
Registration Statement becomes effective and Carolco
will, through its Board of Directors but subject to
the fiduciary duties of its Board of Directors under
applicable law as advised in writing by outside
counsel, recommend to its stockholders the approval
of this Agreement and the transactions contemplated
hereby and not rescind its declaration that the
Merger is advisable. This Agreement and the
transactions contemplated hereby shall be approved
on behalf of Carolco's stockholders if (i) holders
of at least a majority of the combined voting power
with respect to Carolco's voting securities entitled
to vote and present at the Carolco Stockholder
Meeting (other than the Carolco Investors) vote in
favor of this Agreement and the transaction
contemplated hereby, (ii) holders of at least a
majority of the combined voting power with respect
to Carolco's voting securities entitled to vote at
the Carolco Stockholder Meeting (including the
Carolco Investors) vote in favor of this Agreement
and the transactions contemplated hereby, and (iii)
holders of 100% of the Carolco Series A Preferred
Stock, voting as a class, vote in favor of this
Agreement and the transactions contemplated hereby.
(ii) LIVE shall promptly call a meeting of its
stockholders (the "LIVE Stockholder Meeting" and,
together with Carolco Stockholder Meeting, the
"Stockholder Meetings") for the purpose of voting
upon this Agreement and the transactions
contemplated hereby, including the amendments to the
Restated Certificate of Incorporation of LIVE
referred to in Article 3 above, the issuance of LIVE
Common Stock and LIVE Series D Preferred Stock in
connection with the Merger, and taking such other
actions as are reasonably required to consummate the
Merger and, subject to the fiduciary duties of
LIVE's Board of Directors under applicable law,
shall use its best efforts to obtain stockholder
approval of such issuance and action. The LIVE
Stockholder Meeting shall be on the date of the
Carolco Stockholder Meeting or, if such date is not
practicable, on the closest date practicable. LIVE
will, through its Board of Directors but subject to
the fiduciary duties of its Board of Directors under
applicable law as advised in writing by outside
counsel, recommend to its stockholders the approval
of this Agreement and the transactions contemplated
hereby and not rescind its declaration that the
Merger is advisable. This Agreement and the
transactions contemplated hereby shall be approved
on behalf of LIVE's stockholders if (i) holders of
at least a majority of the combined voting power
with respect to LIVE's voting securities entitled to
vote and present at the LIVE Stockholder Meeting
(other than the LIVE Investors) vote in favor of
this Agreement and the transactions contemplated
hereby, (ii) holders of at least 66-2/3% of the
combined voting power with respect to LIVE's voting
securities entitled to vote at the LIVE Stockholder
Meeting (including the LIVE Investors) vote in favor
of the Agreement and the transactions contemplated
hereby and (iii) holders of 100% of the LIVE Series
C Preferred Stock, voting as a class, vote in favor
of the Agreement and the transactions contemplated
hereby.
Section 9.b Registration Statement and Proxy
Statement
(i) LIVE and Carolco shall jointly prepare and file
with the SEC as soon as practicable the Registration
Statement and the Proxy Statement. The Registration
Statement will provide for the registration of all
shares of LIVE capital stock to be issued pursuant
to the Merger, including without limitation, any
shares of LIVE Common Stock underlying any LIVE
Series D Preferred Stock to be issued pursuant to
the Merger, any shares of LIVE Common Stock
underlying any convertible debt of Carolco disclosed
in the CAROLCO LETTER or herein, any shares of LIVE
Common Stock underlying any warrants previously
issued by Carolco as described herein or in the
CAROLCO LETTER, and, as LIVE and Carolco mutually
agree, any other security of LIVE. Each of LIVE and
Carolco shall use all reasonable efforts to (i) have
the Registration Statement declared effective by the
SEC as soon as practicable and (ii) respond to
and/or comply with any SEC staff comments on the
Proxy Statement. LIVE shall also take any action
(other than qualifying to do business in any
jurisdiction in which it is not now so qualified)
required to be taken under state blue sky or
securities laws in connection with the issuance of
the LIVE Common Stock and LIVE Series D Preferred
Stock pursuant to the Merger and the exercise after
the Effective Date of the New Stock Options issuable
in respect of Carolco Stock Options as contemplated
by Section 9.8. LIVE shall also prepare and timely
file with the SEC one or more registration
statements on Form S-8 for the purpose of
registering the shares of LIVE Common Stock issuable
after the Effective Date upon exercise of any
Carolco Stock Options theretofore granted
(collectively, the "Option Registration Statement"),
and LIVE shall use its best efforts to cause the
Option Registration Statement to become effective as
soon as practicable after the Effective Date. LIVE
and Carolco shall each furnish the other company all
information concerning their respective companies
and all such other information required for use in
the Registration Statement, the Option Registration
Statement and the Proxy Statement and both LIVE and
Carolco shall each take such other action as the
other company may reasonably request (and in the
case of the Proxy Statement as required by the
Exchange Act) in connection with the preparation of
such Registration Statement, Option Registration
Statement and Proxy Statement and the actions to be
taken by LIVE pursuant to this Section 9.2.
(ii) If at any time prior to the Effective Date any
event with respect to LIVE or Carolco, their
officers and directors or any of their Subsidiaries
(including CAC) shall occur which is required at
that time to be described in the Proxy Statement or
the Registration Statement, the party with respect
to whom the event occurs shall promptly notify the
other party, and to the extent required by law,
Carolco and LIVE will promptly file an amendment or
supplement with the SEC and disseminate such
amendment to the stockholders of LIVE and the
stockholders of Carolco.
Section 9.c Amendment to Indentures.
(i) LIVE Note Indenture. LIVE shall take all
action necessary to amend the Indenture ("LIVE
Increasing Rate Notes Indenture") governing its
$40,000,000, in aggregate, Increasing Rate Secured
Senior Subordinated Notes due 1999 ("LIVE Increasing
Rate Notes"), in form, scope and substance and on
terms set forth in Exhibit 9.3(a).
(ii) LIVE 12% Indenture. LIVE shall take all action
necessary to amend the Indenture ("LIVE 12%
Indenture") governing its $37,000,000, in aggregate,
12% Notes due 1994, in form, scope and substance and
on terms set forth in Exhibit 9.3(b) and in
accordance with the actions contemplated by
Section 8.1(a)(i)(C) hereof with respect to the LIVE
12% Notes.
Section 9.d Listing Application. LIVE will use
its best efforts to obtain, prior to the Effective
Date, approval for listing the Shares of LIVE Common
Stock registered pursuant to the Registration
Statement on the New York Stock Exchange, upon
official notice of issuance.
Section 9.e Access to Information. Each of the
parties hereto shall, and shall cause each of their
respective Subsidiaries to, afford to the other
party and to such other party's accountants,
counsel, financial advisers and other
representatives, reasonable access, and permit them
to make such inspections as they may reasonably
require, during normal business hours during the
period from the date of this Agreement through the
Effective Date to all their respective properties,
books, contracts, commitments and records and,
during such periods, Carolco and LIVE, as the case
may be, shall, and shall cause each of their
respective Subsidiaries to, furnish promptly to LIVE
or Carolco, as the case may be, all other
information concerning its business, properties and
personnel as LIVE or Carolco, as the case may be,
may reasonably request. Except as required by law,
each of LIVE and Carolco will hold, and will cause
its affiliates, associates, agents and
representatives to hold, any nonpublic information
in confidence unless disclosure of such material is
compelled by judicial or administrative process, or,
in the reasonable opinion of LIVE's and Carolco's
respective outside counsel, by other requirements of
law (in which cases the party compelled to disclose
shall give reasonable notice to the other party
prior to making the compelled disclosure), until
such time as such information becomes publicly
available otherwise than through the actions of such
person, and each of Carolco and LIVE shall use its
best efforts to ensure that such affiliates,
associates and representatives do not disclose such
information to others without the prior written
consent of Carolco or LIVE, as appropriate. In the
event of termination of this Agreement for any
reason, LIVE shall promptly return all documents
containing nonpublic information so obtained from
Carolco or any of its Subsidiaries and any copies
made of such documents for LIVE, and Carolco shall
promptly return all documents containing nonpublic
information so obtained from LIVE or any of its
Subsidiaries and any copies made of such documents
for Carolco. No investigation pursuant to this
Section 9.5 shall add to or subtract from any
representations or warranties of Carolco or LIVE, as
the case may be, or the conditions to the respective
obligations of Carolco or LIVE or CAC to consummate
the Merger. Nothing herein shall limit or release
any of the confidentiality agreements previously
entered in by the parties.
Section 9.f Affiliates. Prior to the Effective
Date, Carolco and LIVE, after consultation with
Gipson Hoffman & Pancione and Sidley & Austin, shall
each cause to be prepared and delivered to the other
a list (reasonably satisfactory to each other's
counsel) identifying all persons who, at the time of
the respective Stockholder Meetings, may be deemed
to be "affiliates" of Carolco as that term is used
in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Affiliates"). Carolco and
LIVE, through its counsel, shall advise each such
possible Affiliate of its obligations under Rule 145
with respect to shares of LIVE Common Stock issued
to each such possible Affiliate pursuant to the
Merger.
Section 9.g Fees and Expenses. Whether or not
the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by
the party incurring such costs and expenses, except
that the legal fees and expenses incurred in
connection with printing and mailing the
Registration Statement and related materials, the
Option Registration Statement and the Proxy
Statement will be shared equally by LIVE and
Carolco, except that in the event this Agreement
shall terminate by virtue of either of the
provisions of subsections (b)(i) or (ii) or (c)(i)
or (ii) of Section 11.1 hereof, then Carolco, in the
case of subsection (b), and LIVE, in the case of
subsection (c), shall reimburse the other party for
all such legal fees and expenses. In the event this
Agreement shall terminate by virtue of
Subsection (d) of Section 11.1 hereof, then the
party who accepts the "competing proposal" or
"offer" shall reimburse the other party for all out-
of-pocket expenses incurred by the other party in
connection with the Merger through the date of
termination of this Agreement.
Section 9.h Carolco Stock Options.
(i) As of the Effective Date, LIVE shall assume
(pursuant to an assumption agreement satisfactory to
LIVE and Carolco) Carolco's obligations under the
1986 Non-Employee Stock Option Plan of Carolco and
the 1986 Employee Stock Option Plan of Carolco
(collectively, the "1986 Plan") and the 1989 Stock
Option and Stock Appreciation Rights Plan of Carolco
(the "1989 Plan") (the 1986 Plan and the 1989 Plan
are sometimes referred to hereinafter collectively
as the "Carolco Stock Plans"). Each option to
purchase shares of Carolco Common Stock outstanding
immediately prior to the Effective Date pursuant to
the Carolco Stock Plans (a "Plan Option") shall
become and represent an option to purchase that
number of shares of LIVE Common Stock (a "New Stock
Option") as the holder of such Plan Option would
have been entitled to receive by virtue of the
Merger had it exercised such Plan Option immediately
prior to the Effective Date, at an exercise price
per share equal to the exercise price per share of
such Plan Option immediately prior to the Effective
Date multiplied by the Exchange Ratio. After the
Effective Date, except as provided in this Section
9.8, each New Stock Option shall be exercisable upon
the same terms and conditions as were applicable
under the related Plan Option prior to the Effective
Date.
(ii) All time elapsed since the grant of a Plan
Option shall be credited to the applicable successor
option for purposes of determining when such
successor option vests.
(iii) In the event of any reclassification,
stock split or stock dividend with respect to LIVE
Common Stock (or if a record date with respect to
any of the foregoing) should occur after the date of
this Agreement and before the Effective Date,
appropriate and proportionate adjustments shall be
made in the exchange ratios for Plan Options.
(iv) After the Effective Date, LIVE shall grant no
New Stock Options or Carolco stock appreciation
rights under the Carolco Stock Plans as assumed by
LIVE or any LIVE stock options or LIVE stock
appreciation rights under LIVE's 1988 Stock Option
and Stock Appreciation Rights Plan. After the
Effective Date, LIVE may grant LIVE stock options or
LIVE stock appreciation rights only pursuant to a
1994 Stock Option and Stock Appreciation Rights Plan
for LIVE substantially in the form attached hereto
as Exhibit 9.8(d) ("New Plan"), subject to approval
of such New Plan by a majority of the voting power
of LIVE entitled to vote and voting at the LIVE
Stockholder Meeting.
Section 9.i Other Obligations of Carolco and
LIVE.
(i) As of the Effective Date, LIVE shall assume
(pursuant to an assumption agreement in the form of
Exhibit 9.9(a) hereto) each of Carolco's obligations
under that certain Employment Agreement dated as of
August 10, 1994, by and between Carolco and Mario
Kassar. The agreement of LIVE under this Section
9.9(a) is also made for the benefit of Mario Kassar,
who is intended to be, and hereby expressly is
constituted, a third party beneficiary of such
agreement.
(ii) As of the Effective Date, LIVE shall become co-
obligor with Carolco (pursuant to an amendment to
the Indenture dated as of October 20, 1993, by and
between Carolco and First Trust of California,
National Association, as Indenture Trustee,
governing the Carolco 5% Notes in the form of
Exhibit 9.9(b) hereto ("Amended and Restated Carolco
5% Indenture")), with respect to certain of
Carolco's obligations with respect to the Carolco 5%
Notes.
(iii) As of the Effective Date, LIVE shall
become co-obligor with Carolco (pursuant to an
amendment to the Standby Purchase and Investment
Agreement dated as of July 29, 1993, by and among
Carolco, Cinepole, Le Studio Canal+, RCS, Pioneer
and Tele-Communications, Inc. in the form of
Exhibit 9.9(c) hereto ("Amended and Restated Standby
Purchase and Investment Agreement")) with respect to
certain of Carolco's obligations with respect to the
Carolco 7% Notes.
(iv) As of the Effective Date, LIVE, Carolco and
American Stock Transfer & Trust Company shall have
entered into that certain First Supplemental
Indenture in the form of Exhibit 9.9(d) hereto with
respect to the Indenture governing the 11.5%/10%
Reducing Rate Senior Notes of Carolco (the "Carolco
11.5%/10% Notes").
(v) As of the Effective Date, LIVE, Carolco and
American Stock Transfer & Trust Company shall have
entered into that certain First Supplemental
Indenture in the form of Exhibit 9.9(e) hereto with
respect to the Indenture governing the 13%/12%
Reducing Rate Senior Subordinated Notes of Carolco
(the "Carolco 13%/12% Notes").
(vi) As of the Effective Date, LIVE, Carolco and IBJ
Schroder Bank & Trust Company shall have entered
into that certain First Supplemental Indenture in
the form of Exhibit 9.9(f) hereto with respect to
the Amended and Restated Indenture governing the 13%
Senior Subordinated Notes of Carolco (the "Carolco
13% Notes").
(vii) As of the Effective Date, LIVE shall
become a party (pursuant to an assumption agreement
in the form of Exhibit 9.9(g) hereto to that certain
Domestic Output Agreement dated as of May 1, 1993 by
and between Carolco and Metro-Goldwyn-Mayer Inc.
("MGM") and with respect to that certain
Confidential Draft Term Sheet dated as of April 23,
1993 by and between Carolco and MGM (together, the
"MGM Distribution Agreements").
(viii) As of the Effective Date, LIVE (as Carolco
Entertainment Inc.) shall become a party (pursuant
to an assumption agreement in the form of Exhibit
9.9(h) hereto) to that certain Output Agreement
dated as of May 8, 1991, by and between RCS Video
Services Antilles N.V. and Carolco International
Inc. (formerly known as Carolco International N.V.),
as amended and to that certain Inducement Letter
dated as of May 8, 1991, by and among RCS Video
Services Antilles N.V., Carolco, Carolco
International Inc. (formerly known as Carolco
International N.V.), RCS Editori SpA and RCS
International Communications N.V.
(ix) As of the Effective Date, LIVE (as Carolco
Entertainment Inc.) shall become a party (pursuant
to an assumption agreement in the form of Exhibit
9.9(i) hereto) to that certain First Refusal
Agreement dated effective as of October 30, 1991, by
and between Carolco and Le Studio Canal+ S.A. and
agreed to by Carolco International Inc. (formerly
known as Carolco International N.V.).
(x) As of the Effective Date, LIVE (as Carolco
Entertainment Inc.) shall become a party (pursuant
to an assumption agreement in the form of Exhibit
9.9(j) hereto) to that certain Ancillary Agreement
Concerning Japan and Laser Disc Rights of Pioneer,
dated as of July 3, 1990 by and between Carolco and
Pioneer and agreed to by Carolco International Inc.
(formerly known as Carolco International N.V.) and
LIVE.
Section 9.j Registration Rights. After the
Effective Date, all registration rights in favor of
the LIVE Investors with respect to any equity
securities of LIVE (other than the LIVE Series C
Preferred Stock and the LIVE Common Stock underlying
such LIVE Series C Preferred Stock, as to which the
registration rights agreement currently in effect
with respect thereto shall continue to remain in
full force and effect after the Effective Date) held
by them as of the Effective Date, or in favor of the
Carolco Investors (other than New Carolco
Investments B.V.) with respect to any equity
securities of Carolco held by them as of the
Effective Date, shall be cancelled and replaced by a
registration rights agreement (the "New Carolco
Entertainment Inc. Registration Rights Agreement")
substantially in the form of Exhibit 9.10 hereto.
Section 9.k Best Efforts. Upon the terms and
subject to the conditions set forth in this
Agreement, and further subject to the fiduciary
obligations of the respective Boards of Directors of
LIVE, CAC and Carolco under applicable law as
advised in writing by outside counsel, each of the
parties agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper
or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger,
and the other transactions contemplated by this
Agreement, including (a) the obtaining of all
necessary actions or non-actions, waivers, consents
and approvals from Governmental Entities and the
making of all necessary registrations and filings
(including filings with Governmental Entities) and
the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any
Governmental Entity, (b) the obtaining of all
necessary consents, approvals or waivers from third
parties including those entities identified in the
LIVE LETTER and the CAROLCO LETTER, (c) the
defending of any lawsuits or other legal
proceedings, whether judicial or administrative,
challenging this Agreement, or the consummation of
the transactions contemplated hereby and thereby,
including seeking to have any stay or temporary
restraining order entered by any court or other
Governmental Entity vacated or reversed, and (d) the
execution and delivery of any additional instruments
necessary to consummate the transactions
contemplated by this Agreement. Copies of all
third-party consents obtained hereunder by LIVE (or
any of its Subsidiaries) or Carolco (or any of its
Subsidiaries) shall be provided to LIVE or Carolco,
respectively, promptly after any such consent is
obtained. In case at any time after the Effective
Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper
officers and/or directors of LIVE, Carolco or CAC
shall take all such necessary action.
Section 9.l Public Announcements. LIVE and CAC,
on the one hand, and Carolco, on the other hand,
will consult with each other before issuing any
press release or otherwise making any public
statements with respect to the transactions
contemplated by this Agreement, and shall not issue
any such press release or make any such public
statement prior to such consultation, except as may
be required by applicable law. Nothing herein shall
limit or release any of the confidentiality
agreements previously entered into by the parties.
Section 9.m State Takeover Laws. If any "fair
price" or "control share acquisition" statute or
other similar statute or regulation is or shall
become applicable to the transactions contemplated
hereby, Carolco and the members of the Board of
Directors of Carolco and LIVE and the members of the
Board of Directors of LIVE shall use their best
efforts to grant such approvals and take such
actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly
as practicable on the terms contemplated hereby and
otherwise act to minimize the effects of such
statute or regulation on the transactions
contemplated hereby.
Section 9.n Indemnification. LIVE and CAC agree
that all rights to indemnification from Carolco for
acts or omissions occurring prior to the Effective
Date now existing shall continue in full force and
effect, as obligations of the Surviving Corporation,
in accordance with their terms. LIVE will provide,
or cause the Surviving Corporation to provide, for a
period of not less than seven years from the
Effective Date, Carolco's current directors and
officers an insurance and indemnification policy
that provides coverage for events occurring prior to
the Effective Date (the "D&O Insurance") that is no
less favorable to them than Carolco's existing
policy or, if substantially equivalent insurance
coverage is unavailable or is only available on
terms which LIVE believes are not commercially
reasonable, the best available coverage. At and
after the Effective Date, LIVE shall indemnify,
defend and hold harmless each person who is now or
has been at any time prior to the date hereof or who
becomes prior to the Effective Date an officer,
director, employee, agent or representative of
Carolco or any of its Subsidiaries and all
defendants in their capacity as such in the same
manner and to the same extent required by the
Restated Certificate of Incorporation of Carolco and
the Restated Bylaws of Carolco and/or the comparable
charter or organizational documents of any of its
Subsidiaries as of the date hereof and in the same
manner and to the same extent required by any
Indemnity Agreements existing as of the date hereof
between Carolco or any of its Subsidiaries whereby
Carolco or any of its Subsidiaries has agreed to
indemnify, defend or hold harmless any officers,
directors, employees or agents thereof (a list of
such indemnity agreements is included in the CAROLCO
LETTER).
Section 9.o [Intentionally Deleted.]
Section 9.p [Intentionally Deleted.]
Section 9.q LIVE Rights. In satisfaction of
Section 10.2(i) hereof, before the Effective Date
LIVE will take all actions necessary to terminate
the existing LIVE Rights Agreement and cancel all
outstanding LIVE Rights.
Section 9.r Continuation of Business or Business
Assets. After the Effective Date, LIVE will
continue at least one significant historic business
line of Carolco or use at least a significant
portion of Carolco's historic business assets in a
business, in each case within the meaning of
Treasury Regulation Sec. 1.368-1(d).
ARTICLE 10
CONDITIONS PRECEDENT
Section 10.a Conditions to Each Party's Obligation
to Effect the Merger. The respective obligations of
each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of
the following conditions:
(i) Stockholder Approvals. (i) This Agreement and
the transactions contemplated hereby shall have been
approved by the requisite vote of the holders of
Carolco capital stock as set forth in Section 9.1
above and (ii) this Agreement and the transactions
contemplated hereby, including the issuance of LIVE
Common Stock and LIVE Series D Preferred Stock
pursuant to the Merger, the amendments to the
Restated Certificate of Incorporation of LIVE and
related matters shall have been approved by the
requisite vote of the holders of LIVE capital stock
as set forth in Section 9.1 above.
(ii) Bringdown of Fairness Opinions. The Chemical
Fairness Opinion and the Seidler Fairness Opinion
shall have been confirmed as of the date immediately
preceding the Effective Date without any material
change in any conclusions or opinions contained
therein.
(iii) Registration Statements. The Registration
Statement shall have become effective in accordance
with the provisions of the Securities Act. No stop
order suspending the effectiveness of the
Registration Statement shall have been issued by the
SEC and remain in effect and no proceedings for such
purpose shall be pending before the SEC.
(iv) Stock Exchange Listing. The shares of LIVE
Common Stock registered pursuant to the Registration
Statement shall be approved for listing on the New
York Stock Exchange, upon official notice of
issuance, or on such other principal United States
trading market (whether a stock exchange or the
National Association of Securities Dealers Automated
Quotation System) as the LIVE Common Stock is listed
immediately prior to the Effective Date or as the
parties may mutually agree.
(v) Reorganization. Each of Carolco and LIVE shall
be reasonably satisfied that none of Carolco, LIVE
and CAC will recognize material taxable gain as a
result of the Merger and that its stockholders will
not recognize any taxable gain as a result of the
Merger.
(vi) Adequate Financing Commitments. Aggregate
financing commitments shall have been received by
Carolco and LIVE, the terms of which shall be set
out more fully on Exhibit 10.1(f) hereto.
(vii) No Material Adverse Change. There shall
not have occurred any change or development in or
affecting the assets, liabilities, business,
operations, condition (financial or other) or
prospects of Carolco or LIVE which, in the
aggregate, could be reasonably expected to have a
Material Adverse Effect on such party, except for
(i) such changes at LIVE with respect to plans
previously disclosed to Carolco with respect to
Strawberries and VCL, or (ii) such changes resulting
from facts disclosed as of the date of the Merger
Agreement in the CAROLCO LETTER or Carolco SEC
Documents or the LIVE LETTER or LIVE SEC Documents,
as the case may be.
(viii) Governmental Approvals. All consents and
approvals of, and notices to and filings with, any
governmental authority or agency as are required in
connection with the consummation of the Merger and
the transactions contemplated hereby shall have been
obtained, given and made, and all waiting periods,
if any, applicable to the consummation of the Merger
imposed by any applicable law, rule or regulation
(including, but not limited to, the HSR Act) shall
have expired without any action, proceeding or
investigation being commenced or threatened which
seeks to enjoin or delay consummation of the Merger
or to impose any material restrictions or onerous
requirements on Carolco, LIVE or their respective
stockholders.
(ix) Third Party Consents. All consents and
approvals of, and notices to and filings with, any
non-governmental persons required in connection with
the consummation of the Merger and the transactions
contemplated hereby shall have been obtained, given
or made, except for any thereof which, if not
obtained, given or made would not, in the aggregate,
have a Material Adverse Effect on the ability of any
party to consummate the transactions contemplated
hereby or on the assets, liabilities, business,
operations, condition (financial or other) or
prospects of any party or any of its direct or
indirect subsidiaries.
(x) No Order. No Governmental Entity or court of
competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or
permanent) which is then in effect and has the
effect of preventing the consummation of the Merger
or making the transactions contemplated hereby
illegal (each party hereto agreeing to use its best
efforts to have any such order, injunction or the
like lifted or waived).
(xi) Approval of Counsel to Carolco and LIVE. All
actions, proceedings, instruments and documents
required to carry out the transactions contemplated
hereby or incidental hereto and all other related
legal matters shall be reasonably satisfactory to
and approved by counsel for each of Carolco and LIVE
and such counsel shall have been furnished with such
certified copies of such corporate actions and
proceedings and such other instruments and documents
as it shall have reasonably requested.
(xii) Registration Rights. The Carolco
Investors (other than New Carolco Investments B.V.)
and the LIVE Investors shall have entered into the
registration rights agreement contemplated in
Section 9.10 hereof.
(xiii) Amended and Restated Certificate of
Incorporation of LIVE. The Amended and Restated
Certificate of Incorporation of LIVE shall have been
filed with the Secretary of State of the State of
Delaware.
Section 10.b Conditions to Obligation of Carolco
to Effect the Merger. The obligation of Carolco to
effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the
following additional conditions, any or all of which
may be waived by Carolco at its option, except as
may be required by law:
(i) Performance of Obligations; Representations and
Warranties; No Material Adverse Change. LIVE and
CAC shall have performed and satisfied in all
material respects each of their covenants and
agreements required or contemplated by this
Agreement to be performed by them on or prior to the
Effective Date; each of the representations and
warranties of LIVE and CAC contained in this
Agreement that is qualified by materiality shall be
true and correct on and as of the Effective Date as
if made on and as of such date and each of the
representations and warranties that is not so
qualified shall be true and correct in all material
respects on and as of the Effective Date as if made
on and as of such date, in each case except as
contemplated or permitted by this Agreement; there
shall have been no Material Adverse Change with
respect to LIVE after the date of this Agreement;
and Carolco shall have received a certificate of
LIVE, signed by the Chief Executive Officer and the
Chief Financial Officer of LIVE, to that effect.
(ii) [Intentionally Deleted.]
(iii) Tax Opinion. Carolco shall receive an
opinion of Gipson Hoffman & Pancione, in form and
substance satisfactory to Carolco, dated the
Effective Date, substantially to the effect that on
the basis of facts, representations and assumptions
set forth in such opinion which are consistent with
the state of facts existing as of the Effective
Date:
(1) The Merger will constitute a reorganization for
federal income tax purposes within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code,
and Carolco, LIVE and CAC will each be a party to
that reorganization within the meaning of Section
368(b) of the Code.
(2) No gain or loss will be recognized by LIVE,
Carolco or CAC as a result of the Merger.
(3) No gain or loss will be recognized by the
holders of Carolco Common Stock or Carolco Series A
Preferred Stock upon the conversion of such Carolco
Common Stock or Carolco Series A Preferred Stock
into shares of LIVE Common Stock or LIVE Series D
Preferred Stock, respectively, by reason of the
consummation of the Merger, except with respect to
cash, if any, received in lieu of fractional shares
of LIVE Common Stock.
(4) The aggregate tax basis of the shares of LIVE
Common Stock or LIVE Series D Preferred Stock into
which shares of Carolco Common Stock or Carolco
Series A Preferred Stock are converted pursuant to
the Merger will be the same as the aggregate tax
basis of shares of Carolco Common Stock or Carolco
Series A Preferred Stock converted into such LIVE
Common Stock or LIVE Series D Preferred Stock in the
Merger, decreased by the amount of any tax basis
allocable to the fractional shares of LIVE Common
Stock in lieu of which cash was received.
(5) The holding period for shares of LIVE Common
Stock or LIVE Series D Preferred Stock into which
shares of Carolco Common Stock or Carolco Series A
Preferred Stock are converted pursuant to the Merger
will include the period that such shares of Carolco
Common Stock or Carolco Series A Preferred Stock
were held, provided such shares of Carolco Common
Stock or Carolco Series A Preferred Stock were held
as capital assets on the Effective Date.
In rendering such opinion, Gipson Hoffman & Pancione
may receive and rely upon representations of fact
contained in certificates of Carolco, LIVE, CAC and
others, and the obligation of Gipson Hoffman &
Pancione to deliver the opinion contemplated in this
Section 10.2(c) shall be subject to the receipt by
Gipson Hoffman & Pancione of the Investor
Representation Agreements contemplated by Section
6.4(c).
(iv) Opinion of Counsel to LIVE and CAC. Carolco
shall have received the opinion of Sidley & Austin,
counsel to LIVE, dated the Effective Date, addressed
to Carolco, in the form attached hereto as Exhibit
10.2(d).
(v) Redemption of LIVE Series B Preferred Stock.
LIVE shall have redeemed all outstanding shares of
the LIVE Series B Preferred Stock in accordance with
the provisions of the Certificate of Designations,
Preferences and Rights governing the LIVE Series B
Preferred Stock.
(vi) No Additional Indebtedness. LIVE shall not
have incurred any indebtedness (as defined in
Section 5.13(a)) from the date hereof through the
Effective Date other than (i) borrowings under its
existing credit facility with Chemical Bank and any
extensions or replacements thereof (the "LIVE Credit
Facility") which borrowings may be used solely for
working capital purposes or for the partial
repayment of amounts owed on the LIVE 12% Notes as
permitted by Section 8.1(a)(i)(C) or for the
redemption of the LIVE Series B Preferred Stock as
contemplated in Section 10.2(e) hereof and (ii)
other borrowings of up to $17,000,000 which may be
used solely for the redemption of the LIVE Series B
Preferred Stock as contemplated in Section 10.2(e)
hereof.
(vii) Amendments to LIVE Increasing Rate Notes
Indenture. LIVE shall have received amendments to
the LIVE Increasing Rate Notes Indenture in form,
scope and substance and on terms set forth in
Exhibit 9.3(a).
(viii) Amendments to LIVE 12% Indenture. The
LIVE 12% Indenture shall have been amended to extend
the maturity date to at least ninety days after the
maturity date of the LIVE Credit Facility and LIVE
shall have received other amendments to such
indenture in form, scope and substance and on terms
set forth in Exhibit 9.3(b).
(ix) LIVE Rights Agreement. The LIVE Rights shall
no longer be outstanding.
(x) Assets of LIVE. Neither LIVE nor its
Subsidiaries shall have disposed of or written-down
the carrying value of any assets of LIVE or its
Subsidiaries except with respect to plans previously
disclosed to Carolco with respect to Strawberries
and VCL and except for immaterial write-downs and
write-offs in the ordinary course of business and
consistent with past practice.
(xi) Sale of Strawberries and VCL. If LIVE shall
have sold Strawberries or VCL, the terms of such
sales shall have been on terms and conditions
reasonably satisfactory to Carolco.
Section 10.c Conditions to Obligations of LIVE and
CAC to Effect the Merger. The obligations of LIVE
and CAC to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the
following additional conditions, any or all of which
may be waived by LIVE and CAC at their option,
except as may be required by law:
(i) Performance of Obligations; Representations and
Warranties; No Material Adverse Change. Carolco
shall have performed and satisfied in all material
respects each of its covenants and agreements
required or contemplated by this Agreement to be
performed on or prior to the Effective Date; each of
the representations and warranties of Carolco
contained in this Agreement that is qualified by
materiality shall be true and correct on and as of
the Effective Date as if made on and as of such date
and each of the representations and warranties that
is not so qualified shall be true in all material
respects on and as of the Effective Date as if made
on and as of such date, in each case except as
contemplated or permitted by this Agreement; there
shall have been no Material Adverse Change with
respect to Carolco after the date of this Agreement;
and LIVE and CAC shall have received a certificate
of Carolco, signed by the Chief Executive Officer
and Chief Financial Officer of Carolco, to that
effect.
(ii) [Intentionally Deleted.]
(iii) Tax Opinion. LIVE shall have received an
opinion of Sidley & Austin, in form and substance
satisfactory to LIVE, dated the Effective Date,
substantially to the effect that on the basis of
facts, representations and assumptions set forth in
such opinion which are consistent with the state of
facts existing as of the Effective Date:
(1) The Merger will constitute a reorganization for
federal income tax purposes within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code,
and Carolco, LIVE and CAC will each be a party to
that reorganization within the meaning of Section
368(b) of the Code.
(2) No gain or loss will be recognized by Carolco,
LIVE or CAC as a result of the Merger.
(3) No gain or loss will be recognized by the
holders of LIVE Common Stock or LIVE Series C
Preferred Stock as a result of the Merger.
In rendering such opinion, Sidley & Austin may
receive and rely upon representations of fact
contained in certificates of Carolco, LIVE, CAC and
others.
(iv) Opinion of Counsel to Carolco. LIVE and CAC
shall have received the opinion of Gipson Hoffman &
Pancione, counsel to Carolco, dated the Effective
Date, addressed to LIVE and CAC, in the form of
Exhibit 10.3(d).
(v) Assets of Carolco. Neither Carolco nor its
Subsidiaries shall have disposed of or written-down
the carrying value of any assets of Carolco or its
Subsidiaries except for immaterial write-downs and
write-offs in the ordinary course of business and
consistent with past practice.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
Section 11.a Termination. This Agreement may be
terminated and the Merger herein contemplated may be
abandoned at any time prior to the Effective Date,
whether before or after any approval by the
stockholders of LIVE and the stockholders of
Carolco:
(i) by mutual consent of LIVE and Carolco, as
authorized by the boards of directors of each of
them;
(ii) by LIVE if (i) Carolco shall have failed to
comply in any material respect with any of its
material covenants or agreements contained in this
Agreement required to be complied with by Carolco
prior to the date of such termination, which failure
to comply has not been cured within five (5)
business days following receipt by Carolco of notice
of such failure to comply; (ii) there has occurred
(A) a material breach by Carolco of any
representation or warranty that is qualified as to
materiality either when made or at the Effective
Date or (B) a breach by Carolco of any
representation or warranty that is not qualified as
to materiality when made or at the Effective Date,
in each case which breach has not been cured within
five (5) business days following receipt by Carolco
of notice of the breach; or (iii) the stockholders
of Carolco voting at the Carolco Stockholder Meeting
shall have failed to approve this Agreement and the
transactions contemplated hereby as contemplated in
Section 9.1(a) hereof;
(iii) by Carolco if (i) LIVE or CAC or any of
their Subsidiaries shall have failed to comply in
any material respect with any of their material
covenants or agreements contained in this Agreement
required to be complied with by LIVE or CAC or any
of their Subsidiaries prior to the date of such
termination, which failure to comply has not been
cured within five (5) business days following
receipt by LIVE or CAC, as the case may be, of
notice of such failure to comply; or (ii) there has
occurred (A) a material breach by LIVE or CAC of any
representation or warranty that is qualified as to
materiality either when made or at the Effective
Date or (B) a breach by LIVE or CAC of any
representation or warranty that is not qualified as
to materiality when made or at the Effective Date,
in each case which breach has not been cured within
five (5) business days following receipt by LIVE or
CAC, as the case may be, of notice of the breach; or
(iii) the stockholders of LIVE voting at the LIVE
Stockholder Meeting shall have failed to approve
this Agreement and the transactions contemplated
hereby as contemplated in Section 9.1(b) hereof;
(iv) by either LIVE or Carolco, if the other party
accepts a competing "takeover proposal" or "offer"
as provided in Section 8.3 hereof;
(v) by either LIVE or Carolco, if such party shall
have exercised its best efforts to effect the Merger
and, notwithstanding such best efforts, if the
Merger has not been effected on or prior to the
close of business on December 31, 1994, unless an
extension of such date is agreed to by the parties
in writing on or before such date;
(vi) by LIVE, if the Board of Directors of Carolco
shall have modified or withdrawn its recommendation
of the Merger or declaration that the Merger is
advisable or if the Board of Directors of Carolco
shall have recommended to stockholders of Carolco
any takeover proposal of any other person or shall
have resolved to do any of the foregoing, in which
case costs shall be shared as set forth in Section
9.7;
(vii) by Carolco, if the Board of Directors of
LIVE and its Advisory Committee considering the
Merger shall have modified or withdrawn its
recommendation of the Merger or declaration that the
Merger is advisable or if the Board of Directors of
LIVE shall have recommended to stockholders of LIVE
any takeover proposal of any other person or shall
have resolved to do any of the foregoing, in which
case costs shall be shared as set forth in
Section 9.7; or
(viii) by either LIVE or Carolco if any permanent
injunction or other order of a court or other
competent authority preventing the consummation of
the Merger shall have become final and
non-appealable.
Section 11.b Effect of Termination. In the event
of termination of this Agreement by either LIVE or
Carolco or both, as provided in Section 11.1, this
Agreement shall forthwith become void and there
shall be no further liability hereunder on the part
of Carolco, LIVE or CAC or their respective officers
or directors except with respect to the provisions
concerning fees and expenses contained in
Section 9.7, and except with respect to provisions
concerning confidentiality and the return of
documents contained in Section 9.4, which shall
survive the termination; provided, however, that
nothing contained in this Section 11.2 shall relieve
any party hereto from any liability for any breach
of this Agreement occurring on or prior to the date
of termination hereof.
Section 11.c Amendment. This Agreement may be
amended by the parties hereto, by or pursuant to
action taken by their respective Boards of Directors
(and in the case of LIVE, with the consent of its
Advisory Committee), at any time before or after
approval of the Merger and the transactions
contemplated hereby by the stockholders of Carolco
or the approval of the Merger and the transactions
contemplated hereby by the stockholders of LIVE,
but, after any such approval by stockholders of
Carolco or LIVE, no amendment shall be made which
(i) alters or changes the amount or kind of shares
of any class or series of capital stock of LIVE,
(ii) alters or changes any terms of the Certificate
of Incorporation of LIVE or the Surviving
Corporation to be effected by the Merger, (iii)
alters or changes any of the terms and conditions of
the Agreement if such alteration or change would
adversely affect the holders of any class or series
of capital stock of LIVE, Carolco or CAC, (iv)
changes the Exchange Ratio provided in Section 4.1
or (v) in any way materially adversely affects the
rights of such stockholders, without the further
approval of such stockholders. This Agreement may
not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 11.d Waiver. At any time prior to the
Effective Date, the parties hereto pursuant to
action taken by their respective Boards of Directors
(and in the case of LIVE, with the consent of its
Advisory Committee of the Board of Directors) may
(i) extend the time for the performance of any of
the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or
in any document delivered pursuant hereto by the
other parties hereto and (iii) waive compliance by
the other parties hereto with any of the agreements
or conditions contained herein which may legally be
waived (except that neither CAC nor LIVE may waive
any material breach hereunder by the other and
except that in the event of a waiver of any material
condition, covenant or breach, each of the Carolco
Investors, in the event of a waiver by Carolco, and
each of the LIVE Investors, in the event of a waiver
by LIVE, shall be entitled to rescind such Carolco
Investor's or LIVE Investor's Investor
Representation Agreement within five (5) business
days of such waiver). Any agreement on the part of
a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure
of any party hereto to enforce at any time any
provision of this Agreement shall not be construed
to be a waiver of such provision, nor in any way to
affect the validity of this Agreement or any part
hereof or the right of any party thereafter to
enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent
breach.
Section 11.e Approval by LIVE Special Committee.
The approval of the LIVE Special Committee shall be
required for any amendment or waiver which has the
effect of reducing or eliminating the requirement
that 100% of the LIVE Series B Preferred Stock be
redeemed as a condition to the Merger.
ARTICLE 12
GENERAL PROVISIONS
Section 12.a Non-Survival of Representations and
Warranties. None of the representations and
warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive
the Effective Date.
Section 12.b Notices. All notices and other
communications hereunder shall be in writing and
shall be deemed given if delivered personally, sent
by overnight courier or telecopied (with a
confirmatory copy sent by overnight courier) to the
parties (with courtesy copies to the LIVE Investors
and Carolco Investors) at the following addresses
(or at such other address for a party as shall be
specified by like notice):
(i) if to LIVE or CAC, to
LIVE Entertainment Inc.
15400 Sherman Way, Suite 500
Van Nuys, California 91406
Attention: Michael J. White, General Counsel
Facsimile: (818) 908-9539
with a copy to:
Sidley & Austin
2049 Century Park East
39th Floor
Los Angeles, California 90067
Attention: Gary J. Cohen, Esq.
Facsimile: (310) 556-6502
(ii) if to Carolco, to
Carolco Pictures Inc.
8800 Sunset Boulevard
Los Angeles, California 90069
Attention: Robert W. Goldsmith, General Counsel
Facsimile: (310) 652-1343
with a copy to:
Gipson Hoffman & Pancione
1901 Avenue of the Stars
Suite 1100
Los Angeles, California 90067
Attention: Lawrence R. Barnett, Esq.
Facsimile: (310) 556-8945
(iii) if to Pioneer, to
Pioneer LDCA, Inc.
2265 East 220th Street
Long Beach, California 90810
Attention: Tetsuro Kudo
Facsimile: (310) 952-2420
with a copy to:
Pioneer LDC, Inc.
1-20-6 Ebisuminami
Shibuya-ku, Tokyo 150
JAPAN
Attention: Mr. Ryuichi Noda
Facsimile: 011 813 5721 2040
and
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attention: Blake Hornick, Esq.
Facsimile: (212) 326-0806
(iv) if to Cinepole, to
Cinepole Productions B.V.
P.O. Box 990
1000 AZ Amsterdam
THE NETHERLANDS
Facsimile:
with a copy to:
Coudert Brothers
52, Avenue Des Champs-Elysees
75008 Paris
FRANCE
Attention: Jonathan M. Wohl, Esq.
Facsimile: 011 331 4359 6655
and
Le Studio Canal+ (U.S.)
301 North Canon Drive, Suite 228
Beverly Hills, California 90210
Attention: Richard J. Garzilli, Esq.
Facsimile: (310) 246-9772
and
Coudert Brothers
1055 West 7th Street, 20th Floor
Los Angeles, California 90017-2503
Attention: John A. St. Clair, Esq.
Facsimile: (213) 689-4467
(v) if to RCS, to
RCS Video International Services B.V.
Avv. Enzo Pulitano
Affari Legali e Societari
RCS Editori SpA
Corso Garibaldi 86
20121 Milan ITALY
Facsimile: 011 392 2584 3073
with a copy to:
Werbel McMillin & Carnelutti
711 Fifth Avenue
New York, New York 10022
Attention: Paul D. Downs, Esq.
Facsimile: (212) 832-3353
(vi) if to MGM Holdings Corporation, to
MGM Holdings Corporation
c/o Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404
Attention: Michael S. Hope
Facsimile: (310) 449-3090
with a copy to:
White & Case
633 West Fifth Avenue, Suite 1900
Los Angeles, California 90071
Attention: David G. Johnson, Esq.
Facsimile: (213) 620-0758
(vii) if to New Carolco Investments B.V., to
New Carolco Investments B.V.
c/o Schutte, Zewald & Jorna
Parklaan 46, 3016 BC Rotterdam
THE NETHERLANDS
Facsimile: 011 3110 4361 880
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy, Esq.
Facsimile: (213) 687-5600
Section 12.c Interpretation. When a reference is
made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and
headings contained in this Agreement are for
reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall
be deemed to be followed by the words "without
limitation." The phrases "date of this Agreement,"
the "date hereof" and words of similar impact,
unless the context otherwise requires, shall be
deemed to refer to August 10, 1994. Unless
expressly indicated herein to the contrary, and when
the context so dictates, the masculine includes the
feminine and the singular includes the plural.
Section 12.d Counterparts. This Agreement may be
executed in counterparts, all of which shall be
considered one and the same agreement and shall
become effective when one or more counterparts have
been signed by each of the parties and delivered to
the other parties.
Section 12.e Entire Agreement; No Third-Party
Beneficiaries. This Agreement, including the
documents and instruments referred to herein, (a)
constitutes the entire agreement and supersedes all
prior agreements and understandings, both written
and oral, among the parties with respect to the
subject matter hereof, and there are no other
covenants, promises, agreements, conditions or
understandings, whether oral or written, among the
parties hereto, and (b) except for the provisions of
Sections 9.9(a) and 9.14, is not intended to confer
upon any person other than the parties any rights or
remedies hereunder.
Section 12.f Governing Law. This Agreement shall
be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
Section 12.g Assignment. Neither this Agreement
nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties
without the prior written consent of the other
parties, except that CAC may assign, in its sole
discretion, any of or all its rights, interests and
obligations under this Agreement to LIVE or to any
direct wholly-owned subsidiary of LIVE, but no such
assignment shall relieve CAC of any of its
obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, LIVE, CAC and Carolco have
caused this Agreement to be signed by their
respective officers thereunto duly authorized all as
of the date first written above.
LIVE ENTERTAINMENT INC.
By: /s/ Roger A. Burlage
Name: Roger A. Burlage
Title: President and Chief Executive Officer
Attest:
/s/ Robert L Denton
Name: Robert L. Denton
Title: Vice President and
Chief Accounting Officer
CAROLCO ACQUISITION CORP.
By:/s/ Roger A. Burlage
Name: Roger A. Burlage
Title: President and Chief Executive Officer
Attest:
/s/ Steven A. Mangel
Name: Steven A. Mangel
Title: Senior Vice President/Legal and Business
Affairs
CAROLCO PICTURES INC.
By: /s/ Mario F. Kassar
Name: Mario F. Kassar
Title: Chairman of the Board and Chief Executive
Officer
Attest:
/s/ Robert W. Goldsmith
Name: Robert W. Goldsmith
Title: Senior Vice President and General Counsel