Dancap Files Lawsuit Against Key Brand & Mirvish

Dancap Productions Inc. and related companies have commenced legal proceedings against U.S.-based Key Brand Entertainment and its affiliates and subsidiaries and Toronto-based Ed Mirvish Enterprises. Dancap is seeking an injunction to prevent Key Brand from selling the Canon and Panasonic Theatres in Toronto to Mirvish, and entering into a non-compete and additional rights agreement with Mirvish. Dancap also seeks damages.

The suit alleges that Key Brand has breached its contractual obligations to Dancap, which flow from an agreement signed last fall between the two companies. It further alleges that this breach will cause irreparable harm to Dancap and that Mirvish encouraged Key Brand to breach its contract with Dancap.

Last fall, Dancap agreed to join Key Brand Entertainment in its acquisition of the North American theatrical assets of Live Nation, Inc., including venues and properties as well as Broadway Across America and Broadway Across Canada. The investment provided by Dancap was the "linchpin" that allowed Key Brand to acquire the theatrical assets of Live Nation, Inc.

The transaction closed in January 2008, at which time Aubrey Dan became a director of Key Brand and chairman of Broadway Across Canada. In addition to acquiring an equity interest in Key Brand, Dancap gained full authority to autonomously manage Key Brand's Canadian assets, including the Canon and Panasonic Theatres in Toronto, and final right to determine which productions would be shown and when. Dancap also gained access to Key Brand's pipeline of theatrical productions and its corporate and theatrical relationships (including Broadway Across America and Broadway Across Canada) as well as the right to invest in future Key Brand and Mirvish productions.

Deal with Mirvish Productions Hidden from Dancap

After the closing of the transaction, Dancap sought information to allow it to begin the process of scheduling the theatres and managing the Canadian assets. Its efforts to obtain financial, operational and scheduling information were largely frustrated.

Dancap alleges that around the time of the closing, Key Brand began secret negotiations with Mirvish to sell the Canon and Panasonic Theatres to it, without Dancap's knowledge, and in breach of its prior agreement with Dancap. Key Brand also proposes to agree to non-compete terms with Mirvish, nullifying the contractual rights Key Brand had previously granted to Dancap by shutting off the theatrical product pipeline it had promised to provide.

The proposed agreement with Mirvish was not revealed to Key Brand's board (of which Mr. Dan is a director) until after the agreement was finalized in early April 2008. The suit alleges that Key Brand intentionally kept Dancap in the dark so Dancap would have only limited time to object and stop the transaction. Dancap also alleges that, if the sale of the two Theatres to Mirvish is allowed, Mirvish will have a dominant position in Toronto commercial theatres suitable for Broadway style productions to the detriment of theatre goers.

Although Key Brand has no contractual right to terminate Dancap management rights, the proposed sale will have the effect of eliminating Dancap's ability to schedule any of its shows at either theatre.

"Our primary reasons for entering into an agreement with, and investing in, Key Brand were to manage the Canadian assets including the right to control the scheduling of shows at the Canon and Panasonic Theatres, and to form a strategic alliance with Key Brand" says Mr. Dan, Founder and President of Dancap. "Key Brand has long known of our interest in the Canon and Panasonic Theatres," he explained."We would never have invested had they disclosed a plan to sell these facilities and enter into agreements with Mirvish. We now have an obligation, to our customers and our business, to enforce our rights under our agreement." Mr. Dan added, "We believe that everyone benefits from Toronto enjoying a rich and vibrant theatre scene, as it did a few short years ago. Trying to limit choice through anti-competitive tactics hurts everyone."

Following an attendance at the Ontario Superior Court of Justice on May 6, Key Brand, its affiliates and subsidiaries and Mirvish provided an undertaking to the Court not to close the transaction until June 6, in order to permit a hearing on the merits of Dancap's motion for an injunction.

Dancap Productions has been gearing up for its final three shows in their inaugural series. The Cameron Mackintosh and The National Theatre of Great Britain's acclaimed new production of Lerner & Loewe's My Fair Lady will be presented from May 8 to 31 at the Toronto Centre for the Arts. A show starring a cast of fuzzy puppets searching for love, purpose and a decent apartment – Avenue Q – will be presented at the Elgin Theatre from July 29 to August 21, 2008. Finally, the much anticipated Jersey Boys will be presented at the Toronto Centre for the Arts from August 21 to October 5, 2008. Winner of the 2006 Tony Award® for Best Musical and the 2006 Grammy Award for Best Musical Show Album, Jersey Boys tells the story of Frankie Valli and The Four Seasons: Frankie Valli, Bob Gaudio, Tommy DeVito and Nick Massi. Tickets for all three shows are available at dancaptickets.com.