1
EXHIBIT 10.6
ASSET AND STOCK PURCHASE AGREEMENT
BETWEEN
CROWN CINEMA CORPORATION
CROWN THEATRE CORPORATION
HOLLYWOOD THEATERS, INC.,
AND
HOLLYWOOD THEATER HOLDINGS, INC.
DATED AS OF AUGUST 26, 1996
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
SALE AND TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 Sale and Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Acquisition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3 Expenses; Prorations of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.5 Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.6 Escrow Agreement; Purchase Price Adjustments;
Post-Closing Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.7 ▇▇▇▇▇▇▇ Money Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.8 Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.10 Non-Assignable Assumed Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
THE CLOSING; TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2 Conditions Precedent to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.3 Conditions Precedent to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.5 Buyer's Inspection of the Acquired Assets . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.6 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.7 Survey and Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.1 Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.2 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.3 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.4 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.5 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.6 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-i-
3
SECTION 4.7 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.8 Contracts and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.9 Theater Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.11 Assets Necessary to Business; Effect of Transfer . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.14 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.15 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.16 Defects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.17 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.18 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.19 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.20 ERISA Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.21 Holdings Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.22 CTC Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.23 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.24 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND HOLDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.1 Corporate Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.2 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.3 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.4 Governmental Authorizations and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.5 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.6 Holdings Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.1 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.2 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.3 Satisfaction of All Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.5 Material Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.6 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.7 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.8 Continuation of Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.9 Interim Operations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.10 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-ii-
4
SECTION 6.11 Preservation of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.12 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.13 Use of Corporate Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.14 Termination of CTC Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.15 Tax Treatment of Sale of CTC Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.16 Corporate Office Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . 41
SECTION 7.1 Survival of Representations and Agreements . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.2 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.3 Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.4 Indemnification for Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.5 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.4 Parties in Interest; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.5 Amendment; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.6 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.7 Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.9 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.13 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Exhibit A - Assignment and Assumption Agreement
Exhibit B - ▇▇▇▇ of Sale and Assignment
Exhibit C - Form of Landlord Consent and Subordination
Exhibit D - Escrow Agreement
Exhibit E - Consulting Agreement
Exhibit F - Form of Sellers' Legal Opinion
Exhibit G - Form of Buyer's Legal Opinion
Schedule 1 - Calculation of TLCF
Schedule 2.1(a) - Real Property
-iii-
5
Schedule 2.1(b) - Theater Leases
Schedule 2.1(d) - Assignable Consents and Approvals
Schedule 2.1(e) - Assumed Contracts
Schedule 2.1(h) - Excluded Assets
Schedule 2.2(a) - Development Theaters Cost
Schedule 2.5 - Existing Debt
Schedule 3.2(c) - Important Theaters
Schedule 3.3 - Rent Amounts and Term of Theater in St. ▇▇▇▇▇▇, Missouri
Schedule 3.7(b) - Title Commitment Amounts
Schedule 4.3 - Sellers Conflicts; Required Consents
Schedule 4.4 - Liens; Agreements Granting Rights to Third Parties
Schedule 4.5 - Proprietary Rights
Schedule 4.6 - Financial Statements; TLCF Sample Calculation
Schedule 4.7 - Conduct of Business
Schedule 4.8 - Contracts and Other Agreements
Schedule 4.9 - Theater Locations
Schedule 4.12 - Litigation
Schedule 4.14 - Environmental Law Undertakings
Schedule 4.17 - Defects
Schedule 4.19 - Brokers
Schedule 4.20 - Employee Benefit Plans
Schedule 4.21 - ERISA
Schedule 4.23 - Labor Matters
Schedule 5.3 - Buyers or Holdings Conflicts
Schedule 5.7 - Holdings Financial Statements
Schedule 6.9 - Interim Operations
Schedule 6.12 - Theaters Owned By Cinema Venture Partners
-iv-
6
ASSET AND STOCK PURCHASE AGREEMENT
This ASSET AND STOCK PURCHASE AGREEMENT (this "Agreement"), is
entered into effective as of August 26, 1996 (the "Effective Date") by and
between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, acting in his individual capacity ("▇▇▇▇▇▇▇"),
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, acting in his capacity as trustee ("Trustee") pursuant to
Trust Agreement dated May 7, 1980 (the "Trust"), Crown Cinema Corporation, a
Missouri corporation ("CCC"), Crown Theatre Corporation, a Missouri corporation
("CTC") (each of ▇▇▇▇▇▇▇, CCC and CTC being a "Seller" and any two or more of
them being collectively referred to as "Sellers"), Hollywood Theaters, Inc., a
Delaware corporation ("Buyer"), and Hollywood Theater Holdings, Inc., a
Delaware corporation ("Holdings"). ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ executes this Agreement
in his individual capacity, in his capacity as President of CCC and CTC, and in
his capacity as Trustee.
W I T N E S S E T H:
WHEREAS, on July 1, 1996, Buyer and Sellers entered into a
Letter of Intent, as supplemented by letter dated July 9, 1996 (as
supplemented, the "Letter of Intent") whereby Buyer proposed to buy and Sellers
agreed to sell the Acquired Assets (as hereinafter defined) subject to the
execution of a definitive agreement; and
WHEREAS, Buyer and Sellers now desire to enter into a
definitive agreement whereby Sellers will sell, convey, transfer and deliver
the Acquired Assets to Buyer free and clear of all Liens (as hereinafter
defined), title imperfections, claims, charges, levies or assessments, and
Buyer will acquire the Acquired Assets from Sellers, all upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For purposes of this
Agreement, the terms set forth below shall have the following respective
meanings:
"Accrued Vacation Obligations" has the meaning set forth in
Section 6.9(d) hereof.
"Acquired Assets" means the CCC Assets, the CTC Stock and the
CTC Assets.
"ADA" has the meaning specified in Section 4.11.
7
"Additional Deposit" has the meaning set forth in Section
2.7(c) hereof.
"Affiliate" shall mean, with respect to any Person, any other
Person who, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. As used herein, the term "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether by the
ownership of voting securities, by contract or otherwise. In the case of
Sellers, the term Affiliate does not include any employee of Sellers, other
than ▇▇▇▇▇▇▇.
"Arbitration Panel" has the meaning specified in Section
8.6(b) hereof.
"Assignment and Assumption Agreement" means an assignment and
assumption document to be executed as of the Closing Date, in the form attached
as Exhibit A hereto.
"Assumed Contracts" has the meaning specified in Section
2.1(e) hereof.
"▇▇▇▇ of Sale and Assignment" means a sale and assignment
document to be executed as of the Closing Date by Sellers, in the form attached
as Exhibit B hereto.
"Cash Purchase Price" has the meaning specified in Section
2.2(a).
"CCC Assets" has the meaning specified in Section 2.1 hereof.
"Closing" has the meaning specified in Section 3.1 hereof.
"Closing Date" has the meaning specified in Section 3.1
hereof.
"Consent" has the meaning specified in Section 4.3 hereof.
"Consulting Agreement" has the meaning specified in Section
2.8.
"Contract" means any contract, agreement, arrangement,
understanding or other instrument or obligation (whether oral or written,
pending or executory).
"CTC Assets" means all of the assets, properties and rights of
any kind owned or leased by CTC, including, without limitation, those of the
nature described with respect to CCC in Section 2.1 hereof.
"CTC Stock" means all of the issued and outstanding shares of
common stock, par value $1.00 per share, of CTC.
"Delivered Documents" has the meaning specified in Section
3.5(a).
"Delivery Date" has the meaning specified in Section 3.5(a).
2
8
"Development Theaters" means the Indian Mound 6 Theater in
Heath, Ohio, the new theater under development in Lawrence, Kansas, the Forum
Twin 2 Theater in Rolla, Missouri, and the Capital 8 Theaters in Jefferson
City, Missouri.
"Dispute Notice" has the meaning specified in Section 2.3(b)
hereof.
"▇▇▇▇▇▇▇ Money Deposit" means the amount to be advanced by
Buyer pursuant to Section 2.7 hereof, which amount is to be held by the Title
Company in an interest bearing account and distributed in accordance with the
terms and conditions of this Agreement.
"Environmental Laws" means any federal, state, local and
foreign laws (including common law), statutes, codes, ordinances, guides,
written policy rules and regulations that are applicable to the Acquired
Assets, and in each case as amended, and any judicial or administrative
interpretation thereof, relating to pollution or protection of human health,
the environment or natural resources (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws, statutes, codes, ordinances, rules, regulations,
consent decrees and judgments relating to emissions, discharges, releases or
threatened releases of Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"Escrow Agreement" has the meaning specified in Section 2.6(a)
hereof.
"Escrowed Funds" has the meaning specified in Section 2.6(a)
hereof.
"Excluded Assets" has the meaning specified in Section 2.1(h)
hereof.
"Existing Debt" means the indebtedness identified on Schedule
2.5 hereto (i) relating to or secured by liens on any Theaters, or (ii) whether
or not relating to or secured by liens on any Theaters, for which CTC or any of
the CTC Assets are obligated or bound, all of which indebtedness is to be
repaid by ▇▇▇▇▇▇▇ and/or CCC on the Closing Date with proceeds of the Cash
Purchase Price.
"Expenses" means any and all fees or expenses or capital
expenditures relating to the replacement of equipment arising out of or
relating to the operation of the Theaters and the Acquired Assets in the
ordinary course of business, including, but not limited to, prepaid fees,
Taxes, utility charges, lease charges, film rental expenses, minimum rent and
percentage rent under the Leases, concession expenses and wages and salaries.
"Expiration Date" has the meaning specified in Section 2.3(b)
hereof.
"Fee Theaters" means the Real Property and Improvements.
"GAAP" means generally accepted accounting principles and
practices as in effect in the United States at the time of the application
thereof, consistently applied for all periods so as
3
9
to fairly reflect the financial condition, the results of operations and the
cash flows of the relevant Person or Persons.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof, any federal or state court and any
other agency, body, authority or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Hazardous Substance" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form, polychlorinated biphenyl
("PCBs") and, to the extent only it exists at levels which are considered
hazardous to human health, radon gas; and (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous waste," "hazardous materials," "extremely hazardous substances,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants" or
words of similar import, under any applicable Environmental Laws.
"Holdings Common Stock" has the meaning specified in Section
2.2(b).
"Holdings Equity Purchaser" means the Person(s) purchasing
common and/or preferred equity of Holdings in connection with the financing by
Buyer of the acquisition of the Acquired Assets.
"Improvements" means all buildings and other improvements
situated on the Real Property.
"Inspection Period" means the period beginning on the date of
this Agreement and ending on the close of business on September 8, 1996.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended and as the same may be amended from time to time, and any
successor statute thereto.
"Knowledge" means the actual knowledge of ▇▇▇▇▇▇▇ and/or ▇▇▇▇▇
▇▇▇▇▇▇ after reasonable inquiry of all district managers and corporate staff of
CCC and CTC.
"Landlord Consent to Assignment and Subordination" means a
written consent to, among other things, the assignment of each Lease by the
respective landlord of such Lease, substantially in the form attached as
Exhibit C hereto.
"Leased Theaters" means (i) all of CCC's right, title and
interest as tenant in, to and under the Leases covering the 22 Theaters which
are identified as "CCC Leased Theaters" on Schedule 4.9 hereto and all of CTC's
right, title and interest as tenant in, to and under the Leases covering the 3
Theaters identified as "CTC Leased Theaters" on Schedule 4.9 hereto.
4
10
"Leases" means those written leases, together with all
amendments, supplements and modifications thereto, relating to the Leased
Theaters as of the date hereof, which Leases are identified on Schedule 2.1(b)
hereto under the captions CCC Leased Theaters and CTC Leased Theaters (being
the "CCC Leases" and the "CTC Leases," respectively).
"Letter of Intent" has the meaning specified in the recitals
hereto.
"Liability" has the meaning specified in Section 7.2 hereof.
"Lien" means, with respect to any properties or assets, any
mortgage, pledge, hypothecation, assignment, security interest, lien or
encumbrance or any preference, priority or other security agreement or
preferential arrangement of any kind or character whatsoever (including, but
not limited to, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction) in
respect of such properties or assets.
"Material Adverse Effect" means a material adverse effect on
the business, operations, affairs, condition (financial or otherwise), results
of operation, properties, assets or liabilities of the Theaters, individually
or in the aggregate.
"Permitted Exceptions" has the meaning specified in Section
3.7(c).
"Person" means any individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization of
any kind or character, including any Governmental Authority.
"Proprietary Rights" means any United States and foreign
letters patent, patents, patent applications, trademarks, trade names, service
marks, brand names, logos and other trade registrations (including unregistered
names and marks), trademark and service ▇▇▇▇ registrations and applications,
copyrights and copyright registrations and applications, inventions, invention
disclosures, trade secrets, processes, designs, technology, know-how and other
similar rights, including proprietary theater ticketing systems and the related
software.
"Purchase Price" has the meaning specified in Section 2.2
hereof.
"Real Property" means fee simple title in and to those certain
tracts of real property on which are located an aggregate of eight Theaters
identified as "CCC Fee Theaters" and "CTC FeeTheaters" on Schedule 4.9 hereto,
which property is more particularly described on Schedule 2.1(a) hereto under
the captions CCC Fee Theaters and CTC Fee Theaters, respectively, together with
all of Sellers' right, title and interest in and to adjacent streets, roads,
alleys, rights of way, easements, rail usage and any strips or gores of real
estate abutting or bounding such property, and all rights, titles and interests
of Sellers appurtenant to such real property and the Improvements.
5
11
"Registration Rights Agreement" means a registration rights
agreement relating to the Holdings Common Stock which has substantially the
same terms as the registration rights agreement to be entered into by Holdings
and the Holdings Equity Purchaser, provided that, unless ▇▇▇▇▇▇▇ otherwise
agrees, such registration rights agreement will (i) ▇▇▇▇▇ ▇▇▇▇▇▇▇ "piggy back"
registration rights with respect to the Holdings Common Stock that will be
exercisable in connection with the first underwritten public offering of common
stock of Holdings, subject to standard underwriters' carve backs; and (ii)
▇▇▇▇▇ ▇▇▇▇▇▇▇ one "demand" registration right in the event that the
underwriters for Holdings' initial public offering of common stock carve back
Durwood's sale of Holdings Common Stock therein.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the outdoor environment, or into, onto, or out of the Theaters,
including the movement of any Hazardous Substance or other substance through or
in the air, soil, surface water, groundwater or other property.
"Retained Liabilities" has the meaning specified in Section
2.5 hereof.
"Revised Commitment" has the meaning specified in Section
3.7(c).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" and "Sellers" have the meanings specified in the
recitals to this Agreement, provided that (i) the use of the singular includes
the plural and the use of the plural includes the singular, and (ii) where the
context requires, the term Sellers excludes ▇▇▇▇▇▇▇ and refers to CCC and CTC
both together and each as a separate Seller.
"Sellers' Ancillary Documents" has the meaning specified in
Section 4.2 hereof.
"Stock Value" means the price at which shares of common stock,
par value $.01 per share, of Holdings are sold by Holdings to the Holdings
Equity Purchaser.
"Stockholders Agreement" means the stockholders agreement
among the holders of equity securities of Holdings.
"Survey" has the meaning specified in Section 3.7(a).
"Surveyor" has the meaning specified in Section 3.7(a).
"Taxes" means all taxes, charges, fees, levies or other
assessments (including, but not limited to, income, gross receipts, excise,
property, sales, occupation, use, service use, license, payroll, franchise,
transfer and recording taxes, fees and charges) imposed by any Governmental
Authority, whether computed on a separate, consolidated, unitary or combined
basis or in any other manner, and includes any interest, penalties and
additions to any tax.
6
12
"Theaters" means the Fee Theaters and the Leased Theaters.
"Third Party Claims" means claims, charges or complaints made
or threatened by third parties or employees of CTC or CCC arising from events
occurring outside the ordinary course of business of CTC or CCC, including, but
not limited to, harassing or illegal acts committed by employees of CTC or CCC
or charges or complaints made by employees to the Equal Employment Opportunity
Commission or any other federal, state or local agency responsible for the
prevention of unlawful employment practices.
"Title Commitment" has the meaning specified in Section
3.7(b).
"Title Company" means Hall Abstract, as agent for Chicago
Title Company, at the address of ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Title Policies" has the meaning specified in Section 3.7(d).
"TLCF" means, with respect to any specified period, the
theater level cash flow of a particular Theater or Theaters, as determined by
reference to the theater level cash flow statements of Sellers for such Theater
or Theaters, prepared consistently in all material respects with Sellers'
historical theater level cash flow statements, as heretofore provided by
Sellers to Buyer, calculated as described in Section 4.6 and as shown on
Schedule 4.6 hereto. The parties acknowledge that TLCF does not include
interest, amortization, depreciation or allocations of general and
administrative expenses or income taxes.
"Transition Time" means 12:00 midnight on Sunday, September 8,
1996.
"UCC" has the meaning specified in Section 3.5(a)(vii).
ARTICLE II
SALE AND TRANSFER OF ASSETS
SECTION 2.1 Sale and Transfer of Assets. In accordance
with the terms and provisions set forth herein, at the Closing Sellers shall
sell, convey, transfer and deliver to Buyer (i) the CTC Stock, free and clear
of all Liens and (ii) all of CCC's and Durwood's right, title and interest in
and to the following properties and assets (collectively, the "CCC Assets"):
(a) the Fee Theaters, including the Real Property
identified on Schedule 2.1(a) hereto and the Improvements;
(b) the leasehold interests in the Leases identified on
Schedule 2.1(b) hereto;
7
13
(c) all tangible personal property, equipment and
fixtures of any kind owned or leased by Sellers and attached to or
located within or on or customarily used in connection with the
operation of the Theaters, including but not limited to seats,
merchandise, inventory, merchantable food and drink, cleaning
equipment, office equipment, projection and sound equipment, screens,
carpets, draperies, soundfold, wall coverings, cash registers, ticket
machines, signs (including marquees), projection supplies, concessions
equipment and prepaid utility and rent deposits in each case, except
for Sellers' rights or interests in any Excluded Assets;
(d) the consents, approvals, licenses, permits,
franchises and other authorizations possessed by Sellers identified in
Schedule 2.1(d) hereto relating to the Theaters to the extent
transferable;
(e) to and under the Contracts listed on Schedule 2.1(e)
hereof (the "Assumed Contracts");
(f) the names "Crown," "Crown Cinema" and "Crown
Theaters," the names of each of the Theaters and any derivatives or
designs of any thereof, either in word form or as a design, and any
other names, trademarks, service marks, trade names, brand names,
logos or slogans incidental thereto or associated therewith;
(g) all records of Sellers that are necessary to the
continuing operation of the Theaters;
(h) all other properties and assets of any kind,
character and description whatsoever (whether or not reflected on the
books of Seller and whether real, personal or mixed, tangible or
intangible, contingent or otherwise) used, or available for use, in
the business or operations of Sellers at the Theaters or necessary for
the continuation of such business or operations consistent with past
practice, other than the assets specifically identified on Schedule
2.1(h) hereto (the "Excluded Assets").
SECTION 2.2 Acquisition of Assets. In consideration of
the sale, conveyance, transfer and delivery of the Acquired Assets, at the
Closing Buyer shall pay and, subject to Section 2.6 hereof, deliver the
following (the "Purchase Price"):
(a) to CCC in consideration of the CCC Assets, the Cash
Purchase Price. The term "Cash Purchase Price" means the sum of (x)
an amount equal to 6.5 times the TLCF for all Theaters, other than
with respect to any new screens opened in 1996 at any Development
Theaters, for the twelve month period ending September 8, 1996 minus
$1,360,779, plus (y) an amount equal to the amount of Existing Debt
incurred in connection with the new screens that opened in 1996 at the
Development Theaters (estimated at $2,800,000) plus (z) to the extent
not financed with the Existing Debt amount referred to in clause (y)
above, actual costs incurred (including engineering, architectural and
legal fees and land purchase price all as estimated on Schedule
2.2(a)) prior to the Closing Date in respect of the development
8
14
of the Development Theaters. Sellers shall estimate the amount of the
Cash Purchase Price by reference to actual TLCF statements for the
relevant Theaters and/or screens for the twelve month period ended
July 31, 1996 and estimates of TLCF for August 1996 and the portion of
September 1996 prior to Closing. Buyer may perform at its expense
during the Inspection Period all procedures it deems necessary or
appropriate to confirm the estimated Cash Purchase Price, including
having its independent accounting firm review the relevant financial
statements and related accounting records of Sellers.
(b) to ▇▇▇▇▇▇▇ in consideration of the CTC Stock, the
Holdings Common Stock. The term "Holdings Common Stock" means a number
of shares of the common stock, par value $.01 per share, of Holdings
equal to the quotient of (x) an amount equal to 0.5 times the TLCF for
all Theaters, other than with respect to any new screens opened in
1996 at any Development Theaters, for the twelve month period ending
September 8, 1996 (determined in a manner consistent with the
calculation of clause (x) of the definition of Cash Purchase Price),
divided by (y) the Stock Value.
SECTION 2.3 Expenses; Prorations of Expenses.
(a) CCC agrees to pay all debts, Expenses and contractual
obligations that arise or are incurred, or with respect to which the
event creating such debt, liability, Expense or obligation arises or
occurred, on or prior to the Transition Time in connection with the
operation and business of the Theaters or related to the Acquired
Assets, whether or not Sellers are aware of such debts, Expenses,
obligations or events. CCC agrees to pay all Third Party Claims that
arise or are incurred, or with respect to which the event creating
such liability or obligation arises or occurs, on or prior the Closing
Date in connection with the operation and business of the Theaters or
related to the Acquired Assets, whether or not Sellers are aware of
such liabilities, obligations or events. Buyer agrees to pay all
debts, Expenses or contractual obligations that arise or are incurred,
or with respect to which the event creating such debt, liability,
Expense or contractual obligation arises or occurs, after the
Transition Time and prior to the Closing (excluding Third Party
Claims) in connection with the operation and business of the Theaters
or related to the Acquired Assets (including general and
administrative and reasonable and customary corporate level expenses).
Buyer agrees to pay all debts, Expenses, contractual obligations,
liabilities and other obligations that arise or are incurred, or with
respect to which the event creating such liability or obligation
arises or occurs, after the Closing in connection with the operation
and business of the Theaters or related to the Acquired Assets. To
the extent that any Expenses required to be prorated are readily
ascertainable as of the Closing Date, Sellers and Buyer agree to pay
such amounts at Closing. With respect to such amounts that are not
readily ascertainable as of the Closing Date, including with respect
to debts, Expenses and contractual obligations incurred by Sellers
after the Transition Time but on or prior to the Closing Date as
described above, Sellers and Buyer shall make payments after the
Closing promptly after such amounts are ascertained, and in any event
within 10 days after evidence of such amounts is received from the
party claiming the right to reimbursement, subject to the following
paragraph (b).
9
15
(b) Sellers and/or Buyer may dispute in good faith any
amounts the other claims to be payable pursuant to this Section 2.3 by
delivering a written notice to the other party or parties setting
forth in reasonable detail the amount and nature of each disputed
matter (each such notice being hereinafter referred to as a "Dispute
Notice") within ten days after receiving a notice that any such amount
is due under Section 2.3(a). Each party shall provide the other party
with such additional information as it may reasonably request as to
the basis of such dispute. The parties shall attempt in good faith to
resolve any dispute as to any matter set forth in a Dispute Notice.
If within 30 days following the date of the receipt of the Dispute
Notice (the "Expiration Date") the dispute cannot be resolved through
negotiation between the parties, the dispute shall be submitted for
resolution by binding arbitration in accordance with Section 8.6
hereof.
SECTION 2.4 Allocation of Purchase Price. Buyer and
Sellers each agree that the Purchase Price is to be allocated hereto among the
Acquired Assets and the Covenant Not to Compete provided in Section 6.12
hereof, and that the portion of the Purchase Price so allocated to the Acquired
Assets is to be allocated among the Acquired Assets as agreed to by the
parties. The parties agree to be bound for all purposes by the foregoing
allocations and will file all tax returns and all tax elections in a manner
consistent with such allocations.
SECTION 2.5 Retained Liabilities. Notwithstanding
anything to the contrary contained in this Agreement, Buyer shall not assume,
pay, perform or discharge any debts, liabilities, Expenses or obligations of
Seller of any kind, character or description whatsoever (whether absolute or
contingent, known or unknown, asserted or unasserted, whether or not the same
are disclosed to Buyer in or pursuant to this Agreement) that arise or are
incurred, or with respect to which the event creating such debt, liability,
Expense or obligation arises or occurred, (i) prior to the Transition Time, in
the case of debts, Expenses and contractual obligations (including general and
administrative and corporate level expenses), and (ii) on or prior to the
Closing Date in the case of all other liabilities and obligations, in each
case in connection with the operation and business of the Theaters or related
to the Acquired Assets (collectively, the "Retained Liabilities"), which
Retained Liabilities include, without limitation, the Existing Debt.
SECTION 2.6 Escrow Agreement; Purchase Price
Adjustments; Post-Closing Payment.
(a) At the Closing, Buyer and Seller shall enter into an
escrow agreement (the "Escrow Agreement") substantially in the form
attached as Exhibit D hereto, pursuant to which Buyer shall deposit
funds from the Cash Purchase Price in an amount equal to $1,000,000.00
(the "Escrowed Funds").
(b) The Purchase Price shall be (i) decreased after the
Closing Date by the amount by which actual TLCF for all Theaters for
the twelve-month period ending September 8, 1996, is lower than the
estimated TLCF for all Theaters (as determined pursuant to Section
2.2(a)) for such period, and (ii) increased by the amount that actual
10
16
TLCF for all Theaters for the twelve-month period ending September 8,
1996 is greater than estimated TLCF for all Theaters (as determined
pursuant to Section 2.2(a)) for such period.
(c) Within sixty days after the Transition Time, Sellers
shall provide to Buyer their estimate of TLCF for all Theaters for the
twelve month period ending on September 8, 1996. Any film
distribution agreements which are not settled within 60 days after the
Transition Time will be deemed as between Buyer and Sellers to be
settled at the amount accrued thereon on Sellers' books (provided such
accruals are made consistent with past practice). If Buyer does not
object to Sellers' determination of TLCF within 30 days after delivery
of Sellers' estimate, Sellers' calculation shall be binding on the
parties. If Buyer does timely object to Sellers' calculation, the
dispute shall be resolved by the same process by which disputes are
resolved in Section 2.3(b).
(d) Within 15 days after the actual TLCF for all Theaters
for the twelve-month period ending September 8, 1996 as determined
pursuant to Section 2.6(c) hereof, the amount of the Purchase Price
adjustments shall be determined and
(i) if no adjustment in the Purchase Price, is
required, Buyer shall cause the Escrowed Funds, together with
all interest and other income accrued thereon, to be paid to
Sellers in accordance with the terms and provisions of the
Escrow Agreement;
(ii) if there are any adjustments in the Purchase
Price that decrease the Purchase Price, (A) Buyer shall be
paid out of the Escrowed Funds an amount equal to the amount
of the decrease in the Purchase Price, together with all
interest and other income accrued on such amount of the
Escrowed Funds, and (B) Buyer shall cause the balance of the
Escrowed Funds, together with all interest and other income
accrued on such amount of the Escrowed Funds, to be paid to
Sellers, in each case in accordance with the terms and
provisions of the Escrow Agreement; and
(iii) if there are any adjustments in the Purchase
Price that increase the Purchase Price, (A) Buyer shall cause
the Escrowed Funds, together with all interest and other
income accrued thereon, to be paid to Sellers in accordance
with the terms and provisions of the Escrow Agreement and (B)
Buyer shall pay an additional amount equal to the increase in
the Purchase Price to Sellers together with interest on such
amount from the Closing Date to the date of payment at a rate
equal to the rate of interest that accrued on the Escrowed
Funds during such period.
SECTION 2.7 ▇▇▇▇▇▇▇ Money Deposit.
(a) The ▇▇▇▇▇▇▇ Money Deposit under this Agreement shall
be as follows: on the date of this Agreement, Buyer shall deliver to
the Title Company the sum of $250,000.00 in immediately available
funds, which is to be held by the Title Company for the benefit of
11
17
Buyer and Sellers in accordance with the terms and conditions of this
Agreement (the "▇▇▇▇▇▇▇ Money Deposit"). The Title Company shall
deposit the ▇▇▇▇▇▇▇ Money Deposit in an interest-bearing account at a
federally insured national bank. From time to time as directed by
Buyer, the Title Company shall pay any interest earned on the ▇▇▇▇▇▇▇
Money Deposit to Buyer. The ▇▇▇▇▇▇▇ Money Deposit shall be refunded
to Buyer, together with any interest thereon, if Buyer terminates this
Agreement during the Inspection Period in accordance with the terms of
Section 3.6 hereof; provided, however, that if Buyer terminates this
Agreement for any reason other than as a result of breach of the terms
hereof by Sellers, a portion of the ▇▇▇▇▇▇▇ Money Deposit not to
exceed $50,000 shall be paid to Sellers in an amount equal to the
reasonable legal and accounting fees and expenses incurred by Sellers
in connection with the transactions contemplated hereby, provided
Sellers provide supporting documentation for such fees and expenses.
If Buyer does not terminate this Agreement during the Inspection
Period pursuant to Section 3.6, the ▇▇▇▇▇▇▇ Money Deposit will become
non-refundable (except as otherwise provided for in (c) below) and the
parties will proceed to Closing, at which the ▇▇▇▇▇▇▇ Money Deposit
shall be applied as a credit toward the payment of the Cash Purchase
Price. Notwithstanding the foregoing except as provided in (c) below,
if this Agreement terminates in accordance with Sections 3.4(a), (c),
(d) or (e), the ▇▇▇▇▇▇▇ Money Deposit shall be refunded to Buyer,
together with any interest thereon; provided, however, that if Buyer
terminates this Agreement for any reason other than as a result of
breach of the terms hereof by Sellers, a portion of the ▇▇▇▇▇▇▇ Money
Deposit not to exceed $50,000 shall be paid to Sellers in an amount
equal to the reasonable legal and accounting fees and expenses
incurred by Sellers in connection with the transactions contemplated
hereby, provided Sellers provide supporting documentation for such
fees and expenses. If Sellers terminate this Agreement in accordance
with Section 3.4(b), the ▇▇▇▇▇▇▇ Money Deposit shall be remitted to
Sellers, and any interest accrued thereon and not previously
distributed shall be remitted to Buyer.
(b) In addition, Buyer shall pay to Sellers the sum of
One Hundred and no/100 Dollars ($100.00) (the "Non-Refundable ▇▇▇▇▇▇▇
Money Deposit") in consideration for this Agreement and the Inspection
Period. Notwithstanding anything in this Agreement to the contrary,
the Non-Refundable ▇▇▇▇▇▇▇ Money Deposit shall be non-refundable to
Buyer in any event.
(c) In addition, if the Closing has not occurred by 2:00
p.m. Central time on September 15, 1996, then on September 16, 1996
Buyer shall pay to Sellers the ▇▇▇▇▇▇▇ Money Deposit plus an
additional Two Hundred Fifty Thousand Dollars ($250,000) (the
"Additional Deposit"). The ▇▇▇▇▇▇▇ Money Deposit and the Additional
Deposit will be applied against the Cash Purchase Price if the Closing
occurs, but as of 2:00 p.m. on September 15, 1996 will be otherwise
non-refundable, except if (i) Buyer terminates this Agreement pursuant
to Sections 3.4(e), or (ii) Sellers terminate this Agreement pursuant
to Section 3.4(g), and upon the occurrence of any of (i) or (ii)
hereof Sellers will refund Buyer all of the Additional Deposit, and
the ▇▇▇▇▇▇▇ Money Deposit will be distributed as provided in Section
2.7(a)).
12
18
SECTION 2.8 Consulting Agreement. On the Closing Date, Buyer
and ▇▇▇▇▇▇▇ will enter into the Consulting Agreement in substantially the form
of Exhibit E hereto pursuant to which ▇▇▇▇▇▇▇ will provide specified services
to Buyer during the term of such agreement in exchange for the consideration
provided under such agreement (the "Consulting Agreement").
SECTION 2.9 Further Assurances. Sellers hereby agree that
from time to time after Closing each of them shall (a) execute, deliver,
acknowledge, file and record, or cause to be executed, delivered, acknowledged,
filed and recorded, such further bills of sale, deeds, general conveyances,
endorsements, assignments and other good and sufficient instruments of sale,
conveyance, transfer and delivery and such further consents, certifications,
affidavits and assurances as are required in order to vest in Buyer all of
Sellers' right, title and interests in and to the Acquired Assets or otherwise
to consummate and make effective the transactions contemplated by this
Agreement and (b) take, or cause to be taken, all actions and do, or cause to
be done, all things, as are required in order to put Buyer in actual possession
and operating control of the Theaters and the Acquired Assets or otherwise to
accomplish the purposes of this Agreement. Buyer agrees to pay all reasonable
expenses associated with any actions required to be taken under this Section
2.9.
SECTION 2.10 Non-Assignable Assumed Contracts. This Agreement
and any document delivered hereunder shall not constitute an assignment or an
attempted assignment of any right under an Assumed Contract contemplated to be
assigned to Buyer hereunder:
(a) which is not assignable without the consent of a
third party if such consent has not been obtained and such assignment
or attempted assignment would constitute a breach thereof; or
(b) if the remedies for the enforcement or any other
particular provisions thereof available to Sellers would not pass to
Buyer.
Sellers shall use reasonable efforts to obtain such consents of third parties
as may be necessary for the assignment of the Assumed Contracts provided that
Seller shall not be obligated to make any payments to such third parties in
addition to those required pursuant to any agreement with third parties in
order obtain such consents, unless Buyer reimburses Seller for such payments at
the time such payments are made. To the extent that any of the Assumed
Contracts are not assignable by the terms thereof or where consents to the
assignment thereof cannot be obtained as herein provided, Sellers shall, at the
Closing, assign to Buyer the full benefit thereof (which shall be deemed to be
Assets) and grant to Buyer an irrevocable power of attorney to perform Sellers'
covenants and obligations thereunder in respect of the period after the Closing
Date, and to enforce Sellers' rights thereunder in the name of Sellers but for
the benefit of Buyer. Sellers shall take or cause to be taken such action in
its name or otherwise as Buyer may require so as to provide Buyer with the
benefits thereof and to effect collection of money or other consideration to
become due and payable under such items and Sellers shall promptly pay over to
Buyer money received by Sellers in respect of all of the foregoing items.
13
19
ARTICLE III
THE CLOSING; TERMINATION
SECTION 3.1 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place on September
27, 1996, or on such other date as has been mutually agreed upon between Buyer
and Sellers (the "Closing Date"), at the offices of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
SECTION 3.2 Conditions Precedent to Obligations of Buyer.
The obligations of Buyer at the Closing hereunder are subject to the
satisfaction on or prior to the Closing Date of the conditions set forth below.
(a) The representations and warranties of Sellers
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the
Closing Date; Sellers shall have performed and complied with all
agreements required by this Agreement to be performed or complied with
by Sellers at or prior to the Closing Date; and Buyer shall have
received certificates, dated as of the Closing Date, signed by Sellers
to the foregoing effect.
(b) No action or proceeding shall have been instituted or
threatened for the purpose or with the possible effect of enjoining or
preventing the consummation of this Agreement or seeking damages on
account thereof.
(c) From the date hereof until Closing, there shall not
have occurred any material casualty or damage (whether or not insured)
to any 2 or more Theaters listed on Schedule 3.2(c) and the business
of Sellers shall have been conducted only in the ordinary course
consistent with past practices.
(d) All necessary action (corporate or otherwise) shall
have been taken by Sellers to authorize, approve, and adopt this
Agreement and the consummation and performance of the transactions
contemplated hereby, and Buyer shall have received a certificate,
dated as of the Closing Date, of Sellers to the foregoing effect.
(e) Buyer, Sellers, and the escrow agent shall have
entered into the Escrow Agreement.
(f) Buyer and ▇▇▇▇▇▇▇ shall have entered into the
Consulting Agreement.
(g) CCC shall have terminated all contracts relating to
the Acquired Assets, other than the Assumed Contracts (including, but
not limited to the contracts listed on Schedule 4.4 hereof).
14
20
(h) Sellers shall have delivered executed written leases
documenting the terms of the oral leases listed on Schedule 4.4
hereto, which leases shall contain rent terms identical to the
respective rental amounts used to calculate TLCF.
(i) Buyer shall have obtained financing for the Cash
Purchase Price on terms acceptable to it.
(j) Buyer shall have received executed Subordination and
Non-Disturbance Agreements from each lender, if any, of the respective
landlords under the Leases, provided that this condition shall be
deemed to have been satisfied so long as lenders for landlords with
respect to no more than two Theaters fail to execute and deliver such
an agreement.
(k) At the Closing, Sellers shall deliver, or cause to be
delivered, to Buyer each of the following:
(i) for each Theater and the related Acquired
Assets, a ▇▇▇▇ of Sale and Assignment, duly executed and
acknowledged by Sellers;
(ii) for each Leased Theater and the related
Assumed Contracts, an Assignment and Assumption Agreement,
duly executed and acknowledged by Seller;
(iii) for each Theater, a fully executed Landlord
Consent to Assignment and Subordination, provided that this
condition shall be deemed to have been satisfied so long as
landlords with respect to no more than two Theaters fail to
execute and deliver Landlord Consents to Assignment and
Subordination, and provided further that obtaining the
landlords' agreements to the provisions in such agreements
relating to landlord subordination of liens shall not be a
condition to closing;
(iv) such other bills of sale, deeds, general
conveyances, endorsements, assignments and other good and
sufficient instruments of sale, conveyance, transfer and
delivery as Buyer may reasonably request in order more
effectively to vest in Buyer all of Sellers' right, title and
interest in and to the Acquired Assets, in each case duly
executed and acknowledged by Sellers;
(v) evidence reasonably satisfactory to Buyer
regarding the termination by Seller prior to Closing of all
Persons employed at each Theater;
(vi) such documents as Buyer may request relating
to the existence and good standing of CCC and CTC under the
laws of the State of Missouri, the authority of Sellers to
enter into this Agreement and any other matters relevant
hereto, all in form and substance reasonably satisfactory to
Buyer;
15
21
(vii) an opinion from ▇▇▇▇▇ ▇▇▇▇ LLP, counsel to
Sellers, to the effect set forth in Exhibit F, incorporating
such reliance, assumptions, qualifications and limitations as
are customary and reasonable;
(viii) an executed counterpart of the Stockholders
Agreement (the stockholders agreement will provide, among
other things, that to the extent Holdings has not completed an
initial public offering on or before the fifth anniversary of
the Closing Date, Trustee shall have the right to "put" all of
its shares to Holdings for the same formula price per common
share at which the holders of Holdings' outstanding preferred
stock may put shares to Holdings);
(ix) evidence satisfactory to Buyer that all
Existing Debt has been repaid in full and all related liens
released; and
(x) stock certificates evidencing the CTC Stock
together with stock powers duly endorsed for transfer of such
shares to Buyer.
(xi) immediately available funds sufficient to
provide for the repair, maintenance or replacement, if any, of
Acquired Assets as contemplated pursuant to Section 3.5(c)(ii)
hereof (unless the Sellers reduce the Purchase Price in
accordance with Section 3.5(c)(iii) hereof).
SECTION 3.3 Conditions Precedent to Obligations of Seller.
The obligations of Sellers at the Closing are subject to the satisfaction on or
prior to the Closing Date of the conditions set forth below.
(a) Buyer's representations and warranties contained in
this Agreement shall be true and correct in all material respects at
and as of the Closing Date with the same effect as though such
representations and warranties had been made as of the Closing Date;
Buyer shall have performed and complied with all agreements required
by this Agreement to be performed or complied with by Buyer at or
prior to the Closing; and Sellers shall have received a certificate,
dated as of the Closing Date, signed by Buyer to the foregoing
effects.
(b) No action or proceeding shall have been instituted or
threatened for the purpose or with the possible effect of enjoining or
preventing the consummation of this Agreement or seeking damages on
account thereof.
(c) All necessary action (corporate or otherwise) shall
have been taken by Buyer and Holdings to authorize, approve and adopt
this Agreement and the consummation and performance of the
transactions contemplated hereby, and Sellers shall have received a
certificate, dated as of the Closing Date, of Buyer and Holdings to
the foregoing effect.
(d) Buyer, Seller and the escrow agent shall have entered
in to the Escrow Agreement.
16
22
(e) Buyer and ▇▇▇▇▇▇▇ shall have entered into the
Consulting Agreement.
(f) Sellers and Holdings shall have entered into the
Registration Rights Agreement.
(g) At the Closing, Buyer shall deliver, or cause to be
delivered, to Sellers each of the following:
(i) the Purchase Price, less the Escrowed Funds;
(ii) such documents as Sellers may request
relating to the existence and good standing of Buyer and
Holdings under the laws of the State of Delaware, the
authority of Buyer and Holdings to enter into this Agreement
and any other matters relevant hereto, all in form and
substance reasonably satisfactory to Sellers;
(iii) an opinion from ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.,
counsel to Buyer and Holdings, to the effect set forth in
Exhibit G, incorporating such reliance, assumptions,
qualifications and limitations as are customary and
reasonable; and
(iv) An assumption of the lease (which shall be
satisfactory to Buyer and shall contain the rent amounts and
term set forth on Schedule 3.3 hereto) regarding the Theater
in St. ▇▇▇▇▇▇, Missouri.
SECTION 3.4 Termination. This Agreement may be terminated
prior to the Closing by (a) the mutual consent of Buyer and Sellers, (b)
Sellers upon the failure of Buyer to perform or comply with any of its
covenants or agreements contained herein prior to or at the Closing or if any
representation or warranty of Buyer hereunder shall not have been true and
correct in all material respects as of the time at which such was made, (c)
Buyer upon the failure of any Seller to perform or comply with any of its
covenants or agreements contained herein prior to or at the Closing or if any
representation or warranty of Sellers hereunder shall not have been true and
correct in all material respects as of the time at which such was made, (d)
Buyer if, at any time from the date hereof and prior to Closing, Buyer shall
have determined in its reasonable discretion that it will be unable to arrange
for the financing on terms and conditions that are satisfactory to it, (e)
Buyer if Sellers elect not to allow Buyer to collect any soil samples or
conduct any drilling at any Theaters requested by Buyer pursuant to Section
3.5(b) hereof, (f) Buyer if any Hazardous Substance (i) exists at any of the
Theaters (including underground storage tanks on the land occupied by the
Theaters, except in compliance with Environmental Laws), (ii) has been disposed
of on, to or from any of the Theaters, except in compliance with Environmental
Laws, (iii) has been released into, onto or out of the land occupied by the
Theaters, except in compliance with Environmental Laws, or (iv) has been
generated, managed, treated or transported to or from any of the Theaters,
except in compliance with Environmental Laws, (g) Sellers if the amount
required to remedy an environmental problem at any of the Fee theaters or
Leased Theaters exceeds $4 million, or (h) either Sellers or Buyer if the
Closing does not occur by October 25, 1996, provided, that no party
17
23
may terminate this Agreement pursuant to (b) or (c) above if such party is, at
the time of any such attempted termination, in breach of any term hereof.
SECTION 3.5 Buyer's Inspection of the Acquired Assets.
(a) Deliveries. Sellers shall provide to Buyer in
Dallas, Texas, on or before 5:00 p.m. Dallas time on the date ten
business days after the Effective Date ("Delivery Date") the following
items and documents relating to the Acquired Assets to the extent the
same are in Sellers' possession or are readily obtainable by Sellers
(all of the following are herein called the "Delivered Documents"):
(i) copies of all ADA, engineering, structural,
elevator, curtain wall, mechanical, roof, environmental and
seismographic reports, a current site plan, the most recent
survey for the Theaters and the land on which they are
situated, elevator specifications, if any, and as-built
architectural, structural, mechanical, and electrical plans
and specifications of the Theaters;
(ii) copies of all monthly operating statements
for each Theatre for each month during 1994, 1995 and 1996;
(iii) copies of all certificates of occupancy,
licenses, permits, authorizations and approvals as required by
law for the construction, occupancy and operation of the
Theaters and the land on which they are situated;
(iv) copies of all real estate tax bills for 1994,
1995 and 1996, including evidence of payment thereof;
(v) a schedule of all guarantees and warranties
in Sellers' possession and still in effect issued or made in
connection with the construction, improvement, alteration or
repair of the Fee Theaters, including without limitation,
guaranties and warranties pertaining to roofs, elevators,
masonry, landscaping and heating and air conditioning systems;
(vi) an insurance certificate showing the amounts
and types of insurance coverage currently carried by Sellers
with respect to the Acquired Assets;
(vii) Uniform Commercial Code ("UCC") search
certificates from the Secretaries of State of Kansas, Missouri
and Ohio reflecting any effective UCC financing statements
then of record that name any Seller as debtor; and
(viii) of any notices of violations of laws or
insurance requirements which relate to the Acquired Assets and
were issued during 1992 or any subsequent year.
18
24
As used herein, "readily obtainable" means that the material either is
in any Sellers' files or in the files of a third-party agent,
contractor or consultant of any Seller and can be obtained by
contacting such third party. Sellers shall not be required to contact
any governmental agencies or authorities nor spend sums of money in
excess of photocopying charges to obtain any of the Delivered
Documents. One complete set of the Delivered Documents shall be
delivered to Buyer at its offices in Dallas, Texas, and if Buyer
requests, a second set of the as-built plans and specifications
specified in clause (a) only shall also be delivered but such second
set shall be copied and delivered at the expense of Buyer.
(b) Buyer's Access to the Acquired Assets. Sellers
covenant and agree that from and after the Effective Date until
Closing or earlier termination of this Agreement, Buyer and its
contractors, agents and employees, at the sole expense of Buyer, may
enter upon any portion of the Real Property and the Theaters from time
to time during reasonable business hours, without any disruption of
the normal conduct of Sellers' business, and with reasonable prior
notice to Sellers for the purposes of inspection (mechanical,
structural and otherwise), tests, including environmental testing and
examination of the operating condition of the Acquired Assets,
provided that Buyer will not take any soil samples or conduct any
drilling without the prior written consent of Sellers, which consent
may be withheld for any reason. If the Closing does not occur, Buyer
will compensate Sellers for any damage to the Acquired Assets caused
by Buyer's negligent conduct during its inspection activities.
(c) Inspection of Condition of the Acquired Assets.
After the Effective Date and prior to Transition Date (except for
environmental problems, for which Buyer may inspect and deliver a list
of problems up to the date of Closing), Buyer may deliver to Sellers
an itemized list or lists of Acquired Assets that reasonably require
repair, maintenance or replacement, and Sellers agree to either (i)
provide such maintenance or replacement, or (ii) deliver to Buyer at
Closing sufficient funds to provide for such maintenance or
replacement, or (iii) reduce the Purchase Price by the estimated
amount required to repair, provide maintenance or replace such
Acquired Assets; provided, however, that Sellers agree to indemnify
Buyer for the difference, if any, between the actual costs and the
estimated costs, and Buyer agrees to pay Sellers the difference, if
any, between the estimated costs and the actual costs. Sellers may
dispute in good faith any repairs, maintenance or replacements
requested by Buyer by delivering the Buyer a written notice setting
forth such objection in reasonable detail to Buyer within two days of
receipt of the Buyer's list. If Buyer objects, the dispute shall be
submitted for resolution by binding arbitration in accordance with
Section 8.6 hereof.
SECTION 3.6 Termination by Buyer. Buyer may terminate this
Agreement during the Inspection Period for any reason or no reason, by
notifying Sellers in writing of its election to terminate this Agreement prior
to the expiration of the Inspection Period. If Buyer terminates this Agreement
within such time period, then Buyer shall promptly deliver to Sellers a copy of
any and all tests, studies and examinations conducted by Buyer related to the
Acquired Assets, Buyer shall receive a prompt refund of the ▇▇▇▇▇▇▇ Money
Deposit, and both parties shall be released from all further obligations under
this Agreement.
19
25
SECTION 3.7 Survey and Title.
(a) Survey. As soon as reasonably possible after the
Effective Date and no later than 10 days after the Effective Date,
Sellers, at their expense, shall provide Buyer and its attorney with
all surveys regarding the Theaters that are in their possession or
otherwise reasonably available to them at no cost or de minimus
expense. At its option, Buyer at its expense may obtain a current
on-the-ground staked "as-built" survey of the Fee Theaters made in
accordance with Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys jointly established by ALTA and ACSM in 1992 and
meeting the accuracy requirements of the Urban Survey, as included
therein, and shall include items 1 through 11 and 15 or such other
standards as Buyer deems appropriate (the "Survey") prepared by a
registered land surveyor licensed in the State of Texas or the state
in which the applicable Theater is located and approved by Buyer (the
"Surveyor"). The Survey (including specifically the certificate of
the Surveyor forming a part thereof) shall be in form and substance
acceptable to the Title Company and Buyer and shall locate all
existing improvements, easements, rights-of-way, setback lines (which
shall show recording data, if applicable), encroachments, conflicts,
overlaps and protrusions affecting the Fee Theaters (to the extent
visible on the ground or listed in the Title Commitment) and other
matters noted on the Title Commitment, shall set forth the outside
perimeter of the Real Property, shall contain a metes and bounds
description of the Real Property and shall set forth the acres
included within the Real Property. The Survey shall contain a
statement on the face thereof certifying that no part of the Real
Property (excluding up to nine Theaters) lies within a flood plain or
flood prone area or a flood way of any body of water as determined by
reference to the current Flood Insurance Rate Map published by the
Federal Emergency Management Agency for the community in which the
Real Property is located except as shown or described on the Survey.
The Survey shall reflect that there is access to and from the Real
Property from a publicly dedicated street or road and shall be
sufficient to cause the Title Company to delete (except for "shortages
in area") the printed exception for "discrepancies, conflicts, or
shortages in area or boundary lines, or encroachments, or any
overlapping of improvements" in the Title Policy to be delivered
pursuant to Section 3.7(d). The Survey also shall show all
underground parking spaces (as striped). The Survey shall be
certified to Buyer, the Title Company and any financing source of
Buyer in a manner reasonably satisfactory to Buyer, Title Company and
such financing source. In the event the metes and bounds legal
description contained on the Survey varies from the metes and bounds
legal description set forth on Schedule 2.1(a) attached hereto, the
Deed shall contain the legal description set forth in the Survey.
(b) Title Commitment. As soon as reasonably possible
after the date hereof and no later than 15 days after the Effective
Date, Sellers, at their cost and expense, shall cause to be issued and
delivered to Buyer and its attorney (i) an Owner's Title Policy
Commitment (the "Title Commitment") from the Title Company setting
forth the status of the title to each of the Fee Theaters, pursuant to
which the Title Company agrees to insure title to each of the Fee
Theaters under an ALTA Owner's Policy Form B (4-6-90) Extended
Coverage in the full amount set forth on Schedule 3.7(b) (which
amounts approximate 7.0 times the twelve
20
26
month TLCF of each such Theater for the period ending at the
Transition Time), calling for standard printed exceptions 1 through 5
(excluding the deletion of survey exceptions if Buyer elects not to
obtain surveys) to be deleted upon receipt of a current tax
certificate and mechanics' lien affidavits from Sellers (such
affidavits to be in form and content reasonably acceptable to Sellers
and Buyer, respectively), with the exception for taxes and assessments
to be limited to real property taxes and assessments for the year in
which the Closing occurs marked "not yet due and payable," and with
the title exception for leases and tenancies to reflect none, (ii)
copies of all documents referred to in the Title Commitment, including
but not limited to, deeds, lien instruments, plats, reservations,
restrictions and easements, and (iii) to the extent not covered by the
Title Commitments, certificates of taxes due covering the Theaters and
prepared by the appropriate tax authorities.
(c) In the event any exceptions appear in the Title
Commitment (or any new exceptions appear in any date down endorsement
or revised commitment, referred to herein collectively as a "Revised
Commitment"), other than the standard printed exceptions (which shall
be modified in the Title Policy as described in Section 3.7(b) above),
that are unacceptable to Buyer, then Buyer shall, within 15 days after
the receipt of the Title Commitment or the Survey, whichever shall be
last received (or within five days after receipt of a Revised
Commitment and copies of any new documents as applicable), notify
Sellers in writing of such fact. If Sellers fail to cure any such
objection (without having any obligation to do so, except as otherwise
provided herein) on or prior to the end of the Inspection Period (or
within five days after Buyer's objection if such objection pertains to
any new exception first appearing in a Revised Commitment received
after five days prior to the end of the Inspection Period), then Buyer
may either (i) terminate this Agreement, and upon such termination
Buyer shall be entitled to a prompt return of the ▇▇▇▇▇▇▇ Money
Deposit or, (ii) so long as the amount which would be required to
satisfy any lien or encumbrance (other than with respect to Existing
Debt to be discharged at Closing) or to cure such defect does not
exceed $4 million, waive the objection and the Cash Purchase Price
shall be reduced by the amount which would be required to satisfy any
lien or encumbrance or to cure such defect, which election shall be
made by delivering written notice to Seller on or before two business
days after the end of the Inspection Period (or within two business
days after the five day cure period as to a Revised Commitment, as
applicable). Sellers may dispute in good faith the amount of any
defect by delivering to Buyer a written notice setting forth such
objection in reasonable detail to Buyer within 2 days. If Buyer
objects, the dispute shall be submitted for resolution by binding
arbitration in accordance with Section 8.6 hereof. For the purposes
of this section, unless Buyer exercises option (i), the modification
of the standard exceptions, as described above, and all easements,
restrictions or other conditions which are shown on the Title
Commitment (or any Revised Commitment) and/or the Survey (to the
extent only such Survey items are ultimately contained in the Title
Policy) and which are not cured by Seller as described above are
hereinafter collectively referred to as the "Permitted Exceptions."
Notwithstanding the foregoing, (i) Sellers shall be obligated
to remove at Closing any mortgage or other lien which secures payment
of a monetary obligation and which may
21
27
burden the Theaters, except for any landlord's lien imposed by the
landlords under the Leases (however, any such landlord lien must be
subordinate to the lease as to such theater or the lienholder must
have entered into a nondisturbance agreement with Seller agreeing not
to disturb Seller or any successor tenant in the event of a
foreclosure of its lien) and liens that arise by, through or under
Buyer or its consultants and agents, and (ii) Sellers agree to remove
any exceptions or encumbrances to title that are created after the
Effective Date as the result of the acts or failure to act by Sellers
or their agents, employees or representatives, failing which Sellers
shall be in default under this Agreement and Buyer shall have the
rights set forth in Section 7.2.
(d) Title. At Closing, Sellers, at their cost and
expense, shall furnish to Buyer a standard form ALTA Owner's Policy of
Title Insurance for all Fee Theaters detailed in Section 3.7(b) above,
issued by the Title Company in Buyer's favor, in the amounts set forth
in Schedule 3.7(b), insuring Buyer's title to the Fee Theaters subject
only to the Permitted Exceptions (collectively, the "Title Policies");
provided, however, at Closing, upon the written request of Buyer to
Sellers and the Title Company, Buyer shall have the right to elect to
waive the requirement that Sellers provide to Buyer a Title Policy for
the Fee Theaters, in which case Buyer shall receive a credit to the
Purchase Price in the amount that Sellers would have expended to
secure from the Title Company such Title Policy as required herein,
less any report or cancellation fees payable by Sellers to the Title
Company as a result of such policy not being issued.
(e) Condition of Title. Sellers shall convey to Buyer
good, marketable and insurable fee simple title to the Fee Theaters
and leasehold title to the Leasehold Theaters, free and clear of all
matters except the Permitted Exceptions. Upon conveyance, transfer
and delivery of the Acquired Assets, Buyer will continue to enjoy
peaceful possession of the Acquired Assets held under the Leases.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Sellers hereby jointly and severally represent and warrant to
Buyer as follows:
SECTION 4.1 Organization and Authority. Each of CCC and CTC
is a corporation duly organized and validly existing and in good standing under
the laws of the State of Missouri and has all requisite corporate power and
authority to own, lease and operate the Theaters and the Acquired Assets as
currently conducted. Sellers have furnished to Buyer true and correct copies
of the charter and bylaws of CCC and CTC as amended to date. ▇▇▇▇▇▇▇ is over
21 years of age, is a resident of the State of Kansas and has no current
intention of becoming a resident of any other state or jurisdiction in the
foreseeable future.
SECTION 4.2 Authority; Binding Effect. Each of Sellers has
all requisite power and authority to enter into this Agreement and each of the
other agreements and instruments to be
22
28
executed and delivered by such Seller pursuant to the terms of this Agreement
(each a "Sellers' Ancillary Document" and, collectively, the "Sellers'
Ancillary Documents") and to perform its obligations hereunder and thereunder.
The execution and delivery by each Seller of this Agreement and each Sellers'
Ancillary Documents, and the performance by each Seller of its respective
obligations hereunder and thereunder and the consummation by each Seller of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of such Seller. This Agreement
and Sellers' Ancillary Documents have been duly executed and delivered by each
Seller and constitute legal, valid and binding agreements of each Seller,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting creditors'
rights generally or by general principles of equity.
SECTION 4.3 Absence of Conflicts. Except as set forth on
Schedule 4.3 hereof, the execution and delivery by Sellers of this Agreement
and Sellers' Ancillary Documents, the performance by each Seller of its
respective obligations hereunder and thereunder and the consummation by each
Seller of the transactions contemplated hereby or thereby will not (a) conflict
with, or result in any violation or breach of, any provision of the charter or
bylaws of such Seller, (b) as of the Closing, conflict with, result in any
violation or breach of, constitute a default under, give rise to any right of
termination or acceleration (with or without notice or the lapse of time or
both) pursuant to, or result in being declared void, voidable or without
further effect, any term or provision of any material note, bond, mortgage,
indenture, lease, franchise, permit, license, Contract or other instrument or
document to which the Acquired Assets are or may be bound, (c) require any
Seller to obtain any consent, approval, permit, notice, action, authorization
or waiver (each, a "Consent") of or file with or give notice to any
Governmental Authority or any other Person not a party to this Agreement,
except for the Consents listed on Schedule 4.3 hereto which have been obtained
and remain in full force and effect, (d) conflict with, or result in any
violation of, any material law, ordinance, statute, rule or regulation of any
Governmental Authority known to Seller to be applicable to the business or
operations of the Theaters or the Acquired Assets or of any order, writ,
injunction, judgment or decree of any court, arbitrator or Governmental
Authority applicable to Seller or its properties or assets or (e) result in the
creation of, or impose on Seller the obligation to create, any Lien upon the
Acquired Assets.
SECTION 4.4 Title to Assets. Except as set forth on Schedule
4.4, Sellers have good and marketable title to the Acquired Assets owned by
Sellers, and have valid leasehold interests in the Acquired Assets leased by
Sellers, in each case free and clear of all Liens (except for any landlord's
lien imposed by the landlords under the Leases however, any such landlord lien
must be subordinate to the lease as to each theater or the lienholder must have
entered into a nondisturbance agreement with Seller agreeing not to disturb
Seller or any successor tenant in the event of a foreclosure of its lien). The
leases of properties or assets included in the Acquired Assets, including, but
not limited to the Leases, are valid, subsisting and effective in accordance
with their respective terms, and Sellers enjoy peaceful possession of all such
properties and assets. True and complete copies of all leases, including but
not limited to the Leases, including all amendments, modifications and
supplements thereto through the date hereof have been delivered to Buyer. The
Leases referred to on Schedule 2.1(b) constitute all of the Theater leases.
Except as set forth on Schedule 4.4 hereto,
23
29
there are no leases, surface or subsurface use agreements, tenancy,
arrangements, service contracts, management contracts, or other agreements,
instruments or encumbrances that will be in force or effect as of the Closing
that grant to any Person, any right, title, interest or benefit in or to all or
any part of the Acquired Assets or any right relating to the ownership, use,
operation, management, maintenance or repair of all or any part of the Acquired
Assets, and no Person has any rights to acquire any of the Acquired Assets.
Except as set forth on Schedule 4.4 hereof, there are no third parties in
possession of any portion of the Theaters as lessees, tenants at sufferance,
trespassers or otherwise. Upon the sale, conveyance, transfer and delivery of
the Acquired Assets in accordance with the terms of this Agreement, Buyer will
(i) acquire good and marketable title to the Acquired Assets owned by Sellers,
free and clear of all Liens except, with respect to Fee Theaters, Permitted
Exceptions, and (ii) continue to enjoy peaceful possession of all Acquired
Assets held under lease.
SECTION 4.5 Proprietary Rights. Schedule 4.5 hereto sets
forth a correct and complete list of (a) all of Sellers' Proprietary Rights in
the Acquired Assets and (b) all licenses, sublicenses and other Contracts to
which any Seller is a party or by which it is bound relating to the ownership,
use or exploitation of any Proprietary Rights. To the Knowledge of Sellers,
Sellers have the right to use and exploit all Proprietary Rights included in
the Acquired Assets without infringing upon or otherwise violating the rights
of any other Person, and to the Knowledge of Sellers no consent, approval or
authorization of any other Person will be required for the use or exploitation
by Buyer after the Closing Date of any Proprietary Rights included in the
Acquired Assets. There is no claim pending or, to the Knowledge of Sellers,
threatened against any Seller that draws into question or otherwise affects any
right of Sellers to use or exploit any Proprietary Rights included in the
Acquired Assets, and Sellers are not aware of any basis for such a claim.
SECTION 4.6 Financials. The unaudited statements of
operations and cash flows and the TLCF statements for the years ended December
31, 1993, 1994 and 1995 which are attached hereto as Schedule 4.6, fairly
present in all material respects, the results of operations and cash flows and
the TLCF's of the Theaters for such twelve-month periods and contain no
material inaccuracies. Such statements were prepared using the same principles
and procedures as used for Seller's audited financials, which audited
financials were prepared in conformity with generally accepted accounting
principles, except as noted therein. The numbers shown as "Theater Level Cash
Flow" on Schedule 4.6 were calculated as follows: (a) all revenue of Sellers
during such periods derived from the respective Theaters, including, without
limitation, ticket revenue, advertising revenue and revenue from concession
sales (providing, however, certain immaterial rebates and other similar amounts
may not have been allocated to the theater level), less (b) all expenses
incurred by Sellers during such period in connection with the ownership,
leasing and operation of the respective Theaters during such periods. The
"Theater Level Cash Flow" on Schedule 4.6 does not include interest,
depreciation, amortization or allocations of general and administrative
expenses or income taxes.
SECTION 4.7 Conduct of Business. Except as set forth on
Schedule 4.7 and except as contemplated in this Agreement, since December 31,
1995, there has not been:
(a) any material adverse change in Sellers' business,
operations, affairs, condition (financial or otherwise), results of
operations, properties, assets or liabilities;
24
30
(b) any sale, assignment or disposition of any
substantial properties or assets (other than the Excluded Assets), of
any kind or character relating to the operations of the Theaters,
except for personal property sold, assigned or disposed of in the
ordinary course of business and consistent with past practice and
custom;
(c) any damage, destruction or loss (whether or not
insured against) affecting the Acquired Assets;
(d) any revocation or termination, or any notice of any
threatened revocation or termination, of any Consents or permits
relating to the operations of the Theaters;
(e) any material change or any anticipated change in the
present relationships between Sellers and any of their significant
suppliers, insurers, lessors, licensors, licensees and distributors
with respect to the Acquired Assets; or
(f) any other material transaction other than in the
ordinary course of business and consistent with past practice and
custom.
SECTION 4.8 Contracts and Other Agreements. Schedule 4.8
sets forth a list of all material of the Contracts, whether written or oral, to
which any Seller is a party relating to the operation of the Theaters which
cannot be terminated by Seller upon 30 days notice. Sellers have delivered or
made available to Buyer true and complete copies of each written Contract
listed on Schedule 4.8 and, in the case of Contracts not reduced to writing,
have provided to Buyer a written summary of the material terms thereof. Each
Contract described in Schedule 4.8 is valid, in full force and effect, and
binding upon Seller that is a party thereto, in accordance with its terms.
Sellers are not in default under any of the Contracts described in Schedule 4.8
and, except as set forth on Schedule 4.8, there exists no event which, with the
giving of notice or lapse of time, or both, would become a default, in each
case with such exceptions thereto as do not, individually or in the aggregate,
have a Material Adverse Effect. Sellers have not received any written notice
from any other party to any Contract listed on Schedule 4.8 of the termination,
or threatened termination, thereof, and, to Sellers' Knowledge, there has
occurred no event that would allow such other party to terminate any Contract.
None of the Acquired Assets is bound by any Contract that was not entered into
in the ordinary course of business and consistent with past practice and
custom.
SECTION 4.9 Theater Locations. Schedule 4.9 sets forth a
true, correct and complete list of the names and locations of all motion
picture theaters (the "Theaters") operated by Sellers on the date hereof and on
the Closing Date.
SECTION 4.10 Solvency. Each Seller is able to pay its debts
as they become due, has capital sufficient to carry on its business as
presently conducted and proposed to be conducted, owns property which has both
a fair value and a fair saleable value in excess of the amount required to pay
its debts as they become due and is solvent. Sellers will not be rendered
insolvent by the transactions contemplated by this Agreement, and following the
consummation of such transactions, each Seller will be able to pay its debts as
they become due, will have capital sufficient to carry on
25
31
its business as then conducted and proposed to be conducted, and will own
property which has a fair value and a fair saleable value in excess of the
amount required to pay its debts as they become due.
SECTION 4.11 Assets Necessary to Business; Effect of
Transfer. The Acquired Assets are sufficient in all material respects to carry
on the business and operations as presently conducted by Sellers at the
Theaters. The Acquired Assets are fit for the purposes for which they are
presently being used and are in all material respects in good operating
condition and repair, ordinary wear and tear excepted, and to Seller's
Knowledge conform in all material respects to all applicable laws relating to
their use and operation (including the provisions of the Americans with
Disabilities Act of 1990, Public Law 101-336, 42 U.S.C. Section 12101 et seq.
(the "ADA"). The Theaters were constructed and have been maintained in
accordance and material compliance with the ADA to the extent applicable.
Sellers have not received any notice to the effect that, or otherwise been
advised that, the Theaters are not in compliance with the ADA, and Sellers have
no reason to anticipate that any existing circumstances at any of the Theaters
are likely to result in violations of the ADA as the Theaters currently exist.
No representation or warranty is being made herein regarding the subject matter
hereof which may arise or otherwise occur as a result of any alterations,
changes or additions of any nature made to any of the Theaters by Buyer.
Sellers are in possession of all material licenses, permits, consents,
approvals and other authorizations that to Sellers' knowledge are required by
any Governmental Authority in connection with the ownership or lease of the
Acquired Assets or the conduct of the business and operations of Sellers at the
Theaters. Upon obtaining the Consents set forth on Schedule 4.3 hereto the
consummation of the transactions contemplated by this Agreement will not
deprive Buyer of the benefits of any material properties included in the
Acquired Assets or any rights or interests relating thereto, or result in the
imposition of any debts, liabilities or obligations on Buyer, except for the
debts, obligations and liabilities created by Buyer in connection with
financing the acquisition of the Acquired Assets.
SECTION 4.12 Litigation. Except as set forth on
Schedule 4.12 hereto, there is no action, suit, inquiry, investigation or other
proceeding pending against, or to Sellers' Knowledge threatened against or
affecting, any Seller or Sellers' properties or assets in any court or before
any arbitrator or any foreign or United States federal, state or local
Governmental Authority (a) in which an adverse decision could, either in any
case or in the aggregate, have a Material Adverse Effect or (b) which in any
manner draws into question the validity of or otherwise affects this Agreement,
the transactions contemplated hereby or the ability of Sellers to perform their
obligations hereunder.
SECTION 4.13 Taxes.
(a) Each Seller has filed or will file in a timely manner
with the appropriate Governmental Authority all tax returns required
to be filed prior to or on the date hereof relating to Taxes due and
payable or Taxes accrued and not yet payable on or before the Closing
Date, and each such tax return has been or will be prepared in
compliance in all material respects with all applicable laws and
regulations.
(b) Each Seller has paid or will pay on the applicable
due date all Taxes that are due and payable or Taxes accrued and not
yet payable on or before the Closing Date
26
32
(including all Taxes shown to be due on such returns or pursuant to
any assessment received by such Seller from any taxing authority),
except such Taxes, if any, as are being contested in good faith by
appropriate proceedings diligently conducted.
(c) There are no claims for Taxes pending against any
Seller nor to the Knowledge of any Seller, any threatened claims for
Tax deficiencies against any Seller for which the Acquired Assets
could be liable, and Sellers do not know of any basis for such claims.
(d) There exist no actual or, to the knowledge of
Sellers, proposed additional assessments or adjustments of Taxes by
any taxing authority for which the Acquired Assets could be liable.
(e) There are no pending audits, actions, proceedings,
disputes, claims or, to Sellers' Knowledge, there are no
investigations with respect to any Taxes payable by or asserted
against any Seller and there is no basis on which any claim for
material Taxes can be asserted against any Seller. No Seller has
received notice from any Governmental Authority of its intent to
examine or audit any Tax Returns of any Seller.
(f) All Taxes required to be withheld or collected by
Seller (including, but not limited to, Tax required to be withheld
with respect to amounts paid or owing to any officer, employee,
creditor, shareholder, independent contractor or other Person) have
been timely withheld or collected and, to the extent required, have
been timely paid, remitted or deposited to or with the relevant
Governmental Authority.
(g) There are no proposed reassessments of the taxable
value of any of the Acquired Assets or similar matters pending with
respect to any taxing authority.
(h) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may
assess or collect a Tax against a Seller for which the Acquired Assets
could be liable.
(i) There are no Liens for Taxes (other than for current
Taxes not yet due and payable) imposed upon the Acquired Assets.
(j) There are no unsatisfied actual or proposed
adjustments or assessments for Taxes against CTC or against ▇▇▇▇▇▇▇ in
his capacity as a shareholder of CTC or, to the Knowledge of Sellers,
any basis for any such assessment or adjustment.
(k) No closing agreement or agreements pursuant to
section 7121 of the Code or any similar provision of any state or
local Law has been entered into by CTC or by ▇▇▇▇▇▇▇ in his capacity
as a shareholder of CTC.
27
33
(l) No taxing authority has raised any issue with respect
to the liability of CTC or any Affiliate thereof (including, without
limitation, ▇▇▇▇▇▇▇) for any Tax that would likely result in the
issuance by any taxing authority of a notice of deficiency or similar
notice for Taxes against ▇▇▇▇▇▇▇ or CTC.
(m) Except for the United States of America, the State of
Ohio, the city of Heath, Ohio, the city of Newark, Ohio, the State of
Missouri, the city of Kansas City, Missouri and the State of Kansas,
there are no other jurisdictions in which income or franchise tax
returns and reports, and returns and reports relating to the payment
of Tax based upon the ownership or use of property therein or the
derivation of income therefrom or measured by premiums or investments
in tangible or intangible property, were, or were required to be,
filed by Sellers or in which Sellers were required to be included.
(n) There are no requests for rulings, outstanding
subpoenas or requests for information with respect to Taxes of CTC or
of ▇▇▇▇▇▇▇ in his capacity as shareholder of CTC, proposed
reassessments of any assets or any property owned or leased by CTC, or
similar matters pending with respect to any taxing authority.
(o) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may
assess or collect a Tax against CTC or ▇▇▇▇▇▇▇ in his capacity as
shareholder of CTC or for which CTC or ▇▇▇▇▇▇▇ in such capacity may be
liable.
(p) CTC has been subject to a valid and effective
election (a "Subchapter S election") to be an S corporation, within
the meaning of section 1361(a)(1) of the Code from November 29, 1989
to the date hereof, and such Subchapter S election has not been
terminated (within the meaning of section 1362(d) of the Code) at any
time prior to the date hereof.
SECTION 4.14 Environmental Compliance.
(a) Sellers are not subject to any existing, pending or
to Sellers' Knowledge threatened action, suit, investigation, inquiry
or proceeding by any Governmental Authority under, and are not
currently in violation of, or subject to, any remedial obligation
under, any Environmental Law.
(b) All material environmental notices, permits, licenses
or similar authorizations, if any, required to be obtained or filed in
connection with the operation of the Theaters have been obtained or
filed.
(c) Hazardous Substances have not been disposed of on, to
or from any of the Theaters during the time of any Seller's ownership
or possession of the Acquired Assets and
28
34
the operation of the Theaters or to Sellers' knowledge prior thereto,
except in compliance with Environmental Laws in effect at the time
such activity was undertaken.
(d) No Hazardous Substances have been generated, managed,
treated or transported to or from the Theaters, except in compliance
with Environmental Laws at the time such activity was undertaken.
(e) To the Knowledge of Sellers, there is not now at, on
or in the Theaters any asbestos, PCBs or, to the extent only it exists
at levels which are considered hazardous to human health, radon gas.
(f) No underground storage tanks currently exist or to
Sellers' Knowledge have existed on the land occupied by the Theaters.
(g) During the time the Theaters have been occupied by
Sellers, there has not been a Release of Hazardous Substances into,
onto or out of the land occupied by the Theaters.
(h) Except as set forth on Schedule 4.14 hereto, no
Seller is a party, whether as a direct signatory or as successor,
assignee or third party beneficiary, or otherwise bound, to any lease
or other Contract relating to the Acquired Assets under which such
Seller is obligated by or entitled to the benefits of, directly or
indirectly, any representation, warranty, indemnification, covenant,
restriction or other undertaking concerning a Release of Hazardous
Substances or non-compliance with Environmental Laws.
(i) Except for the Sellers' lenders or as provided in the
Leases, no Seller has released any other Person from any claim under
any Environmental Law or waived any rights concerning any Releases of
Hazardous Substances into, onto or out of or with respect to the land
occupied by the Theaters.
SECTION 4.15 Utilities.
(a) The Theaters are connected to and are served by
water, solid waste and sewage disposal, drainage, telephone, gas,
electricity and other utility equipment facilities and services
required by law or necessary for the operation or use of the Theaters;
such facilities and services are adequate for the present use and
operation of the Theaters on a fully occupied basis, and are installed
and connected pursuant to valid permits and are in material compliance
with all governmental regulations; and no fact or condition exists
which would result in the termination or curtailment in the furnishing
of utility services to the Theaters.
(b) Sellers have not received notice from any supplier of
water, solid waste and sewage disposal, drainage, telephone, gas,
electricity or other utility services to the Theaters
29
35
that such service is being or will be terminated or curtailed and
Sellers have no knowledge that such termination or curtailment may
occur.
SECTION 4.16 Defects. Except as set forth on Schedules
4.17, there are no material structural defects in the Theaters or any material
defects in the Theaters' mechanical, electrical and plumbing systems.
SECTION 4.17 Condemnation. There are no pending or to
Sellers' Knowledge threatened condemnation or similar proceedings or
assessments affecting the Acquired Assets or any part thereof, nor to the
knowledge of Seller are any such proceedings or assessments contemplated by any
Governmental Authority.
SECTION 4.18 Books and Records. The books and records
of Sellers fairly reflect in all material respects the transactions to which
the Acquired Assets are or were bound, and such books and records are and have
been properly kept and maintained, with the revenues, expenses, assets and
liabilities of Sellers accurately recorded in all material respects therein on
the accrual basis of accounting. True, complete and correct copies of such
books and records have been made available for review by Buyer.
SECTION 4.19 Brokers, Finders, etc. Except as described
in Schedule 4.19, all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any Person acting on behalf of Sellers in such manner as to give rise to a
valid claim against any of the parties hereto for any broker's or finder's
commission. Except as described in Schedule 4.19, Sellers have not retained
any broker or finder in connection with the transactions contemplated hereby.
Any fees, expenses, commissions or other amounts payable to the Persons
identified on Schedule 4.19 shall be payable by Sellers and shall not be the
responsibility of Buyer.
SECTION 4.20 ERISA Matters.
(a) Schedule 4.20 contains a list and brief description
of each "employee pension benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), "employee welfare benefit plan" (as defined in Section 3(1)
of ERISA), stock option, stock purchase, deferred compensation plan or
arrangement, and other employee fringe benefit plan or arrangement
maintained, contributed to or required to be maintained or contributed
to by Sellers for the benefit of any present or former employees of
the Theaters or their beneficiaries (all the foregoing being herein
called "Benefit Plans"). Sellers have delivered to Buyer true,
complete and correct copies of (1) each Benefit Plan (or, in the case
of any unwritten Benefit Plans, descriptions hereof) and (2) the most
recent summary plan description for each Benefit Plan (if any such
description was required).
(b) Each of the Sellers comply with the applicable
requirements of Section 4980B(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), with respect to
30
36
each Benefit Plan that is a group health plan, as such term is defined
in Section 5000(b) (1) of the Code.
(c) Each Benefit Plan has been administered in all
material respects in accordance with its terms. Sellers and all the
Benefit Plans are in compliance in all material respects with the
applicable provisions of ERISA and the Code, including without
limitation the requirements of section 401(a)(4) of the Code regarding
the allocation of employer contributions. All reports, returns and
similar documents with respect to the Benefit Plans required to be
filed with any governmental agency or distributed to any Benefit Plan
participant have been duly and timely filed or distributed. There are
no investigations by any Governmental Authority, termination
proceedings or other claims (except claims for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings against
or involving any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan that could give rise to any material
liability, and there are not any facts that could give rise to any
material liability in the event of any such investigation, claim, suit
or proceeding.
(d) (i) All contributions to, and payments from, the
Benefit Plans that may have been required to be made in accordance
with the terms of the Benefit Plans or any applicable Law have been
timely made and (ii) Sellers and any ERISA Affiliates do not maintain,
and are not required to contribute to, any Pension Plan that is a
defined benefit pension plan (as defined in Section 3(35) of ERISA).
All such contributions to, and payments from, the Benefit Plans,
except those payments to be made from a trust qualified under section
401(a) of the Code, for any period ending before the Closing Date that
are not yet, but will be required to be made, will be properly
accrued.
(e) (i) No "prohibited transaction" (as defined in
section 4975 of the Code or Section 406 of ERISA) has occurred that
involves the assets of any Benefit Plan, and (ii) no prohibited
transaction has occurred that could subject the Sellers or any of
their employees, or, to the Knowledge of Sellers, a trustee,
administrator or other fiduciary of any trust created under any
Benefit Plan to the tax or penalty on prohibited transactions imposed
by Section 4975 of ERISA or the sanctions imposed under Title I of
ERISA.
(f) No employee of Sellers will be entitled to any
additional benefits or any acceleration of the time of payment or
vesting of any benefits under any Benefit Plan as a result of the
transactions contemplated by this Agreement.
SECTION 4.21 Holdings Common Stock.
(a) Sellers are acquiring Holdings Common Stock for their
own account, for investment purposes only and not with a view to
resale or any other distribution thereof, in whole or in part.
Sellers acknowledge and agree that they may not assign, sell,
hypothecate or otherwise transfer the Holdings Common Stock unless (i)
(A) a registration statement is in effect under the Securities Act
with respect to such Holdings Common Stock or (B) a
31
37
written opinion of counsel acceptable to Holdings is obtained to the
effect that no such registration is required and (ii) except in the
case of publicly traded Holdings Common Stock, the transferee is an
"accredited investor" as defined in Regulation D under the Securities
Act. Sellers have no reason to anticipate any change in their
circumstances, financial or otherwise, that would cause or require any
sale or distribution of the Holdings Common Stock.
(b) Sellers acknowledge, agree and are aware that (i) an
investment in the Holdings Common Stock involves a high degree of risk
and that Sellers may lose the entire amount of their investment; (ii)
no United States federal or state or any foreign agency has passed
upon the accuracy, validity or completeness of this Agreement or made
any finding or determination as to the fairness of an investment in
the Holdings Common Stock; (iii) the Holdings Common Stock is
illiquid, and Sellers must bear the economic risk of investment in the
Holdings Common Stock for an indefinite period of time; (iv) this
Agreement and the Stockholders Agreement contain substantial
restrictions on the transferability of the Holdings Common Stock; (v)
there is no existing public or other market for the Holdings Common
Stock there can be no assurance that the Sellers will be able to sell
or dispose of their Holdings Common Stock; (vi) the Holdings Common
Stock has not been registered under the Securities Act or under the
securities laws of any other jurisdiction, including the states of the
United States, and Holdings is under no obligation to register or
qualify the Holdings Common Stock or any of its securities for resale
by Sellers or assist Sellers in complying with any exemption under the
Securities Act or the securities laws of any such jurisdiction or any
other jurisdiction, except as provided in the Registration Rights
Agreement; (vii) an offer or sale of Holdings Common Stock by Sellers
in the absence of registration under the Securities Act will require
the availability of an exemption thereunder; (viii) a restrictive
legend in substantially the form set forth in Section 8.7(a) hereof
shall be placed on the certificates representing the Holdings Common
Stock; and (ix) a notation shall be made in the appropriate records of
Holdings indicating that such Holdings Common Stock are subject to
restrictions on transfer.
(c) Each Seller qualifies as an "accredited investor"
within the meaning of Rule 501 under the Securities Act.
(d) Sellers acknowledge that they (i) have been given the
opportunity to ask questions of, and receive answers from, Holdings
and its officers and employees concerning the terms of an investment
in Holdings Common Stock and other matters pertaining to an investment
in the Holdings Common Stock, (ii) been given the opportunity to
obtain such additional information necessary to evaluate the merits
and risks of an investment in Holdings Common Stock to the extent
Holdings possesses such information, and have received all documents
and information that they have requested relating to an investment in
the Holdings Common Stock; (iii) have not relied upon any
representations or other information (whether oral or written) from
Holdings or its directors, officers or affiliates, or from any other
persons, other than the representations contained in this Agreement;
and (iv) are familiar with the nature of and risks attendant to
investments in the business of
32
38
Holdings and securities in general and have carefully considered and
have, to the extent they believe such discussion necessary, discussed
with their professional legal, financial and tax advisers, the
suitability of an investment in Holdings Common Stock for Sellers'
particular financial and tax situations and has determined that the
Holdings Common Stock is a suitable investment for Sellers.
SECTION 4.22 CTC Capitalization.
(a) CTC is authorized to issue only one class of shares
of stock. The authorized capital stock of CTC consists solely of
shares of common stock, par value $1.00 per share, of which 500 shares
are issued and outstanding. All such shares of stock are owned
beneficially and of record by Trustee free and clear of all Liens.
Trustee has the full right, power and authority to vote the CTC Stock,
the certificates representing the CTC Stock are valid and genuine, and
the delivery of the certificates representing the CTC Stock pursuant
to this Agreement will transfer legal and valid title thereto, free
and clear of any and all Liens, other than those imposed by Buyer.
None of the capital stock of CTC has been or is owned, beneficially or
of record, by any Person other than ▇▇▇▇▇▇▇ and Trustee. There are
not now, nor have there ever been, any outstanding subscriptions,
options, convertible securities, warrants or calls of any kind issued
or granted by, or binding upon, CTC, ▇▇▇▇▇▇▇ or Trustee to purchase or
otherwise acquire any security of, or any equity interest in, CTC.
All of the CTC Stock is duly authorized, validly issued, fully paid
and nonassessable, and no shares of stock of CTC have been issued in
violation of the preemptive rights of any shareholder of CTC.
(b) ▇▇▇▇▇▇▇ and CTC have delivered to Buyer true and
complete copies of the articles of incorporation and bylaws, each as
amended to date, of CTC. Such articles of incorporation and bylaws
are in full force and effect, and CTC is not in violation of any of
the provisions thereof. The stock transfer records of CTC are true
and complete and reflect all issues and transfers of the capital stock
of CTC. The corporate records of the meetings of the directors and
shareholders of CTC, as contained in the minute books, reflect all
material corporate actions and proceedings of such bodies to date.
▇▇▇▇▇▇▇ and CTC have delivered true and complete copies of such stock
transfer records and minute books to Buyer and its counsel.
SECTION 4.23 Labor Matters. Except as listed on
Schedule 4.23, each Seller, with respect to employees and former
employees, (a) has no written handbook applicable to such employees,
(b) is and has been in compliance since January 1, 1996, with all
applicable Laws regarding employment and employment practices, terms
and conditions of employment, wages and hours, occupational safety and
health and workers' compensation and is not engaged in any unfair
labor practices, which the failure to comply with could reasonably be
expected to have a Material Adverse Effect, (c) has no grievances
pending or, to the
33
39
Knowledge of Sellers, threatened against Sellers that could reasonably
be expected to have a Material Adverse Effect and (d) has no charges
or complaints pending or, to the Knowledge of Sellers, threatened
against Sellers before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other federal, state or local
agency responsible for the prevention of unlawful employment
practices. There is no labor strike, slowdown, work stoppage or
lockout actually pending or, to the Knowledge of Sellers, threatened
against or affecting the Theaters or the Acquired Assets. Except as
listed on Schedule 4.23, Sellers are not a party to any collective
bargaining agreement, no such agreement determines the terms and
conditions of the employment of any employee or former employee, and
no collective bargaining agent has been certified as a representative
of any of the employees or former employees. Except as listed on
Schedule 4.23, to the Knowledge of Sellers, no union organizational
campaign is currently pending with respect to any of the employees or
former employees.
SECTION 4.24 Trustee. The Trust has been duly formed in
accordance with applicable Law. The Trustee has been duly appointed
as trustee of the Trust, and is the sole trustee of the Trust. The
Trustee is duly authorized to enter into this Agreement on behalf of
the Trust and to perform its obligations hereunder, including with
respect to indemnification of Buyer pursuant to Article VII.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND HOLDINGS
Buyer and Holdings represent and warrant to Sellers as
follows:
SECTION 5.1 Corporate Organization and Authority. Each
of Holdings and Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its assets and
properties and conduct its business and operations as it is currently
conducted.
SECTION 5.2 Authority; Binding Effect. Each of
Holdings and Buyer has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by Buyer of this
Agreement, the performance by each of them of their respective obligations
hereunder and the consummation by them of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Holdings and Buyer. This Agreement has been duly executed and
delivered by Holdings and Buyer and constitutes a legal, valid and binding
agreement of Holdings and Buyer, respectively, enforceable against each of them
in accordance with the terms hereof.
SECTION 5.3 Absence of Conflicts. The execution and
delivery by Holdings and Buyer of this Agreement, the performance by each of
them of their respective obligations hereunder and the consummation by them of
the transactions contemplated hereby will not:
34
40
(a) conflict with, or result in any violation or breach
of, any provision of the charter or bylaws of Holdings or Buyer;
(b) except for such conflicts referred to on Schedule 5.3
for which consents or waivers will be obtained prior to Closing
conflict with, result in any violation or breach of, constitute a
default under, give rise to any right of termination or acceleration
(with or without notice or the lapse of time or both) pursuant to, or
result in being declared void, voidable or without further effect, any
term or provision of any material note, bond, mortgage, indenture,
lease, franchise, permit, license, Contract or other instrument or
document to which Holdings or Buyer is a party or by which their
respective properties or assets are or may be bound; or
(c) conflict with, or result in any violation of, any
material law, ordinance, statute, rule or regulation of any
Governmental Authority or of any order, writ, injunction, judgment or
decree of any court, arbitrator or Governmental Authority applicable
to Holdings or Buyer or their respective properties or assets.
SECTION 5.4 Governmental Authorizations and Filings.
There is no requirement applicable to Holdings or Buyer to obtain any consent,
approval or authorization of, or to make or effect any declaration, filing or
registration with, any Governmental Authority for the valid execution and
delivery by Holdings or Buyer of this Agreement, the due performance by them of
their respective obligations hereunder or the lawful consummation by it of the
transactions contemplated hereby.
SECTION 5.5 Brokers, Finders, etc. All negotiations
relating to this Agreement and the transactions contemplated hereby have been
carried on without the intervention of any Person acting on behalf of Holdings
or Buyer in such manner as to give rise to a valid claim against any of the
parties hereto for any broker's or finder's commission. Neither Holdings nor
Buyer has retained any broker or finder in connection with the transactions
contemplated hereby.
SECTION 5.6 Holdings Common Stock. The issuance of the
shares of Holdings Common Stock pursuant hereto has been duly authorized by
Holdings and, at closing, the shares of Holdings Common Stock to be delivered
to Sellers pursuant hereto will be validly issued, fully paid and
nonassessable. The issuance and delivery of the Holdings Common Stock is
intended to be exempt from the provisions of Section 5 of the Securities Act.
Neither Holdings, Buyer nor anyone acting on their behalf has taken any action
with respect to the Holdings Common Stock or any securities similar to the
Holdings Common Stock, or otherwise, that would cause the issuance and delivery
of the Holdings Common Stock pursuant hereto not to be exempt from the
provisions of Section 5 of the Securities Act or would require the registration
of the issuance and delivery of such shares pursuant to this Agreement under
the Securities Act or would violate any applicable state securities or blue sky
laws.
SECTION 5.7 Financial Statements. Holdings has
furnished to Sellers the audited consolidated balance sheets of Holdings as of
December 31, 1995, and the related consolidated
35
41
statements of operations for the periods then ended (the "Holdings Financial
Statements"). Holdings Financial Statements are attached hereto as Schedule
5.7. Holdings Financial Statements present fairly the financial condition and
results of operations of Holdings as of the dates and for the periods
indicated, and the Holdings Financial Statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis with prior periods.
SECTION 5.8 Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against, or to Buyer's
knowledge threatened against or affecting, the Buyer's or Holdings' properties
or assets in any court or before any arbitrator or any foreign or United States
federal, state or local Governmental Authority in which an adverse decision
could, either in any case or in the aggregate, have a material adverse effect
on the business, operations, affairs, condition (financial or otherwise),
results of operation, properties, assets or liabilities of Buyer or Holdings.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
SECTION 6.1 Inspection. From the date hereof to the
Closing, Sellers shall give to Buyer and its officers, attorneys, accountants,
and representatives free, full, and complete access during reasonable business
to the Acquired Assets as Buyer may deem necessary or appropriate; provided,
that such due diligence review will not unreasonably interfere with the
operations by Sellers of the Acquired Assets. Sellers will provide Buyer and
its officers, attorneys, accountants and representatives with any information
reasonably requested by them pertaining to income derived from or expenses
associated with the Acquired Assets.
SECTION 6.2 Compliance. From the date hereof to the
Closing, Sellers shall not take or fail to take any action which action or
failure to take such action shall cause the representations and warranties made
by Sellers herein to be untrue or incorrect as of the Closing.
SECTION 6.3 Satisfaction of All Conditions Precedent.
From the date hereof to the Closing, Sellers shall use reasonable efforts to
cause all conditions precedent in Article III to be satisfied by the Closing.
SECTION 6.4 No Solicitation. From the date hereof to
October 25, 1996, Sellers shall not offer any of Acquired Assets for sale, or
solicit offers to buy the Acquired Assets or hold discussions with any party
(other than Buyer and Holdings) looking toward such an offer or solicitation or
toward a sale of equity or a merger or consolidation of Sellers with or into
another entity or any similar transaction. Sellers shall not enter into any
agreement with any party other than Buyer and Holdings with respect to the sale
or other disposition of either the equity interests of Sellers or the Acquired
Assets or with respect to any merger, consolidation, or similar transaction
involving any Seller.
36
42
SECTION 6.5 Material Developments. From the date
hereof to the Closing, Sellers shall notify Buyer of any material problems or
developments with respect to the business or operations of the Theaters of
which Sellers have Knowledge.
SECTION 6.6 Notice of Breach. From the date hereof to
the Closing, Sellers shall, immediately upon becoming aware thereof, give
detailed written notice to Buyer of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a breach,
or would have caused or constituted a breach had such event occurred or been
known to Sellers prior to the date of this Agreement, of any of their
covenants, agreements, representations, or warranties contained or referred to
herein or in any document delivered in accordance with the terms hereof.
SECTION 6.7 Notice of Litigation. From the date hereof
to the Closing, immediately upon becoming aware thereof, Sellers shall notify
Buyer of (a) any suit, action, or proceeding to which any Seller becomes a
party or which is threatened against a Seller in writing, (b) any order or
decree or any complaint praying for an order or decree restraining or enjoining
the consummation of this Agreement or the transactions contemplated hereby, or
(c) any notice from any tribunal of its intention to institute an investigation
into, or to institute a suit or proceeding to restrain or enjoin the
consummation of, this Agreement or the transactions contemplated hereby or to
nullify or render ineffective this Agreement or such transactions if
consummated.
SECTION 6.8 Continuation of Insurance Coverage. From
the date hereof to the Closing, Sellers shall keep in full force and effect
insurance coverage for the Theaters and the Acquired Assets in the same amount
and scope to the coverage now maintained covering the Theaters and the Acquired
Assets. At the Transition Time, Sellers shall deliver to Buyer documentation
indicating that the Buyer has been named an additional insured on the insurance
policies in effect for the Theaters.
SECTION 6.9 Interim Operations of the Company.
(a) Except as set forth in Schedule 6.9 hereto, from the
date hereof to the Closing, Sellers shall conduct their business only
in the ordinary course consistent with past practice, and shall not,
unless Buyer gives its prior written approval (i) sell, pledge,
dispose of, or encumber, or agree to sell, pledge, dispose of, or
encumber, any of the Acquired Assets (except in the ordinary course of
business), (ii) modify, extend, or renew any Lease, or (iii) make any
material acquisition or capital expenditure or commit to make any such
acquisition or expenditure.
(b) From the date hereof to the Closing, Sellers will use
reasonable efforts to maintain the Theaters and the Acquired Assets in
their present operating condition and repair, ordinary wear and tear
excepted. Except for inventory and other assets disposed of in the
ordinary course of business consistent with past practice, all of the
Acquired Assets as of the Transition Time shall be delivered at
Closing by Sellers to Buyer.
37
43
(c) If required by law, Sellers shall offer COBRA
benefits to those employees of CCC eligible to receive such benefits
in connection with the sale by Sellers of the Acquired Assets. Upon
termination of CTC employee benefits pursuant to Section 6.14 hereof,
Sellers shall offer COBRA benefits to those employees of CTC eligible
to receive such benefits if required by law.
(d) At Closing Sellers shall provide Buyer with a
schedule of all accrued but untaken vacation days with respect to each
theater level employee of CCC for calendar year 1996 which has not
been taken as of the Transition Time ("Accrued Vacation Obligations").
To the extent such employees of CCC are employed by Buyer immediately
following the Closing and remain in such employ (subject to Buyers
right to terminate any employee for any reason or no reason at will),
Buyer will honor accrued and unused vacation days as outlined on such
schedule in consideration of Sellers payment to Buyer at Closing of an
amount sufficient to cover the costs of such obligation, such amount
to be agreed to by Buyer and Sellers prior to Closing. Buyer will not
honor the vacation of any employee that accrues between the Transition
Time and the Closing. Except for the Accrued Vacation Obligations,
any employees of CTC or CCC who become employees of Buyer after the
Closing will be subject to the terms and conditions of the Buyer's
employee benefit plans.
SECTION 6.10 Transfer Taxes. Sellers shall be responsible
for and shall pay any and all taxes and recording fees, if any, payable as a
result of the sale, conveyance, transfer and delivery of the Acquired Assets
upon the terms and conditions hereof, provided that Buyer shall be responsible
for all recording and other fees relating to its financing of the Purchase
Price, including any applicable mortgage registration taxes.
SECTION 6.11 Preservation of Books and Records. For a period
of two years from the date hereof, Buyer and Sellers will preserve and maintain
the corporate, accounting, auditing and tax books and records relating to the
Acquired Assets that are held by them on the date hereof and will make such
books and records available to each other upon reasonable notice and at
reasonable times, it being understood that Buyer and Sellers shall be entitled
to make copies of any such books and records as they shall deem reasonably
necessary for purposes of making the same available to appropriate Governmental
Authorities or for other proper purposes.
SECTION 6.12 Covenant Not to Compete. Except as otherwise
consented to or approved in writing by Buyer and except for theaters owned or
operated by Cinema Venture Partners and listed on Schedule 6.12 hereto, Seller,
and Sellers' Affiliates will not at any time for a period of three years
following the Closing, directly or indirectly, acting alone or as a member of a
partnership or as a holder, beneficially or of record, of in excess of 5% of
any security of any class, or as a consultant to or representative of, any
corporation, other business entity or Person (excluding Holdings):
(a) engage in the business of Buyer or Holdings as it is
being conducted immediately following the Closing in competition with
Buyer or Holdings at any location within a 25 mile radius of any
Theater or Development Theater location; or
38
44
(b) request any present or future supplier of,
distributor to or provider of services to Buyer to curtail or cancel
its business with Buyer or Holdings in respect of the operations at
any Theater and the use and operation of the Acquired Assets; or
(c) unless otherwise required by law, disclose to any
Person any details of the organization or affairs of the business of
Buyer or Holdings or any other nonpublic information concerning the
Acquired Assets or the conduct of the operations at the Theaters; or
(d) hire, attempt to hire or assist any other Person in
hiring or attempting to hire any employee of Buyer or Holdings or any
Person who was an employee of Buyer or Holdings within the prior
six-month period.
Sellers and Sellers' Affiliates acknowledge that, in the event the scope of the
covenants set forth in this Section 6.12, is deemed to be too broad in any
court proceeding, the court may reduce such scope to that which it deems
reasonable under the circumstances. The parties hereto agree and acknowledge
that Buyer and Holdings do not have any adequate remedy at law for the breach
or threatened breach by Sellers or Sellers' Affiliates of the agreements set
forth in this Section 6.12 and, accordingly, Sellers and each Sellers'
Affiliate further agree that the provisions of Section 8.6 hereof do not apply
to this Section 6.12 and that Buyer may, in lieu of or in addition to the other
remedies that may be available to it hereunder (including its rights under
Section 7.2) or under applicable law, file a suit in equity to enjoin Sellers
or Sellers' Affiliates from such breach or threatened breach and consent to the
issuance of injunctive relief hereunder.
SECTION 6.13 Use of Corporate Names. Sellers acknowledges
that, from and after the Closing, they will have no right, title or interest in
or to the names "Crown," "Crown Cinema," "Crown Theaters" or any variations
thereof containing the word "Crown" or a variation thereof. Neither Sellers
nor any of their Affiliates shall use any such names in any business or venture
in which such Persons are engaged at any time following the Closing. The
covenant set forth in this Section 6.13. shall survive the Closing and shall
continue in full force and effect forever and without any limit upon duration.
SECTION 6.14 Termination of CTC Employee Benefit Plans.
Prior to Closing, Sellers shall terminate all employee benefit plans relating
to employees of CTC in effect prior to Closing.
SECTION 6.15 Tax Treatment of Sale of CTC Stock. The parties
intend that the transfer of the CTC Stock in exchange for the Holdings Stock
constitutes a B Reorganization, Buyers will not take any action (including
filing 338(h)(10) or similar election) which would jeopardize the treatment for
tax purposes of the transaction as a tax-free reorganization.
SECTION 6.16 Corporate Office Lease. The Buyer agrees to
reimburse Sellers the actual lease payments due and payable on the office lease
agreement at 34th and Broadway from the Transition Time through December 31,
1996.
39
45
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS; INDEMNIFICATION
SECTION 7.1 Survival of Representations and Agreements.
All representations and warranties contained in this Agreement, any Sellers'
Ancillary Documents or in any certificate, document, affidavit or instrument
delivered pursuant to this Agreement shall survive the Closing and the
consummation of the transactions contemplated hereby and thereby and shall
continue in full force and effect:
(a) forever and without any limit upon duration in the
case of the representations and warranties of Sellers set forth in
Sections 4.4, 4.13, 4.14 and 4.22;
(b) for a period of one year in the case of all other
representations made with respect to CTC, its assets, business and
operations;
(c) all other representations and warranties shall not
survive the Closing; and
(d) for the comparable periods of time set forth above in
this Section 7.1 in the case of each representation and warranty (but
no covenant) set forth in any Sellers' Ancillary Document or any
certificate, document, affidavit or instrument delivered pursuant to
this Agreement, based upon the nature of such representation and
warranty when compared to the most analogous representation and
warranty set forth above.
Each covenant and agreement set forth in this Agreement or in any Sellers'
Ancillary Document to be performed after the Closing will survive the Closing
in accordance with its terms. All representations, warranties, covenants and
agreements made or contained in this Agreement or in any Sellers' Ancillary
Document or any certificate, document, affidavit or instrument delivered in
accordance with this Agreement shall be deemed to be material and to have been
relied upon by the parties hereto.
SECTION 7.2 Indemnification of Buyer. From and after
the Closing, CCC and ▇▇▇▇▇▇▇ shall jointly and severally indemnify and hold
Buyer and its directors, officers, employees, agents and Affiliates harmless
against any and all damages, losses, deficiencies, liabilities, obligations,
commitments, costs or expenses (including legal and other expenses reasonably
incurred in investigating and defending against the same) (collectively,
"Liabilities" and each a "Liability") incurred by Buyer resulting from (a) the
breach of any representation or warranty of Sellers contained in Article IV of
this Agreement or in any Sellers' Ancillary Document that is known to Sellers
or Buyer on or prior to the Transition Time (it being acknowledged that Buyer
shall have a continuing right of inspection with respect to the Theaters and
Acquired Assets through the Closing Date), (b) any breach of any agreement or
covenant of Sellers contained in this Agreement or in Sellers' Ancillary
Documents, (c) the conduct of the business and operations of the Theaters and
the Acquired Assets on and prior to the Transition Time (exclusive of amounts
reimbursable to Sellers
40
46
by Buyer during the period following the Transition Time as specified in
Section 2.3 hereof), (d) Third Party Claims arising after the Transition Time
and prior to Closing, (e) the termination of contracts pursuant to Section
3.2(g) hereof, (f) the Retained Liabilities, other than with respect to
Liabilities relating to or arising from Buyer's breach of a representation,
warrant, covenant or agreement made by Buyer, or (g) any liabilities arising
from the operation of any Employee Benefit Plan or the termination of any
Employee Benefit Plan prior to or after Closing, provided, however, that
notwithstanding anything to the contrary herein no amount shall be payable to
Buyer in indemnification under this Section 7.2 unless the aggregate amount of
Liabilities exceeds $50,000. Except in the case of the representations and
warranties of Sellers set forth in Section 4.14, in the event that such
aggregate amount of Liabilities exceeds $50,000, the Sellers shall be liable
only for the amount of the excess of $50,000 but not more than the Cash
Purchase Price.
SECTION 7.3 Indemnification of Seller. From and after
the Closing, Buyer and Holding shall jointly and severally indemnify and hold
CCC and ▇▇▇▇▇▇▇ and their directors, officers, limited partners, employees,
agents and Affiliates harmless against any and all Liabilities incurred by
Sellers resulting from (a) the breach by Buyer or Holdings of any
representation or warranty made by Buyer and Holdings and contained in Article
V, (b) any breach of any agreement or covenant of Buyer and Holdings contained
in this Agreement, and (c) the conduct of the business or operations of the
Theaters by Buyer and Holdings after the Closing Date (subject to the
allocation of certain debts, Expenses and contractual obligations to Buyer
following the Transition Time as specified in Section 2.3 hereof), other than
with respect to Liabilities relating to or arising from a breach of a
representation, warranty, covenant or agreement by Seller.
SECTION 7.4 Indemnification for Third Party Claims.
The following procedures shall be applicable with respect to indemnification
for third party claims arising in connection with any provision of this
Agreement.
(a) Promptly after receipt by the party seeking
indemnification hereunder (an "Indemnitee") of written notice of the
assertion or the commencement of any claim, liability or obligation by
a third party, whether by legal process or otherwise (a "Claim"), with
respect to any matter within the scope of Sections 7.2 or 7.3 hereof,
the Indemnitee shall give written notice thereof (the "Notice") to the
Person from whom indemnification is sought pursuant hereto (the
"Indemnitor") and shall thereafter keep the Indemnitor reasonably
informed with respect thereto, provided that the failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein
shall not relieve the Indemnitor of its obligations hereunder unless
such failure results in (i) a default judgment, (ii) the expiration of
the time to answer a complaint or (iii) material prejudice to
Indemnitor's defense of such Claim. In case any such Claim is brought
against any Indemnitee, the Indemnitor shall be entitled to assume the
defense thereof, by written notice of its intention to the Indemnitee
within 30 days after receipt of the Notice, with counsel reasonably
satisfactory to the Indemnitee at the Indemnitor's own expense. If
the Indemnitor shall assume the defense of such Claim, it shall not
settle such Claim without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld. Notwithstanding the
assumption by the Indemnitor of the defense of any Claim as provided
in this Section 7.4(a), the Indemnitee
41
47
shall be permitted to join in the defense of such Claim and to employ
counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee
of its desire to assume the defense of any such Claim within the
prescribed period of time, or shall notify the Indemnitee that it will
not assume the defense of any such Claim, then the Indemnitee shall
assume the defense of any such Claim, in which event it may do so in
such manner as it may deem appropriate, provided that it shall not
settle any Claim which would give rise to the Indemnitor's liability
under Sections 7.2 or 7.3 hereof, as the case may be, without the
Indemnitor's prior written consent, such consent not to be
unreasonably withheld. The Indemnitor shall be permitted to join in
the defense of such Claim and to employ counsel at its own expense.
SECTION 7.5 Exclusive Remedy. The remedies expressly
provided for in Sections 2.3, 6.12, 7, 8.6 and 8.9 shall be parties' exclusive
remedies with respect to the matters covered by this Agreement and no party
shall be liable to the other under this Agreement with respect to any matter
not initiated within the time limits specified in such sections, if any.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Expenses. Except as expressly provided
herein, each of the parties hereto shall bear all costs, expenses and fees
incurred or assumed by it in the preparation and execution of this Agreement
and in complying with the covenants and agreements contained herein.
SECTION 8.2 Notices. All notices and other
communications hereunder shall be given by delivery in person, by registered or
certified mail (return receipt requested with postage prepaid thereon), by a
nationally recognized overnight courier or by facsimile transmission to the
respective parties at the following addresses (or at such other address as
either party shall have furnished to the other in accordance with the terms of
this Section 8.2):
if to any Seller:
Crown Cinema Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
42
48
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to Buyer or Holdings:
Hollywood Theaters, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications hereunder that are addressed as provided
in or pursuant to this Section 8.2 shall be deemed duly and validly given (a)
if delivered in person, upon delivery, (b) if delivered by registered or
certified mail, 72 hours after being placed in a depository of the United
States mails or (c) if delivered by facsimile transmission, upon transmission
thereof and receipt of the appropriate answerback or (d) if by nationally
recognized overnight courier as of 3:00 p.m. on the day after being delivered
to such courier (if delivered to such courier on a timely basis for next day
delivery.
SECTION 8.3 Entire Agreement. This Agreement,
including the Exhibits and Schedules hereto, constitutes the entire agreement
among the parties with respect to the transactions contemplated hereby and
cancels, merges and supersedes all prior oral or written agreements and
understandings with respect thereto and the parties hereto have no agreements,
representations, or warranties relating to the subject matter of this Agreement
which are not set forth herein or in the Sellers' Ancillary Documents. All
Exhibits and Schedules hereto are expressly made a part of this Agreement and
are incorporated herein by reference.
SECTION 8.4 Parties in Interest; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns (it being understood and
agreed that, except as expressly provided herein, nothing contained
43
49
in this Agreement is intended to confer upon any other Person any rights,
benefits or remedies of any kind or character whatsoever under or by reason of
this Agreement). Neither party may assign this Agreement without the prior
written consent of each of the other parties hereto.
SECTION 8.5 Amendment; Waivers. This Agreement may be
amended only by a written instrument duly executed and delivered on behalf of
each of the parties hereto, and compliance with any term or provision hereof
may be waived only by a written instrument executed by each party entitled to
the benefits thereof. No failure to exercise any right, power or privilege
granted hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege granted hereunder.
SECTION 8.6 Arbitration.
(a) The parties desire to resolve certain disputes,
controversies and claims arising out of this Agreement without
litigation. Accordingly, except in the case of (i) a dispute,
controversy or claim relating to the Covenant Not to Compete in
Section 6.12 hereof or (ii) a suit, action or proceeding to compel
either party to comply with the dispute resolution procedures set
forth in this Section 8.6, the parties agree to use the following
dispute resolution procedures as their sole remedy with respect to any
dispute, controversy or claim arising out of or relating to this
Agreement or any documents ancillary hereto or their breach.
(b) Any party may submit a dispute to arbitration as
contemplated by the provisions of this Section 8.6. The arbitration
shall be heard and determined by a tribunal of three arbitrators
selected in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "Arbitration Panel"). All
decisions and awards by the Arbitration Panel shall be made by
majority vote.
(c) Unless otherwise expressly agreed in writing by the
parties to the arbitration proceedings, the following provisions and
procedures shall govern the conduct of any arbitration proceedings
pursuant to this Section 8.6:
(i) the arbitration proceedings shall be held
in Dallas, Texas, at a site chosen by mutual agreement of the
parties, or if the parties cannot reach agreement on a
location within 30 days of the appointment of the last
arbitrator, then at a site chosen by the Arbitration Panel;
(ii) the Arbitration Panel shall be and remain
at all times wholly independent and impartial;
(iii) the arbitration proceedings shall be
conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, as amended from time
to time;
44
50
(iv) any procedural issues not determined under
the arbitral rules selected pursuant to subparagraph (c)(iii)
above shall be determined by the law of the place of
arbitration, other than those laws which would refer the
matter to another jurisdiction;
(v) the costs of the arbitration proceedings
(including attorneys' fees and costs) shall be borne in the
manner determined by the Arbitration Panel;
(vi) the decision of the Arbitration Panel shall
be reduced to writing and shall be final, binding and
conclusive; and any costs or fees incident to enforcing any
award made by the Arbitration Panel shall, to the maximum
extent permitted by Law, be charged against the party
resisting such enforcement; and
(vii) judgment upon any award made by the
Arbitration Panel may be enforced in any court having
jurisdiction over the person or the assets of the party
against whom the award is made.
SECTION 8.7 Restrictions on Transfer. The Holdings
Common Stock shall not be transferable except upon the conditions specified in
this Section 8.7, which are intended to insure compliance with the provisions
of the Securities Act in respect of the transfer of any such shares.
(a) In addition to any other legend that may be required
by applicable law, each certificate representing shares of Holdings
Common Stock shall (unless otherwise permitted by the provisions of
this Section 8.7) be stamped or otherwise imprinted with a legend in
substantially the following form:
"ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDERS OF
SUCH SHARES OF STOCK ARE SUBJECT TO, THE TERMS AND CONDITIONS
CONTAINED IN THAT CERTAIN ASSET PURCHASE AGREEMENT, DATED AS
OF __________, 1996, AS IT MAY BE AMENDED FROM TIME TO TIME,
WHICH IS AVAILABLE FOR EXAMINATION BY HOLDERS OF SHARES OF THE
COMMON STOCK OF HOLLYWOOD THEATER HOLDINGS, INC. (THE
"COMPANY") AT THE REGISTERED OFFICE OF THE COMPANY. IN
ADDITION TO THE FOREGOING RESTRICTIONS, THESE SHARES OF STOCK
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY UNITED STATES STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT IS IN EFFECT
UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SHARES OR A
WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY IS
45
51
OBTAINED TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED
AND (ii) EXCEPT IN THE CASE OF PUBLICLY TRADED SHARES, THE
TRANSFEREE IS AN "ACCREDITED INVESTOR" AS DEFINED IN
REGULATION D PROMULGATED UNDER THE SECURITIES ACT."
The certificates shall also bear any legend required under any
applicable state securities or "blue sky" laws.
(b) The holder of shares of Holdings Common Stock bearing
a restrictive legend set forth in paragraph (a) above ("Restricted
Shares"), by acceptance thereof, agrees that, unless a registration
statement is in effect under the Securities Act with respect to such
Restricted Shares, prior to any transfer or attempted transfer of such
Restricted Shares, such holder will give Holdings (i) written notice
describing the proposed transfer of any Restricted Shares in
reasonable detail, (ii) certification that the proposed transferee of
the Restricted Shares is an "accredited investor" within the meaning
of Rule 501 under the Securities Act, (iii) such other information
about the proposed transfer of such Restricted Shares or the proposed
transferee of such Restricted Shares as Holdings may request and (iv)
an opinion of counsel reasonably acceptable to Holdings satisfactory
to Holdings to the effect that the proposed transfer of such
Restricted Shares may be effected without registration of such
Restricted Shares under the Securities Act and applicable United
States state securities laws. In addition, if the holder of the
Restricted Shares delivers to Holdings an opinion of counsel that
subsequent transfers of such Restricted Shares will not require
registration or qualification under the Securities Act, Holdings will
cause the transfer agent promptly after such contemplated transfer to
deliver new certificates for such Restricted Shares that do not bear
the legend set forth in paragraph (a) above. If the foregoing
conditions entitling the holder to effect a proposed transfer of such
Restricted Shares without registration under the Securities Act have
not been satisfied, the holder shall not transfer the Restricted
Shares, and Holdings will cause the transfer agent not to transfer
such Restricted Shares on its books or issue any certificates
representing such Restricted Shares. Any purported transfer not in
accordance with the terms hereof shall be void. The restrictions
imposed by this Section 8.7(b) upon the transferability of any
particular Restricted Shares shall cease and terminate when such
Restricted Shares have been sold pursuant to an effective registration
statement under the Securities Act or transferred pursuant to Rule 144
promulgated under the Securities Act. The holder of any Restricted
Shares as to which such restrictions shall have terminated shall be
entitled to receive from Holdings, without expense, a new certificate
representing shares of Holdings Common Stock that does not bear the
restrictive legend set forth above and does not contain any other
reference to the restrictions imposed by this Section 8.7(b). As used
in this Section 8.7(b), the term "transfer" encompasses any sale,
transfer, pledge or other disposition of any shares of Holdings Common
Stock referred to herein.
SECTION 8.8 Severability. In the event that any term or
provision contained in this Agreement is held to be invalid, illegal or
unenforceable for any reason, the invalidity, illegality or
46
52
unenforceability thereof shall not affect any other term or provision hereof
and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained therein.
SECTION 8.9 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with the terms
hereof. Accordingly, the parties agree that each of them shall be entitled to
injunctive relief to prevent breaches of the terms of this Agreement and to
obtain specific performance of the terms hereof, in addition to any other
remedy now or hereafter available at law or in equity, or otherwise.
SECTION 8.10 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
regard to principles of conflicts of law, except to the extent that mandatory
principles of conflicts of law require the application of laws of another
jurisdiction wherein any of the Acquired Assets are located to determine the
validity or effect of the sale, conveyance, transfer or delivery thereof in
accordance with the provisions of this Agreement.
SECTION 8.11 Headings. The Article and Section headings
contained in this Agreement are for convenience of reference only, do not
constitute a part of this Agreement and shall not limit, extend or otherwise
affect the meaning or interpretation of the provisions hereof.
SECTION 8.12 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 8.13 Press Releases. None of the parties hereto
shall issue press releases or other public communications of any sort relating
to this Agreement prior to closing; provided, however, that the parties shall
be entitled to make such disclosures as may be required pursuant to applicable
law or the lawful requirement of any Governmental Authority or by order of a
court of competent jurisdiction.
47
53
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Trustee
CROWN CINEMA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
CROWN THEATRE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
HOLLYWOOD THEATERS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
President
48
54
HOLLYWOOD THEATER HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
President
49
55
LETTER AGREEMENT
November 1, 1996
Hollywood Theaters, Inc.
Hollywood Theaters Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: ASSET AND STOCK PURCHASE AGREEMENT DATED AS OF
AUGUST 26, 1996 (THE "AGREEMENT")
Dear Gentlemen:
This Letter Agreement will serve as an amendment to and supplement of
the Agreement. Our agreements are as follows:
1 . Pursuant to Section 2.2(b) of the Agreement
(capitalized terms used herein without definition shall have the meaning
ascribed thereto in the Agreement), Buyer is to deliver to the Trustee, the
Holdings Common Stock. At the Closing, Buyer will deliver to the Trustee 80%
of the Holdings Common Stock based on the estimated TLCF. When the actual TLCF
is determined pursuant to Section 2.6 of the Agreement, Buyer will cause the
remainder of the Holdings Common Stock to be issued to the Trustee.
2. The current health benefit program for CCC and CTC
will cover participant claims with respect to covered health services provided
to participants and beneficiaries prior to the Transition Time.
If the foregoing meets with your approval, please execute the
enclosed copy of this Letter Agreement and return it to the undersigned.
Very truly yours,
CROWN CINEMA CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
President
CROWN THEATRE CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
President
1
56
Page 2
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
REVOCABLE TRUST
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
Accepted and Agreed to this lst day of November, 1996.
HOLLYWOOD THEATERS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President
HOLLYWOOD THEATER HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President
2