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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 20, 1994
CARMIKE CINEMAS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-14993 58-1469127
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
1301 First Avenue, Columbus, Georgia 31901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 706-576-3400
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(Former name or former address, if changed since last report)
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ITEM 2
On May 20, 1994, Carmike Cinemas, Inc., a Delaware corporation (the
"Company"), acquired substantially all of the assets of Cinema World, Inc., a
Pennsylvania corporation ("Cinema World") (such purchase hereinafter referred
to as the "Transaction") pursuant to an Agreement dated as of the same date by
and between the Company and Cinema World, C.W. Industries, Inc. and C.W.
Advertising, Inc. Cinema World was engaged in the motion picture exhibition
business and its assets consist of theatre properties and equipment located
primarily in Pennsylvania, Ohio and West Virginia.
In the Transaction the Company paid $38,100,000 cash to Cinema World
for assets consisting primarily of 38 theatres comprising 176 screens and one
warehouse. Funds for the Transaction were provided by the Company's new
$100,000.00 Revolving Credit Facility. The Transaction was effective for
accounting purposes on May 20, 1994.
ITEM 7 Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
It is impracticable to provide the required statements for the
acquired business with the filing on Form 8-K. The financial
statements will be filed within the period permitted by
Instruction 7(a)(4) of Form 8-K.
(b) Pro Forma Financial Information
It is impracticable to provide the required pro forma
financial information for the acquired business with the
filing on Form 8-K. The pro forma financial information will
be filed within the period permitted by Instruction 7(b)(2) of
Form 8-K.
(c) Exhibits
2(a) Agreement dated as of May 20, 1994 by and between
Cinema World, Inc., C.W. Industries, Inc. and C. W.
Advertising, Inc. and Carmike Cinemas, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
under signed hereunto duly authorized.
Carmike Cinemas, Inc.
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Registrant
/s/ John O. Barwick, III
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John O. Barwick, III
Vice President-Finance and
Chief Financial Officer
Dated: June 2, 1994
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Manually Signed
Number Description Original of Form 8-K
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<S> <C> <C>
2(a) Agreement dated as of May 20, 1994
by and between Cinema World, Inc., C. W.
Industries, Inc. and C. W. Advertising, Inc.
and Carmike Cinemas, Inc.
</TABLE>
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EXHIBIT 2(A)
AGREEMENT
AGREEMENT, dated as of the 20th day of May, 1994, between CINEMA
WORLD, INC., a Delaware corporation, C. W. INDUSTRIES, INC., a Pennsylvania
corporation, and C. W. ADVERTISING, INC., a Pennsylvania Corporation
(collectively hereinafter "Seller"), and CARMIKE CINEMAS, INC., a Delaware
corporation, ("Buyer").
WITNESSETH:
WHEREAS, Seller operates certain theatres for the exhibition of
motion pictures; and
WHEREAS, Seller and Buyer have previously executed a Letter of
Intent dated March 29, 1994 providing for the sale of substantially all of the
assets of Seller to Buyer; and
WHEREAS, the Board of Directors of Seller and the Board of
Directors of Buyer deem it appropriate to effect the sale and transfer of
substantially all of Seller's assets and certain liabilities pursuant to the
agreement set forth hereinafter.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, intending to be legally bound hereby, and for
other consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the parties hereto have agreed, and do hereby agree, as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the meanings
set forth below:
1.01. "ADVERTISING AGENCY" - C W Advertising, Inc.
1.02. "AFFILIATE" - Any person, firm, corporation, partnership or
association controlling, controlled by, or under common control with another
person, firm, corporation, partnership or association.
1.03. "AGREEMENT" - This Agreement, including the Exhibits attached
hereto, and the Schedules delivered pursuant hereto.
1.04. "Benefit Plans" - The term "Benefit Plans" shall mean any
plan, program, arrangement, practice or contract of Seller which provides
benefits or compensation to or on behalf of employees, or former employees, of
Seller, whether formal or
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informal, whether or not written, including, without limitation, the following
types of benefit plans:
(a) "EXECUTIVE ARRANGEMENTS" - Any profit sharing, stock
options, stock appreciation, phantom stock, deferred compensation, severance,
golden parachute or other executive compensation plan, rabbi trust, program,
contract, arrangement or practice;
(b) "ERISA PLANS" - Any "employee benefit plan" (as
defined in Section 3 (3) of ERISA), including, but not limited to, any
multiemployer plan (as defined in Section 3 (37) and Section 4001 (1) (3) of
ERISA, a "Multiemployer Plan"), defined benefit pension plan, profit sharing
plan, money purchase pension plan, savings or thrift plan, stock bonus plan,
employee stock ownership plan, or any plan, fund, program, arrangement or
practice providing for medical (including post-retirement medical),
hospitalization, accident, sickness, dental, disability or life insurance
benefits; and
(c) "OTHER EMPLOYEE FRINGE BENEFITS" - Any stock purchase,
scholarship, day care, prepaid legal services, severance pay, or other fringe
benefits plan, program, arrangement, contract or practice.
1.05. "CLOSING" - The Closing referred to in Section 2.05. hereof.
1.06. "CLOSING DATE" - The date referred to in Section 2.05 hereof.
1.07. "CONTINUING CONTRACTS" - The agreements relating to the
operation and maintenance of the Property (excluding film exhibition
agreements), which are described on Exhibit "A" attached hereto, together with
any contracts in the nature thereof executed by Seller after the date hereof,
as herein permitted and approved in writing by Buyer, except any contract which
is terminable with thirty (30) days notice without penalty.
1.08. "ERISA - The Employee Retirement Income Security Act of
1974, as amended.
(a) "ERISA AFFILIATE" - The term "ERISA Affiliate shall
mean each trade or business (whether or not incorporated) which together with
Seller is treated as a single employer under Section 4.14 (b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended (the "Code").
1.09. "ESCROW" - $838,997.91 to be deposited with PNC Bank and held
and distributed pursuant to the terms and conditions of the Escrow Agreements
attached hereto as Exhibit "C".
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1.10. "EXCLUDED PROPERTY" - That Property set forth on Schedule
1.10.
1.11. "EXHIBITS" - Those Exhibits referenced in this Agreement and
incorporated herein by such reference.
1.12. "FILM DISTRIBUTORS" - All of the major film suppliers which
are members of the Motion Picture Association of America.
1.13. "GUARANTEED FILM CONTRACTS - Those film contracts which
require Seller to pay a guaranteed minimum film rental amount, notwithstanding
that the film may not have earned same.
1.14. "HOME OFFICE" - 107 Sixth Street, Pittsburgh, Pennsylvania,
provided, however, the lease for said Home Office shall be Excluded Property.
1.15. "IMPOSITIONS" - All real estate taxes, special and benefit
assessments, sewer rents, water rates, personal property taxes, and all other
taxes, assessments and charges of every kind, which may affect the Property or
any part thereof by virtue of any present or future law of any governmental
authority.
1.16. "INTANGIBLE PROPERTY" - All intangible property now or on the
Closing Date owned by Seller pertaining solely to the Property, including all
assignable business licenses, warranties, the Continuing Contracts (to the
extent assignable), telephone exchange numbers to the extent assiqnable. plans
and specifications, blueprints, engineering information and reports, and
governmental approvals.
1.17. "LANDLORD'S CONSENT" - Consent of the Landlords referred to
in Section 2.07 (d) to the transfer and assignment of the Leases described in
Schedule 3.09 (a).
1.18. "LEASEHOLD IMPROVEMENTS" - All right, title and interest of
Seller in the Leasehold Improvements of any kind and description now, or on the
Closing Date, located on or which are part of the Leased Premises.
1.19. "LEASEHOLD INTERESTS" - All and singular, the interests,
estates, rights, privileges, titles, easements, options and appurtenances
belonging or in any way appertaining to the Seller as tenant under the Leases.
1.20. "LEASES" - The leases for the Theatres and all amendments and
modifications thereof, all of which are described on Exhibit "J" attached
hereto.
1.21. "LEASED PREMISES" - The premises demised by the Leases.
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1.22. "PERMITTED LIENS" - (i) Liens and taxes due and payable and
which are prorated pursuant to Section 2.04 hereof; (ii) liens that shall be
discharged prior to or at Closing; and (iii) Permitted Title Exceptions.
1.23. "PERMITTED TITLE EXCEPTIONS" - With respect to the real
property those preprinted exceptions in a standard form ALTA extended coverage
policy of title insurance and those encumbrances set forth on Schedule 1.23.
1.24. "PERSONAL PROPERTY" - All tangible personal property now or
on the Closing Date owned by Seller and used in the operation of the Leased
Premises, warehouse, Advertising Agency and the Home Office including all
supplies, inventories, service and concession equipment, concession inventories
(at a minimum amount of $65,000), heating, ventilating and cooling equipment,
fixtures, cleaning equipment and supplies, surplus equipment, vehicles, alarm
systems, screens, projection equipment, theatre seats, cash registers, display
cases, acoustical wall panels, sound systems, speakers, computers, office
equipment and desks, popcorn poppers and storage bins, linoleum, carpets,
drapes, laundry tubs and trays, washers, dryers, ice boxes, refrigerators,
heating units, stoves, ovens, water heaters, incinerators, furniture and
furnishings, and communication systems, now or on the Closing Date affixed or
attached to or placed upon and used in connection with the operation of the
Theatres, Home Office, warehouse and Advertising Agency, or any of them
(without limiting the generality of the foregoing, the personal property listed
on Exhibit "B" attached hereto shall be included in Personal Property);
provided, however, Personal Property shall not include (a) accounts receivable
as of the Closing Date, and (b) cash and cash equivalents (including
certificates of deposit, commercial paper, and investments in securities on
hand or in banks) as of the Closing Date, (c) the Excluded Property.
1.25. "PROPERTY" - The Leasehold Interests, Leasehold Improvements,
Personal Property and Intangible Property, assets of the Advertising Agency and
the Warehouse, and Real Property.
1.26. "PURCHASE PRICE" - The Purchase Price for the Property is
THIRTY-EIGHT MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($38,100,000.00),
payable as set forth in paragraph 2.02 hereof.
1.27. "REAL PROPERTY" - Real Property owned by Seller described on
Schedule 3.09 (a).
1.28. "SCHEDULES" - Those Schedules referred to in this Agreement,
and incorporated herein by reference.
1.29. "THEATRES" - The thirty-eight (38) locations consisting of
one hundred seventy-six (176) screens for the
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exhibition of motion pictures as specifically set forth on Exhibit "D".
1.30. "THEATRE LEVEL EMPLOYEE" - Any employee who actually works at
a Theatre location.
1.31. "THE WAREHOUSE" - That certain warehouse owned and operated
by C. W. Industries, Inc., and located at 2934 Smallman Street, Pittsburgh,
Pennsylvania.
The definitions of this section shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The term "person" includes individuals, partnerships,
corporations, trusts and other associations. The words "include," "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation." The words "herein," "hereof," "hereunder" and similar terms shall
refer to this contract, unless the context otherwise requires.
Attached to this contract and incorporated herein by reference are
the following:
EXHIBIT A - CONTINUING CONTRACTS
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - ESCROW AGREEMENT
EXHIBIT D - THEATRES
EXHIBIT E - BILL OF SALE
EXHIBIT F - COVENANT NOT TO COMPETE AGREEMENT
EXHIBIT G - FORM OF LANDLORD'S CONSENT
AND ESTOPPEL
EXHIBIT H - SELLER'S REQUIRED INSURANCE
EXHIBIT I - REAL PROPERTY
EXHIBIT J - LEASES
SCHEDULE 1.10 - EXCLUDED PROPERTY
SCHEDULE 1.23 - PERMITTED TITLE EXCEPTIONS
SCHEDULE 2.02(a) - WIRING INSTRUCTIONS
SCHEDULE 2.03 - PURCHASE PRICE ALLOCATION
SCHEDULE 2.04(9) - ADVERTISING BOOKED AND NOT PRINTED
OR BROADCASTED
SCHEDULE 2.07(b) - HOME OFFICE FURNITURE, FIXTURES AND
EQUIPMENT
SCHEDULE 2.07(c) - CONSENT OF OTHERS
SCHEDULE 3.02(a) - CASH FLOW INFORMATION
SCHEDULE 3.03(a) - TRANSACTION NOT IN ORDINARY COURSE
OF BUSINESS
SCHEDULE 3.04 - UNPAID TAXES
SCHEDULE 3.06 - GOVERNMENTAL NOTIFICATIONS
AND CONSENTS
SCHEDULE 3.07 - COMPLIANCE WITH OTHER INSTRUMENTS
SCHEDULE 3.09(a) - DESCRIPTION OF REAL PROPERTY OWNED
BY SELLER
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SCHEDULE 3.09(b) - DESCRIPTION OF REAL PROPERTY LEASED
TO SELLER
SCHEDULE 3.10 - TRADENAMES
SCHEDULE 3.11 - INSURANCE
SCHEDULE 3.12 - DEFAULTS
SCHEDULE 3.13 - LITIGATION
SCHEDULE 3.14 - COMPLIANCE WITH LAWS
SCHEDULE 3.16 - LABOR MATTERS
SCHEDULE 3.17 (a) - CONTRACTS AND COMMITMENTS
SCHEDULE 3.17 (c) - SCREEN ADVERTISING AND CREDIT CARD
AGREEMENTS
SCHEDULE 3.19 - EMPLOYEE BENEFIT PLANS AND
WELFARE PLANS
SCHEDULE 3.23 - ENVIRONMENTAL MATTERS
SCHEDULE 3.24 - DISCOUNT TICKETS AND GIFT CERTIFICATES
SCHEDULE 5.03 - MATERIAL ADVERSE CHANGE IN OPERATION
OF THEATRES
SCHEDULE 7.04 - GOVERNMENTAL NOTIFICATIONS
AND CONSENTS REQUIRED BY BUYER
SCHEDULE 7.06 - LITIGATION OF BUYER
ARTICLE II
PURCHASE AND SALE OF PROPERTY
2.01. Agreement to Sell. Pursuant to the terms and conditions of
this Agreement, at Closing Seller agrees to sell, convey, transfer, assign and
deliver to Buyer, and Buyer agrees to purchase from Seller all of the Property
owned and used by Seller in the operation of its motion picture exhibition
business in the Theatres, warehouse, Advertising Agency, and Home Office,
except Excluded Property.
2.02. Purchase Price. The Purchase Price for the Property will be
paid to the Seller as follows:
(a) At Closing, Buyer shall pay and deliver by wire
transfer to Seller, pursuant to wiring instructions set forth on Schedule 2.02
(a), the Purchase Price less the Escrow.
2.03. Purchase Price Allocation. The Purchase Price will be
allocated to the Property as shown on Schedule 2.03, and each of the parties
agree to report this transaction for Federal income tax purposes in accordance
with the allocation shown on said schedule.
2.04. Closing Adjustments.
(a) The following items affecting the Property shall be
apportioned, adjusted, prorated or otherwise accounted for between Seller and
Buyer as of the Closing Date:
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(i) Except as set forth in paragraph (d) of this Section,
rent, additional rent, common area maintenance and all other charges payable by
Seller as tenant under the Leases as follows: (1) any charge payable on a
monthly or yearly basis and any other charge which is subject to year end
adjustment shall be prorated, as of the Closing Date, for the month in which
the Closing Date shall occur and any year end adjustment thereof shall be paid
by, or the refund from the lessor paid to, Seller and Buyer in proportion to
their respective payments thereof (i.e., Seller to make all such payments prior
to the Closing Date and Buyer to make all such payments after the Closing
Date), and (2) Impositions under the Leases not payable monthly but payable in
full after the Closing at the end of a lease year or tax fiscal year, as
provided in the respective Leases, shall be prorated as of the Closing Date but
Seller will pay Buyer its share thereof within 15 days after Buyer furnishes
Seller the billing and substantiation thereof received from each respective
lessor;
(ii) Payments owing by Seller under the Leases to
merchants' associations or similar business promotion organizations;
(iii) Buyer shall pay Seller on the Closing Date for any
security deposits held by lessors under the Leases; Buyer's pro rata share of
all other prepaid items for which Buyer would be liable after the Closing Date
under the Leases; and
(iv) Buyer shall pay Seller on the Closing Date its
prorated share of prepaid expenses, if any, on Continuing Contracts assumed by
Buyer at Closing.
(v) Reduced admission tickets, group tickets or so-called
other "discount tickets" (collectively "Discount Tickets") issued by Seller
prior to the Closing Date and presented by customers for admission to the
Theatres on or after the Closing Date shall be honored by Buyer but may be
redeemed by Buyer from Seller for the amount determined as follows: (a) The
first 30,000 Discount Tickets honored by Buyer shall be repaid by Seller to
Buyer in an amount equal to $4.00 for each Discount Ticket honored by Buyer;
(b) the next 5,250 Discount Tickets honored by Buyer shall be paid by Seller to
Buyer in an amount equal to $2.00 for each Discount Ticket honored by Buyer;
and (c) all other Discount Tickets honored by Buyer shall be repaid to Buyer by
Seller in an amount equal to $3.70 for each Discount Ticket honored by Buyer.
(vi) Seller shall also reimburse Buyer in the amount of
any gift certificates issued by Seller prior to the Closing Date and used at
the Theatres subsequent to the Closing Date, when, as and in the amount said
gift certificates are redeemed, provided, however, Buyer shall not be obligated
to honor any such gift certificate or discount ticket after one (1) year
immediately following the Closing Date.
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(vii) Buyer shall and hereby covenants and agrees to be
bound by all free admission passes (season passes, refund passes and trip
passes) distributed prior to the Closing Date by Seller or Seller's authorized
agents to third parties.
(viii) Notwithstanding anything contained herein to the
contrary, Buyer shall submit to Seller for reimbursement to Buyer Discount
Tickets or gift certificates once a month in the manner required herein, and
Seller shall pay same to Buyer by the 3Oth day thereafter.
(b) General real property taxes and other Impositions
imposed upon or assessed against the Property (and not otherwise payable by
Seller as tenant under the Leases directly to the lessors thereunder or payable
by such lessors without any obligation of payment on the part of Seller) shall
be remitted to the collecting authorities by Seller if the same are due and
payable on or before the Closing Date, and by Buyer if due and payable
thereafter; provided, however, such real property taxes and other Impositions
imposed upon or assessed against the Property for the current tax fiscal year
in which the Closing Date occurs ("Proration Period") shall be apportioned and
prorated between Seller and Buyer on and as of the Closing Date with Buyer
bearing only the expense of that proportion of such Impositions that the number
of days in the Proration Period following and including the Closing Date bears
to 365. If the amount of any such taxes, assessments and other Impositions to
be borne by the parties hereto, as above provided, is not ascertainable on the
Closing Date, Seller shall pay to Buyer, or Buyer shall pay to Seller, as the
case may be, its share of the amount of such taxes, assessments or other
Impositions within 15 days after receipt by the paying party of the appropriate
tax bill(s) evidencing the amount thereof.
(c) Seller shall pay all utility costs in respect of the
Leased Premises (except to the extent the lessors are liable therefor under the
Leases or such costs are a part of a lease charge to be prorated pursuant to
clause (i) of paragraph (a) of this Section) incurred prior to the Closing
Date, and those incurred thereafter shall be paid by Buyer. If the utility
charges for the last utility period cannot be ascertained on the Closing Date,
then at such subsequent date as all utility bills for such utility period have
been obtained, the parties shall promptly pay their respective prorated
amounts. Any deposits of Seller held by utility companies shall be returned to
Seller, and Buyer shall be responsible for making its own deposits with the
utility companies.
(d) With respect to any percentage rent (as defined in the
respective leases) payable under the Leases for the applicable lease years
thereunder during which the lease assignments occur, the percentage rent
(taking into account any applicable credits or adjustments) shall be prorated
between the Buyer and Seller such that each party shall pay when due that
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percent of the total percentage rent payable which equals such party's
respective gross receipts (as defined in the respective leases) divided by the
total gross receipts for such lease year.
(e) Seller and Buyer shall also make such other
adjustments or apportionments with respect to the Property as may be necessary
to carry out the intention of the parties hereto so that Buyer shall not be
liable for matters accruing or occurring prior to the Closing Date and that
Seller shall not be liable for matters accruing or occurring from and after the
Closing Date and that Seller shall bear all of the expenses and burdens, and
shall be entitled to all of the benefits and income, of and from ownership of
the Property prior to the Closing Date and Buyer shall bear all such expenses
and burdens and shall be entitled to all such benefits and income from and
after the Closing Date.
(f) The foregoing adjustments shall be determined and
payment made from one party to the other (as the case may be) on the Closing
Date to the extent they are known and agreed to by both parties; otherwise,
such adjustments shall be determined as soon as possible after the Closing Date
and the adjustments, if any, shall be determined and payment made by the party
owing the adjustment to the other within 30 days after the adjustment is
determined.
(g) With respect to the Advertising Agency, Seller shall
pay any and all invoices, affidavits or bills of any nature whatsoever, and
shall receive all of the income, commissions and film credit attributable to
and arising from all advertisements placed on behalf of Film Distributors prior
to the Closing Date notwithstanding the broadcast or print date of such
advertisement as set forth on Exhibit 204 (g).
2.05. Closing Date and Place. The Closing of the transaction
contemplated by this Agreement shall take place at Aderson, Frank and Steiner,
on the later of (i) May 20, 1994, or (ii) the third day after the conditions
precedent set forth in Articles V and VIII herein have been satisfied or waived
(the "Closing Date"). A pre-closing shall be held at such offices, two (2) days
prior to the Closing Date, at which such pre-closing, all closing documents
shall be executed and deposited into escrow pursuant to the respective closing
instruments of Buyer and Seller. The Closing shall be deemed to occur as of
12:01 p.m. on the Closing Date.
2.06. Buyer's Performance At and After Closing. At Closing, Buyer
shall:
(a) Pay and deliver by wire transfer the Purchase Price to
Seller, less the Escrow.
(b) Deliver the Escrow to the Escrow Agent.
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(c) Deliver to Seller a Certificate of the Secretary of
Buyer stating that this Agreement and other instruments and documents executed
in connection herewith have been duly authorized by the Board of Directors of
Buyer and setting forth the names, titles, signatures and attesting to the
incumbency of those persons authorized to execute this Agreement and the
instruments and documents executed in connection herewith. Copies of all
resolutions pertaining to such authorization shall be attached to the
certificate.
(d) Furnish Buyer's opinion of counsel.
(e) Assume Seller's liability under Leases.
(f) Pursuant to Section 2.04, transfer and deliver to
Seller any and all cash remittances or properties Buyer may receive in respect
of the Property relating to the periods prior to the Closing Date.
(g) Pay one-half (1/2) of any realty transfer tax imposed
in connection with the transfer of the Real Property.
2.07. Seller's Performance at Closing. At Closing, Seller will
deliver to Buyer:
(a) All bills of sale, substantially in form attached
hereto as Exhibit "E", assignments of licenses and permits (to the extent
assignable), executory contracts, leases, easements and rights of way as are
necessary in order to effectively vest in Buyer good, indefeasible and
marketable title to the Property free and clear of all encroachments, leases,
tenancies, liens, encumbrances, mortgages, conditional sales and other title
retention agreements, pledges, covenants, restrictions, reservations, easements
and options except for the Permitted Liens;
(b) Actual possession and operating control of the
Property, except the furniture, fixtures and equipment located in the home
office at 107 Sixth Street, Pittsburgh, Pennsylvania, as more particularly
described on Schedule 2.07 (b) attached hereto (Seller shall surrender said
home office property to Buyer no later than sixty (60) days after Closing);
(c) A certificate of Seller, executed by an officer,
certifying that the persons executing this Agreement and other documents
consummating transactions contemplated by this Agreement have been duly and
validly authorized by its Board of Directors so to do, and that except as set
forth on Schedule 2.07 (c), no consent or approval of any other person is
necessary. Such certificate shall set forth the names, titles, and signatures
and attest to the incumbency of those persons authorized to execute this
Agreement and all Agreements, instruments and documents in
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connection herewith. Copies of all resolutions pertaining to such authorization
shall be attached to the certificate;
(d) Any and all consents of third parties necessary for
the transfer and assignment of the Property, including, but not limited to, any
required Landlords' Consents to the assignment of all Leases for the Theatres
with no changes adverse to Buyer in the terms and conditions thereof;
(e) Seller's opinion of counsel.
2.08. Seller's Performance At and After Closing. Seller hereby
covenants and agrees that at or after the Closing, as required, Seller shall:
(a) At the request of Buyer, take all action reasonably
necessary to put Buyer in actual possession of the Property, and execute and
deliver such further instruments of conveyance, sale, transfer and assignment,
and take such other action as may be reasonably necessary to transfer to Buyer
any of the Property and confirm the title of Buyer to the Property. Further,
after Closing, should Seller be a necessary party in order for Buyer to
exercise its rights with respect to the Property, Seller will take reasonable
efforts, at Buyer's request and at Buyer's expense, to assist Buyer therein;
(b) Pay when due and payable any governmental taxes or
other governmental charges which may arise out of the transfer of the Property,
including without limitation any transfer, documentary stamp tax, surtax, gross
receipts, excise, title, and sales and use tax. The parties agree to cooperate
in taking such steps as may be necessary or appropriate in order to take
advantage of any exemptions from any such governmental taxes, or other charges
which may be available with respect to the transfer of the Property, provided,
however, Seller shall only pay one-half (1/2) of the Realty Transfer Tax
imposed in connection with the transfer of the Real Property;
(c) For a period of one (1) year following the Closing
Date, provide Buyer access to any accounting records, and lease files and
records relating to the ownership or operation of the Property, which are in
Seller's possession, and assist Buyer, at Buyer's expense, in the preparation
of any financial statements and/or completion of any audit of financial
statements that may be required to meet SEC Regulations;
(d) At the request of Buyer, prosecute or otherwise
enforce in Seller's name for the benefit of Buyer, any claims, rights or
benefits that are being transferred to Buyer under this Agreement, and that
require prosecution or enforcement in Seller's name. Any such prosecution or
enforcement shall be at Buyer's sole expense, unless such prosecution or
enforcement is made necessary
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by a material breach of this Agreement by the Seller, in which case such
prosecution or enforcement shall be at Seller's sole expense;
(e) Hold Buyer harmless from all charges or liabilities
incurred by the Seller prior to the Closing Date relating to the Property; and
(f) Transfer or deliver to Buyer any and all cash
remittances or property Seller may receive in respect of the Property relating
to the periods after the Closing Date.
2.09. Buyer Does Not Assume Any of Seller's Liabilities or
Obligations. Seller, at Closing, will transfer all of the Property to Buyer
free and clear of any and all claims, liens, mortgages, options, charges,
security interests, assignments, restrictions, easements, actions or demands or
encumbrances whatsoever, except for:
(a) Obligations arising after the Closing Date with
respect to Continuing Contracts and Leases included in the Property as
described on Schedule 3.09 (b),
(b) Permitted Liens, and
(c) The post-closing prorated items included in Section
2.04.
Except as expressly set forth herein, or in any law applicable
hereto, Buyer is not assuming any obligations or liabilities of Seller or of
Seller's business or any liabilities attendant to any of the Property, whether
known or unknown, liquidated or contingent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement for Buyer's performance hereunder, Seller
hereby makes the following representations and warranties, each of which (as
qualified by all Exhibits and Schedules to this Agreement) is true and correct
on the date of this Agreement, shall be true and correct on the Closing Date,
except as otherwise disclosed by Seller to Buyer in a Schedule or Exhibit
attached hereto, and shall survive the Closing and the transactions,
contemplated by this Agreement for a period of twelve (12) months from the
Closing Date, and shall be deemed to be independently relied upon by Buyer.
3.01. Legal Status. Sellers are corporations duly organized,
validly existing, and in good standing under the laws of the State of Delaware
as to Cinema World, Inc., and under the laws of the Commonwealth of
Pennsylvania as to C. W. Industries, Inc.
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and C. W. Advertising, Inc. Seller has all requisite corporate power and
authority to own its properties, to carry on its business, as now being owned
and operated by it, to enter into this Agreement, and to perform its
obligations hereunder.
3.02. Financial Information.
(a) Schedule 3.02 (a) contains (i) certain financial
information of the Theatres for fiscal years ended 12/31/93, 12/31/92 and
12/31/91, and the 3-month periods ended 3/31/94 and 3/31/93, (ii) confidential
offering memorandum dated October, 1993.
(b) The financial information is in accordance, in all
material respects, with the books and records of the Seller, and except as
stated therein presents fairly the results of operations of the Theatres for
the respective periods indicated, subject to year end adjustments in case of
any interim statements.
3.03. Absence of Specified Changes. Since 12/31/93, there has
not been any, except as otherwise provided below:
(a) Transaction by Seller with respect to the Property
except in the ordinary course of business as conducted on that date, except as
set forth on Schedule 3.03 (a).
(b) Debt, obligation or liability (whether absolute or
contingent) incurred by Seller which will not be discharged at or before
Closing (whether or not presently outstanding), which creates a lien upon or
otherwise encumbers the Property;
(c) Mortgage, pledge or other encumbrance of any of the
Property, except for Permitted Liens;
(d) Sale, lease, abandonment or other disposition of any
of the Property, excluding inventory, used in the normal course of business;
(e) Except as set forth on Schedule 3.16, labor dispute,
strike, work stoppage, or any other occurrence, event or condition of a similar
nature which impacts the Property which materially impacts Buyer's ability to
operate the Property;
(f) Amendment or termination of any contract, Lease,
agreement or license included in the Property to be assigned to Buyer in which
Seller is a party;
(g) Agreement, other than this Agreement, by Seller to do
any of the acts described in this Section 3.03;
(h) Except as set forth on Schedule 3.25, arrangement for
discount, promotional or prepaid tickets, or admission passes or other similar
arrangement not in the ordinary course of business of Seller, or for which
Seller shall reimburse Buyer.
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3.04. Tax Returns. Except with respect to real and personal
property taxes payable after the date hereof, and except as set out on Schedule
3.04, all known taxes, including without limitation, income, property, ad
valorem, sales, use, franchise, gross receipts, added value, employees income
withholding and social security taxes imposed by the United States, by any
state, municipality, other local government or other subdivision or
instrumentality of the United States, or by any other taxing authority, that
are due and payable by the Seller prior to the Closing, and all interest and
penalties thereon, whether disputed or not, which would result in the
imposition of a lien, claim or encumbrance on the Property or against the Buyer
have been paid in full, all tax returns required to be filed in connection
therewith have been accurately prepared and duly and timely filed, or subject
to a valid extension, and all deposits required by law to be made by Seller
with respect to employees withholding taxes have been duly made. Seller is not
delinquent in the payment of any tax, assessment, or governmental charge or
deposits which would result in the imposition of a lien, claim or encumbrance
on the Property or against the Buyer, and has no tax, deficiency or claim
outstanding, proposed or assessed against it, and there is no basis for any
such deficiency or claim, which would result in the imposition or any lien,
claim or encumbrance on the Property or against the Buyer.
3.05. Authorization. The execution and delivery of this Agreement
by Seller, and the consummation by Seller of the transactions contemplated by
this Agreement have been or will be duly and validly authorized, and no further
corporate authorization is necessary on the part of Seller.
3.06. Governmental Notifications and Consents. Except as regards
the Hart-Scott-Rodino filing and any SEC filings, and as set forth on Schedule
3.06, no material notification, consent, authorization, order of approval of,
or filing or registration with any governmental commission, board or other
regulatory body, is required for or in connection with the execution and
delivery of this Agreement by Seller, and the consummation by Seller of the
transactions contemplated hereby.
3.07. Compliance with Other Instruments. Except as specifically
disclosed in Schedule 3.07 to this Agreement, and except such instruments as
will be discharged or in respect of which consents or waivers will be obtained
at or before Closing, the execution and delivery of this Agreement, and the
consummation of the transactions of the Seller contemplated by this Agreement
will not result in or constitute any of the following: (i) an event that would
permit any party to terminate any agreement, or to accelerate the maturity of
any material indebtedness, or other material obligation by which any of the
Property may be bound or affected, unless same is paid at or before Closing
Date, or (ii) a breach, violation, or default, or an event that with notice or
lapse of time, or both, would constitute a breach, violation or default under
the Articles of Incorporation or By-Laws of Seller, or any lease, assignable
license, continuing contract, or (iii) a
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violation of any order, writ, injunction or decree of any court, administrative
agency or governmental body, or (iv) an event which would result in the
creation or imposition of any lien, charge or encumbrance on any of the
Property.
3.08. Personal Property.
The Seller has good and marketable title to all Personal
Property included in the Property, free and clear of all liens, claims,
charges, security interests, and other encumbrances of any kind or nature,
except for the Permitted Liens. All of the Seller's machinery, furniture and
equipment included in the Property is located on the premises of the Theatres,
warehouse, Advertising Agency and Home Office, and is set forth on Exhibit "B".
3.09. Real Property.
(a) Schedule 3.09 (a) contains a true and correct
description of all real property owned by the Company, including all structures
located thereon. The Company has good and marketable title to all real property
owned by it, free and clear of all mortgages, liens, charges and encumbrances,
except for Permitted Title Exceptions.
(b) The documents described in Schedule 3.09 (b) contain a
true and correct description of all property leased to the Seller included in
the Property, including, to best of Seller's knowledge, the correct name,
street address and telephone number of the Landlord. Each of the leases
included in the Property disclosed in said Schedule is in full force and
effect, and, except as set forth on said Schedule, Seller has received no
written notice of any existing defaults or events of default, real or claimed,
or events which with notice or lapse of time, or both, would constitute
defaults, the consequences of which, severally or in the aggregate, would have
a material adverse affect on the business or operations of the Seller relating
to or being carried on at the real property in question. Except for the
requirement that the Seller obtain those valid and binding consents pursuant to
Sections 2.07 (d) and 4.09, the continuation, validity and effectiveness of
those leases will in no way be affected by the transactions contemplated by
this Agreement.
(c) To the best of Seller's knowledge, all improvements on
the real estate owned by, leased to or used by Seller conform in all material
respects to all applicable federal, state and local laws, zoning and building
ordinances, and health and safety ordinances, and the property is zoned for the
various purposes for which the real estate and improvements thereon are
presently being used.
3.10. Licenses Permits and Trademarks. Schedule 3.10 lists all
trade names used by the Seller exclusively in the operation of the Property.
The Seller has all governmental
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permits, licenses, and similar authorities presently issued or granted to or
used by the Seller and which are material to the conduct of its business in the
Theatres, and Advertising Agency. The Seller has not received written notice
that its use of any such trade names violates or infringes upon any rights
claimed therein by third parties.
3.11. Insurance. Schedule 3.11 contains a list and brief
description of the policies of fire, liability, and other forms of insurance
(except title insurance) owned or held by the Seller, regarding the Property.
The properties and business of the Seller, consisting of the Theatres,
warehouse, Home Office and Advertising Agency are of an insurable nature are
insured to the extent and against such risks customarily insured against by
- - -corporations of similar size and in similar businesses, as required by the
terms of the Leases of the Theatres to which the Seller is a party. All
policies listed on Schedule 3.11 will be outstanding and duly in force on the
Closing Date. The Seller is not now, and on the Closing Date will not be in
default regarding the provisions of any such policies, and has not and shall
not have failed to give any notice or present any claim thereunder in due and
timely fashion. Buyer will procure its own insurance from and after the Closing
Date, and is not relying on Seller's insurance from and after said Date.
3.12. Defaults. Except as set forth on Schedule 3.12, and subject
to receipt of the Landlords' consents, Seller has received no notice of any
default or claim of purported or alleged default, and to the best of Seller's
information, knowledge and belief, there exists no state of facts (including
any facts which will exist as a result of the consummation of and performance
under this Agreement), which, with notice or lapse of time, or both, would
constitute a default in any material obligation on the part of the Seller to be
performed under any Continuing Contract or agreement which affects the
operation of the Property, and those contracts or agreements set out on
Schedule 3.17. The Seller has in all respects performed, and on the Closing
Date shall have performed, all obligations required to be performed by it under
any such material contract or agreement, and Seller has not waived any right
under any such material contract or agreement.
3.13. Litigation. Except as set forth on Schedule 3.13, Seller has
received no written notice of any actions, suits, investigations or proceedings
(whether or not purportedly on behalf of the Seller) to which the Seller is a
party, and which any of the Property is or may be subject, pending or to the
best of Seller's knowledge threatened against or affecting the Seller, or any
of the Property, at law, in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign.
3.14. Compliance with Laws. Except to the extent disclosed in
Schedule 3.14, (i) the Seller has not been notified in writing that it has
failed to comply in any respect with, or is in default in any respect under any
laws, ordinances, requirements,
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regulations or orders applicable to its operation of the Theatres; (ii) to the
best of Seller's knowledge, the Seller is not subject to any judgment, order,
writ, injunction or decree that materially adversely affects, or might in the
future reasonably be expected to materially adversely affect its operation of
the Property; (iii) to the best of Seller's knowledge, Seller is not now, and
on the Closing Date will not be in default concerning any law, order, writ,
injunction or decree of any federal, state, municipal court or any other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign with respect to the theatres, and there is no investigation
pending or, to the best of Seller's knowledge, threatened against or affecting
the Seller by any state or federal governmental agency, and Seller has not
received written notice of any investigation pending or threatened against or
affecting the Seller by any state or federal governmental agency, department or
instrumentality that would adversely affect Buyer's operation of the Theatres
after the Closing Date.
3.15. Brokers and Finders. Except for the fees owed to Furman Selz
by Buyer, neither Seller nor any of its officers, directors or employees have
employed any broker, agent or finder, or incurred any liability for any
brokerage fees, agent's commissions or finder's fees concerning the
transactions contemplated hereby.
3.16. Labor Matters.
(a) Except as disclosed on Schedule 3.16, (i) there are no
collective bargaining agreements with any labor organization, group or
association covering or affecting any employees of Seller (collective
bargaining agreements); (ii) there is no duty to recognize any labor
organization, group or association as a representative of any employees of
Seller; (iii) there is no unfair labor practice, charge or complaint against
Seller pending or, to the knowledge of Seller, threatened, before the National
Labor Relations Board of any state or local agency, nor is there a labor
strike, slowdown, work stoppage, picketing or other labor dispute pending, or
to the knowledge of Seller, threatened, against Seller; (iv) there is no
existing question concerning the representation of employees of Seller, nor are
there any pending organizing attempts to establish new representation of, or to
change the representation of any employees of Seller, nor any certification or
decertification question; (v) there is no grievance pending or threatened
affecting Seller; (vi) no agreement, arbitration or court decision or
governmental order exists that in any way limits or restricts Seller (or would
limit or restrict Buyer) from relocating or closing any of its operations;
(vii) there are no charges, investigations, administrative proceedings, or
formal complaints of discrimination, including, without limitation,
discrimination based on sex, age, marital status, race, national origin, sexual
preference, handicap or veteran status ("Discrimination Charge") pending, or to
the knowledge of Seller, threatened, before the Equal Employment
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opportunity Commission, or any federal, state or local agency or court against
Seller; (viii) Seller has not entered into or is otherwise bound by any
contract or understanding, written or oral, to restrict its ability to
terminate the employment of any or all of its employees for any lawful reason
or for no reason, with or without notice, without penalty or liability or
additional obligation to make payments or provide benefits; and (ix) to the
knowledge of Seller, no customer or supplier of Seller is involved in,
threatened with, or materially affected by any labor dispute, arbitration,
labor related lawsuit or administrative proceeding. There have been no
governmental audits of the Equal Employment opportunity practices of Seller,
and no basis for any Discrimination Charge.
(b) Notwithstanding any other provision of this Agreement,
Buyer does not agree to adopt or to succeed to any of the collective bargaining
agreements disclosed on Schedule 3.16. Further, it is expressly acknowledged
and understood that nothing contained herein shall require Buyer to be bound or
otherwise obligated to recognize or bargain with any labor organization, group
or association representing, covering or affecting any employees of Seller.
(c) Subject to the provisions set forth in Article X
hereof, Seller shall specifically indemnify and hold Buyer harmless against
losses, liabilities, damages, costs (including cost of investigation), claims,
causes or causes of action, and/or expenses (including settlements, judgments,
court costs, reasonable attorneys fees and other litigation expenses) incurred
by Buyer, resulting from any employment disputes, claims, and/or charges
relating to Seller's acts, omissions or misconduct prior to the Closing Date.
Such claims and charges shall include, but not be limited to, claims, charges
or actions filed by current or former employees of the Seller or applicants for
employment with the Seller under applicable Workers' Compensations statutes,
Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination
Employment Act, as amended, the Americans With Disabilities Act, the National
Labor Relations Act, Section 1981 of the Civil Rights Act of 1966, as amended,
the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards
Act, and any applicable state laws prohibiting discrimination in the workplace.
3.17. Contracts and Commitments.
(a) Schedule 3.17 (a) contains a list of any of the
following contracts or commitments regarding the Seller's operation of the
Theatres, warehouse, Home Office and Advertising Agency to which the Seller is
a party or by which the Seller benefits, which are not terminable by the Seller
at will, without penalty, and which are not listed or described in any other
Schedule, and for which Buyer will have any liability whatsoever: (i) Oral or
written contracts or commitments for the employment of any Theatre Level
Employee, including any severance or other termination provisions with respect
to such employment; (ii) oral or written contracts with or commitments to any
labor union or any other
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agreements, amendments, supplements, letters or memoranda of understanding with
any labor union or other representative of Theatre Level Employees; (iii) oral
or written contracts for the purchase, sale, production or supply, whether on a
continuing basis or otherwise, of goods or services of any type; (iv) oral or
written distributor, sales agency or vendor contracts or subcontracts or any
franchise or license agreement; (v) oral or written advertising contracts or
commitments; (vi) employee benefit plans, and to the extent not included, any
other bonus, vacation, pension, profit sharing, retirement, disability, stock
purchase, stock option, health, hospitalization, insurance or similar plan or
practice, formal or informal, in effect concerning Theatre Level Employees, for
which Buyer will have any liability whatsoever; (vii) any continuing contract
or commitment for the purchase, use, or leasing of materials, supplies,
inventory, motion pictures, equipment or services not terminable without
penalty on less than thirty (30) days notice by the Seller; (viii) any
contracts, leases, agreements, commitments, quotas, restrictions or trade
conditions upon which the Property depend or are materially affected; (ix) oral
or written agreements for the employment of any agents, finders, brokers,
booking agents, advertising agents or independent contractors involving payment
by the Seller of salary, commissions or other amounts under or in respect of
such agreement; (x) oral or written contracts or commitments for the
acquisition (by lease, purchase or otherwise) of theatres, theatre sites, or
other interest in real estate, construction of any buildings or fixtures, the
expansion or remodeling of any of the Seller's existing theatres, and the
operation and management of theatres for, on behalf of, or in partnership with
other persons or entities; and (xi) any other material contracts or commitments
not otherwise specified above.
(b) Each of the contracts listed in Schedule 3.17 (a) or
described in this Section, but which is included in any other Schedule, is in
full force and effect, and to the best of Seller's knowledge, there are no
existing defaults or events of default, real or claimed, or events which with
notice or lapse of time, or both, would constitute defaults, the consequences
of which, severally or in the aggregate, would have a material adverse effect
on the Seller's operation of the Theatres, warehouse, Home Office and
Advertising Agency. Except as reflected in such Schedules, the continuation,
validity and effectiveness of such contracts, and all other material terms
thereof, will in no way be affected by the transactions contemplated by this
Agreement.
(c) Except as set forth on Schedule 3.17 (c), the Theatres
are not subject to any screen advertising or credit card acceptance agreements.
(d) Seller has no Guaranteed Film Contracts with respect
to the Theatres.
3.18. Condition of Property. All items of inventory, machinery
and equipment, furniture and fixtures, and leasehold improvements owned or
leased by Seller, and included in the
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Property are in good operating condition (normal wear and tear excepted), and
in a state of good maintenance and repair, and all such inventory, machinery
and equipment, furniture and fixtures, and leasehold improvements are
considered by Seller adequate and usable for the operation of the business of
Seller's business as the same is presently conducted.
3.19. Employee Benefit Plans.
(a) Buyer shall have no responsibility, liability, duty,
or obligation, including, but not limited to, the obligation to provide any
reports, notices, contributions or benefit payments with regard to any and all
Benefit Plans.
(b) Specific Indemnification. Subject to the provisions
set forth in Article X hereof, Seller agrees to completely indemnify Buyer for
any and all losses, liabilities damages, costs (including cost of
investigation), claims, causes or causes of actions, and/or expenses (including
reasonable legal fees and expenses) relating to Benefit Plans with respect to
services performed prior to the Closing Date, including, but not limited to,
(i) actions brought by individuals seeking benefits; (ii) actions undertaken by
any government agency, including, but not limited to, the Internal Revenue
Service, the United States Department of the Treasury, the United States
Department of Labor, or the Pension Benefit Guaranty Corporation. As used in
this Section 3.19, actions include any claims for benefits, settlements,
penalties, fines, excess taxes, and includes, but is not limited to, any claims
arising under the Consolidated Budget Reconciliation Act of 1984 (COBRA); (iii)
Seller's failure to comply with the group health plan continuation coverage
requirements of Section 4980 (b) of Internal Revenue Code, and Section 601 of
ERISA (COBRA) with respect to any "qualified beneficiary" (as defined in
COBRA), and any "qualifying events" (as defined in COBRA) occurring on or
before the Closing Date (including any termination of employment which is
effective at the Closing Date), including, without limitation, federal and
state income tax liability and/or any liability under the welfare plan or
program maintained by Seller prior to the Closing Date; any collective
bargaining agreements, and any responsibilities or obligations to any union
and/or union employees of Seller; and any retirement plan, and all obligations
to pay contributions to or on account of any Benefit Plan (including any
Benefit Plans that are multiemployer plans) which obligations (i) have not been
paid as of the Closing Date, and (ii) are attributable to, arise out of, or
result from services rendered, operations performed or events occurring during
the period ending on the date immediately prior to the Closing Date.
3.20. Authority. Except as otherwise set forth in this Agreement,
this Agreement constitutes the valid and binding obligation of the Seller,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, or other laws affecting creditor rights generally, or
as may be modified by a court of equity, in an action for specific performance.
Neither the execution and delivery of this Agreement by the Seller, nor the
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consummation of the transactions contemplated hereby will violate any
provisions of the Articles of Incorporation or Bylaws of Seller, or any law or
any order of any court, or any governmental unit to which Seller is subject,
nor will such execution, delivery or consummation conflict with, or result in a
breach of, or constitute a default under any indenture, mortgage, LEASE,
agreement or other instrument to which Seller is a party, or by which any of
them is bound, or result in the creation of any lien, charge or encumbrance
upon Seller's assets or properties, or result in acceleration of the maturity
of any payment date of any of Seller's obligations, or increase or materially
and adversely affect the obligations of Seller thereunder to which the Property
is subject.
3.21. Accuracy of Information. No representation or warranty of, or
any information provided to Buyer by Seller in this Agreement, or in any
statement, certificate or schedule furnished by the Seller pursuant hereto, or
in connection with the transactions contemplated hereby, contains, or on the
Closing Date will contain, any untrue statement of a material fact, or omits,
or on the Closing Date will omit, to state any material fact necessary in order
to make the statements contained therein not misleading, and all such
statements, information, representations, warranties, certificates and
schedules shall be true and complete on and as of the Closing Date as though
made on that date, except to the extent otherwise disclosed by Seller to Buyer
on a Schedule or Exhibit attached hereto. To the extent same are in Seller's
possession, true copies of all Leases, Continuing Contracts, labor agreements,
and other instruments (necessary to the Buyer in operation of the Property)
listed on or referred to, or otherwise related to any item referred to in the
Schedules, delivered or furnished to the Buyer pursuant to this Agreement have
been delivered or have been made available, or will upon request be made
available for inspection by the Buyer. Buyer shall be entitled to rely upon the
accuracy of all such written information in the preparation of its filings with
the Securities and Exchange Commission. The Seller shall immediately notify
Buyer of any inaccuracies or omissions in any of such information previously
supplied to Buyer, of which Seller becomes aware.
3.22. Claims. Except for claims arising under or in connection with
this Agreement, Seller does not nor on the Closing Date will have, any claims
of any nature, whether asserted or unasserted, against Buyer.
3.23. Environmental Matters. Other than normal quantities of
cleaning and maintenance supplies, no Hazardous Waste, Hazardous Substances and
Hazardous Materials, as said terms are described under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA")
(hereinafter "Waste Material"), and all other applicable environmental laws
were stored or disposed of by Seller on the Property to be conveyed or assigned
hereunder during the period Seller was in possession of said Property to be
conveyed or assigned hereunder, and, to the best of Seller's information,
knowledge and belief, no waste materials presently
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exist except as specifically disclosed in Schedule 3.23 to this Agreement.
Seller has no information or knowledge or reason to believe that Waste Material
from any source was stored or disposed of on the Property to be conveyed or
assigned at any time other than material which may have been temporarily stored
thereon and removed prior to Closing. To the best of Seller's information,
knowledge and belief, Seller has at no time generated, stored or disposed of
Waste Material, including, but not limited to, asbestos, PCBs, and urea
formaldehyde foam insulation, as defined in CERCLA, the Hazardous Material
Transportation Act, 49 USC 1801, et. seq., as amended: the Clean Air Act, 42
USC 7401, et. seq., as amended; the Clean Water Act, 33 USC 1251, et. seq., as
amended; the Toxic Substances Control Act, 15 USC 2601, et. seq., as amended;
the Resource, Conservation and Recovery Act, 42 USC 6901, et. seq., as
amended; and the Rivers and Harbor Act, 33 USC 401, et. seq., as amended; or
any other federal and/or state environmental statute, except to the extent such
Waste Material, and their place of generation, interim or final storage, and
site of disposal are identified on Schedule 3.23 to this Agreement. To the best
of Seller's knowledge, no aboveground or underground storage tanks are located
on any of the Property to be conveyed or assigned hereunder.
3.24. Discounts and Gift Certificates. Except as set forth on
Schedule 3.24, there are not outstanding any discount or promotional tickets,
gift certificates, prepaid tickets or admission passes or any other
arrangements allowing the holder thereof to reduced or free admission to any of
the Theatres. A sample of said Discount Ticket and gift certificates is
attached hereto on Schedule 3.24.
3.25. Post-Closing Payment to Vendors and Suppliers, Seller agrees
that in accordance with its past practices, after the Closing Date, it shall
pay its vendors and suppliers.
ARTICLE IV
OBLIGATIONS AND COVENANTS OF SELLER
The Seller covenants and agrees with the Buyer that the fulfillment
of each of the following covenants and agreements constitutes a condition
precedent to the obligations of the Buyer to close hereunder:
4.01. Conduct of the Operation of the Theatres Prior to the Closing
Date. Except to the extent that the Buyer shall otherwise consent in writing
from the date hereof to the Closing Date, the Seller shall:
(a) Operate the Theatres substantially as presently
operated, and only in the ordinary course, and use all reasonable efforts to
preserve intact its good will, reputation and present business organization, as
regards the Theatres, and to preserve its relationships with persons having
business dealings with it, with
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respect to the Theatres, consistent with prudent business practices;
(b) Maintain all of the Theatres in their present
operating order and condition, reasonable wear, tear and use excepted;
(c) Take all steps reasonably necessary to maintain its
intangible assets, regarding the Theatres; including without limitation its
patents, trademarks, trade names, brand names, copyrights, licenses, and any
pending applications therefor;
(d) As regarding the operation of the Theatres, warehouse,
Home Office and Advertising Agency, pay its accounts payable in the ordinary
course of business, in accordance with past practices;
(e) Comply with all laws materially applicable to the
operation of the Theatres, the failure of which will result in a material
injury to the said operation and;
(f) Regarding the Theatres, maintain the books and records
of the Seller in the usual, regular and ordinary manner, on a basis consistent
with past practices.
4.02. Tax Returns. All income, sales, use, franchise, property
and other tax returns of the Seller required to be filed by the Closing Date,
taking into account any extensions of filing deadlines granted to the Seller,
that have not YET BEEN FILED PRIOR to the date hereof (including those relating
to periods after the Closing Date), and all such returns applicable to periods
prior to the Closing Date, filed after the Closing Date, shall be prepared by
the Seller consistent with its past practices.
4.03. Access and Information. From the date hereof to the Closing
Date, or termination, if sooner, Seller shall afford to the Buyer, its counsel,
accountants and other representatives, at the sole expense of Buyer, upon
reasonable notice and during normal business hours, free and full access to all
the properties, books, contracts, commitments and records of the Seller, and
furnish such persons with all information, (including financial and operating
data) concerning the ownership and operation of the Property as they reasonably
may request, including copies and extracts of pertinent records, documents and
contracts. The Seller shall assist the Buyer, its counsel, accountants and
representatives, at Buyer's expense, in their examination of such Seller's
books and records.
4.04. Notification of Changes. Between the date hereof and the
Closing Date, Seller shall promptly notify Buyer in writing of any material
adverse change in the method of conducting the Seller's operations, any damage
to or loss of any property, or amount of property used in the operation of the
Theatres, warehouse, Home Office and Advertising Agency, or the institution of,
or the threat of institution of legal proceedings against the
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Seller regarding or affecting the operation of the Theatres, or the status or
conduct of legal proceedings, including investigations by any governmental
agency against the Seller which could reasonably be expected to affect the
operation of the Theatres, warehouse, Home Office and Advertising Agency.
4.05. Certain Acts Prohibited. Between the date hereof and the
Closing Date, Seller, without the prior written consent of Buyer, shall not:
(a) Incur any material liability in respect of the
Property, or encumber or permit the encumbrance of the Property, except for
Permitted Liens and Film Contracts;
(b) Other than inventory disposed of in the ordinary
course of business, dispose of or contract to dispose of any of the Property;
except for replacements or substitutes in the ordinary course of business (but
will not sell any of the Theatres).
(c) Enter into any material agreement regarding the
Theatres that is not cancelable by the Seller without penalty upon notice of
thirty (30) days or less;
(d) Grant any increase in rates of pay for Theatre Level
Employees of the Theatres;
(e) Except as to the Excluded Property, enter into any
lease or contract for the purchase, lease or acquisition of real estate, or any
lease or contract for the purchase, lease or acquisition of personal property;
(f) Enter into or become a party to any contract or
commitment under which the value of services to be provided or the cost of
goods to be purchased may exceed amounts arising in the ordinary course of
business.
4.06. Insurance. From and after the date hereof and through the
Closing Date, the Seller will maintain all of its insurance policies regarding
the Property in effect as of the date hereof; and all Property shall be used,
operated, maintained and repaired in accordance with Seller's present
practices, and in accordance with provisions of such insurance policies
relating thereto.
4.07. No Default. The Seller will not at any time after the date
hereof and through the Closing Date do any act or omit to do any act, or
knowingly permit any act or omission to act, that would cause a breach of any
contract, lease, commitment or other obligation of the Seller, regarding the
Theatres, warehouse, Home Office and Advertising Agency.
4.08. Compliance with Laws. At all times after the date hereof
and through the Closing Date, the Seller will comply with
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all applicable laws, which may be required for the consummation of the
transactions contemplated hereby.
4.09. Consent of Others. To the extent that the consummation of the
transactions provided for herein requires the consent of a third party, whether
to avoid the occurrence of an event of default under any contract, license,
lease or agreement to which the Seller is a party or by which the Property are
bound or otherwise, the Seller shall obtain any such consent prior to the
Closing Date. Specifically, Seller shall use reasonable efforts to obtain any
and all consents required and necessary in order to validly and effectively
transfer and assign each of the Leases set forth on Schedule 3.09 (b), without
change in the terms and conditions thereof, on which the Theatres are operated
by Seller, and are to be transferred to Buyer. Notwithstanding anything
contained herein to the contrary, Seller shall have no liability to Buyer in
the event such landlord consents are not obtained.
4.10. No Shopping. From and after the date hereof and until the
Closing, the Seller will not, directly or indirectly, through any officer,
director, agent, broker or otherwise (i) solicit, initiate or encourage
submission of proposals or offers from any third party relating to any
acquisition or purchase of the Property, or (ii) participate in any discussions
or negotiations regarding, or furnish to any person any information with
respect to any of the foregoing, or (iii) otherwise cooperate in any way with,
or assist, or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing. To the extent that
confidential written information has been supplied, which if hereafter supplied
on or after the date hereof would violate (ii) above, the Seller will cause the
return of such information. The Seller shall promptly notify Buyer if any such
proposal or offer with any person with respect thereto is made. The Seller
acknowledges that Buyer is relying on this covenant as a basis for incurring
expenses and executive time and effort in proceeding in good faith towards the
consummation of the purchase hereunder; accordingly, Buyer shall be entitled,
in addition to such legal relief as it may have available to it, to equitable
relief (including without limitation injunctive and specific performance
relief) in the event of a violation of this covenant, it being acknowledged that
the Property represents a unique investment opportunity.
4.11. Covenants Not to Compete. Seller and Jeffrey G. Lewine shall
enter into an agreement with Buyer to be in substantially the form attached as
Exhibit "F" hereto, and satisfactory to Buyer, not to compete with Buyer in the
motion picture exhibition business in the areas described on Schedule 4.11 for
a period of five (5) years following the Closing Date within a radius of
fifteen (15) miles from any of the Theatres; provided, however, said covenant
shall not apply to Lewine's acquisition of an existing theatre chain.
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4.12. Termination of Employees. On the Closing Date, Seller shall
terminate all of its Theatre Level Employees, warehouse employees, and
Advertising Agency employees.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of the Buyer to consummate the transactions
provided for herein are, at the option of the Buyer, subject to the
satisfaction in all material respects of the following conditions precedent on
or prior to the Closing Date.
5.01. Compliance by Seller. All the terms, covenants and conditions
of this Agreement to be complied with and performed by the Seller on or before
the Closing Date shall have been fully complied with and performed.
5.02. Representations and Warranties of Seller. The representations
and warranties of Seller contained herein and in the Schedules, Exhibits and
certificates delivered pursuant hereto, or in connection with the transactions
as contemplated hereby shall be true and correct on and as of the Closing Date
with the same effect as though all such representations and warranties had been
made on and as of that date, and Buyer shall have received a certificate dated
the Closing Date signed by the Seller stating that all such representations and
warranties are true and correct. True copies of all available deeds, title
insurance policies, mortgages, indentures, notes, leases, agreements, plans,
contracts and other instruments listed on or referred to, or otherwise related
to any item referred to in the Schedules and Exhibits, delivered or furnished
to the Buyer pursuant to this agreement have been delivered or have been made
available, or will upon request be made available for inspection by the Buyer.
5.03. No Adverse Change. Except as otherwise fully and adequately
disclosed in this Agreement or on Schedule 5.03 hereto and except for changes
affecting the motion picture exhibition business generally, there shall not
have been any material adverse change in the operation of the Theatres
comprising the Property between execution hereof and the Closing Date, and the
Seller shall have delivered to Buyer a certificate signed by the Seller dated
the Closing Date, to such effect.
5.04. Approval of Legal Matters. All actions, proceedings,
instruments and documents reasonably necessary or reasonably appropriate to
Buyer, or its counsel, to effectuate this Agreement and the consummation of the
transactions contemplated hereby, or incidental thereto shall have been
approved by such counsel.
5.05. Opinion of Counsel for the Seller. Buyer shall have received
an opinion dated the Closing Date of Aderson, Frank and Steiner, counsel to
Seller, in form, scope and substance, and
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subject to such exceptions as are satisfactory to Buyer and its counsel, to the
effect that:
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power and authority to carry on
its business, and own and lease its properties as and in the places where such
business is being conducted, and where such properties are now owned, leased or
operated;
(b) This Agreement was duly authorized, executed and
delivered by Seller, and this Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally, or as may be modified by a court in an action for
specific performance or considering the waiver of legal rights;
(c) Other than filing required under the Hart-Scott Rodino
Antitrust Improvements Ace of 1976, no consent or approval by any governmental
authority is required in connection with the consummation by Seller of the
transactions contemplated hereby;
(d) No facts have come to such counsel's attention which
would lead it to believe that the representations of Seller in this Agreement,
and the descriptions of the matters set forth in the Schedules and Exhibits
hereto, contain any untrue statement of a material fact, or omit to state a
material fact required to be stated, or necessary to make the representations
not misleading;
(e) To such Counsel's knowledge, after inquiry of officers
of the Company, there is no litigation, proceeding or investigation pending or
threatened that might result in an adverse change in the business, properties
of Seller, or that questions the validity of this Agreement, or of any action
taken or to be taken by any Seller hereunder;
In expressing their opinion as to matters of fact relevant
to conclusions of law, counsel for Seller may rely, to the extent they deem
proper, upon certificates of Seller and representations and warranties of
Seller contained herein, provided copies of such certificates are delivered to
Buyer and its counsel.
5.06. Litigation. No suit shall, at the Closing Date, be pending
or threatened before any court, governmental agent, bureau, board or other
authority in which the transactions contemplated by this Agreement are sought
to be restrained, or in connection with which damages or other relief is
sought, or in which any material claim shall be asserted against the Seller
regarding the Property which is not disclosed herein, or in the Schedules or
Exhibits delivered herewith.
5.07. Condition of Property and Risk of Loss. On the Closing
Date, all of the Property including equipment, furniture and fixtures located
in the Property shall be substantially in the
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same condition as at the close of business on the date hereof except for:
(a) Ordinary use and wear and tear thereof; and
(b) Changes occurring in the ordinary course of business
between the date hereof and the Closing Date.
5.08. Uniform Commercial Code Searches: Title Insurance. The Buyer
shall have received Uniform Commercial Code Searches (conducted by Buyer at
Buyer's expense through a date reasonably proximate in time to the Closing
Date) of filings made pursuant to Article 9 thereof in all jurisdictions where
the Property is located, which searches shall be in form, scope- and substance
reasonably satisfactory to Buyer and its counsel, and which shall not disclose
any liens, security interests or encumbrances not disclosed in a Schedule, and
which will not be satisfied on or before Closing. Buyer shall, at Buyer's
expense, cause an examination to be made of the Seller's title to the Property
upon which the Theatres are located and such title examination shall only
disclose the Permitted Title Exceptions. Further, Buyer shall have received
irrevocable commitments from Mid-South Title/Lawyers Title, Chicago Title
Insurance Company, Commonwealth Land Title Insurance Company, Lawyers Title of
North Carolina or Lawyers Title Insurance Corporation to issue their standard
form ALTA extended coverage policy of title insurance, dated as of the Closing
Date.
5.09. Consents. Seller shall have delivered to Buyer the written
consent of third parties referred to in Section 2.07 (d), which consent shall
be in substantially the form, scope and substance of the Landlord's estoppels
attached hereto as Exhibit "G".
5.10. Hart-Scott-Rodino. The waiting period applicable to the
transaction contemplated hereby under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or been terminated, and no
governmental entity shall have expressed the intention to file an action to
restrain, modify or prohibit the transaction contemplated by this Agreement, or
any part thereof.
5.11. Completion of Theatre Renovations. Seller has fully
completed the renovations to the Cinema World Theatre in Erie, PA, and the
Cinema World Theatre in Washington, PA, or made provisions therefor to the
satisfaction of Buyer.
5.12. Seller's Insurance. A certificate evidencing Seller's
insurance coverage shall have been given to Buyer for its review prior to the
execution of this Contract.
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ARTICLE VI
FIRE, CONDEMNATION AND INSURANCE
6.01. Fire Condemnation and Insurance.
(a) If, prior to the Closing Date, all or a part of the
Property shall be destroyed or damaged by fire or any other casualty, or if all
or a part thereof shall be condemned, in whole or in part, by governmental or
other lawful authority, neither Seller nor Buyer shall have any liability for
any such destruction, damage or condemnation and Buyer shall have the option of
(i) completing the purchase without adjustment in the Purchase Price, in which
event Seller shall comply with its obligations set forth in paragraph (b) of
this Section, or (ii) canceling this Contract and all obligations of Seller and
Buyer hereunder; provided, however, Buyer may not elect to exercise the option
set forth in clause (ii) if the Property shall be damaged or destroyed by fire
or other casualty covered by Seller's Required Insurance, (as defined in
paragraph (c) of this Section) and the cost to repair or replace such damaged
or destroyed Property shall not exceed $1,500,000 in the aggregate provided
Seller complies with its obligations under paragraphs (b) and (c) of this
Section. Buyer shall exercise one of the aforesaid two options by giving notice
to Seller within 10 days after the giving of notice by Seller to Buyer of the
occurrence of the damage or destruction or condemnation, and the failure of
Buyer to give any notice within said 10 day period shall constitute an election
by Buyer not to cancel this Contract.
(b) In the event of damage to or destruction of any of the
Property or a condemnation thereof and this Contract is not terminated as
provided in paragraph (a) of this Section, Seller shall have no obligation to
restore or repair the same and Buyer shall accept the same in its then
condition at Closing, but Seller shall pay to Buyer, at Closing, all insurance
or condemnation proceeds received by Seller, except business interruption
insurance through the Closing Date, with respect to such loss or taking, plus
the amount of any deductible under any Required Insurance.
(c) Prior to the Closing Date, Seller shall maintain in
full force and effect on the Property, damage insurance coverage ("Required
Insurance"), a description of which is set forth on Exhibit "H" hereto.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS OF BUYER
The Buyer represents and warrants to the Seller as follows:
7.01. Organization in Good Standing. The Buyer is a corporation
duly organized and existing, and in good standing under the laws of the State
of Delaware, and has full corporate power to carry on its businesses, to own
and operate its properties and
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assets, and to consummate the transactions contemplated by this Agreement.
7.02. Authority. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Buyer; no further corporate action of any nature is
required pursuant to the Articles of Incorporation and By-Laws of the Buyer;
and this Agreement constitutes the valid and binding obligations of the Buyer,
except as may be limited by bankruptcy, insolvency, or other laws affecting
creditors rights generally, or as may be modified by a court of equity in an
action for specific performance. The execution, delivery and performance of
this Agreement will not violate or result in default under any provision of the
Articles of Incorporation or By-Laws of the Buyer, or any material commitment,
indenture, license or other obligation to which the Buyer is a party, and will
not, to the best knowledge of the Buyer, contravene any law, rule or regulation
of any administrative agency or governmental body or any other order, writ,
injunction or decree of any court, administrative agency or governmental agency
applicable to the Buyer.
7.03. Claims. Except for claims arising under or in connection with
this Agreement, Buyer neither has nor on the Closing Date will have any claims
of any nature, whether asserted or unasserted, against Seller.
7.04. Governmental Notifications and Consents. Other than
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and
except as set forth on Schedule 7.04, no notification, consent, authorization,
order of approval of, or filing or registration with any governmental
commission, board or other regulatory body, or any other party, is required for
or in connection with the execution and delivery of this Agreement by Buyer,
and the consummation by Buyer of the transactions contemplated hereby.
7.05. Buyer's Indemnity for Seller's Continuing Liability under
Leases. Buyer hereby covenants and agrees that it shall save, defend, indemnify
and hold Seller harmless from and against, and shall pay or reimburse the
Seller for any and all claims, demands, causes of action, liabilities or
expenses, including reasonable fees and disbursements of attorneys arising out
of or relating in any way to the ownership or use of the Property or occupancy
or operation by the Buyer of the Premises demised by the Leases, including, but
not limited to those arising out of obligations of the Lessee thereunder of the
Premises from and after the Closing Date.
7.06. Litigation. Except as set forth on Schedule 7.06, Buyer has
received no written notice of any actions, suits, investigations or
proceedings, whether or not purportedly on behalf of the Buyer, to which the
Buyer is a party, and which any of the Property is or may be subject, pending
or to the best of Buyer's knowledge threatened against or affecting the Buyer,
which would
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prevent Buyer from performing its obligations pursuant to this Agreement.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of the Seller to consummate the transactions
provided for herein are subject to the satisfaction, in all material respects,
of the following conditions on or prior to the Closing Date:
8.01. Compliance by the Buyer. All the terms, covenants and
conditions of this Agreement to be complied with and performed by the Buyer on
or before the Closing Date shall have been fully complied with and performed in
all material respects.
8.02. Representations and Warranties of the Buyer. The
representations and warranties of the Buyer contained herein shall be true and
correct, on and as of the Closing Date, with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date, and the Buyer shall have furnished to the Seller a certificate
dated the Closing Date and signed by the President or Vice President and
Secretary of the Buyer to such effect.
8.03. Litigation. No suit shall, at the Closing Date, be pending or
threatened before any court, governmental agent, bureau, board or other
authority in which the transactions contemplated by this Agreement are sought
to be restrained, or in connection with which damages or other relief is
sought, or in which any material claim shall be asserted against the Buyer
regarding the Theatres not disclosed herein, or in the Schedules or Exhibits
delivered hereto.
8.04. Approval of Legal Matters. All actions, proceedings,
instruments and documents reasonably necessary or reasonably appropriate to
Seller, or its counsel, to effectuate this Agreement and the consummation of
the transactions contemplated hereby, or incidental thereto shall have been
approved by such counsel.
8.05. Hart-Scott-Rodino. The waiting period applicable to the
transaction contemplated hereby under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or been terminated, and no
governmental entity shall have expressed the intention to file an action to
restrain, modify or prohibit the transaction contemplated by this Agreement, or
any part thereof.
8.06. Buyer's SEC Compliance. Buyer shall have taken all necessary
actions in order to comply with any applicable Securities and Exchange
Commission Rules and Regulations regarding this transaction.
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8.07. Opinion of Counsel for the Buyer. Seller shall have
received an opinion dated the Closing Date of Champion & Champion, counsel
to Buyer, in form, scope and substance, and subject to such exceptions
as are satisfactory to Seller and its counsel, to the effect that:
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power and authority to carry on
its business, and own and lease its properties as and in the places where such
business is being conducted, and where such properties are now owned, leased or
operated;
(b) This Agreement was duly authorized, executed and
delivered by Buyer, and this Agreement constitutes the valid and legally
binding obligation of the Buyer, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally, or as may be modified by a court in an action for
specific performance or considering the waiver of legal rights;
(c) Other than filing required under the Hart-Scott-Rodino
Antitrust Improvements Ace of 1976, no consent or approval by any governmental
authority is required in connection with the consummation by Buyer of the
transactions contemplated hereby;
(d) No facts have come to such counsel's attention which
would lead it to believe that the representations of Buyer in this Agreement,
and the descriptions of the matters set forth in the Schedules and Exhibits
hereto, contain any untrue statement of a material fact, or omit to state a
material fact required to be stated, or necessary to make the representations
not misleading;
(e) To such Counsel's knowledge, after inquiry of officers
of the Company, there is no litigation, proceeding or investigation pending or
threatened that might result in an adverse change in the business, properties
of Buyer, or that questions the validity of this Agreement, or of any action
taken or to be taken by any Buyer hereunder;
In expressing their opinion as to matters of fact relevant to
conclusions of law, counsel for Buyer may rely, to the extent they deem proper,
upon certificates of Buyer and representations and warranties of Buyer
contained herein, provided copies of such certificates are delivered to Seller
and its counsel.
ARTICLE I
TERMINATION
9.01. Right of Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing Date:
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(a) By the mutual consent of the Board of Directors of
Buyer and the Board of Directors of Seller;
(b) By the Board of Directors of Buyer in the event the
conditions set forth in Articles IV and V of this Agreement shall not have been
satisfied or waived by the Closing Date.
(c) By the Board of Directors of Seller in the event that
the conditions set forth in Articles VII and VIII of this Agreement shall not
have been satisfied or waived by the Closing Date.
(d) By either the Boards of Directors of Buyer or the
Seller if any action or proceeding before any court or other governmental body
or agency shall have been instituted in good faith by an unrelated third party
(i) to restrain, modify or prohibit the transaction contemplated by this
Agreement, (ii) to recover damages from Buyer or Seller if such action or
proceeding, directly related to this Agreement, could result in the imposition
of a material liability against or affecting the business or properties of the
Buyer or the Seller in the opinion of the party seeking to terminate this
agreement, or (iii) to force Buyer or the Seller to take any action that would
have a material and adverse effect on the business or properties of Buyer or
Seller, directly related to this Agreement, in the opinion of the party seeking
to terminate this Agreement unless either the Buyer or the Seller causes such
action or proceeding to be dismissed on or prior to the Closing Date.
9.02. Notice of Termination. Notice of termination of this
Agreement, as provided for in this Article, shall be given by the parties so
terminating to the other parties hereto, in accordance with the provisions of
Section 11.08 of this Agreement.
9.03. Effect of Termination. In the event that this Agreement is
terminated, this Agreement shall become void, and of no further force and
effect, without liability of any party to any other party.
ARTICLE X
PARTIES' AGREEMENT TO CROSS-INDEMNIFY
10.01. (a) Indemnification of Buyer. Subject to the terms and
conditions of this Article X, Seller hereby agrees to indemnify, defend and
hold Buyer harmless from and against all claims asserted against, imposed upon
or incurred by Buyer by reason of, or resulting from:
(1) Seller's breach or non-fulfillment of any
warranty, or any material inaccuracy of any representation contained in, or
made pursuant to this Agreement, or
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(2) Seller's breach or non-fulfillment of any
covenant or agreement, other than a representation or warranty, contained in or
made pursuant to this Agreement; or
(3) Any undisclosed liability.
(b) Indemnification of Seller. In addition to the
indemnification of Seller contained in Section 7.05 hereof, Buyer covenants
with Seller that Buyer will save, indemnify, defend and hold Seller harmless at
all times after the Closing Date against and in respect of all debts,
liabilities, claims, demands, causes of action, losses, charges, costs,
expenses (including reasonable attorneys fees and court costs), damages or
taxes of any nature, whether accrued or absolute, contingent or liquidated,
known or unknown, arising from the operations of Buyer after the Closing Date
or as a result of any matter or thing represented, covenanted or warranted by
Buyer in this Agreement or in any Exhibit hereto or document delivered
hereunder being untrue or not as represented, covenanted, or warranted, and
from any and all pecuniary damage or deficiency resulting from any
misrepresentation, breach of any warranty or non-fulfillment of any covenant or
agreement on the part of Buyer contained herein or therein, in any and all
actions, suits, proceedings, demands, assessments or judgments, costs or
expenses (including reasonable attorneys fees and court costs) incident to any
of the foregoing, by reason of any demand, lien or claim by the United States
Internal Revenue Service or taxing authorities in any state or any other
jurisdiction, or by any other creditor of Buyer by virtue of any alleged or
actual liability incurred by Seller arising from operations of Buyer after the
Closing Date.
10.02. Conditions of Indemnification. Obligations and liabilities
of the Seller in 10.01 (a) hereunder, and the Buyer in 10.01 (b) hereunder,
hereinafter collectively the "Indemnifying Party", with respect to claims shall
be subject to the following terms and conditions:
(a) The Buyer in 10.01 (a) and the Seller in 10.01 (b),
hereinafter the "Indemnified Party", shall give the Indemnifying Party notice
of any claim ("Notice of Claim") promptly after the Indemnified Party receives
notice thereof, and, to the best of Indemnified Party's knowledge, advise
Indemnifying Party which representation and warranty, covenant or agreement set
forth herein said claim violates (in no event more than thirty (30) days after
Indemnified Party receives such notice). The Indemnifying Party may object to
such claim by mailing written notice of said objection (the "Notice of
Objection") to the Indemnified Party within ten (10) days after delivery by
Indemnified Party of the Notice of Claim. The Notice of Objection shall set
forth, in reasonable detail, the grounds upon which the objection is based. If
no Notice of Objection shall have been so mailed within such ten (10) day
period, the Indemnifying Party shall be deemed to acknowledge the correctness
of the claim or claims specified in the Notice of Claim for the full amount,
and the Indemnifying Party shall either pay to the Indemnified Party, on the
40th day
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following the date of the Notice of Claim, in cash, the amount of such claim or
claims subject to Section 10.04 hereof or the Indemnifying Party will undertake
the defense thereof by representatives of their own choosing. All costs and
expenses of such defense (including fees of counsel), and any settlement or
compromise resulting from the defense of any claim will be paid by the
Indemnifying Party. If the Indemnifying Party mails a timely Notice of
Objection to the Claim or Claims set forth in any Notice of Claim, and such
claim or claims shall not have been resolved or compromised within 120 days
from the date of the Notice of Objection, such claim or claims shall be settled
by arbitration in accordance with the provisions of paragraph 11.14 hereof.
(b) In the event that the Indemnifying Party, within a
reasonable time after receipt of notice of any such claim, but in no event more
than thirty (30) days after receipt of such notice, fails to defend, the
Indemnified Party will (upon further notice to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such claim on
behalf, for the account and risk of the Indemnifying Party, and at Indemnifying
Party's expense, subject to the right of the Indemnifying Party to assume the
defense of such claim at any time prior to settlement, compromise or final
determination thereof.
10.03. Assistance. In the event so requested by the Indemnifying
Party, the Indemnified Party shall use its best efforts to make available all
information and assistance reasonably required in the defense by the
Indemnifying Party of a claim.
10.04. Limitations. The Indemnifying Party's obligation to
indemnify the Indemnified Party as provided IN SECTION 10.01 above is subject
to the condition that the Indemnifying Party shall have been given notice by
Indemnified Party of the claim for which indemnity is sought within twelve (12)
months after the Closing Date. Except as to claims not seeking payment of
money, Seller shall not be obligated to so save, defend, indemnify and hold the
Buyer harmless from and against, and shall not be obligated to pay or reimburse
the Buyer for any claims, demands, causes of action, liabilities or expenses
arising out of or relating in any way to the ownership or use of the Property
or the Premises (collectively the "Claims") as herein set forth unless and to
the extent that the aggregate claims of the Buyer for such indemnification
exceed the amount of $100,000. For example, in the event Buyer's claims reach
$110,000, Seller will be obligated to pay or reimburse Buyer the entire
$110,000. In the event Buyer's aggregate claims are less than $100,000, Seller
would not be obligated to pay or reimburse Buyer anything.
ARTICLE XI
MISCELLANEOUS
11.01. Survival of Representations. All statements contained in
any Schedule, Exhibit, document, certificate or other instrument delivered by
or on behalf of the Buyer or the Seller
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pursuant hereto, or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties hereunder by the Buyer or the
Seller as the case may be. Except for the representation and warranty made by
Buyer in Section 3.18 hereof, which shall expire on the 10th day following the
Closing Date, the representations, warranties and agreements made by the Buyer
and the Seller herein shall survive consummation of the transactions
contemplated hereby for twelve (12) months after Closing Date, and no
inspection or audit of the inventories, properties, financial condition,
records or other matters relating to the Seller shall limit, affect or impair
the ability of the Buyer to rely upon the representations, warranties and
agreements of the Seller set forth herein.
11.02. Assignment. This Agreement shall not be assignable by either
party hereto without the written consent of the other, and shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, assignees and legal representatives.
11.03. Public Announcements. Except as required by law, neither
party shall make any public announcement concerning this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, such consent not to be unreasonably withheld.
11.04. Construction. This Agreement shall be construed and enforced
in accordance with the laws of the State of Pennsylvania, USA.
11.05. Amendment. This Agreement may be amended, supplemented or
interpreted at any time by written instrument executed by the parties hereto.
11.06. Expenses: Brokers and Finders Fees. Seller and Buyer agree
that, other than fees or commissions payable by Buyer to Buyer's
representative, Furman Selz, there are no brokers or finders fees or
commissions payable to any person employed by Seller or Buyer in connection
with the transactions contemplated by this Agreement, and Seller and Buyer will
indemnify each other with respect thereto, and hold each other harmless
therefrom. Each party hereto shall pay its or his or her own expenses incident
to this Agreement and the transactions contemplated hereby, including all fees
and expenses of their counsel, whether or not such transaction shall be
consummated.
11.07. Further Assurances. The parties hereto agree and acknowledge
that certain computations, exchange and notification of information and other
actions may be required from time to time, and after the date hereof through
and after the Closing Date with respect to this Agreement. The parties hereto,
and their respective representatives, shall use their reasonable best efforts
to cooperate with one another in the expeditious completion of all such
computations, notifications and actions required. Without limiting the
generality of the foregoing, Seller agrees to use its
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reasonable best efforts to assist Buyer with respect to the resolution of any
matters arising in connection with or affecting the title of the Seller to any
of the Property. Seller shall execute and deliver any and all documents, and
will cause any and all other action to be taken, either before or after the
Closing which may be necessary or proper to effect or evidence the provisions
of this Agreement, and the transactions contemplated hereby.
11.08. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have duly
been given if delivered, or if mailed by United States Certified Mail, prepaid,
to the parties or their assignees, at the following addresses (or such other
addresses as shall be given in writing by the parties to one another), or sent
via telecopier to the parties at the telecopier number set forth below:
BUYER: John 0. Barwick, III
Carmike Cinemas, Inc.
1301 - 1st Avenue
Columbus, GA 31901
TELEPHONE - 706/576-3415
TELECOPIER - 706/576-3419
With a copy to: F. Lee Champion, III
Champion & Champion
1030 Second Avenue
Columbus, GA 31901
TELEPHONE - 706/324-4477
TELECOPIER - 706/324-0470
SELLER: Cinema World, Inc.
ATTN: Jeffrey Lewine
107 Sixth Street
Pittsburgh, PA 15222
TELEPHONE - 412/232-0042
TELECOPIER - 412/232-0052
With a copy to: Sanford M. Aderson
Aderson, Frank and Steiner
2320 Grant Building
Pittsburgh, PA 15219-2203
TELEPHONE - 412/263-0500
TELECOPIER - 412/263-0565
11.09. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy. The election of any one remedy by a party hereto shall not constitute a
waiver of the right to pursue other available remedies.
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11.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11. Entire Agreement. This Agreement, the Exhibits hereto, and
the certificates, Schedules and other documents delivered pursuant hereto are
incorporated by reference herein, contain the entire agreement between the
parties concerning the transaction contemplated herein, and supersede all prior
agreements or understandings between the parties hereto relating to the subject
matter hereof. No oral representation, agreement or understanding made by any
party hereto shall be valid or binding upon such party or any other party
hereto.
11.12. Additional Documents. The parties hereto will at any time
after the date hereof sign, execute and deliver, or cause others so to do, all
such powers of attorneys, deeds, assignments, documents and instruments, and do
or cause to be done all such other acts and things as may be necessary or
proper to carry out the transactions contemplated by this Agreement.
11.13. Captions and Section Headings. The captions and section
headings used herein are for convenience only, and are not a part of this
Agreement, and shall not be used in construing it.
11.14. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in New Orleans, Louisiana, in accordance with the arbitration rules
of the American Arbitration Association, and judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
11.15. Schedules. To the extent that identical information may be
required by two or more Schedules hereto, such information need be supplied on
only one Schedule if appropriate cross-references are made on such other
Schedules, or if the information is readily available on another Schedule, or
in the Agreement.
11.16. Bulk Transfer. The parties hereby waive the applicable
provisions of the Uniform Commercial Code relating to Bulk Transfers in the
states in which the Property is located, and
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Seller hereby indemnifies Buyer, as set forth in Article X hereof, from
Seller's failure to comply with such provisions.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
on the day and year first above written.
SELLER:
ATTEST: CINEMA WORLD, INC.
/s/ BY: /s/
- - --------------------------------- ---------------------------------
Assistant Secretary Title:
----------------------------
(Corporate Seal)
ATTEST: C. W. INDUSTRIES, INC.
/s/ BY: /s/
- - --------------------------------- ---------------------------------
Assistant Secretary Title:
----------------------------
(Corporate Seal)
ATTEST: C. W. ADVERTISING, INC.
/s/ BY: /s/
- - --------------------------------- ---------------------------------
Assistant Secretary Title:
----------------------------
(Corporate Seal)
Signed, sealed and delivered
by SELLER in the presence of:
/s/
- - ---------------------------------
Witness
/s/ Sandra L. Baker
- - ---------------------------------
Notary Public
*Signatures continued on the next page.
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BUYER:
ATTEST: CARMIKE CINEMAS, INC.
/s/ BY: /s/
- - ----------------------------- -----------------------------
President
(Corporate Seal)
Signed, sealed, and delivered
by BUYER in the presence of:
/s/
- - -----------------------------
Witness
/s/ Sandra L. Baker
- - -----------------------------
Notary Public
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