<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 0-14993
-------
CARMIKE CINEMAS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 58-1469127
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1301 FIRST AVENUE, COLUMBUS, GEORGIA 31901-2109
(Address of principal Executive Offices) (Zip Code)
(706) 576-3400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common Stock, $.03 par value --
9,740,101 shares outstanding as of August 11, 1995
Class B Common Stock, $.03 par value --
1,420,700 shares outstanding as of August 11, 1995
1
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------------- -----------------
(Unaudited)
(000's omitted)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,265 $ 17,872
Short-term investments 7,499 4,815
Accounts and notes receivable 4,462 3,814
Inventories 2,994 1,939
Prepaid expenses 4,526 5,025
-------- --------
TOTAL CURRENT ASSETS 26,746 33,465
OTHER ASSETS 7,379 7,006
PROPERTY AND EQUIPMENT - Note C 438,876 381,851
Less accumulated depreciation
and amortization 99,686 87,880
-------- --------
339,190 293,971
EXCESS OF COST OVER FAIR
VALUE OF TANGIBLE ASSETS
ACQUIRED -- Note C 47,890 43,156
-------- --------
$421,205 $377,598
======== ========
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
(Unaudited)
(000's omitted)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 25,497 $ 23,478
Accrued expenses 13,513 11,327
Current maturities of long-term debt
and capital lease obligations 8,948 9,352
-------- --------
TOTAL CURRENT LIABILITIES 47,958 44,157
LONG-TERM DEBT - less current maturities 42,287 3,495
SENIOR NOTES 111,364 118,182
CAPITAL LEASE OBLIGATIONS -
less current maturities 24,042 19,245
CONVERTIBLE SUBORDINATED DEBT 3,174 3,051
DEFERRED INCOME TAXES 18,312 17,512
SHAREHOLDERS' EQUITY - Note B
Class A Common Stock, $.03 par value, authorized
15,000,000 shares, issued 9,740,101 and
9,738,101 shares, respectively 292 292
Class B Common Stock, $.03 par value, authorized
5,000,000 shares, issued and outstanding
1,420,700 shares 43 43
Paid-in capital 99,772 99,763
Retained earnings 73,961 71,858
-------- --------
174,068 171,956
$421,205 $377,598
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---------- --------- --------- --------
(000's omitted except per share data)
<S> <C> <C> <C> <C>
REVENUES
Admissions $63,839 $47,987 $109,201 $ 95,639
Concessions and other 27,394 20,098 45,930 39,878
------- ------- -------- --------
91,233 68,085 155,131 135,517
COSTS AND EXPENSES
Film rentals 31,586 22,307 52,045 44,884
Concession costs 3,407 2,387 6,057 5,199
Other theatre operating costs 37,535 29,416 70,732 58,265
General and administrative 1,369 1,241 2,604 2,322
Depreciation and amortization 6,437 5,591 12,550 10,934
------- ------- -------- --------
80,334 60,942 143,988 121,604
------- ------- -------- --------
OPERATING INCOME 10,899 7,143 11,143 13,913
Interest expense 3,965 4,454 7,638 8,466
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 6,934 2,689 3,505 5,447
Income taxes 2,773 1,076 1,402 2,179
------- ------- -------- --------
NET INCOME $ 4,161 $ 1,613 $ 2,103 $ 3,268
======= ======= ======== ========
NET INCOME PER SHARE $ .37 $ .20 $ .19 $ .40
======= ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
--------- ----------
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,103 $ 3,268
Items which did not use cash:
Depreciation and amortization 12,550 10,934
Deferred income taxes 800 501
Gain on sale of productive property and equipment -0- (50)
Changes in operating assets and liabilities:
Accounts receivable and inventories (1,703) 2,750
Prepaid expenses 499 (1,342)
Accounts payable 2,019 (122)
Accrued expenses 2,186 356
-------- --------
NET CASH PROVIDED BY OPERATIONS 18,454 16,295
INVESTING ACTIVITIES
Purchases of property and equipment (23,220) (11,365)
Purchases of assets from other theatre operators (39,215) (50,300)
Disposals of property and equipment 12 46
Decrease (increase) in:
Short-term investments (2,684) 15,285
Other (444) (904)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (65,551) (47,238)
FINANCING ACTIVITIES
Debt and other liabilities:
Borrowings under revolving credit line 107,700 85,000
Repayments of revolving credit line (68,200) (20,000)
Additional borrowings 5,180 -0-
Payments on long term obligations (8,190) (36,563)
Issuance of Class A Common Stock -0- 366
-------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 36,490 28,803
-------- --------
DECREASE IN CASH AND
CASH EQUIVALENTS (10,607) (2,140)
Cash and cash equivalents at beginning of period 17,872 10,649
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 7,265 $ 8,509
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
CARMIKE CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the six-month
period ended June 30, 1995 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
NOTE B -- REVOLVING CREDIT FACILITY
On May 4, 1994, the Company entered into a Credit Agreement (the "Agreement")
with four banks to provide a revolving line of credit of up to $100,000,000 for
working capital, acquisitions and other general corporate purposes. The
Agreement has a three year revolving credit period, extended upon the mutual
consent of the Company and the banks for one year periods and will convert to a
four year term loan at the end of the revolving credit period. The Company has
the option to borrow at rates based on either the base rate of Wachovia Bank of
Georgia, N.A. or LIBOR + .375% and is required to pay annual fees of .10% on
the full amount of the facility and annual fees of .05% on the unused part of
the commitment. The interest rate, facility fees and commitment fees are
subject to adjustment based upon the Company's ratio of total debt to defined
cash flows. The Agreement contains certain restrictive provisions which, among
other things, limit additional indebtedness of the Company, limit dividend and
other restricted payments, require that certain debt to capitalization ratios
be maintained and require minimum levels of cash flows. At June 30, 1995 the
Company had $39,500,000 outstanding under this facility.
Under the terms of this Agreement, no payments are due until after May 3, 1997,
nor does the Company anticipate reducing the amount outstanding at June 30,
1995. Accordingly, no amounts have been classified as current maturities in
the accompanying Condensed Consolidated Financial Statements.
6
<PAGE> 7
CARMIKE CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995
NOTE C -- ACQUISITIONS
The Company's acquisitions in 1995 and 1994 have been accounted for under the
purchase method of accounting. Under the purchase method of accounting, the
results of operations of the acquired businesses are included in the
accompanying consolidated statements as of their respective acquisition dates.
The assets and liabilities of acquired businesses are included based on an
allocation of the purchase price.
In separate transactions, the Company acquired certain assets and businesses as
follows:
<TABLE>
<CAPTION>
Number of
Approximate ---------
Seller Purchase Price Theatres Screens Effective Date
------ -------------- -------- ------- --------------
(in thousands)
<S> <C> <C> <C> <C>
1995
Carolina Cinema Corp. $ 750 2 7 February 10, 1995
Theatre Developers, Inc. 1,200 1 8 February 24, 1995
MasTec, Inc. 11,300 21 83 March 17, 1995
Rocky Mountain Cinema
Partners 1,585 5 11 May 5, 1995
Plitt Theatres, Inc. 24,380 28 145 June 2, 1995
------- -- ---
$39,215 57 254
======= == ===
1994
General Cinema Corp.
and subsidiaries $ 6,400 6 28 January 21, 1994
General Cinema Corp.
of Louisiana 5,800 4 20 May 20, 1994
Cinema World, Inc. 38,100 38 176 May 20, 1994
------- -- ---
$50,300 48 224
======= == ===
</TABLE>
The excess of purchase price over net assets of businesses acquired has been
recorded as an intangible asset. Amounts recorded were $5,300,000 to date in
1995 and $18,733,000 in 1994.
Pro-forma results have not been presented for the 1995 acquisitions as they
were not significant during the periods presented in the accompanying condensed
consolidated financial statements.
The pro-forma unaudited results of operations below do not purport to represent
what the Company's actual results of operations would have been had the 1994
acquisition of Cinema World, Inc. occurred on January 1, 1994 and should not
serve as a forecast of the Company's operating results for any future periods.
7
<PAGE> 8
CARMIKE CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995
NOTE C -- ACQUISITIONS (CONTINUED)
Unaudited pro-forma results of the Cinema World, Inc. acquisition are as
follows (in thousands):
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1994
--------------
<S> <C>
Revenues $148,920
Net income 3,771
Earnings per share .46
</TABLE>
The above pro-forma income statement data gives effect to the acquisition of
assets from Cinema World, Inc. as if the acquisition had occurred at January 1,
1994. The pro-forma adjustments are based upon available information and
certain assumptions that management believes reasonable. The adjustments to
the historical data are as follows:
a. General and administrative costs were reduced to reflect the
incremental amount of general and administrative costs the Company
estimates it would have incurred over the applicable time period.
b. Depreciation expense was adjusted to reflect depreciation based upon
the Company's allocation of the acquisition purchase price.
c. Interest expense has been adjusted to reflect debt incurred at
borrowing rates of 4.5% to 5%.
8
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
COMPARISON OF THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1995 AND JUNE 30, 1994
RESULTS OF OPERATIONS
Total revenues for the quarter ended June 30, 1995 increased 34.0% to
$91,233,000 from $68,085,000 for the quarter ended June 30, 1994. This
increase consists of a $15,852,000 increase in admissions and a $7,296,000
increase in concessions and other. The increases are attributed to additional
revenues generated by the increased number of screens in operation and
increases in admission and concession prices. Also on a same screen basis,
attendance for the quarter increased 9.4%
Total revenues for the six months ended June 30, 1995 increased 14.5% to
$155,131,000 from $135,517,000 for the six months ended June 30, 1994. This
increase consists of a $13,562,000 increase in admissions and a $6,052,000
increase in concessions and other. These increases are due primarily to the
additional revenues generated by the increase in the number of screens in
operation as a result of the acquisitions (See Note C of Notes to Condensed
Consolidated Financial Statements)(the "Acquisitions") and increases in
admission and concession prices. For the six months ended June 30, 1995,
attendance on a same screen comparison decreased 5.4% below that for the six
months ended June 30, 1994.
Cost of operations (film rentals, concession costs and other theatre operating
costs) increased 34% from $54,110,000 to $72,528,000 for the quarter ended June
30, 1995. This dollar increase is due to the increased number of screens in
operation. As a percentage of total revenues, cost of operations remained the
same at 79.5%.
Cost of operations for the six months ended June 30, 1995 increased 18.9% from
$108,348,000 to $128,834,000 also as a result of the increased number of
screens in operation. As a percentage of total revenues, cost of operations
increased from 80.0% of total revenues to 83.0% of total revenues in the six
months ended June 30, 1995. This percentage is due primarily to the level of
fixed costs, such as occupancy cost, managers salaries and utilities included
in this cost category that do not vary with decreases in sales and attendance
levels, combined with higher film rentals paid reflecting a better quality of
film product in the six months ended June 30, 1995.
General and administrative costs for the quarter ended June 30, 1995 increased
10.3% from $1,241,000 to $1,369,000 primarily as a result of increased
personnel costs because of the Acquisitions and expansions and decreased as a
percentage of total revenues from 1.8% to 1.5%.
General and administrative costs for the six months ended June 30, 1995
increased 12.1% from $2,322,000 to $2,604,000 primarily as a result of
increased personnel costs because of the Acquisitions and expansions. As a
percentage of total revenues, general and administrative costs remained the
same at 1.7%.
Depreciation and amortization increased 15.1% from $5,591,000 to $6,437,000 for
the quarter ended June 30, 1995 due to the Acquisitions and expansions. As a
percentage of total revenues depreciation and amortization decreased from 8.2%
to 7.1%.
Depreciation and amortization for the six months ended June 30, 1995 increased
14.8% from $10,934,000 to $12,550,000 due to the Company's Acquisitions and
expansions. As a percentage of total revenues, depreciation and amortization
remained the same at 8.1%.
9
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
COMPARISON OF THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1995 AND JUNE 30, 1994
Interest expense for the quarter ended June 30, 1995 decreased 11.0% to
$3,965,000 from $4,454,000 due to the decrease in the average amount of
outstanding debt.
Interest expense for the six months ended June 30, 1995 decreased 9.8% to
$7,638,000 from $8,466,000 for the six months ended June 30, 1994 due to the
decrease in the average amount of outstanding debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues are collected in cash, principally through box office
admissions and theatre concessions. Because its revenues are received in cash
prior to the payment of related expenses, the Company has an operating "float"
which partially finances its operations.
The Company's capital requirements arise principally in connection with new
theatre openings and acquisitions of existing theatres and theatre circuits.
New theatre openings typically are financed with internally generated cash
flow, borrowings under bank credit lines or under long-term leasing
arrangements with developers.
The Company believes that its presently anticipated capital needs for theatre
construction and possible acquisitions will be satisfied by the short-term
investments on hand, the revolving credit facility (See Note B of Notes to
Condensed Consolidated Financial Statements), additional bank financings,
private placements of debt, internally generated cash flow and, where
appropriate, future lease financings. At August 11, 1995, the Company had
approximately $11,000,000 in cash and short term investments on hand and
$74,000,000 was available under the Company's revolving credit facility.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders.
The annual meeting of shareholders of the Company was held on May 8,
1995. At the annual meeting, the shareholders voted on the election of six
directors. The results of the voting were as follows:
<TABLE>
<CAPTION>
FOR VOTE WITHHELD
--- -------------
<S> <C> <C>
C. L. Patrick 21,858,518 144,646
Michael W. Patrick 21,868,818 134,346
Carl L. Patrick, Jr. 21,868,618 134,546
John W. Jordan, II 21,918,916 84,248
Carl E. Sanders 21,988,116 15,048
David W. Zalaznick 21,988,116 15,048
</TABLE>
Also at the annual meeting the shareholders voted to approve an amendment to
the Company's Restated Certificate of Incorporation to increase the number of
authorized shares of the Company's Class A Common Stock from 15,000,000 to
22,500,000. The results of the voting were as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
--- ------- ---------
<S> <C> <C> <C>
Class A Common Votes 6,769,200 1,012,094 14,870
Class B Common Votes 14,207,000 -0- -0-
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3(a) - Restated Certificate of Incorporation of the Company
3(b) - Certificate of Amendment of Restated Certificate of
Incorporation
11 - Statement re: computation of earnings per share
12 - Agreement dated as of June 2, 1995 by and between Carmike
Cinemas, Inc. and Plitt Theatres, Inc.
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on May 24, 1995 to report
the signing of an agreement to purchase 145 screens from Plitt
Theatres, Inc.
11
<PAGE> 12
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
undersigned, thereunto duly authorized.
CARMIKE CINEMAS, INC.
(Registrant)
Date: 8/11/95 By: /s/ Michael W. Patrick
----------------- -------------------------------
Michael W. Patrick - President
(Chief Executive Officer)
Date: 8/11/95 By: /s/ John O. Barwick, III
----------------- -------------------------------
John O. Barwick, III - Vice
President Finance
(Chief Accounting and
Financial Officer)
12
<PAGE> 1
EXHIBIT 3(a)
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "CARMIKE CINEMAS, INC.", FILED IN THIS OFFICE ON THE SECOND DAY
OF OCTOBER, A.D. 1986, AT 1:01 0'CLOCK P.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7303833
DATE: 11-16-94
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
CARMIKE CINEMAS, INC.
Carmike Cinemas, Inc. (the "Corporation"), organized and existing under and by
virtue of the General Corporation Law of the State of Delaware does hereby
certify that:
1. The name under which the Corporation was originally
incorporated was "Martin Cinemas, Inc." and its original Certificate of
Incorporation was filed with the Secretary of State of Delaware on April 2,
1982;
2. The Directors of the Corporation, by unanimous written consent
pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware, adopted as of September 29, 1986 resolutions proposing and declaring
advisable and in the best interest of the Corporation the following restatement
of the Certificate of Incorporation of the Corporation, as previously amended
and supplemented;
3. This restatement of the Certificate of Incorporation of the
Corporation has been duly adopted in accordance with Sections 245 and 141 of
the General Corporation Law of the State of Delaware;
4. This restatement of the Certificate of Incorporation of the
Corporation only restates and integrates and does not further amend the
provisions of the Corporation's Certificate of Incorporation as heretofore
amended or supplemented, and there is no discrepancy between those provisions
and the provisions of this Restated Certificate of Incorporation except as
otherwise allowed by the General Corporation Law of the State of Delaware; and
5. The text of the Certificate of Incorporation of the
Corporation, as previously amended and supplemented, is hereby restated by this
Restated Certificate of Incorporation to read in full as follows:
FIRST: The name of the Corporation (hereinafter called the
"Corporation") is
<PAGE> 3
CARMIKE CINEMAS, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is 1209
Orange Street, Wilmington, New Castle County, Delaware 19801; and the name of
the registered agent of the Corporation in the State of Delaware at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity of which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares of capital stock of all classes
which the Corporation shall have authority to issue is 21,000,000, consisting
of (i) 20,000,000 shares of Common Stock, which in turn consists of (A)
15,000,000 shares of Class A Common Stock, par value $.03 per share (the "Class
A Common Stock"), and (B) 5,000,000 shares of Class B Common Stock, par value
$.03 per share (the "Class B Common Stock"), and (ii) 1,000,000 shares of
Preferred Stock, par value $1.00 per share (the "Preferred Stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in respect of each class
of stock of the Corporation, are as follows:
A. PREFERRED STOCK
The Board of Directors is authorized, subject to the limitations
prescribed by law and the provisions of this Article FOURTH, to provide for the
issuance of the shares of the Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
-2-
<PAGE> 4
(b) Whether that series shall have dividend rights, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
applicable rate and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different conditions
and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payments of shares
of that series; and
(h) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the common shares with respect to the
same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to holders
of shares of the Preferred Stock of all series shall be insufficient to pay
such holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
-3-
<PAGE> 5
B. CLASS A COMMON STOCK AND CLASS B COMMON STOCK
I. Dividends and other Distributions. Subject to the rights of
----------------------------------
the holders of Preferred Stock, and subject to any other provisions of this
Certificate of Incorporation, as amended from time to time, holders of Class A
Common Stock and Class B Common Stock shall be entitled to receive such
dividends and other distributions in cash, stock or property of the Corporation
as may be declared thereon by the Board of Directors from time to time out of
assets or funds of the Corporation legally available therefor; provided that in
the case of cash dividends, if at any time a cash dividend is paid on the Class
A Common Stock, a cash dividend must also be paid on the Class B Common Stock
in an amount per share of Class B Common Stock equal to 85% of the amount of
the cash dividend paid on each share of the Class A Common Stock (rounded down,
if necessary, to the nearest one-hundredth of a cent), or if at any time a cash
dividend is paid on the Class B Common Stock, a cash dividend must also be paid
on the Class A Common Stock in an amount equal to 117.647% of the amount of the
cash dividend paid on each share of the Class B Common Stock (rounded up, if
necessary, to the nearest one-hundredth of a cent), such that a cash dividend
may not be paid on either the Class A Common Stock or the Class B Common Stock
unless a cash dividend is also paid on the other as aforesaid; and provided,
further, that in the case of dividends or other distributions payable in stock
of the Corporation other than Preferred Stock, including distributions pursuant
to stock splits or divisions of stock of the Corporation other than Preferred
Stock, which occur after the initial issuance of shares of Class B Common Stock
by the Corporation, only shares of Class A Common Stock shall be distributed
with respect to Class A Common Stock and only shares of Class B Common Stock in
an amount per share equal to the amount per share paid with respect to the
Class A Common Stock shall be distributed with respect to Class B Common Stock,
and that, in the case of any combination or reclassification of the Class A
Common Stock, the shares of Class B Common Stock shall also be combined or
reclassified so that the number of shares of Class B Common Stock outstanding
immediately following such combination or reclassification shall bear the same
relationship to the number of shares outstanding immediately prior to such
combination or reclassification as the number of shares of Class A Common Stock
outstanding immediately following such combination or reclassification bears to
the number of shares of Class A Common Stock outstanding immediately prior to
such combination or reclassification.
-4-
<PAGE> 6
II. Voting.
-------
(a) At every meeting of the stockholders every holder of Class A
Common Stock shall be entitled to one (1) vote in person or by proxy for each
share of Class A Common Stock standing in his name on the transfer books of the
Corporation and every holder of Class B Common Stock shall be entitled to ten
(10) votes in person or by proxy for each share of Class B Common Stock
standing in his name on the transfer books of the Corporation.
(b) Following the initial issuance of shares of Class B Common
Stock, the Corporation may not effect the issuance of any additional shares of
Class B Common Stock (except in connection with stock splits and stock
dividends) unless and until such issuance is authorized by the holders of a
majority of the voting power of the shares of Class A Common Stock and of Class
B Common Stock entitled to vote, each voting separately as a class.
(c) Except as may be otherwise required by law or by this Article
Fourth, the holders of Class A Common Stock and Class B Common Stock shall vote
together as a single class, subject to any voting rights which may be granted
to holders of Preferred Stock.
(d) Every reference in this Certificate of Incorporation to a
majority or other proportion of shares of stock shall refer to such majority or
other proportion of the votes of such shares of stock.
III. Transfer.
---------
(a) No person holding shares of Class B Common Stock of record
(hereinafter called a "Class B Holder") may transfer, and the Corporation shall
not register the transfer of, such shares of Class B Common Stock, whether by
sale, assignment, gift, bequest, appointment or otherwise, except to a
Permitted Transferee, and any attempted transfer of shares not permitted
hereunder shall result in such shares being converted into Class A Common Stock
as provided by subsection (d) of this Section III. A Permitted Transferee shall
mean, with respect to each person from time to time shown as the record holder
of shares of Class B Common Stock:
(i) In the case of a Class B Holder who is a natural
person,
(A) The spouse of such Class B Holder, any lineal
descendant of a parent of such Class B
-5-
<PAGE> 7
Holder, and any spouse of such lineal descendant (which lineal
descendants, their spouses, the Class B Holder, and his or her
spouse are herein collectively referred to as the "Class B
Holder's Family Members");
(B) The trustee of a trust (including a voting
trust) principally for the benefit of such Class B Holder
and/or one or more of his or her Permitted Transferees
described in each subclause of this clause (i) other than this
subclause (B), provided that such trust may also grant a
general or special power of appointment to one or more of such
Class B Holder's Family Members and may permit trust assets to
be used to pay taxes, legacies and other obligations of the
trust or of the estates of one or more of such Class B
Holder's Family Members payable by reason of the death of any
of such Family Members;
(C) A corporation if a majority of the beneficial
ownership of outstanding capital stock of such corporation
which is entitled to vote for the election of directors is
owned by, or a partnership if a majority of the beneficial
ownership of the partnership interests which are entitled to
participate in the management of the partnership are held by,
the Class B Holder or his or her Permitted Transferees
determined under this clause (i), provided that if by reason
of any change in the ownership of such stock or partnership
interests, such corporation or partnership would no longer
qualify as a Permitted Transferee, all shares of Class B
Common Stock then held by such corporation or partnership
shall, upon written notice given by the Corporation to such
corporation or partnership, without further act on anyone's
part, be converted into shares of Class A Common Stock
effective upon the date of the giving of such notice, and
stock certificates formerly representing such shares of Class
B Common Stock shall thereupon and thereafter be deemed to
represent a like number of shares of Class A Common Stock; and
(D) The estate of such Class B Holder.
(ii) In the case of a Class B Holder holding the shares of
Class B Common Stock in question as trustee pursuant to a trust (other
than a trust described in clause (iii) below), "Permitted Transferee"
means
-6-
<PAGE> 8
(A) any person transferring Class B Common Stock to such trust and (B) any
Permitted Transferee of any such transferor determined pursuant to clause (i)
above.
(iii) In the case of a Class B Holder holding the shares of Class B
Common Stock in question as trustee pursuant to a trust which was irrevocable
on the record date for determining the persons to whom the Class B Common Stock
is first issued by the Corporation (hereinafter in this Section III called the
"Record Date"), "Permitted Transferee" means (A) any person to whom or for
whose benefit principal may be distributed either during or at the end of the
term of such trust whether by power of appointment of otherwise and (B) any
Permitted Transferee of any such person determined pursuant to clause (i)
above.
(iv) In the case of a Class B Holder which is a corporation or
partnership acquiring record and beneficial ownership of the shares of Class B
Common Stock in question upon its initial issuance by the Corporation,
"Permitted Transferee" means (A) any partner of such partnership, or
stockholder of such corporation, on the Record Date, (B) any person
transferring such shares of Class B Common Stock to such corporation or
partnership, and (C) any Permitted Transferee of any such person, partner, or
stockholder referred to in subclauses (A) and (B) of this clause (iv),
determined under clause (i) above.
(v) In the case of a Class B Holder which is a corporation or
partnership (other than a corporation or partnership described in clause (iv)
above) holding record and beneficial ownership of the shares of Class B Common
Stock in question, "Permitted Transferee" means (A) any person transferring
such shares of Class B Common Stock to such corporation or partnership and (B)
any Permitted Transferee of any such transferor determined under clause (i)
above.
(vi) In the case of a Class B Holder which is the estate of a
deceased Class B Holder, or which is the estate of a bankrupt or insolvent
Class B Holder, which holds record and beneficial ownership of the shares of
Class B Common Stock in question, "Permitted Transferee" means a Permitted
Transferee of such deceased, bankrupt or insolvent Class B Holder as determined
pursuant to clause (i), (ii), (iii), (iv) or (v) above, as the case may be.
-7-
<PAGE> 9
(b) For purposes of this Section III:
(i) The relationship of any person that is derived by or
through legal adoption shall be considered a natural one.
(ii) Each joint owner of shares of Class B Common Stock
shall be considered a "Class B Holder" of such shares.
(iii) A minor for whom shares of Class B Common Stock are
held pursuant to a Uniform Gifts to Minors Act or similar law shall be
considered a Class B Holder of such shares.
(iv) Unless otherwise specified, the term "person" means
both natural persons and legal entities.
(v) Without derogating from the election conferred upon the
Corporation pursuant to subclause (C) of clause (i) above, each reference to
a corporation shall include any successor corporation resulting from merger
or consolidation, and each reference to a partnership shall include any
successor partnership resulting from the death or withdrawal of a partner.
(c) Any transfer of shares of Class B Common Stock not permitted hereunder
shall result in the conversion of the transferee's shares of Class B Common
Stock into shares of Class A Common Stock, effective the date on which
certificates representing such shares are presented for transfer on the books
of the Corporation or on such earlier date that the Corporation receives notice
of such attempted transfer. The Corporation may, in connection with preparing
a list of stockholders entitled to vote at any meeting of stockholders, or as a
condition to the transfer or the registration of shares of Class B Common Stock
on the Corporation's books, require the furnishing of such affidavits or other
proof as it deems necessary to establish that any person is the beneficial
owner of shares of Class B Common Stock or is a Permitted Transferee.
(d) Shares of Class B Common Stock shall be registered in the names of the
beneficial owners thereof and not in "street" or "nominee" name. For this
purpose, a "beneficial owner" of any shares of Class B Common Stock shall mean
a person who, or an entity which, possesses the power, either singly or
jointly, to direct the voting or disposition of such shares. Certificates for
shares of Class B Common Stock shall bear a legend referencing the restrictions
on transfer imposed by this Section III.
-8-
<PAGE> 10
IV. Conversion Rights.
------------------
(a) Subject to the terms and conditions of this Section IV, each share of
Class B Common Stock shall be convertible at any time or from time to time, at
the option of the respective holder thereof, at the office of any transfer
agent for Class B Common Stock, and at such other place or places, if any, as
the Board of Directors may designate, or if the Board of Directors shall fail
so to designate, at the principal office of the Corporation (attention of the
Secretary of the Corporation), into one (1) fully paid and nonassessable share
of Class A Common Stock. Upon conversion, the Corporation shall make no
payment or adjustment on account of dividends accrued or in arrears on Class B
Common Stock surrendered for conversion or on account of any dividends on the
Class A Common Stock issuable on such conversion. Before any holder of Class B
Common Stock shall be entitled to convert the same into Class A Common Stock,
he shall surrender the certificate or certificates for such Class B Common
Stock at the office of said transfer agent (or other place as provided above),
which certificate or certificates, if the Corporation shall so request, shall
be duly endorsed to the Corporation or in blank or accompanied by proper
instruments of transfer to the Corporation or in blank (such endorsements or
instruments of transfer to be in form satisfactory to the Corporation), and
shall give written notice to the Corporation at said office that he elects so
to convert said Class B Common Stock in accordance with the terms of this
Section IV, and shall state in writing therein the name or names in which he
wishes the certificate or certificates for Class A Common Stock to be issued.
Every such notice of election to convert shall constitute a contract between
the holder of such Class B Common Stock and the Corporation, whereby the holder
of such Class B Common Stock shall be deemed to subscribe for the amount of
Class A Common Stock which he shall be entitled to receive upon such
conversion, and, in satisfaction of such subscription, to deposit the Class B
Common Stock to be converted and to release the Corporation from all liability
thereunder, and thereby the Corporation shall be deemed to agree that the
surrender of the certificate or certificates therefor and the extinguishment of
liability thereon shall constitute full payment of such subscription for Class
A Common Stock to be issued upon such conversion. The Corporation will as soon
as practicable after such deposit of a certificate or certificates for Class B
Common Stock, accompanied by the written notice and the statement above
prescribed, issue and deliver at the office of said transfer agent (or other
place as provided above) to the person for whose account such Class B Common
-9-
<PAGE> 11
Stock was so surrendered, or to his nominee(s) or transferee(s), a certificate
or certificates for the number of full shares of Class A Common Stock to which
he shall be entitled as aforesaid. Subject to the provisions of subsection (c)
of this Section IV, such conversion shall be deemed to have been made as of the
date of such surrender of the Class B Common Stock to be converted; and the
person or persons entitled to receive the Class A Common Stock issuable upon
conversion of such Class B Common Stock shall be treated for all purposes as
the record holder or holders of such Class A Common Stock on such date.
(b) The issuance of certificates for shares of Class A Common
Stock upon conversion of shares of Class B Common Stock shall be made without
charge for any stamp or other similar tax in respect of such issuance.
However, if any such certificate is to be issued in a name other than that of
the holder of the share or shares of Class B Common Stock converted, the person
or persons requesting the issuance thereof shall pay to the Corporation the
amount of any tax which may be payable in respect of any transfer involved in
such issuance or shall establish to the satisfaction of the Corporation that
such tax has been paid.
(c) The Corporation shall not be required to convert Class B
Common Stock, and no surrender of Class B Common Stock shall be effective for
that purpose, while the stock transfer books of the Corporation are closed for
any purpose; but the surrender of Class B Common Stock for conversion during
any period while such books are so closed shall become effective for conversion
immediately upon the reopening of such books, as if the conversion had been
made on the date such Class B Common Stock was surrendered.
(d) The Corporation covenants that it will at all times reserve
and keep available, solely for the purpose of issue upon conversion of the
outstanding shares of Class B Common Stock, such number of shares of Class A
Common Stock as shall be issuable upon the conversion of all such outstanding
shares, provided that nothing contained herein shall be construed to preclude
the Corporation from satisfying its obligations in respect of the conversion of
the outstanding shares of Class B Common Stock by delivery of shares of Class A
Common Stock which are held in the treasury of the Corporation. The
Corporation covenants that if any shares of Class A Common Stock, required to
be reserved for purposes of conversion hereunder, require registration with or
approval of any governmental authority under any federal or state law before
such shares of Class A Common Stock may be issued upon
-10-
<PAGE> 12
conversion, the Corporation will use its best efforts to cause such shares to
be duly registered or approved, as the case may be. The Corporation will
endeavor to list the shares of Class A Common Stock required to be delivered
upon conversion prior to such delivery upon each national securities exchange,
if any, upon which the outstanding Class A Common Stock is listed at the time
of such delivery. The Corporation covenants that all shares of Class A Common
Stock which shall be issued upon conversion of the shares of Class B Common
Stock, will, upon issue, be fully paid and nonassessable and not entitled to
any preemptive rights.
V. Liquidation Rights. In the event of any dissolution,
-------------------
liquidation or winding up of the affairs of the Corporation, whether voluntary
or involuntary, after payment or provision for payment of the debts and other
liabilities of the Corporation, the holders of Preferred Stock shall be
entitled to receive, out of the net assets of the Corporation, an amount for
each share equal to the amount fixed in the Certificate of Incorporation, plus
an amount equal to all dividends accrued and unpaid on such shares to the date
fixed for distribution, and no more, before any of the assets of the
Corporation shall be distributed or paid over to the holders of Class A Common
Stock. After payment in full of said amounts to the holders of Preferred Stock,
the remaining assets and funds of the Corporation shall be divided among and
paid ratably to the holders of Class A Common Stock and Class B Common Stock.
If, upon such dissolution, liquidation or winding up, the assets of the
Corporation distributable as aforesaid among the holders of Preferred Stock
shall be insufficient to permit full payment to them of said preferential
amounts, then such assets shall be distributed among such holders ratably in
proportion to the respective total amounts which they shall be entitled to
receive as provided in this Section V. A merger or consolidation of the
Corporation with or into any other corporation or a sale or conveyance of all
or any part of the assets of the Corporation (which shall not in fact result in
the liquidation of the Corporation and the distribution of assets to
stockholders) shall not be deemed to be a voluntary or involuntary liquidation
or dissolution or winding up of the Corporation within the meaning of this
Section V.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and of its
stockholders
-11-
<PAGE> 13
or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the corporation would have if there were no vacancies.
Election of directors need not be by written ballot.
2. After the original or other By-Laws of the
Corporation have been adopted, amended, or repealed, as the case may
be, in accordance with the provisions of Section 109 of the General
Corporation Law of the State of Delaware, and, after the Corporation
has received any payment for any of its stock, the power to adopt,
amend, or repeal the By-Laws of the Corporation may be exercised by
the Board of Directors of the Corporation; provided, however, that any
provision for the classification of directors of the Corporation for
staggered terms pursuant to the provisions of subsection (d) of
Section 141 of the General Corporation Law of the State of Delaware
shall be set forth in an initial By-Law or in a By-Law adopted by the
stockholders entitled to vote of the Corporation unless provisions for
such classification shall be set forth in this Certificate of
Incorporation.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all
of the expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
EIGHTH: From time to time any of the provisions of this Certificate
of Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws
-12-
<PAGE> 14
of the State of Delaware at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the Corporation by this Certificate of
Incorporation are granted subject to the provisions of this Article EIGHTH.
NINTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
directors's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction for which the director derived an
improper personal benefit. This Article NINTH shall not eliminate or limit the
liability of a director for any act or omission occurring prior to the time
this Article NINTH became effective.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Restated Certificate of Incorporation to be signed
by its President and attested by its Secretary as of the 29th day of September,
1986.
CARMIKE CINEMAS, INC.
CARMIKE CINEMAS, INC.
DELAWARE By: /s/ Michael W. Patrick
CORPORATE SEAL ----------------------
1982 Michael W. Patrick,
President
Attest: /s/ Marion Nelson Jones
-----------------------
Marion Nelson Jones,
Secretary
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<PAGE> 1
EXHIBIT 3(b)
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "CARMIKE CINEMAS, INC.", FILED IN THIS OFFICE ON THE TENTH DAY OF MAY, A.D.
1995, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
(SEAL) -----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7502286
DATE: 05-11-95
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
CARMIKE CINEMAS, INC.
CARMIKE CINEMAS, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), DOES HEREBY CERTIFY, as follows:
1. The Board of Directors of the Company, by unanimous written
consent pursuant of Section 141(f) of the General Corporation Law of the State
of Delaware, duly adopted the following resolutions as of February 28, 1995,
which have not been revoked or modified and are in full force and effect:
RESOLVED, That the Board of Directors of the Corporation does hereby
authorize and approve the amendment of Article Fourth of the Restated
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), in order to increase the authorized number of shares of the
Corporation's Class A Common Stock from 15,000,000 shares to 22,500,000 shares,
such amendment to be substantially as set forth in Exhibit A to these
resolutions;
RESOLVED FURTHER, That the proper officers of the Corporation be, and
they hereby are, authorized and directed to submit the above proposed amendment
to the Certificate of Incorporation to the shareholders of the Corporation for
action thereon at the 1995 annual meeting of shareholders of the Corporation;
RESOLVED FURTHER, That, subject to shareholder approval of the above
proposed amendment to the Certificate of Incorporation, the proper officers be,
and they hereby are, authorized and empowered to take all such action as any
one of them may deem necessary or desirable to effect the above proposed
amendment to the Certificate of Incorporation, including the execution and
filing of a Certificate of Amendment as is provided for by Section 242 of the
Delaware General Corporation Law.
Exhibit A to the written consent sets forth the text of the first
paragraph of Article Fourth of the Certificate of Incorporation as proposed to
be amended to read as follows:
<PAGE> 3
FOURTH: The aggregate number of shares of capital stock of all
classes which the Corporation shall have authority to issue is
28,500,000, consisting of (i) 27,500,000 shares of Common Stock, which
in turn consists of (A) 22,500,000 shares of Class A Common Stock, par
value $.03 per share (the "Class A Common Stock"), and (B) 5,000,000
shares of Class B Common Stock, par value $.03 per share (the "Class B
Common Stock"), and (ii) 1,000,000 shares of Preferred Stock, par
value $1.00 per share (the "Preferred Stock").
2. Thereafter, pursuant to the foregoing resolutions, at the next
annual meeting of stockholders of the Company which was duly called and held in
accordance with said resolutions and with Sections 222 and 242 of said General
Corporation Law on May 8, 1995 at 11:00 a.m., Eastern Daylight Time, the
proposed amendment was considered, a vote of the stockholders entitled to vote,
by ballot, in person or by proxy, was taken for and against the proposed
amendment, and the holders of a majority of the issued and outstanding Class A
Common Stock and Class B Common Stock, and the holders of a majority of the
outstanding Class A Common Stock, voting as a separate class, being the classes
of stock entitled to vote on said amendment, voted in favor of said amendment.
3. The amendment hereinbefore set forth with respect to Article
FOURTH of the Certificate of Incorporation of the Company has been duly adopted
in accordance with the provisions of Section 242 of said General Corporation
Law.
<PAGE> 4
IN WITNESS WHEREOF, CARMIKE CINEMAS, INC. has caused this certificate
to be signed and acknowledged by the Company's President, Michael W. Patrick,
and to be attested by the Company's Secretary, Larry M. Adams, this 8th day of
May, 1995.
CARMIKE CINEMAS, INC.
By: /s/ Michael W. Patrick
-------------------------------
Michael W. Patrick
President
ATTEST:
/s/ Larry M. Adams
-------------------------------
Larry M. Adams
Secretary
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
($000's omitted, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
--------- ----------- ---------- -------
(000's omitted except for per share data)
<S> <C> <C> <C> <C>
Average shares outstanding 11,161 7,976 11,161 7,975
Net effect of dilutive stock options
based on the treasury stock method
using average market price 104 185 99 172
------- ------ ------- ------
TOTALS 11,265 8,161 11,260 8,147
======= ====== ======= ======
NET INCOME $ 4,161 $1,613 $ 2,103 $3,268
======= ====== ======= ======
NET INCOME PER SHARE .37 $ .20 $ .19 $ .40
======= ====== ======= ======
</TABLE>
Note: Fully diluted calculation is not presented because dilution is less than
3%.
<PAGE> 1
EXHIBIT 12
A G R E E M E N T
AGREEMENT, dated as of the 17th day of May, 1995, between PLITT
THEATRES, INC., a Delaware corporation, and PLITT SOUTHERN THEATRES, INC., a
Delaware corporation (hereinafter "Seller"), and CARMIKE CINEMAS, INC., a
Delaware corporation, ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller desires to sell certain of its assets, interests, and
rights, and Buyer desires to purchase the same; and
WHEREAS, the Boards of Directors of Seller and the Board of Directors
of Buyer deem it appropriate to effect the sale and transfer of certain of
Seller's assets and liabilities pursuant to the agreement set forth
hereinafter.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, and for other consideration, 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. "AFFILIATE" - Any person, firm, corporation, partnership or
association controlling, controlled by, or under common control with another
person, firm, corporation, partnership or association.
1.02. "AGREEMENT" - This Agreement, including the Exhibits attached
hereto, and the Schedules delivered pursuant hereto.
1.03. "ASSETS" - The property, both real and personal of the Seller,
including real property, Leasehold Interests, Leasehold Improvements, and all
furniture, fixtures, equipment, film contracts, theatre names and service marks
(EXCLUDING CINEPLEX, CINEPLEX ODEON, ODEON, PLITT and SEPTUM), machinery,
materials, supplies, and other intangible properties pertaining to the
Theatres set forth on Schedule 1.26.
1.04. "BUYER'S KNOWLEDGE" - The knowledge of John O. Barwick, III.
1
<PAGE> 2
1.05. "CASH FLOW STATEMENTS" - Internally prepared statements by
Seller that summarize Theatre Revenue and Theatre Expenses for each of the
Theatres.
1.06. "CLOSING" - The Closing referred to in Section 2.05 hereof.
1.07. "CLOSING DATE" - The date referred to in Section 2.05 hereof.
1.08. "CONTINUING CONTRACTS" - The agreements relating to the
operation and maintenance of the Theatres (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.
1.09. "EFFECTIVE DATE" - 12:01 a.m. Eastern Daylight Savings Time,
June 2, 1995.
1.10. "ERISA" - The Employee Retirement Income Security Act of 1974,
as amended.
1.11. "EXCLUDED ASSETS" - Those assets set forth on Schedule 1.11.
Any damages caused by removal of Excluded Assets will be repaired by Seller.
1.12. "EXHIBITS" - Those Exhibits referenced in this Agreement and
incorporated herein by such reference.
1.13. "FILM CONTRACTS" - All of those contracts and agreements of
Seller for film rental applicable to the Theatres as of the Possession Date.
1.14. "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.
1.15. "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 (b). For any Theatre that Seller does not have Landlord's
written consent at Closing, Buyer agrees that it will accept oral telephonic
consent given to John O. Barwick, III, F. Lee Champion, III or Michael W.
Patrick for purposes hereof, and Buyer will confirm receipt of such oral
consent for each Theatre by letter to Landlord, with copy to Seller.
1.16. "LEASED PREMISES" - The Premises demised by the Leases.
2
<PAGE> 3
1.17. "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 a part of the Leased Premises.
1.18. "LEASEHOLD INTERESTS" - All and singular the interest, estates,
rights, privileges, titles, easements, options and appurtenances belonging, or
in any way appertaining to the Seller as tenant under the Leases.
1.19. "LEASES" - The Leases for the Theatres, and all amendments and
modifications thereof, all of which are described on Schedule 3.09 (b) attached
hereto.
1.20. "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 by the Closing; (iii) Permitted Title Exceptions; and (iv)
landlord's lien on equipment for the Hoffner Center Theatre, Orlando, FL.
1.21. "PERMITTED TITLE EXCEPTIONS" - With respect to the fee simple
real property those preprinted exceptions in a standard form ALTA extended
coverage policy of title insurance and those encumbrances set forth on Schedule
1.21. With respect to leased real property, landlord liens arising under the
Leases or pursuant to operation of law.
1.22. "POSSESSION DATE " - The Closing Date for each Theatre for
which the Landlord's Consent has been received prior to the Closing Date. For
each Theatre that Landlord's Consent has not been received prior to the Closing
Date, Buyer shall take possession of said Theatre on the first Friday following
receipt of said Landlord's Consent by Buyer.
1.23. "PURCHASE PRICE" - The Purchase Price for the Assets is
TWENTY-TWO MILLION AND 00/100 DOLLARS ($22,000,000.00), payable as set forth in
paragraph 2.02 hereof.
1.24. "SCHEDULES" - Those Schedules referred to in this Agreement.
1.25. "SELLER'S KNOWLEDGE" - The knowledge and/or awareness of
Seller's Chief Financial Officer, Ellis Jacob.
1.26. "THEATRES" - The twenty-eight (28) locations consisting of one
hundred forty-five (145) screens for the exhibition of motion pictures as
specifically set forth on Schedule 1.26.
1.27. "THEATRE CASH FLOW" - Theatre Cash Flow equals the excess of
Theatre Revenue over Theatre Expenses.
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1.28. "THEATRE EXPENSES" - Theatre Expenses shall be calculated for
each Theatre on a theatre by theatre basis by applying the percentages set out
opposite each Theatre on Schedule 1.28 for each of film costs, confection
costs, advertising expense, payroll and supplies and services. The Pacer/Coke
expense shall be determined by multiplying the amount set out opposite each
Theatre by a fraction equal to the number of days between the Effective Date
and the Possession Date divided by 365. Occupancy costs shall be calculated by
prorating actual occupancy costs for each Theatre for the number of days
between the Effective Date and the Possession Date.
1.29. "THEATRE LEVEL EMPLOYEE" - Any employee who actually works at a
Theatre location.
1.30. "THEATRE REVENUE" - Equals the sum of all box office,
concession and other revenue receipts as said other revenue receipts are
described on Schedule 1.30.
1.31. "USABLE FILM PAYMENTS" - The aggregate amount of all advance
film rentals paid by the Seller prior to the Possession Date pursuant to
Guaranteed Film Contracts to which Buyer has not consented prior to or on the
Possession Date which advance film rentals were actually earned by the Buyer
within ninety (90) days after the Possession Date.
1.32. "UNEARNED FILM PAYMENTS" - The aggregate amount of all advance
film rentals paid by the Seller prior to the Possession Date pursuant to film
contracts other than Guaranteed Film Contracts, less the amount of such
advance film rentals actually earned by Seller through the sale of admission
tickets prior to the Possession Date.
ARTICLE II
PURCHASE AND SALE OF ASSETS
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 Assets
owned and used by Seller in the operation of its motion picture exhibition
business in the Theatres specifically set forth on Schedule 1.26.
2.02. Purchase Price. The Purchase Price for the Assets 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 in paragraph 2.06 (a), the
Purchase Price, less: (1) The amount set forth on Schedule 2.02 (a) (1) for
any Theatre, or group of Theatres for which the Landlord Consents have not been
received;
(b) Subsequent to Closing, on the Possession Date for any
applicable Theatre Buyer shall pay and deliver by wire transfer to Seller the
amount set forth on Schedule 2.02 (a) (l)
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for any Theatre or group of Theatres for which the Landlord Consents have
subsequently been received.
2.03. Purchase Price Allocation. The Purchase Price will be
allocated to the Assets 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) On and as of the Possession Date, Seller will pay Buyer
or Buyer will pay Seller, as applicable, its prorated share of all proratable
expenses, including but not limited to rents, security deposits, property taxes,
percentage rents based upon applicable lease provisions when and as determined,
common area maintenance and other proratable items pursuant to the assigned
leases and utilities. Percentage rent under Leases shall be prorated for the
applicable lease year based upon the amount of revenue derived from the
applicable Theatre during the period said Theatre is operated by Seller and
Buyer respectively.
(b) On the Possession Date, Buyer will pay Seller the
Unearned Film Payments plus the unused portion of any Guaranteed Film Contracts
to which Buyer has consented prior to the Possession Date.
(c) Within ninety (90) days after the Closing, Buyer will pay
Seller the Usable Film Payments.
(d) In the event the parties become aware of any items after
the Possession Date that should have been prorated on the Possession Date, the
parties agree that the appropriate party will pay the other party the
appropriate prorated amount.
2.05. Closing Date and Place. The Closing of the transactions
contemplated by this Agreement shall be effective as of the Effective Date.
The Closing shall be conducted by exchange of documents via telecopier and
physical transfer of documentation in escrow subject to each party's
performance hereunder. Subject to the expiration of the waiting period
required under the Hart-Scott-Rodino Act, the Closing Date shall be and take
place on June 23, 1995, or such other Friday as may be agreed upon by the
parties hereto.
2.06. Buyer's Performance at Closing. At Closing, Buyer shall:
(a) Pay and deliver by wire transfer to Plitt Theatres,
Inc., Bank of America, 1850 Gateway Boulevard, Concord, CA 94520, ABA -
121000358, Account $U.S. 1235801134 (DEPOSITORY/DISBURSEMENT) the amount set
forth in Section 2.02 (a).
(b) 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
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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.
(c) Pay fifty percent (50%) of any transfer, documentary stamp
tax, surtax, gross receipts, excise, title and sales and use tax.
(d) Pay Seller by wire transfer as aforesaid for Seller's
popcorn and drink syrup inventory located at the Theatres at the lesser of
Buyer's or Seller's cost.
(e) Pay Seller the amount of Seller's petty cash located at
the Theatres as shown on Schedule 2.06 (e).
(f) Deliver to Seller an assumption of liabilities under the
Leases and Continuing Contracts in form and substance satisfactory to Seller.
2.07. Seller's Performance at Closing. At Closing, Seller will
deliver to Buyer:
(a) In form satisfactory to Buyer, all warranty deeds, bills
of sale, assignments of licenses, permits and executory contracts, assignment
of leases, easements and rights of way accompanied by certain covenants and
endorsements as are necessary in order to effectively vest in Buyer good,
indefeasible and marketable title to the Assets 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 and
Permitted Title Exceptions.
(b) Actual possession and operating control of the Assets to
which Landlords' Consents have been obtained prior to Closing.
(c) A certificate of Seller, executed by an officer,
certifying that the execution and delivery of this Agreement by Seller and the
consummation by Seller of the transactions contemplated by this Agreement have
been duly and validly authorized by its Boards of Directors, 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 connection herewith.
Copies of all resolutions pertaining to such authorization shall be attached to
the certificate.
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(d) Any and all consents of third parties necessary for the
transfer and assignment of the Assets, including, but not limited to,
Landlords' Consents to the assignment of all leases of real property; except
for those Landlords' Consents referred to in Section 2.10.
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 Assets, 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 Assets and confirm the title of Buyer to the Assets. Further, after
Closing, should Seller be a necessary party in order for Buyer to exercise its
rights with respect to the Assets, Seller will take reasonable efforts, at
Buyer's expense, to assist Buyer therein.
(b) Pay any Canadian governmental taxes or other governmental
charges which may arise out of the transfer of the Assets, and pay Fifty
Percent (50%) of 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 Assets.
(c) For the period of eighteen (18) months following the
Closing Date, provide Buyer access to any operating records, accounting
records, correspondence, memoranda, and other records and data relating to the
ownership or operation of the Assets, which are in Seller's possession, and
assist Buyer in the preparation of any financial statements and/or completion
of any Audit of financial statements that may be required to meet SEC
Regulations. Seller has previously provided Buyer with the information listed
on Schedule 2.08 (c).
(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 expense, unless such prosecution or enforcement
is made necessary 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 Possession Date relating to the Assets; and
(f) Transfer or deliver to Buyer any and all cash
remittances or property Seller may receive in respect of the Assets
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and the payment, if any, to which Buyer shall be entitled pursuant to Section
2.04.
(g) Allow Buyer to use the Pacer equipment located in the
Theatres at no cost to Buyer until such time as Buyer replaces this equipment
with equipment of Buyer's choice, but in no event later than 10/31/95. Buyer
will ship the Pacer equipment to Seller upon replacement, and Buyer and Seller
shall each pay fifty percent (50%) of cost of shipping. Buyer agrees that it
shall maintain said equipment in its present condition, normal wear and tear
excepted. Buyer shall bear all risk of loss for said equipment until said
equipment is physically returned to Seller.
(h) On or before July 15, 1995, wire transfer to Carmike
Cinemas, Inc., Wachovia Bank, Atlanta, Georgia, ABA 061-000-010, Account No.
17-503-600, the Theatre Cash Flow of the Theatres for which the Landlord's
Consents have been received for the period from the Effective Date to the
Closing Date, and submit an accounting regarding same.
(i) For each Theatre for which Landlord's Consent has not
been received prior to June 23, 1995, which Seller continues to operate on
Buyer's behalf, within fourteen (14) days following the Possession Date for
said Theatre, Seller shall wire transfer to Buyer, pursuant to the wiring
instructions set forth in paragraph 2.08 (h), the Theatre Cash Flow from said
Theatre since the Effective Date, and deliver an accounting applicable thereto.
2.09. Buyer Does Not Assume Any of Seller's Liabilities or
Obligations. Seller, at Closing, will transfer all of the Assets 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 Assets as described on
Schedule 3.09 (b).
(b) Permitted Liens and Permitted Title Exceptions, and
(c) The post-closing prorated items included in Section 2.04.
Except as expressly set forth herein, Buyer is not assuming any obligations or
liabilities of Seller or of Seller's business or any liabilities attendant to
any of the Assets, whether known or unknown, liquidated or contingent.
2.10. Seller's Continued Operation of Theatres for Buyer's Account.
(a) The parties hereby acknowledge and agree that the Closing
which shall take place on the Closing Date will be effective on the Effective
Date. Accordingly, Seller hereby covenants and agrees that it shall continue
to operate the Theatres
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in the normal course of business consistent with its past practices, on behalf
of Buyer, and for Buyer's account, during the period between the Effective Date
and the Possession Date.
(b) In the event Seller has not received Landlord's Consent
for all the Theatres on or before the Closing Date, Seller shall continue to
operate, on behalf of Buyer, and for Buyer's account, the Theatres for which
Landlords' Consents have not been received, and Seller shall make every effort
to obtain the remaining Landlords' Consents as soon as possible, but in no
event later than August 31, 1995. In the event Seller has not obtained
Landlords' Consents for any Theatre on August 31, 1995, the Purchase Price
shall be adjusted (reduced) for any applicable Theatre by the value assigned to
that Theatre as shown on Schedule 2.02 (a), and the Theatre Cash Flow for any
such Theatre for the period from the Effective Date to August 31, 1995 shall be
for Seller's account.
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 eighteen (18) months from the
Closing Date, and shall be deemed to be independently relied upon by Buyer.
Provided, however, except as set forth on any Landlords' Consent, any
representation or warranty of which there is Buyer's Knowledge is untrue or
incorrect that is not raised at Closing shall be waived.
3.01. Legal Status. Plitt Theatres, Inc. and Plitt Southern Theatres,
Inc. are corporations duly organized, validly existing, and in good standing
under the laws of the State of Delaware. 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. Complete and accurate copies of the Articles of
Incorporation of Seller (certified by Seller) and the By-Laws of Seller
(certified by Seller) which have been or will be delivered to Buyer by Seller
prior to the Closing, and copies of the corporate minutes of Seller authorizing
this transaction which have been or will be made available to Buyer by Seller
for review prior to the Closing are true and complete as now in effect on the
date of this Agreement.
3.02. Cash Flow Data.
(a) Schedule 3.02 (a) contains cash flow information of the
Theatres for years ended 12/31/94, 12/31/93 and 12/31/92.
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(b) The cash flow 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.
3.03. Absence of Specified Changes. Since 12/31/94, there has not
been any:
(a) Transaction by Seller with respect to the Assets 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 Assets;
(c) Mortgage, pledge or other encumbrance of any of the
Assets, except for Permitted Liens;
(d) Sale, lease, abandonment or other disposition of any of
the Assets, excluding inventory, by Seller;
(e) To the best of Seller's Knowledge, labor dispute, strike,
work stoppage, or any other occurrence, event or condition of a similar nature
which materially adversely impacts the Assets;
(f) Amendment or termination of any contract, lease,
agreement or license included in the Assets to be assigned to Buyer in which
Seller is a party;
(g) Agreement by Seller to do any of the acts described in
this Section 3.03;
(h) To the extent of Seller's Knowledge, other occurrence,
event or condition of any character not disclosed in this Agreement, or any
Exhibit or Schedule hereof, that has a material adverse impact on the Assets,
or
(i) 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.
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,
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municipality, other local government or other subdivision or instrumentality of
the United States, or by any other taxing authority, that are due or payable by
the Seller, and all interest and penalties thereon, whether disputed or not,
which would result in the imposition of a lien, claim or encumbrance on the
Assets 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, 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 Assets or against the Buyer, and to the best of Seller's Knowledge 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 Assets 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 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, or any other party, 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 indebtedness, or other obligation by which any of the Assets may be bound
or affected, 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,
license, supply contract, commitment, or other agreement, instrument,
arrangement or obligation to which any of the Assets may be bound or affected,
or (iii) a violation of any order, writ, injunction or decree of any court,
administrative agency or governmental body, or (iv) an event which to the best
of Seller's Knowledge would result in the creation or imposition of any lien,
charge or encumbrance on any of the Assets.
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3.08. Personal Property.
(a) The Seller has good and marketable title to all personal
property mentioned in Schedule 3.08 (a) included in the Assets, 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 Assets is located on the
premises of the Theatres, and is set forth in said Schedule.
(b) All leases of personal property included in Assets used
or employed by the Seller are in full force and effect, and 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 consequence of
which, severally or in the aggregate, would have an adverse affect on the
business or financial condition of the Assets.
3.09. Real Property.
(a) Schedule 3.09 (a) contains a true and correct description
of all real property owned by Seller included in the Assets. Seller has good,
indefeasible and marketable title to said real property free and clear of all
mortgages, liens, charges and encumbrances, except for the Permitted Title
Exceptions and Permitted Liens.
(b) The documents described in Schedule 3.09 (b) contain a
true and correct description of all real property leased to the Seller included
in the Assets. Each of the leases included in the Assets disclosed in said
Schedule is in full force and effect, and, except as set forth on said
Schedule, 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 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, leased to or used by the Seller substantially conform in all
material respects to all applicable state and local laws, zoning and building
ordinances, and health and safety ordinances (excluding requirements of the
American Disabilities Act for existing Theatre properties constructed prior to
January 26, 1992), and the property is zoned for the various purposes for which
the real estate and improvements thereon are presently being used.
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3.10. Licenses, Permits and Trademarks. Schedule 3.10 lists all trade
names, trademarks, trade styles, service marks and copyrights currently used by
the Seller in the conduct of its business in the Theatres. The Seller has all
permits, licenses, franchises 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. The Seller has all non-governmental permits,
licenses, franchises and certificates in all trademarks, trade names, trade
styles, service marks and copyrights necessary for the conduct of its business
as presently conducted in the Theatres, all of which are now valid and in good
standing. The Seller has not received notice that its use of any such trade
names, trademarks, trade styles or service marks 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 Theatres. The properties
and business of the Seller, consisting of the Theatres, of an insurable nature
are insured to the extent and against such risks, as required by the terms of
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 Possession Date.
To the best of Seller's knowledge, Seller is not now, and on the Closing Date
will not be in default regarding the provisions of any such policy, and has not
and shall not have failed to give any notice or present any claim thereunder in
due and timely fashion.
3.12. Defaults. Except as set forth on Schedule 3.12, there is no
default or claim or purported or alleged default, or 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 obligation on the part of the Seller to be
performed under any material contract or agreement which materially adversely
affects the operation of the Assets, including, but not limited to, contracts
for the rental of motion pictures, 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, there are no
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
Assets is or may be subject, pending or to the best of Seller's Knowledge
threatened against or affecting the Seller and any of the Assets, at law, in
equity or before or by any federal, state, municipal or other governmental
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department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
3.14. Compliance with Laws. Except to the extent disclosed in
Schedule 3.14, and excluding requirements of the Americans with Disabilities
Act of 1990 for existing Theatre properties constructed prior to January 26,
1992, (i) the Seller has not been notified, nor is there any Seller's Knowledge
that it has failed to comply in any respect with, or is in default in any
respect under any laws, ordinances, requirements, regulations or orders
applicable to its operation of the Theatres; (ii) the Seller is not subject to
any judgment, order, writ, injunction or decree that adversely affects, or
might in the future reasonably be expected to adversely affect its operation of
the Theatres; (iii) the Seller is not now, and on the Possession Date will not
be in default concerning any 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, and there is no
investigation pending or, to Seller's Knowledge, threatened against or
affecting the Seller by any state or federal governmental agency, and there is
no investigation pending or threatened against or affecting the Seller by any
state or federal governmental agency, department or instrumentality that would
adversely affect its operation of the Theatres.
3.15. Brokers and Finders. 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) The Seller is not a party to and has no obligations under
any agreement, collective bargaining or otherwise, with any party regarding the
rates of pay or working conditions of any of the Theatre Level Employees of the
Seller, nor is obligated under any agreement to recognize or bargain with any
labor organization or union on behalf of any of said employees regarding the
operation of the Theatres, other than as shown on Schedule 3.16;
(b) Regarding Seller's operation of the Theatres, to the best
of Seller's knowledge, there is no organization activity among any of the
Seller's employees, and neither the Seller nor any of its officers, directors,
employees or agents has currently been charged or notified of or to the best of
Seller's Knowledge threatened with the charge of any unfair labor practice;
(c) Regarding the Seller's operation of the Theatres, the
Seller has not been notified (nor is there any
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Seller's Knowledge) that it has failed to comply with any applicable federal
and state laws and regulations concerning the employer/employee relationship,
and with any of its agreements relating to the employment of its Theatre Level
Employees including, without limitation, regulations or agreement provisions
relating to wages, bonuses, employment practices, hours of work, and the
payment of Social Security taxes. Regarding the Seller's operation of the
Theatres, the Seller is not liable for any unpaid wages, bonuses or commissions
or any tax, penalty, assessment or forfeiture for failure to comply with any of
the foregoing; and
(d) The Buyer shall not be liable for any contractually or
legally required severance payments or accrued and unpaid employee benefits,
including, but not limited to, pension and profit sharing plans, vacation pay,
sick pay, longevity bonuses, commissions or merit bonuses, and Seller shall
indemnify and hold Buyer harmless from any and all damages, costs and expenses
(including attorneys fees) associated therewith and accruing prior to Closing.
3.17. Contracts and Commitments.
(a) Schedule 3.17. contains a list of any of the following
contracts or commitments regarding the Seller's operation of the Theatres 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: (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 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 Assets depend or are materially affected; (ix) oral
or written agreements for the employment of any agents, finders, brokers,
booking agents, advertising agents or independent
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contractors involving payment by the Seller of salary, commissions or other
amounts under or in respect of such agreement.
(b) Each of the contracts listed in Schedule 3.17 or
described in this Section, but which is included in any other Schedule, is in
full force and effect, and 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.
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) The Theatres are subject to the screen advertising
agreements described on Schedule 3.17 (c), which are Continuing Contracts, and
which shall be honored by Buyer from and after the Closing Date.
(d) The Theatres are not subject to any credit card
acceptance agreements.
3.18. Condition of Property. All Assets are sold AS IS, WHERE IS,
provided, however, said Assets are considered adequate and usable for the
operation of the Theatres as the same are presently operated.
3.19. Employee Benefit Plans.
(a) Except as set forth on Schedule 3.19 (a), there are no
Theatre Level Employee benefit plans, as defined in Section 3 (3) of ERISA,
including employee pension benefit plans, as defined in Section 3 (2) of ERISA,
maintained currently or in the past by the Seller, or under which the Seller
has any present or future obligation or liability, or under which any employee
of the Seller has any present or future rights to benefits for which Buyer will
have any liability whatsoever.
(b) There are no welfare plans, other than as set forth on
Schedule 3.19 (b), as defined in Section 3 (l) of ERISA covering Theatre Level
Employees of the Seller.
3.20. Authority. 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.
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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 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, 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 information, whether provided orally or in writing, 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.
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. To the best of Seller's Knowledge, other
than ordinary cleaning agents, no hazardous substance (as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended) including, without limitation, asbestos, PCBs, and urea formaldehyde
foam insulation is or has been located, stored or incorporated in or on any of
the Assets, and Seller has complied with all federal, state and local statutes,
laws, ordinances, regulations and orders relating to environmental matters,
including, but not limited to, matters related to air pollution, water
pollution, noise control, on-site or off-site hazardous substance handling,
discharge, disposal, or recovery, toxic or hazardous substances or materials
(whether products or waste), asbestos, urea formaldehyde foam insulation and
PCBs. Further, the site of disposal of any such substance is identified on
Schedule 3.23 to this Agreement.
3.24. Benefit of Representations and Warranties. The Seller hereby
agrees that the benefits or other interests of Buyer in the representations and
warranties contained in this Article III, and in the rights to indemnification
under Articles IX of this Agreement, may be assigned by Buyer only to such
banks or other
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financial institutions as provide financing to Buyer in connection with Buyer's
acquisition hereunder, as well as to such banks or other financial institutions
as may be substituted for such original lenders or as may provide refinancing
of such indebtedness. To the extent that Buyer so assigns such benefits or
interests, the assignees shall be deemed to be third party beneficiaries of
such benefits and interests, and shall be bound by the terms and conditions of
this Agreement with respect to the assertion of such benefits and interest.
3.25. Discounts. Except as set forth on Schedule 3.25, there are not
outstanding any discount or promotional tickets, prepaid tickets or admission
passes or any other arrangements allowing the holder thereof to reduced or
free admission to any of the Theatres included in the Assets.
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
Possession Date. Except to the extent that the Buyer shall otherwise consent
in writing from the date hereof to the Possession Date, the Seller shall:
(a) Operate the Theatres substantially as presently operated,
and only in the ordinary course, and use its best 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 respect to the Theatres, consistent with prudent
business practices;
(b) Maintain all of the Theatres in normal operating order
and condition, reasonable wear 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 pay its
accounts payable in the ordinary course of business;
(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;
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(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 pertaining to the operation of the Theatres,
which may result in the imposition or attachment of any lien, required to be
filed by the Possession 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 Possession Date), and all
such returns applicable to periods prior to the Possession Date, filed after
the Possession Date, shall be prepared by the Seller consistent with its past
practices.
4.03. Access and Information. From the date hereof to the Possession
Date, Seller shall afford to the Buyer, its counsel, accountants and other
representatives, upon reasonable notice, free and full access to all the
offices, properties, books, contracts, commitments and records of the Seller
regarding the Theatres, and furnish such persons with all information,
(including financial and operating data) concerning the affairs 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 in their examination of such Seller's books and
records.
4.04. Notification of Changes. Between the date hereof and the
Possession Date, Seller shall promptly notify Buyer in writing of any adverse
change in the method of conducting the Seller's operations of the Theatres, any
damage to or loss of any property, or amount of property used in the operation
of the Theatres, or the institution of, or the threat of institution of legal
proceedings against the Seller regarding of affecting the operation of the
Theatres, or the status or conduct of legal proceedings, including
investigations by any governmental agency against the Seller which may affect
the operation of the Theatres.
4.05. Certain Acts Prohibited. Between the date hereof and the
Possession Date, Seller, without the prior written consent of Buyer, shall not:
(a) Incur any material liability in respect of the Assets, or
encumber or permit the encumbrance of the Assets, except for Permitted Liens;
(b) Dispose of or contract to dispose of any of the Assets;
except for replacements or substitutes in the ordinary course of business (but
will not sell any of the Theatres).
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(c) Enter into any agreement regarding the Theatres that is
not cancelable by the Seller without penalty upon notice of thirty (30) days or
less;
(d) Other than pay raises to new employees after ninety (90)
days of employment in the ordinary course of business, grant any increase in
rates of pay for Theatre Level Employees of the Theatres;
4.06. Insurance. From and after the date hereof and through the
Possession Date, the Seller will maintain all of its insurance policies
regarding the Theatres in effect as of the date hereof; and all property shall
be used, operated, maintained and repaired in a normal business manner, 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 Possession 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.
4.08. Compliance with Laws. At all times after the date hereof and
through the Possession Date, the Seller will comply with 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 Assets are
bound or otherwise, the Seller shall obtain any such consent prior to the
Possession Date. Specifically, Seller shall obtain any and all consents
required and necessary in order to validly and effectually transfer and assign
each of the leases of real property 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. In the event Seller has
obtained seventeen (17) of the twenty-five (25) Landlords' Consents for the
Theatres on or before the Closing Date, the Closing shall take place and Seller
shall continue to operate the Theatres for which Landlords' consents have not
been obtained for Buyer's account until said Consents are obtained and the
Theatre transferred to Buyer. Provided, however, Buyer shall not be required
to accept any first run Theatre located in a film zone which contains more than
one first run Theatre unless Landlord's Consent has been received for all first
run Theatres in said film zone. Neither party shall have any liability to the
other for damages in the event any third party consent is not obtained.
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4.10. No Shopping. Other than Cinemark USA, Inc., 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 Assets, 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, or any inquiry or contact 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 Assets represent a unique investment
opportunity.
4.11. Covenants Not to Compete. Seller shall enter into an agreement
with Buyer to be in substantially the form attached as Exhibit "B" hereto, and
satisfactory to Buyer, not to compete with Buyer in the motion picture
exhibition business in the cities set forth on Schedule 1.26 for a period of
three (3) years following the Closing. Excluded from said Covenant Not to
Compete shall be existing theatres which are not being transferred to Buyer and
are located in the cities set forth on Schedule 1.26, and Seller's new theatre
being constructed at Universal Studios in Orlando, Florida.
4.12. Interim Use of Seller's Signs. In recognition of the fact
that Buyer needs a limited time subsequent to the Closing Date ("Interim
Period") to install its own exterior signs on the Theatres, the exterior signs
of Seller shall remain on the Theatres until replaced by Buyer. During the
Interim Period, Buyer shall take good care of Seller's signs and indemnify and
save Seller harmless from any damage thereto. The foregoing is done solely as
an accommodation to Buyer, and in no event shall Buyer hold out to the public
that any of the Theatres are Seller's theatres following the Closing Date, nor
shall Buyer illuminate the Seller's tradename on the signs. Buyer shall use
its best efforts to remove Seller's signs in connection with Buyer's
installation of its own signs within six (6) months subsequent to the Closing
Date, and Buyer shall render said signs unusable. Seller shall deliver to
Buyer at Closing a license for use of said signs and the name Septum.
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ARTICLE V
CONDITIONS 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 on or prior to the Closing Date
and/or the Possession 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. On the Closing Date such representations
and warranties will not contain, any untrue statement of a material fact, or
omit to state any material fact necessary in order to make the statements
contained therein not misleading, and all statements, information,
representations and warranties of Seller to Buyer contained herein and in the
Schedules, Exhibits and certificates delivered pursuant thereto shall be true
and complete on and as of the Closing Date as though made on that date. 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,
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, provided, however, except as set forth on any
Landlords' consent, any representation or warranty of which there is Buyer's
Knowledge that is untrue or incorrect that is not raised at closing shall be
waived. Buyer shall be entitled to rely upon the accuracy of all such
information, whether provided orally or in writing, in the preparation of its
filings with the Securities and Exchange Commission. Any inspection or audit,
including the audit of the inventories, properties, financial condition or
other matters relating to the Seller and its business conducted pursuant to
this Agreement shall in no way limit, affect or impair the ability of Buyer to
rely upon the representations, warranties, covenants and agreements of the
Seller set forth herein.
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
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business generally, there shall not have been any material adverse change in
the operation of the Theatres comprising the Assets between 12/31/94 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. Litigation. No suit shall, at the Closing Date, be pending or
threatened before any court, governmental agency, 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 Theatres not disclosed herein, or in the Schedules or Exhibits
delivered hereto.
5.06. Condition of Property and Risk of Loss. On the Possession
Date, all of the Assets including equipment, furniture and fixtures located in
the Theatres shall be substantially in the same condition as at the close of
business on the date hereof except for:
(a) Ordinary use and wear thereof;
(b) Changes occurring in the ordinary course of business
between the date hereof and the Possession Date; and
(c) If, on or prior to the Closing Date, all or a substantial
part of the Assets located at any Theatre (an "Affected Theatre"), are
destroyed or damaged by fire or any other casualty, or are expropriated or
otherwise seized by governmental or other lawful authority, the Seller shall
immediately advise Buyer thereof in writing, and Buyer shall have the option in
respect only of said Affected Theatre, exercisable by notice in writing within
seven (7) days of receipt of notice from Seller as aforesaid:
(i) To complete the transaction contemplated herein
without reduction of the Purchase Price, in which event all proceeds of
insurance plus any deductible payable thereon, or compensation for
appropriation, expropriation, or seizure shall be payable to Buyer, and all
right of claim of Seller to any such amounts not paid by the Closing Date shall
be assigned to Buyer; or
(ii) To refuse to complete the transaction contemplated
herein with respect to the Affected Theatre by notice to Seller, and, in such
event, the Purchase Price shall be reduced
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for said Theatre by the value assigned to that Theatre as shown on Schedule
2.02 (a).
If the aforedescribed seven (7) day period extends beyond
the Closing Date, then the Closing Date for said Affected Theatre shall be
extended, at the option of the Buyer, to the date which is two (2) business
days after the expiration of the aforesaid seven (7) day period.
5.07. 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 Theatres are 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 interest or encumbrances not disclosed in a Schedule or
satisfied, or applicable Assets released, on or prior to the Closing Date.
Buyer shall, at Buyer's expense, cause an examination to be made of the
Seller's title to the leased premises 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 Seller, Commonwealth Land Title
Insurance Seller, 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.
5.08. Consents. Except for the Landlords' Consents referred to in
Section 2.10, and any oral consents accepted by Buyer at Closing, 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 "B".
5.09. Governmental Approvals. 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.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS OF BUYER
The Buyer represents and warrants to the Seller as follows:
6.01. Organization in Good Standing. The Buyer is a corporation duly
organized and existing, and in good standing under
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the laws of the State of Delaware, and has full corporate power to carry on its
businesses, to own and operate its properties and assets, and to consummate the
transactions contemplated by this Agreement.
6.02. 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.
6.03. 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.
6.04. Governmental Notifications and Consents. Except as set forth on
Schedule 6.04, no material 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.
6.05. Buyer's Non-Disclosure of Seller's Confidential Information. In
the event that the transaction contemplated herein is not completed, Buyer
agrees that:
(a) It will not, directly or indirectly, use for its own
purposes any information, trade secrets or confidential data relating to the
Theatres (including, without limitation, information and data relating to the
Seller's operations or the methods by which Seller conducts its business)
discovered or acquired by it, its representatives, or any of them, as a result
of the Seller making available any information, books, accounts, records or
other data and information relating to the Theatres;
(b) It will not disclose, divulge or communicate any such
information, trade secrets or confidential data so
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discovered or acquired to any other person, firm or corporation; and
(c) It will forthwith return to Seller any documents
delivered pursuant to this Agreement, and any copies made thereof. Prior to
permitting Buyer's representatives or the Buyer to investigate the properties,
books, contracts, commitments and records of the Theatres, Seller shall be
entitled to receive a covenant similar to the covenant contained in this
section from such representatives.
Buyer shall not be liable for disclosure of any such
information, trade secrets or confidential data upon the occurrence of one or
more of the following events, and shall promptly advise the Seller of the
occurrence of such event: (i) Such information, trade secrets or confidential
data is or becomes publicly available other than through a breach of this
Agreement; (ii) such information, trade secrets or confidential data is
subsequently lawfully obtained by the Buyer from a third party without breach
of this Agreement by the Buyer as shown by documentation sufficient to
establish the third party as a legitimate source thereof; or (iii) Seller has
provided its prior written consent for such disclosure by the Buyer.
ARTICLE VII
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:
7.01. 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.
7.02. 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 and Secretary of the Buyer to such effect.
7.03. 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
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claim shall be asserted against the Buyer regarding the Theatres not disclosed
herein, or in the Schedules or Exhibits delivered hereto.
7.04. 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.
7.05. Governmental Approvals. 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.
ARTICLE VIII
TERMINATION
8.01. Right of Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing Date:
(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 VI and VII 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
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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.
(e) By either the Boards of Directors of Buyer or Seller if
the waiting period applicable to the transaction contemplated hereby under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall not have expired or
been terminated prior to 8/31/95.
8.02. 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 10.08
of this Agreement.
8.03. 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 IX
AGREEMENTS TO INDEMNIFY
9.01. Seller's Agreement to Indemnify. Subject to the terms and
conditions of this Article IX, each party (the "Indemnifying Party") agrees to
indemnify, defend and hold the other party (the "Indemnified Party) harmless
from and against all claims asserted against, imposed upon or incurred by the
other party by reason of, or resulting from:
(a) A breach or non-fulfillment of any warranty, or any
inaccuracy of any representation contained in, or made pursuant to this
Agreement, or
(b) A breach or non-fulfillment of any covenant or agreement,
other than a representation or warranty, contained in or made pursuant to this
Agreement; or
(c) Any undisclosed liability.
9.02. Conditions of Indemnification. Obligations and liabilities of
the Indemnifying Party hereunder with respect to claims shall be subject to the
following terms and conditions:
(a) The Indemnified Party shall give the Indemnifying Party
notice of any 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
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Indemnified Party receives such notice), and the Indemnifying Party will
undertake the defense thereof by representatives of their own choosing
satisfactory to Indemnified Party. 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.
(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.
9.03. 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.
9.04. Limitations. The Indemnifying Party's obligation to indemnify
the Indemnified Party as provided in Section 9.01 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 eighteen
(18) months after the Closing Date.
ARTICLE X
MISCELLANEOUS
10.01. Survival of Representations. All statements contained in any
Schedule, document, certificate or other instrument delivered by or on behalf
of the Buyer or the Seller 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. The
representations, warranties and agreements made by the Buyer and the Seller
herein shall survive consummation of the transactions contemplated hereby for
eighteen (18) 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. Provided, however, any representation or warranty which Buyer knows to
be untrue or incorrect not raised at Closing shall be waived.
10.02. Assignment. This Agreement shall not be assignable by either
party hereto without the written consent of the other,
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<PAGE> 30
and shall inure to the benefit of and be binding upon the parties hereto and
their respective successors, assignees and legal representatives.
10.03. 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.
10.04. Construction. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia, USA.
10.05. Amendment. This Agreement may be amended, supplemented or
interpreted at any time by written instrument executed by the parties hereto.
10.06. Expenses; Brokers and Finders Fees. Seller and Buyer agree
that 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.
10.07. 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 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 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 Assets. The parties 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.
10.08. 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 or Canadian Registered
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
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<PAGE> 31
via telecopier to the parties at the telecopier number set forth below:
BUYER: John O. Barwick, III
Carmike Cinemas, Inc.
1301 - 1st Avenue
Columbus, GA 31901
TELECOPIER - 706/576-3419
With a copy to: F. Lee Champion, III
Champion & Champion
1030 Second Avenue
Columbus, GA 31901
TELECOPIER - 706/324-0470
SELLER: Plitt Theatres, Inc.
1303 Yonge Street
Toronto, Canada M4T2Y9
TELECOPIER - 416/323-6677
ATTENTION: Ellis Jacob
With a copy to: Michael Herman
Plitt Theatres, Inc.
1303 Yonge Street
Toronto, Canada M4T2Y9
TELECOPIER - 416/323-6677
and Kitchens, Kelley & Gaynes, P. C.
ATTN: Gary Shmerling
11 Piedmont Center, N.E., # 900
3495 Piedmont Road
Atlanta, GA 30305-1753
TELEPHONE - 404/237-4100
TELECOPIER - 404/364-0126
10.09. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy. Other than election to terminate this Agreement, the election of any
one remedy by a party hereto shall not constitute a waiver of the right to
pursue other available remedies.
10.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an
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<PAGE> 32
original, but all of which together shall constitute one and the same
instrument.
10.11. 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.
10.12. 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.
10.13. 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.
10.14. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration 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.
10.15. 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.
10.16. Peachtree City Lease. The parties hereto agree to cooperate
regarding negotiation of a new lease for the West Park Walk Theatre, Peachtree
City, Georgia. In the event said new lease results in an increase in the rent
or other charges payable thereunder, the Purchase Price shall be adjusted as
set forth on Schedule 10.16.
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10.17. Bulk Sales. Buyer hereby waives Seller's compliance with laws
applicable to Bulk Sales or Transfers, and Seller hereby indemnifies Buyer from
any loss attributable thereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, on the day and year first above written.
SELLER:
PLITT THEATRES, INC.
BY:
---------------------------
Title: Executive V.P.
ATTEST:
-----------------------
Title: Executive V.P.
(Corporate Seal)
PLITT SOUTHERN THEATRES, INC.
BY:
---------------------------
Title: Executive V.P.
ATTEST:
-----------------------
Title: Executive V.P.
(Corporate Seal)
Signed, sealed and delivered
by SELLER in the presence of:
----------------------------
Witness
Carol Anne Levine
----------------------------
Notary Public
CAROL ANN LEVINE, Notary Public, Municipality of
Metropolitan Toronto, limited to the attestation of
Instruments and the taking of affidavits, for Cineplex
Odeon Corporation.
Expires January 18, 1996.
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<PAGE> 34
BUYER:
CARMIKE CINEMAS, INC.
BY: John O. Barwick, III
---------------------------
John O. Barwick, III
Vice President-Finance
(Corporate Seal)
Signed, sealed and delivered
by BUYER in the presence of:
-----------------------------
Witness
Linda Day
-----------------------------
Notary Public
LINDA DAY
--NOTARY PUBLIC--
Muscogee County, Georgia
OFFICIAL SEAL
My Commission Expires June 16, 1995
34
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