EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated April 19, 2005, by and
among, CARMIKE CINEMAS, INC., a Delaware corporation and/or any one or more
designated affiliates thereof as provided in Section 15.1.(a) below ("Buyer"),
and each of the shareholders of Company as set forth as signatories to this
Agreement (individually "Shareholder" and together, "Shareholders").
RECITALS
A. Xxxxxx X. Xxxxxxxxx Corporation, a Delaware corporation,
("Company") is an owner/lessee and operator of multi-screen motion
picture theatres in Illinois, Indiana, Michigan and Wisconsin (the
"Business").
B. Company owns all the issued and outstanding shares of capital
stock of GKC MICHIGAN THEATRES, INC., a Delaware corporation, GKC
THEATRES, INC. a Delaware corporation and GKC INDIANA THEATRES, INC,
an Indiana corporation ( each individually a "Subsidiary" and
collectively the "Subsidiaries").
C. Company's facilities include seventeen (17) owned and thirteen
(13) leased multi-screen motion picture theatres, and certain
undeveloped real estate (each a "Property" and together
"Properties").
D. Shareholders own all of the issued and outstanding shares
("Shares") of capital stock of Company, including all rights thereto
and interests therein.
E. Buyer, an owner/operator of motion picture theatres, desires to
purchase the Shares from Shareholders and Shareholders desire to
sell the Shares to Buyer, upon the terms and conditions herein set
forth.
F. On March 16, 2005, Buyer and Shareholders entered into a
non-binding letter of intent ("Letter of Intent") that set forth, on
a preliminary, non-binding basis, the major terms and conditions of
the transactions contemplated by this Agreement. The terms and
conditions hereof shall govern any conflict between the Letter of
Intent and this Agreement.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, and agreements
hereinafter set forth, and intending to be legally bound hereby, the
parties hereto agree as follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, on the
Closing Date, in consideration of the "Purchase Price," Shareholders shall
sell, convey, transfer, assign and deliver to Buyer and Buyer shall
purchase, accept and acquire from Shareholders, all right, title and
interest whatsoever in and to all of the Shares, which constitute all of
the equity interests in Company, other than "Treasury Stock," free and
clear of all Liens.
2. PURCHASE PRICE
2.1 Purchase Price. The purchase price ("Purchase Price") payable
for the Shares shall be Sixty-Six Million Dollars ($66,000,000.00):
2.1.(a) minus the amount of the Company's Debt Obligations as of
"Closing;"
2.1.(b) plus/minus the Final Closing Adjustment determined in accordance
with Section 2.3.(c).
2.2 Payment of Purchase Price. The Purchase Price shall be paid by
Buyer as follows:
2.2.(a) Xxxxxxx Money Deposit.
(i) Deposit and Investment of Xxxxxxx Money Deposit. On
the date hereof, Buyer shall pay to the Escrowee (as
hereinafter defined) an xxxxxxx money deposit equal to Two
Hundred Fifty Thousand Dollars ($250,000.00)(including
interest, the "Xxxxxxx Money Deposit") to be held pursuant and
subject to the terms and conditions of this Agreement and the
Xxxxxxx Money Escrow Agreement(as hereinafter defined). The
Xxxxxxx Money Deposit shall be invested in an interest bearing
money market account (or such other investments as Buyer and
Shareholders may choose in their discretion), with interest
earned thereon accruing to the benefit of Buyer.
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(ii) Payment of Xxxxxxx Money Deposit to Shareholders at
Closing. At the Closing, as part of the Purchase Price (and
not in addition thereto), the Xxxxxxx Money Deposit shall be
delivered to Shareholders and credited against the Purchase
Price. In the event of a termination of this Agreement, the
Xxxxxxx Money Deposit will either be returned to Buyer or
delivered to Shareholders as provided for in Section 11 and
pursuant and subject to the Xxxxxxx Money Escrow Agreement.
2.2.(b) At the Closing, Buyer shall deliver to the Escrowee of the
Closing Escrow Agreement in cash the following sums:
(i) Cash to Fund A of Closing Escrow Agreement. One
Million Dollars ($1,000,000.00) as Fund A to be held for 120
days from the Closing Date, subject to, and disbursed as
provided in this Agreement and the closing escrow agreement a
copy of which is attached hereto as Exhibit A and made a part
hereof (the "Closing Escrow Agreement"). Any funds remaining
in Fund A 120 days following Closing Date, (as hereinafter
defined) that are not being contested by Buyer shall be paid
immediately over to Shareholders, together with all accrued
interest thereon.
(ii) Cash to Fund B of Closing Escrow Agreement. Two
Million TWO HUNDRED THOUSAND Dollars ($2,200,000.00) as Fund B
to be held for eighteen (18) months from the Closing Date,
subject to, and disbursed as provided in this Agreement and
the Closing Escrow Agreement. Any funds remaining in Fund B at
the expiration of eighteen (18) months from the Closing Date
that are not being contested by Buyer, shall be paid
immediately over to Shareholders, together with all accrued
interest thereon.
2.2.(c) Cash to Shareholders. At the Closing, Buyer shall deliver to
Shareholders in cash ("Closing Cash Payment") Sixty-Two Million FIVE
Hundred Fifty Thousand Dollars ($62,550,000.00):
(1) minus the amount of the Company's Debt Obligations
as of Closing;
(ii) plus/minus the Estimated Closing Adjustment
determined in accordance with Section 2.3.(b).
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2.2.(d) Post-Closing Adjustment. Within three (3) Business Days
following determination of the Final Closing Adjustment pursuant to
Section 2.3.(c), either the Shareholders shall pay to Buyer or Buyer shall
pay to Shareholders, as appropriate, an amount equal to the difference
between the Final Closing Adjustment and the Estimated Closing Adjustment,
the payment of which on Shareholders' part is secured by Fund A of said
Closing Escrow Agreement.
2.2.(e) Method of Payment. All cash payments under this Section 2.2
shall be made by wire transfer of immediately available funds to an
account designated by the recipient. All payments of the Purchase Price,
including any adjustments thereto, are to be made for pro rata
distribution among Shareholders in accordance with their respective
shareholdings in Company as shown on distribution and wiring instructions
delivered to Buyer prior to Closing.
2.3 Determination of Closing Adjustment.
2.3.(a) Definition of Closing Adjustment. The term "Closing
Adjustment" for the purpose of Section 2.1.(b) and 2.2.(c)(ii) shall mean
as of the Effective Time, as shown on the Company's Consolidated Balance
Statement :(i) the sum of all of the Company's cash, cash equivalents,
prepaid expenses, concession inventory, supply inventory, and accounts
receivable (together called "Total Current Assets") plus "Other Assets"
which consist of Deferred Tax Assets, minus (ii) the sum of all of the
Company's Current Liabilities and Deferred Liabilities which consist of
Deferred Tax Liabilities (including all normally prorated items relating
to the period prior to the Closing, including, without limitation, all
Taxes and assessments, rents, and utilities and all fees associated with
Licenses and Permits and registrations), all as determined in accordance
with generally accepted accounting principles for the movie theater
industry as consistently applied by the Company in its financial
statements. The remainder amount to the extent Section 2.3.(a)(i) exceeds
Section 2.3.(a)(ii) shall be a plus for the purposes of Section 2.1.(b)
and 2.2.(c)(ii). If Section 2.3.(a)(ii) exceeds Section 2.3.(a)(i), then
the difference is a minus for the purposes of Section 2.1.(b) and
2.2.(c)(ii).
2.3.(b) Estimated Closing Adjustment. For purposes of determining
the Closing Cash Payment payable by Buyer at the Closing, prior to the
Closing Date, Shareholders shall, in consultation with Company and based
on the Company's financial statements, prepare and deliver to Buyer the
Estimated Closing Statement, which shall include an estimated calculation
of the Closing Adjustment as of the Effective Time (the "Estimated Closing
Adjustment"). In the event Buyer shall object to any of the information
set forth on the Estimated Closing Statement including the Estimated
Closing Adjustment the parties shall negotiate in good faith and agree on
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appropriate adjustments so that such Estimated Closing Statement and the
Estimated Closing Adjustment shall reflect a reasonable, good faith
estimate of the Final Closing Statement and Final Closing Adjustment. The
Closing Adjustment, as finally determined by the parties pursuant to this
subsection 2.3.(b) is herein referred to as the "Estimated Closing
Adjustment."
2.3.(c) Final Closing Adjustment. On or before Ninety (90)
days after the Closing Date, Buyer shall prepare and deliver to
Shareholders the Final Closing Adjustment Statement and Balance
Sheet together with its calculation ("Buyer's Calculation") of the
Final Closing Adjustment based thereon as of the Effective Time.
Shareholders may dispute Buyer's Calculation; provided, however,
that Shareholders shall notify Buyer in writing of the disputed
amount, and the basis of such dispute, within fifteen (15) Business
Days of Shareholders' receipt of the Final Closing Adjustment
Statement and Balance Sheet. In the event of a dispute with respect
to any part of Buyer's Calculation, Buyer and Shareholders shall
attempt to mutually, and in good faith, reconcile their differences.
If Buyer and Shareholders are unable to reach a resolution of such
differences within thirty (30) days of receipt of Shareholders'
written notice of dispute to Buyer, Shareholders and Buyer shall
submit the amounts remaining in dispute for determination and
resolution to the Independent Accounting Firm, who shall, acting as
experts and not as arbitrators, be instructed to determine and
report to the parties, within thirty (30) days after such
submission, upon such remaining disputed amounts, and such report
shall be final, binding and conclusive on the parties hereto with
respect thereto. Any part of Buyer's Calculation (i) that is not
disputed, or (ii) that was initially disputed by Shareholders and
that is subsequently mutually agreed to in writing by Shareholders
and Buyer, or (iii) that is finally determined by the Independent
Accounting Firm; shall be deemed undisputed with regard to the
"Final Closing Adjustment." The fees and disbursements of the
Independent Accounting Firm shall be allocated equally between Buyer
and Shareholders.
3. DUE DILIGENCE
3.1 Delivery of Due Diligence Materials. Upon the date of execution
and delivery of this Agreement, Company and Shareholders shall make
available to Buyer at Company's corporate offices all of the items listed
on Exhibit B ("Due Diligence Materials"). During the "Due Diligence
Period"( as hereinafter defined) and thereafter through and including
Closing, Shareholders shall cause Company to provide to Buyer, its
counsel, accountants and other representatives (i) full access to all of
the Due Diligence Materials, Properties, books, records, contracts
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and documents of Company for the purpose of such inspection, investigation
and testing as Buyer deems appropriate (and Company shall furnish or cause
to be furnished to Buyer and its representatives all information with
respect to the Business and affairs of Company as Buyer may reasonably
request); (ii) access to all employees, agents and representatives for the
purposes of such meetings and communications as Buyer reasonably desires;
and (iii) access to all vendors, customers and others having business
dealings with Company; Buyer agreeing that such access and Due Diligence
Materials are proprietary information of Company and must not be disclosed
by Buyer unless and until the transaction contemplated by this Agreement
is closed. In the interim, Buyer will use its best efforts to keep
strictly confidential the nature and progress of negotiations and
discussions between the parties. Buyer shall complete its due diligence
investigation of the Exhibit B items within thirty (30) days following the
date hereof ("Due Diligence Period").
3.2 Buyer's Due Diligence
3.2.(a) Due Diligence. Upon execution and delivery hereof, Buyer shall
conduct its due diligence investigation with respect to the Company including,
but not limited to, the Business, financial, legal, operational, customer,
worker's compensation, employee and real estate due diligence, with results
satisfactory to Buyer, in its sole discretion. Notwithstanding anything in this
Agreement to the contrary, the obligations of Buyer to consummate any and all
transactions contemplated by this Agreement are subject to and conditioned upon
the satisfaction of the conditions set forth in this Subsection 3.2, such
conditions being conditions precedent to Closing, on or prior to the date that
is thirty (30) days following the execution of this Agreement; however, the
foregoing limitations shall not apply to any matters that should have been
disclosed to Buyer by Shareholders prior to the expiration of such thirty (30)
day period, which arise after the expiration of such thirty (30) day period, or
with respect to which Shareholders first receive notice of or otherwise become
aware of after the expiration of such thirty (30) day period.
3.2.(b) Notice. In the event Buyer desires to terminate this Agreement,
Buyer shall give written notice to Shareholders within the thirty (30) day Due
Diligence Period that Buyer elects to terminate this Agreement and the Xxxxxxx
Money Deposit shall be transferred to Shareholders pursuant to Section 11.2 (a)
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4. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders, jointly and severally, make the following
representations and warranties to Buyer, for themselves, each of which is
true and correct on the date hereof and shall remain true and correct to
and including the Closing Date,
4.1 Corporate.
4.1.(a) Organization. Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.1.(b) Corporate Power. Company has all requisite corporate power and
authority to own, operate, use and lease its Properties and assets and to carry
on the Business as and where such is now being conducted.
4.1.(c) Qualification. Company is duly licensed or qualified to do
business as a foreign corporation, and is in good standing, in each jurisdiction
wherein the situs of the Properties owned or leased by it, or the nature of the
Business, makes such licensing or qualification necessary including, without
limitation, the states of Wisconsin, Michigan, Indiana and Illinois.
4.1.(d) Subsidiaries. Schedule 4.1(d) sets forth the name, jurisdiction
of incorporation, capitalization, ownership and officers and directors of each
corporation in which Company has a direct or indirect equity interest (each, a
"Subsidiary") and the jurisdictions in which each Subsidiary is qualified or
licensed to do business as a foreign corporation. Except as listed in Schedule
4.1.(d), Company does not own, directly or indirectly, any capital stock or
other equity securities or interests of any corporation or have any direct or
indirect equity or other ownership interest in any other entity or business. All
of the outstanding shares of capital stock or other equity securities or
interests of each Subsidiary owned by Company are free and clear of any Lien and
are validly issued, fully paid and nonassessable, except as listed on Schedule
4.1.(d). Each Subsidiary (x) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, (y) has full
corporate power and authority to carry on its business as it is now being
conducted and to own and lease the properties and assets it now owns and leases,
and (z) is in good standing and is duly qualified or licensed to do business as
a foreign corporation in each of the jurisdictions listed opposite the name of
such Subsidiary in Schedule 4.1.(d), which are the only jurisdictions in which
such Subsidiary is required to be so qualified or licensed. The copies of the
"Certificate of Incorporation and By-Laws" of each Subsidiary, including
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any amendments thereto, all of which have been heretofore delivered by
Shareholders to Buyer, are true, correct and complete copies of such instruments
as presently in effect. The corporate minute book and stock records of each
Subsidiary all of which have been heretofore furnished to Buyer for inspection,
are true, correct and complete and accurately reflect all material corporate
action taken by such Subsidiary.
4.1.(e) Corporate Documents, etc. The copies of the Certificate of
Incorporation and By-Laws of Company, including any amendments thereto, all of
which have been heretofore delivered by Shareholders to Buyer, are true, correct
and complete copies of such instruments as presently in effect. The corporate
minute book and stock records of Company which will be furnished to Buyer for
inspection, are true, correct and complete and accurately reflect all material
corporate action taken by Company.
4.1.(f)Capitalization of Company and Subsidiaries. The authorized capital
stock of Company consists entirely of 50,000 shares of voting common stock and
54,000 shares of non-voting common stock, no par value. All issued and
outstanding capital stock, being 23,451 Shares, is now and will be on the
Closing Date all owned of record and beneficially by Shareholders in the
respective numbers set forth in Schedule 4.1.(f). All such Shares are validly
issued, fully paid and nonassessable. Additionally, there is issued common stock
held by the Company as "Treasury Stock," consisting of 200 shares of voting
common stock and 2,949 shares of nonvoting common stock. There are no
outstanding warrants, options or convertible securities.
4.2 Shareholders.
4.2.(a) Power. Each Shareholder has full power, legal right and authority
to enter into, execute and deliver this Agreement and the other agreements,
instruments and documents contemplated hereby to be executed by a Shareholder
("Ancillary Instrument(s)"), and to carry out the transactions contemplated
hereby and thereby.
4.2.(b) Validity. This Agreement has been duly and validly executed and
delivered by each Shareholder and is, and when executed and delivered each
Ancillary Instrument will be, the legal, valid and binding obligation of such
Shareholder, enforceable in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
4.2.(c) Title. Each Shareholder has, and at Closing Buyer will receive,
good and marketable title to the Shares to be sold by such Shareholder
hereunder, free and
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clear of all Liens including, without limitation, voting trusts or agreements,
proxies, marital or community property interests.
4.3 No Violation. The execution and delivery of this Agreement or
the Ancillary Instruments and the consummation by Company and Shareholders
of the transactions contemplated hereby and thereby (a) will not violate
any Law or any Order of any Government Entities, (b) except for applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
("HSR Act"), will not require any authorization, consent, approval,
exemption or other action by or notice to any Government Entity
(including, without limitation, under any "plant-closing" or similar law),
or (c) subject to obtaining the consents referred to in Section 6.6, will
not violate or conflict with, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
nor will it result in the termination of, or accelerate the performance
required by, or result in the creation of any Lien upon any of the assets
of Company (or the Shares) under, any term or provision of the Certificate
of Incorporation or By-Laws of Company or of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or
character to which Company or any Shareholder is a party or by which
Company or any Shareholder or any of its or their assets or Properties may
be bound or affected.
4.4 Financial Statements. Included as Schedule 4.4 are true and
complete copies of the financial statements( the "Financial Statements")
of Company consisting of (i) audited balance sheets of Company as of
December 31, 2004, 2003, 2002, 2001 and 2000, and the related audited
statements of income and cash flows for the calendar years then ended
(including the notes contained therein or annexed thereto), which audited
financial statements have been reported on, and are accompanied by, the
signed, unqualified audit opinions of the independent auditors for Company
for such years, and (ii) an unaudited balance sheet of Company as of
December 31, 2004 ("Recent Balance Sheet"), and the related unaudited
statements of income and cash flows for the calendar year then ended and
for the corresponding period of the prior year. The financial statements
of Company as of December 31, 2004 will be audited and attached to
Schedule 4.4 by the Closing. All of such financial statements (including
all notes and schedules contained therein or annexed thereto) are true,
complete and accurate, have been prepared in accordance with "GAAP"
applied on a consistent basis, have been prepared in accordance with the
books and records of Company, and fairly present, in accordance with GAAP
for the movie theatre industry as consistently applied by the Company in
its financial statements, the assets, liabilities and financial
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position, the results of operations and cash flows of Company as of the
dates and for the years and periods indicated.
4.5 Tax Matters.
4.5.(a) Provision For Taxes. As of the date of the Recent Balance Sheet,
the unpaid Taxes of Company and the Subsidiaries did not exceed the reserve for
Tax liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the Recent Balance
Sheet. The unpaid Taxes of Company and the Subsidiaries do not exceed such
reserve for Tax liability as adjusted for the passage of time through the end of
the day prior to the Closing Date in accordance with the past custom and
practice of the Company and the Subsidiaries in filing its Tax returns. Since
the date of the Recent Balance Sheet, neither Company nor any Subsidiary has
incurred any liability for Taxes arising from any extraordinary gains or losses
outside the ordinary course of business consistent with past custom and practice
of Company. Company pays estimated tax payments on a quarterly basis based on
prior years taxable income. For purposes of the Balance Sheet and Income
Statement, Company on a monthly basis records an estimated tax expense for the
current year which may differ from the actual tax expense for income tax
purposes. At the end of the year, Company makes an adjustment to reconcile the
income tax expense and reflect the appropriate tax liability. Company will
continue to make estimated tax payments on a quarterly basis and the tax
liability will be adjusted to reflect the proper amount of tax due upon final
closing.
4.5.(b) Tax Returns Filed. All Tax returns required to be filed on or
before the Closing Date, including the 2004 consolidated return, which is on
extension and will be filed by the Closing Date, by or on behalf of Company and
the Subsidiaries have been timely filed. All such Tax returns were, when filed,
true, complete and accurate in all respects, and the Taxes shown as due thereon
were paid or adequately accrued. Company has heretofore delivered to Buyer
true, complete and accurate copies of all Tax returns filed by each Company for
Tax periods ending on or after January 1, 2000. Company has duly withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, shareholder, independent
contractor or other third-party. There are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon any Property or other asset of
Company.
4.5.(c) Tax Audits. Schedule 4.5.(c) indicates those Tax returns of
Company for Tax periods ending on or after January 1, 2000 that have been
audited by the Internal Revenue Service or by any other Tax authority. Except as
set forth in Schedule 4.5.(c) and specifically disclosed or fully reflected in
the Recent Balance Sheet or in the
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Estimated Closing Adjustment Statement there are no :(i) outstanding notices of
underpayment of taxes or other deficiencies, or notice of proposed adjustments;
(ii) requests for information relating to taxes; or (iii) notices indicating an
intent to commence an audit. Company has delivered to Buyer true, complete and
accurate copies of all examination reports. No claim has been made by a Tax
authority in a jurisdiction where Company has not filed Tax returns that Company
is or may be subject to taxation by that jurisdiction. Except as set forth in
Schedule 4.5.(c), Company has not waived any statute of limitations.
4.5.(d) No Requirement to Withhold under Section 1445. Neither Company
nor any Shareholder is a "foreign person," "foreign corporation," "foreign
partnership," "foreign trust" or "foreign estate" within the meaning of Section
1445 of the Code.
4.5.(e) Certain Pre-Closing Date Transactions. Neither Company nor any
Subsidiary will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any Tax period (or portion thereof)
ending after the Closing Date as a result of any: (i) change in method of
accounting for a Tax period ending on or prior to the Closing Date under Section
481(c) of the Code (or any corresponding or similar provision of state, local or
foreign Tax law); (ii) "closing agreement" as described in Section 7121 of the
Code (or any correspondence or similar provision of state, local, or foreign Tax
law) executed on or prior to the Closing date; (iii) installment sale or "open
transaction" disposition made on or prior to the Closing Date; or (iv) prepaid
amount received on or prior to the Closing Date.
4.5.(f)Other. Since January 1, 2000, Neither Company nor any Subsidiary
has (i) filed any consent or agreement under Section 341(f) of the Code, (ii)
applied for any Tax ruling, (iii) entered into a closing agreement or advance
pricing agreement with any Tax authority, (iv) filed an election under Section
338(g) or Section 338(h)(10) of the Code (or has taken any action that would
result in any income Tax liability to Company. Neither Company nor any
Subsidiary has as a result of a deemed election within the meaning of Section
338(e) of the Code), (v) made any payments, or been a party to an agreement
(including this Agreement) that under any circumstances could obligate it to
make payments, that are not deductible because of Section 280G or Section 162(m)
of the Code (or any corresponding or similar provision of state, local, or
foreign Tax law), (vi) entered into any Tax allocation, indemnity, or sharing
agreement, (vii) entered into any gain recognition agreement under Section 367
of the Code, (viii) been the "distributing corporation" (within the meaning of
Section 355(c)(2) of the Code) with respect to a transaction described in
Section 355 of the Code within the 3-year period ending as of the date of this
Agreement, or (ix) made or revoked any election under Treas. Reg. Section
301.7701-3 regarding classification as a corporation, as a partnership, or as a
disregarded entity.
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4.6 Accounts Receivable. All accounts receivable of Company
reflected on the Recent Balance Sheet, have been incurred in the normal
course of business, are collectible (net of the reserve shown on the
Recent Balance Sheet for doubtful accounts) in the ordinary course of
business within one hundred ten (110) days of the Closing Date thereof
without the necessity of commencing legal proceedings; are subject to no
counterclaim or setoff; and are not in dispute. Schedule 4.6 contains the
aged schedule of accounts receivable included in the Recent Balance Sheet.
All accounts receivable of Company reflected on the Estimated Closing
Adjustment Statement and the Final Closing Adjustment Statement will
represent arm's length sales actually made in the ordinary course of
business and will be collected (net of the reserve shown on the Estimated
Closing Adjustment Statement and the Final Closing Adjustment Statement
for doubtful accounts) in the ordinary course of business within one
hundred ten (110) days of the Closing Date without the necessity of
commencing legal proceedings and will be subject to no counterclaim or
set-off and will not be in dispute. To the extent a receivable remains
uncollected after said one hundred ten (110) day period, it (less the
amount attributable thereto as "Reserve") will be satisfied out of Fund A
of the Closing Escrow Agreement and the Company shall assign the
receivable to Shareholder's together with rights to collect.
4.7 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.7 neither Company nor any Subsidiary has any undisclosed
liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Financial
Statements or the Recent Balance Sheet and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof.
4.8 No Litigation. Except as set forth in Schedule 4.8 , (i) there
is no action, suit, arbitration, proceeding, investigation or inquiry,
whether civil, criminal or administrative (collectively, "Litigation")
pending or threatened against Shareholders (in such capacity) or Company,
its directors (in such capacity), its Business or any of its Properties or
other assets, nor does Company or any Shareholder know, or have grounds to
know, of any basis for any Litigation and (ii) neither Company nor its
Business or assets is subject to any Order of any Government Entity.
Schedule 4.8 also identifies and summarizes all Litigation to which
Shareholders (in such capacity) or Company or any of its directors (in
such capacity) have been parties since January 1, 2000, not including
defense of litigation handled and terminated, by the Company's insurance
carriers.
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4.9 Compliance With Legal Requirements and Orders.
4.9.(a) Compliance. Except as set forth in Schedule 4.9.(a) or
specifically disclosed in the Recent Balance Sheet or in the Adjustment
Statements, (A) Company (including each and all of its Subsidiaries, operations,
practices, Properties (or any of them) and assets) is in compliance with all
applicable Legal Requirements and Orders and (B) neither Shareholders nor
Company has received notice of any violation or alleged violation of, and
neither Shareholders nor Company is subject to any Liability for past or
continuing violation of, any Legal Requirement. All reports and returns required
to be filed by Company with any Governmental Entity have been filed, and were
accurate and complete when filed. Without limiting the generality of the
foregoing and to the best of the Shareholders' knowledge:
(i) The operation of the Business as it is now conducted does
not, nor does any condition existing at any of the Properties, in
any manner constitute a nuisance or other tortious interference with
the rights of any person or persons in such a manner as to give rise
to or constitute the grounds for a suit, action, claim or demand by
any such person or persons seeking compensation or damages or
seeking to restrain, enjoin or otherwise prohibit any aspect of the
conduct of the Business or the manner in which it is now conducted.
(ii) Company and the Subsidiaries have made all required
payments to its unemployment compensation reserve accounts with the
appropriate Governmental Entity of the states where it is required
to maintain such accounts, and each of such accounts has a positive
balance.
(iii) Company and the Subsidiaries are believed to be exempt
from reporting under the federal Occupational Safety and Health Act
of 1970, as amended.
4.9.(b) Licenses and Permits. Company and the Subsidiaries have all
Licenses and Permits required for the conduct of the Business and operation of
the Properties and is and has been in compliance with all such Licenses and
Permits.
4.9.(c) Environmental Matters. Except as set forth in Schedule 4.9 (c):
(i) Company and the Subsidiaries are , and at all times have
been, in full compliance with, and have not been and are not in violation
of or liable under, any Environmental Law. Shareholders have no basis to
expect, nor has any
13
of them received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Entity or private citizen acting
in the public interest, or (ii) the current or prior owner or operator of
any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake
or bear the cost of any Environmental, Health, and Safety Liabilities with
respect to any of the Properties or any other properties or assets
(whether real, personal, or mixed) in which Company has had an interest,
or with respect to any Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or
processed by Company or the Subsidiaries , or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(ii) There are no pending or, to the Knowledge of Shareholders
Threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Properties or any other properties and assets
(whether real, personal, or mixed) in which Company or the Subsidiaries
has or had an interest.
(iii) Shareholders have no Knowledge of, any basis to expect,
nor has any of them received, any citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any
alleged, actual, or potential obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to any of
the Properties or any other properties or assets (whether real, personal,
or mixed) in which Company or the Subsidiaries had an interest, or with
respect to any or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by
Company, or the Subsidiaries have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
(iv) To the best of Shareholders' knowledge there are no
Hazardous Materials present on or in the Environment at the Properties,
including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other
part of the Properties or incorporated into any structure therein or
thereon. Shareholders have not permitted or conducted, or are aware of,
any Hazardous Activity conducted with respect to the Properties or any
other properties
14
or assets (whether real, personal, or mixed) in which Company or the
Subsidiaries has or had an interest except in full compliance with all
applicable Environmental Legal Requirements.
(v) There has been no Release or, to the Knowledge of
Shareholders, Threat of Release, of any Hazardous Materials at or from the
Properties where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from or by
the Properties, or from or by any other properties and assets (whether
real, personal, or mixed) in which Company or the Subsidiaries has or had
an interest.
(vi) Shareholders have delivered to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by Shareholders or Company or the Subsidiaries
pertaining to Hazardous Materials or Hazardous Activities in, on, or under
the Properties, or concerning compliance by, Company, the Subsidiaries or
any other Person for whose conduct they are or may be held responsible,
with Environmental Legal Requirements.
4.10 Title to and Condition of Properties.
4.10.(a) Marketable Title. Company or the Subsidiaries have good and
marketable title to all of Company's assets, Business and Properties, including,
without limitation, all such assets and Properties reflected in the Recent
Balance Sheet and in the Adjustment Statements, free and clear of all Liens,
except those described in Schedule 4.10 (a), and, in the case of any Property,
Liens for Taxes or special assessments not yet due or which are being contested
in good faith by appropriate proceedings, municipal and zoning ordinances,
building or use restrictions, and easements for public roads and public
utilities, exceptions or reservations of coal, minerals, and mining rights, none
of which interfere with the use and enjoyment of any Property as currently
utilized. None of Company's or the Subsidiaries assets, Business or Properties
are subject to any restrictions with respect to the transferability thereof;
and Company's title thereto will not be affected in any way by the transactions
contemplated hereby.
4.10.(b) Insurance. Set forth in Schedule 4.10.(b) is a complete list and
description of all policies of fire, liability, product liability, workers
compensation, health and other forms of insurance presently in effect with
respect to the Business and
15
Properties of Company and the Subsidiaries, true and correct copies of which
have heretofore been delivered to Buyer. All such policies are valid,
outstanding and enforceable policies; and no such policy (not any previous
policy) provides for or is subject to any currently enforceable retroactive rate
or premium adjustment or loss sharing arrangement, except for worker's
compensation insurance (payroll variable) and general liability insurance
(attendance variable). No notice of cancellation or termination has been
received with respect to any such policy, and neither Company nor any
Shareholder has knowledge of any act or omission of Company or the Subsidiaries
which could result in cancellation of any such policy prior to its scheduled
expiration date. Company has not been refused any insurance with respect to any
Property or an aspect of the operations of the Business nor has its coverage
been limited by any insurance carrier to which it has applied for insurance or
with which it has carried insurance during the last three years. Company has
duly and timely made all claims it has been entitled to make under each policy
of insurance. Since January 1, 2000 all general liability policies maintained by
or for the benefit of Company have been "occurrence" policies and not "claims
made" policies. There is no claim by Company pending under any such policies as
to which coverage has been questioned, denied or disputed by the underwriters of
such policies, and neither Company nor any of Shareholders knows of any basis
for denial of any claim under any such policy.
4.10.(c) The buildings, plants, structures, and equipment of the Company
and the Subsidiaries are structurally sound, are in good operating condition and
repair,(considering the Improvements age, location and type) and are adequate
for the uses to which they are being put, and none of such buildings, plants,
structures, or equipment is in need of maintenance or repairs except for
ordinary wear and tear, and routine maintenance and repairs that are not
material in nature or cost. The buildings, plants, structures, and equipment of
the Company are sufficient for the continued conduct of the Company's businesses
after the Closing in substantially the same manner as conducted prior to the
Closing.
4.11 Contracts and Commitments.
4.11.(a) Personal Property Leases. Except as set forth in Schedule
4.11.(a), neither Company nor the Subsidiaries have any leases of personal
property.
4.11.(b) Contracts With Affiliates and Certain Others. Except as set forth
in Schedule 4.11.(b), neither Company nor the Subsidiaries have any agreement,
understanding, contract or commitment (written or oral) with any Affiliate or
any employee, agent, consultant, distributor, dealer, vendor or franchisee that
is not cancelable by Company on notice of not longer than ninety (90) days
without material liability, penalty or premium of any nature or kind whatsoever.
16
4.1l.(c) Powers of Attorney. Neither Company nor the Subsidiaries have
given a power of attorney, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever.
4.11.(d) Collective Bargaining Agreements. Neither Company nor the
Subsidiaries is a party to any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups.
4.11.(e) Debt Obligations. Except as set forth in Schedule 4.11.(e) and
specifically disclosed in the Recent Balance Sheet and in the Estimated Closing
Statement, neither Company nor the Subsidiaries has any Debt Obligations Upon
payment of all Debt Obligations at Closing, the Properties and all other assets
of the Company and the Subsidiaries will be free and clear of all Liens, except
the liens of real estate taxes, special assessments and personal property taxes,
not yet due or payable
4.11.(f) Guarantees. Except as disclosed on Schedule 4.11.(f), neither
Company nor the Subsidiaries has guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as a surety,
or otherwise agreed to be contingently or secondarily liable for the obligations
of any person, including theatre leases, Debt Obligations and capitalized
equipment leases.
4.ll.(g) Contracts Subject to Renegotiation. Neither Company nor the
Subsidiaries is a party to any contract which is subject to renegotiation.
4.ll.(h) Burdensome or Restrictive Agreements. Except as disclosed on
Schedule 4.11.(h) addressing the Clinton, Iowa property, neither Company nor the
Subsidiaries is a party to nor is it bound by any agreement requiring either to
assign any interest in any trade secret or proprietary information, or
prohibiting or restricting Company or any Subsidiary from competing in any
business or geographical area or soliciting customers or otherwise restricting
it from carrying on its Business anywhere in the world.
4.11.(i) No Default. Neither Company nor the Subsidiaries is in default
under any lease, contract or commitment, nor has any event or omission occurred
prior to the closing which through the passage of time or the giving of notice,
or both, would constitute a default thereunder or cause the acceleration of any
of Company's or any Subsidiaries' obligations or result in the creation of any
Lien on any Property or other assets owned, leased, used or occupied by Company
or any Subsidiary. No third party is in default under any lease, contract or
commitment to which Company or any Subsidiary is a party, nor has any event or
omission occurred which, through the passage of time or the giving of notice, or
both, would constitute a
17
default thereunder or give rise to an automatic termination, or the right of
discretionary termination, thereof.
4.11(j) Schedule 4.11(j) contains a complete and
accurate list, and Shareholders have delivered to Buyer true and
complete copies, of:
(i) each contract that involves performance of services
or delivery of goods or materials by Company or any Subsidiary;
(ii) each Contract that involves performance of services
or delivery of goods or materials to Company or any Subsidiary;
(iii) each contract that was not entered into in the
Ordinary Course of Business;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other contract affecting
the ownership of, leasing of, title to, use of, or any leasehold or other
interest in, any real property;
(v) each licensing agreement or other contract with
respect to patents, trademarks, copyrights, or other intellectual,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of
the Intellectual Assets;
(vi) each joint venture, partnership, and other contract
(however named) involving a sharing of profits, losses, costs, or
liabilities by Company or any Subsidiary with any other Person;
(vii) each Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments
for goods;
(viii) each contract for capital expenditures in excess
of $50,000.00;
(ix) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
18
4.12 Labor Matters and Employees
4.12(i) To the best of Shareholders' knowledge, within the last
five years neither Company nor the Subsidiaries has experienced any labor
disputes, union organization attempts or any work stoppage due to labor
disagreements in connection with its Business. Except to the extent set
forth in Schedule 4.12 and specifically disclosed and fully reflected in
the Recent Balance Sheet or in the Adjustment Statements, (a) the Company
and Subsidiaries are in compliance with all applicable Legal Requirements
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practice; (b) there is no unfair labor practice charge or complaint
against Company or the Subsidiaries pending or threatened; (c) there is no
labor strike, dispute, request for representation, slowdown or stoppage
actually pending or threatened against or affecting Company or the
Subsidiaries nor any secondary boycott with respect to products of Company
or the Subsidiaries; (d) no question concerning representation has been
raised or is threatened respecting the employees of Company or the
Subsidiaries; (e) no grievance which might have a material adverse effect
on Company, the Subsidiaries or any Property (individually or in the
aggregate), is pending and no such claim therefor exists; and (f) there
are no administrative charges, court complaints or other Litigation
against Company or the Subsidiaries concerning alleged employment
discrimination or other employment related matters pending or threatened
before the U.S. Equal Employment Opportunity Commission or any Government
Entity.
Set forth on Schedule 4.12 attached hereto and by this
reference made a part hereof, is an accurate list showing all officers,
directors and manager level and above employees of the Company and the
Subsidiaries, listing all employment agreements with such officers, directors
and employees and the annual rate of compensation (and the portions thereof
attributable to salary, commissions (and commission rates), bonus and other
compensation, respectively) of each of such persons as of the date hereof.
Attached to Schedule 4.12 are true, complete and correct copies of any
employment agreements (or other agreements to which the Company or the
Subsidiaries are bound or have liability with respect to such person) for
persons listed on Schedule 4.12. Since January 1, 2005, there
19
have been no increases in the compensation or benefits payable to or to become
payable to, or any special bonuses to, any full time officer, director, key
employee or other employee, except ordinary salary increases implemented on a
basis and in amounts consistent with past practices and amounts.
(ii) To the best of the Shareholders' knowledge, after due
inquiry, except as set forth on Schedule 4.12 neither the Company nor any
Subsidiary is in violation of, and has not violated, any applicable equal
employment opportunity laws, regulations or orders, wage and hour laws,
regulations or orders, occupational safety and health laws, regulations or
orders, federal labor laws, regulations or orders or any other laws, regulations
or orders relating to employment.
(iii) With respect to all current employees (as defined in
Section 274a.1(g) of Title 8, Code of Federal Regulations) of the Company and
the Subsidiaries, true and complete copies of all Forms I-9 (Employment
Eligibility Verification Forms) completed pursuant to the Immigration Reform and
Control Act of 1986, as amended, and all regulations promulgated thereunder
("IRCA"), and any and all copies of documentation, records or other papers
retained with Forms I-9, have been delivered to or made available to Buyer. To
the best of the Shareholders' knowledge, after due inquiry, the Company and the
Subsidiaries have complied with IRCA with respect to the completion of Forms I-9
for all employees and the reverification of the employment status of any and all
employees whose employment authorization documents indicated a limited period of
employment authorization.
(iv) To the best of the Shareholders' knowledge, after
due inquiry, with respect to all former employees who left the
Company's or any Subsidiaries' employment within three (3)
years prior to Closing, the Company and the Subsidiaries have
complied with IRCA with respect to the maintenance of Forms
I-9 for at least three (3) years or for one (1) year beyond
the date of termination, whichever is later. Shareholders will
use their best efforts to deliver or make available to Buyer
true and complete list of all terminated employees manager
level and above hired by the Company and the Subsidiaries less
than three (3) years prior to Closing or terminated less than
one (1) year prior to Closing, true and complete copies of all
Forms I-9 maintained for terminated employees pursuant to
IRCA, and
20
any and all copies of documentation, records or other papers
retained with Forms I-9, have been or will be delivered or
made available to Buyer.
(v) Schedule 4.12 contains a true and complete list of all
employees of the Company and the Subsidiaries working under INS authorization in
E, F, H, J, L, M, O, P or TN Visa Status together with a listing of each such
employee's visa status and visa expiration date. To the best of the
Shareholders' knowledge, after due inquiry, the Company and the Subsidiaries
maintain current files containing all Labor Condition Application (LCA) related
public and non-public access documentation which it must present upon request by
the U.S. Department of Labor or the general public, including, but not limited
to, all documentation noted in 20 CFR Section 655.760.
(vi) To the best of the Shareholders' knowledge, after due
inquiry, neither the Company nor any Subsidiary has had immigration violations,
nor has it employed individuals not authorized to work in the United States.
Neither the Company nor any Subsidiary has ever received notice of, nor, to the
best of the Shareholders' knowledge, after due inquiry, has the Company or any
Subsidiary ever been the subject of any inspection or investigation by any
Governmental Authority relating to its compliance with or violation of IRCA, nor
has it been warned, fined or otherwise penalized by any Governmental Authority
by reason of any failure to comply with IRCA, nor is such a proceeding pending
or threatened.
(viii) To the best of the Shareholders' knowledge, after due inquiry, the
consummation the transactions contemplated by this Agreement will not give
rise to any liability of the Company or any Subsidiary for its failure to
properly complete, maintain and update Forms I-9 prior to the Closing, or
give rise to any liability of the Company or any Subsidiary for the
employment prior to the Closing of individuals not authorized to work in
the United States, or cause any current employee to become unauthorized to
work in the United States.
21
4.13 Employee Benefit Plans.
4.13.(a) Disclosure. Schedule 4.0 sets forth all Employee
Plans/Agreements, true and correct copies of which, including all amendments
thereto, have heretofore been provided to Buyer.
4.13.(b) Future Commitments. Neither the Company nor any Subsidiary has
any announced plan or commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee Plan/Agreement,
except for retention agreements which shall be fully satisfied by the
Shareholders prior to Closing and for which there shall be no liability
whatsoever on and following the Closing Date.
4.14 Trade Rights. Neither the Company nor any Subsidiary owns,
controls, uses or holds any Trade Rights.
4.15 Bank Accounts. Schedule 4.15 sets forth the names and locations of
all banks, trust companies, savings and loan associations and other financial
institutions at which Company or any Subsidiary maintains a safe deposit box,
lock box or checking, savings, custodial or other account of any nature, the
type and number of each such account and the signatories therefore, a
description of any compensating balance arrangements, and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
4.16 Assets Necessary to Business. Company and the Subsidiaries
presently have and at the Closing will have good, valid and marketable title
to all owned Properties and its other assets, tangible and intangible.
4.17 No Brokers or Finders. Neither Company, any Subsidiary nor any of
its directors, officers, employees, Shareholders or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
Section 4.18 Intellectual.
(a) Intellectual Assets -- The term "Intellectual Assets" includes:
22
(i) Company's and all Subsidiaries' names, all fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights");and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used,
or licensed by Company or any Subsidiary as licensee or licensor.
(b) Schedule 4.18 contains a complete and accurate list and summary
description, including any royalties paid or received by the Companies or any
Subsidiary , of all Contracts relating to the Intellectual Assets to which
Company or any Subsidiary is a party or by which Company or any Subsidiary is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $10,000.00 under which Company or any Subsidiary is the licensee. There are
no outstanding and, to Shareholders' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business
(i) Except as set forth on Schedule 4.18 the Intellectual
Assets are all those necessary for the operation of the Company's or any
Subsidiaries' businesses as they are currently conducted, Company or the
Subsidiaries are the owner of all right, title, and interest in and to each of
the Intellectual Assets, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims, and has the right to
use without payment to a third party all of the Intellectual Assets.
4.19 Absence of Certain Changes and Events. Except as set forth in
Schedule 4.19 since the date of the Consolidated Balance Sheet, the Company and
the Subsidiaries have conducted their businesses only in the Ordinary Course of
Business and there has not been any:
23
(a) change in Company's or any Subsidiaries' authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of Company or any Subsidiary; issuance of any security convertible into
such capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by Company or any Subsidiary of any shares of
any such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of Company or any
Subsidiary;
(c) payment or increase by Company or any Subsidiary of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of Company
or any Subsidiary;
(e) damage to or destruction or loss of any asset or of Company or
any Subsidiary, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Company or any Subsidiary, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to Company or any Subsidiary of at
least $10,000.00;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or of Company or any
Subsidiary or mortgage, pledge, or imposition of any lien or other encumbrance
on any material asset or of any Company or any Subsidiary, including the sale,
lease, or other disposition of any of the Intellectual Assets;
(h) cancellation or waiver of any claims or rights with a value to
Company or any Subsidiary in excess of $10,000.00;
24
(i) material change in the accounting methods used by Company
or any Subsidiary; or
(j) agreement, whether oral or written, by Company or any
Subsidiary to do any of the foregoing.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to
Shareholders, each of which is true and correct on the date hereof, shall
remain true and correct to and including the Closing Date, shall be
unaffected by any investigation heretofore or hereafter made by
Shareholders or any notice to Shareholders, and shall survive the Closing
of the transactions provided for herein.
5.1 Corporate.
5.1.(a) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.l.(b) Corporate Power. Buyer has all requisite corporate power to enter
into this Agreement and the other documents and instruments to be executed and
delivered by Buyer and to carry out the transactions contemplated hereby and
thereby.
5.2 Authority. This Agreement is authorized by the Executive
Committee of Buyer's "Board of Directors" and subject to the terms hereof
does constitute, and when executed and delivered, the other Ancillary
Instruments to be executed and delivered by Buyer pursuant hereto will
constitute, valid and binding agreements of Buyer, enforceable in
accordance with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally.
5.3 No Brokers or Finders. Neither Buyer nor any of its directors,
officers, employees or agents have retained, employed or used any broker
or finder in connection with the transaction provided for herein or in
connection with the negotiation thereof.
5.4 Investment Intent. The Shares are being acquired by Buyer for
investment only and not with the view to resale or other distribution.
Buyer operates and is active in the same business and industry in which
Company or any Subsidiary is involved, namely the ownership and operation
of multi-screen motion picture or movie theatres and complexes.
25
6. COVENANTS
6.1 Title Insurance. Shareholders shall order (prior to the deadline
set forth in Section 3.1) and deliver to Buyer, at Shareholders' expense,
updated title insurance searches of its existing title insurance policies
on each of its owned Properties by such company or companies that issued
such policies (in such capacity, "Title Insurance Company"), confirming
the fee simple title thereto in Company. Buyer acknowledges that Company's
owned properties are already insured and that copies of such policies will
be delivered to Buyer to inspect. The foregoing title search and
confirmation of title is to show no adverse liens or claims not
specifically disclosed by the Company's Financial Statements. Shareholders
agree to deliver to Buyer at Closing all documents necessary to clear
record title of all liens and encumbrances constituting mortgages, deeds
to secure debt, security deeds, Uniform Commercial Code filings and any
and all other evidence of recorded debt on Company Property.
6.2 Environmental Reports. Shareholders shall deliver to Buyer upon
execution and delivery hereof all "Phase I" environmental reports for each
Property currently in Company's or any Subsidiaries' possession. No
updated "Phase I" environmental reports are required of Shareholders for
the Properties. If there is no Phase I environmental report for a
Property, then one shall be ordered by Shareholders at the mutual cost of
Shareholders and Buyer.
6.3 HSR Act Filings. If required by law, Buyer at its cost agrees to
file as soon as reasonably practicable, a "Notification and Report Form"
under the HSR Act with the FTC and the Antitrust Division. Notwithstanding
the foregoing, in no event shall any party be required to sell, divest or
otherwise dispose of any assets, businesses or lines of business in order
to comply with the foregoing, nor shall any party be required to agree to
or observe any restrictions or limitations on its ability to conduct or
engage in any line of business in order to comply with the foregoing.
6.4 Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by Buyer,
Shareholders covenant that the Company and the Subsidiaries shall, and
Shareholders shall cause, each of the following to occur:
6.4.(a) No Changes. Company and the Subsidiaries have and will carry on
their Business diligently and in the same manner as prior to the entry into the
discussion that led to the execution of the Letter of Intent and will not make
or institute, and has
26
not made or instituted, any changes in its methods of purchase, sale,
management, accounting or operation compared to previous periods.
6.4.(b) Maintain Organization. Company and the Subsidiaries will take such
action as may be necessary to maintain, preserve, renew and keep in favor and
effect the existence, rights and franchises of Company and the Subsidiaries and
will preserve the Business, Properties and organization of Company and the
Subsidiaries intact, to keep available to Company and the Subsidiaries the
present officers and employees, and to preserve for Company and the Subsidiaries
its present relationships with film companies and other suppliers and customers
and others having business relationships with Company and the Subsidiaries, all
at no additional cost to Company, any Subsidiary or Shareholders other than in
the ordinary course of business.
6.4.(c) No Breach. Company, the Subsidiaries and Shareholders will not do
or omit any act, or permit any omission to act, which may cause a Breach of any
contract, commitment or obligation that is material, either to Company any
Subsidiaries or any Property (individually or in the aggregate).
6.4.(d) No Material Contracts. No contract or commitment will be entered
into, and no purchase of materials or supplies and no sale of goods or services
(real, personal, or mixed, tangible or intangible) will be made, by or on behalf
of Company or the Subsidiaries, except contracts, commitments, purchases or
sales which are in the ordinary course of business and consistent with past
practice.
6.4.(e) No Corporate Changes. Neither Company nor any Subsidiary shall
amend its "Certificate of Incorporation" or By-Laws or make any changes in
authorized or issued capital stock.
6.4.(f) Maintenance of Insurance. Company and the Subsidiaries shall
maintain all of the insurance in effect as of the date hereof.
6.4.(g) Maintenance of Property. Company and the Subsidiaries shall use,
operate, maintain and repair each Property and all other assets of Company and
the Subsidiaries in a normal business manner, consistent with Company's and the
Subsidiaries' historical practices.
6.5 No Solicitation or Negotiations With Other Parties. Other than
with respect to Buyer and its Affiliates, Company and Shareholders
represent and warrant that they, their Affiliates and their
representatives have terminated any other parties' (other than Buyer and
its representatives) access to any nonpublic information about the Company
and the Properties. From and after the date hereof, Company and
Shareholders shall not, nor shall they permit any of their Affiliates
27
to, nor shall they authorize or permit any of Company's officers,
directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained or utilized by it or
any of its Affiliates to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information which has not been
previously publicly disseminated), or take any other action designed to
facilitate, any inquiries or the making of any proposal which constitutes,
or may reasonably be expected to lead to, any Proposal or any sale,
transfer, assignment or other disposition of any Property.
6.6 Consents. Prior to Closing, Company and Shareholders shall
obtain all written consents necessary for the consummation of the
transactions contemplated hereby, including, without limitation, consents
from Landlords of Leases requiring said Landlord's consent to the
Transaction or transfer of the Lease.
6.7 Estoppel Certificates. On or before the Closing Date, Company
will use its Best Efforts to obtain an Estoppel Certificate or status
letters from the landlord under each lease of a Property, which estoppel
certificate or status letter will certify (i) the lease is valid and in
full force and effect; (ii) the amounts payable by Company under the lease
and the date to which the same have been paid; and (iii) whether there
are, to the knowledge of said landlord, any defaults thereunder, and, if
so, specifying the nature thereof.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the
Closing of each of the following conditions:
7.1 Representations and Warranties True of the Closing Date. Each of
the representations and warranties made by Shareholders in this
Agreement, Schedules and Exhibits, shall be true and correct when made and
shall be true and correct at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing
Date.
7.2 Compliance With Agreement. Shareholders shall have performed and
complied with all of their agreements and obligations under this Agreement
which are to be performed or complied with by them prior to or on the
Closing Date, including the delivery of the closing documents specified in
Section 10.1.
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7.3 Satisfaction of Buyer's Due Diligence: The Due Diligence Period has
expired without notice being given pursuant to 3.2(b), or Buyer has waived
same.
7.4 Absence of Litigation. No Litigation shall have been commenced
or threatened, and no investigation by any Governmental Entity shall
have been commenced, against Buyer, Company, any Subsidiary,
Shareholders or any of the Affiliates, officers or directors of any
of them, the Business or any of the Properties, with respect to the
transactions contemplated hereby, including a Xxxx-Xxxxx-Xxxxxx
proceeding.
8. CONDITIONS PRECEDENT TO SHAREHOLDERS' OBLIGATIONS
Each and every obligation of Shareholders to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions:
8.1 Representations and Warranties True on the Closing Date. Each of the
representations and warranties made by Buyer in this Agreement shall be true and
correct when made and shall be true and correct at and as of the Closing Date as
though such representations and warranties were made or given on and as of the
Closing Date.
8.2 Compliance With Agreement. Buyer shall have performed and complied
with all of Buyer's agreements and obligations under this Agreement which are to
be performed or complied with by Buyer prior to or on the Closing Date,
including the delivery of the closing documents and the Purchase Price specified
in Section 10.2.
8.3 Absence of Litigation. No Litigation shall have been commenced or
threatened, and no investigation by any Government Entity shall have been
commenced, against Buyer, Company, any Subsidiary, Shareholders or any of the
Affiliates, officers or directors of any of them, the Business or any of the
Properties, with respect to the transactions contemplated hereby.
9. SURVIVAL; INDEMNIFICATION
9.1 Survival. All of the representations warranties and covenants of and
the resulting indemnity of Shareholders contained in this Agreement shall
survive the Closing for a period of Eighteen (18) months from the Closing,
during which time they shall remain in full force and effect, excepting:
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a. intentional material misrepresentations adverse to
the Buyer, which shall continue in effect forever
a. the representations, warranties and covenants made
and agreed pertaining to liability for or with
respect to Taxes of the Company and Subsidiaries,
which shall continue in effect for nine (9) months
after the expiration of any statute of limitation,
including any extensions thereof, applicable to
any of the Taxes referred to herein or any Returns
with respect to any such Taxes
b. the representations, warranties and covenants made
and agreed to by the Shareholders, as to the
ownership of the Shares and as to the
capitalization of the Company and the Subsidiaries
set forth in Schedule 4.1 (f) which shall survive
forever;
d. the representations, warranties and covenants made
and agreed to by Shareholders, with respect to compliance with
Environmental Laws as set forth in Section 4.9(c) above, which
shall survive for a period of Five (5) years after the Closing
Date.
9.2 By Shareholders. Except as provided in Section 9.1, the
representations, warranties, covenants, and agreements given by the
Shareholders that are contained in this Agreement shall survive the
Closing Date for a period of eighteen months, and pursuant to any
investigation or inquiry made by or on behalf of Buyer, the Shareholders,
jointly and severally agree to indemnify Buyer against any loss, cost,
liability, or expense arising during the periods set forth in Section 9.1
above after the Closing Date (including, without limitation, costs and
expenses of litigation and reasonable attorney's fees) incurred by reason
of the incorrectness or breach of any of their respective representations,
warranties, covenants, and agreements contained in this Agreement or given
on the Closing Date. Notwithstanding the foregoing, the aggregate
liability of Shareholders for
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indemnity under this Agreement or otherwise shall not exceed the Two
Million TWO HUNDRED THOUSAND Dollar ($2,200,000.00) Fund B amount held
pursuant to the Closing Escrow Agreement.
9.3 By Buyer. Subject to the terms and conditions of this Section 9,
Buyer hereby agrees to indemnify, defend and hold harmless each
Shareholder from and against all Claims asserted against, resulting to,
imposed upon or incurred by any such person, directly or indirectly, by
reason of or resulting from (a) the inaccuracy or breach of any
representation or warranty of Buyer contained in or made pursuant to this
Agreement; and (b) Claims for any post-Closing events, facts or
circumstances.
9.4 Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Section 9 with
respect to Claims relating to third parties shall be subject to the
following terms and conditions:
9.4.(a) Notice and Defense. The party or parties to be indemnified
(whether one or more, "Indemnified Party") will give the party from whom
indemnification is sought ("Indemnifying Party") prompt written notice of any
such Claim, and the Indemnifying Party will undertake the defense thereof by
representatives chosen by it as reasonably approved by the Indemnified Party.
Failure to give such notice shall not affect the Indemnifying Party's duty or
obligations under this Section 9, except to the extent the Indemnifying Party is
prejudiced thereby. So long as the Indemnifying Party is defending any such
Claim actively and in good faith, the Indemnified Party shall not settle such
Claim. The Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by them and in the
possession or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such Claim, and
shall in other respects give reasonable cooperation in such defense.
9.4.(b) Failure to Defend. If the Indemnifying Party, within a reasonable
time after notice of any such Claim, fails to defend such Claim actively and in
good faith, the indemnified Party will (upon further notice) have the light, at
the Indemnifying Party's cost, to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with respect to
such Claim, on behalf of and for the account and risk of the Indemnifying Party,
and the Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to judgment
therein.
9.4.(c) Indemnified Party's Rights. Anything in this Section 9.4 to the
contrary notwithstanding, the Indemnifying Party shall not, without the written
consent
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of the indemnified Party, settle or compromise any Claim or consent to the entry
of any judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party of a release
from all Liability in respect of such Claim.
9.4.(d) Right to Participate. Notwithstanding a party's responsibility
for the defense of a claim, the other party shall have the right to participate,
at its own expense and with its own counsel, in the defense of a claim and the
party having responsibility for defense of the claim ("Defending Party") shall
consult with the other party from time to time on all material matters relating
to the defense of such claim. The Defending Party shall provide the other party
with copies of all pleadings and material correspondence relating to such claim.
9.5 Claims Procedure. The following exclusive procedure shall govern
any and all indemnification claims against an Indemnifying Party which may
be brought pursuant to the provisions of this Agreement:
9.5.(a) Notice. The Indemnified Party shall give written
notice to the Indemnifying Party of all claims, whether between the
parties or raised by a third party, that could constitute a claim
for indemnification under this Section 9. Failure to give such
notice shall not affect the Indemnifying Party's duty or obligations
under this Section 9, except to the extent the Indemnifying Party is
prejudiced thereby. The written notice shall specify to the extent
known by the Indemnified Party (i) the factual basis for such claim
and the alleged violation of this Agreement; (ii) the dollar amount
of the claim and the basis therefor; and (iii) copies of all
underlying correspondence or communication from a third party or
otherwise with respect to the foundation of such claim.
9.5.(b) Determination Procedure. With respect to indemnification claims
between the parties, following receipt of notice from the Indemnified Party of a
claim, the Indemnifying Party shall have thirty (30) days to make such
investigation of the claim as the Indemnifying Party deems necessary or
desirable. With respect to indemnification claims relating to the claims of
third parties, the Indemnifying Party shall have a reasonable period, given the
nature of the third party claim and any response time required by such third
party, to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For purposes of such investigation, the Indemnified
Party agrees to make available to the Indemnifying Party and/or its authorized
representatives the information relied upon by the Indemnified Party to
substantiate the claim, as well as any other information bearing thereon
reasonably requested by the Indemnifying Party. If the Indemnified Party and the
32
Indemnifying Party agree at or prior to the expiration of such investigation
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, then the Indemnifying Party shall immediately pay to the
Indemnified Party the full amount of the claim; provided, however, that if the
Indemnifying Party is a Shareholder, then such payment must be made by reducing
the amount held in Fund B pursuant to the Closing Escrow Agreement. If Fund B is
reduced to a zero balance or has terminated by passage of time, then the
Shareholders have no further liability under this Section 9 or this Agreement.
If the Indemnified Party and the Indemnifying Party do not agree within thirty
(30) days from the date of a claim hereunder (or any mutually agreed upon
extension thereof, including subsequent to the final determination of a
third-party indemnification claim), then the Indemnified Party and the
Indemnifying Party shall appoint a panel of three neutral arbitrators (one
selected by the Indemnified Party, one by the Indemnifying Party and one by the
first two arbitrators) and the arbitrators thus appointed shall settle the
dispute. If the Indemnified Party and the Indemnifying Party, or any one of
them, are unwilling or unable to appoint an arbitrator, or if a duly appointed
arbitrator refuses to act or is incapable of acting and the Indemnified Party
and the Indemnifying Party, or any of them, are unwilling or unable to concur in
or agree upon the appointment of a new arbitrator to fill the vacancy, or any
appointment is not made within fifteen (15) Business Days after service of a
written notice to concur in or agree upon the appointment of an arbitrator or a
new arbitrator, as the case may be, application may be made by either party to a
court of competent jurisdiction for the appointment of an arbitrator or a new
arbitrator, as the case may be. The arbitration shall be conducted in Illinois
pursuant to the "Commercial Arbitration Rules of the American Arbitration
Association of Illinois," The decision of the arbitrators shall be final,
conclusive and binding upon the parties. Any expenses of such arbitration
including, without limitation, the fees of the arbitrators and, if determined
appropriate by the arbitrators, the reasonable costs of the non-prevailing
party, as the case may be, shall be paid by either the Indemnifying Party or
Indemnified Party as determined appropriate by the arbitrators.
9.6 Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Section 9, which payment may
be accomplished in whole or in part, at the option of the Indemnified
Party, by the Indemnified Party setting off any amount owed to the
Indemnifying Party by the Indemnified Party, and provided that, if the
Indemnifying Party is a Shareholder, then such payment shall be made by
reducing the amount held in escrow Fund B pursuant to the Closing Escrow
Agreement, without further recourse against Shareholders as a result of
being an Indemnifying Party if the amount held in escrow Fund B is reduced
to zero or the Closing Escrow Agreement has otherwise terminated by
passage of time.
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9.7 No Waiver. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder.
10. CLOSING
The closing of this transaction ("Closing") shall take place
at the offices of Barber, Segatto, Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000, at 12:01 A.M. on Thursday, May 19, 2005 or at
such other time prior thereto and place as the parties hereto shall agree
upon. Such date is referred to in this Agreement as the "Closing Date." A
pre-Closing shall be conducted on the day prior to the Closing Date at
which all documents and other items to be delivered at Closing will be
inspected, preapproved and executed by all of the parties. The Closing
shall be deemed to be effective for all business, accounting, financial,
Tax, legal and other purposes as of 12:01 A.M. on the Closing Date.
10.1 Documents to be Delivered by Company and Shareholders. At the
Closing, Shareholders shall deliver or cause to be delivered to Buyer the
following documents, in each case duly executed or otherwise in proper
form:
10.1.(a) Stock Certificate(s). A stock certificate or certificates
representing the Shares, duly endorsed for transfer or with duly executed stock
powers attached.
10.1.(b) Compliance Certificate. A certificate signed by each
Shareholder that each of the representations and warranties made by Shareholders
in this Agreement is true and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been made or given
on and as of the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Buyer).
10.1.(c) Closing Escrow Agreement. The Closing Escrow Agreement duly
executed by Shareholders and the Escrow Company in the form of Exhibit A hereto.
10.1.(d) Good Standing and Foreign Qualification Certificates. A
certificate from the Secretary of State of the State of Delaware evidencing that
Company and the Subsidiafvries as the case may be is in good standing as of
recent dates prior to the Closing and certificates evidencing Company's
qualification to do business in states identified by Buyer including, without
limitation, the states of Wisconsin, Michigan, Indiana and Illinois.
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10.1.(e) Incumbency Certificate. Incumbency certificates relating to each
person executing (as a corporate officer or otherwise on behalf of another
person) any document executed and delivered to Buyer pursuant to the terms
hereof.
10.1.(f) Estimated Closing Adjustment Statement. The Estimated Closing
Adjustment Statement, executed by Shareholders and Buyer.
10.1.(g) Resignations. The resignations of Xxxx Xxxxxxxxx, Xxxxxxxx
Xxxxxxxxx, Xxxx Xxxx, Xxx Xxxx, and Xxxxxxx Xxxxx as executive officers and
Employees, and Xxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx as directors of Company and
the Subsidiaries, effective as of the Closing Date.
10.1.(h) Consents and Approvals. All approvals, consents and waivers that
are required to effect the transactions contemplated hereby.
10.1.(i) Estoppel Certificates. The estoppel certificates required by
Section 6.7.
10.1.(j) Schedules. The Schedules, and Exhibits.
10.1.(k) Affidavit. An affidavit, in form satisfactory to Buyer, to the
effect that Company is not a "foreign person," "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate" under Section 1445 of the
Code, and containing all such other information as is required to comply with
the requirements of such Section.
10.1.(l) Pay-off Letter. Pay-off letters from each counterparty to a Debt
Obligation including the Equipment Lease Obligations
10.1.(m) Opinion of Counsel An opinion of Xxxxxx Segatto Xxxxxx & Xxxxx ,
dated the Closing Date, in the form of Exhibit
10.1.(n) Release of Company by Shareholders Shareholders shall release
Company and the Subsidiaries from any and all liabilities in form and substance
as agreed upon by the parties.
10.1.(o) Other Documents. All other documents, instruments or writings
required to be delivered to Buyer at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as Buyer may
reasonably request.
35
10.2 Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver the following documents, in each case duly executed or otherwise
in proper form:
10.2.(a) Closing Cash Payment. To Shareholders, the Closing Cash Payment
as required by Section 2.2 (c), and the Xxxxxxx Money Deposit as required by
Section 2.2 (a).
10.2.(b) Closing Escrow Amount. To Escrow Agent, the "Closing Escrow
Amounts" as required by Section 2.2 (b).
10.2.(c) Compliance Certificate. To Shareholders, a certificate signed by
an officer of Buyer that the representations and warranties made by Buyer in
this Agreement are true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and as of the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Shareholders).
10.2.(d) Certified Resolutions. To Shareholders, a certified copy of the
resolutions of the Board of Directors of Buyer authorizing and approving this
Agreement and the consummation of the transactions contemplated by this
Agreement.
10.2.(e) Closing Escrow Agreement. To Shareholders, the Closing Escrow
Agreement duly executed by Buyer and the Escrow Company in substantially the
form of Exhibit A hereto.
10.2.(f) Opinion of Counsel. An opinion of Page, Scrantom, Sprouse, Xxxxxx
& Ford, P.C. , dated the Closing Date, in the form of Exhibit attached hereto.
10.2.(g) Other Documents. To Shareholders, all other documents,
instruments or writings required to be delivered to Shareholders at or prior to
the Closing pursuant to this Agreement and such other certificates of authority
and documents as Shareholders may reasonably request.
10.3 Allocation of the Purchase Price. The Shareholders and Buyer
acknowledge and agree that the payment of the Purchase Price contemplated
hereunder is for the acquisition of all the outstanding Shares of the
Company and personal goodwill. Shareholders and Buyer agree to allocation
of the Purchase Price among said items as agreed between the Parties upon
receipt of an independent valuation report applicable thereto.
36
11. TERMINATION
11.1 Termination by Mutual Agreement. This Agreement may be terminated
without further liability of any party at any time prior to the Closing by a
mutual written agreement of Buyer and Shareholders.
11.2 Termination by Buyer.
11.2.(a) Due Diligence Termination. At any time prior to the
expiration of the Due Diligence Period, Buyer may, by written notice to
Shareholders, terminate this Agreement based on the results of Buyer's due
diligence investigation with the effect set forth in Section 11.4, that is
the Escrow Money Deposit shall be paid to Shareholders to compensate for
the Shares having been taken off the market.
11.2.(b) Termination by Shareholder Breach. If there has been a
material violation or breach of any Shareholder of any of the agreements,
representations or warranties contained in this Agreement which has not
been waived in writing by Buyer or cured by Shareholders, or there has
been a material failure of satisfaction of a condition to the obligations
of Buyer which has not been so waived, then Buyer may, by written notice
to Shareholders at any time prior to the Closing that such violation,
breach, or failure is continuing and not cured by Shareholders, terminate
this Agreement with the effect set forth in Section 11.4.
11.3 Termination by Shareholders. If the Due Diligence Period has expired
without termination of this Agreement by Buyer and if the Closing has not timely
occurred, or if there is a breach or violation by Buyer under Section 5 or
Section 8, then Shareholders may terminate this Agreement with the effect set
forth in Section 11.4.
11.4 Effect of Termination. If this Agreement is terminated by Buyer
pursuant to Section 11.2.(b) or by mutual agreement of the parties pursuant to
Section 11.1, then the Escrowee shall immediately return the Xxxxxxx Money
Deposit (including all interest earned thereon) to Buyer by wire transfer of
immediately available funds to an account designated by Buyer in writing in
advance. If this Agreement is terminated by Buyer pursuant to Section 11.2.(a),
then the Escrow Company shall immediately pay to Shareholders the Xxxxxxx Money
Deposit by wire transfer of immediately available funds to an account designated
by Shareholders in writing in advance. If this Agreement is terminated by
Shareholders pursuant to Section 11.3, then the Escrow Company shall
37
immediately deliver the Xxxxxxx Money Deposit (including all interest earned
thereon) to Shareholders by wire transfer of immediately available funds to an
account designated by Shareholders in writing in advance, which Xxxxxxx Money
Deposit shall be Shareholders sole and exclusive remedy for termination of this
Agreement. If this Agreement is terminated, regardless of by whom or why, the
Diligence Materials in Buyer's, or its affiliates', or agents', or employees'
possession shall be returned to Shareholders or Company without any public
disclosure of same. The parties hereto hereby acknowledge and agree that the
damages to Shareholders due to failure of the Buyer to close hereunder are
difficult if not impossible to ascertain and amount of the Xxxxxxx Money Deposit
represents a reasonable pre-estimate of said damages, and is intended to be
liquidated damages and not a penalty.
11.5 Allocation of Expense of Termination. If the transactions
contemplated by this Agreement are not consummated, the parties will each pay
their own expenses and fees incident to the negotiation, preparation, and
execution of this Agreement and any other transactions relating to the
consummation thereof, including, without limitation, fees of counsel,
accountants, and other experts.
11.6 Diligence Materials. If this Agreement is terminated, regardless of
by whom or why, the Diligence Materials in Buyer's, or its affiliates', or
agents', or employees' possession shall be returned to Shareholders or Company
without any public disclosure of same.
12. POST-CLOSING COVENANTS
12.1 Noncompetition; Confidentiality.
12.1.(a) Shareholders. Subject to the Closing, and as an inducement
to Buyer to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with
the Business being acquired pursuant to this Agreement, each Shareholder
hereby covenants and agrees as follows:
(i) Covenant Not to Compete. Subject to geographical limits
hereinafter specifically set forth, for a period of three (3) years
from the Closing Date, no Shareholder will directly or indirectly:
(A) engage in, continue in or cany on any business which
competes with the Business or is substantially similar
thereto, including owning or controlling any financial
interest in any
38
corporation, partnership, firm or other form of business
organization which is so engaged;
(B) consult with, advise or assist in any way, whether or not
for consideration, any Person, corporation, partnership, firm or
other business organization which is now or becomes a competitor of
Company, any Subsidiary or Buyer or any of their Affiliates in any
aspect with respect to their theatre businesses, including, but not
limited to, advertising or otherwise endorsing the products of any
such competitor; soliciting customers or otherwise serving as an
intermediary for any such competitor; loaning money or rendering any
other form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with any
such competitor; or
(C) engage in any practice the purpose of which is to evade
the provisions of this covenant not to compete or to commit any act
which adversely affects the Business;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national securities exchange
or traded in the national over-the-counter market in an amount which shall not
exceed 5% of the outstanding shares of any such corporation. The parties agree
that the geographic scope of this covenant not to compete shall extend to a
radius of five (5) miles from each of the Properties currently operated by
Company or any Subsidiary. The parties agree that Buyer may sell, assign or
otherwise transfer this covenant not to compete, in whole or in part, to any
person, corporation, firm or entity that purchases all or part of the Business
of the Company or any Subsidiary. In the event a court of competent jurisdiction
determines that the provisions of this covenant not to compete are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that this covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and effect, and
any such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such jurisdiction.
(ii) Covenant of Confidentiality. No Shareholder shall at any time
subsequent to the Closing, except as explicitly requested by Buyer, (a)
use for any purpose, or (b) disclose to any person documents, tapes, discs
or programs containing, any confidential
39
information concerning any Company. For purposes hereof,
"confidential information" shall mean and include, without
limitation, all Trade Rights in which Company has an interest, all
customer lists and customer information, and all other information
concerning any of the Companies' and Subsidiaries' Business not
previously disclosed to the public directly by Company or any
Subsidiary.
(iii) Equitable Relief for Violations. Each Shareholder
agrees that the provisions and restrictions contained in this
Section 12.1 are necessary to protect the legitimate continuing
interests of Buyer in acquiring the Company, and that any violation
or breach of these provisions will result in irreparable injury to
Buyer for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to Buyer for
such violation or breach and regardless of any other provision
contained in this Agreement, Buyer shall be entitled to injunctive
and other equitable relief as a court may grant after considering
the intent of this Section 12.1.
12.2 Use of Names. Except as allowed by agreements between Shareholders
and Buyer entered into at or after Closing, following the Closing, neither
Shareholders nor any of their Affiliates shall, without the prior written
consent of Buyer, make any commercial use of any Trade Rights, including,
without limitation, the "GKC" trade name and related marks owned or used by the
Company on the date hereof or previously or any other name or xxxx confusingly
similar thereto.
13. RESOLUTION OF DISPUTES
13.1 Arbitration. After the Closing, except as otherwise provided herein,
any dispute, controversy or claim arising out of or relating to this Agreement
or any Ancillary Agreement shall be settled by binding arbitration held in
Illinois in accordance with the Commercial Arbitration Rules of the American
Arbitration Association of Illinois then in effect, except as specifically
otherwise provided in this Section 13.
13.2 Arbitrators. The panel to be appointed shall consist of three neutral
arbitrators (one to be chosen by Buyer, one to be chosen by Shareholders, and
one to be chosen by the first two chosen arbitrators).
13.3 Procedures; No Appeal. The arbitrators shall allow such discovery as
the arbitrators determine appropriate under the circumstances and shall resolve
the dispute as expeditiously as practicable, and if reasonably
40
practicable, within one hundred twenty (120) days after the selection of the
arbitrators. The arbitrators shall give the parties written notice of the
decision, with the reasons therefor set out, and shall have thirty (30) days
thereafter to reconsider and modify such decision if any party so requests
within ten (10) days after the decision. Thereafter, the decision of the
arbitrators shall be final, binding, and nonappealable with respect to all
persons, including (without limitation) persons who have failed or refused to
participate in the arbitration process.
13.4 Authority. The arbitrators shall have authority to award relief under
legal or equitable principles, including interim or preliminary relief, and to
allocate responsibility for the costs of the arbitration and to award recovery
of attorneys fees and expenses in such manner as is determined to be appropriate
by the arbitrators.
13.5 Entry of Judgment. Judgment upon the award rendered by the
arbitrators may be entered in any court having in personam and subject matter
jurisdiction. Shareholders and Buyer hereby submit to the in personam
jurisdiction of the Federal and State courts in Illinois, for the purpose of
confirming any such award and entering judgment thereon.
13.6 Confidentiality. All proceedings under this Section 13, and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all parties and by the arbitrators.
13.7 Continued Performance. The fact that the dispute resolution
procedures specified in this Section 13 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party.
13.8 Tolling. All applicable statutes of limitation shall be tolled while
the procedures specified in this Section 13 are pending. The parties will take
such action, if any, required to effectuate such tolling.
14. DEFINITIONS
All defined terms used herein shall have the meaning set forth in this
Section 14 or elsewhere defined in this Agreement as follows:
41
"Affiliate" shall mean, with respect to the person in question, (i)
any shareholders, directors or officers of such person; (ii) any spouse,
children or family members of such person; or (iii) any other person that,
directly or indirectly, (a) owns or controls fifty percent (50%) or more of the
outstanding voting and/or equity interests of such person, or (b) controls, is
controlled by or is under common control with, the person in question. For the
purposes of this definition, the term "control" and its derivations means having
the power, directly or indirectly, to direct the management, policies or general
conduct of business of the Person in question, whether by the ownership of
voting securities, contract or otherwise. As to the Company, "Affiliate" shall
include the Subsidiaries.
"Antitrust Division" shall mean the Antitrust Division of the United
States Department of Justice.
"Best Efforts" The efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible [; provided, however, that an
obligation to use Best Efforts under this Agreement does not require the Person
subject to that obligation to take actions that would result in a materially
adverse change in the benefits to such Person of this Agreement and the
Contemplated Transactions].
"Breach" A "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Business Day" shall mean any day other then Saturday, Sunday and
any day which is a day on which banking institutions in the State of Illinois
are authorized or required by law or other government action to close.
"Buyer" As defined in the first paragraph of this Agreement.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation Liability Act, as amended.
"Claim" shall include (i) all Liabilities, costs and expenses
(including, without limitation, interest (including prejudgment interest in any
litigated matter), court costs and attorneys fees and expenses; (iii) all
claims, suits, actions, costs of investigation, causes of action, proceedings
and assessments, whether or not ultimately determined to be valid; and (iii) all
cost and expenses associated with the enforcement of this Agreement or any of
the Ancillary Agreements.
"Closing" As defined in Section 10.
42
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" As defined in the Recitals of this Agreement.
"Consent" Any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contract" Any Contract (a) under which Company or any Subsidiary
has or may acquire any rights, (b) under which any Company or any Subsidiary has
or may become subject to any obligation or liability, or (c) by which any
Company, any Subsidiary or any of the assets owned or used by it is or may
become bound.
"Debt Obligations" shall mean outstanding principal, interest and
prepayment amounts, under Operating Lines of Credit, Construction Lines of
Credit, Permanent Debt Financing, Equipment Lease Obligations and Related Party
Obligations shown on the Company's consolidated balance statement.
"Effective Time" shall mean the close of business on the Business
Day immediately prior to the Closing Date.
"Encumbrance" Any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment" Soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" Any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such
43
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
"Environmental Law" Any Legal Requirement that requires or relates
to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" The Employee Retirement income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
44
"Estimated Closing Adjustment Statement" shall mean a projected
balance sheet of Company which shall represent a reasonable estimate of the
Final Closing Adjustment Statement; such balance sheet to be prepared in
accordance with GAAP applied on a consistent basis and as otherwise required by
this Agreement and accompanied by schedules setting forth in reasonable detail
all assets and liabilities included therein.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facilities" Any real property, leaseholds, or other interests
currently or formerly owned or operated by and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by Company.
"Final Closing Adjustment Statement" shall mean a balance sheet of
Company as of the Effective Time, such balance sheet to be prepared in
accordance with GAAP applied on a consistent basis and as otherwise required by
this Agreement and accompanied by schedules setting forth in reasonable detail
all assets and liabilities at the Effective Time.?
"FTC" shall mean the United States Federal Trade Commission.
"GAAP" Generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements were prepared.
"Governmental Authorization" Any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" Any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity" The distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
45
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials" Any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"HSR Act" The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"Improvements" shall mean all buildings, improvements and structures
now or on the Closing Date located on any, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, systems and other so-called "infrastructure"
improvements.
"Independent Accounting Firm" shall mean an independent accounting
firm of national or regional reputation mutually appointed by Shareholders and
Buyer.
"Knowledge" An individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter;
or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
Knowledge of the following individuals shall be attributed to and
considered Knowledge of the Shareholders for purposes of this Agreement:
Shareholders, Xxxx Xxxx, Xxx Xxxx and Xxxxxxx Xxxxx.
"Law" shall mean any constitution, statute, law, ordinance, rule,
authorization or regulation promulgated or issued by a Government Entity,
including, without limitation, the Americans with Disabilities Act.
"Legal Requirement" Any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
46
"Liability" or "Liabilities" shall mean and include any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, debt, demand,
judgment, fine, penalty, settlement, damage, deficiency, cost, expense,
obligation or responsibility of any nature or kind, fixed or unfixed, accrued,
absolute or contingent, known or unknown, asserted or unasserted, liquidated or
unliquidated, matured or unmatured, secured or unsecured, including all costs
and expenses (legal, accounting or otherwise) relating thereto, reduced in all
cases by insurance reimbursements or other recoveries of monies on such account.
"Licenses and Permits" shall mean all licenses, permits, consents,
approvals, authorizations, registrations and certifications of all Government
Entities and all certification organizations.
"Liens" shall mean and include all mortgages, liens, (statutory or
otherwise) security interests, claims, pledges, licenses, equities, options,
conditional sales contracts, assessments, levies, charges or encumbrances of any
nature whatsoever.
"Noncompetition Agreements" As defined in Section.
"Occupational Safety and Health Law" Any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Operating and Service Agreements" shall mean all management,
service and operating agreements and contracts entered into by Company with
respect to the Properties or the Business of Company, including, but not limited
to, agreements and contracts relating to maintenance and repair of the
Properties, refuse service agreements, pest control service agreements,
landscaping agreements, parking lot maintenance agreements and snow removal
contracts.
"Operating Lines of Credit" shall mean Bank One Credit Agreement
amended and restated, dated September 30, 2004.
"Order" Any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" An action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
47
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) [and is not required to be specifically authorized by the
parent company (if any) of such Person]; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Person" Any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" As defined in Section.
"Proceeding" Any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Property" shall have the meaning set forth in the Recitals to this
Agreement.
"Proposal" means any inquiry, proposal or offer from any person
(other than Buyer and its Affiliates and representatives) relating to any direct
or indirect (i) merger, consolidation or similar transaction involving the
Company, (ii) sale, lease or other disposition, directly or indirectly, by
merger, consolidation, share exchange or otherwise, of any of the assets of the
Company other than sales within the ordinary course of business consistent with
past practice, (iii) recapitalization, restructuring, liquidation, dissolution,
or other similar type of transaction with respect to or involving the Company or
(iv) transaction that is similar in form, substance or purpose to any of the
foregoing transactions.
"Release" Any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
Representative" With respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" The Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Shareholders" As defined in the first paragraph of this Agreement.
"Shareholders' Releases" As defined in Section.
"Shares" As defined in the Recitals of this Agreement.
48
"Subsidiary" With respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"Tax" Any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be Filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" A substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Threatened" A claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
49
15. MISCELLANEOUS
15 1 Assignment; Parties in Interest.
15.1 (a) Assignment. Except as expressly provided herein, the rights and
obligations of a party hereunder may not be assigned, transferred or encumbered
without the prior written consent of the other parties. Buyer may assign its
rights and interest in and to this Agreement to one or more of its Affiliates
upon advance written notice to Shareholders; provided, however, notwithstanding
such assignment, Buyer shall remain directly and primarily liable to
Shareholders for its obligations hereunder.
15.1.(b) Parties in Interest; No Third Party Beneficiaries. This Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other Person other than the
parties hereto any right or remedy under or by reason of this Agreement.
15.2 Recordings. Neither this Agreement nor any notice or memorandum
thereof shall be recorded in any real property records for any
jurisdiction. Any such recordation shall constitute a default under this
Agreement by the recording party.
15.3 Law Governing Agreement. This Agreement shall be construed and
interpreted according to the internal Laws of the State of Illinois,
excluding any
50
choice of Law rules that may direct the application of the Laws of another
jurisdiction.
15.4 Amendment and Modification. The parties hereto may amend, modify and
supplement this Agreement in such manner as may be agreed upon by them in
writing.
15.5 Notice. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; or
(b) sent to the parties at their respective addresses indicated herein by
registered or certified U.S. mail, return receipt requested and postage prepaid,
or by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
IF TO BUYER, TO:
Xxxxxx X. Xxxxxx
Carmike Cinemas, Inc.
0000 0xx Xxx.
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
(with a copy, which shall not constitute notice, to:
Xxx Xxxxxxxx
Page, Scrantom, Sprouse, Xxxxxx & Ford, P.C.
0000 Xxx Xxx. 0xx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall furnish to Shareholders in
writing.
IF TO SHAREHOLDERS, TO:
51
Xxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
(with a copy, which shall not constitute notice, to)
Xxxxx X. Xxxxx
Barber, Segatto, Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other person or address as Shareholders shall furnish to Buyer in
writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if sent by overnight courier pursuant to this
paragraph, such communication shall be deemed delivered upon receipt; and if
sent by U.S. mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee fails or refuses to accept
delivery, as of the date of such failure or refusal. Any party to this Agreement
may change its address for the purposes of this Agreement by giving notice
thereof in accordance with this Section 15.5.
15.6 Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated, and except as specifically set forth in
this Agreement to the contrary, all fees and expenses incurred by Shareholders
in connection with this Agreement will be borne by Shareholders and all fees and
expenses incurred by Buyer in connection with this Agreement will be borne by
Buyer, including all filing fees associated with any filings under the HSR Act,
15.7 Publicity. The parties agree that, except in the performance of
the obligations under this Agreement, no party shall, with respect to this
Agreement and the transactions contemplated hereby, make any public
announcements, issue press releases or otherwise furnish information regarding
this Agreement or the transactions contemplated to any third party without the
consent of the other parties, which consent shall not be unreasonably withheld,
delayed or conditioned, except as required by Law, the rules and regulations of
the
52
"SEC" or the "NASDAQ Exchange" or unless such action is taken based on advice of
counsel given in good faith.
15.8 Entire Agreement. This Agreement embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein.
15.9 Counterparts; Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Signatures of
the parties transmitted by facsimile shall be deemed to be their original
signatures for all purposes
15.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
15.11 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
15.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
15.13 Incorporation of Schedules and Exhibits. The Schedules and Exhibits
are incorporated herein by reference and made a part hereof. Information set
forth in a disclosure Schedule shall be deemed to have been disclosed with
respect to any other section of this Agreement, without the necessity for
specific cross-referencing. A Schedule can be amended prior to the Closing upon
prior notice to and approval by Buyer.
53
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
BUYER:
CARMIKE CINEMAS INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx, President, pursuant
to authority of its Board of Directors
SHAREHOLDERS:
/s/ Xxxx Xxxxxxxxx
--------------------------------------
Xxxx Xxxxxxxxx, individually as a
Shareholder
/s/ Xxxx Xxxxxxxxx
---------------------------------------
Xxxx Xxxxxxxxx, as Executor of and
Trustee under the Will of Xxxxxx X.
Xxxxxxxxx
/s/ Xxxxxxxx Xxxxxxxxx
---------------------------------------
Xxxxxxxx Xxxxxxxxx, individually as a
Shareholder
54
