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EXHIBIT 10.7
ASSET PURCHASE AGREEMENT
BETWEEN
DICKINSON, INC.
AND
HOLLYWOOD THEATERS, INC.
DATED AS OF AUGUST 19, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
SALE AND TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 Sale and Transfer of Dickinson Assets . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Sale and Transfer of Hollywood Assets . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Expenses; Proration of Cash and Expenses . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.5 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.6 Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.8 Non-Assignable Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
THE CLOSING; TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Conditions Precedent to Obligations of Hollywood . . . . . . . . . . . . . . . . . 13
SECTION 3.3 Conditions Precedent to Obligations of Dickinson . . . . . . . . . . . . . . . . . 15
SECTION 3.5 Hollywood's Inspection of the Dickinson Assets . . . . . . . . . . . . . . . . . . 18
SECTION 3.6 Dickinson's Inspection of the Hollywood Assets . . . . . . . . . . . . . . . . . . 19
SECTION 3.7 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.8 Survey and Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DICKINSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.1 Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.2 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.3 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.4 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.5 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.6 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.7 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.8 Contracts and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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SECTION 4.9 Theater Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.11 Assets Necessary to Business; Effect of Transfer . . . . . . . . . . . . . . . . . 28
SECTION 4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.14 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.15 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.16 Defects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.17 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.18 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.19 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.20 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOLLYWOOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.1 Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.2 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.3 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.4 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.5 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.6 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.7 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.8 Contracts and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.9 Theater Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11 Assets Necessary to Business; Effect of Transfer . . . . . . . . . . . . . . . . . 36
SECTION 5.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.14 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.15 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.16 Defects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.17 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.18 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.19 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.20 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VI
DICKINSON COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.1 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.2 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.3 Satisfaction of All Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 41
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SECTION 6.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.5 Material Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.6 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.7 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.8 Continuation of Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.9 Interim Operations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.10 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.11 Preservation of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.12 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.13 Use of Corporate Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII
HOLLYWOOD COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.1 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.3 Satisfaction of All Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.5 Material Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.6 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.7 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.8 Continuation of Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.9 Interim Operations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.10 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.11 Preservation of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.12 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.13 Use of Corporate Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.14 Ramada 4 Theater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . 47
SECTION 8.1 Survival of Representations and Agreements . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.2 Indemnification of Hollywood . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.3 Indemnification of Dickinson . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.4 Indemnification for Third Party Claims . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.5 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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SECTION 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.4 Parties in Interest; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.5 Amendment; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.6 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.8 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.12 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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Exhibit A - Form of Assignment and Assumption Agreement
Exhibit B - Form of Bill of Sale and Assignment
Exhibit C - Form of Landlord Consent and Subordination
Schedule 2.1(a) - Dickinson Fee Theater
Schedule 2.1(b) - Dickinson Leased Theaters
Schedule 2.1(d) - Dickinson Assignable Consents, Licenses and Authorizations
Schedule 2.1(e) - Dickinson Assumed Contracts
Schedule 2.1(g) - Dickinson Excluded Assets
Schedule 2.2(a) - Hollywood Fee Theaters
Schedule 2.2(b) - Hollywood Leased Theaters
Schedule 2.2(d) - Hollywood Assignable Consents, Licenses and Authorizations
Schedule 2.2(e) - Hollywood Assumed Contracts
Schedule 2.2(g) - Hollywood Excluded Assets
Schedule 2.6(a) - Dickinson Existing Debt
Schedule 2.6(b) - Hollywood Existing Debt
Schedule 3.8(b) - Title Commitments
Schedule 4.3 - Dickinson Conflicts and Consents
Schedule 4.4 - Dickinson Liens; Agreements Granting Rights to Third Parties
Schedule 4.5 - Dickinson Proprietary Rights
Schedule 4.6 - Dickinson Financial Statements
Schedule 4.7 - Dickinson Conduct of Business
Schedule 4.8 - Dickinson Contracts and Other Agreements
Schedule 4.9 - Dickinson Theater Locations
Schedule 4.12 - Dickinson Litigation
Schedule 4.14 - Dickinson Environmental Law Undertakings
Schedule 4.16 - Dickinson Defects
Schedule 4.19 - Dickinson Brokers
Schedule 5.3 - Hollywood Conflicts and Consents
Schedule 5.4 - Hollywood Liens; Agreements Granting Rights to Third Parties
Schedule 5.5 - Hollywood Proprietary Rights
Schedule 5.6 - Hollywood Financial Statements
Schedule 5.7 - Hollywood Conduct of Business
Schedule 5.8 - Hollywood Contracts and Other Agreements
Schedule 5.9 - Hollywood Theater Locations
Schedule 5.12 - Hollywood Litigation
Schedule 5.14 - Hollywood Environmental Law Undertakings
Schedule 5.16 - Hollywood Defects
Schedule 5.19 - Hollywood Brokers
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ASSET AND STOCK PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), is entered
into effective as of August 19, 1997 (the "Effective Date") by and between
Dickinson, Inc., a Kansas corporation, doing business in the name of Dickinson
Theaters ("Dickinson"), and Hollywood Theaters, Inc., a Delaware corporation
("Hollywood").
W I T N E S S E T H:
WHEREAS, on July 8, 1997, Dickinson and Hollywood entered into
a Letter of Intent (the "Letter of Intent") whereby (i) Hollywood proposed to
buy and Dickinson agreed to sell the Dickinson Assets (as hereinafter defined)
and (ii) Dickinson proposed to buy and Hollywood agreed to sell the Hollywood
Assets (as hereinafter defined), in each case subject to the execution of a
definitive agreement; and
WHEREAS, Hollywood and Dickinson now desire to enter into a
definitive agreement whereby (i) Dickinson will sell, convey, transfer and
deliver the Dickinson Assets to Hollywood free and clear of all Liens (as
hereinafter defined), title imperfections, claims, charges, levies or
assessments, and Hollywood will acquire the Dickinson Assets from Dickinson and
(ii) Hollywood will sell, convey, transfer and deliver the Hollywood Assets to
Dickinson free and clear of all Liens, title imperfections, claims, charges,
levies or assessments, and Dickinson will acquire the Hollywood Assets from
Hollywood, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For purposes of this Agreement,
the terms set forth below shall have the following respective meanings:
"ADA" has the meaning specified in Section 4.11.
"Affiliate" shall mean, with respect to any Person, any other
Person who, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. As used herein, the term "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether by the
ownership of voting securities, by contract or otherwise.
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"Arbitration Panel" has the meaning specified in Section
9.6(b).
"Assignment and Assumption Agreement" means an assignment and
assumption document to be executed as of the Closing Date by either Dickinson
or Hollywood, as appropriate, in the form attached as Exhibit A.
"Bill of Sale and Assignment" means a sale and assignment
document to be executed as of the Closing Date by either Dickinson or
Hollywood, as appropriate, in the form attached as Exhibit B hereto.
"Cash Purchase Price" has the meaning specified in Section
2.3.
"Closing" has the meaning specified in Section 3.1.
"Closing Date" has the meaning specified in Section 3.1.
"Consent" has the meaning specified in Section 4.3.
"Contract" means any contract, agreement, arrangement,
understanding or other instrument or obligation (whether oral or written,
pending or executory).
"Delivery Date" has the meaning specified in Section 3.5(a).
"Dickinson" has the meaning specified in the preamble to this
Agreement.
"Dickinson Assets" has the meaning specified in Section 2.1.
"Dickinson Assumed Contracts" has the meaning specified in
Section 2.1(e).
"Dickinson Delivered Documents" has the meaning specified in
Section 3.5(a).
"Dickinson Excluded Assets" has the meaning specified in
Section 2.1(g).
"Dickinson Existing Debt" means the indebtedness identified on
Schedule 2.6(a) hereto (i) relating to or secured by liens on any Dickinson
Theaters, or (ii) whether or not relating to or secured by liens on any
Dickinson Theaters, for which Dickinson or any of the Dickinson Assets are
obligated or bound.
"Dickinson Expenses" means any and all fees or expenses or
capital expenditures relating to the replacement of equipment arising out of
or relating to the operation of the Dickinson Theaters and the Dickinson Assets
in the ordinary course of business, including, but not limited to, prepaid
fees, Taxes, utility charges, lease charges, film rental expenses, minimum rent
and
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percentage rent under the Dickinson Leases, concession expenses, wages and
salaries and other trade payables.
"Dickinson Fee Theater" means the Dickinson Real Property and
Dickinson Improvements.
"Dickinson Improvements" means all buildings and other
improvements situated on the Dickinson Real Property.
"Dickinson Leased Theaters" means all of Dickinson's right,
title and interest as tenant in, to and under the Dickinson Leases covering the
four Dickinson Theaters which are identified as "Dickinson Leased Theaters" on
Schedule 4.9.
"Dickinson Leases" means those written leases, together with
all amendments, supplements and modifications thereto, relating to the
Dickinson Leased Theaters as of the date hereof, which Dickinson Leases are
identified on Schedule 2.1(b).
"Dickinson Real Property" means fee simple title in and to
that certain tract of real property on which is located one Dickinson Theater
identified as "Dickinson Fee Theater" on Schedule 4.9 hereto, which property is
more particularly described on Schedule 2.1(a) hereto, together with all of
Dickinson's right, title and interest in and to adjacent streets, roads,
alleys, rights of way, easements, rail usage and any strips or gores of real
estate abutting or bounding such property, and all rights, titles and interests
of Dickinson appurtenant to such real property and the Dickinson Improvements.
"Dickinson Retained Liabilities" has the meaning specified in
Section 2.6 (a).
"Dickinson Theaters" means the Dickinson Fee Theater and the
Dickinson Leased Theaters.
"Dickinson's Ancillary Documents" has the meaning specified in
Section 4.2.
"Dispute Notice" has the meaning specified in Section 2.4(e).
"Environmental Laws" means any federal, state, local and
foreign laws (including common law), statutes, codes, ordinances, guides,
written policy rules and regulations that are applicable to either the
Dickinson Assets or the Hollywood Assets, and in each case as amended, and any
judicial or administrative interpretation thereof, relating to pollution or
protection of human health, the environment or natural resources (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws, statutes, codes,
ordinances, rules, regulations, consent decrees and judgments relating to
emissions, discharges, releases or threatened releases of Hazardous Substances,
or otherwise relating to the
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manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"Expiration Date" has the meaning specified in Section 2.4(e).
"GAAP" means generally accepted accounting principles and
practices as in effect in the United States at the time of the application
thereof, consistently applied for all periods so as to fairly reflect the
financial condition, the results of operations and the cash flows of the
relevant Person or Persons.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof, any federal or state court and any
other agency, body, authority or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Hazardous Substance" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form, polychlorinated biphenyl
("PCBs") and, to the extent only it exists at levels which are considered
hazardous to human health, radon gas; and (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous waste," "hazardous materials," "extremely hazardous substances,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants" or
words of similar import, under any applicable Environmental Laws.
"Hollywood" has the meaning specified in the preamble to this
Agreement.
"Hollywood Assets" has the meaning specified in Section 2.2.
"Hollywood Assumed Contracts" has the meaning specified in
Section 2.2(e).
"Hollywood Delivered Documents" has the meaning specified in
Section 3.6(a).
"Hollywood Excluded Assets" has the meaning specified in
Section 2.2(g).
"Hollywood Existing Debt" means the indebtedness identified on
Schedule 2.6(b) hereto (i) relating to or secured by liens on any Hollywood
Theaters, or (ii) whether or not relating to or secured by liens on any
Hollywood Theaters, for which Hollywood or any of the Hollywood Assets are
obligated or bound.
"Hollywood Expenses" means any and all fees or expenses or
capital expenditures relating to the replacement of equipment arising out of
or relating to the operation of the Hollywood Theaters and the Hollywood Assets
in the ordinary course of business, including, but not limited to, prepaid
fees, Taxes, utility charges, lease charges, film rental expenses, minimum rent
and
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percentage rent under the Hollywood Leases, concession expenses, wages and
salaries and other trade payables.
"Hollywood Fee Theaters" means the Hollywood Real Property and
Hollywood Improvements.
"Hollywood Improvements" means all buildings and other
improvements situated on the Hollywood Real Property.
"Hollywood Leased Theaters" means all of Hollywood's right,
title and interest as tenant in, to and under the Hollywood Leases covering the
five Hollywood Theaters which are identified as "Hollywood Leased Theaters" on
Schedule 5.9.
"Hollywood Leases" means those written leases, together with
all amendments, supplements and modifications thereto, relating to the
Hollywood Leased Theaters as of the date hereof, which Hollywood Leases are
identified on Schedule 2.2(b).
"Hollywood Real Property" means fee simple title in and to
those certain tracts of real property on which are located an aggregate of two
Hollywood Theaters identified as "Hollywood Fee Theaters" on Schedule 4.9
hereto, which property is more particularly described on Schedule 2.1(a)
hereto, together with all of Hollywood's right, title and interest in and to
adjacent streets, roads, alleys, rights of way, easements, rail usage and any
strips or gores of real estate abutting or bounding such property, and all
rights, titles and interests of Hollywood appurtenant to such real property and
the Hollywood Improvements.
"Hollywood Retained Liabilities" has the meaning specified in
Section 2.6(b).
"Hollywood Theaters" means the Hollywood Fee Theaters and the
Hollywood Leased Theaters.
"Hollywood's Ancillary Documents" has the meaning specified in
Section 5.2.
"Inspection Period" means the period beginning on the date of
this Agreement and ending on the close of business on September 2, 1997.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended and as the same may be amended from time to time, and any
successor statute thereto.
"Knowledge" means the actual knowledge of Dickinson or
Hollywood, as appropriate, after reasonable inquiry of all district managers
and corporate staff of Dickinson or Hollywood, respectively.
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"Landlord Consent to Assignment and Subordination" means a
written consent to, among other things, the assignment of each Dickinson Lease
or Hollywood Lease, as appropriate, by the respective landlord of such lease,
substantially in the form attached as Exhibit C hereto.
"Letter of Intent" has the meaning specified in the recitals
hereto.
"Liability" has the meaning specified in Section 8.2.
"Lien" means, with respect to any properties or assets, any
mortgage, pledge, hypothecation, assignment, security interest, lien or
encumbrance or any preference, priority or other security agreement or
preferential arrangement of any kind or character whatsoever (including, but
not limited to, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction) in
respect of such properties or assets.
"Material Adverse Effect" means a material adverse effect on
the business, operations, affairs, condition (financial or otherwise), results
of operation, properties, assets or liabilities of the Dickinson Theaters
and/or the Hollywood Theaters, as appropriate, individually or in the
aggregate.
"Permitted Exceptions" has the meaning specified in Section
3.8(c).
"Person" means any individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization of
any kind or character, including any Governmental Authority.
"Proprietary Rights" means any United States and foreign
letters patent, patents, patent applications, trademarks, trade names, service
marks, brand names, logos and other trade registrations (including unregistered
names and marks), trademark and service mark registrations and applications,
copyrights and copyright registrations and applications, inventions, invention
disclosures, trade secrets, processes, designs, technology, know-how and other
similar rights, including proprietary theater ticketing systems and the related
software.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the outdoor environment, or into, onto, or out of the Dickinson
Theaters or the Hollywood Theaters, as the case may be, including the movement
of any Hazardous Substance or other substance through or in the air, soil,
surface water, groundwater or other property.
"Revised Commitment" has the meaning specified in Section
3.8(c).
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"Surveyor" has the meaning specified in Section 3.8(a).
"Surveys" has the meaning specified in Section 3.8(a).
"Taxes" means all taxes, charges, fees, levies or other
assessments (including, but not limited to, income, gross receipts, excise,
property, sales, occupation, use, service use, license, payroll, franchise,
transfer and recording taxes, fees and charges) imposed by any Governmental
Authority, whether computed on a separate, consolidated, unitary or combined
basis or in any other manner, and includes any interest, penalties and
additions to any tax.
"Theaters" means the Dickinson Theaters and the Hollywood
Theaters.
"Third Party Claims" means claims, charges or complaints made
or threatened by third parties or employees of Dickinson or Hollywood arising
from events occurring outside the ordinary course of business of Dickinson or
Hollywood, including, but not limited to, harassing or illegal acts committed
by employees of Dickinson or Hollywood or charges or complaints made by
employees to the Equal Employment Opportunity Commission or any other federal,
state or local agency responsible for the prevention of unlawful employment
practices.
"Title Commitment" has the meaning specified in Section
3.8(b).
"Title Company" means (i) with respect to Dickinson, Columbian
National Title Insurance of Topeka, Inc., as agent for Columbia National Title
Insurance, at the address of 820 Southeast Quincy, Topeka, Kansas 66612, Attn:
Eric Deitcher and (ii) with respect to Hollywood, Hall Abstract, as agent for
Chicago Title Company, at the address of 200 South 8th Street, St. Joseph,
Missouri 64501, Attn: Steve Crawford.
"Title Policies" has the meaning specified in Section 3.8(d).
"TLCF" means, with respect to each Theater, the higher of the
theater level cash flow of such Theater for the twelve months ended March 31,
1996 and the twelve months ended March 31, 1997, as determined by reference to
the theater level cash flow statements of Dickinson or Hollywood, as
appropriate, for such Theater, prepared in accordance with GAAP, and prepared
consistently in all material respects with Dickinson's or Hollywood's
historical theater level cash flow statements, as heretofore provided by
Dickinson to Hollywood and by Hollywood to Dickinson. The parties acknowledge
that TLCF does not include interest, amortization, depreciation or allocations
of general and administrative expenses or income taxes.
"UCC" has the meaning specified in Section 3.5(a)(vii).
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ARTICLE II
SALE AND TRANSFER OF ASSETS
SECTION 2.1 Sale and Transfer of Dickinson Assets. In
accordance with the terms and provisions set forth herein, at the Closing
Dickinson shall sell, convey, transfer and deliver to Hollywood all of
Dickinson's right, title and interest in and to the following properties and
assets (collectively, the "Dickinson Assets"):
(a) the Dickinson Fee Theater, including the Dickinson
Real Property identified on Schedule 2.1(a) hereto and the Dickinson
Improvements;
(b) the leasehold interests, including leasehold
improvements, in the Dickinson Leases identified on Schedule 2.1(b)
hereto;
(c) all tangible personal property, equipment and
fixtures of any kind owned or leased by Dickinson and attached to or
located within or on or customarily used in connection with the
operation of the Dickinson Theaters, including but not limited to
seats, merchandise, inventory, merchantable food and drink, cleaning
equipment, office equipment, projection and sound equipment, screens,
carpets, draperies, soundfold, wall coverings, cash registers, ticket
machines, signs (including marquees), projection supplies, concessions
equipment and prepaid utility and rent deposits in each case, except
for Dickinson's rights or interests in any Dickinson Excluded Assets;
(d) the consents, approvals, licenses, permits,
franchises and other authorizations possessed by Dickinson identified
in Schedule 2.1(d) hereto relating to the Dickinson Theaters to the
extent transferable;
(e) the Contracts listed on Schedule 2.1(e) hereof (the
"Dickinson Assumed Contracts");
(f) all business books and records of Dickinson that are
necessary to the continuing operation of the Dickinson Theaters;
(g) all other properties and assets of any kind,
character and description whatsoever (whether or not reflected on the
books of Dickinson and whether real, personal or mixed, tangible or
intangible, contingent or otherwise) used, or available for use, in
the business or operations of Dickinson at the Dickinson Theaters or
necessary for the continuation of such business or operations
consistent with past practice, other than the assets specifically
identified on Schedule 2.1(g) hereto (the "Dickinson Excluded
Assets").
SECTION 2.2 Sale and Transfer of Hollywood Assets. In
accordance with the terms and provisions set forth herein, at the Closing
Hollywood shall sell, convey, transfer and deliver to
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Dickinson all of Hollywood's right, title and interest in and to the following
properties and assets (collectively, the "Hollywood Assets"):
(a) the Hollywood Fee Theaters, including the Hollywood
Real Property identified on Schedule 2.2(a) hereto and the Hollywood
Improvements;
(b) the leasehold interests, including leasehold
improvements, in the Hollywood Leases identified on Schedule 2.2(b)
hereto;
(c) all tangible personal property, equipment and
fixtures of any kind owned or leased by Hollywood and attached to or
located within or on or customarily used in connection with the
operation of the Hollywood Theaters, including but not limited to
seats, merchandise, inventory, merchantable food and drink, cleaning
equipment, office equipment, projection and sound equipment, screens,
carpets, draperies, soundfold, wall coverings, cash registers, ticket
machines, signs (including marquees), projection supplies, concessions
equipment and prepaid utility and rent deposits in each case, except
for Hollywood's rights or interests in any Hollywood Excluded Assets;
(d) the consents, approvals, licenses, permits,
franchises and other authorizations possessed by Hollywood identified
in Schedule 2.2(d) hereto relating to the Hollywood Theaters to the
extent transferable;
(e) the Contracts listed on Schedule 2.2(e) hereof (the
"Hollywood Assumed Contracts");
(f) all business books and records of Hollywood that are
necessary to the continuing operation of the Hollywood Theaters;
(g) all other properties and assets of any kind,
character and description whatsoever (whether or not reflected on the
books of Hollywood and whether real, personal or mixed, tangible or
intangible, contingent or otherwise) used, or available for use, in
the business or operations of Hollywood at the Hollywood Theaters or
necessary for the continuation of such business or operations
consistent with past practice, other than the assets specifically
identified on Schedule 2.2(g) hereto (the "Hollywood Excluded
Assets").
SECTION 2.3 Cash Purchase Price. At Closing, Dickinson
shall pay and deliver to Hollywood in immediately available same day funds
$1,118,000 (the "Cash Purchase Price").
SECTION 2.4 Expenses; Proration of Cash and Expenses.
(a) Dickinson agrees to pay all debts, Dickinson Expenses
and contractual obligations that arise or are incurred, or with
respect to which the event creating such debt, liability, Dickinson
Expense or obligation arises or occurred, on or prior to the Closing
Date
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in connection with the operation and business of the Dickinson
Theaters or related to the Dickinson Assets, whether or not Dickinson
is aware of such debts, Dickinson Expenses, obligations or events.
Dickinson agrees to pay all Third Party Claims that arise or are
incurred, or with respect to which the event creating such liability
or obligation arises or occurs, on or prior the Closing Date in
connection with the operation and business of the Dickinson Theaters
or related to the Dickinson Assets, whether or not Dickinson is aware
of such liabilities, obligations or events.
(b) Hollywood agrees to pay all debts, Hollywood
Expenses and contractual obligations that arise or are incurred, or
with respect to which the event creating such debt, liability,
Hollywood Expense or obligation arises or occurred, on or prior to the
Closing Date in connection with the operation and business of the
Hollywood Theaters or related to the Hollywood Assets, whether or not
Hollywood is aware of such debts, Hollywood Expenses, obligations or
events. Hollywood agrees to pay all Third Party Claims that arise or
are incurred, or with respect to which the event creating such
liability or obligation arises or occurs, on or prior the Closing Date
in connection with the operation and business of the Hollywood
Theaters or related to the Hollywood Assets, whether or not Hollywood
is aware of such liabilities, obligations or events.
(c) To the extent that any Dickinson Expenses, Hollywood
Expenses are readily ascertainable as of the Closing Date, Dickinson
and Hollywood agree to pay such amounts at Closing. With respect to
such amounts that are not readily ascertainable as of the Closing
Date, Dickinson and Hollywood shall make payments after the Closing
promptly after such amounts are ascertained, and in any event within
10 days after evidence of such amounts is received from the party
claiming the right to reimbursement, subject to paragraph (e) of this
Section 2.4.
(d) At the close of business on the Closing Date, each of
Hollywood and Dickinson shall take inventory of all unopened
perishable concession goods on site at each of the Hollywood Theaters
and Dickinson Theaters, respectively. Within ten (10) days after the
Closing Date, each of Hollywood and Dickinson agrees to pay to the
other party hereto their respective cost for such unopened perishable
concessions.
(e) Either party hereto may dispute in good faith any
amounts the other claims to be payable pursuant to this Section 2.4 by
delivering a written notice to the other party or parties setting
forth in reasonable detail the amount and nature of each disputed
matter (each such notice being hereinafter referred to as a "Dispute
Notice") within ten days after receiving a notice that any such amount
is due under Section 2.4(a) or Section 2.4(b), as the case may be.
Each party shall provide the other party with such additional
information as it may reasonably request as to the basis of such
dispute. The parties shall attempt in good faith to resolve any
dispute as to any matter set forth in a Dispute Notice. If within 30
days following the date of the receipt of the Dispute Notice (the
"Expiration Date") the dispute cannot be resolved through negotiation
between the parties, the dispute shall be submitted for resolution by
binding arbitration in accordance with Section 9.6 hereof.
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SECTION 2.5 [Intentionally Omitted]
SECTION 2.6 Retained Liabilities.
(a) Notwithstanding anything to the contrary contained in
this Agreement, Hollywood shall not assume, pay, perform or discharge
any debts, liabilities, Dickinson Expenses or obligations of Dickinson
of any kind, character or description whatsoever (whether absolute or
contingent, known or unknown, asserted or unasserted, whether or not
the same are disclosed to Hollywood in or pursuant to this Agreement)
that arise or are incurred, or with respect to which the event
creating such debt, liability, Dickinson Expense or obligation arises
or occurs, on or prior to the Closing Date, in each case in connection
with the operation and business of the Dickinson Theaters or related
to the Dickinson Assets (collectively, the "Dickinson Retained
Liabilities"), which Dickinson Retained Liabilities include, without
limitation, the Dickinson Existing Debt.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Dickinson shall not assume, pay, perform or discharge
any debts, liabilities, Hollywood Expenses or obligations of Hollywood
of any kind, character or description whatsoever (whether absolute or
contingent, known or unknown, asserted or unasserted, whether or not
the same are disclosed to Dickinson in or pursuant to this Agreement)
that arise or are incurred, or with respect to which the event
creating such debt, liability, Hollywood Expense or obligation arises
or occurs, on or prior to the Closing Date, in each case in connection
with the operation and business of the Hollywood Theaters or related
to the Hollywood Assets (collectively, the "Hollywood Retained
Liabilities"), which Hollywood Retained Liabilities include, without
limitation, the Hollywood Existing Debt.
SECTION 2.7 Further Assurances. The parties hereby agree
that from time to time after Closing each of them shall (a) execute, deliver,
acknowledge, file and record, or cause to be executed, delivered, acknowledged,
filed and recorded, such further bills of sale, deeds, general conveyances,
endorsements, assignments and other good and sufficient instruments of sale,
conveyance, transfer and delivery and such further consents, certifications,
affidavits and assurances as are required in order to (i) vest in Hollywood all
of Dickinson's right, title and interests in and to the Dickinson Assets or
otherwise to consummate and make effective the transactions contemplated by
this Agreement, (ii) vest in Dickinson all of Hollywood's right, title and
interests in and to the Hollywood Assets or otherwise to consummate and make
effective the transactions contemplated by this Agreement, (iii) take, or cause
to be taken, all actions and do, or cause to be done, all things, as are
required in order to put Hollywood in actual possession and operating control
of the Dickinson Theaters and the Dickinson Assets or otherwise to accomplish
the purposes of this Agreement and (iv) take, or cause to be taken, all actions
and do, or cause to be done, all things, as are required in order to put
Dickinson in actual possession and operating control of the Hollywood Theaters
and the
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Hollywood Assets or otherwise to accomplish the purposes of this Agreement.
Each party agrees to pay its own expenses associated with any actions required
to be taken by each of them under this Section 2.7.
SECTION 2.8 Non-Assignable Assumed Contracts. This
Agreement and any document delivered hereunder shall not constitute an
assignment or an attempted assignment of any right under a Dickinson Assumed
Contract or a Hollywood Assumed Contract contemplated to be assigned hereunder:
(a) which is not assignable without the consent of a
third party if such consent has not been obtained and such assignment
or attempted assignment would constitute a breach thereof; or
(b) if the remedies for the enforcement or any other
particular provisions thereof available to Dickinson or Hollywood, as
applicable, would not pass to the other party hereto.
Dickinson and Hollywood shall use reasonable efforts to obtain such consents of
third parties as may be necessary for the assignment of the Dickinson Assumed
Contracts and the Hollywood Assumed Contracts, as the case may be, provided
that neither party shall be obligated to make any payments to such third
parties in addition to those required pursuant to any agreement with third
parties in order obtain such consents, unless Dickinson and Hollywood reimburse
one another for such payments at the time such payments are made. To the
extent that any of the Dickinson Assumed Contracts or Hollywood Assumed
Contracts are not assignable by the terms thereof or where consents to the
assignment thereof cannot be obtained as herein provided, Dickinson and
Hollywood, as applicable, shall, at the Closing, assign to the other party the
full benefit thereof (which shall be deemed to be Dickinson Assets or Hollywood
Assets, as applicable) and grant to the other party an irrevocable power of
attorney to perform the covenants and obligations thereunder in respect of the
period after the Closing Date, and to enforce such assignee's rights thereunder
in the name of such assignee but for the benefit of the assigning party hereto.
Dickinson or Hollywood, as applicable, shall take or cause to be taken such
action in its name or otherwise as the other party hereto may require so as to
provide Dickinson or Hollywood with the benefits thereof and to effect
collection of money or other consideration to become due and payable under such
items, and Dickinson and Hollywood shall promptly pay over to the other party
money received by each party in respect of all of the foregoing items.
ARTICLE III
THE CLOSING; TERMINATION
SECTION 3.1 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place on August 28,
1997, or on such other date as has been mutually agreed upon between Hollywood
and Dickinson (the "Closing Date"), at the offices of Baker & Botts, L.L.P.,
2001 Ross Avenue, Dallas, Texas 75201 and shall be effective as of 11:59 p.m.
on the Closing Date.
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SECTION 3.2 Conditions Precedent to Obligations of
Hollywood. The obligations of Hollywood at the Closing hereunder are subject
to the satisfaction on or prior to the Closing Date of the conditions set forth
below.
(a) The representations and warranties of Dickinson
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the
Closing Date; Dickinson shall have performed and complied with all
agreements required by this Agreement to be performed or complied with
by Dickinson at or prior to the Closing Date; and Hollywood shall have
received certificates, dated as of the Closing Date, signed by
Dickinson to the foregoing effect.
(b) No action or proceeding shall have been instituted or
threatened for the purpose or with the possible effect of enjoining or
preventing the consummation of this Agreement or seeking damages on
account thereof.
(c) From the date hereof until Closing, there shall not
have occurred any material casualty or damage (whether or not insured)
to any Dickinson Theater and the business of Dickinson shall have been
conducted only in the ordinary course consistent with past practices.
(d) All necessary action (corporate or otherwise) shall
have been taken by Dickinson to authorize, approve, and adopt this
Agreement and the consummation and performance of the transactions
contemplated hereby, and Hollywood shall have received a certificate,
dated as of the Closing Date, of Dickinson to the foregoing effect.
(e) Dickinson shall have terminated all contracts
relating to the Dickinson Assets, other than the Dickinson Assumed
Contracts.
(f) Hollywood shall have received executed Subordination
and Non-Disturbance Agreements from each lender, if any, of the
respective landlords under the Dickinson Leases, provided that this
condition shall be deemed to have been satisfied so long as lenders
for landlords with respect to no more than two Dickinson Theaters fail
to execute and deliver such an agreement.
(g) Dickinson shall have completed such environmental
reviews with respect to the Dickinson Fee Theater as Hollywood deems
necessary.
(h) Dickinson shall have amended the Lease Agreement for
Premises at Northpark Mall, by and between Northpark Mall Management
Company, Agent, and
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Dickinson, Inc. (the "NMMC Lease"), to conform the terms and
conditions of such lease to the terms and conditions of the Lease
Agreement for Premises at Joplin, Missouri, Northpark Mall Shopping
Center, by and between The First National Bank & Trust Company of
Joplin, Trustee, and Dickinson, Inc., dated October 1, 1971,
including, without limitation, the provisions of Section 8.2(B) of the
NMMC Lease prohibiting the tenant from conducting business from the
leased premises on Sunday, and Section 8.2(D) of the NMMC Lease
prohibiting the tenant from operating any device for the sale of
merchandise, food, beverages or other goods or services without the
prior written consent of the landlord.
(i) At the Closing, Dickinson shall deliver, or cause to
be delivered, to Hollywood each of the following:
(i) for each Dickinson Theater and the related
Dickinson Assets, a Bill of Sale and Assignment, duly executed
and acknowledged by Dickinson;
(ii) for each Dickinson Leased Theater and the
related Dickinson Assumed Contracts, an Assignment and
Assumption Agreement, duly executed and acknowledged by
Dickinson;
(iii) for each Dickinson Theater, a fully executed
Landlord Consent to Assignment and Subordination;
(iv) for each Dickinson Fee Theater, a title
opinion acceptable to Hollywood.
(v) such other bills of sale, deeds, general
conveyances, endorsements, assignments and other good and
sufficient instruments of sale, conveyance, transfer and
delivery as Hollywood may reasonably request in order more
effectively to vest in Hollywood all of Dickinson's right,
title and interest in and to the Dickinson Assets, in each
case duly executed and acknowledged by Dickinson;
(vi) evidence reasonably satisfactory to Hollywood
regarding the termination by Dickinson prior to Closing of all
Persons employed at each Dickinson Theater;
(vii) such documents as Hollywood may request
relating to the existence and good standing of Dickinson under
the laws of the State of Kansas, the authority of Dickinson to
enter into this Agreement and any other matters relevant
hereto, all in form and substance reasonably satisfactory to
Hollywood;
(viii) evidence satisfactory to Hollywood that all
liens on any Dickinson Assets have been released;
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(ix) the Cash Purchase Price; and
(x) immediately available funds sufficient to
provide for the repair, maintenance or replacement, if any, of
Dickinson Assets as contemplated pursuant to Section
3.5(c)(ii).
SECTION 3.3 Conditions Precedent to Obligations of
Dickinson. The obligations of Dickinson at the Closing are subject to the
satisfaction on or prior to the Closing Date of the conditions set forth below.
(a) Hollywood's representations and warranties contained
in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same effect as though such
representations and warranties had been made as of the Closing Date;
Hollywood shall have performed and complied with all agreements
required by this Agreement to be performed or complied with by
Hollywood at or prior to the Closing; and Dickinson shall have
received a certificate, dated as of the Closing Date, signed by
Hollywood to the foregoing effects.
(b) No action or proceeding shall have been instituted or
threatened for the purpose or with the possible effect of enjoining or
preventing the consummation of this Agreement or seeking damages on
account thereof.
(c) From the date hereof until Closing, there shall not
have occurred any material casualty or damage (whether or not insured)
to any Hollywood Theater and the business of Hollywood shall have been
conducted only in the ordinary course consistent with past practices.
(d) All necessary action (corporate or otherwise) shall
have been taken by Hollywood to authorize, approve and adopt this
Agreement and the consummation and performance of the transactions
contemplated hereby, and Dickinson shall have received a certificate,
dated as of the Closing Date, of Hollywood to the foregoing effect.
(e) Hollywood shall have terminated all contracts
relating to the Hollywood Assets, other than the Hollywood Assumed
Contracts.
(f) Dickinson shall have received executed Subordination
and Non-Disturbance Agreements from each lender, if any, of the
respective landlords under the Hollywood Leases, provided that this
condition shall be deemed to have been satisfied so long as lenders
for landlords with respect to no more than two Hollywood Theaters fail
to execute and deliver such an agreement.
(g) Hollywood shall have completed such environmental
reviews with respect to the Hollywood Fee Theaters as Dickinson deems
necessary.
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(h) At the Closing, Hollywood shall deliver, or cause to
be delivered, to Dickinson each of the following:
(i) for each Hollywood Theater and the related
Hollywood Assets, a Bill of Sale and Assignment, duly executed
and acknowledged by Hollywood;
(ii) for each Hollywood Leased Theater and the
related Hollywood Assumed Contracts, an Assignment and
Assumption Agreement, duly executed and acknowledged by
Hollywood;
(iii) for each Hollywood Theater, a fully executed
Landlord Consent to Assignment and Subordination;
(iv) for each Hollywood Fee Theater, a title
opinion acceptable to Dickinson.
(v) such other bills of sale, deeds, general
conveyances, endorsements, assignments and other good and
sufficient instruments of sale, conveyance, transfer and
delivery as Dickinson may reasonably request in order more
effectively to vest in Dickinson all of Hollywood's right,
title and interest in and to the Hollywood Assets, in each
case duly executed and acknowledged by Hollywood;
(vi) evidence reasonably satisfactory to Dickinson
regarding the termination by Hollywood prior to Closing of all
Persons employed at each Hollywood Theater;
(vii) such documents as Dickinson may request
relating to the existence and good standing of Hollywood under
the laws of the State of Delaware, the authority of Hollywood
to enter into this Agreement and any other matters relevant
hereto, all in form and substance reasonably satisfactory to
Dickinson;
(viii) evidence satisfactory to Dickinson that all
liens on any Hollywood Assets have been released; and
(ix) immediately available funds sufficient to
provide for the repair, maintenance or replacement, if any, of
Hollywood Assets as contemplated pursuant to Section
3.6(c)(ii) hereof.
SECTION 3.4 Termination. This Agreement may be
terminated prior to the Closing by:
(a) the mutual consent of Hollywood and Dickinson;
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(b) Dickinson upon the failure of Hollywood to perform or
comply with any of its covenants or agreements contained herein prior
to or at the Closing or if any representation or warranty of Hollywood
hereunder shall not have been true and correct in all material
respects as of the time at which such was made;
(c) Hollywood upon the failure of Dickinson to perform or
comply with any of its covenants or agreements contained herein prior
to or at the Closing or if any representation or warranty of Dickinson
hereunder shall not have been true and correct in all material
respects as of the time at which such was made;
(d) Dickinson if Hollywood elects not to allow Dickinson
to collect any soil samples or conduct any drilling at any Hollywood
Theaters requested by Dickinson pursuant to Section 3.6(b) hereof;
(e) Hollywood if Dickinson elects not to allow Hollywood
to collect any soil samples or conduct any drilling at any Dickinson
Theaters requested by Hollywood pursuant to Section 3.5(b) hereof;
(f) Hollywood if any Hazardous Substance (i) exists at
any of the Dickinson Theaters (including underground storage tanks on
the land occupied by the Dickinson Theaters, except in compliance with
Environmental Laws), (ii) has been disposed of on, to or from any of
the Dickinson Theaters, except in compliance with Environmental Laws,
(iii) has been released into, onto or out of the land occupied by the
Dickinson Theaters, except in compliance with Environmental Laws, or
(iv) has been generated, managed, treated or transported to or from
any of the Dickinson Theaters, except in compliance with Environmental
Laws;
(g) Dickinson if any Hazardous Substance (i) exists at
any of the Hollywood Theaters (including underground storage tanks on
the land occupied by the Hollywood Theaters, except in compliance with
Environmental Laws), (ii) has been disposed of on, to or from any of
the Hollywood Theaters, except in compliance with Environmental Laws,
(iii) has been released into, onto or out of the land occupied by the
Hollywood Theaters, except in compliance with Environmental Laws, or
(iv) has been generated, managed, treated or transported to or from
any of the Hollywood Theaters, except in compliance with Environmental
Laws;
(h) Dickinson, if there is an environmental problem or a
defect in title at any of the Hollywood Fee Theaters or Hollywood
Leased Theaters that Hollywood is unwilling to cure, or that cannot be
cured to Dickinson's reasonable satisfaction;
(i) Hollywood, if there is an environmental problem or a
defect in title at any of the Dickinson Fee Theater or Dickinson
Leased Theaters that Dickinson is unwilling to cure or that cannot be
cured to Hollywood's reasonable satisfaction; or
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(j) either Dickinson or Hollywood if the Closing does not
occur by September 25, 1997.
SECTION 3.5 Hollywood's Inspection of the Dickinson
Assets.
(a) Deliveries. Dickinson shall provide to Hollywood in
Dallas, Texas, on or before 5:00 p.m. Dallas time on the date ten
business days after the Effective Date ("Delivery Date") the following
items and documents relating to the Dickinson Assets to the extent the
same are in Dickinson's possession or are readily obtainable by
Dickinson (all of the following are herein called the "Dickinson
Delivered Documents"):
(i) copies of all ADA, engineering, structural,
elevator, curtain wall, mechanical, roof, environmental and
seismographic reports, a current site plan, the most recent
survey for the Dickinson Theaters and the land on which they
are situated, elevator specifications, if any, and as-built
architectural, structural, mechanical, and electrical plans
and specifications of the Dickinson Theaters;
(ii) copies of all certificates of occupancy,
licenses, permits, authorizations and approvals as required by
law for the construction, occupancy and operation of the
Dickinson Theaters and the land on which they are situated;
(iii) copies of all real estate tax bills for 1995,
1996 and 1997, including evidence of payment thereof;
(iv) a schedule of all guarantees and warranties
in Dickinson's possession and still in effect issued or made
in connection with the construction, improvement, alteration
or repair of the Dickinson Fee Theater, including without
limitation, guaranties and warranties pertaining to roofs,
elevators, masonry, landscaping and heating and air
conditioning systems;
(v) Uniform Commercial Code ("UCC") search
certificates from the Secretary of State of the State of
Missouri and the Secretary of State of the State of Kansas
reflecting any effective UCC financing statements then of
record that name Dickinson as debtor; and
(vi) of any notices of violations of laws or
insurance requirements which relate to the Dickinson Assets
and were issued during 1993 or any subsequent year.
As used herein, "readily obtainable" means that the material either is
in any Dickinson's files or in the files of a third-party agent,
contractor or consultant of Dickinson and can be obtained by
contacting such third party. Dickinson shall not be required to
contact any governmental agencies or authorities nor spend sums of
money in excess of photocopying charges to obtain any of the Dickinson
Delivered Documents. One complete set of the
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Dickinson Delivered Documents shall be delivered to Hollywood at its
offices in Dallas, Texas, and if Hollywood requests, a second set of
the as-built plans and specifications specified in clause (i) only
shall also be delivered but such second set shall be copied and
delivered at the expense of Hollywood.
(b) Hollywood's Access to the Dickinson Assets.
Dickinson covenants and agrees that from and after the Effective Date
until Closing or earlier termination of this Agreement, Hollywood and
its contractors, agents and employees, at the sole expense of
Hollywood, may enter upon any portion of the Dickinson Real Property
and the Dickinson Theaters from time to time during reasonable
business hours, without any disruption of the normal conduct of
Dickinson's business, and with reasonable prior notice to Dickinson
for the purposes of inspection (mechanical, structural and otherwise),
tests, including environmental testing and examination of the
operating condition of the Dickinson Assets, provided that Hollywood
will not take any soil samples or conduct any drilling without the
prior written consent of Dickinson, which consent may be withheld for
any reason. If the Closing does not occur, Hollywood will compensate
Dickinson for any damage to the Dickinson Assets caused by Hollywood's
negligent conduct during its inspection activities.
(c) Inspection of Condition of the Dickinson Assets.
During the Inspection Period (except for environmental problems, for
which Hollywood may inspect and deliver a list of problems up to the
date of Closing), Hollywood may deliver to Dickinson an itemized list
or lists of Dickinson Assets that (x) reasonably require repair,
maintenance or replacement, (y) relate to the operation of the related
Theater and (z) individually are estimated to cost in excess of
$1,000, and Dickinson agrees to either (i) provide such maintenance or
replacement or (ii) deliver to Hollywood at Closing sufficient funds
to provide for such maintenance or replacement; provided, however,
that Dickinson agrees to indemnify Hollywood for the difference, if
any, between the actual costs and the estimated costs, and Hollywood
agrees to pay Dickinson the difference, if any, between the estimated
costs and the actual costs. Dickinson may dispute in good faith any
repairs, maintenance or replacements requested by Hollywood by
delivering to Hollywood a written notice setting forth such objection
in reasonable detail to Hollywood within two days of receipt of the
Hollywood's list. If Hollywood objects, the dispute shall be
submitted for resolution by binding arbitration in accordance with
Section 9.6 hereof.
SECTION 3.6 Dickinson's Inspection of the Hollywood
Assets.
(a) Deliveries. Hollywood shall provide to Dickinson in
Mission, Kansas, on or before 5:00 p.m. Mission, Kansas time on the
Delivery Date the following items and documents relating to the
Hollywood Assets to the extent the same are in Hollywood's possession
or are readily obtainable by Hollywood (all of the following are
herein called the "Hollywood Delivered Documents"):
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(i) copies of all ADA, engineering, structural,
elevator, curtain wall, mechanical, roof, environmental and
seismographic reports, a current site plan, the most recent
survey for the Hollywood Theaters and the land on which they
are situated, elevator specifications, if any, and as-built
architectural, structural, mechanical, and electrical plans
and specifications of the Hollywood Theaters;
(ii) copies of all certificates of occupancy,
licenses, permits, authorizations and approvals as required by
law for the construction, occupancy and operation of the
Hollywood Theaters and the land on which they are situated;
(iii) copies of all real estate tax bills for 1995,
1996 and 1997, including evidence of payment thereof;
(iv) a schedule of all guarantees and warranties
in Hollywood's possession and still in effect issued or made
in connection with the construction, improvement, alteration
or repair of the Hollywood Fee Theaters, including without
limitation, guaranties and warranties pertaining to roofs,
elevators, masonry, landscaping and heating and air
conditioning systems;
(v) UCC search certificates from the Secretary of
State of the State of Missouri and Secretary of State of the
State of Kansas reflecting any effective UCC financing
statements then of record that name Hollywood as debtor; and
(vi) of any notices of violations of laws or
insurance requirements which relate to the Hollywood Assets
and were issued during 1993 or any subsequent year.
As used herein, "readily obtainable" means that the material either is
in Hollywood's files or in the files of a third-party agent,
contractor or consultant of Hollywood and can be obtained by
contacting such third party. Hollywood shall not be required to
contact any governmental agencies or authorities nor spend sums of
money in excess of photocopying charges to obtain any of the Hollywood
Delivered Documents. One complete set of the Hollywood Delivered
Documents shall be delivered to Dickinson at its offices in Mission,
Kansas, and if Dickinson requests, a second set of the as-built plans
and specifications specified in clause (i) only shall also be
delivered but such second set shall be copied and delivered at the
expense of Dickinson.
(b) Dickinson's Access to the Hollywood Assets. Hollywood
covenants and agrees that from and after the Effective Date until
Closing or earlier termination of this Agreement, Dickinson and its
contractors, agents and employees, at the sole expense of Dickinson,
may enter upon any portion of the Hollywood Real Property and the
Hollywood Theaters from time to time during reasonable business hours,
without any disruption of the normal conduct of Hollywood's business,
and with reasonable prior notice to Hollywood for the purposes of
inspection (mechanical, structural and otherwise), tests, including
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environmental testing and examination of the operating condition of
the Hollywood Assets, provided that Dickinson will not take any soil
samples or conduct any drilling without the prior written consent of
Hollywood, which consent may be withheld for any reason. If the
Closing does not occur, Dickinson will compensate Hollywood for any
damage to the Hollywood Assets caused by Dickinson's negligent conduct
during its inspection activities.
(c) Inspection of Condition of the Hollywood Assets.
During the Inspection Period (except for environmental problems for
which Dickinson may inspect and deliver a list of problems up to the
date of Closing), Dickinson may deliver to Hollywood an itemized list
or lists of Hollywood Assets that (x) reasonably require repair,
maintenance or replacement, (y) relate to the operation of the related
Theater and (z) individually are estimated to cost in excess of
$1,000, and Hollywood agrees to either (i) provide such maintenance or
replacement, or (ii) deliver to Dickinson at Closing sufficient funds
to provide for such maintenance or replacement, or (iii) reduce the
Cash Purchase Price by the estimated amount required to repair,
provide maintenance or replace such Hollywood Assets; provided,
however, that Hollywood agrees to indemnify Dickinson for the
difference, if any, between the actual costs and the estimated costs,
and Dickinson agrees to pay Hollywood the difference, if any, between
the estimated costs and the actual costs. Hollywood may dispute in
good faith any repairs, maintenance or replacements requested by
Dickinson by delivering to Dickinson a written notice setting forth
such objection in reasonable detail to Hollywood within two days of
receipt of the Dickinson's list. If Dickinson objects, the dispute
shall be submitted for resolution by binding arbitration in accordance
with Section 9.6 hereof.
SECTION 3.7 Termination. Either party hereto may
terminate this Agreement during the Inspection Period for any reason or no
reason, by notifying the other party in writing of its election to terminate
this Agreement prior to the expiration of the Inspection Period. If one party
terminates this Agreement within such time period, then the other party shall
promptly deliver to the party seeking termination a copy of any and all tests,
studies and examinations conducted by such party related to the Dickinson
Assets or Hollywood Assets, as applicable, and both parties shall be released
from all further obligations under this Agreement.
SECTION 3.8 Survey and Title.
(a) Survey. As soon as reasonably possible after the
Effective Date, Dickinson and Hollywood, as the case may be, at their
own expense, shall provide the other party and its attorney with
current on-the- ground staked "as-built" surveys of the Dickinson Fee
Theater and the Hollywood Fee Theaters, respectively. The surveys
delivered pursuant to this Section 3.8 shall be made in accordance
with Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys jointly established by ALTA and ACSM in 1992 and meeting the
accuracy requirements of the Urban Survey, as included therein, and
shall include items 1 through 11 and 15 or such other standards as
such requesting party deems appropriate (the "Surveys") prepared by a
registered land surveyor licensed in the state in which the applicable
Theater is located and approved by the requesting party (the
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"Surveyor"). The Surveys (including specifically the certificate of
the Surveyor forming a part thereof) shall be in form and substance
acceptable to each Title Company and the requesting party and shall
locate all existing improvements, easements, rights-of-way, setback
lines (which shall show recording data, if applicable), encroachments,
conflicts, overlaps and protrusions affecting the Dickinson Fee
Theater or the Hollywood Fee Theaters, as the case may be, (to the
extent visible on the ground or listed in the Title Commitment) and
other matters noted on the Title Commitment, shall set forth the
outside perimeter of the Dickinson Real Property or Hollywood Real
Property, as applicable, shall contain a metes and bounds description
of the Dickinson Real Property or Hollywood Real Property, as the case
may be, and shall set forth the acres included within the Dickinson
Real Property or Hollywood Real Property, as applicable. The Survey
shall contain a statement on the face thereof certifying that no part
of the Dickinson Real Property or Hollywood Real Property, as the case
may be, lies within a flood plain or flood prone area or a flood way
of any body of water as determined by reference to the current Flood
Insurance Rate Map published by the Federal Emergency Management
Agency for the community in which the Dickinson Real Property or
Hollywood Real Property, as the case may be, is located except as
shown or described on the Surveys. The Surveys shall reflect that
there is access to and from the Dickinson Real Property or Hollywood
Real Property, as the case may be, from a publicly dedicated street or
road and shall be sufficient to cause the Title Company to delete
(except for "shortages in area") the printed exception for
"discrepancies, conflicts, or shortages in area or boundary lines, or
encroachments, or any overlapping of improvements" in the Title Policy
to be delivered pursuant to Section 3.8(d). The Surveys also shall
show all underground parking spaces (as striped). The Surveys shall
be certified to the requesting party, the Title Company and any
financing source of the requesting party in a manner reasonably
satisfactory to the requesting party, Title Company and such financing
source. In the event the metes and bounds legal description contained
on any Survey varies from the metes and bounds legal description set
forth on Schedule 2.1(b) attached hereto, the Deed shall contain the
legal description set forth in the Survey.
(b) Title Commitment. As soon as reasonably possible
after the date hereof, each party, at its own cost and expense, shall
cause to be issued and delivered to the other party and its attorney
(i) an Owner's Title Policy Commitment (the "Title Commitment") from
the Title Company setting forth the status of the title to each of the
Dickinson Fee Theater or Hollywood Fee Theaters, as applicable,
pursuant to which the Title Company agrees to insure title to each of
the Dickinson Fee Theater, in the case of Dickinson, or Hollywood Fee
Theaters, in the case of Hollywood, under an ALTA Owner's Policy Form
B (4-6-90) Extended Coverage in the full amount set forth on Schedule
3.8(b), calling for standard printed exceptions 1 through 5 (excluding
the deletion of survey exceptions if either party elects not to obtain
surveys) to be deleted upon receipt of a current tax certificate and
mechanics' lien affidavits from Dickinson or Hollywood, as applicable
(such affidavits to be in form and content reasonably acceptable to
Dickinson and Hollywood, respectively), with the exception for taxes
and assessments to be limited to real property taxes and assessments
for the year in which the Closing occurs marked "not yet due and
payable," and with the title
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exception for leases and tenancies to reflect none, (ii) copies of all
documents referred to in the Title Commitment, including but not
limited to, deeds, lien instruments, plats, reservations, restrictions
and easements, and (iii) to the extent not covered by the Title
Commitments, certificates of taxes due covering the Theaters and
prepared by the appropriate tax authorities.
(c) In the event any exceptions appear in the Title
Commitment (or any new exceptions appear in any date down endorsement
or revised commitment, referred to herein collectively as a "Revised
Commitment"), other than the standard printed exceptions (which shall
be modified in the Title Policy as described in Section 3.8(b) above),
that are unacceptable to either party hereto, then the other party
shall, within 15 days after the receipt of the Title Commitment or the
Survey, whichever shall be last received (or within five days after
receipt of a Revised Commitment and copies of any new documents as
applicable), notify the other party in writing of such fact. If such
party fails to cure any such objection (without having any obligation
to do so, except as otherwise provided herein) on or prior to the end
of the Inspection Period (or within five days after the objecting
party's objection if such objection pertains to any new exception
first appearing in a Revised Commitment received after five days prior
to the end of the Inspection Period), then the objecting party may
either (i) terminate this Agreement or, (ii) so long as the amount
which would be required to satisfy any lien or encumbrance (other than
with respect to Dickinson Existing Debt or Hollywood Existing Debt, as
applicable, to be discharged at Closing) or to cure such defect does
not exceed $100,000, waive the objection and the Cash Purchase Price
shall be, if Hollywood is the objecting party, increased, or, if
Dickinson is the objecting party, reduced by the amount which would be
required to satisfy any lien or encumbrance or to cure such defect,
which election shall be made by delivering written notice to the other
party on or before two business days after the end of the Inspection
Period (or within two business days after the five day cure period as
to a Revised Commitment, as applicable). Each party hereto may
dispute in good faith the amount of any defect by delivering to the
other party a written notice setting forth such objection in
reasonable detail within 2 days. If such other party objects, the
dispute shall be submitted for resolution by binding arbitration in
accordance with Section 9.6 hereof. For the purposes of this section,
unless either party exercises option (i), the modification of the
standard exceptions, as described above, and all easements,
restrictions or other conditions which are shown on the applicable
Title Commitment (or any Revised Commitment) and/or the Survey (to the
extent only such Survey items are ultimately contained in the Title
Policy) and which are not cured by the other party as described above
are hereinafter collectively referred to as the "Permitted
Exceptions."
Notwithstanding the foregoing, (i) each party shall be
obligated to remove at Closing any mortgage or other lien which
secures payment of a monetary obligation and which may burden its
respective Theaters, except for any landlord's lien imposed by the
landlords under the Dickinson Leases or the Hollywood Leases, as the
case may be, (however, any such landlord lien must be subordinate to
the lease as to such theater or the lienholder must have entered into
a nondisturbance agreement with such party agreeing not to disturb
such party
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or any successor tenant in the event of a foreclosure of its lien) and
liens that arise by, through or under each party or its consultants
and agents, and (ii) each party agrees to remove any exceptions or
encumbrances to title that are created after the Effective Date as the
result of the acts or failure to act by such party or its agents,
employees or representatives, failing which such party shall be in
default under this Agreement and the other party shall have the rights
set forth in Section 8.2 or Section 8.3, as applicable.
(d) Title. At Closing, Dickinson and Hollywood, as the
case may be, at their own cost and expense, shall furnish to the other
party a standard form ALTA Owner's Policy of Title Insurance for the
Dickinson Fee Theater or Hollywood Fee Theaters, respectively,
detailed in Section 3.8(b) above, issued by the Title Company in such
party's favor, in the amounts set forth in Schedule 3.8(b), insuring
such party's title to the Dickinson Fee Theater or Hollywood Fee
Theaters, as applicable, subject only to the Permitted Exceptions
(collectively, the "Title Policies"); provided, however, at Closing,
upon the written request of one party to the other and the Title
Company, each party shall have the right to elect to waive the
requirement that the other party provide a Title Policy for any
Theater, in which case there shall be an offsetting adjustment to the
Cash Purchase Price in the amount that such party would have expended
to secure from the Title Company such Title Policy as required herein,
less any report or cancellation fees payable by such party to the
Title Company as a result of such policy not being issued.
(e) Condition of Title. Dickinson and Hollywood,
respectively, shall convey to the other party good, marketable and
insurable fee simple title to the Dickinson Fee Theater, with respect
to Dickinson, and the Hollywood Fee Theaters, with respect to
Hollywood, and leasehold title to the Dickinson Leasehold Theaters,
with respect to Dickinson, and Hollywood Leasehold Theaters, with
respect to Hollywood, free and clear of all matters except the
Permitted Exceptions. Upon conveyance, transfer and delivery of the
Dickinson Assets and the Hollywood Assets, Hollywood and Dickinson,
respectively, will continue to enjoy peaceful possession of the
Dickinson Assets, with respect to Dickinson, and the Hollywood Assets,
with respect to Hollywood.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DICKINSON
Dickinson hereby represents and warrants to Hollywood as
follows:
SECTION 4.1 Organization and Authority. Dickinson is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Kansas and has all requisite corporate power and authority
to own, lease and operate the Dickinson Theaters and the Dickinson Assets as
currently conducted. Dickinson has furnished to Hollywood true and correct
copies of the charter and bylaws of Dickinson as amended to date.
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SECTION 4.2 Authority; Binding Effect. Dickinson has all
requisite power and authority to enter into this Agreement and each of the
other agreements and instruments to be executed and delivered by Dickinson
pursuant to the terms of this Agreement (each a "Dickinson's Ancillary
Document" and, collectively, the "Dickinson's Ancillary Documents") and to
perform its obligations hereunder and thereunder. The execution and delivery
by Dickinson of this Agreement and each Dickinson's Ancillary Documents, and
the performance by Dickinson of its obligations hereunder and thereunder and
the consummation by Dickinson of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary action on the
part of Dickinson. This Agreement and Dickinson's Ancillary Documents have
been duly executed and delivered by Dickinson and constitute legal, valid and
binding agreements of Dickinson, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights generally or by general principles of equity.
SECTION 4.3 Absence of Conflicts. Except as set forth on
Schedule 4.3 hereof, the execution and delivery by Dickinson of this Agreement
and Dickinson's Ancillary Documents, the performance by Dickinson of its
obligations hereunder and thereunder and the consummation by Dickinson of the
transactions contemplated hereby or thereby will not (a) conflict with, or
result in any violation or breach of, any provision of the charter or bylaws of
Dickinson, (b) as of the Closing, conflict with, result in any violation or
breach of, constitute a default under, give rise to any right of termination or
acceleration (with or without notice or the lapse of time or both) pursuant to,
or result in being declared void, voidable or without further effect, any term
or provision of any material note, bond, mortgage, indenture, lease, franchise,
permit, license, Contract or other instrument or document to which the
Dickinson Assets are or may be bound, (c) require Dickinson to obtain any
consent, approval, permit, notice, action, authorization or waiver (each, a
"Consent") of or file with or give notice to any Governmental Authority or any
other Person not a party to this Agreement, except for the Consents listed on
Schedule 4.3 hereto which have been obtained and remain in full force and
effect, (d) conflict with, or result in any violation of, any material law,
ordinance, statute, rule or regulation of any Governmental Authority known to
Dickinson to be applicable to the business or operations of the Dickinson
Theaters or the Dickinson Assets or of any order, writ, injunction, judgment or
decree of any court, arbitrator or Governmental Authority applicable to
Dickinson or its properties or assets or (e) result in the creation of, or
impose on Dickinson the obligation to create, any Lien upon the Dickinson
Assets.
SECTION 4.4 Title to Assets. Except as set forth on
Schedule 4.4, Dickinson has good and marketable title to the Dickinson Assets
owned by Dickinson, and has valid leasehold interests in the Dickinson Assets
leased by Dickinson, in each case free and clear of all Liens (except for any
landlord's lien imposed by the landlords under the Dickinson Leases, however,
any such landlord lien must be subordinate to the lease as to each theater or
the lienholder must have entered into a nondisturbance agreement with Dickinson
agreeing not to disturb Dickinson or any successor tenant in the event of a
foreclosure of its lien). The leases of properties or assets included in the
Dickinson Assets, including, but not limited to the Dickinson Leases, are
valid, subsisting and effective in accordance with their respective terms, and
Dickinson enjoys peaceful possession of all
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such properties and assets. True and complete copies of all of the Dickinson
Leases, including all amendments, modifications and supplements thereto through
the date hereof have been delivered to Hollywood. The Dickinson Leases
referred to on Schedule 2.1(b) constitute all of the Dickinson Theater leases.
Except as set forth on Schedule 4.4 hereto, there are no leases, surface or
subsurface use agreements, tenancy, arrangements, service contracts, management
contracts, or other agreements, instruments or encumbrances that will be in
force or effect as of the Closing that grant to any Person, any right, title,
interest or benefit in or to all or any part of the Dickinson Assets or any
right relating to the ownership, use, operation, management, maintenance or
repair of all or any part of the Dickinson Assets, and no Person has any rights
to acquire any of the Dickinson Assets. Except as set forth on Schedule 4.4
hereof, there are no third parties in possession of any portion of the
Dickinson Theaters as lessees, tenants at sufferance, trespassers or otherwise.
Upon the sale, conveyance, transfer and delivery of the Dickinson Assets in
accordance with the terms of this Agreement, Hollywood will (i) acquire good
and marketable title to the Dickinson Assets owned by Dickinson, free and clear
of all Liens except, with respect to Dickinson Fee Theater, Permitted
Exceptions, and (ii) continue to enjoy peaceful possession of all Dickinson
Assets held under lease.
SECTION 4.5 Proprietary Rights. Schedule 4.5 hereto sets
forth a correct and complete list of (a) all of Dickinson's Proprietary Rights
in the Dickinson Assets and (b) all licenses, sublicenses and other Contracts
to which Dickinson is a party or by which it is bound relating to the
ownership, use or exploitation of any Proprietary Rights. To the Knowledge of
Dickinson, Dickinson has the right to use and exploit all Proprietary Rights
included in the Dickinson Assets without infringing upon or otherwise violating
the rights of any other Person, and to the Knowledge of Dickinson no consent,
approval or authorization of any other Person will be required for the use or
exploitation by Hollywood after the Closing Date of any Proprietary Rights
included in the Dickinson Assets. There is no claim pending or, to the
Knowledge of Dickinson, threatened against Dickinson that draws into question
or otherwise affects any right of Dickinson to use or exploit any Proprietary
Rights included in the Dickinson Assets, and Dickinson is not aware of any
basis for such a claim.
SECTION 4.6 Financials. The unaudited statements of
operations and cash flows and the TLCF statements for the twelve months ending
March 31, 1996 and March 31, 1997, which are attached hereto as Schedule 4.6,
fairly present in all material respects, the results of operations and cash
flows and the TLCF's of the Dickinson Theaters for such twelve-month periods
and contain no material inaccuracies. Such statements were prepared using the
same principles and procedures as used for Dickinson's audited financials,
which audited financials were prepared in conformity with generally accepted
accounting principles, except as noted therein. The numbers shown as "Theater
Level Cash Flow" on Schedule 4.6 were calculated as follows: (a) all revenue
of Dickinson during such periods derived from the respective Dickinson
Theaters, including, without limitation, ticket revenue, advertising revenue
and revenue from concession sales (providing, however, certain immaterial
rebates and other similar amounts may not have been allocated to the theater
level), less (b) all expenses incurred by Dickinson during such period in
connection with the ownership, leasing and operation of the respective
Dickinson Theaters during such periods. The Theater Level Cash
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Flow on Schedule 4.6 does not include interest, depreciation, amortization or
allocations of general and administrative expenses or income taxes.
SECTION 4.7 Conduct of Business. Except as set forth on
Schedule 4.7 and except as contemplated in this Agreement, since December 31,
1996, there has not been:
(a) any material adverse change in Dickinson's business,
operations, affairs, condition (financial or otherwise), results of
operations, properties, assets or liabilities;
(b) any sale, assignment or disposition of any
substantial properties or assets (other than the Dickinson Excluded
Assets), of any kind or character relating to the operations of the
Dickinson Theaters, except for personal property sold, assigned or
disposed of in the ordinary course of business and consistent with
past practice and custom;
(c) any damage, destruction or loss (whether or not
insured against) affecting the Dickinson Assets;
(d) any revocation or termination, or any notice of any
threatened revocation or termination, of any Consents or permits
relating to the operations of the Dickinson Theaters;
(e) any material change or any anticipated change in the
present relationships between Dickinson and any of their significant
suppliers, insurers, lessors, licensors, licensees and distributors
with respect to the Dickinson Assets; or
(f) any other material transaction other than in the
ordinary course of business and consistent with past practice and
custom.
SECTION 4.8 Contracts and Other Agreements. Schedule 4.8
sets forth a list of all material Contracts, whether written or oral, to which
Dickinson is a party relating to the operation of the Dickinson Theaters which
cannot be terminated by Dickinson upon 30 days notice. Dickinson has delivered
or made available to Hollywood true and complete copies of each written
Contract listed on Schedule 4.8 and, in the case of Contracts not reduced to
writing, has provided to Hollywood a written summary of the material terms
thereof. Each Contract described in Schedule 4.8 is valid, in full force and
effect, and binding upon Dickinson that is a party thereto, in accordance with
its terms. Dickinson is not in default under any of the Contracts described in
Schedule 4.8 and, except as set forth on Schedule 4.8, there exists no event
which, with the giving of notice or lapse of time, or both, would become a
default, in each case with such exceptions thereto as do not, individually or
in the aggregate, have a Material Adverse Effect. Dickinson has not received
any written notice from any other party to any Contract listed on Schedule 4.8
of the termination, or threatened termination, thereof, and, to Dickinson's
Knowledge, there has occurred no event that would allow such other party to
terminate any Contract. None of the Dickinson Assets are bound by any Contract
that was not entered into in the ordinary course of business and consistent
with past practice and custom.
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SECTION 4.9 Theater Locations. Schedule 4.9 sets forth a
true, correct and complete list of the names and locations of all Dickinson
Theaters on the date hereof and on the Closing Date.
SECTION 4.10 Solvency. Dickinson is able to pay its debts
as they become due, has capital sufficient to carry on its business as
presently conducted and proposed to be conducted, owns property which has both
a fair value and a fair saleable value in excess of the amount required to pay
its debts as they become due and is solvent. Dickinson will not be rendered
insolvent by the transactions contemplated by this Agreement, and following the
consummation of such transactions, Dickinson will be able to pay its debts as
they become due, will have capital sufficient to carry on its business as then
conducted and proposed to be conducted, and will own property which has a fair
value and a fair saleable value in excess of the amount required to pay its
debts as they become due.
SECTION 4.11 Assets Necessary to Business; Effect of
Transfer. The Dickinson Assets are sufficient in all material respects to
carry on the business and operations as presently conducted by Dickinson at the
Dickinson Theaters. The Dickinson Assets are fit for the purposes for which
they are presently being used and are in all material respects in good
operating condition and repair, ordinary wear and tear excepted, and to
Dickinson's Knowledge conform in all material respects to all applicable laws
relating to their use and operation (including the provisions of the Americans
with Disabilities Act of 1990, Public Law 101-336, 42 U.S.C. Section 12101 et
seq. (the "ADA"). The Dickinson Theaters were constructed and have been
maintained in accordance and material compliance with the ADA to the extent
applicable. Dickinson has not received any notice to the effect that, or
otherwise been advised that, the Dickinson Theaters are not in compliance with
the ADA, and Dickinson has no reason to anticipate that any existing
circumstances at any of the Dickinson Theaters are likely to result in
violations of the ADA as the Dickinson Theaters currently exist. No
representation or warranty is being made herein regarding the subject matter
hereof which may arise or otherwise occur as a result of any alterations,
changes or additions of any nature made to any of the Theaters by Hollywood.
Dickinson is in possession of all material licenses, permits, consents,
approvals and other authorizations that to Dickinson's knowledge are required
by any Governmental Authority in connection with the ownership or lease of the
Dickinson Assets or the conduct of the business and operations of Dickinson at
the Dickinson Theaters. Upon obtaining the Consents set forth on Schedule 4.3
hereto the consummation of the transactions contemplated by this Agreement will
not deprive Hollywood of the benefits of any material properties included in
the Dickinson Assets or any rights or interests relating thereto, or result in
the imposition of any debts, liabilities or obligations on Hollywood, except
for the debts, obligations and liabilities created by Hollywood in connection
with financing the acquisition of the Dickinson Assets.
SECTION 4.12 Litigation. Except as set forth on Schedule
4.12 hereto, there is no action, suit, inquiry, investigation or other
proceeding pending against, or to Dickinson's Knowledge threatened against or
affecting, Dickinson's properties or assets in any court or before any
arbitrator or any foreign or United States federal, state or local Governmental
Authority (a) in which an adverse decision could, either in any case or in the
aggregate, have a Material Adverse
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Effect or (b) which in any manner draws into question the validity of or
otherwise affects this Agreement, the transactions contemplated hereby or the
ability of Dickinson to perform their obligations hereunder.
SECTION 4.13 Taxes.
(a) Dickinson has filed or will file in a timely manner
with the appropriate Governmental Authority all tax returns required
to be filed prior to or on the date hereof relating to Taxes due and
payable or Taxes accrued and not yet payable on or before the Closing
Date, and each such tax return has been or will be prepared in
compliance in all material respects with all applicable laws and
regulations.
(b) Dickinson has paid or will pay on the applicable due
date all Taxes that are due and payable or Taxes accrued and not yet
payable on or before the Closing Date (including all Taxes shown to be
due on such returns or pursuant to any assessment received by
Dickinson from any taxing authority), except such Taxes, if any, as
are being contested in good faith by appropriate proceedings
diligently conducted.
(c) There are no claims for Taxes pending against
Dickinson nor to the Knowledge of Dickinson, any threatened claims for
Tax deficiencies against Dickinson for which the Dickinson Assets
could be liable, and Dickinson does not know of any basis for such
claims.
(d) There exist no actual or, to the Knowledge of
Dickinson, proposed additional assessments or adjustments of Taxes by
any taxing authority for which the Dickinson Assets could be liable.
(e) There are no pending audits, actions, proceedings,
disputes, claims or, to Dickinson's Knowledge, there are no
investigations with respect to any Taxes payable by or asserted
against Dickinson and there is no basis on which any claim for
material Taxes can be asserted against Dickinson. Dickinson has not
received notice from any Governmental Authority of its intent to
examine or audit any Tax Returns of Dickinson.
(f) All Taxes required to be withheld or collected by
Dickinson (including, but not limited to, Tax required to be withheld
with respect to amounts paid or owing to any officer, employee,
creditor, shareholder, independent contractor or other Person) have
been timely withheld or collected and, to the extent required, have
been timely paid, remitted or deposited to or with the relevant
Governmental Authority.
(g) There are no proposed reassessments of the taxable
value of any of the Dickinson Assets or similar matters pending with
respect to any taxing authority.
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(h) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may
assess or collect a Tax against Dickinson for which the Dickinson
Assets could be liable.
(i) There are no Liens for Taxes (other than for current
Taxes not yet due and payable) imposed upon the Dickinson Assets.
(j) No taxing authority has raised any issue with respect
to the liability of Dickinson or any Affiliate thereof for any Tax
that would likely result in the issuance by any taxing authority of a
notice of deficiency or similar notice for Taxes against Dickinson.
(k) Except for the United States of America, the State of
Kansas, the city of Topeka, the State of Kansas, the city of
Lawrence, the State of Missouri, the city of Joplin, there are no
other jurisdictions in which income or franchise tax returns and
reports, and returns and reports relating to the payment of Tax based
upon the ownership or use of property therein or the derivation of
income therefrom or measured by premiums or investments in tangible or
intangible property, were, or were required to be, filed by Dickinson
or in which Dickinson was required to be included.
(l) There are no requests for rulings, outstanding
subpoenas or requests for information with respect to Taxes of
Dickinson, proposed reassessments of any assets or any property owned
or leased by Dickinson, or similar matters pending with respect to any
taxing authority.
(m) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may
assess or collect a Tax against Dickinson or for which Dickinson may
be liable.
SECTION 4.14 Environmental Compliance.
(a) Dickinson is not subject to any existing, pending or
to Dickinson's Knowledge threatened action, suit, investigation,
inquiry or proceeding by any Governmental Authority under, and are not
currently in violation of, or subject to, any remedial obligation
under, any Environmental Law.
(b) All material environmental notices, permits, licenses
or similar authorizations, if any, required to be obtained or filed in
connection with the operation of the Dickinson Theaters have been
obtained or filed.
(c) Hazardous Substances have not been disposed of on, to
or from any of the Dickinson Theaters during the time of Dickinson's
ownership or possession of the Dickinson Assets and the operation of
the Dickinson Theaters or to Dickinson's Knowledge prior
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thereto, except in compliance with Environmental Laws in effect at the
time such activity was undertaken.
(d) No Hazardous Substances have been generated, managed,
treated or transported to or from the Dickinson Theaters, except in
compliance with Environmental Laws at the time such activity was
undertaken.
(e) To the Knowledge of Dickinson, there is not now at,
on or in the Dickinson Theaters any asbestos, PCBs or, to the extent
only it exists at levels which are considered hazardous to human
health, radon gas.
(f) No underground storage tanks currently exist or to
Dickinson's Knowledge have existed on the land occupied by the
Dickinson Theaters.
(g) During the time the Dickinson Theaters have been
occupied by Dickinson, there has not been a Release of Hazardous
Substances into, onto or out of the land occupied by the Dickinson
Theaters.
(h) Except for the Dickinson Leases and as set forth on
Schedule 4.14 hereto, Dickinson is not a party, whether as a direct
signatory or as successor, assignee or third party beneficiary, or
otherwise bound, to any lease or other Contract relating to the
Dickinson Assets under which Dickinson is obligated by or entitled to
the benefits of, directly or indirectly, any representation, warranty,
indemnification, covenant, restriction or other undertaking concerning
a Release of Hazardous Substances or non-compliance with Environmental
Laws.
(i) Except for the Dickinson's lenders or as provided in
the Dickinson Leases, Dickinson has not released any other Person
from any claim under any Environmental Law or waived any rights
concerning any Releases of Hazardous Substances into, onto or out of
or with respect to the land occupied by the Dickinson Theaters.
SECTION 4.15 Utilities.
(a) The Dickinson Theaters are connected to and are
served by water, solid waste and sewage disposal, drainage, telephone,
gas, electricity and other utility equipment facilities and services
required by law or necessary for the operation or use of the Dickinson
Theaters; such facilities and services are adequate for the present
use and operation of the Dickinson Theaters on a fully occupied basis,
and are installed and connected pursuant to valid permits and are in
material compliance with all governmental regulations; and no fact or
condition exists which would result in the termination or curtailment
in the furnishing of utility services to the Dickinson Theaters.
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(b) Dickinson has not received notice from any supplier
of water, solid waste and sewage disposal, drainage, telephone, gas,
electricity or other utility services to the Dickinson Theaters that
such service is being or will be terminated or curtailed and Dickinson
has no knowledge that such termination or curtailment may occur.
SECTION 4.16 Defects. Except as set forth on Schedule
4.16, there are no material structural defects in the Dickinson Theaters or any
material defects in the Dickinson Theaters' mechanical, electrical and plumbing
systems.
SECTION 4.17 Condemnation. There are no pending or to
Dickinson's Knowledge threatened condemnation or similar proceedings or
assessments affecting the Dickinson Assets or any part thereof, nor to the
Knowledge of Dickinson are any such proceedings or assessments contemplated by
any Governmental Authority.
SECTION 4.18 Books and Records. The books and records of
Dickinson fairly reflect in all material respects the transactions to which the
Dickinson Assets are or were bound, and such books and records are and have
been properly kept and maintained, with the revenues, expenses, assets and
liabilities of Dickinson accurately recorded in all material respects therein
on the accrual basis of accounting. True, complete and correct copies of such
books and records have been made available for review by Hollywood.
SECTION 4.19 Brokers, Finders, etc. Except as described
in Schedule 4.19, all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any Person acting on behalf of Dickinson in such manner as to give rise to a
valid claim against any of the parties hereto for any broker's or finder's
commission. Except as described in Schedule 4.19, Dickinson has not retained
any broker or finder in connection with the transactions contemplated hereby.
Any fees, expenses, commissions or other amounts payable to the Persons
identified on Schedule 4.19 shall be payable by Dickinson and shall not be the
responsibility of Hollywood.
SECTION 4.20 Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against, or to Dickinson's
Knowledge threatened against or affecting, Dickinson's properties or assets in
any court or before any arbitrator or any foreign or United States federal,
state or local Governmental Authority in which an adverse decision could,
either in any case or in the aggregate, have a material adverse effect on the
business, operations, affairs, condition (financial or otherwise), results of
operation, properties, assets or liabilities of Dickinson.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOLLYWOOD
Hollywood represents and warrants to Dickinson as follows:
SECTION 5.1 Organization and Authority. Hollywood is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate the Hollywood Theaters and the Hollywood
Assets as currently conducted. Hollywood has furnished to Dickinson true and
correct copies of the charter and bylaws of Hollywood as amended to date.
SECTION 5.2 Authority; Binding Effect. Hollywood has all
requisite power and authority to enter into this Agreement and each of the
other agreements and instruments to be executed and delivered by Hollywood
pursuant to the terms of this Agreement (each a "Hollywood's Ancillary
Document" and, collectively, the "Hollywood's Ancillary Documents") and to
perform its obligations hereunder and thereunder. The execution and delivery
by Hollywood of this Agreement and each Hollywood's Ancillary Documents, and
the performance by Hollywood of its obligations hereunder and thereunder and
the consummation by Hollywood of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary action on the
part of Hollywood. This Agreement and Hollywood's Ancillary Documents have
been duly executed and delivered by Hollywood and constitute legal, valid and
binding agreements of Hollywood, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights generally or by general principles of equity.
SECTION 5.3 Absence of Conflicts. Except as set forth on
Schedule 5.3 hereof, the execution and delivery by Hollywood of this Agreement
and Hollywood's Ancillary Documents, the performance by Hollywood of its
obligations hereunder and thereunder and the consummation by Hollywood of the
transactions contemplated hereby or thereby will not (a) conflict with, or
result in any violation or breach of, any provision of the charter or bylaws of
Hollywood, (b) as of the Closing, conflict with, result in any violation or
breach of, constitute a default under, give rise to any right of termination or
acceleration (with or without notice or the lapse of time or both) pursuant to,
or result in being declared void, voidable or without further effect, any term
or provision of any material note, bond, mortgage, indenture, lease, franchise,
permit, license, Contract or other instrument or document to which the
Hollywood Assets are or may be bound, (c) require Hollywood to obtain any
Consent of or file with or give notice to any Governmental Authority or any
other Person not a party to this Agreement, except for the Consents listed on
Schedule 5.3 hereto which have been obtained and remain in full force and
effect, (d) conflict with, or result in any violation of, any material law,
ordinance, statute, rule or regulation of any Governmental Authority known to
Hollywood to be applicable to the business or operations of the Hollywood
Theaters or the Hollywood Assets or of any order, writ, injunction, judgment or
decree of any court, arbitrator or
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Governmental Authority applicable to Hollywood or its properties or assets or
(e) result in the creation of, or impose on Hollywood the obligation to create,
any Lien upon the Hollywood Assets.
SECTION 5.4 Title to Assets. Except as set forth on
Schedule 5.4, Hollywood has good and marketable title to the Hollywood Assets
owned by Hollywood, and has valid leasehold interests in the Hollywood Assets
leased by Hollywood, in each case free and clear of all Liens (except for any
landlord's lien imposed by the landlords under the Hollywood Leases, however,
any such landlord lien must be subordinate to the lease as to each theater or
the lienholder must have entered into a nondisturbance agreement with Hollywood
agreeing not to disturb Hollywood or any successor tenant in the event of a
foreclosure of its lien). The leases of properties or assets included in the
Hollywood Assets, including, but not limited to the Hollywood Leases, are
valid, subsisting and effective in accordance with their respective terms, and
Hollywood enjoys peaceful possession of all such properties and assets. True
and complete copies of all of the Hollywood Leases, including all amendments,
modifications and supplements thereto through the date hereof have been
delivered to Dickinson. The Hollywood Leases referred to on Schedule 2.1(b)
constitute all of the Hollywood Theater leases. Except as set forth on
Schedule 5.4 hereto, there are no leases, surface or subsurface use agreements,
tenancy, arrangements, service contracts, management contracts, or other
agreements, instruments or encumbrances that will be in force or effect as of
the Closing that grant to any Person, any right, title, interest or benefit in
or to all or any part of the Hollywood Assets or any right relating to the
ownership, use, operation, management, maintenance or repair of all or any part
of the Hollywood Assets, and no Person has any rights to acquire any of the
Hollywood Assets. Except as set forth on Schedule 5.4 hereof, there are no
third parties in possession of any portion of the Hollywood Theaters as
lessees, tenants at sufferance, trespassers or otherwise. Upon the sale,
conveyance, transfer and delivery of the Hollywood Assets in accordance with
the terms of this Agreement, Dickinson will (i) acquire good and marketable
title to the Hollywood Assets owned by Hollywood, free and clear of all Liens
except, with respect to Hollywood Fee Theaters, Permitted Exceptions, and (ii)
continue to enjoy peaceful possession of all Hollywood Assets held under lease.
SECTION 5.5 Proprietary Rights. Schedule 5.5 hereto sets
forth a correct and complete list of (a) all of Hollywood's Proprietary Rights
in the Hollywood Assets and (b) all licenses, sublicenses and other Contracts
to which Hollywood is a party or by which it is bound relating to the
ownership, use or exploitation of any Proprietary Rights. To the Knowledge of
Hollywood, Hollywood has the right to use and exploit all Proprietary Rights
included in the Hollywood Assets without infringing upon or otherwise violating
the rights of any other Person, and to the Knowledge of Hollywood no consent,
approval or authorization of any other Person will be required for the use or
exploitation by Dickinson after the Closing Date of any Proprietary Rights
included in the Hollywood Assets. There is no claim pending or, to the
Knowledge of Hollywood, threatened against Hollywood that draws into question
or otherwise affects any right of Hollywood to use or exploit any Proprietary
Rights included in the Hollywood Assets, and Hollywood is not aware of any
basis for such a claim.
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SECTION 5.6 Financials. The unaudited statements of
operations and cash flows and the TLCF statements for the twelve months ending
March 31, 1996 and March 31, 1997, which are attached hereto as Schedule 5.6,
fairly present in all material respects, the results of operations and cash
flows and the TLCF's of the Hollywood Theaters for such twelve-month periods
and contain no material inaccuracies. Such statements were prepared using the
same principles and procedures as used for Hollywood's audited financials,
which audited financials were prepared in conformity with generally accepted
accounting principles, except as noted therein. The numbers shown as "Theater
Level Cash Flow" on Schedule 5.6 were calculated as follows: (a) all revenue
of Hollywood during such periods derived from the respective Hollywood
Theaters, including, without limitation, ticket revenue, advertising revenue
and revenue from concession sales (providing, however, certain immaterial
rebates and other similar amounts may not have been allocated to the theater
level), less (b) all expenses incurred by Hollywood during such period in
connection with the ownership, leasing and operation of the respective
Hollywood Theaters during such periods. The Theater Level Cash Flow on
Schedule 5.6 does not include interest, depreciation, amortization or
allocations of general and administrative expenses or income taxes.
SECTION 5.7 Conduct of Business. Except as set forth on
Schedule 5.7 and except as contemplated in this Agreement, since December 31,
1996, there has not been:
(a) any material adverse change in Hollywood's business,
operations, affairs, condition (financial or otherwise), results of
operations, properties, assets or liabilities;
(b) any sale, assignment or disposition of any
substantial properties or assets (other than the Hollywood Excluded
Assets), of any kind or character relating to the operations of the
Hollywood Theaters, except for personal property sold, assigned or
disposed of in the ordinary course of business and consistent with
past practice and custom;
(c) any damage, destruction or loss (whether or not
insured against) affecting the Hollywood Assets;
(d) any revocation or termination, or any notice of any
threatened revocation or termination, of any Consents or permits
relating to the operations of the Hollywood Theaters;
(e) any material change or any anticipated change in the
present relationships between Hollywood and any of their significant
suppliers, insurers, lessors, licensors, licensees and distributors
with respect to the Hollywood Assets; or
(f) any other material transaction other than in the
ordinary course of business and consistent with past practice and
custom.
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SECTION 5.8 Contracts and Other Agreements.
Schedule 5.8 sets forth a list of all material Contracts, whether
written or oral, to which Hollywood is a party relating to the
operation of the Hollywood Theaters which cannot be terminated by
Hollywood upon 30 days notice. Hollywood has delivered or made
available to Dickinson true and complete copies of each written
Contract listed on Schedule 5.8 and, in the case of Contracts not
reduced to writing, has provided to Hollywood a written summary of the
material terms thereof. Each Contract described in Schedule 5.8 is
valid, in full force and effect, and binding upon Hollywood that is a
party thereto, in accordance with its terms. Hollywood is not in
default under any of the Contracts described in Schedule 5.8 and,
except as set forth on Schedule 5.8, there exists no event which, with
the giving of notice or lapse of time, or both, would become a
default, in each case with such exceptions thereto as do not,
individually or in the aggregate, have a Material Adverse Effect.
Hollywood has not received any written notice from any other party to
any Contract listed on Schedule 5.8 of the termination, or threatened
termination, thereof, and, to Hollywood's Knowledge, there has
occurred no event that would allow such other party to terminate any
Contract. None of the Hollywood Assets are bound by any Contract that
was not entered into in the ordinary course of business and consistent
with past practice and custom.
SECTION 5.9 Theater Locations. Schedule 5.9 sets forth a
true, correct and complete list of the names and locations of all Hollywood
Theaters on the date hereof and on the Closing Date.
SECTION 5.10 Solvency. Hollywood is able to pay its debts
as they become due, has capital sufficient to carry on its business as
presently conducted and proposed to be conducted, owns property which has both
a fair value and a fair saleable value in excess of the amount required to pay
its debts as they become due and is solvent. Hollywood will not be rendered
insolvent by the transactions contemplated by this Agreement, and following the
consummation of such transactions, Hollywood will be able to pay its debts as
they become due, will have capital sufficient to carry on its business as then
conducted and proposed to be conducted, and will own property which has a fair
value and a fair saleable value in excess of the amount required to pay its
debts as they become due.
SECTION 5.11 Assets Necessary to Business; Effect of
Transfer. The Hollywood Assets are sufficient in all material respects to
carry on the business and operations as presently conducted by Hollywood at the
Hollywood Theaters. The Hollywood Assets are fit for the purposes for which
they are presently being used and are in all material respects in good
operating condition and repair, ordinary wear and tear excepted, and to
Hollywood's Knowledge conform in all material respects to all applicable laws
relating to their use and operation (including the provisions of the ADA). The
Hollywood Theaters were constructed and have been maintained in accordance and
material compliance with the ADA to the extent applicable. Hollywood has not
received any notice to the effect that, or otherwise been advised that, the
Hollywood Theaters are not in compliance with the ADA, and Hollywood has no
reason to anticipate that any existing circumstances at any of the Hollywood
Theaters are likely to result in violations of the ADA as the Hollywood
Theaters currently exist. No representation or warranty is being made herein
regarding the subject matter hereof which may arise or otherwise occur as a
result of any alterations, changes
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or additions of any nature made to any of the Theaters by Dickinson. Hollywood
is in possession of all material licenses, permits, consents, approvals and
other authorizations that to Hollywood's knowledge are required by any
Governmental Authority in connection with the ownership or lease of the
Hollywood Assets or the conduct of the business and operations of Hollywood at
the Hollywood Theaters. Upon obtaining the Consents set forth on Schedule 5.3
hereto the consummation of the transactions contemplated by this Agreement will
not deprive Dickinson of the benefits of any material properties included in
the Hollywood Assets or any rights or interests relating thereto, or result in
the imposition of any debts, liabilities or obligations on Hollywood, except
for the debts, obligations and liabilities created by Dickinson in connection
with financing the acquisition of the Hollywood Assets.
SECTION 5.12 Litigation. Except as set forth on Schedule
5.12 hereto, there is no action, suit, inquiry, investigation or other
proceeding pending against, or to Hollywood's Knowledge threatened against or
affecting, Hollywood's properties or assets in any court or before any
arbitrator or any foreign or United States federal, state or local Governmental
Authority (a) in which an adverse decision could, either in any case or in the
aggregate, have a Material Adverse Effect or (b) which in any manner draws into
question the validity of or otherwise affects this Agreement, the transactions
contemplated hereby or the ability of Hollywood to perform their obligations
hereunder.
SECTION 5.13 Taxes.
(a) Hollywood has filed or will file in a timely manner
with the appropriate Governmental Authority all tax returns required
to be filed prior to or on the date hereof relating to Taxes due and
payable or Taxes accrued and not yet payable on or before the Closing
Date, and each such tax return has been or will be prepared in
compliance in all material respects with all applicable laws and
regulations.
(b) Hollywood has paid or will pay on the applicable due
date all Taxes that are due and payable or Taxes accrued and not yet
payable on or before the Closing Date (including all Taxes shown to be
due on such returns or pursuant to any assessment received by
Hollywood from any taxing authority), except such Taxes, if any, as
are being contested in good faith by appropriate proceedings
diligently conducted.
(c) There are no claims for Taxes pending against
Hollywood nor to the Knowledge of Hollywood, any threatened claims for
Tax deficiencies against Hollywood for which the Hollywood Assets
could be liable, and Hollywood does not know of any basis for such
claims.
(d) There exist no actual or, to the Knowledge of
Hollywood, proposed additional assessments or adjustments of Taxes by
any taxing authority for which the Hollywood Assets could be liable.
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(e) There are no pending audits, actions, proceedings,
disputes, claims or, to Hollywood's Knowledge, there are no
investigations with respect to any Taxes payable by or asserted
against Hollywood and there is no basis on which any claim for
material Taxes can be asserted against Hollywood. Hollywood has not
received notice from any Governmental Authority of its intent to
examine or audit any Tax Returns of Hollywood.
(f) All Taxes required to be withheld or collected by
Hollywood (including, but not limited to, Tax required to be withheld
with respect to amounts paid or owing to any officer, employee,
creditor, shareholder, independent contractor or other Person) have
been timely withheld or collected and, to the extent required, have
been timely paid, remitted or deposited to or with the relevant
Governmental Authority.
(g) There are no proposed reassessments of the taxable
value of any of the Hollywood Assets or similar matters pending with
respect to any taxing authority.
(h) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may
assess or collect a Tax against Hollywood for which the Hollywood
Assets could be liable.
(i) There are no Liens for Taxes (other than for current
Taxes not yet due and payable) imposed upon the Hollywood Assets.
(j) No taxing authority has raised any issue with respect
to the liability of Hollywood or any Affiliate thereof for any Tax
that would likely result in the issuance by any taxing authority of a
notice of deficiency or similar notice for Taxes against Hollywood.
(k) Except for the United States of America, the State of
Kansas, the city of Garden City, the State of Kansas, the city of
Hutchinson, the State of Missouri, the city of Jefferson City, there
are no other jurisdictions in which income or franchise tax returns
and reports, and returns and reports relating to the payment of Tax
based upon the ownership or use of property therein or the derivation
of income therefrom or measured by premiums or investments in tangible
or intangible property, were, or were required to be, filed by
Hollywood or in which Hollywood was required to be included.
(l) There are no requests for rulings, outstanding
subpoenas or requests for information with respect to Taxes of
Hollywood, proposed reassessments of any assets or any property owned
or leased by Hollywood, or similar matters pending with respect to any
taxing authority.
(m) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may
assess or collect a Tax against Hollywood or for which Hollywood may
be liable.
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SECTION 5.14 Environmental Compliance.
(a) Hollywood is not subject to any existing, pending or
to Hollywood's Knowledge threatened action, suit, investigation,
inquiry or proceeding by any Governmental Authority under, and are not
currently in violation of, or subject to, any remedial obligation
under, any Environmental Law.
(b) All material environmental notices, permits, licenses
or similar authorizations, if any, required to be obtained or filed in
connection with the operation of the Hollywood Theaters have been
obtained or filed.
(c) Hazardous Substances have not been disposed of on, to
or from any of the Hollywood Theaters during the time of Hollywood's
ownership or possession of the Hollywood Assets and the operation of
the Hollywood Theaters or to Hollywood's Knowledge prior thereto,
except in compliance with Environmental Laws in effect at the time
such activity was undertaken.
(d) No Hazardous Substances have been generated, managed,
treated or transported to or from the Hollywood Theaters, except in
compliance with Environmental Laws at the time such activity was
undertaken.
(e) To the Knowledge of Hollywood, there is not now at,
on or in the Hollywood Theaters any asbestos, PCBs or, to the extent
only it exists at levels which are considered hazardous to human
health, radon gas.
(f) No underground storage tanks currently exist or to
Hollywood's Knowledge have existed on the land occupied by the
Hollywood Theaters.
(g) During the time the Hollywood Theaters have been
occupied by Hollywood, there has not been a Release of Hazardous
Substances into, onto or out of the land occupied by the Hollywood
Theaters.
(h) Except for the Hollywood Leases and as set forth on
Schedule 4.14 hereto, Hollywood is not a party, whether as a direct
signatory or as successor, assignee or third party beneficiary, or
otherwise bound, to any lease or other Contract relating to the
Hollywood Assets under which Hollywood is obligated by or entitled to
the benefits of, directly or indirectly, any representation, warranty,
indemnification, covenant, restriction or other undertaking concerning
a Release of Hazardous Substances or non-compliance with Environmental
Laws.
(i) Except for the Hollywood's lenders or as provided in
the Hollywood Leases, Hollywood has not released any other Person
from any claim under any Environmental Law
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or waived any rights concerning any Releases of Hazardous Substances
into, onto or out of or with respect to the land occupied by the
Hollywood Theaters.
SECTION 5.15 Utilities.
(a) The Hollywood Theaters are connected to and are
served by water, solid waste and sewage disposal, drainage, telephone,
gas, electricity and other utility equipment facilities and services
required by law or necessary for the operation or use of the Hollywood
Theaters; such facilities and services are adequate for the present
use and operation of the Hollywood Theaters on a fully occupied basis,
and are installed and connected pursuant to valid permits and are in
material compliance with all governmental regulations; and no fact or
condition exists which would result in the termination or curtailment
in the furnishing of utility services to the Hollywood Theaters.
(b) Hollywood has not received notice from any supplier
of water, solid waste and sewage disposal, drainage, telephone, gas,
electricity or other utility services to the Hollywood Theaters that
such service is being or will be terminated or curtailed and Hollywood
has no knowledge that such termination or curtailment may occur.
SECTION 5.16 Defects. Except as set forth on Schedule
5.16, there are no material structural defects in the Hollywood Theaters or any
material defects in the Hollywood Theaters' mechanical, electrical and plumbing
systems.
SECTION 5.17 Condemnation. There are no pending or to
Hollywood's Knowledge threatened condemnation or similar proceedings or
assessments affecting the Hollywood Assets or any part thereof, nor to the
Knowledge of Hollywood are any such proceedings or assessments contemplated by
any Governmental Authority.
SECTION 5.18 Books and Records. The books and records of
Hollywood fairly reflect in all material respects the transactions to which the
Hollywood Assets are or were bound, and such books and records are and have
been properly kept and maintained, with the revenues, expenses, assets and
liabilities of Hollywood accurately recorded in all material respects therein
on the accrual basis of accounting. True, complete and correct copies of such
books and records have been made available for review by Hollywood.
SECTION 5.19 Brokers, Finders, etc. Except as described
in Schedule 5.19, all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any Person acting on behalf of Hollywood in such manner as to give rise to a
valid claim against any of the parties hereto for any broker's or finder's
commission. Except as described in Schedule 5.19, Hollywood has not retained
any broker or finder in connection with the transactions contemplated hereby.
Any fees, expenses, commissions or other amounts payable to the Persons
identified on Schedule 5.19 shall be payable by Hollywood and shall not be the
responsibility of Hollywood.
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SECTION 5.20 Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against, or to Hollywood's
Knowledge threatened against or affecting, Hollywood's properties or assets in
any court or before any arbitrator or any foreign or United States federal,
state or local Governmental Authority in which an adverse decision could,
either in any case or in the aggregate, have a material adverse effect on the
business, operations, affairs, condition (financial or otherwise), results of
operation, properties, assets or liabilities of Hollywood.
ARTICLE VI
DICKINSON COVENANTS AND AGREEMENTS
SECTION 6.1 Inspection. From the date hereof to the
Closing, Dickinson shall give to Hollywood and its officers, attorneys,
accountants, and representatives free, full, and complete access during
reasonable business hours to the Dickinson Assets as Hollywood may deem
necessary or appropriate; provided, that such due diligence review will not
unreasonably interfere with the operations by Dickinson of the Dickinson
Assets. Dickinson will provide Hollywood and its officers, attorneys,
accountants and representatives with any information reasonably requested by
them pertaining to income derived from or expenses associated with the
Dickinson Assets.
SECTION 6.2 Compliance. From the date hereof to the
Closing, Dickinson shall not take or fail to take any action which action or
failure to take such action shall cause the representations and warranties made
by Dickinson herein to be untrue or incorrect as of the Closing.
SECTION 6.3 Satisfaction of All Conditions Precedent.
From the date hereof to the Closing, Dickinson shall use reasonable efforts to
cause all conditions precedent in Article III to be satisfied by the Closing.
SECTION 6.4 No Solicitation. From the date hereof to
September 25, 1997, Dickinson shall not offer any of Dickinson Assets for sale,
or solicit offers to buy the Dickinson Assets or hold discussions with any
party (other than Hollywood) looking toward such an offer or solicitation or
toward a sale of equity or a merger or consolidation of Dickinson with or into
another entity or any similar transaction. Dickinson shall not enter into any
agreement with any party other than Hollywood with respect to the sale or other
disposition of either the equity interests of Dickinson or the Dickinson Assets
or with respect to any merger, consolidation, or similar transaction involving
Dickinson.
SECTION 6.5 Material Developments. From the date hereof
to the Closing, Dickinson shall notify Hollywood of any material problems or
developments with respect to the business or operations of the Dickinson
Theaters of which Dickinson has Knowledge.
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SECTION 6.6 Notice of Breach. From the date hereof to
the Closing, Dickinson shall, immediately upon becoming aware thereof, give
detailed written notice to Hollywood of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a breach,
or would have caused or constituted a breach had such event occurred or been
known to Dickinson prior to the date of this Agreement, of any of their
covenants, agreements, representations, or warranties contained or referred to
herein or in any document delivered in accordance with the terms hereof.
SECTION 6.7 Notice of Litigation. From the date hereof
to the Closing, immediately upon becoming aware thereof, Dickinson shall notify
Hollywood of (a) any suit, action, or proceeding to which Dickinson becomes a
party or which is threatened against Dickinson in writing that involves the
Dickinson Assets, (b) any order or decree or any complaint praying for an order
or decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereby, or (c) any notice from any tribunal of its
intention to institute an investigation into, or to institute a suit or
proceeding to restrain or enjoin the consummation of, this Agreement or the
transactions contemplated hereby or to nullify or render ineffective this
Agreement or such transactions if consummated.
SECTION 6.8 Continuation of Insurance Coverage. From the
date hereof to the Closing, Dickinson shall keep in full force and effect
insurance coverage for the Dickinson Theaters and the Dickinson Assets in the
same amount and scope to the coverage now maintained covering the Dickinson
Theaters and the Dickinson Assets.
SECTION 6.9 Interim Operations of the Company.
(a) From the date hereof to the Closing, Dickinson shall
conduct their business only in the ordinary course consistent with
past practice, and shall not, unless Hollywood gives its prior written
approval (i) sell, pledge, dispose of, or encumber, or agree to sell,
pledge, dispose of, or encumber, any of the Dickinson Assets (except
in the ordinary course of business), (ii) modify, extend, or renew any
Dickinson Lease, or (iii) make any material acquisition or capital
expenditure or commit to make any such acquisition or expenditure.
(b) From the date hereof to the Closing, Dickinson will
use reasonable efforts to maintain the Dickinson Theaters and the
Dickinson Assets in their present operating condition and repair,
ordinary wear and tear excepted.
(c) If required by law, Dickinson shall offer COBRA
benefits to those employees of Dickinson eligible to receive such
benefits in connection with the sale by Dickinson of the Dickinson
Assets. Upon termination of Dickinson employee benefits pursuant to
Section 6.14 hereof, Dickinson shall offer COBRA benefits to those
employees of Dickinson eligible to receive such benefits if required
by law.
SECTION 6.10 Transfer Taxes. Dickinson shall be
responsible for and shall pay any and all taxes and recording fees, if any,
payable as a result of the sale, conveyance, transfer and delivery of the
Dickinson Assets upon the terms and conditions hereof.
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SECTION 6.11 Preservation of Books and Records. For a
period of two years from the date hereof, Hollywood and Dickinson will preserve
and maintain the corporate, accounting, auditing and tax books and records
relating to the Dickinson Assets that are held by them on the date hereof and
will make such books and records available to each other upon reasonable notice
and at reasonable times, it being understood that Hollywood and Dickinson shall
be entitled to make copies of any such books and records as they shall deem
reasonably necessary for purposes of making the same available to appropriate
Governmental Authorities or for other proper purposes.
SECTION 6.12 Covenant Not to Compete. Except as otherwise
consented to or approved in writing by Hollywood, Dickinson, and Dickinson's
Affiliates will not at any time for a period of three years following the
Closing:
(a) participate in, directly or indirectly, acting alone
or as a member of a partnership or as a holder, beneficially or of
record, of in excess of 5% of any security of any class, or as a
consultant to or representative of, any corporation, other business
entity or Person that is engaged in the business of Hollywood as it is
being conducted immediately following the Closing in competition with
Hollywood at any location within a 25 mile radius of any Dickinson
Theater; provided, however, the provisions of this Section
6.12(a)shall not apply to the Webb City Drive-In movie theatre
currently operated by Dickinson so long as such movie theater is
operated as a "sub-run" theater; or
(b) request any present or future supplier of,
distributor to or provider of services to Hollywood to curtail or
cancel its business with Hollywood in respect of the operations at any
Dickinson Theater and the use and operation of the Dickinson Assets;
or
(c) unless otherwise required by law, disclose to any
Person any details of the organization or affairs of the business of
Hollywood or any other nonpublic information concerning the Dickinson
Assets or the conduct of the operations at the Dickinson Theaters; or
(d) hire, attempt to hire or assist any other Person in
hiring or attempting to hire any employee of Hollywood or any Person
who was an employee of Hollywood within the prior six-month period and
who is or was employed as a Hollywood District Manager, or a position
senior thereto.
Dickinson and Dickinson's Affiliates acknowledge that, in the event the scope
of the covenants set forth in this Section 6.12, is deemed to be too broad in
any court proceeding, the court may reduce such scope to that which it deems
reasonable under the circumstances. The parties hereto agree and acknowledge
that Hollywood does not have any adequate remedy at law for the breach or
threatened breach by Dickinson or Dickinson's Affiliates of the agreements set
forth in this Section 6.12 and, accordingly, Dickinson and each Dickinson's
Affiliate further agree that the provisions of Section 9.6 hereof do not apply
to this Section 6.12 and that Hollywood may, in lieu of or in addition to the
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other remedies that may be available to it hereunder (including its rights
under Section 8.2) or under applicable law, file a suit in equity to enjoin
Dickinson or Dickinson's Affiliates from such breach or threatened breach and
consent to the issuance of injunctive relief hereunder.
SECTION 6.13 Use of Corporate Names. Dickinson
acknowledges that, from and after the Closing, it will have no right, title or
interest in or to the name "Hollywood" or any variations thereof. Neither
Dickinson nor any of their Affiliates shall use any such names in any business
or venture in which such Persons are engaged at any time following the Closing.
The covenant set forth in this Section 6.13. shall survive the Closing and
shall continue in full force and effect forever and without any limit upon
duration.
ARTICLE VII
HOLLYWOOD COVENANTS AND AGREEMENTS
SECTION 7.1 Inspection. From the date hereof to the
Closing, Hollywood shall give to Dickinson and its officers, attorneys,
accountants, and representatives free, full, and complete access during
reasonable business hours to the Hollywood Assets as Dickinson may deem
necessary or appropriate; provided, that such due diligence review will not
unreasonably interfere with the operations by Hollywood of the Hollywood
Assets. Hollywood will provide Dickinson and its officers, attorneys,
accountants and representatives with any information reasonably requested by
them pertaining to income derived from or expenses associated with the
Hollywood Assets.
SECTION 7.2 Compliance. From the date hereof to the
Closing, Hollywood shall not take or fail to take any action which action or
failure to take such action shall cause the representations and warranties made
by Hollywood herein to be untrue or incorrect as of the Closing.
SECTION 7.3 Satisfaction of All Conditions Precedent.
From the date hereof to the Closing, Hollywood shall use reasonable efforts to
cause all conditions precedent in Article III to be satisfied by the Closing.
SECTION 7.4 No Solicitation. From the date hereof to
September 25, 1997, Hollywood shall not offer any of Hollywood Assets for sale,
or solicit offers to buy the Hollywood Assets or hold discussions with any
party (other than Dickinson) looking toward such an offer or solicitation or
toward a sale of equity or a merger or consolidation of Hollywood with or into
another entity or any similar transaction. Hollywood shall not enter into any
agreement with any party other than Dickinson with respect to the sale or other
disposition of either the equity interests of Hollywood or the Hollywood Assets
or with respect to any merger, consolidation, or similar transaction involving
Hollywood.
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SECTION 7.5 Material Developments. From the date hereof
to the Closing, Hollywood shall notify Dickinson of any material problems or
developments with respect to the business or operations of the Hollywood
Theaters of which Hollywood has Knowledge.
SECTION 7.6 Notice of Breach. From the date hereof to
the Closing, Hollywood shall, immediately upon becoming aware thereof, give
detailed written notice to Hollywood of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a breach,
or would have caused or constituted a breach had such event occurred or been
known to Hollywood prior to the date of this Agreement, of any of their
covenants, agreements, representations, or warranties contained or referred to
herein or in any document delivered in accordance with the terms hereof.
SECTION 7.7 Notice of Litigation. From the date hereof
to the Closing, immediately upon becoming aware thereof, Hollywood shall notify
Dickinson of (a) any suit, action, or proceeding to which Hollywood becomes a
party or which is threatened against Hollywood in writing that involves the
Hollywood Assets, (b) any order or decree or any complaint praying for an order
or decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereby, or (c) any notice from any tribunal of its
intention to institute an investigation into, or to institute a suit or
proceeding to restrain or enjoin the consummation of, this Agreement or the
transactions contemplated hereby or to nullify or render ineffective this
Agreement or such transactions if consummated.
SECTION 7.8 Continuation of Insurance Coverage. From the
date hereof to the Closing, Hollywood shall keep in full force and effect
insurance coverage for the Hollywood Theaters and the Hollywood Assets in the
same amount and scope to the coverage now maintained covering the Hollywood
Theaters and the Hollywood Assets.
SECTION 7.9 Interim Operations of the Company.
(a) From the date hereof to the Closing, Hollywood shall
conduct their business only in the ordinary course consistent with
past practice, and shall not, unless Dickinson gives its prior written
approval (i) sell, pledge, dispose of, or encumber, or agree to sell,
pledge, dispose of, or encumber, any of the Hollywood Assets (except
in the ordinary course of business), (ii) modify, extend, or renew any
Hollywood Lease, or (iii) make any material acquisition or capital
expenditure or commit to make any such acquisition or expenditure.
(b) From the date hereof to the Closing, Hollywood will
use reasonable efforts to maintain the Hollywood Theaters and the
Hollywood Assets in their present operating condition and repair,
ordinary wear and tear excepted.
(c) If required by law, Hollywood shall offer COBRA
benefits to those employees of Hollywood eligible to receive such
benefits in connection with the sale by
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Hollywood of the Hollywood Assets. Upon termination of Hollywood
employee benefits pursuant to Section 7.14 hereof, Hollywood shall
offer COBRA benefits to those employees of Hollywood eligible to
receive such benefits if required by law.
SECTION 7.10 Transfer Taxes. Hollywood shall be
responsible for and shall pay any and all taxes and recording fees, if any,
payable as a result of the sale, conveyance, transfer and delivery of the
Hollywood Assets upon the terms and conditions hereof, provided that Dickinson
shall be responsible for all recording and other fees relating to its financing
of the Cash Purchase Price, including any applicable mortgage registration
taxes.
SECTION 7.11 Preservation of Books and Records. For a
period of two years from the date hereof, Hollywood and Dickinson will preserve
and maintain the corporate, accounting, auditing and tax books and records
relating to the Hollywood Assets that are held by them on the date hereof and
will make such books and records available to each other upon reasonable notice
and at reasonable times, it being understood that Hollywood and Dickinson shall
be entitled to make copies of any such books and records as they shall deem
reasonably necessary for purposes of making the same available to appropriate
Governmental Authorities or for other proper purposes.
SECTION 7.12 Covenant Not to Compete. Except as otherwise
consented to or approved in writing by Dickinson, Hollywood, and Hollywood's
Affiliates will not at any time for a period of three years following the
Closing:
(a) participate in, directly or indirectly, acting alone
or as a member of a partnership or as a holder, beneficially or of
record, of in excess of 5% of any security of any class, or as a
consultant to or representative of, any corporation, other business
entity or Person that is engaged in the business of Dickinson as it is
being conducted immediately following the Closing in competition with
Dickinson at any location within a 25 mile radius of any Hollywood
Theater; provided, however, the provisions of this Section
7.12(a)shall not apply to the Ramada 4 movie theater in Jefferson
City, Missouri currently operated by Hollywood so long as such movie
theater is operated as a "sub-run" theater; or
(b) request any present or future supplier of,
distributor to or provider of services to Dickinson to curtail or
cancel its business with Dickinson in respect of the operations at any
Hollywood Theater and the use and operation of the Hollywood Assets;
or
(c) unless otherwise required by law, disclose to any
Person any details of the organization or affairs of the business of
Dickinson or any other nonpublic information concerning the Hollywood
Assets or the conduct of the operations at the Hollywood Theaters; or
(d) hire, attempt to hire or assist any other Person in
hiring or attempting to hire any employee of Dickinson or any Person
who was an employee of Dickinson within the
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prior six-month period and who is or was employed as a Dickinson
District Manager, or a position senior thereto.
Hollywood and Hollywood's Affiliates acknowledge that, in the event the scope
of the covenants set forth in this Section 7.12, is deemed to be too broad in
any court proceeding, the court may reduce such scope to that which it deems
reasonable under the circumstances. The parties hereto agree and acknowledge
that Dickinson does not have any adequate remedy at law for the breach or
threatened breach by Hollywood or Hollywood's Affiliates of the agreements set
forth in this Section 7.12 and, accordingly, Hollywood and each Hollywood's
Affiliate further agree that the provisions of Section 9.6 hereof do not apply
to this Section 7.12 and that Dickinson may, in lieu of or in addition to the
other remedies that may be available to it hereunder (including its rights
under Section 8.3) or under applicable law, file a suit in equity to enjoin
Hollywood or Hollywood's Affiliates from such breach or threatened breach and
consent to the issuance of injunctive relief hereunder.
SECTION 7.13 Use of Corporate Names. Hollywood
acknowledges that, from and after the Closing, it will have no right, title or
interest in or to the name "Dickinson" or any variations thereof. Neither
Hollywood nor any of its Affiliates shall use any such names in any business or
venture in which such Persons are engaged at any time following the Closing.
The covenant set forth in this Section 7.13 shall survive the Closing and shall
continue in full force and effect forever and without any limit upon duration.
SECTION 7.14 Ramada 4 Theater. Hollywood shall operate
the Ramada 4 Theater in Jefferson City, Missouri as a "sub run" movie theater
until the earlier of (i) the termination of the lease agreement between
Hollywood and the landlord of the Ramada 4 Theater, at which point Hollywood
shall be obligated to remove all theater-related equipment from such theater or
(ii) Hollywood's assignment of all of its right, title and interest in and to
the lease agreement between Hollywood and the landlord of the Ramada 4 Theater
to Dickinson, which assignment shall be in consideration of Dickinson's
performance under this Agreement, and shall be of no additional cost to
Dickinson at the time of such assignment.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS; INDEMNIFICATION
SECTION 8.1 Survival of Representations and Agreements.
All representations and warranties contained in this Agreement, any Dickinson's
Ancillary Documents, any Hollywood's Ancillary Documents or in any certificate,
document, affidavit or instrument delivered pursuant to this Agreement shall
survive the Closing and the consummation of the transactions contemplated
hereby and thereby and shall continue in full force and effect:
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(a) forever and without any limit upon duration in the
case of the representations and warranties of Dickinson set forth in
Sections 4.4, 4.13 and 4.14;
(b) forever and without any limit upon duration in the
case of the representations and warranties of Hollywood set forth in
Sections 5.4, 5.13 and 5.14;
(c) for a period of one year in the case of all other
representations made with respect to Dickinson and Hollywood, their
assets, business and operations;
(d) all other representations and warranties shall not
survive the Closing; and
(e) for the comparable periods of time set forth above in
this Section 8.1 in the case of each representation and warranty (but
no covenant) set forth in any Dickinson's Ancillary Document,
Hollywood's Ancillary Document or any certificate, document, affidavit
or instrument delivered pursuant to this Agreement, based upon the
nature of such representation and warranty when compared to the most
analogous representation and warranty set forth above.
Each covenant and agreement set forth in this Agreement, in any Hollywood's
Ancillary Document or in any Dickinson's Ancillary Document to be performed
after the Closing will survive the Closing in accordance with its terms. All
representations, warranties, covenants and agreements made or contained in this
Agreement, in any Hollywood's Ancillary Documents, in any Dickinson's Ancillary
Document or any certificate, document, affidavit or instrument delivered in
accordance with this Agreement shall be deemed to be material and to have been
relied upon by the parties hereto.
SECTION 8.2 Indemnification of Hollywood. From and after
the Closing, Dickinson shall indemnify and hold Hollywood and its directors,
officers, employees, agents and Affiliates harmless against any and all
damages, losses, deficiencies, liabilities, obligations, commitments, costs or
expenses (including legal and other expenses reasonably incurred in
investigating and defending against the same) (collectively, "Liabilities" and
each a "Liability") incurred by Hollywood resulting from (a) the breach of any
representation or warranty of Dickinson contained in Article IV of this
Agreement or in any Dickinson's Ancillary Document that is known to Dickinson
or Hollywood on or prior to the Closing (it being acknowledged that Hollywood
shall have a continuing right of inspection with respect to the Dickinson
Theaters and Dickinson Assets through the Closing Date), (b) any breach of any
agreement or covenant of Dickinson contained in this Agreement or in
Dickinson's Ancillary Documents, (c) the conduct of the business and operations
of the Dickinson Theaters and the Dickinson Assets on and prior to the Closing
(exclusive of amounts reimbursable to Dickinson by Hollywood during the period
following the Closing as specified in Section 2.4 hereof), (d) Third Party
Claims arising prior to Closing, (e) the termination of contracts pursuant to
Section 3.2(e) hereof, (f) the Dickinson Retained Liabilities, other than with
respect to Liabilities relating to or arising from Hollywood's breach of a
representation, warranty, covenant or agreement made by Hollywood, or (g) any
liabilities arising from the operation of any Employee Benefit Plan or the
termination of any Employee Benefit Plan prior to or after Closing,
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provided, however, that notwithstanding anything to the contrary herein no
amount shall be payable to Hollywood in indemnification under this Section 8.2
unless the aggregate amount of Liabilities exceeds $50,000. Except in the case
of the representations and warranties of Dickinson set forth in Section 4.14,
in the event that such aggregate amount of Liabilities exceeds $50,000,
Dickinson shall be liable only for the amount of the excess of $50,000.
SECTION 8.3 Indemnification of Dickinson. From and after
the Closing, Hollywood shall indemnify and hold Dickinson and its directors,
officers, employees, agents and Affiliates harmless against any and all
Liabilities incurred by Dickinson resulting from (a) the breach of any
representation or warranty of Hollywood contained in Article V of this
Agreement or in any Hollywood's Ancillary Document that is known to Dickinson
or Hollywood on or prior to the Closing (it being acknowledged that Dickinson
shall have a continuing right of inspection with respect to the Hollywood
Theaters and Hollywood Assets through the Closing Date), (b) any breach of any
agreement or covenant of Hollywood contained in this Agreement or in
Hollywood's Ancillary Documents, (c) the conduct of the business and operations
of the Hollywood Theaters and the Hollywood Assets on and prior to the Closing
(exclusive of amounts reimbursable to Hollywood by Dickinson during the period
following the Closing as specified in Section 2.4 hereof), (d) Third Party
Claims arising prior to Closing, (e) the termination of contracts pursuant to
Section 3.3(e) hereof, (f) the Hollywood Retained Liabilities, other than with
respect to Liabilities relating to or arising from Dickinson's breach of a
representation, warranty, covenant or agreement made by Dickinson, or (g) any
liabilities arising from the operation of any Employee Benefit Plan or the
termination of any Employee Benefit Plan prior to or after Closing, provided,
however, that notwithstanding anything to the contrary herein no amount shall
be payable to Dickinson in indemnification under this Section 8.3 unless the
aggregate amount of Liabilities exceeds $50,000. Except in the case of the
representations and warranties of Hollywood set forth in Section 5.14, in the
event that such aggregate amount of Liabilities exceeds $50,000, Hollywood
shall be liable only for the amount of the excess of $50,000.
SECTION 8.4 Indemnification for Third Party Claims. The
following procedures shall be applicable with respect to indemnification for
third party claims arising in connection with any provision of this Agreement.
(a) Promptly after receipt by the party seeking
indemnification hereunder (an "Indemnitee") of written notice of the
assertion or the commencement of any claim, liability or obligation by
a third party, whether by legal process or otherwise (a "Claim"), with
respect to any matter within the scope of Sections 8.2 or 8.3 hereof,
the Indemnitee shall give written notice thereof (the "Notice") to the
Person from whom indemnification is sought pursuant hereto (the
"Indemnitor") and shall thereafter keep the Indemnitor reasonably
informed with respect thereto, provided that the failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein
shall not relieve the Indemnitor of its obligations hereunder unless
such failure results in (i) a default judgment, (ii) the expiration of
the time to answer a complaint or (iii) material prejudice to
Indemnitor's defense of such Claim. In case any such Claim is brought
against any Indemnitee, the Indemnitor shall be entitled to assume the
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defense thereof, by written notice of its intention to the Indemnitee
within 30 days after receipt of the Notice, with counsel reasonably
satisfactory to the Indemnitee at the Indemnitor's own expense. If
the Indemnitor shall assume the defense of such Claim, it shall not
settle such Claim without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld. Notwithstanding the
assumption by the Indemnitor of the defense of any Claim as provided
in this Section 8.4(a), the Indemnitee shall be permitted to join in
the defense of such Claim and to employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee
of its desire to assume the defense of any such Claim within the
prescribed period of time, or shall notify the Indemnitee that it will
not assume the defense of any such Claim, then the Indemnitee shall
assume the defense of any such Claim, in which event it may do so in
such manner as it may deem appropriate, provided that it shall not
settle any Claim which would give rise to the Indemnitor's liability
under Sections 8.2 or 8.3 hereof, as the case may be, without the
Indemnitor's prior written consent, such consent not to be
unreasonably withheld. The Indemnitor shall be permitted to join in
the defense of such Claim and to employ counsel at its own expense.
SECTION 8.5 Exclusive Remedy. The remedies expressly
provided for in Sections 2.4, 6.12, 7.12, 8, 9.6 and 9.8 shall be the parties'
exclusive remedies with respect to the matters covered by this Agreement and no
party shall be liable to the other under this Agreement with respect to any
matter not initiated within the time limits specified in such sections, if any.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Expenses. Except as expressly provided
herein, each of the parties hereto shall bear all costs, expenses and fees
incurred or assumed by it in the preparation and execution of this Agreement
and in complying with the covenants and agreements contained herein.
SECTION 9.2 Notices. All notices and other
communications hereunder shall be given by delivery in person, by registered or
certified mail (return receipt requested with postage prepaid thereon), by a
nationally recognized overnight courier or by facsimile transmission to the
respective parties at the following addresses (or at such other address as
either party shall have furnished to the other in accordance with the terms of
this Section 9.2):
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if to Dickinson:
Dickinson, Inc.
5913 Woodson Road
Mission, Kansas
Attention: Frank Torchia
Facsimile: (913) 432-9507
with a copy to:
Steven C. Krueger
Morrison & Hecker L.L.P.
2610 Grand Avenue
Kansas City, Missouri 64108
Facsimile: (816) 474-4208
if to Hollywood:
Hollywood Theaters, Inc.
2911 Turtle Creek Blvd.
Suite 1150
Dallas, Texas 75219
Attention: Thomas W. Stephenson, Jr.
Facsimile: (214) 520-2323
with a copy to:
Carlos A. Fierro
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, TX 75201
Facsimile: (214) 953-6503
All notices and other communications hereunder that are addressed as provided
in or pursuant to this Section 9.2 shall be deemed duly and validly given (a)
if delivered in person, upon delivery, (b) if delivered by registered or
certified mail, 72 hours after being placed in a depository of the United
States mails or (c) if delivered by facsimile transmission, upon transmission
thereof and receipt of the appropriate answerback or (d) if by nationally
recognized overnight courier as of 3:00 p.m. on the day after being delivered
to such courier (if delivered to such courier on a timely basis for next day
delivery).
SECTION 9.3 Entire Agreement. This Agreement, including
the Exhibits and Schedules hereto, constitutes the entire agreement among the
parties with respect to the transactions
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contemplated hereby and cancels, merges and supersedes all prior oral or
written agreements and understandings with respect thereto and the parties
hereto have no agreements, representations, or warranties relating to the
subject matter of this Agreement which are not set forth herein or in the
Dickinson's Ancillary Documents or Hollywood's Ancillary Documents. All
Exhibits and Schedules hereto are expressly made a part of this Agreement and
are incorporated herein by reference.
SECTION 9.4 Parties in Interest; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns (it being understood and
agreed that, except as expressly provided herein, nothing contained in this
Agreement is intended to confer upon any other Person any rights, benefits or
remedies of any kind or character whatsoever under or by reason of this
Agreement). Neither party may assign this Agreement without the prior written
consent of each of the other party hereto.
SECTION 9.5 Amendment; Waivers. This Agreement may be
amended only by a written instrument duly executed and delivered on behalf of
each of the parties hereto, and compliance with any term or provision hereof
may be waived only by a written instrument executed by each party entitled to
the benefits thereof. No failure to exercise any right, power or privilege
granted hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege granted hereunder.
SECTION 9.6 Arbitration.
(a) The parties desire to resolve certain disputes,
controversies and claims arising out of this Agreement without
litigation. Accordingly, except in the case of (i) a dispute,
controversy or claim relating to the Covenant Not to Compete in
Section 6.12 or Section 7.12 hereof or (ii) a suit, action or
proceeding to compel either party to comply with the dispute
resolution procedures set forth in this Section 9.6, the parties agree
to use the following dispute resolution procedures as their sole
remedy with respect to any dispute, controversy or claim arising out
of or relating to this Agreement or any documents ancillary hereto or
their breach.
(b) Any party may submit a dispute to arbitration as
contemplated by the provisions of this Section 9.6. The arbitration
shall be heard and determined by a tribunal of three arbitrators
selected in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "Arbitration Panel"). All
decisions and awards by the Arbitration Panel shall be made by
majority vote.
(c) Unless otherwise expressly agreed in writing by the
parties to the arbitration proceedings, the following provisions and
procedures shall govern the conduct of any arbitration proceedings
pursuant to this Section 9.6:
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(i) the arbitration proceedings shall be held in
Dallas, Texas, in the case of any proceeding commenced by
Hollywood, and in Johnson County, Missouri, in the case of any
proceeding commenced by Dickinson, at a site chosen by mutual
agreement of the parties, or if the parties cannot reach
agreement on a location within 30 days of the appointment of
the last arbitrator, then at a site chosen by the Arbitration
Panel;
(ii) the Arbitration Panel shall be and remain at
all times wholly independent and impartial;
(iii) the arbitration proceedings shall be
conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, as amended from time
to time;
(iv) any procedural issues not determined under
the arbitral rules selected pursuant to subparagraph (c)(iii)
above shall be determined by the law of the place of
arbitration, other than those laws which would refer the
matter to another jurisdiction;
(v) the costs of the arbitration proceedings
(including attorneys' fees and costs) shall be borne in the
manner determined by the Arbitration Panel;
(vi) the decision of the Arbitration Panel shall
be reduced to writing and shall be final, binding and
conclusive; and any costs or fees incident to enforcing any
award made by the Arbitration Panel shall, to the maximum
extent permitted by Law, be charged against the party
resisting such enforcement; and
(vii) judgment upon any award made by the
Arbitration Panel may be enforced in any court having
jurisdiction over the person or the assets of the party
against whom the award is made.
SECTION 9.7 Severability. In the event that any term or
provision contained in this Agreement is held to be invalid, illegal or
unenforceable for any reason, the invalidity, illegality or unenforceability
thereof shall not affect any other term or provision hereof and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained therein.
SECTION 9.8 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with the terms
hereof. Accordingly, the parties agree that each of them shall be entitled to
injunctive relief to prevent breaches of the terms of this Agreement and to
obtain specific performance of the terms hereof, in addition to any other
remedy now or hereafter available at law or in equity, or otherwise.
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SECTION 9.9 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Missouri, without regard to principles of conflicts of law, except to the
extent that mandatory principles of conflicts of law require the application of
laws of another jurisdiction wherein any of the Dickinson Assets or Hollywood
Assets are located to determine the validity or effect of the sale, conveyance,
transfer or delivery thereof in accordance with the provisions of this
Agreement.
SECTION 9.10 Headings. The Article and Section headings
contained in this Agreement are for convenience of reference only, do not
constitute a part of this Agreement and shall not limit, extend or otherwise
affect the meaning or interpretation of the provisions hereof.
SECTION 9.11 Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 9.12 Press Releases. None of the parties hereto
shall issue press releases or other public communications of any sort relating
to this Agreement prior to closing; provided, however, that the parties shall
be entitled to make such disclosures as may be required pursuant to applicable
law or the lawful requirement of any Governmental Authority or by order of a
court of competent jurisdiction.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
DICKINSON, INC.
By: /s/ Glen Wood Dickinson, III
------------------------------------
Glen Wood Dickinson, III
President
HOLLYWOOD THEATERS, INC.
By: /s/ Thomas W. Stephenson. Jr.
------------------------------------
Thomas W. Stephenson, Jr.
President
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