Exhibit A
ASSET PURCHASE AGREEMENT
Dated as of May 24, 1995
by and among
Discovery Zone, Inc.,
Discovery Zone L.P.,
Blockbuster Amusement Holding Corporation,
a subsidiary of Viacom Inc.,
and
Blockbuster Family Fun, Inc.
TABLE OF CONTENTS
Page
ARTICLE I Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . 1
Section 1.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Purchase Price; Assumption of Liabilities . . . . . . . . . . 3
Section 2.1 Amount of the Purchase Price . . . . . . . . . . . . . . 3
Section 2.2 Assumed Liabilities . . . . . . . . . . . . . . . . . . 3
Section 2.3 Excluded Liabilities . . . . . . . . . . . . . . . . . . 3
Section 2.4 Allocation of the Purchase Price among the Purchased . .
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III Closing
Section 3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2 Procedure at the Closing . . . . . . . . . . . . . . . . 5
ARTICLE IV Representations and Warranties of BAHC . . . . . . . . . . . . 6
Section 4.1 Organization, Power, Authority, Authorization . . . . . 6
Section 4.2 Financial Statements . . . . . . . . . . . . . . . . . . 7
Section 4.3 Liabilities . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.4 Real Estate . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.5 Good Title to and Condition of Purchased Assets . . . . 9
Section 4.6 Environmental Matters . . . . . . . . . . . . . . . . 10
Section 4.7 Intentionally Omitted . . . . . . . . . . . . . . . . 11
Section 4.8 Licenses and Permits . . . . . . . . . . . . . . . . . 11
Section 4.9 Intellectual Property . . . . . . . . . . . . . . . . 12
Section 4.10 Adequacy of Assets; Relationships with Suppliers . . 13
Section 4.11 Documents of and Information with Respect to BFF . . 13
Section 4.12 Tax Matters . . . . . . . . . . . . . . . . . . . . . 14
Section 4.13 Litigation . . . . . . . . . . . . . . . . . . . . . 14
Section 4.14 No Material Adverse Change . . . . . . . . . . . . . 14
Section 4.15 Absence of Certain Acts or Events . . . . . . . . . . 14
Section 4.16 Compliance with Laws . . . . . . . . . . . . . . . . 15
Section 4.17 Labor Relations of BFF . . . . . . . . . . . . . . . 15
Section 4.18 Employee Benefits . . . . . . . . . . . . . . . . . . 16
Section 4.19 Product and Other Liability Claims . . . . . . . . . 16
ARTICLE V Representations and Warranties of DZI and DZLP . . . . . . . 16
Section 5.1 Organization, Power, Authority . . . . . . . . . . . . 16
Section 5.2 Due Authorization and Binding Obligation . . . . . . . 17
ARTICLE VI Additional Covenants of BAHC . . . . . . . . . . . . . . . . 18
Section 6.1 Reasonable Efforts . . . . . . . . . . . . . . . . . . 18
Section 6.2 Conduct of Business Pending the Closing . . . . . . . 18
Section 6.3 Access to BFF's Properties and Records . . . . . . . . 18
Section 6.4 No Disclosure . . . . . . . . . . . . . . . . . . . . 19
Section 6.5 No Other Discussions . . . . . . . . . . . . . . . . . 19
Section 6.6 Interim Financial Statements . . . . . . . . . . . . . 19
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ARTICLE VII Additional Covenants of DZI . . . . . . . . . . . . . . . . 20
Section 7.1 Reasonable Efforts . . . . . . . . . . . . . . . . . . 20
Section 7.2 No Disclosure . . . . . . . . . . . . . . . . . . . . 20
Section 7.3 Conduct Prior to Closing . . . . . . . . . . . . . . . 20
ARTICLE VIII Conditions to the Obligation of DZI and DZLP . . . . . . . 20
Section 8.1 Accuracy of Representations and Warranties
and Compliance with Obligations . . . . . . . . . . . . . . . . 20
Section 8.2 Certified Resolutions . . . . . . . . . . . . . . . . 20
Section 8.3 Receipt of Necessary Consents . . . . . . . . . . . . 21
Section 8.4 No Adverse Litigation . . . . . . . . . . . . . . . . 21
Section 8.5 No Material Adverse Change . . . . . . . . . . . . . . 21
Section 8.6 Consummation of Transactions . . . . . . . . . . . . . 21
Section 8.7 License Agreement . . . . . . . . . . . . . . . . . . 21
Section 8.8 Operating Lease . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX Conditions to Obligation of BAHC and BFF . . . . . . . . . . 21
Section 9.1 Accuracy of Representations and Warranties
and Compliance with Obligations . . . . . . . . . . . . . . . . 22
Section 9.2 Certified Resolutions . . . . . . . . . . . . . . . . 22
Section 9.3 No Adverse Litigation . . . . . . . . . . . . . . . . 22
Section 9.4 No Material Adverse Change . . . . . . . . . . . . . . 22
Section 9.5 Consummation of Transactions . . . . . . . . . . . . . 22
Section 9.6 Sublease . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.7 Assignment Agreement . . . . . . . . . . . . . . . . . 22
Section 9.8 Guaranty Agreement . . . . . . . . . . . . . . . . . . 22
ARTICLE X Certain Actions After the Closing . . . . . . . . . . . . . . 23
Section 10.1 DZLP to Act as Agent for BFF . . . . . . . . . . . . 23
Section 10.2 Delivery of Property Received by BFF After
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 10.3 DZLP Appointed Attorney for Sellers . . . . . . . . . 23
Section 10.4 Execution of Further Documents . . . . . . . . . . . 23
Section 10.5 Employment by DZLP of BFF's Employees . . . . . . . . 24
Section 10.6 Employee Benefits . . . . . . . . . . . . . . . . . . 24
Section 10.7 Liquor Licenses . . . . . . . . . . . . . . . . . . . 24
Section 10.7 Net Worth . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI Indemnification . . . . . . . . . . . . . . . . . . . . . . 25
Section 11.1 Agreement by BAHC to Indemnify . . . . . . . . . . . 25
Section 11.2 Agreement by DZI to Indemnify . . . . . . . . . . . . 26
Section 11.3 Indemnification Procedures for Third
Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.4 Credit Provisions . . . . . . . . . . . . . . . . . . 27
ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.1 Survival of Representations and Warranties . . . . . 28
Section 12.2 Brokers' Commission . . . . . . . . . . . . . . . . . 28
Section 12.3 Amendment and Modification . . . . . . . . . . . . . 28
Section 12.4 Binding Effect . . . . . . . . . . . . . . . . . . . 28
Section 12.5 Entire Agreement . . . . . . . . . . . . . . . . . . 28
Section 12.6 Headings . . . . . . . . . . . . . . . . . . . . . . 28
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Section 12.7 Execution in Counterpart . . . . . . . . . . . . . . 28
Section 12.8 Notices . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.9 Governing Law . . . . . . . . . . . . . . . . . . . . 29
Section 12.10 Publicity . . . . . . . . . . . . . . . . . . . . . 29
Section 12.11 Termination . . . . . . . . . . . . . . . . . . . . 29
Section 12.12 Expenses . . . . . . . . . . . . . . . . . . . . . 30
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Exhibits
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Exhibit A: Note
Exhibit B: License Agreement
Exhibit C: Sublease
Exhibit D: Assignment Agreement
Exhibit E: Guaranty Agreement
Schedules
---------
BFF Disclosure Schedule
DZI Disclosure Schedule
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of this
____ day of May, 1995 by and among DISCOVERY ZONE, INC., a Delaware
corporation ("DZI"), DISCOVERY ZONE L.P., a Delaware limited partnership
("DZLP") and an indirect wholly-owned subsidiary of DZI, BLOCKBUSTER
AMUSEMENT HOLDING CORPORATION, a Delaware corporation ("BAHC") and a
wholly-owned subsidiary of Viacom Inc. ("Viacom"), and BLOCKBUSTER FAMILY
FUN, INC., a Delaware corporation ("BFF").
Recitals
Blockbuster Fun & Fitness Holding Corp. ("BFFHC"), which is a wholly-
owned subsidiary of BAHC, owns all of the issued and outstanding shares of
capital stock of BFF. BFF is engaged in the business of owning, operating
and developing a family entertainment center under the name and xxxx of
"Block Party" in each of Albuquerque, New Mexico and Indianapolis, Indiana
(the "Centers"). This Agreement provides for the sale by BFF to DZLP of
substantially all of BFF's assets, properties and business related to the
Centers (the "Business") for a purchase price consisting of a promissory
note and the assumption by DZLP of certain obligations of BFF, all as
herein provided and on the terms and conditions hereinafter set forth.
Covenants
NOW, THEREFORE, DZI, DZLP, BAHC and BFF, in consideration of the
agreements, covenants and conditions contained herein, hereby make the
following representations and warranties, give the following covenants and
agree as follows:
ARTICLE I
Purchase and Sale of Assets
Section 1.1 Purchased Assets. BFF agrees to and will sell, convey,
transfer, assign and deliver to DZLP at the Closing (as hereinafter
defined), free and clear of all liens, mortgages, pledges, encumbrances and
charges of every kind (except those which DZLP has expressly agreed in
Section 2.2 hereof to assume), on the terms and subject to the conditions
set forth in this Agreement, all of the assets, properties and business of
BFF of every kind and description, real, personal and mixed, tangible and
intangible, of BFF wherever located (except those assets of BFF which are
specifically excluded from this sale by Section 1.2 hereof) as they shall
exist at the Closing Date (as hereinafter defined), in each case used
exclusively in the Business (collectively, the "Purchased Assets").
Without limiting the generality of the foregoing, but subject to Section
1.2 hereof, the Purchased Assets shall include the following:
1.1.1 all machinery, equipment, tools, supplies, leasehold
improvements, construction in progress, furniture and fixtures, automobiles
and trucks and other fixed assets owned by BFF (the "Purchased Fixed
Assets");
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1.1.2 all inventories of BFF (the "Purchased Inventory");
1.1.3 all receivables of BFF, including without limitation all trade
accounts receivable arising from sales of inventory in the ordinary course
of business, notes receivable and insurance proceeds receivable (the
"Purchased Receivables");
1.1.4 all of the interest of and the rights and benefits accruing to
BFF as lessee under (i) all leases of real property and all improvements to
and buildings thereon including without limitation those described in
Section 4.4.2 of the BFF Disclosure Schedule (as hereinafter defined) (the
"Purchased Leasehold Premises"), and (ii) all leases or rental agreements
covering machinery, equipment, tools, supplies, furniture and fixtures,
automobiles and trucks and other fixed assets, including without limitation
those described in Section 4.11 of the BFF Disclosure Schedule (the
"Purchased Leased Property") (the leasehold rights described in clauses (i)
and (ii) are collectively referred to as the "Purchased Leasehold Rights");
1.1.5 all of the rights and benefits accruing to BFF under all sales
orders, sales contracts, supply contracts, purchase orders and purchase
commitments made by BFF in the ordinary course of business, all other
agreements to which BFF is a party or by which it is bound and all other
choses in action, causes of action and other rights of every kind of BFF
(the "Purchased Contract and Other Rights");
1.1.6 all operating data and records of BFF, including, without
limitation, the Centers' customer lists, financial, accounting and credit
records, correspondence, budgets and other similar documents and records
(the "Purchased Records");
1.1.7 all of the proprietary rights of BFF, including without
limitation all trademarks, trade names, patents, patent applications,
licenses thereof, trade secrets, technology, know-how, formulae, designs
and drawings, computer software, slogans, copyrights, processes, operating
rights, other licenses and permits, and other similar intangible property
and rights relating to the products or business of the Centers (the
"Purchased Proprietary Rights");
1.1.8 all cash and cash equivalents and investments, whether short-
term or long-term, of the Centers, including without limitation bank
accounts, certificates of deposit, treasury bills and securities (the
"Purchased Cash and Investments");
1.1.9 all prepaid and deferred items of BFF, other than prepaid
rentals and taxes, including prepaid insurance and unbilled charges and
deposits relating to the operations of the Centers (the "Purchased Prepaid
Items"); and
1.1.10 all of the goodwill of BFF (the "Purchased Goodwill").
Section 1.2 Excluded Assets. Anything to the contrary in Section
1.1 notwithstanding, the Purchased Assets shall exclude the following
assets of BFF: (i) the Note (as hereinafter defined) and BFF's other
rights under this Agreement; (ii) any shares of capital stock of BFF which
are owned and held by BFF as treasury shares; (iii) the corporate minute
books and stock records of BFF; (iv) all trademarks and trade names and
other intangible property and
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rights relating to, derived from, or using the name "Block Party",
"Blockbuster" or the torn-ticket logo; (v) the liquor license issued with
respect to the Albuquerque Center; (vi) the $1,785,450 in cash received by
BFF as a reimbursement by the Landlord of leasehold improvement costs with
respect to the Indianapolis Purchased Leasehold Premises; and (vii) all
property and assets of BFF not used in the operation of the Centers.
ARTICLE II
Purchase Price; Assumption of Liabilities
Section 2.1 Amount of the Purchase Price. As consideration for the
Purchased Assets (the "Purchase Price"), DZLP agrees, subject to the terms,
conditions and limitations set forth in this Agreement:
2.1.1 to deliver to BFF a promissory note, in the form of Exhibit A
attached hereto, in an aggregate principal amount of $13,214,550 (the
"Note"); and
2.1.2 to assume and be responsible for the Assumed Liabilities (as
hereinafter defined).
Section 2.2 Assumed Liabilities. DZLP agrees to and will at the
Closing assume and agree to pay, discharge and perform when lawfully due
only those liabilities, contracts, commitments and other obligations of BFF
(i) arising after the Closing Date under all leases for the Purchased
Leasehold Premises and the Purchased Leased Property or (ii) set forth in
Section 2.2 of the BFF Disclosure Schedule (the "Assumed Liabilities").
Section 2.3 Excluded Liabilities. Anything to the contrary in
Section 2.2 notwithstanding, the Assumed Liabilities shall exclude the
following liabilities, contracts, commitments and other obligations of BFF
(the "Excluded Liabilities"):
2.3.1 BFF's obligations and any liabilities arising under this
Agreement;
2.3.2 any obligation of BFF for federal, state, local or foreign
income tax liability (including interest and penalties) arising from the
operations of the Business up to the Closing Date or arising out of the
sale by BFF of the Purchased Assets pursuant hereto, including without
limitation the liabilities shown on the Financial Statements (as
hereinafter defined) as "Deferred Taxes";
2.3.3 any obligation of BFF for any transfer, sales or other taxes,
fees or levies (including motor vehicle sales taxes) imposed by any state
or other governmental entity on or arising out of the sale of the Purchased
Assets pursuant hereto;
2.3.4 any obligation of BFF for expenses incurred in connection with
the sale of the Purchased Assets pursuant hereto, including, without
limitation, the fees and expenses of their counsel;
3
2.3.5 any obligation or liability of BFF listed on Section 2.3 of the
BFF Disclosure Schedule;
2.3.6 any liability, contract, commitment or other obligation of BFF,
known or unknown, fixed or contingent, the existence of which constitutes
or will constitute a breach of any representation or warranty of BAHC
contained in or made pursuant to Article IV of this Agreement;
2.3.7 any liability relating to the employees or other personnel of
the Business prior to the Closing or in connection with the performance by
BFF of its obligations under the Sublease (as hereinafter defined),
including, without limitation, accrued salaries, liabilities under pension
or other "employee benefit plans" (as such term is used in Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA")) maintained
or contributed to by BFF or any member of BFF's "control group" (as such
term is used in Section 414(b) and (c) of the Internal Revenue Code of
1986, as amended (the "Code")), expenses of such employees and other
personnel, liabilities and obligations under any collective bargaining
agreement, liabilities and obligations for Workers' Compensation claims and
liabilities and obligations for any claims arising under the Workers
Adjustment and Retraining Notification Act of 1988 or any similar law in
any jurisdiction;
2.3.8 liabilities and obligations under any Environmental Law (as
hereinafter defined) arising out of the conduct of the Business prior to
the Closing, the operation of the Albuquerque Center pursuant to the
Sublease, or the ownership, operation, or occupancy of any real property
presently or previously owned, used, or occupied by the Business; and
2.3.9 without limiting the generality of the foregoing, all other
liabilities, contracts, commitments, costs, expenses, or other obligations
of BFF not specifically assumed by DZI in Section 2.2, of any nature
whatsoever, known or unknown, liquidated or unliquidated, accrued,
absolute, contingent, or otherwise, whether or not related to the Business,
the Purchased Assets or BFF's operation of the Business, and whether
arising prior to or after the Closing Date.
Section 2.4 Allocation of the Purchase Price among the Purchased
Assets. The Purchase Price shall be allocated among each item or class of
the Purchased Assets as shall be agreed upon by the parties hereto within
60 days from the Closing Date. BFF and DZLP agree that they will prepare
and file their federal and any state or local income tax returns based on
such allocation of the Purchase Price. BFF and the DZLP agree that they
will prepare and file any notices or other filings required pursuant to
Section 1060 of the Internal Revenue Code of 1986, and that any such
notices or filings will be prepared based on such allocation of the
Purchase Price.
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ARTICLE III
Closing
Section 3.1 Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of DZI,
on May 24, 1995 or as soon as practicable after the satisfaction or waiver
of the conditions which are set forth in Articles VIII and IX of this
Agreement and concurrent with the closing under the Stock Purchase
Agreement dated as of April 17, 1995 (the "Stock Purchase Agreement") by
and among DKB, Inc., the Xxxxx X. Xxxxx June, 1992 Non-Exempt Trust, the
Xxxxx X. Xxxxx June, 1992 Non-Exempt Trust, Xxxxxx X. Xxxxx, Xxxxx X.
Xxxxx, Xxxxx X. Xxxxx, BAHC, and BAHC's indirect wholly-owned subsidiary
Blockbuster Discovery Investment, Inc. The date on which the Closing occurs
is sometimes referred to herein as the "Closing Date."
Section 3.2 Procedure at the Closing. At the Closing, the parties
hereto agree to take the following steps in the order listed below
(provided, however, that upon their completion all such steps shall be
deemed to have occurred simultaneously):
3.2.1 BAHC shall deliver to DZI, in form and substance reasonably
satisfactory to DZI, the certificate described in Section 8.1 hereof and
all other previously undelivered documents required to be delivered by BFF
or BAHC to DZI at or prior to the Closing pursuant to the terms of this
Agreement.
3.2.2 DZI shall deliver to BAHC or BFF, in form and substance
reasonably satisfactory to BAHC, the certificate described in Section 9.1
hereof and all other previously undelivered documents required to be
delivered by DZI to BAHC or BFF at or prior to the Closing pursuant to the
terms of this Agreement.
3.2.3 BFF shall deliver to DZLP such deeds, bills of sale,
endorsements, assignments and other instruments, in such form as in each
case is reasonably satisfactory to DZI, as shall be sufficient to vest in
DZLP good and marketable title to the Purchased Assets, free and clear of
all liens, mortgages, pledges, encumbrances, and charges of every kind
(except those which DZI has expressly agreed in Section 2.2 hereof to
assume).
3.2.4 Viacom and Blockbuster Entertainment Inc. ("BEI") shall
execute and deliver to DZI a royalty-free license in the form attached
hereto as Exhibit B (the "License Agreement").
3.2.5 DZLP shall execute and deliver to BFF the Note.
3.2.6 DZLP shall deliver to BFF instruments, in such form as in
each case is satisfactory to BFF, as shall be sufficient to effect the
assumption by DZLP of the Assumed Liabilities.
3.2.7 DZLP and BFF shall execute and deliver a lease agreement in
the form attached hereto as Exhibit C (the "Sublease").
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3.2.8 Viacom shall execute and deliver a trademark assignment in
the form attached hereto as Exhibit D (the "Assignment Agreement").
3.2.9 DZI shall execute and deliver to BFF the guaranty agreement
in the form attached hereto as Exhibit E ("the Guaranty Agreement").
3.2.10 DZLP and BFF shall execute and deliver a cross receipt
acknowledging receipt from the other, respectively, of the Purchased Assets
and the Purchase Price.
ARTICLE IV
Representations and Warranties of BAHC
In order to induce DZI and DZLP to enter into this Agreement and to
purchase the Purchased Assets, subject to the disclosure schedule attached
hereto and incorporated herein by reference (the "BFF Disclosure
Schedule"), BAHC hereby makes the representations and warranties set forth
below, each of which is independently relied upon by DZI and DZLP
regardless of any other investigation made or information obtained by DZI
or DZLP, and each of which is correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article IV). As used hereinafter in
this Article IV, (i) the term "knowledge of BAHC" shall mean actual
knowledge of the executive officers, officers or persons having the
position of district manager or higher of BAHC and/or BFF on the date
hereof after reasonable investigation and (ii) the term "BFF Material
Adverse Effect" shall mean a material adverse effect on the Business or the
Purchased Assets taken as a whole.
Section 4.1 Organization, Power, Authority, Authorization and
Binding Obligation.
4.1.1 BFF is a corporation duly organized and legally existing in
good standing under the laws of the jurisdiction of its incorporation and
has full corporate power and authority necessary (i) to own or lease its
properties and to carry on its business as it is now being conducted, and
(ii) to enter into this Agreement and the agreements contemplated hereby,
and to carry out the transactions and agreements contemplated hereby or
thereby. BFF is legally qualified to transact business as a foreign
corporation, and is in good standing, in each of the jurisdictions in which
its business or property is such as to require that it be thus qualified,
except such jurisdictions where the failure to be so qualified would not
have a BFF Material Adverse Effect. BAHC is a corporation duly organized
and legally existing in good standing under the laws of the jurisdiction of
its incorporation, with full corporate power and authority to enter into
this Agreement and to carry out the transactions and agreements
contemplated hereby or thereby.
4.1.2 The execution, delivery and performance of this Agreement,
the License Agreement, the Sublease and each of the other agreements
contemplated hereby and thereby and the consummation of the transactions
contemplated hereby and thereby have been duly
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authorized by all necessary corporate action of each of BAHC and BFF, as
the case may be. Each of this Agreement and the License Agreement has been
duly executed and delivered by each of BAHC and BFF and is a valid and
binding obligation of BAHC and BFF, enforceable in accordance with its
terms. The Sublease has been duly authorized and, when executed and
delivered in accordance with its terms, will be a valid and binding
agreement of each of BFF enforceable in accordance with its terms. Except
as set forth on Section 4.1 of the BFF Disclosure Schedule, neither the
execution and delivery of this Agreement, the License Agreement or the
Sublease or the agreements contemplated thereby nor the consummation of the
transactions contemplated hereby or thereby will, as the case may be:
(i) conflict with or violate any provision of BAHC's or BFF's respective
certificates of incorporation or bylaws; (ii) conflict with or violate any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to,
binding upon or enforceable against BAHC or BFF; (iii) result in any breach
of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require
any notice under, any mortgage, contract, agreement, indenture, trust or
other instrument which is either binding upon or enforceable against BAHC
or BFF or the assets and properties of BAHC or BFF; or (iv) impair or in
any way limit any governmental or official license, approval, permit or
authorization of BAHC or BFF; except, in the case of each of clauses (iii)
and (iv) above, for such breaches, defaults, accelerations, creations of
any right to accelerate, terminate, modify or cancel, requirements of
notice, impairments or limitations, which would not have a BFF Material
Adverse Effect. No permit, consent, approval or authorization of, or
declaration to or filing with, any regulatory or other government authority
is required in connection with the execution and delivery of this
Agreement, the License Agreement or the Sublease or the agreements
contemplated thereby by BAHC or BFF, as the case may be, and the
consummation by each of them of the transactions contemplated hereby or
thereby, except such as shall have been obtained on or prior to the Closing
Date and such consents and approvals as are required to transfer to DZLP
the liquor license issued to BFF with respect to the Indianapolis Center.
Section 4.2 Financial Statements.
4.2.1 Set forth in Section 4.2 of the BFF Disclosure Schedule are
the following unaudited financial statements, including the notes
pertaining thereto, of BFF (collectively, the "Financial Statements"):
(i) balance sheet at March 31, 1995;
(ii) statements of income and retained earnings and cash flow for each
calendar year since the formation of BFF; and
(iii) statements of income and retained earnings and cash flow for
the four-month period ended April 23, 1995.
4.2.2 The Financial Statements present fairly the financial
position of BFF as of such balance sheet date and the results of its
operations for such periods; provided, that the unaudited balance sheet and
statements of income and retained earnings and cash flow as of and for the
four-month period ended April 23, 1995 will be subject to normal year-end
adjustments (which
7
will not be material individually or in the aggregate). The unaudited
balance sheet of BFF at March 31, 1995 included in Section 4.2 of the BFF
Disclosure Schedule is referred to herein as the "Last Balance Sheet."
Section 4.3 Liabilities. BFF does not have any liabilities or
obligations, either accrued, absolute, contingent or otherwise, except:
(i) to the extent reflected in or taken into account in determining net
worth on the Last Balance Sheet and not heretofore paid or discharged;
(ii) to the extent clearly disclosed and specifically set forth in or
incorporated by express reference in the BFF Disclosure Schedule;
(iii) liabilities incurred in the ordinary course of business (consistent
with prior practice) since the date of the Last Balance Sheet; or (iv)
liabilities which individually or in the aggregate would not have a BFF
Material Adverse Effect.
Section 4.4 Real Estate.
4.4.1 BFF does not own any real estate.
4.4.2 Section 4.4.2 of the BFF Disclosure Schedule accurately and
completely sets forth, with respect to every parcel of the Leasehold
Premises: (i) the lessor thereof and the commencement date and term of the
lease with respect to such Purchased Leasehold Premises; and (ii) the
location (including address) thereof. A true and complete copy of each
lease agreement listed on Section 4.4.2 of the BFF Disclosure Schedule and
each guaranty by BAHC or any of its subsidiaries of BFF's obligations under
any lease has been delivered or made available to DZI prior to the date
hereof, and none of such leases or guaranties has been amended or modified
except to the extent that such amendments or modifications are disclosed in
such copies or in Section 4.4.2 of the BFF Disclosure Schedule. The leases
covering the Purchased Leasehold Premises are legally binding and
enforceable agreements of BFF and are in full force and effect. BFF is not
in default or breach in any respect under any such lease except for such
defaults which would not have a BFF Material Adverse Effect. No event has
occurred which with the passage of time or the giving of notice or both
would cause a breach of or default by BFF, under any of such leases which
would have a BFF Material Adverse Effect, nor, to the knowledge of BAHC
(which knowledge qualification is not applicable for purposes of
determining whether there is a breach of this representation or warranty
giving rise to a claim for indemnifiable damages by DZI under Section 11.1
hereof), is there any breach by any other party to such leases which would
have a BFF Material Adverse Effect. Except as set forth on Section 4.4.2
of the BFF Disclosure Schedule, neither BAHC nor BFF has: (i) received any
notice from a landlord of Purchased Leasehold Premises of the termination
of any such lease, (ii) exercised or waived any expansion or renewal
options thereunder, (iii) waived in writing any of BFF's rights under any
of such leases, or (iv) sublet any Purchased Leasehold Premises.
4.4.3 BFF has a valid leasehold interest in each of its respective
Purchased Leasehold Premises, free and clear of all liens, mortgages,
options to purchase, pledges, encumbrances, charges, claims, security
interests, equities, assessments, restrictions, leases, subleases,
tenancies, covenants and easements, title defects or rights of any other
party of any kind, nature and description whatsoever (any of the preceding,
a "Defect"), except for Defects set forth on Section 4.4.3 to the BFF
Disclosure Schedule, liens for real estate taxes not yet due and payable,
8
and such Defects, if any, as are not material in character, amount or
extent and do not detract from the value, or interfere with the present
use, of such properties or otherwise impair business operations in a manner
which would have a BFF Material Adverse Effect.
4.4.4 Except as set forth on Section 4.4.4 of the BFF Disclosure
Schedule, the buildings and other improvements located on the Purchased
Leasehold Premises are each in good operating condition, normal wear and
tear excepted. All facilities located on the Purchased Leasehold Premises
have received all necessary approvals of governmental authorities
(including licenses and permits required in connection with the operation
thereof) except for such approvals the absence of which would not have a
BFF Material Adverse Effect. The operation and maintenance of such
facilities have not been in violation of any applicable laws, rules and
regulations, the violation of which would have a BFF Material Adverse
Effect.
4.4.5 Each of the Purchased Leasehold Premises: (i) has direct
access to public roads or access to public roads by means of a perpetual
access easement and has direct access and the non-exclusive right to the
use of parking areas for automobiles, such access and parking being
sufficient to satisfy the current normal transportation and parking
requirements of the Centers; and (ii) is served by all utilities in such
quantity and quality as are sufficient to satisfy the current normal
business activities as conducted at such site.
4.4.6 Neither BAHC nor BFF has received notice of: (i) any
condemnation proceeding with respect to any portion of the Purchased
Leasehold Premises or any access thereto, and to the knowledge of BAHC (but
without inquiry of any governmental authority), no proceeding is
contemplated by any governmental authority; (ii) any special assessment
which materially affects any of the Purchased Leasehold Premises, and,
except as set forth in Section 4.4.6 of the BFF Disclosure Schedule, to the
knowledge of BAHC (but without inquiry of any governmental authority), no
such special assessment is contemplated by any governmental authority; or
(iii) any change in the zoning laws applicable to any Purchased Leasehold
Premises.
Section 4.5 Good Title to and Condition of Purchased Assets.
4.5.1 BFF is the legal and beneficial owner of, and has good and
marketable title to, all of the Purchased Assets (other than the Purchased
Leasehold Premises) free and clear of all Defects, except those set forth
in Section 4.5 of the BFF Disclosure Schedule and those reflected in the
Financial Statements, and those Defects, if any, as are not material in
character, amount or extent and do not detract from the value, or interfere
with the present use, of such assets or otherwise impair business
operations, in each case in a manner which would have a BFF Material
Adverse Effect.
4.5.2 All of the Purchased Fixed Assets are in good operating
condition, normal wear and tear excepted, except for Purchased Fixed Assets
having an aggregate net book value of not in excess of $25,000, and each of
the Purchased Fixed Assets which has a book value in excess of $5,000 is in
good operating condition, normal wear and tear excepted.
4.5.3 The Purchased Inventory consists of items of a quality and
quantity usable and salable in the normal course of BFF's business at
values in the aggregate at least equal to the net
9
values at which such items are carried on BFF's books and at values at
least equal to the net values at which such items are recorded in the Last
Balance Sheet, as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of BFF.
Section 4.6 Environmental Matters.
4.6.1 As used in this Section 4.6, "Environmental Law" means the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Occupational Safety and Health Act (29
U.S.C. Sections 651 et. seq.) ("OSHA"), and the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), together with all other
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees and rulings thereunder) of any governmental
authority relating to (i) emissions, discharges, releases, or threatened
releases of Hazardous Material (as hereinafter defined) into ambient air,
surface water, ground water, or lands, (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Material, (iii) worker health and safety, or (iv) pollution or
protection of the environment. "Hazardous Material" means (a) any
"hazardous waste" as defined in RCRA and the Regulations promulgated
thereunder, (b) any "hazardous substance" or "pollutant or contaminant" as
defined in CERCLA and regulations promulgated thereunder; (c) asbestos, as
that term is defined in the Toxic Substance Control Act (15 U.S.C. Sections
2601 et. seq.) (the "TSCA"); (d) any Polychlorinated Biphenyl, as that term
is defined in the TSCA; and (e) petroleum, any of its derivatives, by-
products and other petroleum-related hydrocarbons.
4.6.2 The operations of BFF are in compliance with all
Environmental Laws except for violations which would not have a BFF
Material Adverse Effect. Neither of BAHC nor BFF has received notification
of any past or present failure by BFF to comply with any Environmental Laws
applicable to BFF or the assets and properties of BFF. Without limiting
the generality of the foregoing, neither BAHC nor BFF has received any
notification (including requests for information directed to BAHC or BFF)
from any governmental agency asserting that BFF is or may be a "potentially
responsible party" for a remedial action at a waste storage, treatment or
disposal facility, pursuant to the provisions of any Environmental Law
assigning responsibility for the costs of investigating or remediating
releases of Hazardous Materials into the environment.
4.6.3 To the knowledge of BAHC or BFF, BFF has not disposed or
arranged for any third parties to dispose, of Hazardous Material upon the
Purchased Leasehold Premises or away from such property, except as
permitted by law. Except as set forth on Section 4.6 of the BFF Disclosure
Schedule (which disclosure is for information purposes only and will not
qualify this representation or warranty for purposes of determining whether
there is a breach of this representation or warranty giving rise to a claim
for indemnifiable damages by DZI under Section 11.1 hereof), there are no
Environmental Laws or licenses, permits or orders applicable to BFF related
to environmental matters requiring any work, repairs, construction or
capital expenditures by BFF with respect to the assets or properties of BFF
which would have a BFF Material Adverse Effect.
10
4.6.4 There has not occurred, nor is there presently occurring, a
release of any Hazardous Material on, into or, to the knowledge of BAHC,
beneath the surface of any of the Purchased Leasehold Premises. For
purposes of this Section 4.6, the term "release" shall mean releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping. There is no asbestos
in or on any of the Purchased Leasehold Premises, the existence of which
would have a BFF Material Adverse Effect .
4.6.5 Section 4.6 of the BFF Disclosure Schedule identifies (which
disclosure is for information purposes only and will not qualify this
representation or warranty for purposes of determining whether there is a
breach of this representation or warranty giving rise to a claim for
indemnifiable damages by DZI under Section 11.1 hereof), and BAHC has
delivered or made available to DZI final copies of, the following materials
that are in the possession of BAHC, BFF or their affiliates (and any other
such materials that, to the knowledge of BAHC, have been prepared): (i) all
environmental audits or studies, assessments or occupational health studies
relating to the assets, properties or business of the Centers undertaken by
governmental agencies or BFF or their agents; (ii) the results of any
ground, water, soil, air or asbestos monitoring undertaken with respect to
the Purchased Leasehold Premises; (iii) all written communications between
BFF and any environmental agency within the past three years; and (iv) all
citations issued to BFF within the past three years under the OSHA.
4.6.6 Except as set forth on Section 4.6 of the BFF Disclosure
Schedule (which disclosure is for information purposes only and will not
qualify this representation or warranty for purposes of determining whether
there is a breach of this representation or warranty giving rise to a claim
for indemnifiable damages by DZI under Section 11.1 hereof), BFF has not
used any underground storage tanks and there are not now nor, to the
knowledge of BAHC or BFF, have there ever been any underground storage
tanks on the Purchased Leasehold Premises. For purposes of this Section
4.6.6, the term "underground storage tanks" shall have the meaning given it
in RCRA.
Section 4.7 Intentionally Omitted
Section 4.8 Licenses and Permits. BFF possesses all licenses and
other required governmental or official approvals, permits or
authorizations, the failure to possess which would have a BFF Material
Adverse Effect. Except as set forth in Section 4.8 of the BFF Disclosure
Schedule (which disclosure is for information purposes only and will not
qualify the representation or warranty for purposes of determining whether
there is a breach of this representation and warranty giving rise to a
claim for indemnifiable damages by DZI under Section 11.1 hereof), all such
licenses, approvals, permits and authorizations are valid and in full force
and effect, BFF is in compliance with their requirements, and no proceeding
is pending or, to the knowledge of BAHC, threatened to revoke or amend any
of them. Except for liquor licenses for each of the Centers, none of such
licenses, approvals, permits or authorizations will be impaired by the
execution and delivery of this Agreement and the consummation of the
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transactions contemplated hereby in any manner that would result in a BFF
Material Adverse Effect.
Section 4.9 Intellectual Property.
4.9.1 Section 4.9.1 of the BFF Disclosure Schedule identifies (i)
each patent, trademark or service xxxx registration and copyright
registration issued to BFF, (ii) each pending patent application or
application for trademark, service xxxx or copyright registration made by
BFF to be used in the operation of the Centers, (iii) each material
unregistered trademark, service xxxx and trade name owned by BFF, (iv) each
license, sublicense, agreement, or other written permission under which BFF
uses the Intellectual Property (as hereinafter defined) of any third party
in the operation of the Centers, and (v) each license, sublicense,
agreement, or other written permission under which any third party uses any
Intellectual Property of BFF constituting Purchased Assets. BFF has
delivered or made available to DZI a correct and complete copy of each
patent, trademark, service xxxx or copyright registration, application,
license, sublicense, agreement, or written permission listed in Section
4.9.1 of the BFF Disclosure Schedule. BFF possesses all items of
intellectual property of the types described in clauses (i) through (v) of
the first sentence of this Section 4.9.1 and other proprietary rights,
including trade secrets and other confidential business information,
inventions, technology, know how, designs and drawings, slogans, and other
similar intangible property and rights to any of the foregoing
(collectively, the "Intellectual Property"), necessary to operate the
Centers as they are now being operated.
4.9.2 With respect to each patent, trademark registration, service
xxxx registration, copyright registration, patent application, and
application for trademark, service xxxx, copyright registration,
unregistered trademark, service xxxx and trade name listed in Section 4.9.1
of the BFF Disclosure Schedule, except as set forth in Section 4.9.2 of the
BFF Disclosure Schedule, (i) BFF possesses all right, title, and interest
in and to each such item of Intellectual Property, free and clear of any
Defect, (ii) such Intellectual Property is not subject to any outstanding
injunction, judgment, order, ruling, decree or charge, (iii) no action,
suit, proceeding, hearing, investigation, complaint, claim or demand is
pending, or to the knowledge of BAHC, is threatened which challenges the
legality, validity, enforceability, use or ownership of such Intellectual
Property, and (iv) to the knowledge of BAHC, there is no infringement of
any of such Intellectual Property or other Intellectual Property of BFF by
any other person. Each license, agreement, or written permission listed in
Section 4.9.1 of the BFF Disclosure Schedule (i) is legal, valid, binding
and enforceable against BFF and in full force and effect, (ii) neither BFF
nor, to the knowledge of BAHC, any other party thereto, is in breach or
default (either presently or with the giving of notice or the lapse of time
or both) under any of such licenses agreements or written permissions, and
(iii) no event has occurred which would permit the termination,
modification or acceleration of any such license, agreement or written
permission. BFF is not infringing or misappropriating the Intellectual
Property of any other person. Except as set forth in Section 4.9.2 of the
BFF Disclosure Schedule, all filing and/or registration requirements with
respect to the Intellectual Property (including the payment of filing and
registration fees, if applicable) are not past due, except where the
failure to comply with such requirement would not result in a BFF Material
Adverse Effect.
12
4.9.3 Except as set forth on Section 4.9.3 of the BFF Disclosure
Schedule, BFF is the licensee, or the legal and beneficial owner of and has
good and marketable title to, each software and hardware computer-related
component currently used in connection with and necessary to support
operations at the Centers.
Section 4.10 Adequacy of Assets; Relationships with Suppliers.
Except as set forth on Section 4.10 of the BFF Disclosure Schedule, the
Purchased Assets and the intellectual property subject to the License
Agreement and the Assignment Agreement constitute, in the aggregate, all of
the property currently used in and necessary for the conduct of the
Business in the manner in which it is currently being conducted. The
Purchased Contracts and Other Rights constitute all of such contracts and
rights as are necessary to conduct the Business in the manner in which it
is currently being conducted except for such contracts and rights the
absence of which, individually or in the aggregate, would not have a BFF
Material Adverse Effect. There is, to the knowledge of BAHC, no written or
oral communication, fact, event or action which exists or has occurred
within 90 days prior to the date of this Agreement, which indicate that any
current supplier to BFF of items essential to the conduct of the Business
will terminate its business relationship with BFF.
Section 4.11 Documents of and Information with Respect to BFF.
Section 4.11 of the BFF Disclosure Schedule accurately and completely sets
forth a true and complete list of the following: (i) each material
agreement, contract or commitment between BFF on the one hand, and BAHC or
any of BAHC's other subsidiaries, on the other hand; (ii) each loan, credit
agreement, guarantee, security agreement or similar document or instrument
to which BFF is a party or by which it is bound; (iii) each lease of
personal property to which BFF is a party or by which it is bound involving
annual lease payments in excess of $50,000; (iv) any other agreement,
contract or commitment to which BFF is a party or by which it is bound
which involves a future commitment by it in excess of $50,000 and which
cannot be terminated without liability on 90 days or less notice; (v) each
collective bargaining agreement of BFF; (vi) the name and current annual
salary of each officer or other employee of BFF whose current annual salary
is in excess of $100,000 and the profit sharing, bonus or any other form of
compensation (other than salary) paid or payable by BFF to or for the
benefit of each such person for the 365-day period ended March 31, 1995,
and any employment or other agreement of BFF with any of its officers or
employees; (vii) the names of the officers and directors of BFF; and
(viii) the name and address of each bank or depository in which BFF has an
account or safe-deposit box, the name in which the account or box is held
and the names of all persons authorized to draw thereon or to have access
thereto. BAHC has previously furnished or made available to DZI a true and
complete copy of each such written (and a written summary of each of those
that are not written) agreement, contract or commitment listed on
Section 4.11 of the BFF Disclosure Schedule. None of BFF nor, to the
knowledge of BAHC, any other party thereto or bound thereby is in default
under any of the contracts, agreements or instruments listed on
Section 4.11 of the BFF Disclosure Schedule, except where such default
would not have a BFF Material Adverse Effect, and, to the knowledge of BAHC
(other than with respect to acts or omissions of BAHC or BFF), no act or
event has occurred which with notice or lapse of time, or both, would
constitute such a default. BFF is not a party to, nor is it or any of its
property bound by, any other agreement or instrument with respect to which
a default might have a BFF Material Adverse Effect. With
13
respect to all contracts, agreements and instruments listed on Section 4.11
of the BFF Disclosure Schedule and except as set forth therein each is in
full force and effect and a legally binding agreement of BFF.
Section 4.12 Tax Matters.
4.12.1 BFF has timely filed all returns and reports required to be
filed with respect to sales, use and property taxes, and has collected and
timely paid all sales, use and property taxes required to be collected or
paid by BFF, except where the failure to file such returns and reports or
collect and pay such taxes would not have a BFF Material Adverse Effect.
4.12.2 Except as provided in Section 4.12 of the BFF Disclosure
Schedule, (i) BFF has not received from any governmental authority any
written notice of proposed adjustment, deficiency or underpayment of any
sales, use or property taxes, which notice has not been satisfied by
payment or been withdrawn, (ii) there are no claims that have been asserted
or threatened relating to such taxes against BFF, and (iii) there are no
agreements for the extension of time for the assessment of any such taxes
of BFF.
Section 4.13 Litigation. Except as set forth on Section 4.13 of the
BFF Disclosure Schedule (which disclosure is for information purposes only
and will not qualify this representation or warranty for purposes of
determining whether there is a breach of this representation or warranty
giving rise to a claim for indemnifiable damages by DZI under Section 11.1
hereof), there are no actions, suits, claims, governmental investigations
or arbitration proceedings pending or, to the knowledge of BAHC, threatened
against or affecting BFF or any of its assets or properties except, in the
case of threatened actions, suits, claims, governmental investigations or
arbitration proceedings only, any such actions, suits, claims, governmental
investigations, or arbitration proceedings as would not have a BFF Material
Adverse Effect. There are no outstanding injunctions, judgments, orders,
rulings, decrees or charges of any federal, state, provincial or local
judicial, quasi-judicial or administrative authority by which BFF or any of
its assets are bound which would reasonably be expected to have a BFF
Material Adverse Effect.
Section 4.14 No Material Adverse Change. Except as disclosed on
Section 4.14 of the BFF Disclosure Schedule, since the date of the Last
Balance Sheet, (i) there has not occurred any event which would have a BFF
Material Adverse Effect, and (ii) there is, to the knowledge of BAHC, no
threatened or prospective event or condition of any character whatsoever
(other than general economic conditions) which is reasonably expected to
have a BFF Material Adverse Effect.
Section 4.15 Absence of Certain Acts or Events. Except as disclosed
on Section 4.15 of the BFF Disclosure Schedule, and except for this
Agreement and the transactions contemplated hereby, since March 31, 1995,
BFF has not: (i) made any change in the employment terms for any of its
officers or employees, paid any bonus to or increased the compensation of
any of the foregoing outside the ordinary course or granted any severance
or termination pay to, or entered into any severance agreement with any
officer or employee; (ii) established, adopted, entered into or amended, in
any material respect, or took action to
14
accelerate any rights or benefits under any employee benefit plan; (iii)
made or obligated itself to make any capital expenditures aggregating more
than $25,000, other than capital expenditures relating to the construction
or furnishing of any Centers; (iv) paid any expenses on its own behalf or
on behalf of BAHC in connection with the transactions contemplated hereby;
or (v) otherwise engaged in any business or transactions (including
purchases, sales or pledging of assets), or incurred any indebtedness,
outside of the ordinary course of business.
Section 4.16 Compliance with Laws.
4.16.1 BFF is in compliance with all laws, regulations and orders
applicable to the Purchased Assets and the Business, except where the
failure to so comply would not have a BFF Material Adverse Effect. Neither
BFF nor BAHC has received notification of any asserted past or present
failure by BFF to comply with any laws, which failure (if established)
would have a BFF Material Adverse Effect.
4.16.2 Neither BFF nor BAHC nor any officer of BFF has made any
payment of funds in connection with the business of BFF prohibited by law.
4.16.3 BFF is and at all times has been in full compliance with the
terms and provisions of the Immigration Reform and Control Act of 1986 (the
"Immigration Act"). With respect to each Employee (as defined in 8 C.F.R.
274a. 1(f)) of BFF for whom compliance with the Immigration Act by BFF as
Employer is required, BFF possesses (i) each such Employee's Form I-9
(Employment Eligibility Verification form), and (ii) all other records,
documents or other papers prepared, procured and/or retained by BFF
pursuant to the Immigration Act. BFF has not been cited, fined, served
with a Notice of Intent to Fine or with a Cease and Desist Order, nor has
any action or administrative proceeding been initiated or threatened
against BFF by reason of any actual or alleged failure to comply with the
Immigration Act.
Section 4.17 Labor Relations of BFF. Except as set forth in
Section 4.17 of the BFF Disclosure Schedule, BFF is not a party to or bound
by any collective bargaining agreement or any other agreement with a labor
union, and there has been no effort by any labor union during the 24 months
prior to the date hereof to organize any employees of BFF into one or more
collective bargaining units. There is not pending or, to the knowledge of
BAHC, threatened any labor dispute, strike or work stoppage which affects
or which may affect the business of BFF or which may interfere with their
continued operation. BAHC has not received notice (which notice
qualification is not applicable for purposes of determining whether there
is a breach of this representation or warranty giving rise to a claim for
indemnifiable damages by DZI under Section 11.1 hereof) that any of BFF or
any agent, representative or employee of BFF or BAHC has within the last 24
months committed any unfair labor practice as defined in the National Labor
Relations Act which would have a BFF Material Adverse Effect, and there is
not now pending or, to the knowledge of BAHC, threatened any charge or
complaint against BFF by or with the National Labor Relations Board or any
representative thereof. There has been no strike, walkout or work stoppage
involving any of the employees of BFF during the 24 months prior to the
date hereof.
15
Section 4.18 Employee Benefits. BFF does not maintain, contribute to
or sponsor, nor at any time since June 30, 1989, has it maintained,
contributed to or sponsored: (i) any non-qualified deferred compensation
or retirement plans or arrangements; (ii) any qualified defined
contribution retirement plans or arrangements; (iii) any qualified defined
benefit pension plan; (iv) any other plan, program, agreement or
arrangement under which former employees of BFF or their beneficiaries are
entitled, or current employees of BFF will be entitled following
termination of employment, to medical, health, life insurance or other
benefits other than pursuant to benefit continuation rights granted by
state or federal law; or (v) any other employee benefit, health, welfare,
medical, disability, life insurance, stock, stock purchase or stock option
plan, program, agreement, arrangement or policy.
Section 4.19 Product and Other Liability Claims; Product Warranties.
Section 4.19 of the BFF Disclosure Schedule sets forth all product
liability claims or liability claims related to services rendered by BFF
for injury or damage to persons or property which are pending or, to the
knowledge of BAHC, threatened against BFF with respect to products or
services sold by BFF, except for any claims which, individually, do not
exceed $5,000. Section 4.19 of the BFF Disclosure Schedule also sets
forth, for the last fiscal year of BFF and for the interim period ended on
the date hereof, the aggregate amount of product or other liability claims
paid by or on behalf of BFF.
ARTICLE V
Representations and Warranties of DZI and DZLP
In order to induce BFF and BAHC to enter into this Agreement and to
consummate the transactions contemplated hereunder subject to the
disclosure schedule attached hereto and incorporated herein by reference
(the "DZI Disclosure Schedule"), DZI makes the representations and
warranties set forth below, each of which is independently relied upon by
BAHC and BFF regardless of any other investigation made or information
obtained by BAHC and BFF, and each of which is correct and complete as of
the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article V). As
used hereinafter in this Article V, the term "DZI Material Adverse Effect"
shall mean a material adverse effect on the assets, business, financial
condition or operations of DZI and its subsidiaries considered as one
enterprise.
Section 5.1 Organization, Power, Authority. DZI is a corporation
duly organized and legally existing in good standing under the laws of the
state of its incorporation and has full corporate power and authority
necessary (i) to own or lease its properties and to carry on its business
as it is now being conducted, and (ii) to enter into this Agreement and the
agreements and instruments
16
contemplated hereby, and to carry out the transactions and agreements
contemplated hereby or thereby. DZLP is a limited partnership duly
organized and legally existing in good standing under the laws of the state
of its organization and has full power and authority necessary (i) to own
or lease its properties and to carry on its business as it is now being
conducted, and (ii) to enter into this Agreement and the agreements and
instruments contemplated hereby, and to carry out the transactions and
agreements contemplated hereby or thereby. DZI and DZLP are legally
qualified to transact business as a foreign corporation or limited
partnership, and is in good standing, in each of the jurisdictions in which
its business or property is such as to require that it be thus qualified,
except such jurisdictions where the failure to be so qualified would not
have a DZI Material Adverse Effect.
Section 5.2 Due Authorization and Binding Obligation. The execution,
delivery and performance of this Agreement, the Note, the Assignment
Agreement and the Sublease and each of the other agreements contemplated
hereby and thereby and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action of DZI
and DZLP. This Agreement has been duly executed and delivered by each of
DZI and DZLP and is a valid and binding obligation of each of DZI and DZLP,
enforceable in accordance with its terms. Each of the Note, the Assignment
Agreement and the Sublease has been duly authorized and, when executed and
delivered in accordance with the terms of this Agreement, will be a valid
and binding obligation of each of DZI and DZLP, enforceable in accordance
with its terms. Except as set forth in Section 5.2 of the DZI Disclosure
Schedule, neither the execution and delivery of this Agreement the Note,
the Assignment Agreement, the Sublease or the agreements contemplated
thereby nor the consummation of the transactions contemplated hereby or
thereby will: (i) conflict with or violate any provision of DZI's, DZLP's
or any subsidiary of DZI's respective certificates of incorporation ,
bylaws or partnership agreement; (ii) conflict with or violate any law,
ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to,
binding upon or enforceable against DZI or any subsidiary of DZI or DZLP;
(iii) result in any breach of, constitute a default under, result in the
acceleration of, create in any party the right to, or otherwise result in,
the acceleration, termination, modification or cancellation (including
pursuant to any change in control provision), or require any notice under,
any material mortgage, contract, agreement, indenture, trust or other
instrument which is either binding upon or enforceable against DZI or any
subsidiary of DZI or DZLP, or the assets and properties of DZI or any
subsidiary of DZI or DZLP; or (iv) impair or in any way limit any
governmental or official license, approval, permit or authorization of DZI
or any subsidiary of DZI or DZLP; except, in the case of clause (iv) above,
such limitations which would not have a DZI Material Adverse Effect. No
permit, consent, approval or authorization of, or declaration to or filing
with, any regulatory or other government authority is required in
connection with the execution and delivery of this Agreement, the Note, the
Assignment Agreement or the Sublease or the agreements contemplated thereby
by DZI and DZLP and the consummation by DZI and DZLP of the transactions
contemplated hereby or thereby, except such as shall have been obtained on
or prior to the Closing Date and such consents and approvals as are
required to transfer to DZLP the liquor license issued to BFF with respect
to the Indianapolis Center.
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ARTICLE VI
Additional Covenants of BAHC
Section 6.1 Reasonable Efforts. From and after the execution and
delivery of this Agreement until the Closing Date, BAHC will use, and will
cause BFF to use, its reasonable efforts to cause to be satisfied as soon
as practicable and prior to the Closing Date all of the conditions set
forth in Article VIII to the obligations of DZLP to purchase the Purchased
Assets.
Section 6.2 Conduct of Business Pending the Closing. From and after
the execution and delivery of this Agreement and until the Closing Date,
except for this Agreement and the transactions contemplated hereby and
except as otherwise provided in Section 6.2 of the BFF Disclosure Schedule
and as otherwise provided by the prior written consent of DZI:
6.2.1 BAHC will cause BFF to conduct the Business and operate the
Centers in the manner in which the same have heretofore been conducted, and
BAHC will use its reasonable efforts to cause BFF to (i) preserve its
business organization intact, and (ii) keep available to DZI the services
of its officers, employees, agents and suppliers.
6.2.2 BAHC will cause BFF to maintain the Purchased Assets in
customary repair, order and condition, reasonable wear, use and damage by
unavoidable casualty excepted, and to maintain insurance which is adequate
in character and amount to cover all of its properties and with respect to
the conduct of its business as are in effect on the date of this Agreement.
6.2.3 BAHC will not permit BFF to (i) sell, assign, transfer,
encumber, waste, alienate, or otherwise dispose of any of the Purchased
Assets, except for sales made in the ordinary course of business; (ii) make
any change in the employment terms for any of its officers or employees,
pay any bonus to or increase the compensation of any of the foregoing
outside the ordinary course or grant any severance or termination pay to,
or enter into any employment or severance agreement with any officer or
employee; (iii) establish, adopt or enter into any employee benefit plan;
(iv) enter into or engage in any transaction with any affiliate except
intercompany advances or withdrawals from BAHC or its subsidiaries to BFF
consistent with prior practice; (v) make or obligate itself to make any
capital expenditures aggregating more than $25,000 without the prior
approval of DZI; or (vi) otherwise engage in any business or transactions
(including purchases, sales or pledging of the Purchased Assets), or incur
any indebtedness, outside of the ordinary course of business with respect
to the Purchased Assets.
6.2.4 BAHC will not, and will cause BFFHC not to, sell or
otherwise transfer any of its interests, either direct or indirect, in BFF.
6.2.5 BAHC will not, and will cause BFF not to, take any action,
or omit to take any action, the result of which would cause any of the
representations and warranties made by BAHC herein to become untrue.
Section 6.3 Access to BFF's Properties and Records. From and after
the execution and delivery of this Agreement, BAHC will cause BFF to afford
to representatives of DZI access, during normal business hours and upon
reasonable notice, to BFF's offices, properties,
18
books and records to conduct a full and complete investigation, including
legal, financial, operational and environmental reviews, of the Business,
and will cause BFF to furnish or make available to such representatives
during such period all such information relating to the foregoing
investigation as DZI may reasonably request; provided, however, that any
furnishing of, or making available, such information to DZI and any
investigation by DZI shall not affect the right of DZI and DZLP to rely on
the representations and warranties made by BAHC in or pursuant to this
Agreement, and provided further that DZI and DZLP will hold in confidence
all documents and information concerning BFF so furnished, or made
available and, if the sale of Purchased Assets pursuant hereto shall not be
consummated, such confidence shall be maintained and DZI and DZLP will not
use or disclose to any person any such document or information (except to
the extent that such information can be shown to be previously available to
DZI, publicly available, or disclosed to DZI by a person who is not
obligated to maintain the confidentiality of such information).
Section 6.4 No Disclosure. Without the prior written consent of DZI,
BAHC will not, and will cause BFF not to, prior to the Closing Date,
disclose the existence of or any term or condition of this Agreement to any
person or entity except that such disclosure may be made (a) to any person
to whom such disclosure is necessary in order to satisfy any of the
conditions to the consummation of the purchase of the Purchased Assets; or
(b) if required to be disclosed pursuant to the requirements of law (in
which case BAHC shall notify DZI prior to making such disclosure).
Section 6.5 No Other Discussions. None of BAHC nor any of its
affiliates, agents or representatives, will directly or indirectly solicit,
or engage in any negotiation or exchange of information with, another
entity or person regarding the sale or transfer of all or any substantial
part of the stock or assets of BFF or to the merger or consolidation of BFF
with, or into, any person or entity other than DZI.
Section 6.6 Interim Financial Statements. From and after the
execution and delivery of this Agreement until the Closing, BAHC shall
prepare, or cause to be prepared, and furnish to DZI the following
financial statements of BFF (the "Interim Financial Statements"):
(i) unaudited balance sheets at the end of each month; and
(ii) unaudited statements of operations, stockholder's equity and cash
flow for each month.
BAHC shall prepare and furnish the Interim Financial Statements in
accordance with usual timing and prepared in a manner consistent with the
Financial Statements.
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ARTICLE VII
Additional Covenants of DZI
Section 7.1 Reasonable Efforts. DZI will use its reasonable efforts
to cause to be satisfied as soon as practicable and prior to the Closing
Date all of the conditions set forth in Article IX to the obligations of
BAHC and BFF to sell the Purchased Assets pursuant to this Agreement.
Section 7.2 No Disclosure. Without the prior written consent of
BAHC, neither DZI nor DZLP will, prior to the Closing Date, disclose the
existence of or any term or condition of this Agreement to any person or
entity except that such disclosure may be made (a) to any person to whom
such disclosure is necessary in order to satisfy any of the conditions to
the consummation of the purchase of the Purchased Assets as set forth in
this Agreement; or (b) if required to be disclosed pursuant to the
requirements of law (in which case DZI or DZLP shall consult with BAHC
prior to making such disclosure).
Section 7.3 Conduct Prior to Closing. DZI will not, and will cause
its subsidiaries not to, take any action, or omit to take any action, the
result of which would cause any of the representations and warranties made
by DZI herein to become untrue.
ARTICLE VIII
Conditions to the Obligation of DZI and DZLP
The obligations of DZLP to purchase the Purchased Assets shall be
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions:
Section 8.1 Accuracy of Representations and Warranties and Compliance
with Obligations. The representations and warranties of BAHC contained in
this Agreement shall have been true and correct in all material respects at
and as of the date hereof, and they shall be true and correct in all
material respects at and as of the Closing Date with the same force and
effect as though made at and as of that time. Each of BAHC and BFF shall
have performed and complied in all material respects with all of its
respective obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. BAHC shall have delivered
to DZI a certificate, dated as of the Closing Date and signed by an
authorized officer of BAHC certifying that such representations and
warranties are thus true and correct in all material respects and that all
such obligations have been thus performed and complied with in all material
respects.
Section 8.2 Certified Resolutions. BAHC shall have delivered to DZI
copies of the resolutions adopted by the board of directors of each of
Viacom, BAHC and BFFHC and by the board of directors and the sole
stockholder of BFF authorizing the transactions contemplated by
20
this Agreement certified in each case as of the Closing Date by the
Secretary or an Assistant Secretary of Viacom, BAHC or BFF, as applicable.
Section 8.3 Receipt of Necessary Consents. The consents or approvals
of third parties set forth on Section 8.3 of the BFF Disclosure Schedule to
the transactions contemplated hereby shall have been obtained and shown by
written evidence satisfactory to DZI.
Section 8.4 No Adverse Litigation.
8.4.1 No action, suit, investigation or proceeding will have been
instituted by any person not affiliated with any of the parties hereto or
by any governmental agency to restrain, prohibit, invalidate, or otherwise
challenge the legality of the sale of the Purchased Assets to DZLP or any
other transaction contemplated hereby, which action, suit, investigation or
proceeding will have resulted in a temporary restraining order, preliminary
or permanent injunction, or other order preventing consummation of the sale
of the Purchased Assets to DZLP or any other transaction contemplated
hereby, which order or injunction is in effect at the Closing.
8.4.2 No action, suit, investigation or proceeding will have been
instituted by any person not affiliated with any of the parties hereto or
by any governmental agency to collect damages arising out of the sale of
the Purchased Assets to DZLP or any other transaction contemplated hereby,
which action, suit, investigation or proceeding is reasonably likely to
succeed and is reasonably likely to result in a material liability on the
part of DZLP or any of its affiliates.
Section 8.5 No Material Adverse Change. Except as set forth on the
BFF Disclosure Schedule, since the Last Balance Sheet, there shall not have
been any change or event which would have a BFF Material Adverse Effect.
Section 8.6 Consummation of Transactions. Prior to or concurrently
with the Closing under this Agreement the transactions contemplated by the
Stock Purchase Agreement shall have been consummated.
Section 8.7 License Agreement. Viacom and BEI shall have executed
and delivered to DZI the License Agreement.
Section 8.8 Sublease. BFF shall have executed and delivered to DZLP
the Sublease.
ARTICLE IX
Conditions to Obligation of BAHC and BFF
The obligations of BAHC and BFF to sell the Purchase Assets shall be
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions:
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Section 9.1 Accuracy of Representations and Warranties and Compliance
with Obligations. The representations and warranties of DZI contained in
this Agreement shall have been true and correct in all material respects at
and as of the date hereof, and they shall be true and correct in all
material respects at and as of the Closing Date with the same force and
effect as though made at and as of that time. DZI and DZLP shall have
performed and complied in all material respects with all of their
respective obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. DZI shall have delivered to
BAHC a certificate, dated as of the Closing Date and signed by an
authorized officer of DZI, certifying that such representations and
warranties are thus true and correct in all material respects and that all
such obligations have been thus performed and complied with in all material
respects.
Section 9.2 Certified Resolutions. DZI shall have delivered to BAHC
copies of the resolutions adopted by the board of directors of DZI and by
the general partner of DZLP authorizing the transactions contemplated by
this Agreement.
Section 9.3 No Adverse Litigation.
9.3.1 No action, suit, investigation or proceeding will have been
instituted by any person not affiliated with any party hereto or by any
governmental agency to restrain, prohibit, invalidate, or otherwise
challenge the legality of the sale of the Purchased Assets to DZLP or any
other transaction contemplated hereby, which action, suit, investigation or
proceeding will have resulted in a temporary restraining order, preliminary
or permanent injunction, or other order preventing consummation of the sale
of the Purchased Assets to DZLP or any other transaction contemplated
hereby, which order or injunction is in effect at the Closing.
9.3.2 No action, suit, investigation or proceeding will have been
instituted by any person not affiliated with any party hereto or by any
governmental agency to collect damages arising out of the sale of the
Purchased Assets to DZLP or any other transaction contemplated hereby,
which action, suit, investigation or proceeding is reasonably likely to
succeed and is reasonably likely to result in a material liability on the
part of BAHC or any of its affiliates.
Section 9.4 No Material Adverse Change. Except as set forth on the
DZI Disclosure Schedule, since December 31, 1994, there shall not have been
any change or event which would have a DZI Material Adverse Effect.
Section 9.5 Consummation of Transactions. Prior to or concurrently
with the Closing under this Agreement the transactions contemplated by the
Stock Purchase Agreement shall have been consummated.
Section 9.6 Sublease. DZLP shall have executed and delivered to BFF
the Sublease.
Section 9.7 Assignment Agreement. DZLP shall have executed and
delivered to BFF the Assignment Agreement.
Section 9.8 Guaranty Agreement. DZI shall have executed and
delivered to BFF the Guaranty Agreement.
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ARTICLE X
Certain Actions After the Closing
10.1 DZLP to Act as Agent for BFF. This Agreement shall not
constitute an agreement to assign any claim, contract, license, lease,
commitment, sales order or purchase order if any attempted assignment of
the same without the consent of the other party thereto would constitute a
breach thereof or in any way affect the rights of BFF thereunder. If such
consent is not obtained or if any attempted assignment would be ineffective
or would affect BFF's rights thereunder so that DZLP would not in fact
receive all such rights, then subject to the terms and conditions of
Section 10.3 hereof, DZLP shall act as the agent for BFF in order to obtain
for DZLP the benefits thereunder.
10.2 Delivery of Property Received by BFF After Closing. From and
after the Closing, DZLP shall have the right and authority to collect, for
the account of DZLP, all receivables and other items which shall be trans-
ferred or are intended to be transferred to DZLP as part of the Purchased
Assets as provided in this Agreement, and to endorse with the name of BFF
any checks or drafts received on account of any such receivables or other
items of the Purchased Assets. BFF agrees that it will transfer or deliver
to DZLP, promptly after the receipt thereof, any cash or other property
which BFF receives after the Closing Date in respect of any claims, con-
tracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items transferred or intended to
be transferred to DZLP as part of the Purchased Assets under this
Agreement.
10.3 DZLP Appointed Attorney for Sellers. Effective at the Closing
Date, BFF hereby constitutes and appoints DZLP, its successors and assigns,
the true and lawful attorney of BFF, in the name of either DZLP or BFF (as
DZLP shall determine in its sole discretion) but for the benefit and at the
expense of DZLP (except as otherwise herein provided), (i) to institute and
prosecute all proceedings which DZLP may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the
Purchased Assets as provided for in this Agreement; (ii) subject to Article
XI, to defend or compromise any and all actions, suits or proceedings in
respect of any of the Purchased Assets, and to do all such acts and things
in relation thereto as DZLP shall deem advisable; and (iii) to take all
action which DZLP may reasonably deem proper in order to provide for DZLP
the benefits under any of the Purchased Assets where any required consent
of another party to the sale or assignment thereof to DZLP pursuant to this
Agreement shall not have been obtained. BFF acknowledges that the
foregoing powers are coupled with an interest and shall be irrevocable.
DZLP shall be entitled to retain for its own account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest
in respect thereof.
Section 10.4 Execution of Further Documents. From and after the
Closing and upon the reasonable request of a party hereto, each party
hereto shall execute, acknowledge and deliver all such further acts, deeds,
bills of sale, assignments, assumptions, transfers, conveyances, powers of
attorney and assurances as may be required to convey and transfer to and
vest in DZLP and protect its right, title and interest in the Purchased
Assets and to assume the Assumed
23
Liabilities, and as may be appropriate otherwise to carry out the
transactions contemplated by this Agreement and the agreements contemplated
hereby.
Section 10.5 Employment by DZLP of BFF's Employees.
10.5.1 BFF and BAHC shall use their best efforts to aid DZLP in
engaging such of BFF's employees as are employed at the Centers on the
Closing Date. BFF shall continue to employ all of such employees that are
employed at the Albuquerque Center as are necessary to perform BFF's
obligations under the Sublease. DZLP shall employ all of such employees
that are employed at the Indianapolis Center as soon as practicable after
the Closing Date and for at least 60 days after the Closing Date (other
than such employees DZLP terminates for cause), provided, however, that
DZLP shall reimburse BFF for its costs with respect to the employment of
such persons from the Closing Date until the commencement of employement of
such persons by DZLP.
10.5.2 DZLP shall have no obligation to continue, or institute any
replacement or substitution for, any vacation, severance, incentive, bonus,
profit sharing, pension or other employee benefit plan or program of BFF
other than as set forth in Section 10.6 hereof.
Section 10.6 Employee Benefits. DZLP agrees, with respect to all of
its medical, hospitalization and dental benefit plans for employees of BFF
that DZLP employs that: (a) it will consider all BFF service before the
Closing Date in determining the eligibility to participate of BFF employees
who are such employees both immediately before and immediately after the
Closing Date ("Continuing Employees"); (b) it will offer medical,
hospitalization and dental coverage to such Continuing Employees on the
same terms and conditions as such benefits are generally available to
similarly situated DZLP employees who were not hired as a result of an
acquisition of an entity which previously had employees and (c) it will
cover from the time of the Closing and will waive any exclusions for pre-
existing conditions for all such Continuing Employees who, immediately
before the Closing Date were covered by the medical, hospitalization and
dental plans offered by BFF to its employees.
Section 10.7 Liquor Licenses. From and after the Closing and until
the later of such time as (i) DZLP shall have obtained a new liquor license
with respect to the Albuquerque Center and (ii) the transfer of the
existing liquor license with respect to the Indianapolis Center from BFF to
DZLP shall have been approved and effected by all necessary governmental
entities, BFF shall maintain its corporate existence, accounts, and state
and federal licenses, permits and tax identification numbers, shall
maintain such employees, officers, and agents as are necessary to retain
such liquor licenses and shall assist DZLP in the procurement and transfer
of such liquor licenses, and BFI and DZLP shall fully perform their
respective obligations under the Sublease.
Section 10.8 Net Worth. BAHC agrees that, until such time as its
potential obligations under Article XI are extinguished, it will maintain a
minimum net worth equal to or greater than the total Purchase Price.
24
ARTICLE XI
Indemnification
Section 11.1 Agreement by BAHC to Indemnify.
11.1.1 BAHC agrees that it will defend, indemnify and hold DZI and
its affiliates harmless in respect of the aggregate of all indemnifiable
damages of DZI. For this purpose, "indemnifiable damages" of DZI means the
aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including related and reasonable counsel fees and expenses, and
compensatory and demonstrable consequential damages) incurred or suffered
by DZI as a direct result of (i) any inaccurate representation or warranty
made by BAHC in or pursuant to this Agreement or any facts giving rise to
such inaccurate representation or warranty; provided, however,
notwithstanding anything to the contrary elsewhere herein, for the purpose
of determining "indemnifiable damages," such representations and warranties
shall be read as and deemed to be representations and warranties without
any qualification regarding materiality (including any qualification
regarding a BFF Material Adverse Effect); provided, further, that any such
expenses, losses, costs, deficiencies, liabilities or damages resulting
from any item or items relating to a common set of facts or circumstances
in connection with an inaccurate representation or warranty shall not be
considered "indemnifiable damages" unless the amount involved is greater
than $2,500; (ii) any default in the performance of any of the covenants or
agreements made by BAHC in this Agreement; (iii) the failure to obtain the
consent of any landlord of any of the Purchased Leasehold Premises to any
of the transactions contemplated by this Agreement; or (iv) DZLP becoming
obligated to purchase an additional theater system from Iwerks
Entertainment, Inc. ("Iwerks") pursuant to a contract between BFF and
Iwerks dated February 1, 1994. DZI shall not make claims against BAHC for
indemnifiable damages more than once per calendar month.
11.1.2 Each of the representations and warranties, and the
covenants set forth in Sections 6.2.3 and 6.2.5, made by BAHC in this
Agreement shall survive until and including the first anniversary of the
Closing Date, notwithstanding any investigation at any time made by or on
behalf of DZI, and thereafter all such representations and warranties shall
be extinguished; provided, however, the representations and warranties made
by BAHC in Sections 4.1, 4.2 and 4.5.1 hereof shall in each case survive
forever and those made in Section 4.6 shall in each case survive for a
period of seven years and six months from the Closing Date. No claim for
the recovery of indemnifiable damages based upon the inaccuracy of such
representations and warranties may be asserted by DZI after such
representations and warranties shall be thus extinguished; provided,
however, that claims first asserted within the applicable period (whether
or not the amount of any such claim has become ascertainable within such
period) shall not thereafter be barred.
11.1.3 BAHC shall only be liable for any claim for indemnifiable
damages arising out of any inaccuracy of any representation or warranty or
any facts giving rise to such inaccurate representation or warranty if the
aggregate amount of all such indemnifiable damages exceeds $50,000, in
which case BAHC shall be liable for all indemnifiable damages arising out
of such
25
inaccuracies and defaults, including the first $50,000. Notwithstanding
any other provisions of this Agreement to the contrary, (i) the
indemnification obligations herein of BAHC for any indemnifiable damages of
DZI and its affiliates arising from a breach of the representations or
warranties in Section 4.6 which breach first becomes known to DZI after the
first anniversary of the Closing Date or from a default in the performance
by BAHC of its obligations under any other covenant or agreement contained
herein shall not be subject to the limitation contained in the preceding
sentence and (ii) any indemnifiable damages in respect of any such default
referred to in clause (i) shall not be included in the amount of
indemnifiable damages for purposes of determining whether the $50,000
limitation contained in the preceding sentence has been exceeded. The total
amount of indemnifiable damages of DZI shall be limited to the total amount
of the Purchase Price.
11.1.4 Except as expressly stated herein, the remedies provided for
in this Section 11.1 shall be the sole monetary remedy available to DZI
under this Agreement.
Section 11.2 Agreement by DZI to Indemnify.
11.2.1 DZI agrees that it will defend, indemnify and hold BAHC and
its affiliates harmless in respect of the aggregate of all indemnifiable
damages of BAHC. For this purpose, "indemnifiable damages" of BAHC means
the aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including related and reasonable counsel fees and expenses, and
compensatory and demonstrable consequential damages) incurred or suffered
by BAHC as a direct result of any (i) inaccurate representation or warranty
made by DZI in or pursuant to this Agreement or any facts giving rise to
such inaccurate representation or warranty; provided, however,
notwithstanding anything to the contrary elsewhere herein, for the purpose
of determining "indemnifiable damages," such representations and warranties
shall be read as and deemed to be representations and warranties without
any qualification regarding materiality (including any qualification
regarding a DZI Material Adverse Effect); provided, further, that any such
expenses, losses, costs, deficiencies, liabilities or damages resulting
from any item or items relating to a common set of facts or circumstances
in connection with an inaccurate representation or warranty shall not be
considered "indemnifiable damages" unless the amount involved is greater
than $2,500; or (ii) default in the performance of any of the covenants or
agreements made by DZI in this Agreement.
11.2.2 Each of the representations and warranties made by DZI in
this Agreement shall survive forever.
11.2.3 DZI shall be liable only for any claim for indemnifiable
damages arising out of any inaccuracy of any representation or warranty or
any facts giving rise to such inaccurate representation or warranty if the
aggregate amount of all such indemnifiable damages exceeds $50,000 in which
case DZI shall be liable for all indemnifiable damages arising out of such
inaccuracies or defaults, including the first $50,000. The total amount of
indemnifiable damages of BAHC shall be limited to the total amount of the
Purchase Price.
11.2.4 Except as expressly stated herein, the remedies provided for
in this Section 11.2 shall be the sole monetary remedy available to BAHC
under this Agreement.
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Section 11.3 Indemnification Procedures for Third Party Claims. In
the event that subsequent to the Closing Date any claim is asserted by a
third party against a party hereto as to which such party is entitled to
indemnification hereunder, such party (the "indemnified party") shall as
promptly as possible notify the party obligated to indemnify it (the
"indemnifying party") thereof in writing. No delay on the part of the
indemnified party to notify the indemnifying party of a claim shall relieve
any obligation of the indemnifying party to indemnify the indemnified party
with respect to such claim unless (and then solely to the extent) the
indemnifying party is prejudiced in its ability to defend against the
subject claim by the delay in such notification. The indemnifying party
shall have the right, upon written notice to the indemnified party within
ten (10) days after receipt from the indemnified party of notice of such
claim, to conduct at its expense and with counsel of its choice reasonably
satisfactory to the indemnified party the defense against such claim in its
own name, or, if necessary, in the name of the indemnified party. In the
event that the indemnifying party shall fail to give such notice, it shall
be deemed to have elected not to conduct the defense of the subject claim,
and in such event the indemnified party shall have the right to conduct
such defense and to compromise and settle the claim without prior consent
of the indemnifying party, and the indemnifying party will remain
responsible for all indemnifiable damages suffered by the indemnified party
relating to the subject claim. In the event that the indemnifying party
does elect to conduct the defense of the subject claim, the indemnified
party will cooperate with and make available to the indemnifying party such
assistance and materials as may be reasonably requested by it, all at the
expense of the indemnifying party, and the indemnified party shall have the
right at its expense to participate in the defense, provided that the
indemnified party shall have the right to compromise and settle the claim
only with the prior written consent of the indemnifying party (such consent
not to be unreasonably withheld). The indemnifying party will not consent
to the entry of any judgment with respect to a subject claim or enter into
any settlement with respect thereto, which does not include a provision
whereby the plaintiff or claimant releases the indemnified party from all
liability with respect thereto, or, in cases involving equitable relief,
puts the indemnified party in the same position as it was prior to the
initiation of the claim without the prior written consent of the
indemnified party (such consent not to be unreasonably withheld so long as
such settlement involves the payment of money damages).
Section 11.4 Credit Provisions. In the event that,
notwithstanding the limitations contained in this Article XI, an
indemnifying party nevertheless becomes liable to an indemnified party
hereunder, the indemnifying party shall be entitled to a credit or offset
against any such liability of an amount equal to the value of any net tax
benefit realized by the indemnified party in connection with the loss or
damage suffered by the indemnified party which forms the basis of the
indemnifying party's liability hereunder and the receipt of the
indemnification payment by the indemnified party.
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ARTICLE XII
Miscellaneous
Section 12.1 Survival of Representations and Warranties. All of the
respective representations, warranties, covenants, agreements and
indemnification and hold harmless obligations of the parties to this
Agreement shall survive the consummation of the transactions contemplated
hereby; provided that any recovery for a breach of representation,
warranty, covenant or agreement under this Agreement shall be subject to
the provisions of Article XI.
Section 12.2 Brokers' Commission. DZI will indemnify and hold
harmless BAHC from the commission, fee or claim of any person, firm or
corporation employed or retained or claiming to be employed or retained by
DZI to bring about, or to represent it in, the transactions contemplated
hereby. BAHC will indemnify and hold harmless DZI from the commission, fee
or claim of any person, firm or corporation employed or retained or
claiming to be employed or retained by BFF or BAHC to bring about, or to
represent them in, the transactions contemplated hereby.
Section 12.3 Amendment and Modification. The parties hereto may
amend, modify and supplement this Agreement in such manner as may be agreed
upon by them in writing.
Section 12.4 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, assignees, heirs and legal representatives. Nothing in this
Agreement shall confer upon any person, firm or corporation not a party to
this Agreement, or the legal representatives of such person, firm or
corporation, any rights or remedies of any nature or kind whatsoever by
reason of this Agreement.
Section 12.5 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto contain the entire agreement of the parties hereto
with respect to the sale of the Purchased Assets to DZLP and supersede all
prior understandings and agreements of the parties with respect to the
subject matter hereof. Except for the representations and warranties made
herein and the other agreements being executed in connection herewith, no
other representations or warranties, express or implied, have been made
with respect to the subject matter hereof. Any reference herein to this
Agreement shall be deemed to include the Schedules and Exhibits attached
hereto.
Section 12.6 Headings. The descriptive headings in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
Section 12.7 Execution in Counterpart. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original.
Section 12.8 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when received, whether
personally, by telegram, telex, facsimile transmission (followed by regular
mail) or registered or certified mail (return receipt
28
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to BAHC, Blockbuster Amusement Holding
addressed to: Corporation
Xxx Xxxxxxxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
Fax No.: (000) 000-0000
If to DZI, Discovery Zone, Inc.
addressed to: 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Fax No.: (000) 000-0000
Section 12.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed therein, without regard to the
conflicts of laws principles thereof.
Section 12.10 Publicity. No press release or other public
announcement related to this Agreement or the transactions contemplated
hereby will be issued by any party hereto without the prior approval of the
other parties, except that any party may make such public disclosure which
it believes in good faith to be required by law (in which case such party
will consult with the other parties prior to making such disclosure).
Section 12.11 Termination.
12.11.1 Anything to the contrary herein notwithstanding, prior to the
Closing Date this Agreement may be terminated and the transactions
contemplated hereby and thereby may be abandoned:
(i) by the mutual written consent of all of the parties hereto at any
time prior to the Closing Date;
(ii) by BAHC in the event of the material breach by DZI of any
provision of this Agreement (it being agreed that if the breach
in question is a breach by DZI of a representation or warranty
contained in Article V of this Agreement, such breach will not be
considered a material breach unless it would result in a DZI
Material Adverse Effect), which breach is not remedied by DZI
within 10 days after receipt of notice thereof from BAHC; or
(iii) by DZI in the event of the material breach by BAHC of any
provision of this Agreement (it being agreed that if the breach
in question is a breach by BAHC of any representation or warranty
contained in Article IV of this Agreement, such breach will not
be considered a material breach unless it would result in a BFF
29
Material Adverse Effect), which breach is not remedied by BAHC
within 10 days after receipt of notice thereof from DZI; or
(iv) by any party hereto if the Closing has not taken place by June
30, 1995.
If this Agreement is terminated pursuant to clause 12.11.1 (i) above, no
party shall have any liability for any cost, expense, loss of anticipated
profit or any further obligation for breach of warranty or otherwise to any
other party to this Agreement. Any termination of this Agreement pursuant
to clauses 12.11.1 (ii), (iii) or (iv) above shall be without prejudice to
any other rights or remedies of the respective parties.
12.11.2 The risk of any loss to the assets and properties of BFF and
all liability with respect to injury and damage occurring in connection
therewith shall be the sole responsibility of BAHC until the completion of
the Closing. If any material part of said properties shall be damaged by
fire or other casualty prior to the completion of the Closing hereunder,
DZI shall have the right and option:
(i) to terminate this Agreement, without liability to any party
hereto; or
(ii) to proceed with the Closing hereunder, in which event such
casualty shall not constitute a breach by BAHC of any
representation, warranty or covenant in this Agreement, and DZI
shall be entitled to receive and retain the insurance proceeds
arising from such casualty.
Section 12.12 Expenses. Whether or not the transactions contemplated
hereby are consummated, all costs and expenses incurred in connection with
the transactions contemplated hereby shall be paid by the party incurring
such expenses.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
DISCOVERY ZONE, INC. BLOCKBUSTER FAMILY FUN, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx Xxxxxxxx
---------------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxx Xxxxxxxx
Title: Senior Vice President Title: Senior Vice President
DISCOVERY ZONE L.P. BLOCKBUSTER AMUSEMENT
HOLDING CORPORATION
By: DZGP, Inc.
Its General Partner
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxx Title: Senior Vice President
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
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