AmendmentNo. 1 To AssetPurchase and Sale Agreement

 10.           A new Section 7.15 is hereby added to the Original Agreement as follows:

 

 

“7.15                      Sublease of Retail Portions of the Kapolei Property.  At and simultaneously with the Closing, Buyer (as sublandlord) and Seller (as subtenant) will enter into a sublease in substantially the form of Exhibit L attached hereto (the “Kapolei Retail Area Sublease”) of those portions of the Kapolei 16 Property occupied by the retail leases set forth on Exhibit A-2 of the Original Agreement (the “Kapolei Retail Leases”), and Buyer will assign to Seller the Kapolei Retail Leases.  The parties acknowledge and agree that, for purpose of the Kapolei Retail Area Sublease, the net cash flow for the Kapolei Retail Leases for the 12 months ended June 30, 2007 was $228,732.”

 

 

11.           Section 9.1 of the Original Agreement is hereby deleted and replaced with the following:

 

“9.1           Closing Date.  Subject to the satisfaction (or waiver by Buyer or Seller as provided therein) of the conditions precedent in Articles 5 and 6 hereof, the transactions contemplated by this Agreement shall be consummated at a closing (the “Closing”) at the offices of Weissmann Wolff Bergman Coleman Grodin & Evall, LLP, 9665 Wilshire Boulevard, Ninth Floor, Beverly Hills, California 90212.  The Closing shall occur on Friday, February 15, 2008 (the “Scheduled Closing Date”).  The date of the Closing is sometimes referred to herein as the “Closing Date.”  The Closing shall be effective as of 8:00 a.m. (local time) on the Closing Date.”

 

 

 

13.           The Original Agreement is hereby amended to provide that although the Theater operated pursuant to the Kahala 8 Lease shall remain a “Theater” for all purposes under the Agreement, Seller shall not assign its rights as tenant under the Kahala 8 Lease to Buyer and, in lieu thereof, the parties shall enter into the Kahala Management Agreement at the Closing.  Accordingly, obtaining the consent of the landlord under the Kahala 8 Lease to the assignment of the Kahala 8 Lease from Seller to Buyer shall not be a condition precedent to any party’s obligation to consummate the transactions contemplated by the Agreement. However, Seller acknowledges and agrees that Buyer is making no representation or warranty as to the effectiveness of that management agreement under the Kahala 8 Lease or that the management agreement is permitted under the Kahala 8 Lease.   Seller shall indemnify, hold harmless and defend Buyer against any and all claims, loss or liability resulting from any assertion by the landlord under the Kahala 8 Lease that the management agreement is not effective and/or that it is not permitted under the Kahala 8 Lease to the extent provided in the Kahala Management Agreement. Without limiting the generality of the foregoing, and notwithstanding that the Kahala 8 Lease shall not be assigned by Seller to Buyer at Closing, the Purchased Assets shall continue to include all furniture, fixtures, equipment and inventory located at the Theater operated under the Kahala 8 Lease.

 

 

14.           Buyer agrees to change its name to Consolidated Entertainment, Inc. within ten (10) days following the Closing Date.

 

 

15.           Exhibit B to the Original Agreement is hereby replaced in its entirety by Exhibit B to this Amendment.  Schedule 3.1.3 to the Original Agreement is hereby replaced in its entirety by Schedule 3.1.3 to this Amendment.  Exhibits C-1 and C-2 to the Original Agreement are hereby deleted and replaced by Exhibit C-1 to this Amendment.

 

 

16.           Section 7.7 of the Original Agreement is hereby amended to provide that Buyer shall honor and redeem all Coupons and Passes presented at the Theaters for a period of two (2) years after the Closing Date, in lieu of the one (1) year period set forth in the Purchase Agreement.

 

 

17.           Seller agrees to leave for Buyer the following amount of cash at each Theater on the Closing Date: (i) Seller shall leave for Buyer the sum of $2,000 at each of the following Theaters: Kaahumanu and Kukui; (ii) Seller shall leave for Buyer the sum of  $4,000 at each of the following Theaters: Town Square, Grossmont, Carmel

 

 

Mountain, Gaslamp, Pearlridge, Kahala, Kapolei, Koko Marina, and Koolau; and (ii) Seller shall leave for Buyer the sum of $10,000 at each of the following Theaters: Valley Plaza, Mililani, Ward, and Rohnert Park.  Seller shall be entitled to an increase in the Purchase Price payable at the Closing equal to the amount of such cash.

 

 

18.           Buyer has agreed to assume the union contracts set forth as Exhibit 18 to this Amendment.  Notwithstanding such assumption, it is acknowledged and agreed that Buyer is not assuming any responsibility for any liabilities or obligations that may have accrued under either such contract or any predecessor contract or agreement with such unions prior to the Closing.   For example, in the event of any present or future underfunding of any benefit or retirement plan, program or fund, Buyer’s obligation shall be calculated only by reference to the hours worked by employees subsequent to the Closing Date, and Seller shall be responsible for any balance of any liability, if applicable, with respect to any such underfunding.  The parties agree that the union contracts listed set forth on Exhibit 18 shall be deemed Material Contracts for purposes of Section 3.7.

 

 

19.           Concurrently with the Closing, Seller shall sell, transfer and assign to Buyer, and Buyer shall purchase and acquire from Seller, the 2004 Ford E350 (Econoline 350) Van (VIN # 1FTNE24L13HC03895) (the “Van”) for a purchase price of $8,000.00.  The purchase price for the Van shall be paid by Buyer to Seller by wire transfer of immediately available funds at Closing.  The  Van is sold on an “as is” basis, without any representations or warranties of any kind.   Buyer shall be solely responsible for any taxes or assessments which may arise from the transfer of the Van, including from submission to the Hawaii Department of Motor Vehicles of an application for change of title to the Van.

 

 

20.           Buyer hereby agrees that, if the landlord under the Gaslamp 15 Lease (as defined in Exhibit A-1) conditions its consent to the assignment of such lease to Buyer’s Affiliate (the “Gaslamp Assignee”) on the Gaslamp Assignee’s agreement to make monthly or quarterly impound payments of the Gaslamp Assignee’s share of real property taxes and/or insurance costs, Buyer and the Gaslamp Assignee shall consent to make such payments as so requested by such landlord.    The parties agree that notwithstanding the provisions of the agreement to which the Gaslamp Assignee and Seller are parties evidencing the assignment and assumption of the Gaslamp 15 Lease, that the Gaslamp Assignee shall have no responsibility for any obligation of the tenant under the Gaslamp 15 Lease to the extent arising prior to the Closing Date, that Seller shall continue to have responsibility for all tenant obligations under the Gaslamp 15 Lease to the extent arising prior to the Closing Date, and that Seller will indemnify Buyer against any liability for any such obligation, such indemnity to be without setoff, deductible or any time limitation other than the applicable statute of limitations.

 

 

21.           Intentionally omitted.

 

 

22.           Buyer hereby represents and warrants that its credit agreement with its lender includes the following provision:

 

 

“Assignment of Representations, Warranties, Covenants, Indemnities and Rights. Agent shall have received a duly executed copy of an Assignment of Representations, Warranties, Covenants, Indemnities and Rights in respect of Borrower's and Reading’s rights under the Acquisition Agreement, which assignment shall be expressly permitted under the Acquisition Agreement or shall have been consented to by the Sellers and other parties to the Acquisition Agreement in writing.”

 

 

The Selling Parties agree to execute and deliver to Buyer at Closing duly executed counterparts of such consent in substantially the form of Exhibit 22 to this Amendment.

 

23.           At Buyer’s request, after the Closing Seller shall deliver to Buyer, with respect to each employee of Seller at the Theaters to whom Buyer has offered employment, (i) the following information: such employee’s name, address, social security number, job location, pay rate, and whether they have been classified by Seller as an exempt or non-exempt employee for the purpose of determining whether such employee is entitled to overtime pay, and (ii) a copy of such employee’s most recent performance assessment.  As a material inducement to Seller to make such disclosures to Buyer, Buyer hereby (a) all such disclosures are made for informational purposes only and without any representation, warranty or opinion as to any matter (including as to the classification of any employee as an exempt or non-exempt employee or as to any information contained in any such performance assessment), and (b) Buyer agrees to indemnify, hold harmless and defend Seller (its successors and assigns) from and against any matter arising from or in connection with the provision of such information to Buyer.  Buyer’s indemnification obligations under this Section 23 shall not be subject to any minimum threshold, offset or deductible or to any time limitation other than the applicable statute of limitations.

 

24.           Seller commits to make, or agrees to cause one or more of its Affiliates to make, an additional loan to RDI of up to One Million Five Hundred Thousand Dollars ($1,500,000), or such lesser amount as may be requested by RDI, on or before July 31, 2008, provided that RDI delivers written notice of the amount of such loan to Seller not later than June 30, 2008, and Seller commits to make, or agrees to cause one or more of its Affiliates to make, an additional loan to RDI of up to One Million Five Hundred Thousand Dollars ($1,500,000), or such lesser amount as may be requested by RDI, on or before July 31, 2009, provided that RDI delivers written notice of the amount of such loan to Seller not later than June 30, 2009.  The parties also agree as follows with respect to any loans made to RDI pursuant to this Section 24:  (a) such loans shall accrue interest at the rate of 8.50% per annum, compounded annually; (b) all accrued interest and the entire principal balance of such loans shall be all due and payable on the date which is three (3) years after the Closing Date; and (c) such loans shall be evidenced by one or more promissory notes otherwise substantially in the form of Promissory Note attached

 

 

as Exhibit C-1 to the Original Agreement (and not in the form attached as Exhibit C-1 to this Agreement).

 

 

25.           Seller agrees, following the closing, to maintain the current utilities serving the Theatres until February 29, 2008 in the name of Seller.   Buyer agrees promptly to reimburse to Seller the cost of such utilities against receipt of appropriate documentation.